Well-known trademark defence in cancellation proceedings rejected

In Kwality Biscuits (Pty) Limited v National Brands Limited (Case 14991/2002), the Transvaal Provincial Division of the High Court of South Africa has ruled that where the owner of a mark that is subject to a non-use cancellation proceeding is South African, it cannot claim that its mark is protected as a well-known mark under the Paris Convention for the Protection of Industrial Property. The court held that the well-known mark defence only applies to foreign mark owners.

Kwality Biscuits (Pty) Limited brought a claim before the High Court against National Brands Limited (NBL), seeking cancellation of its DIXI and CHOC-KRUST trademark registrations on the grounds of non-use. Both companies manufacture and sell biscuits (cookies).

NBL produced evidence of use of its CHOC-KRUST trademark during the relevant five-year period. It could not, however, produce evidence of use of its DIXI mark during this period. Instead, it argued that both the CHOC-KRUST and DIXI trademarks remained well-known during the relevant period and therefore qualified for protection under the Paris Convention as well-known marks. NBL pointed out that Section 27(5) of the South African Trademarks Act 1993 prevents cancellation for non-use where a mark is protected under the convention.

In response to this argument, Kwality stated that the protection under the convention was only available to foreign companies or traders that were nationals of convention countries and, therefore, NBL, which is a South African company, could not claim protection under the convention.

A 'convention country' is defined in Section 2(1)(v) of the Trademarks Act as:

"…any country or group of countries in respect of which there is in force a proclamation under Section 63 declaring such country or group of countries to be a convention country or convention countries for the purposes of this act."

South Africa was proclaimed as a convention country for the purposes of the Trademarks Act by Government Gazette Notice 1559 of 1996. It would seem therefore that South African proprietors of well-known trademarks should be entitled to claim protection of their marks under the convention.

However, the High Court came to a different conclusion. It considered an obiter dictum of Mr Justice Swart in Scientific Chemical (Pty) Limited v Liqui-Seal (Pty) Limited ((2000) JOL 9474(T)), in which he stated that the provisions of Section 27(5) of the Trademarks Act apply to foreign traders only and not to local companies. Based on this statement, the High Court rejected NBL's argument that it had a well-known mark defence. Instead, the judge came to the following conclusion:

"I do not see any valid logical reason why a South African act can elicit protection for its own nationals from a foreign convention. It stands to reason that foreign companies need to qualify as nationals of convention countries to be entitled to claim protection under the Paris Convention. I am therefore not persuaded that [NBL] is entitled or qualifies to claim the protection under the Paris Convention. I find that Section 27(5) is not applicable in this case and therefore not available for [NBL] to use as a defence."

NBL is seeking leave to appeal against the judgment from the Supreme Court of Appeal.

Karen Lüderitz, Adams & Adams, Pretoria