Westminster Tobacco Co (Cape Town and London) (Pty) Ltd v Philip Morris Products S.A.

Westminster Tobacco Co (Westminster), a subsidiary of British American Tobacco South Africa (BATSA), was the registered proprietor of two trade marks for "PARLIAMENT" in relation to cigarettes and tobacco products. Philip Morris Products S.A. (Philip Morris), part of the Philip Morris International group, sought to have Westminster's trade marks expunged for non-use under s 27(1)(b) of the Trade Marks Act 194 of 1993. Philip Morris alleged that Westminster had not made bona fide use of the PARLIAMENT marks during the five-year period prior to 22 July 2008. Westminster launched PARLIAMENT cigarettes in January 2008, initially in Upington, then extended to Bloemfontein, Welkom, and later Gauteng. The brand was marketed in the low-price segment, with sales of approximately 1.5 million cigarettes in 2008, growing to nearly 15 million in 2010, before being withdrawn in 2012. Westminster's initial explanation was that the launch was to establish a presence in the low-price market. However, a document discovered during trial revealed the true strategy was "tactical execution" - strategically placing the brand in low-price "hot spots" to disrupt competitors without cannibalizing their premium Peter Stuyvesant brand. Philip Morris argued this was not genuine commercial use but merely to prevent expungement of the marks.

• Whether Westminster made bona fide use of the PARLIAMENT trade marks during the five-year period prior to and expiring on 22 July 2008
• What constitutes 'bona fide use' of a trade mark under s 27(1)(b) of the Trade Marks Act 194 of 1993
• Whether use of a trade mark for tactical/strategic purposes (disrupting competitors and protecting other brands) constitutes genuine trade mark use
• Whether the intention to protect a trade mark from expungement negates bona fide use when there are also commercial objectives

The appeal was upheld with costs (including costs for two counsel) to be paid by Philip Morris. The High Court order for expungement of the trade marks was set aside and replaced with an order dismissing the application with costs.

Bona fide use of a trade mark under s 27(1)(b) of the Trade Marks Act 194 of 1993 means use by the proprietor of the registered trade mark on goods with the object or intention primarily of protecting, facilitating, and furthering trade in such goods, not for some ulterior object. The use must be genuine, not merely token, and must be consistent with the essential function of a trade mark - to guarantee the identity of origin of goods to consumers and distinguish them from those of other origins. Use for tactical or strategic commercial purposes, including disrupting competitors in a market segment and protecting other brands, constitutes bona fide use provided there is a genuine commercial objective of promoting trade in the goods bearing the mark. The presence of an additional motive to protect the trade mark from expungement does not negate bona fide use where genuine commercial purposes exist. The test is fact-specific and qualitative rather than quantitative - minimal use can be bona fide use if genuine. Poor execution, limited scope, or ultimate commercial failure of a product launch does not mean use of the mark was not bona fide.

The Court noted concerns about the fairness of raising new legal arguments on appeal that were not clearly articulated in pleadings, witness statements, or heads of argument below, particularly where the opposing party bears the onus of proof. While the Court did not decide whether it was open to Philip Morris to advance its main argument (that tactical use was not trade mark use) given how late it was raised, the Court observed that disputants must observe fair procedural rules even in equitable proceedings. The Court also commented favorably on Ms Heglund's credibility, noting that her voluntary disclosure of a potentially damaging document (the AME presentation) reflected well on her honesty, as suppressing it would have been easy but dishonest. The Court questioned the admissibility of much of Ms Fleming's expert evidence, which appeared to be argument rather than expertise, though no objection was made at trial.

This case provides important clarification on what constitutes "bona fide use" of a trade mark under South African law. It establishes that: (1) Bona fide use does not require extensive or successful use - minimal, genuine use suffices; (2) Strategic or tactical use of a mark (including to disrupt competitors or protect other brands) can constitute bona fide use if there is a genuine commercial purpose; (3) The fact that one motive is to protect a trade mark from expungement does not negate bona fide use if there are also legitimate commercial objectives; (4) Poor execution, inefficiency, or commercial failure in launching a product does not mean the use was not bona fide; (5) The test is whether the mark is used genuinely in trade to identify goods and distinguish them from competitors, not whether the business strategy is optimal or conventional. The case demonstrates the courts' pragmatic approach to trade mark protection, recognizing diverse commercial strategies while distinguishing genuine trade from purely defensive registration.