Yossi Barel v Popular Trading CC and Others

Yossi Barel (the appellant) registered the trademark ENRICO COVERI in South Africa in classes 3, 14, 18, 24 and 25 during 2007 and in class 35 during 2013, after the original Italian trademarks registered by the late designer Enrico Coveri expired due to non-payment of renewal fees. Mr Barel manufactures footwear bearing the ENRICO COVERI mark in China and Turkey. Popular Trading CC (first respondent) imports and distributes footwear from Italy under the authentic ENRICO COVERI brand, manufactured by ENRICO COVERI SRL, the company founded by the late designer. Since 2009, Popular Trading sourced authentic ENRICO COVERI footwear from EC's licensees. In December 2021, Mr Barel lodged a complaint under s 3(1) of the Counterfeit Goods Act 37 of 1997 (CGA), and a magistrate issued a search warrant under s 6(1) of the CGA. The warrant was executed and Popular Trading's footwear was seized. Popular Trading applied to set aside the warrant and for a declaration under s 7(4)(a) of the CGA that the seized goods were not counterfeit goods. The high court set aside the warrant and declared the seized goods not to be counterfeit goods.

• Whether the seized goods bearing the ENRICO COVERI mark imported by Popular Trading constitute 'counterfeit goods' as defined in the Counterfeit Goods Act 37 of 1997
• Whether the search warrant issued in terms of s 6 of the CGA should be set aside
• Whether counterfeiting under s 1(1)(b) of the CGA requires mens rea in the form of dolus (intention)
• What constitutes 'goods calculated to be confused with or to be taken as being the protected goods' under the definition of counterfeiting
• The distinction between trademark infringement under the Trade Marks Act 194 of 1993 and counterfeiting under the CGA

The appeal was dismissed with costs, including the costs of two counsel where so employed. The high court's order setting aside the search warrant and declaring that the seized goods were not counterfeit goods was upheld.

Counterfeiting under s 1(1)(b) of the Counterfeit Goods Act 37 of 1997 requires mens rea in the form of dolus (intention). The phrase 'calculated to be confused with or to be taken as being the protected goods' imports an element of planning, design or intention to deceive. The word 'calculated' must be given meaning and cannot be treated as superfluous. For counterfeiting to occur, it must be established that the alleged counterfeiter intended the goods to be confused with the protected goods or intended the goods to be taken as being the protected goods. Counterfeiting requires more than mere trademark infringement under the Trade Marks Act 194 of 1993—it involves deliberate and fraudulent infringement. Goods that are authentic products from the original source, even if bearing marks identical to a registered trademark held by another party, are not counterfeit goods where there is no intention to deceive or confuse the public into believing the goods are those of the trademark proprietor.

The majority noted that authenticity is highly prized in the fashion industry and that the ENRICO COVERI brand originated in Italy with the late fashion designer Enrico Coveri. The majority also observed that the rhetorical question may justifiably be asked: 'Why would the importer and distributor of authentic footwear intend his footwear to be confused with or to be taken as being the footwear manufactured by a company other than the company that manufactures the authentic footwear?' The minority judgment observed that the high court erred in its conclusion but did not elaborate extensively beyond the core legal principles. Both judgments noted the difficulties courts have had with interpreting the definition of 'counterfeiting' in the CGA. The case also highlights issues around the lapsing and re-registration of trademarks and the complex international dimensions of trademark protection where original marks have expired in one jurisdiction but authentic goods continue to be manufactured under those marks in the country of origin.

This judgment clarifies the meaning of 'counterfeiting' under the Counterfeit Goods Act 37 of 1997, particularly s 1(1)(b) dealing with trademarks. The majority judgment establishes that counterfeiting requires more than mere trademark infringement—it requires an intention to deceive, specifically that goods be 'calculated' (planned, designed or intended) to be confused with or taken as being the protected goods. This imports mens rea in the form of dolus into the definition of counterfeiting. The judgment distinguishes between dealing in authentic goods (even where trademark rights may be disputed) and counterfeiting, which involves deliberate and fraudulent conduct. It provides important guidance on when goods can be considered 'counterfeit goods' and the elements required to establish counterfeiting beyond trademark infringement. The judgment also highlights the tension between trademark registration and the distribution of authentic goods bearing marks that have complex international histories.