Herbal Zone (Pty) Limited and Others v Infitech Technologies (Pty) Limited and Others

The second appellant, Mr Herzallah, became involved in marketing Tongkat Ali extract capsules under the mark "Phyto Andro" since 2006 in South Africa. The first appellant, Herbal Zone (Pty) Ltd, imported the product. From 2009 to 2014, Infitech Technologies (first respondent) was sole distributor under a distribution agreement with Herbal Zone. After termination, Herbs Oils & Co (second respondent), formed by Infitech's shareholders, began distributing a competing product also called "Phyto Andro". Herbal Zone responded by placing advertisements and distributing circulars warning that the competing product was "counterfeit" and threatening legal action. Herbal Zone also engaged a private investigator, leading to a police raid and arrests under the Counterfeit Goods Act. Infitech, Herbs Oils and their shareholders then applied for interdicts restraining these statements as defamatory and Herbal Zone counter-applied for an interdict based on passing off.

• Whether Herbal Zone established the requisite reputation in the Phyto Andro mark in South Africa to succeed in a passing off claim
• Whether the reputation and goodwill in the mark vested in Herbal Zone or in Herbal Zone International (the Malaysian manufacturer)
• Whether statements that a competing product was 'counterfeit' and that legal action would be taken constituted actionable defamation
• Whether an interdict restraining future publication of allegedly defamatory statements should be granted
• The requirements for granting an interdict to restrain publication of defamatory matter where freedom of expression is at stake

The appeal succeeded in part. The order of the high court was amended to read: (a) The application is dismissed with costs; (b) The counter application is dismissed with costs. Each party was ordered to pay their own costs of the appeal.

The binding legal principles are: (1) In passing off claims, an importer/distributor does not acquire goodwill in a mark merely by selling goods manufactured by another unless it adds something to the mark or get-up to identify itself as the source, with the enquiry being one of fact; (2) The onus rests on the claimant in passing off to prove that the reputation vests in it on a balance of probabilities, assessed according to the Plascon-Evans rule; (3) Interdicts restraining future publication of allegedly defamatory matter should not be granted unless the applicant establishes: (a) a clear right; (b) that the respondent has no sustainable defence; (c) irreparable harm; and (d) that damages would not be an adequate remedy; (4) Where a respondent lays a sustainable factual foundation for a defence of justification (truth and public interest) to defamation, this creates a genuine dispute of fact that cannot be resolved on motion and the interdict must be refused; (5) Constitutional protection of freedom of expression requires that interdicts restraining speech be granted sparingly and only where there is no colourable defence.

The court made several non-binding observations: (1) The confusion between Herbal Zone and Herbal Zone International in the documentation may have been deliberate rather than inadvertent given its persistence over several years; (2) The court noted it was not making a final determination of who owns the reputation in the Phyto Andro mark, as the parties deliberately refrained from fully arguing this issue, preferring to reserve it for future trademark registration proceedings; (3) The court commented that even if the reputation did not vest in Herbal Zone, the fact that it was importing and distributing the product entitled it to describe competing products as "counterfeit" in the sense of not being the genuine article it was distributing; (4) The court observed that the earlier judgment in Hix Networking regarding freedom of speech must now be understood in light of constitutional protection, giving freedom of expression greater weight than it had historically; (5) The inclusion of paragraph 1.2 of the high court's order (regarding statements that the product was harmful) was "plainly erroneous" as it was based on disputed facts about an incident in July 2015.

This case is significant for several reasons: (1) It clarifies the requirements for establishing reputation in passing off claims, particularly for importers and distributors who must prove the reputation vests in them rather than the foreign manufacturer; (2) It reinforces the restrictive approach to interdicts restraining publication of allegedly defamatory matter, emphasizing that such interdicts should be granted sparingly given constitutional protection of freedom of expression; (3) It confirms that a sustainable factual foundation for a defence (such as truth and public interest) will prevent the grant of an interdict even where statements are prima facie defamatory; (4) It demonstrates the application of the Plascon-Evans rule where evidence must be assessed taking into account the respondent's version where disputes of fact exist; (5) It illustrates the evidential burden on parties claiming intellectual property rights where corporate structures and relationships are unclear or deliberately obscured.