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IN THE COMPANIES TRIBUNAL OF SOUTH AFRICA

 

 

Case No: CT00275ADJ2020

 

 

In the matter between:

 

 

CHANEL LIMITED                                                   APPLICANT

 

and

 

FIRST CHANEL WOMEN TRADING (PTY) LTD     RESPONDENT

 

 

Presiding Member of the Companies Tribunal: ISHARA BODASING

Date of Decision: 1 MARCH 2020

 

 

DECISION (Reasons and an Order)

 

 

1.       INTRODUCTION

 

1.1.  Applicant is Chanel Ltd., a company duly incorporated and existing under the laws of England and Wales, with its principal place of business at No. 5 Queensway, Croydon, Surrey, CR9 4DL, UK.

 

1.2.  Respondent is First Chanel Women Trading (Pty) Ltd., a company duly incorporated in accordance with the company laws of South Africa, with registration number 2018/255047/07, and having its registered address at Jabulani Extension 1, Block 40 9 Flats, Soweto, Gauteng, 1868.

 

1.3.  This is an application for a determination order:

 

a.              that Respondent’s name does not satisfy the requirements of section 11(2) of the Companies Act 71 of 2008 (“the Act”), and

b.              that Respondent be directed to choose a new name as provided for in terms of section 160 of the Act.

 

2.       BACKGROUND

 

2.1.  On 13 January 2020 Applicant approached this Tribunal for relief. On 21 January 2020, the Deputy Sheriff of Soweto West served a copy of the application at Respondent’s registered address.

 

2.2.  Respondent did not file an answering affidavit within twenty (20) business days, following which, on 24 February 2020 Applicant applied for a default order in terms of Regulation 153 of the Companies Regulations (the Regulations).[1]

 

2.3.  Lucy Kathryn Aboulian, Applicant’s Head of Intellectual Property, duly authorised, deposed to the founding affidavit for the initial application. Amanda Leigh Swanepoel, an attorney with Adams & Adams Attorneys representing Applicant, deposed to an affidavit in support of the application for default judgment.

 

3.       ISSUES

 

3.1     In support of Applicant’s contention that Respondent’s name flouts the provisions of section 11(2) of the Act, Applicant submits that the inclusion of the word CHANEL in the Respondent’s name infringes its registered trademarks. Proof of registration of Applicant’s trademarks in South Africa was attached to the application.

 

3.2     Applicant claims statutory and common law rights in the word CHANEL; widespread and extensive use thereof locally and internationally; its business having begun as far back as the early 1900’s. Ms Aboulian goes into much detail in her affidavit to describe the substantial goodwill and reputation of the Applicant.

 

3.3     Applicant also contends that the dominant and memorable part of Respondent’s company name is identical to the Applicant’s trademark “CHANEL”. Applicant argues that Respondent’s name is therefore confusingly and deceptively similar to Applicant’s registered trademark CHANEL and is in contravention of Section 11(2)(b) and (c)(i) of the Act.

 

3.4     Applicant has underscored the prejudice it will suffer if denied relief, especially as it does not have control over the quality of products or services of Respondent.

 

4.       APPLICABLE LAW

 

4.1   Section 11 of the Act provides as follows: “11. Criteria for names of companies. —

 

(1)....

(2) The name of a company must— (a) not be the same as—

(i) the name of another company, domesticated company, registered external company, close corporation or co-operative;

...

(b)      not be confusingly similar to a name, trade mark, mark, word or expression contemplated in paragraph (a) unless—

(i)         in the case of names referred to in paragraph (a) (i), each company bearing any such similar name is a member of the same group of companies;

…

(c)      not falsely imply or suggest, or be such as would reasonably mislead a person to believe incorrectly, that the company—

(i)         is part of, or associated with, any other person or entity;”

 

4.2     Section 160 of the Act deals with disputes concerning reservation or registration of company names and enunciates the jurisdiction of the Companies Tribunal as follows:

 

(1)            A person to whom a notice is delivered in terms of this Act with respect to an application for reservation of a name, registration of a defensive name, application to transfer the reservation of a name or the registration of a defensive name, or the registration of a company’s name, or any other person with an interest in the name of a company, may apply to the Companies Tribunal in the prescribed manner and form for a determination whether the name, or the reservation, registration or use of the name, or the transfer of any such reservation or registration of a name, satisfies the requirements of this Act.

 

(2)            An application in terms of subsection (1) may be made— (a) within three months after the date of a notice contemplated in subsection (1), if the applicant received such a notice; or (b) on good cause shown at any time after the date of the reservation or registration of the name that is the subject of the application, in any other case.

 

(3)            After considering an application made in terms of subsection (1), and any submissions by the applicant and any other person with an interest in the name or proposed name that is the subject of the application, the Companies Tribunal –:

 

(a)            must make a determination whether that name, or the reservation, registration or use of the name, or the transfer of the reservation or registration of the name, satisfies the requirements of this Act; and

(b)            may make an administrative order directing-

 

(i)          the Commission to

(aa) reserve a contested name, or register a particular defensive name that had been contested, for the applicant;

(bb) register a name or amended name that had been contested as the name of a company;

(cc) cancel the reservation of a name, or the registration of a defensive name; or

(dd) transfer, or cancel the transfer of, the reservation of a name, or the registration of a defensive name; or

(ii)        a company to choose a new name, and to file a notice of an amendment to its Memorandum of Incorporation, within a period and on any conditions that the Tribunal considers just, equitable and expedient in the circumstances, including a condition exempting the company from the requirement to pay the prescribed fee for filing the notice of amendment contemplated in this paragraph.”

 

4.3     Companies Regulation 153 of 2011 provides for default orders:

 

(1)      If a person served with an initiating document has not filed a response within the prescribed period, the initiating party may apply to have the order, as applied for, issued against that person by the Tribunal.

 

5.       EVALUATION

 

5.1     I am convinced that Applicant has made out a case for the main application to be considered on a default basis, and proceed to deal with the merits of the case.

 

5.2     “Similar” in section 11(2)(b) of the Act would be “having a marked resemblance or likeness” and that the offending name should immediately bring to mind the well-known trade mark or other name.[2] The test for “confusingly similar” is, as in the case of passing-off: “... a reasonable likelihood that ordinary members of the public, or a substantial section thereof, may be confused or deceived into believing that the goods or merchandise of the former are the goods or merchandise of the latter or are connected therewith. Whether there is such a reasonable likelihood of confusion or deception is a question of fact to be determined in light of the particular circumstances of the case.” [3]

 

5.3     “Confusingly similar” in Section 11(2)(b) has to be examined carefully to determine if this is in fact so in casu. In considering case law on the concept, it must be as alike in a manner that will confuse the “ordinary reasonable careful man, i.e. not the very careful man nor the very careless man.”[4] The “reasonable man” has been further qualified: “A rule of long standing requires that the class of persons who are likely to be the purchasers of the goods in question must be taken into account in determining whether there is a likelihood of confusion or deception.”[5]

 

5.4     In line with what was stated in Ewing t/a The Buttercup Dairy Company v Buttercup Margarine Corporation Ltd 1917 (34) RPC at 232 and 238, it can be concluded that confusion and/or deception may arise from the side-by- side use of the trade mark and Respondent’s name, which can lead to injury of the Applicant’s business, especially since it has no control whatsoever over the quality of services rendered by Respondent.

 

5.5     The doctrine of imperfect recollection has been explained by our courts[6]: there is a probability that a substantial number of people will be at least confused, if not deceived, given the fact that an individual does not have the two marks before him, side by side and that memory is often imperfect. In Cowbell AG vs ICS Holdings 2001 (3) SA 941 (SCA), the court said: "the decision involves a value judgment and that the ultimate test is whether, on a comparison of the two marks it can properly be said that there is a reasonable likelihood of confusion if both marks are to be used together in a normal and fair manner, in the ordinary course of business."

 

5.6     It can therefore be also be concluded that the word “CHANEL” in Respondent’s name will reasonably mislead the reasonable person to believe incorrectly that there is an association with the Applicant’s ”CHANEL’ trademarks. The fact is that the two businesses can clearly have similar or overlapping activities in respect of their corporate branding, and this will, as under section 11(2)(b), include the likelihood/possibility that the reasonable person will be misled.

 

5.7     Finally, in the case of Polaris Capital (Pty) Ltd v The Registrar of Companies and Polaris Capital Management Inc. (unreported judgment, Case No. 11607/2005, CPD), the learned judge commented on undesirability in terms of Section 45 (2) of the 1973 Companies Act: “It is submitted that by allowing the close corporation name to remain on the register, in addition to causing deception and confusion, its registration will hinder the registrar’s role in maintaining and promoting good governance and administration of corporate entities in the interest of the general public.”

 

5.8     Thus, permitting the Respondent to keep the name CHANEL in its company name will create confusion and hinder the Registrar from maintaining and promoting good governance and administration of a corporate entity in the interest of the general public. It is evident therefore that the name CHANEL as incorporated in the Respondent’s company name falls within the ambit of Section 11(2)(b)(iii) and (c) as argued.

 

6.       FINDINGS

 

6.1     I find that the balance of convenience favours the Applicant.

 

6.2     Applicant has shown that Respondent has transgressed Section 11(2)(b) and (c): its name is confusingly similar and falsely implies, or could reasonably mislead a person to believe incorrectly, that the Respondent is part of, or associated with the Applicant. Hence it is entitled to an order as claimed in terms of Section 160 of the Act.

 

6.3     The Applicant’s application is granted as set out below.

 

6.4     Even though Applicant has omitted to cite the Companies and Intellectual Property Commission (CIPC) as Second Respondent, the order below is made.

 

7.       ORDER

 

7.1     An administrative order is made in terms of Section 160(3)(b)(ii) that Respondent change its name to one which does not incorporate the word CHANEL, as it is in contravention of Sections 11(2)(b)(iii) and (c)(i) of the Act.

 

7.2     This order must be served on the Respondent and the CIPC by the Tribunal’s Recording Officer (Registrar).

 

7.3     The Respondent is hereby ordered to change its name within 60 (calendar) days of date of receipt of this order and to file a notice of amendment of its Memorandum of Incorporation.

 

7.4     There is no order of costs against the Respondent, as the matter has not been opposed. The Respondent is hereby exempted from the requirement to pay the prescribed fee for filing the notice of amendment.

 

7.5     Since the Respondent is a profit company, in accordance with Section 11(1)(b) and (3)(a) of the Act, it can use its registration number as its company name immediately followed by the expression “South Africa”, should it not be in a position to use another name.

 

7.6     The Registrar of CIPC is directed to inform the Respondent forthwith of the decision of the Tribunal and to ensure that the name is changed within the requisite time period as aforesaid; and to invite the Respondent to file an amended Memorandum of Incorporation using a satisfactory name.

 

 

ADV. ISHARA BODASING

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