Trademark can retain status despite being descriptive geographical indicator

In Group LFE (SA) (Pty) Ltd v Swartland Winery Limited ((467/09) [2011], March 4 2011), the Supreme Court of Appeal has ruled, in essence, that a trademark can still be a trademark even if it serves a dual purpose of also being a descriptive geographical indicator.

 

Swartland Winery Limited is the owner of the registered trademark SWARTLAND for alcohol. It has used the mark for some 60 years in connection with its wine, resulting in the mark becoming well known and strongly associated with it by consumers.

 

Group LFE (SA) (Pty) Ltd, a Dutch exporter of South African wines into the European Union, made use of the term 'Swartland' on one of its wine ranges. It claimed to be doing so only to indicate geographical origin, and not for trademark purposes. 

 

Swartland Winery is situated in an area in the Western Cape which has been known since the 17th century as 'Het Zwarte Land' in Dutch, and later as 'Swartland' in Afrikaans. In terms of the Wine, Other Fermented Beverages and Spirits Act, all wines are to be designated as having a particular geographical origin. Wines from the Swartland area are to be designated (as from 1975) as Swartland wines of origin.

 

The Supreme Court of Appeal dismissed LFE’s argument that its was not using SWARTLAND as a trademark. It examined the trade dress of the bottle in detail and concluded that SWARTLAND was quite clearly being used as a trademark, as well as an indication of geographical origin. The term 'Swartland' appeared in prominent, large script on the label, which conveyed to the average purchaser that the mark of the particular wine was SWARTLAND.

 

LFE had also lodged a counterclaim that the SWARTLAND mark should be cancelled as it had become exclusively a geographical indicator and, consequently, could not serve as a trademark. The court accepted that SWARTLAND does, on the face of it, serve as a geographical indicator. However, as the SWARTLAND mark is nevertheless, as a result of significant use, capable of distinguishing Swartland Winery’s wines, it was saved from cancellation. The court found that “[Swartland Winery]'s wines have been known for many decades as Swartland wines and by no other name.... How, under these circumstances, it can be suggested that the mark did not become distinctive is impossible to fathom”. 

 

As a final argument, LFE claimed that the registration of the SWARTLAND mark was in conflict with the provisions of the Liquor Products Act. This act provides that one may not use a 'wine of origin' designation in connection with the sale of wine. The argument was that, as Swartland is a designated area, the use of the trademark SWARTLAND in relation to wine is unlawful. However, the Liquor Products Act also provides that a trademark, whether registered or not, which was used in connection with the sale of alcohol as at July 1990, was lawful. As the SWARTLAND mark was an established (although unregistered) trademark at the relevant date, this argument also had to fail.

 

This judgment provides an important clarification on the recent decision of the Supreme Court of Appeal in Century City Property Services CC vs Century City Property Owner’s Association, in which the Century City name was stripped of its trademark status as a result of having become a geographical indicator (for further details please see "Significant ruling on geographical place names for services issued"). However, where a trademark has truly retained its trademark status despite having a dual descriptive meaning, it cannot be stripped of that status.