This matter relates to an appeal, by New Balance Athletic Shoe, Inc ("New Balance"), against a decision by the Registrar of Trade Marks (upheld in first appeal to North Gauteng High Court) to expunge trade mark nos. 1972/1361 P-F FLYERS and B1965/02999 P-F ("New Balance trade marks" or "the trade marks") on the grounds of non-use in terms of section 27(1)(b) of the Trade Marks Act 194 of 1993.
In expungement proceedings, in terms of section 27(1)(b), the onus of proving relevant use of the trade marks under attack falls on the trade mark proprietor. The relevant period is defined as a 5 year period ending 3 months before the expungement application is launched. The Supreme Court of Appeal was given an opportunity to examine the evidence provided in defending the expungement application, and made various findings relating to the level of evidence that is required of a trade mark holder in order to defend a non-use expungement application.
The Supreme Court of Appeal referred to the onus with approval as it was to be expected that the trade mark proprietor would have comprehensive and peculiar knowledge of the use of the trade mark.
In defending the trade marks New Balance claimed use of the trade marks "during the past 5 years", provided pictures of their South African store, pictures of footwear in the store and pictures of models displaying footwear. They also claimed turnover in the last 5 years of R700000 and promotional expenditure of R250000, in South Africa. These claims were made by the General Manager in South Africa and corroborated by 3 executives of New Balance South Africa.
The Supreme Court of Appeal noted that the evidence did not include any invoices or delivery notes recording purchases or receipt of stock that was claimed to have been sold, no invoices recording sales, no accounting records of transactions or any other documentary evidence to prove that products had been sold. The Supreme Court of Appeal went on to state that what is required to overcome the burden of proof in defending non-use claims is "...at the least, is clear and unambiguous factual evidence that brings the matter within the terms of the section."
The Supreme Court of Appeal went on to find that the evidence advanced by New Balance was insufficient to carry the burden of proof required to defend the trade marks under attack.
The important lesson to be learnt from this case is that the trade mark proprietor will need to provide clear documents evidencing proof of sales of goods (or receipt of stock) in order to defend expungement proceedings. Trade mark proprietors should consider evaluating their current receipts to ensure that these documents clearly indicate trade marks used in relation to the products sold/received, as such documents will be crucial in defending non-use expungement attacks.
The Supreme Court of Appeal also re-affirmed the principle of territoriality and confirmed that a person can adopt a mark as their own, in South Africa, even if it has been used in a foreign country.
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