South Africa: A Special Case Of Wine

Last Updated: 29 July 2011
Article by Stuart Gardiner

Originally published May 2011

The recent decision of the Supreme Court of Appeal in Groupe LFE SA (Pty) Limited v Swartland Winery (467/09) [2011] ZASCA 4 (4 March 2011) has important consequences for the use and adoption of the names of geographical locations as trade marks for goods, and particularly for alcoholic beverages including wine.

Distinctiveness

It is invariable in law if a geographical name is to function and be registrable as a trade mark that it be distinctive. In other words it must in itself be able to identify and distinguish goods emanating from one source from goods originating from other sources.

Hence the word must either be inherently distinctive per se (aptly illustrated by the service marks GOOGLE and YAHOO) or it must have acquired the requisite distinctiveness as a result of its use as a trade mark in relation to the products concerned to such a degree that relevant persons in the marketplace – being purchasers or purveyors of such goods – regard the mark as indicating the origin of the user's products to the exclusion of all else.

Section 10(2)(b) of the Trade Marks Act 1994 presumes certain words to be non-distinctive and unregistrable as trade marks, including in this category marks which consist exclusively of a word which may serve in trade to designate the kind, quality, quantity, intended purpose, value, geographical origin or other characteristics of goods.

Under a proviso to section 10(2)(b) the presumption that the word chosen is not distinctive can be rebutted if the user of the word claimed as a trade mark can adduce sufficient evidence proving that it has in fact become distinctive of the user's goods for relevant persons as a result of use of the word as a mark in trade.

Century City

As far as the distinctiveness and registrability of indications of geographical origin are concerned the Supreme Court of Appeal went a long way towards settling the law in its judgment in Century City Apartments Property Services CC and Another v Century City Property Owners' Association 2010 (3) SA 1 (SCA). It recorded that:

  • A name which designates a geographical location is not excluded from trade mark registration per se. For it to be struck by the section 10(2)(b) prohibition it must on a reasonable assumption suggest the presence of a current association in the minds of relevant persons between the geographical location concerned and the goods for which its use as a trade mark is intended.
  • If it is probable that relevant persons might believe the word to indicate the geographical origin of the relevant goods, the word concerned will not be a distinctive trade mark.
  • Refusing such marks registration serves the public interest, permitting use by all parties of a descriptively geographical name freely.
  • Free use includes using the name to associate the relevant goods with the location concerned so as to obtain a favourable consumer response.

Swartland

In the Swartland case it was common cause that an association between the geographical location "Swartland" and wine was established and that "Swartland" has since 1975 been the name of a designated area of production in the nature of a ward, duly promulgated as such under the Wine of Origin Scheme provided for by the Liquor Products Act 1989. It is an offence and thus unlawful in terms of section 11(3)(a)(i) of this Act to use such a designated ward name as a trade mark in the sale of wine or other liquor products. As a result such marks are, according to the provisions of section 10(12) of the Trade Marks Act, unregistrable as their use as trade marks in trade would be contrary to law.

The respondent had registered SWARTLAND as a trade mark for liquor products and objected to the manner in which the appellant used "Swartland" in the get-up of the label of its wines for export. A final interdict restraining such use on the basis of trade mark infringement was obtained in the Court of first instance and confirmed on appeal.

The appellant argued in the main that SWARTLAND was unregistrable as a trade mark and had to be expunged from the Register in the light of the principles applicable to the registrability or otherwise of geographical indications of origin set out in Century City, as well a on the ground that use of the name as a trade mark would be contrary to law under section 10(12) of the Trade Marks Act.

It is to be noted that the presumption against registrability in section 10(2)(b) of that Act applies exclusively to a geographical name such as SWARTLAND "without more", which is to say the name per se without added matter (Century City [para 32]).

It was not disputed that "Swartland" was such a name and that it was struck by the provisions of section 10(2)(b). However the respondent relied on the proviso to the section, namely that SWARTLAND had become a distinctive trade mark in its hands through use.

It is also noteworthy that whereas the proviso requires proof of use of the mark to which the section refers, being the name as registered without more, use of SWARTLAND WINERY was regarded by the Court as such use. The addition of "winery" amounted to nothing more as it comprised a non-distinctive suffix (Swartland [para 16]).

The Supreme Court of Appeal has made it clear on a number of occasions that a mark is not proven to be distinctive per se merely on the basis of evidence indicating substantial sales alone. It must be shown in evidence that such sales were made under the mark in question in a manner linking it with the relevant goods in such a way in the mind of relevant persons that the ordinary or in this case geographic meaning of the word is eclipsed and instead functions as a trade mark indicating that the goods featuring it emanate from a single enterprise as a distinct source. (See Verimark (Pty) Ltd v BMW AG; BMW AG v Verimark (Pty) Ltd 2007 (6) SA 263 (SCA); and Commercial Auto Glass (Pty) Ltd v Bayerische Motoren Werke Aktiengesellschaft AG 2007 (6) SA 637 (SCA) [2007] 4 All SA 1331).

The respondent in the Swartland case started out as a cooperative established in 1948 under the name Swartlandse Koöperatiewe Wynmaatskappy Beperk. It subsequently changed its name to Swartland Winery Limited during 2006 when it converted to a company with limited liability under the Companies Act 1973.

This evidence plus the fact there was no other winery which featured the element "Swartland" in its corporate name adduced by the respondent's managing director was held by the Court to be sufficient to discharge the onus on the respondent to show that "Swartland" (and nothing more) was the distinctive mark of the respondent through use as provided for in the proviso to section 10(2)(b). No other evidence such as evidence from the trade or from relevant persons was adduced or required.

This also meant that the name "Swartland" was "established" as the trade mark of the respondent on 1 July 1990 when the Liquor Products Act 1989 and the current Wine of Origin Scheme came into force. In support of this contention the respondent had provided illustrations of two "bottles bearing the trade mark SWARTLAND and dated 1986 and 1972".

It followed that use of the name of the production area Swartland as a trade mark was not an offence, as this use was exempted from the prohibition against such use under a defence relating to established trade marks provided by section 11(12)(a) of the Liquor Products Act. As such use was, therefore, not unlawful, the mark was not expunged from the Register under the provisions of section 10(12) of the Trade Marks Act.

The Swartland judgment is authority for a number of unexpected propositions regarding the registrability of indications of geographical names as trade marks.

The incorporation of a geographical name in the corporate name of an enterprise for a substantial period will be found to be trade mark use of that geographical name and nothing more for the purposes of the proviso to section 10(2)(b) of the Act, unless, it seems, another enterprise has also included the geographical name in its corporate name or has established other proprietary rights in the name in relation to the relevant products over time. In such an instance the recordal of substantial, albeit unspecified sales, enables distinctiveness to be assumed and established.

The burden of proof required to establish the distinctiveness of geographical names under the proviso to section 10(2)(b) is therefore lower when compared with the high bar applicable to the other species non-distinctive marks referred to in the section.

It follows from the judgment that a geographical name associated with particular goods can serve both as a trade mark for and as an indication of the geographical origin of such goods simultaneously. The two concepts are therefore not mutually exclusive as might otherwise be supposed in the light of the Century City judgment.

From the perspective of wine legislation, the result is that certain district or other names promulgated as areas of production under the Wine of Origin Scheme are registrable trade marks as well. The well-known wine production areas of Franschhoek (Franschhoek Cellar, est. 1945), Wellington (Wellington Cooperative Cellar, est. 1934) and Robertson (Robertson Winery, est. 1941) are included in this category whilst Boland also becomes registrable as a trade mark by Boland Kelder (est. 1948).

The makers and purveyors of liquor products will now need to be particularly wary in using the names of such production areas upon or in relation to liquor products if registrations of such marks are not to be infringed. In this regard it needs to be borne in mind that the monopoly afforded will not be confined to wine but will include all liquor products in trade mark class 33.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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