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13/86
207/84
IN THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION)
In the matter between:
ESQUIRE ELECTRONICS LIMITED Appellant
AND
EXECUTIVE VIDEO Respondent
CORAM: CORBETT, HOEXTER, JACOBS, SMALBERGER, JJA et NICHOLAS, AJA
HEARD: 20 February 1986
DELIVERED: 13 March 1986
J U D G M E N T NICHOLAS, AJA
This appeal arises out of a judgment
and subsequent order of DIDCOTT J sitting in the Durban and
Coast
2 Coast Local Division of the Supreme Court. The judgment (which
concerned three similar applications which were heard together) is
reported
sub nom. Esquire Electronics Ltd and Another v. D Roopanand Bros (Pty)
Ltd 1984 (4) SA 409 (D and C.L.D.); 1985 R.P.C. 83.
The appellant (which
was the first applicant
in all three of the applications in the Court a
quo)
is Esquire Electronics Ltd, a company incorporated and
having
its principal place of business in Hong Kong.
It manufactures, and
distributes in many countries of the
world, pre-recorded video cassettes.
Such cassettes
are popularly known as "video films" (inaccurately,
because
they are recorded on magnetic tape, not filmi-
or
3 or simply as
"videos". The videos produced by Esquire Electronics record cinema films made in
India with Indian actors and depicting
Indian ways of life. They are extremely
popular in South Africa, especially in Natal.
The respondent (which was the
respondent in the second of the three applications in the Court a quo) is
Executive Video, a firm which carries on the business of manufacturing and
dealing in videos at 71 Victoria Street, Durban.
Esquire Electronics is the
registered proprietor of three South African trade marks all of which are
registered in Part A of the register
of trade marks in respect of class 9 of
Schedule 4 to the Trade Mark
Regulations
4
Regulations, 1971. They are:
Trade Mark 73/0190, consisting of the word
ESQUIRE, with date of registration 11 January 1973, in
respect of
"Electrical apparatus and instruments (including wireless); sound recording and reproducing apparatus, instruments and media including radios, tape recorders, wire recorders, magnetic tapes, sound tapes, phonograph records, parts of and accessories for all the aforementioned goods."
Trade Mark 80/1576, consisting of the word ESQUIRE
and a device, with date of registration 20 March 1980,
in respect of
"Sound and/or video recording media in the form of tapes and of wires, cassettes and cartridge discs for
use
5
use with the aforesaid tapes; video and audio products and sound and/or video receiving and reproducing apparatus and instruments employing laser beam techniques."
Trade Mark 80/1577, consisting of the word
ESQUIRE and a different device, with the same
date of
registration as Trade Mark 80/1576, also in respect of
"Sound and/or video recording media in the form of tapes and of wires, cassettes and cartridge discs for use with the aforesaid tapes; video and audio products and sound and/or video receiving and reproducing apparatus and instruments employing laser beam techniques."
The videos produced by Esquire Electronics
are made
in the following way. It obtains the moving
pictures on 35 mm cinematographic
film from Bombay.
The
6 The optical images and sound track on each film are
transferred to audio-visual magnetic tape by a process known as transfer. This
recorded tape is called a first generation "U"matic master, which has a standard
width of 4 inch. It may be used to make other "U"matic
masters. It cannot be
used in the ordinary domestic video cassette recorder (commonly called a "VCR").
For this purpose the recording
on the "U"matic master is copied onto video
cassettes containing magnetic tape with a standard width of 2 inch. These are
called
second generation tapes.
Second generation tapes can in turn be copied
by anyone who has the use of two VCRs.
The
7 The results of such copying are called third generation tapes. Because of
the ease with which copies can be made, a thriving industry
in "pirated" videos
has mushroomed in South Africa.
When making the "U"matic masters Esquire
Electronics causes one or more of its trade marks to be superimposed on the
record of the
film at various parts of the tape. In the ordinary course, the
trade marks appear on second generation and subsequent generation
tapes. The
trade marks are usually superimposed at places where the sound track is crucial
to the flow and continuity of the presentation
so that any attempt by a "pirate"
to edit out the trade marks will result in a
serious
8 serious impairment of its integrity and intelligibility.
Esquire
Electronics does business by supplying "U"matic master tapes to authorized
distributors, including a South African company.
Big Screen Home Video
(Proprietary) Limited, which was the second applicant in the relevant
application. From these master tapes
such distributors then manufacture second
generation tapes in which they deal in the respective areas for which they are
authorized.
In September 1983 it came to the notice of Esquire electronics
and Big Screen that Executive Video was making and selling unauthorized
copies
of its videos of Indian films. An investigator acting on behalf of Esquire
Electronics
and
9 and Big Screen purchased from Executive Video a video of the film
BETAAB. It was obvious that this was a direct copy of Esquire
Electronics's
video, for it in-cluded Esquire trade marks (usually as part of the words "An
ESQUIRE presentation") superimposed on
the record at various places.
Esquire
Electronics and Big Screen thereupon made an application against Executive
Video, ex parte and in camera, in which, relying inter alia
on trade mark infringement, they sought orders interdicting Executive Video from
using the trade mark "ESQUIRE" on video cassettes
and advertisements therefor,
and from dealing in video cassettes bearing that trade mark.
A
10 A rule nisi was granted. On the return day, this ap-plication and
two others came before DIDCOTT J. At the
request of all the parties the
learned judge agreed to limit himself at that stage to preliminary rulings on
three points. In the
result he dealt with only one of the points, and concluded
that Esquire Electronics had no cause of action for infringement of its
trade
marks. That was his ruling. (See 1984 (4) SA 409 at 415 I.) Arising out of this
ruling, the learned judge at a later date granted
an order dismissing the
application and ordering Esquire Electronics to pay the costs.
DIDCOTT J then granted leave to Esquire Elec
tronics
11
tronics to appeal against this order, and directed that the
costs of the application for leave be costs in the appeal. The parties
agreed
that the appeal should be limited to the issue of trade mark infringement and
that the appeal would finally determine the
litigation be-tween the
parties.
So far as it is relevant to the present matter s. 44 of the Trade
Marks Act, No 62 of 1963, provides:
"44.(1) the rights acquired
by registration of a trade mark shall
be infringed by -
(a) unauthorized use as a trade mark in relation to goods or services in respect of which the trade mark is registered, of a mark so nearly resembling it as to be likely to deceive
or
12
or cause confusion: or (b) unauthorized use in the course of trade, otherwise than as a trade mark, of a mark so nearly resembling it as to be likely to deceive or cause confusion, if such use is in relation to or in connection with goods or services for which the trade mark is registered and is like-ly to cause injury or prejudice to the proprietor of the trade mark:
"Mark" and "trade mark" are defined as follows in s. 2(1)
of the Act:
"'mark' includes a device, brand, heading, label, ticket, name, sig-nature, word, letter, numeral or any combination thereof or a con-tainer of goods;
'trade mark', other than a certifi-cation mark, means a mark used or
proposed
13
proposed to be used in relation to goods or services for the purpose of -
(a) indicating a connection in the course of trade between the goods or services and some person having the right, either as proprietor or as a registered user, to use the mark, whether with or without any indication of the identity of that person; and (b) distinguishing the goods or services in relation to which the mark is used or proposed to be used, from the same kind of goods or services connected in the course of trade with any other person; "
S.s. (2) and (3)(a) of s. 2 of the Act provide -
"(2) References in this Act to the use of a mark shall be construed as references to the use of a printed or
other
14
other visual representation of the mark, and in addition, in the case of a container, use of such container and, in the case of a mark which is capable of being audibly reproduced, the use of an audible reproduction of the mark.
3(a) References in this Act to the use of a mark in relation to goods shall be construed as references to the use thereof upon, or in physical or other relation to, goods."
In these provisions there are various expressions relating to "use" of a mark: "use as a trade mark" (s. 44(1)(a)); "use in the course of a trade", "Use .... otherwise than as a trade mark (s.44(l)(b)); "used .... in relation to goods" (definition of "trade mark" in s. 2(1)); "the use of a printed or other visual representation of the mark ...." (s.2(2)); "the use (of the
mark
15 mark) upon, or in physical or other relation to, goods"
(s.2(3)(a)).
These expressions are all facets of the essen-tial function of a
trade mark, namely, to indicate the origin of the goods in connection
with which
it is used; it is "a badge of origin"of such goods. ( See Aristoc Ltd v.
Rysta Ltd (62) 1945 RPC 65 (H.L.) passim; Shalom Investments (Pty)
Ltd and Others v. Dan River Mills In-corporated 1971 (1) SA 689(A) at 699 H)
Cp. para (a)
of the definition of "trade mark"). The following dicta are
illustrative:
"A trade mark must be register-
ed in respect of goods, it must
be
used in relation to goods, it must
indicate a connection in the
course
of trade between goods and the user
of
16
of the trade mark. A trade mark must thus be used in trade. 'Trade' is no doubt a wide word but its meaning must vary with and be controlled by its context. A connection with goods in the course of trade in my opinion means in the definition section an association with the goods in the course of their production and preparation for the market."
(per LORD MACMILLAN in the Aristoc case at p. 79 line '
49 to p. 80 line 5).
"The word 'origin' is no doubt used in a special and almost technical sense in this connection, but it denotes at least that the goods are issued as vendible goods under the aegis of the proprietor of the trade mark, who thus assumes responsibility for them, even though the responsibility is limited to selection, like
that
17
that of the salesman of carrots on
commission in Major
v. Franklin,
(1908) I K.B., 712. By putting them
on the market under
his trade mark
he vouched his responsibility, and
the carrots were 'his
goods' by
selection though he was neither the
owner nor grower of them.
The
limitation in the Act of 1938,
'in the course of trade',
sufficient
ly, in my opinion, preserves the
essential and characteristic
func
tion of the mark. The proprietor
is required to be a trader who
places
the goods before the public as being
his goods. That is the vital
con
nection, "
(per LORD WRIGHT ibid at p. 82 lines 43 to 51.)
Executive Video in its answering affidavit admitted that it had made and distributed copies of six videos produced by Esquire Electronics, and there is not
to
18 to be found in that affidavit any suggestion that in such copies
the word "Esquire" did not appear when the videos were played
on a VCR.
Executive Video's case was essentially that in copying and distributing the
videos, it did not infringe any of the trade
marks of Esquire
Electronics.
There was some debate during the argument on whether the
expression "magnetic tapes" in Trade Mark No 73/0190 related only to sound
tapes
and did not include video tapes. On the face of it this would seem to be so: the
relevant genus is "sound recording and reproducing apparatus", and
"magnetic tapes" as a species of that genus would not include video tapes. It
is,
however
19 however, unnecessary to decide the point: the word "Esquire"
is the dominant feature of the other two trade marks which relate
inter
alia to "video recording media in the form of tapes and ... cassettes" and
they clearly include video tapes. The first question to be
answered is whether .
Executive Video "used" the trade marks. In his judgment (at 413 E) DIDCOTT J
posed the question,
"But can it be said with any cogency that, by reproducing or trading in reproductions of video tapes which record the mark, the respondents are using it within the meaning of s 44(1)?"
He answered that he did not think so, saying (at 413 F-G),
"The difficulty lies in the form the word 'Esquire' takes on the
tapes
20.
tapes, on both the originals and the reproductions. It is composed of nothing but magnetic signals.
Section 2(2) of the Act is important in this connection. In those re-spects which now count, it dictates: 'References in this Act to the use of a mark shall be construed as references to the use of a printed or other visual representation of
the mark '
The mark must therefore be visually represented before the use of it can amount to such for the purposes of s. 44(1)."
Referring to the case of Unic SA v. Lyndeau Products
Ltd 1964 RPC
37, which he distinguished on the facts,
the learned judge said:
"There the Court had a representa-tion of the mark which was visual, though not easily visible. Here the mark's representation is neither.
It
21
It is not one which can be seen with the aid of instruments magnifying it, clarifying it, illuminating it, or penetrating some coating which conceals it. It does not have the form enabling it to be seen. In no circumstances and under no conditions can that be done. Before anything at all is discernible the magnetic signals must be converted by an electronic process into an image. They must be transformed, in short, into something entirely different. The image, to be sure, is both visual and visible. But it exists solely on the screen. It is not what represents the mark on the tape itself. There one finds nothing visual, nothing which is capable of the use postulated by s 44(1)."
On appeal counsel for Esquire Electronics did not
attack this part of the judgment. They relied only
on
22
on the representations of the mark which appear on the
television screen when the video is played on a VCR. These, it is true, were
not
a use of the mark on goods nor a use in physical relation to goods - they
appeared only on the television screen. The contention
was, however, that the
use was "in other relation" to goods.
DIDCOTT J accepted that such images are
"visual representations of the mark" within the meaning of s. 2(2), but held
that this was
not a use "in relation to" a video cassette. It was a use "in
relation to" the images emitted by the tapes (see p. 414 F-G; p. 415
H). He
relied on dicta in the judgment of JENKINS LJ in Spillers Ltd's
Application (1953) 70 RPC 51 (C.A.), which
were
23 were approved in the opinion of LORD OAKSEY in the appeal to the House of Lords (reported sub nom. Hovis Ltd v. Spillers Ltd (1954) 71 RPC 234 (H.L.). In Spillers's case it was decided that a mark placed on bread was not used "in relation to" the flour from which it was baked. DIDCOTT J did not think that the present case was analogous to that: "the tapes of the first ap-plicant could hardly be regarded as ingredients or com-ponents of the movies shown from them". He considered, however, that the principle to be extracted from the dicta was relevant. He said at p. 415 (G-H)
"The principle which the dicta es-tablish, if I may express it in my own words, is the following. It is
not
24
not enough for the use of the mark to relate to goods related in turn to those for which the trade mark is registered. Its use must relate to the very goods for which the trade mark is registered. I go along with that. It seems inescapable here too, the moment one has a hard look at s 44(1).
It also puts paid to the notion, I believe, that the use of a mark in relation to images derived from video tapes is tantamount to its use in relation to the video tapes themselves. The tapes and the images are intrinsically different things, no less than flour and bread.
The conclusion I have consequently reached is that the first applicant has no cause of action for an infringement of its trade marks on any of the grounds alleged, and that is my ruling."
The principle is clear enough, but in my opinion DIDCOTT J
erred
25
erred in applying it in this case. The images derived from a video tape are not "goods": they are insubstantial, evanescent, transitory. Nor are they "things" different from the video tape which records them. They are the translation into optical terms of the information recorded in magnetic patterns along the length of that tape, apart from which they have no existence. A reference to the case of the Cheshire cat is not inapposite:
".... This time it vanished quite slowly, beginning with the end of the tail, and ending with the grin, which remained some time after the rest of it had gone.
'Well! I've often seen a cat with-" out a grin,' thought Alice, 'but a
grin
26
grin without a cat! It is the most curious thing I ever saw in my life.'"
The goods in respect of which the trade marks were registered included video
tapes. Video tapes may be blank, in which case they are
acquired for the purpose
of making recordings thereon; or they may have a programme pre-recorded thereon,
in which case they are
acquired for the purpose of playing the programme. But in
both cases they are video tapes - objects not intrinsically different.
I do
not think that the ordinary viewer would consider that the words "An ESQUIRE
presentation", which appear on the screen, applied
to the images: he would
regard them as referring to the performance recorded on the video tape which is
being played.
I
27 I am accordingly of the opinion that, subject to the other contentions of Executive Video which remain to be dealt with, it was established that the trade marks were infringed. There was a use of the trade marks in the form of a visual representation on the television screen. It was a use in the course of trade. It was a use in relation to pre-recorded video cassettes. It indicated that the goods had their origin in Esquire Electronics - that the goods were used under the aegis of Esquire Electronics, the proprietor of the mark.
In supplementary heads of argument filed at a
late stage, counsel for
Esquire Electronics contended
for the first time that Executive Video's
conduct consti
tuted
28 tuted infringement under s. 44(11(b) of the Act.
In view of my conclusion in regard to s. 44(1)(a), it is unnecessary to consider
whether, having regard to what took place in the Court a_ quo when
application was made for leave to appeal, it is competent for Esquire
Electronics to raise this contention, or whether it is
well-founded.
At the
hearing of the appeal counsel for Executive Video advanced a submission not
raised in the Court a quo or referred to in their heads of argument,
namely, that for there to be infringement of a trade mark, there must be use by
the alleged
infringer personally or through his servant or agent. No authority
was cited
in
29 in support of this submission, which was said to be implicit in the
relevant provisions of the Act. In the present case Executive
Video did no more
than produce the videos and market them. That did not involve a visual
representation of the mark of Execu-tive
Video or its servants or agents, since
it appeared only when the video was played in a VCR by the customer.
I do not
think that this argument has any merit. The modern law of trade mark
infringement is statutory, but its origins are to be
found in the common law
rule that it is an actionable wrong, ie, a delict, to filch the trade of another
by imitating the name, mark
or device by which that person has acquired a
reputation for his goods (see
Policansky
29(a)
Policansky Bros Ltd v L & A Policansky 1935 AD 89, at p 97). A delict is committed not only by the actual perpetrator, but by those who instigate or aid or advise its perpetration. See McKenzie v.
Van
30
Van der Merwe, 1917 AD 41. In that case SOLOMON JA
said at p. 51:
"Under the Lex Aquilia not only the persons who actually took part in the commission of a delict were held liable for the damage caused, but also those who assisted them in any way, as well as those by whose command or instigation or advice the delict was committed. To a similar effect is the passage which was quoted from Grotius (3, 32, 12, 13) that everyone is liable for a delict 'even though he has not done the deed himself, who has by act or omission in some way or other caused the deed or its consequence: by act, that is by command, consent, harbouring, abetting, advising or instigating'."
In the present case Executive Video produced the video
cassettes and
disposed of them, knowing and intending that
they
31 they would be put to use for the purpose for which they
were purchased or hired and that such use would necessarily involve the
visual
representation of the trade mark. In the circumstances it is idle to contend
that Executive Video is innocent of infringement.
An alternative defence
raised by Executive Video was that the registration of Trade Marks Nos 73/0190,
80/1576 and 80/1577 was invalid.
The basis was that "video recording media in
the form of tapes" were not encompassed by any of the goods in class 9 of
Schedule 4
to the Trade Mark Regulations, 1971 in respect of which the
trade marks were registered. This point was argued in the Court a quo but
DIDCOTT J did not find it
necessary
32 necessary to deal with it. (See p. 412 F - 413 B). In my
opinion this point cannot properly be considered without the Registrar
of Trade
marks having been joined. A decision upholding the point might have far-reaching
consequences, affecting the validity of
numerous other trade marks on the
register. More-over, Regulation 4(4) provides that if any doubt arises as to
what class any particular
description of goods or services belongs to, the doubt
shall be resolved by the Registrar. It is plain that the Registrar is directly
and substantially interested in the point and that it should not be decided
unless he is given an opportunity of being heard. (See
Amalgamated
Engineering Union
v
33 v. Minister of Labour 1949(3) SA 637 (A)).
It was argued that
Executive Video was entitled to rely on the alleged invalidity of the
registration as a shield and a defence as
between immediate parties. But while
it is true that a decision by this Court upholding the point would not be
binding on the Registrar
as res judicata, it would, by reason of the
stare decisis rule, effectively be as binding on the Registrar as if it were
res judicata.
DIDCOTT J heard the argument at the end of February 1984
when the question of the interest of the Registrar of Trade Marks was raised.
Since then there have been no proceedings instituted for rectification of
the
34
the register, nor has there been any application either
to the Court a quo or to this Court for the joinder of
the Registrar. In the circumstances I think that
this Court should now decline to consider the point.
"It is necessary, finally, to deal with a further
alternative submission
by Executive Video which was not
made in the Court a_ quo. In
counsel's formulation,
this was that
"An unlawful infringement in terms of Section, 44 can only take place where the use of the trade mark precedes its circulation or the sale or hire of items on which it appears and where it is accordingly relied upon, or could be relied upon by the prospective purchaser or lessee before the purchase or lease.
There
35
There can be no infringement where the mark comes into existence for the first time after the circulation, sale or lease takes place."
It was submitted that this proposition was squarely supported by the cases of
Smith Kline & French Laboratories Ltd v. Stirling-Winthrop Group Ltd
1976 RPC 511 at 534; and Unilevers (Striped Toothpaste) Trade Mark
Application 1980 FSR 280.
Neither of those cases is in point.
Infringement was not in question; the issue in each case was in regard to the
registrability of
a mark. Nor is there anything in s. 44 of the Act from which
such a proposition can be extracted.
The result is that the appeal succeeds. It
was
36 was agreed between the parties that in this event Esquire Electronics would be entitled to all the costs in the Court a quo and on appeal.
The following order is made:
1. The appeal is upheld with costs, including the costs of two counsel.
2. The order of the Court a quo is set aside, and there is substituted therefore an order in the following terms.
"1. The Respondent, its agents and servants are interdicted and restrained from infringing Trade Mark Nos 80/1576 and 80/1577 contrary to the provisions of section 44 (1) (a)
of
37
of the Trade Marks Act No 62 of 1963 as amended by using the said trade marks,
(a) in relation to video cassette tapes
(b) to describe or advertise video cassette tapes onto which films are recorded in the course of trade;
(c) alienating, hiring, disposing of or in the course
of trade in any manner dealing in any video
cassette tapes on which any film of Indian
origin and the trade marks have been recorded
and which have been marketed on 15 August 1983
or will be marketed thereafter. 2. The respondent is ordered to pay the costs of the
first
38 first applicant, including the costs of two counsel."
H C NICHOLAS, AJA
CORBETT, JA )
HOEXTER, JA ) Concur
JACOBS, JA )
SMALBERGER, JA )
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