SA Trade Mark Law Shows Some Global Vitality

Foreign companies that do business in South Africa through local agents or distributors may be encouraged by a recent South African trade mark decision. The decision covers a wide range of issues including passing off, the revocation (cancellation) of a trade mark registration, an objection to a company name, and an objection to a .co.za domain name registration.

The facts in the case of Global Vitality Incorporated v Enzyme Process Africa (Pty) Ltd (21 August 2015, Western Cape High Court) were straightforward. Global Vitality, a US company, sells dietary nutritional supplements in a number of countries. These products are sold under the trade mark "Enzyme Process". The company uses distributors in the various countries to sell its products. In South Africa it appointed a distributor, who subsequently formed a company called Enzyme Process Africa (Pty) Ltd.

During the period that the distribution arrangement was in place, the local distributor acted in an inappropriate manner, in that it purchased unbranded dietary nutritional supplements from other foreign manufacturers and then sold those products in South Africa under the trade mark Enzyme Process, registered Enzyme Process as a trade mark in South Africa, registered a company under the name Enzyme Process Africa and last, but not least, registered the South African domain name, www.enzymeprocess.co.za. Needless to say, the relationship between the parties came to an end, and the US company took legal action seeking redress on a number of grounds:

Passing off: The US company claimed that the local distributor was guilty of passing off. Judge Cloete agreed. The judge rejected the local distributor's argument that it, in fact, owned the goodwill and reputation in the trade mark Enzyme Process. The judge made the point that an agent who adds nothing to the product does not acquire a goodwill of its own.

But there were other factors too, including:

the fact that the US company had been selling its product in South Africa for a number of years before it appointed the local distributor; the fact that the products that the US company sent to the local distributor all had the Enzyme Process trade mark applied to them, notwithstanding the fact that the local distributor sometimes also applied a separate label with its own contact details; and the fact that the local distributor had basically acknowledged its status as a mere distributor of another company's products, by referring to itself on...