Commercial Auto Glass (Pty) Ltd v Bayerische Motoren Werke Aktiengesellschaft

The appellant, Commercial Auto Glass (Pty) Ltd, was in the business of supplying and fitting accessories and spare parts for motor vehicles, particularly windscreens. The respondent, BMW AG, held three registered trade mark registrations for 'BMW', 'BM', and '3 Series' in class 12 for vehicles and parts. The appellant supplied and fitted unauthorized windscreens for BMW models, advertising them as 'BMW E30 3 Series 83-92', 'BMW E36 3 Series 91-97', etc., with prices listed. The windscreens themselves bore embedded markings with the appellant's name and stick-on labels including marks like 'BM E 36'. The appellant's invoices described goods sold as 'BMW E36 2 DR 92-97 WS'. BMW did not complain about the appellant supplying unauthorized windscreens per se, but objected to the manner in which the business was conducted, alleging trade mark infringement. The high court (Prinsloo J, Pretoria) found in favor of BMW, holding that the appellant infringed BMW's trade marks.

• Whether the appellant's use of BMW's registered trade marks on unauthorized spare parts constituted trade mark infringement under section 34(1)(a) of the Trade Marks Act 194 of 1993
• Whether the appellant's use of the marks amounted to 'trade mark use' in the sense of designating or tending to designate the undertaking from which goods originate
• Whether the appellant could rely on the statutory exception in section 34(2)(c) regarding bona fide use of trade marks to indicate intended purpose of spare parts
• Whether BMW's unregistered marks 'E30', 'E36', and 'E46' were entitled to protection as well-known trade marks under section 35 and Article 6 bis of the Paris Convention
• Whether the use by the appellant was bona fide, reasonable, and consistent with fair practice

Leave to appeal was granted. The appeal was upheld only to the extent of substituting a corrected order. The new order: (a) restrained the appellant from infringing BMW's registered trade marks in relation to windscreens and windows for motor vehicles under section 34(1)(a); (b) restrained the appellant from infringing BMW's unregistered well-known trade marks E30, E36, and E46 in relation to windscreens and windows for motor vehicles under section 35; (c) ordered the appellant to pay costs in the high court, including costs of two counsel. The appellant was also ordered to pay the costs of both the application for leave to appeal and the appeal itself, including costs of two counsel.

The binding legal principles established are: (1) Use of a registered trade mark on unauthorized spare parts constitutes trade mark infringement under section 34(1)(a) if consumers are likely to interpret the mark as designating or tending to designate the trade mark owner as the source of the goods, thereby creating an impression of a material link between the product and the owner. (2) For the section 34(2)(c) exception to apply, use of a trade mark in relation to spare parts must be bona fide, reasonable, and consistent with fair practice. Bona fide use requires honest use without intention to deceive and unequivocally making clear that the goods are not connected in the course of trade with the proprietor of the trade mark. (3) Account must be taken of the overall presentation of the product, including how the trade mark owner's mark is displayed, how it is distinguished from the third party's own mark, and the effort made to ensure consumers distinguish the products. (4) If use is capable of two constructions and, on balance, a substantial number of persons may be deceived into believing the goods emanate from the trade mark owner, the use constitutes trade mark infringement. (5) Model designations can function as trade marks capable of protection under section 35 as well-known marks if they perform a dual function of distinguishing models and serving as badges of origin, rather than being purely descriptive.

The Court made several non-binding observations: (1) The object of trade mark law as reflected in section 34(1)(a) and (b) is to prevent commercial speech that is misleading. Trade mark use that is not misleading in the sense of suggesting provenance by the trade mark owner is protected both constitutionally and under ordinary trade mark principles. (2) The Court cited Justice Holmes' observation that 'when the mark is used in a way that does not deceive the public, we see no sanctity in the word as to prevent its being used to tell the truth.' (3) The Court noted that issues involving spare parts and alleged counterfeits are not always black and white, and that the question whether advertising creates an impression of commercial connection must be decided according to the circumstances of each case. (4) The Court observed that the distinction between protected and unprotected use can be illustrated by comparing 'XYZ Spare Parts' (not protected) with 'Spare parts for XYZ goods' (protected under section 34(2)(c)). (5) The Court inferred from the lack of explanation for the appellant's business practices that the appellant wished to obtain an unfair advantage from use of the trade marks and did not wish to inform the public of the true facts concerning the origin of the windscreens.

This case is significant in South African trade mark law for several reasons: (1) It clarified the concept of 'trade mark use' in the context of unauthorized spare parts, establishing that use which creates an impression of a material link between the product and the trade mark owner constitutes infringement, even if some consumers might realize the parts are not genuine. (2) It interpreted the section 34(2)(c) exception narrowly, requiring that use of trade marks on spare parts must unequivocally make clear that goods are not connected with the trade mark proprietor to qualify as bona fide use consistent with fair practice. (3) It applied European Court of Justice principles regarding honest practices in spare parts advertising, emphasizing the need to consider the overall presentation of products and efforts made to distinguish unauthorized parts from genuine ones. (4) It confirmed that model designations (like E30, E36, E46) can function as both descriptive identifiers and badges of origin, thus qualifying for protection as well-known trade marks. (5) It reinforced that the question of whether advertising creates an impression of commercial connection is a factual question to be determined in light of the circumstances of each case. The case is an important precedent for disputes involving aftermarket spare parts and the boundaries of permissible use of manufacturer trade marks.