Cadbury (Pty) Limited v Beacon Sweets & Chocolates (Pty) Limited and The Registrar of Trade Marks

Cadbury and Beacon are both manufacturers and distributors of sweets and confectionery. The dispute concerned Beacon's registered trade mark 86/3570 in class 30 for confectionery, which was a composite mark featuring a plate of sweets, a little man made of sweets, and the name "Liquorice Allsorts". The mark had been registered subject to certain disclaimers. Beacon had been marketing sweets under the name Liquorice Allsorts since 1952 and had annual sales of approximately R33 million (1996) with R1 million spent on advertising. Beacon was the only manufacturer and supplier of Liquorice Allsorts in South Africa at the time. Beacon also manufactured and packaged the same product for supermarket chains (Pick 'n Pay, Woolworths, OK Bazaars) which sold them under their own trade marks but using the name "Liquorice Allsorts" in packaging that did not resemble Beacon's registered mark. Cadbury applied for rectification of the register by requiring an additional disclaimer that registration would give no right to exclusive use of the name "Liquorice Allsorts" separately from the mark.

• Whether section 15 of the Trade Marks Act 194 of 1993 applies to require a disclaimer for matter contained in a registered trade mark that is not capable of distinguishing
• Whether the capability of matter to distinguish must be assessed at the date of application for registration or at the date of the application for rectification
• Whether section 15 applies only when a court is deciding whether a trade mark should remain on the register at all, or also applies when considering whether it should remain in its present form
• Whether the term 'Liquorice Allsorts' is capable of distinguishing Beacon's goods from those of others or is merely descriptive of the product type
• Whether Beacon's use through supermarket chains constituted permitted use under section 38 of the Trade Marks Act
• Whether the court should exercise its discretion to require a disclaimer

The appeal was upheld with costs, including costs of two counsel. The Court ordered rectification of trade mark 86/3570 by insertion of an additional disclaimer: "The registration of this mark shall also give no right to the exclusive use of the name Liquorice Allsorts, separately and apart from the mark." The first respondent (Beacon) was ordered to pay costs of the application, including costs of two counsel.

The binding legal principles established are: (1) Under section 15 of the Trade Marks Act 194 of 1993, when determining whether a registered trade mark shall remain on the register, the court must assess whether matter contained in the mark is capable of distinguishing at the time of the rectification application, not at the date of original registration. (2) Section 15 applies both to determine whether a mark shall be entered on the register and whether it shall remain on the register, including in what form it should remain. (3) Matter that is merely the generic or descriptive name of a product type, rather than the name of a particular trader's product, is not capable of distinguishing within the meaning of section 9 and should be subject to a disclaimer. (4) A sole producer cannot render a generic product name capable of distinguishing merely through extensive sales and advertising under that name. (5) Use by third parties of matter contained within a composite mark, even with the proprietor's consent, does not constitute permitted use under section 38 unless the third parties use the trade mark as registered in its entirety. (6) A court has original discretion on appeal to decide whether to require a disclaimer and is not bound by the discretion exercised by the lower court or registrar.

The Court made several non-binding observations: (1) The use of hyphens in "all-sorts" versus "allsorts" neither adds to nor subtracts from anything, as hyphens are usually optional and not pronounced. (2) Trade marks perform an adjectival function in relation to goods or services, and the absence of an alternative noun for a product is a fair indication the term does not perform a trade mark function. (3) Theoretically, a disclaimer is never necessary since registration cannot give rights except those arising from the mark as a whole, but disclaimers serve the practical function of preventing composite marks from inhibiting use of disclaimed elements by others. (4) While the proviso to section 15 means Beacon might still attempt to assert rights through common law passing-off actions, this is not a sufficient reason to refuse the relief sought since the nature of protection differs from trade mark protection. (5) The Court noted that on appeal it has original discretion regarding disclaimers, citing authority from Distillers Corporation and Estee Lauder Cosmetics cases.

This case is significant in South African trade mark law for establishing important principles regarding the rectification of trade marks through disclaimers under section 15 of the Trade Marks Act 194 of 1993. It clarifies that: (1) the capability to distinguish under section 15 must be assessed at the time of the rectification application, not the original registration date; (2) section 15 applies to determine not only whether a mark should remain on the register but also in what form; (3) the sole producer of a product cannot, through advertising and sales alone, render a generic product name capable of distinguishing; (4) use by third parties of matter contained in a composite mark, even with consent, does not constitute permitted use of the trade mark as a whole under section 38; and (5) disclaimers serve an important function in preventing composite marks from creating monopolies over descriptive or generic elements. The case reinforces that statutory monopolies are exceptions requiring justification and that traders should not be subjected to litigation risks when clear statutory remedies are available.