Joest (Pty) Ltd v Jöst GmbH + KG

The first respondent (Jöst), a German multinational company established in 1919, designs and manufactures vibrating machines and components. In 1976, Jöst incorporated a South African subsidiary (later becoming the appellant J) to operate its business under licence. The subsidiary was initially wholly owned by Jöst and operated under the Joest/Jöst trade mark. In 1989, due to international disinvestment pressures, Jöst sold 75% of its shareholding to the Vogel family, and in 1996 sold the remaining 25%. The parties entered into manufacturing licensing agreements in 1989 and 1996. The agreements granted J rights to use Jöst's know-how and required products to bear the Joest mark or be labeled "Manufactured under licence of JÖST, Germany" if J changed its company name. J imported substantial components from Jöst (€1-1.5 million annually) bearing the Jöst mark. In 1996, Gunter Vogel registered the Joest trade mark in his own name in South Africa, later assigning it to J in 2012. Jöst registered the JÖST mark in South Africa in 2011. The licensing agreement terminated in 2012, after which J claimed it had developed its own technology and owned the mark. J launched an application to expunge Jöst's trade marks. Jöst counter-applied to expunge J's trade marks and sought interdictory relief.

• Who is the lawful proprietor of the Joest/Jöst trade mark in South Africa?
• Whether the 1996 licensing agreement was merely a know-how agreement or also constituted a trade mark licence
• Whether J acquired proprietorship of the trade mark through use and development of its own products
• Whether trade mark registrations by either party should be expunged from the register as wrongly made or wrongly remaining entries under section 24(1) of the Trade Marks Act 194 of 1993
• Whether either party is entitled to interdictory relief for trade mark infringement and passing off
• The proper interpretation of licensing agreements under German law (the applicable law)
• Whether an agent or distributor acquires goodwill in a mark by selling goods manufactured by another
• Whether assignment of rights not validly held can transfer proprietorship

1. Main appeal dismissed with costs including costs of two counsel. 2. Cross-appeal upheld with costs including costs of two counsel. 3. J's trade mark registrations (nos. 1996/00964, 2010/00726, 2010/00727, 2010/00728) ordered expunged from the register. 4. J interdicted from infringing Jöst's registered trade marks nos. 2006/29062 and 2006/29063 in classes 7 and 9. 5. J interdicted from passing off its goods and services as those of Jöst or as connected with Jöst by use of confusingly similar marks. 6. J ordered to remove the Joest/Jöst marks and related get-up from all materials in its possession or control, or deliver up such materials. 7. Enquiry directed pursuant to section 34(4) of the Trade Marks Act to determine quantum of damages or reasonable royalty payable by J to Jöst.

A licensee who operates under licence from a trade mark proprietor and uses the mark to indicate the proprietor as the house of origin does not acquire proprietorship of the mark, even after the licensee ceases to be a wholly-owned subsidiary and continues to manufacture products. The goodwill and reputation in the mark remain with the original proprietor/licensor where: (1) the licensing relationship continues after share transfers; (2) licensing agreements restrict use to defined territories and prohibit sub-licensing; (3) labeling provisions require acknowledgment of the licensor; (4) substantial components bearing the licensor's mark continue to be imported; and (5) no express assignment of trade mark rights occurs. An agent or distributor who merely sells or imports goods manufactured by another does not acquire goodwill in the mark, as the mark indicates manufacturing provenance, not importation/distribution. A person cannot assign trade mark rights they do not validly possess (nemo dat quod non habet principle).

The Court made several observations: (1) If J wrongly attached the Joest/Jöst mark to its own products without Jöst's knowledge and approval, it could be accused of passing off and/or infringing section 34 of the Trade Marks Act. (2) It is the prerogative of a trade mark owner to decide the method of monetizing its reputation and technical know-how, whether through direct royalties on mark usage or royalties relating to manufacturing. (3) The Court noted that J's assertion of joint ownership of the mark by virtue of developing its own technology to which it attached the Joest/Jöst mark could not establish proprietorship. (4) The Court characterized J's actions as "manipulative and opportunistic" in registering the marks through Gunter Vogel. (5) The Court observed that the purpose of trade mark law is to prevent commercial "speech" that is misleading and that trade mark use that does not suggest provenance by the trade mark owner is protected. (6) German law's approach to contract interpretation (starting with wording and parties' concurrent understanding, then objective meaning in light of circumstances and interests) is not significantly different from South African law.

This case establishes important principles regarding trade mark proprietorship in parent-subsidiary and licensing relationships. It confirms that: (1) An agent or distributor who merely sells goods manufactured by another, without adding anything to the mark or get-up, does not acquire goodwill in the name; (2) Continuation of licensing relationships after disinvestment does not transfer proprietorship of marks absent express assignment; (3) Courts will look beyond formal agreements to the substance of the relationship and the origin of goodwill; (4) The nemo dat quod non habet principle applies to trade mark assignments - one cannot transfer rights one does not hold; (5) Opportunistic registration of marks by licensees will not be upheld; (6) Commercial context and history are critical in determining trade mark proprietorship. The case reinforces that trade mark law serves truth in competition and prevents misleading indications of commercial origin. It provides guidance on interpreting foreign law (German law) in South African proceedings and the role of expert evidence in such matters.