South Africa: Grey Goods – It’s A Package Deal

Last Updated: 6 June 2012
Article by Reggie Dlamini

The term "grey goods" refers to products which are manufactured by a trade mark holder in one country and imported into another country by a party other than the official representative of the trade mark holder in the importing country. As a result, although the goods are genuine they are typically marketed in the importing country without the consent or involvement of the authorised trader in that territory. This article briefly discusses the key provisions of the Consumer Protection Act No. 68 of 2008 (CPA) relating to grey goods, in comparison to the corresponding clauses of the preceding statute.

Prior to the CPA the sale of grey goods in South Africa was regulated under the Consumer Affairs (Unfair Business Practices Act) No. 71 of 1988 in terms of General Notice No. 107 of 2007. The relevant sections of the notice provide as follows:

1. In this notice, unless the context indicates otherwise:

1.1. ...

1.2. ...

1.3. 'Branded product' means an imported product which bears, on the product and/or packaging thereof, the registered trade mark of the originator of such product.

1.4. 'End-users' mean any person including a consumer who purchases a product for his/her own use and not for resale.

1.5. ...

1.6. 'Sellers' are persons who promote, display, offer for sale or sell any branded product to end-users.

1.7. 'Unauthorised branded product' means a branded imported product imported without the express authorisation given by or on behalf of the owner of the trade mark and includes any tangible object or product promoted or offered in the ordinary course of business for sale or supply to end users.

1.8. 'Business practice means':

1.8.1. the business practice whereby branded products imported without the trade mark owner's authority are advertised, promoted and/or offered for sale to end users and where end users have not been alerted by the seller that it:

  1. is not designated by or on behalf of the trade mark owner as an authorised distributor of the branded product; and
  2. that the authorised South African distributor is under no obligation to honour the manufacturer's warranties/guarantees and/or after sales support.

1.8.2. the business practice whereby the sellers of unauthorised branded products do not include, in all forms of advertising or promotion, including in-store promotions, websites and brochures, when every such product is advertised or promoted, the following wording in conspicuous size, without change: 'The authorised South African distributor of this product is under no obligation to honour the manufacturer's guarantees/warranties or to provide after sales service'....

2. The business practice is hereby declared unfair and therefore unlawful and persons are hereby directed to:

  1. refrain from applying the business practice;
  2. refrain at any time from applying the business practice.

The Unfair Business Practices Act has now been repealed by the CPA and the above provisions have been replaced (and supplemented) by section 25, read with regulation 8, of the CPA which provides as follows:

25(1) A person who offers or agrees to supply, or supplies, any goods that-

  1. have been reconditioned, rebuilt or remade; and
  2. that bear the trade mark of the original producer or supplier,

must apply a conspicuous notice to those goods stating clearly that they have been reconditioned, rebuilt or remade, as the case may be.

25(2) A person who markets any goods that bear a trade mark, but have been imported without the approval or licence of the registered owner of that trade mark, must apply a conspicuous notice to those goods in the prescribed manner and form.

Regulation 8 states the following:

8(1) The notice contemplated in subsections (1) and (2) of section 25 of the Act must be applied –

  1. In a place on the goods and the marketing material of the goods where a consumer is likely to see that notice; and
  2. In an easily legible size and manner,

to the goods and all forms of advertising or promotion, including in-store promotions, packaging, websites and brochures, when these goods are advertised or promoted, stating clearly that they have been reconditioned, rebuilt or remade, as the case may be.

8(2) The supplier must when selling goods to the consumer –

  1. expressly draw his or her attention to the notice prescribed in subregulation (1)
  2. in plain language explain the meaning of the notice to the consumer; and
  3. the notice contemplated in section 25(2) of the Act must be applied –

    1. in a place on the goods and the marketing material of the goods where a consumer is likely to see that notice; and
    2. in an easily legible size and manner;

to the goods and all forms of advertising or promotion, including in-store promotions, packaging, websites and brochures, when these goods are advertised or promoted, stating clearly, if the goods bear a trade mark, that they have been imported without the approval or license of the registered owner of that trade mark and that no guarantee or warranty in respect of such goods will be honoured or fulfilled by any official or licensed importer of such goods.

The provisions of the CPA are wider than the corresponding sections under the Unfair Business Practices Act. Arguably, they are also clearer. For instance, it would appear from the definitions of "end-users" and "unauthorised branded products" in 1.4 and 1.7 (above) that the notice prescribed in 1.8 was required only in the case of sales of grey goods directly to consumers, and not in the event of sales for purposes of further on-sale. That would have meant, for example, that distributors, who sold goods exclusively to wholesalers for supply to retailers may not have fallen within the ambit of the provisions of the Unfair Business Practices Act.

Subject to certain exemptions, the provisions of the CPA generally apply to every supply of goods or services in South Africa by a seller acting in the ordinary course of business, provided that the consumer is a natural person or a juristic person whose total asset value or annual turnover at the time of the sale is less than R2 million.

One of the main differences between the CPA and the Unfair Business Practices Act is that the latter did not contain any provisions dealing with reconditioned, rebuilt or remade goods bearing the trade mark of the original producer or supplier. If the trade mark was registered, its unauthorised use in the course of trade on such goods could in principle be prevented by way of trade mark infringement proceedings. The CPA does not do away with the trade mark infringement remedy in such cases, but it now imposes the additional requirement that a conspicuous notice must be applied stating clearly that the goods have been reconditioned, rebuilt or remade, as the case may be. Accordingly the trade mark infringement remedy would still be available in appropriate cases, notwithstanding the presence of the notice in terms of section 25(1) of the CPA.

In the event of unauthorised use in the course of trade of a registered trade mark on or upon grey goods (genuine goods), as opposed to goods which have been remade, rebuilt or reconditioned, a defence against trade mark infringement would be available in terms of section 34(2)(d) of the Trade Mark's Act 194 of 1993.

Unlike the Unfair Business Practices Act, the CPA prescribes that the 'grey goods notice' must also appear on the packaging of the goods in question. As far as consumers and trade mark owners are concerned this is likely to be one of the most significant provisions. Previously it would, for instance, not necessarily have been impermissible for the notice to be included together with the applicable terms and conditions in a user manual or in a separate pamphlet (which would have been concealed inside the packaging). This new requirement therefore necessitates new packaging materials containing the requisite notice for grey goods, which will make it easier for consumers to identify such goods.

The provision in section 25(2) that approval or licence be obtained from the "registered owner" of the trade mark may have unintended consequences. On a literal interpretation this provision requires only that the 'grey goods notice' be applied solely in instances where the trade mark applied to the goods in question enjoys registered trade mark protection in at least one territory. In the (admittedly unlikely) event that the trade mark in question is not registered at all in any country the provisions of section 25(2) would presumably not apply. Even if this scenario does not arise, the reality is that in most countries the trade mark registration process generally takes a number of years to complete, which does not appear to have been considered by the legislature.

Section 85 of the CPA establishes the office of the National Consumer Commission, which is charged with enforcing the provisions of the CPA. It can, among other things, issue compliance notices setting out details of the nature of non-compliance, any steps that are required to be taken, the period within which those steps must be taken and any penalty that may be imposed in terms of the CPA if those steps are not taken. In terms of section 100(4) a compliance notice remains in force until it is set aside by the Tribunal or a court or the commission issues a compliance certificate.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
ENSafrica
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
ENSafrica
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions