Counterfeit Goods

Counterfeit Goods

What happens if you import, manufacture, or sell goods in South Africa whose product name is already trademarked by another seller? What happens where the goods are legitimate, but you lack the permission of the trade mark owner to sell them? Recently, our Supreme Court of Appeal was faced with a similar situation in Yossi Barel v Popular Trading CC, and the conclusions reached by the Bench promise a far-reaching impact on the sale of trademarked goods in the country.

BACKGROUND

Our courts have long bemoaned the wording of the Counterfeit Goods Act 37 of 1997, which has often been labelled confusing and vague. Of particular concern has been the definition of ‘counterfeiting’. Past case law has indicated that the following must be established by a trade mark owner to prove the counterfeiting of goods:

1. The manufacture or application of trade marked goods;
2. In South Africa or elsewhere;
3. Without the permission of the trade mark owner;
4. The trade mark is protected under South African law;
5. The trade mark applies to the relevant goods;
6. The counterfeit goods are the ‘subject matter’ or a ‘colourful imitation’ of the trade-marked goods; and
7. The counterfeit goods are ‘calculated to be confused with or to be taken as being the protected goods of the trade mark owner.

Courts have also emphasised, however, that ‘something more’ is required to establish that goods are counterfeited, which constitutes a criminal offence, as opposed to just simply infringing on a trade mark, which is a civil wrong. Until recently, however, what that ‘something’ is has been unclear.

FACTS

In the Yossi Barel case, Mr Barel, who owned the trade mark ‘ENRICO COVERI’ in South Africa, sought to confiscate the imported shoes of Popular Trading, which shared the trade-marked name. However, the imported shoes originated from a designer brand in Italy whose existence predated Mr Barel’s ownership of the trade name, bringing into question whether the goods were ‘calculated to be confused with’ the protected goods.

FINDINGS

In its decision, the Court finally addressed what the ‘something more’ was in establishing counterfeiting – intention. When importing or creating counterfeiting products, there must be a clear desire on the part of the counterfeiter to mimic the legitimate goods. Without this intention to mislead consumers, the act cannot constitute counterfeiting. As Popular Trading’s  imported products came from a legitimate Italian source and Mr Barel failed to provide evidence of an intention to imitate his trade-marked goods, Popular Trading’s appeal was upheld, allowing them to reclaim their seized goods.

Without a fraudulent intention to deceive consumers, goods closely resembling trade-marked goods cannot be labelled as counterfeit goods. They could, however, still constitute trade mark infringement under the Trade Marks Act 194 of 1993. For any further legal queries concerning trade marks, please contact Xuba & Associates Attorneys.