Etraction (Pty) Ltd v Tyrecor (Pty) Ltd

Etraction (Pty) Ltd, a trader in wheels, tyres and related products, was the registered proprietor of the trade mark INFINITY (registration number 2008/08612) in class 12 for "vehicle components and accessories; wheels, tires, rims", effective 15 April 2008. Etraction claimed to have used the mark INFINITY on rims since 1995, but there was no evidence it ever used the mark on tyres. Tyrecor (Pty) Ltd, a competitor, imported and sold tyres under the "Infinity" brand in South Africa. Tyrecor's predecessor, Falck Trading (Pty) Ltd, had imported and sold Infinity tyres since 2006, with substantial sales and advertising expenditure. In March 2008, Tyrecor's representative visited Etraction to offer to supply Infinity tyres. Three weeks later, on 15 April 2008, Etraction applied to register the INFINITY mark including tyres. Etraction did not inform Tyrecor of its objection or application until after registration was granted on 19 May 2011. Etraction then sought to interdict Tyrecor from using the mark. Tyrecor defended on grounds of prior bona fide use under s 36(1) of the Trade Marks Act 194 of 1993 and counter-claimed for expungement under s 27(1) on the basis that Etraction lacked bona fide intention to use the mark on tyres.

• Whether Tyrecor could rely on the defence of continuous and bona fide prior use under s 36(1) of the Trade Marks Act 194 of 1993
• Whether use by Falck Trading as Tyrecor's predecessor in title satisfied the requirements of s 36(1)
• Whether a party relying on s 36(1) must be the 'proprietor' of an unregistered mark
• Whether Falck acquired sufficient reputation and goodwill in the Infinity mark to sustain a passing-off action
• Whether Tyrecor was Falck's successor in title
• Whether Etraction's registration of the INFINITY mark in respect of tyres should be expunged under s 27(1)(a) for lack of bona fide intention to use the mark

The appeal was dismissed with costs, including costs of two counsel where employed. The order for partial expungement was amended to direct the Registrar to expunge "tires" from Etraction's trade mark registration and amend it to read: "Vehicle components and Accessories: wheels and rims, but not including tyres".

1. Section 36(1) of the Trade Marks Act protects continuous and bona fide prior use of a mark and does not require that the prior user be the "proprietor" of the unregistered mark in a technical sense. What is protected is the common law right arising from use that establishes a reputation capable of supporting a passing-off action. 2. An importer/distributor can acquire protectable goodwill and reputation in a mark if it markets goods in such a way that the mark comes to indicate that the goods emanate from that importer/distributor, rather than being a mere conduit for goods from another source. This is a question of fact. 3. A successor in title to a business that used a mark can rely on the predecessor's use for purposes of s 36(1), provided there has been a genuine transfer of the business and its associated goodwill. 4. Under s 27(1)(a), registration of a trade mark without bona fide intention to use it, where the purpose is ulterior to genuine commercial use (such as to harm a competitor's existing trade), justifies expungement. Surreptitious registration in knowledge of another's prior use, with intent to disrupt that use rather than to genuinely trade, demonstrates lack of bona fide intention.

Wallis JA observed (without deciding) that s 36(1) may have a broader reach than protecting only use sufficient to found a passing-off action. He noted there is much to be said for the proposition that "any lawful use having the characteristics of being both continuous and bona fide may found the defence" as that is precisely what the section says. He cited the Swiss case of Rytz Industriebau AG as an example of prior usage not necessarily involving passing-off rights. The court also noted, without deciding, concerns about whether the principle of severability of goodwill from reputation established in Caterham Car Sales v Birkin Cars remains good law in light of the UK Supreme Court decision in Starbucks (HK) Ltd v British Sky Broadcasting Group PLC [2015] UKSC 31, suggesting South Africa may now be one of the only jurisdictions not taking a "hard line" on requiring customers within the jurisdiction for goodwill to exist.

This case is significant in South African trade mark law for clarifying the scope and application of the defence of prior bona fide use under s 36(1) of the Trade Marks Act. It establishes that a party need not be the technical "proprietor" of an unregistered mark to invoke the defence—what matters is whether the use was continuous, bona fide, and sufficient to establish a protectable reputation. The judgment confirms that goodwill in an unregistered mark can vest in an importer/distributor who actively markets goods in a manner that creates a reputation in the territory. The case also provides important guidance on what constitutes lack of bona fide intention to use a mark under s 27(1)(a), emphasizing that registration for an ulterior purpose—to harm a competitor rather than to genuinely trade—justifies expungement. The decision reinforces that trade mark registration is not a tool to suppress legitimate competition or "throw a spanner in the commercial works" of an existing user.