LA Group (Pty) Ltd v Stable Brands (Pty) Ltd and Another

LA Group (Pty) Ltd (the appellant), a proprietor of POLO word and POLO PONY & PLAYER device trade marks, launched a trade mark infringement application against Stable Brands (Pty) Ltd (the respondent). The respondent filed a counter-application seeking removal of all 46 of the appellant's POLO trade mark registrations from the Register of Trade Marks on multiple grounds under the Trade Marks Act 194 of 1993 (the Act). The appellant withdrew its main application at the commencement of the hearing, but the respondent persisted with its counter-application. The high court (Van der Westhuizen J) granted the removal of all 46 registrations on grounds including: lack of distinctiveness (ss 10(2)(a), (b), (c)); non-use for five years or longer (s 27(1)(b)); registration without genuine intention to use coupled with non-use (s 27(1)(a)); and likelihood of confusion or deception arising from the manner of use (s 10(13)). The case involved evidence of an agreement between the appellant and the Polo/Ralph Lauren Company LP (Ralph Lauren) allowing both parties to use similar POLO marks in South Africa in different product categories. The appellant appealed the high court's order to the Supreme Court of Appeal with leave.

• Whether the appellant's POLO trade marks are liable to removal for lack of distinctiveness under s 24 read with ss 10(2)(a), (b), and (c) of the Act
• Whether the marks had acquired distinctiveness through use as contemplated in the proviso to s 10(2) of the Act
• Whether the appellant failed to make bona fide use of its trade marks for a continuous period of five years or longer under s 27(1)(b) of the Act
• Whether the trade marks were registered without bona fide intention to use and had not been used, warranting removal under s 27(1)(a) of the Act
• Whether the manner in which the appellant used its trade marks alongside Ralph Lauren's similar marks was likely to cause deception or confusion under s 10(13) of the Act
• The proper interpretation of s 10(13) and whether it requires consideration of the mark itself or comparison with marks of other traders

The appeal was upheld with costs, including costs of two counsel (costs for preparation of the appeal record disallowed). The high court's order was set aside and replaced with an order: (1) Upholding removal under s 27(1)(b) of only three registrations: 1978/01082 DOUBLE POLO PONY (device) in class 25; 1985/08367 POLO COMPANY & DOUBLE POLO PLAYER (word and device) in class 25; and 2009/26481 POLO PONY & PLAYER (device) in class 6; (2) Upholding removal under s 27(1)(a) of five registrations partially or in respect of certain goods only; (3) Dismissing the counter-application for removal under s 27(1)(a) and (b) for the vast majority of the appellant's trade marks; (4) Dismissing entirely the counter-application under s 24 read with s 10(2)(a), (b), and (c); (5) Dismissing entirely the counter-application under s 24 read with s 10(13); (6) Ordering the Registrar to effect the necessary rectifications; (7) Ordering the respondent to pay the costs of the counter-application including costs of two counsel.

The binding legal principles established by the majority judgment are: (1) Section 10(13) of the Trade Marks Act requires that the manner of use of the mark itself by its proprietor must be likely to cause deception or confusion; it does not permit comparison with the marks of other traders or encompass passing-off type deceptiveness based on another party's mark; (2) When determining whether a mark is liable to removal for lack of distinctiveness under s 10(2)(a), (b), or (c), the court must consider whether the mark has acquired distinctiveness through use as provided in the proviso to s 10(2); (3) A mark that has acquired distinctiveness through extensive use over a long period, supported by evidence of substantial sales, widespread advertising, and public recognition, is not liable to removal under s 10(2) even if the word or sign itself has a dictionary meaning or descriptive quality; (4) Trade mark co-existence agreements between parties using similar marks in different product categories are legally valid, and lawful use pursuant to such agreements does not constitute use likely to cause deception or confusion under s 10(13); (5) For purposes of s 27(1)(b), the proprietor must establish bona fide use during the relevant five-year period through clear evidence, but the court should not apply an overly technical approach requiring separate proof for each individual registration where marks are used as part of a genuine trading operation; (6) Sections 10(14) and 10(15) of the Act specifically address situations where competing marks are registered with consent; where such registration occurs lawfully, subsequent use pursuant to that consent cannot be attacked under s 10(13) by third parties; (7) The badge of origin function of a trade mark is fulfilled provided all items bearing that mark come from the same source, regardless of whether consumers associate the mark with a different well-known brand.

The majority judgment made several non-binding observations: (1) Trade mark co-existence is neither novel nor unique, and interests of commerce may be served by allowing parties to share similar marks in different product categories; (2) The fact that a word appears in a dictionary or is used descriptively in some contexts does not automatically render it incapable of functioning as a trade mark when it has acquired distinctiveness; (3) The use of a word like "polo" by sporting associations or bodies regulating the sport does not prevent the word from functioning as a trade mark for commercial goods; (4) Where parties enter into valid co-existence agreements pursuant to ss 10(14) or 10(15), it would be anomalous if a third party could undermine such agreements by seeking removal under s 10(13) based on the very co-existence that was lawfully created; (5) The high court's reliance on unauthenticated internet printouts and archived articles from 2012-2014 as evidence of confusion in 2018 was inappropriate; (6) The preparation of court records must comply with the rules of the Supreme Court of Appeal; failure to do so wastes judicial resources and may result in cost consequences. The minority judgment observed that: (1) Proprietors should not be permitted to benefit from association with well-known marks of others by creating market confusion; (2) The distinction between a right-facing and left-facing polo pony device is insufficient to avoid confusion; (3) Where an agreement between parties is not disclosed to the court despite being central to the case, adverse inferences may be appropriate; (4) The essence of trade mark law is to guarantee commercial origin, and use that obscures origin is problematic even if technically lawful.

This case is significant in South African trade mark law for several reasons: (1) It clarifies the proper interpretation and application of s 10(13) of the Trade Marks Act, holding that this provision requires examination of how the proprietor uses its own mark, not comparison with another trader's mark—it does not encompass passing-off type deceptiveness; (2) It affirms the importance of the proviso to s 10(2) protecting marks that have acquired distinctiveness through use, even if they were initially descriptive or non-distinctive; (3) It recognizes the validity of trade mark co-existence agreements where parties with similar marks agree to operate in different product categories or territories; (4) It provides guidance on the evidence required to prove bona fide use under s 27(1)(a) and (b), emphasizing the need for clear and compelling evidence but rejecting overly technical approaches; (5) It addresses the territorial nature of trade marks and the irrelevance of use in foreign jurisdictions; (6) It demonstrates the high threshold for establishing that a mark has become generic or merely descriptive, particularly where there is extensive evidence of use and acquired distinctiveness; (7) It clarifies the relationship between ss 10(13), 10(14), and 10(15), showing that s 10(13) serves a different purpose than the provisions dealing with conflicting registrations; (8) The split decision reflects the complexity of applying trade mark law principles where similar marks are used by different parties in the same market under agreement.