CIV/APN/131/88
IN THE HIGH COURT OF LESOTHO
In the matter between:
O.K. BAZAARS (1929) LIMITED Applicant
and
HYPERAMA (PTY) LIMITED Respondent
JUDGMENT
Delivered by the Honourable Mr. Justice J.L. Kheola on the 17th day of October, 1988
On the 8th June, 1988 the applicant applied for and obtained a Rule Nisi calling on the respondent to show cause why it should not be:
2.1 interdicted and restrained whether by itself or by its servants or agents from using the name Hyperama or any name confusingly
similar thereto in the course of or in any relation to its stores or to any business conducted by
2.2 interdicted and restrained by itself or by its servants or agents from using the letterheads in "GM10" and "GM11"
and from using the name Hyperama in the colour and form and logo as exemplified in annexures "GM10" and "GM11 to the affidavit of Gerald Manne or in any colour, form or logo similar thereto;
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2.3 ordered to deliver up to the applicant for destruction all examples of the letterhead in annexures "GM10" and "GM11"
to the affidavit of Gerald Manne and any other material or advertising or other matter on which the name Hyperama whether by itself or in conjunction with the logo and colour green appears;
2.4 oredered to pay such damages as an enquiry to be held into the damages suffered by the applicant should find payable;
2.5 ordered to pay the costs of this application.
Pending the final end and determination of this application, paragraph 2.2 above shall operate as an interim interdict.
The applicant is now seeking confirmation of the rule but the respondent is strongly opposing the confirmation of the rule (a) above, as far as rule (b) and rule (c) are concerned, the respondent has without admission of liability agreed to destroy or to deliver up for destruction its letterheads and to use lettering which is not the same or similar to that of the applicant. The respondent has made a tender of the costs incurred in connection therewith.
The applicant is a company incorporated with limited liability in the Republic of South Africa and has many stores throughout Southern
Africa. The applicant has, as a major division, a group of stores which trade under the name "The Hyperama" or "Die
Hyperama". The Hyperama are not a separate entity. There are now ten (10) Hyperama Stores in the Republic of South Africa including the one which was opened in Bloemfontein in 1987.
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The respondent is a company incorporated in Lesoth and has traded in this country since 1983. It now has four (4) stores which are all situated in Maseru along Market Street and Kingsway Road.
The founding affidavit is made by one Mr. Gerald Manne who is the Director of the applicant and the Group Executive Director of the applicant's Hyperama Stores. He deposes that the name Hyperama had been coined for use in the applicant's stores and that in the Republic of South Africa the name is registered as a trade mark (certificates from the Registrar are Annexure "GM4"). A logo for the name was designed and can be seen from the Hyperama letterhead (Annexure "GM5"). The logo was independently
created for the Hyperama division by a Mr. David Helman who was an employee of The McCann Group S.A. (Pty) Ltd., an advertising agency. As part of the new trade identity and get-up for Hyperama Stores, The McCann Group S.A. (Pty) Ltd. were also instructed to advise on a new colour for use in the logo and store get-up. The choice of the green colour was a result of extensive research by a Mr. Graham de Villiers of the McCann Group S.A. (Pty) Ltd. The colour green has been used by the Hyperama Stores since 1979 and it is featured as the Hyperama Stores' trading colour in the store names, on the logo, letterheads, other stationery, on all blazers and uniforms worn by the Hyperama staff, the stores' decor, on points of sale tickets, price labels and packaging (see Annexures "GM5" and "GM6".)
Mr. Manne further deposes that the Hyperamas conduct an extremely active advertising campaign for their stores. The advertising
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takes place in three main media areas; television radio and the Republic of South Africa's national press. Advertising also takes place in the local newspapers in areas in which Hyperamas are situated. The Advertising is also handled by The McCann Group S.A. (Pty) Ltd. Regarding the details of the advertisements, Mr.Manne refers to the supporting affidavit of a Mrs. Sheila McGillivray to which examples of the advertisements are attached (see Annexures "SM1" to SM14" inclusive). According to Mrs McGillivray's affidavit the applicant spent some R3.5 million in the last year alone on advertising its Hyperama stores. The total cost of advertising Hyperama stores in the last five years is in excess of R15.5 million.
In addition to direct advertising, the applicant spends large sums of money on sports and cultural events and also on charitable and other projects. The total cost of sponsorship linked to the Hyperama division in 1986-87/1987-88 is approximately R500,000 per annum.
Mr. Manne deposes that from the information given above it is clear that the Hyperama division is a substantial business enterprise and that the applicant has acquired a substantial goodwill and reputation in the name Hyperama and also in the logo and particular colour green in which the name invariably appears. This goodwill and reputation is known not only in the areas in which the Hyperama stores are situated but also throughout the Republic of South Africa and substantial parts of its neighbouring territories including the Kingdom of Lesotho and in particular its capital, Maseru because both South African TV1 and TV4 on which Hyperama advertises are received
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in Lesotho and in particular in Maseru. Radio Oranje on which the applicant advertises is received in Lesotho and in Maseru, The South African Sunday Times newspaper and The Star newspaper in both of which the Hyperama advertising appears are available and sold on regular basis in Maseru. According to Mrs. McGillivray's affidavit the circulation of the Sunday Times in Lesotho is 2124.
According to the affidavit of a Mr. Johannes Arnold Koornhof who is an attorney of this Court and a resident of Ladybrand, very many people pass through the border post at Maseru Bridge for shopping and other purposes in Bloemfontein. He is aware that many mine labourers from Lesotho are employed in the Republic of South Africa in large centres like Welkom, Klerksdorp and Johannesburg, and that these mine labourers regularly visit Lesotho. He recently made enquiries from the authorities on the South African side of the border and was informed that during the 1988 Easter weekend more than 30,000 persons passed through the border control.
It is alleged that the respondent operates two stores in Maseru in Market Street and in Kingsway. Both stores operate under the name "Hyperama". The name is represented in green on both stores as it apparent from Annexures "GM8" and "GM9". In May, 1988 two of the suppliers of goods to applicant's Hyperama stores contacted Mr. Manne to enquire if the applicant was operating
a Hyperama in Maseru. This followed receipt of letters by the suppliers -Audiodek and Tek Electronics - from the respondent which
letters appeared to come from applicant's Hyperama (See Annexures "GM10" and "GM11"). It is alleged that the use by the respondent of the name Hyperama, the logo and the Hyperama green constitutes a passing
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off by the respondent that its business and/or stores are those of the applicant or are connected therewith.
The respondent's answering affidavit is made by one Mr. Anver Mahomed Sayanvala who is the Director of the respondent. He admits most of the facts stated by Mr. Manne in his founding affidavit but denies that the respondent has committed any passing off on the following grounds:
The respondent has traded in Maseru under the name and style of Hyperama since June, 1983. He disputes that the activities of the respondent only came to the applicant's attention in May, 1988. Many of the employees, including managers of O.K. BAZZARS Store in Maseru, which has been there since 1980, have over the years purchased goods from the respondent's stores in Maseru. He claims that the applicant has waived its right of relief if it ever had it (which the respondent denies);alternatively, that the applicant is estopped from enforcing such right having stood
by for nearly five years and allowed respondent to carry on its business as aforesaid;
The applicant's target market in its advertising campaign for the Hyperama Stores is most certainly not Lesotho where it has no
Hyperama store nor does it intend to open one in the future;
The applicant has not demonstrated that as a result of its advertisements it has established any reputation and acquired any goodwill in the Kingdom of Lesotho or lost any custom as a result of purchases from respondent's businesses rather than the applicant's.
The signwriting of the word Hyperama on the respondent's stores differs from the logo of the applicant and, furthermore, the applicant's
stores are known as "The Hyperama" as opposed to respondent's stores in which "The" or "Die" do
not appear.
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I have examined the applicant's letterheads in Annexure "GM5" and I compared them with the letterheads of the respondent in Annexures "GM10" and "GM11" and found very striking similarity; the only difference being that in the respondent's
"Hyperama" the words "The" or "Die" do not appear.
I have also examined the name Hyperama in the green colour and form and logo in Annexure "GM6" which appears on the applicant's stores and I compared it with respondent's form and logo which appears in Annexures "GM8" and "GM9" and found very striking similarity. In his answering affidavit Mr. Sayanvala does not explain how the respondent came across the name "Hyperama" because as we have been made to understand it is an invented word and according to the applicant it was invented specifically for use by its Hyperama division.
The evidence before me establishes in a convincing way that the respondent copied the applicant's name "Hyperama" and its logo and also the store get-up. The only question is whether the action of the respondent constitutes passing off; whether or not the applicant has established a reputation and goodwill in Lesotho which entitles it to proceed for passing off.
The wrong known as passing off was defined by Rabie, J.A. in Capital Estate and others v. Holiday Inns Inc. and others, 1977 (2) S.A. 916 (A.D.) at page 929C in the following words:
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"The wrong known as passing off consists in a representation by one person that his business (or merchandise, as the case may be) is that of another, or that it is associated with that of another, and in order to determine whether a representation amounts to a passing off, one enquires whether there is a reasonable likelihood that members of the public may be confused into believing that the business of the one is, or is connected with, that of another." (See also Adcock-lngram Product Limited v. Beechams (S.A.) (Pty) Ltd. 1977 (4) S.A. 434).
Mr. Du Toit, counsel for the respondent, submitted that the foundation of an action for passing off is the protection of goodwill. Goodwill must therefore exist and there must be some act calculated to injure it. I agree with this submission. In the case of Commissioner of Inland Revenue v. Muller and Co's Margerine Ltd. (1901) A.C. 217 Lord MacHaughten described goodwill as follows:
"It is the benefit and advantage of the good name, reputation and connection of a business. It is the attractive force that brings in custom. It is the one thing which distinguishes an old-established business from a new business at its first start. The goodwill of a business must emanate from a particular centre or source. However widely extended or defused its influence may be, goodwill is worth nothing unless it has power of attraction sufficient to bring customers home to the source from which it emanates. Goodwill is composed of a variety, of elements. It differs in its composition in different trades and in different business in the same trade. One element may preponderate here and other elements there.... For my part I think if there is one attribute common to all cases of goodwill, it is the attribute of locality. For goodwill has no independent existence. It cannot subsist by itself. It must be attached to a business. Destroy the business and the goodwill perishes with it, the elements remain which may perhaps be gathered up and revived again." (See Grazy Horse: Alain: Alain Bernadinet Cie v. Pavillion Properties Ltd. 1967 R.P.C. 581; Slenderella Systems Inc. of America v. Hawkins, 1959 (1) S.A. 519).
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Mr. Du Toit submitted that as a matter of jurisdiction the applicant must show that the goodwill he seeks to protect exists within or extends to the area of jurisdiction of the High Court of Lesotho. This Court can only protect as asset (goodwill) within its own jurisdiction. The respondent contends that the applicant has no goodwill in Lesotho. This is so because applicant has no business here, does not trade here, has no association with trade here, nor has it even entered market here. It does not even intend to do so. In support of his submission Mr. Du Toit referred to Slenderella's case (supra) in which it was held that the party complaining of passing off must show that he has a right of property within the jurisdiction of the Court he has approached to which damage is likely to result unless an interdict or injunction be granted.
In the Grazy Horse Case (supra) the facts were that the plaintiffs carried on business of a place of intertainment in Paris under the name of Grazy Horse Saloon. The defendant company started a place of intertainment in London under the name Grazy Horse. An advertisement issued by them stated "Grazy Horse Saloon comes to London," giving the impression that they were offering the same entertainment as did the plaintiffs. The plaintiffs had since 1951 extensively published their Paris business in the United Kingdom, but they carried on no activities of any kind in the United Kingdom. On the plaintiff's motion for an interlocutory injunction to restrain passing off it was held.
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"that a trader cannot acquire goodwill in this country (England) for purposes of a passing off action without user of some sort here. Although in certain cases slight activities might suffice, the mere dissemination of material advertising the plaintiff's business activities abroad could not consitute user in this country sufficient to acquire a reputation in the sense material for a passing off action, and an interlocutory injunction could not therefore be granted." (See Star Industrial Company Limited v. Yap Kwee Kor (1976) FSR 256 at 269; Sheraton Corporation of America v. Sheraton Motels Ltd. (1964) RPC. 202).
In all the above cases it was held that the extent of the reputation of a particular symbol is limited geographically to that territory in which it is known as indicative of the goods, services or business in question. It was emphasised that in order to succeed in a passing off action the applicant must prove that he is carrying on business in the country whose courts he has approached for an interdict. The respondent is relying on these territoriality cases to support the argument that inasmuch as the applicant has no business in Lesotho trading under the name "Hyperama" it cannot succeed in an action for passing off in the courts of Lesotho.
On the other hand Mr. Pearson, applicant's counsel, submitted that the true test is whether the applicant's reputation exists in the area in which the respondent is operating its business and whether the goodwill is known there in such a way that persons seeing the respondent's business or goods will make the association with the applicant. This proposition gets support from a number of cases including C. & A Modes and another v. C.&.A. (Water ford) Ltd. and others (1978) FSR 126 especially at page 138-139 where Henchy, J. said;
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"Goodwill does not necessarily stop at a frontier. Whether in a particular area a plaintiff has a goodwill which is liable to be damaged by the unlawful competition resulting from passing off is a question of fact and of degree. What has to be established for the success of a plaintiff's claim in an action such as this is that by his business activities - be they by direct selling within the State or otherwise - he has generated within the State a property right in a goodwill which will be violated by the passing off. It is true that there is authority for the proposition that a plaintiff's reputation which owes nothing to user in this State is not sufficient to support a passing off action (Alain Bernardin et Cie v. Pavillion Properties Ltd (1967) R.P.C. 58) but, as is stated in Kerly's Low of Trade Marks and Trade Names (10th ed., p. 386), it is difficult to see any rational basis for this distinction. If there are in this State sufficient customers of a plaintiff's business to justify his claim to have a vested right to retain and expand that custom, then there is ample authority in principle i and in the decided cases for the conclusion that, no matter where the plaintiff's business is based, he is entitled to be protected against its being taken away or dissipated by someone whose deceptive conduct is calculated to create a confusion of identity in the minds of existing or potential customers."
In Bask in - Bobbins Ice Cream Company v. Gutman (1976) F.S.R. 545 at page 548 where Graham, J. said:
"Some businesses are, however, to a greater or lesser extent truly international in character and the reputation and goodwill attaching to them cannot in fact help being international also. Some national boundaries such as, for example, those between members of the EEC are in this respect becoming ill-defined and uncertain as modern travel, and Community rules make the world grow smaller. Whilst therefore not wishing to quarrel with the decisions in question, if they are reed as I have suggested, I believe myself that the true legal position is best expressed by the general proposition, which seems to me to be derived from the general line of past authority, that that existence and extent of the plaintiffs' reputation and goodwill in every case is one of fact however it may be proved and whatever it is based on."
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Although the decisions of the Supreme Court of Ireland and the English decisions are not binding on the High Court of Lesotho, I hove always found them to be very persuasive where they deal with the common law. It was agreed that the wrong of passing off falls under the common law. I have read the C.& A. Case (supra) and the Bask in -Robbing's Cose (supra) and found them to make good law.
It has been shown above that the applicant advertises very extensively on TV1 and TV4 which are available to the viewers in Maseru; it advertises on Radio Oranje which is also received by listeners in Maseru; it advertises in the Sunday Times newspaper of which over 2000 copies are sold in Maseru every week. I am sure that a very substantial number of people who live in Maseru have seen these advertisements and therefore know the applicant's Hyperama Stores even if some of them have never actually visited them.
There is evidence which I have accepted that many residents of Maseru often go to Bloemfontein for shopping and that it is likely that some of them have visited the applicant's Hyperama Store in Bloemfontein.
Many citizen of Lesotho travel to South Africa to work in the mines as well as in all sectors of the ecomony and in practically all the cities of the Republic of South Africa. It is again likely that they have seen the advertisements and have also visited the applicant's Hyperama Stores. The evidence upon which the applicant relies to establish its reputation is that because of the extensive
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advertising in the media which reaches a good number of the residents of Maseru and the citizens of Lesotho working in the Republic of South Africa who are customers or potential customers of the applicant's Hyperama stores, the applicant has proved reputation and goodwill within the jurisdiction of this Court.
In some cases the courts have been prepared to infer the existence of the requisite reputation from evidence of extensive sales and advertising alone. In John Craig (PTY) LTD. v. Pupa Clothing Industries, 1977 (3) S.A. 144 at p. 155G-H King, A.J. said:
"The respondent has not disputed that over a period of years the applicant has sold to the public tens of thousands of pairs of slacks and other men's garments using its aforesaid get-up. Further, the respondent has not disputed the advertising by the applicant in The World newspaper and by means of its shop window displays. A justifiable conclusion from those facts is awareness of the get-up by a substantial number of persons. A bare denial of a conclusion whilst the facts, from which the conclusion is drawn, are not denied cannot be regarded as sufficient to create a dispute of fact which cannot be resolved on paper.
Adopting a robust and common sense approach to the question of reputation on these papers I am of the view that the applicant has
established a reputation in its get-up. To hold otherwise would merely involve an over-fastidious approach. Mr. Kriegler did not
argue that the question of reputation could not be decided on the papers. Vide, Soffiantini v. Mould, 1956 (4) S.A. 150 (E)." (See Easyfind International v. Instaplan Holdings, 1983 (3) S.A. 917 at p.p. 925-925; Haggar Company V. S.A. Tailorscrart (Pty) Ltd., 1985 (4) S.A. 569 at p.p. 578, 580).
Mr. Du Toit submitted that the highwater mark of the case which the applicant attempts to make out is that the Kingdom of Lesotho is the recipient of certain "spillover" of the applicant's
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advertising efforts in the Republic of South Africa. Willy-nilly and because international borders do not create barriers to the diffusion of electronic messages, certain of applicant's advertisements can be seen or heard in Maseru. He submits that that is not enough to establish goodwill in the Kingdom of Lesotho because there is neither trade nor association with the trade in this country.
He admits that some form of applicant's reputation might be established amongst the readers of Sunday Times in Maseru, however that reputation does not amount to a protectable goodwill. I disagree with this submission because once it is accepted that goodwill does not necessarily stop at frontiers then it is a question of fact whether or not the applicant has a goodwill in this country. Evidence has shown that the residents of Maseru are exposed to the massive advertising campaign on the South African media.
On the basis of the extensive advertising by the applicant of its Hyperama stores which is received in Maseru and Lesotho I am satisfied that the applicant has proved the requisite reputation which amounts to a protectable goodwill within this country.
As far as confusion is concerned the applicant has not placed before this Court the evidence of people who have actually been deceived by the respondent's name and logo store get-up as that of the applicant. However, I do not think that there was any need for the applicant to lead evidence of members of the public to car. and say they were deceived. I have observed the great similarity in the applicant's name "Hyperama and the logo and get-up as company
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to that of the respondent. In Tavener Rutledge Ltd. v. Specter's Ltd., 1957 R.P.C. at 502 where Roxburgh, J. said:
"The Court of Appeal have said over and over again that a Judge is not entitled to say: 'I do not know what the answer to the case is. That may be so, but I do not think interlocutory applications are subject to the same principle as that. I think a Judge is entitled to say this, and I say it. This is a case in which I should undoubtedly be influenced by evidence of persons having been actually deceived, if such evidence were available. Mr. Levy is quite right is saying there is no obligation to produce such evidence. That is true enogh. If, on the face of it, the Judge sees that the thing is calculated to deceive, he does not wait for the evidence of somebody who has been deceived. But if the Judge is not satisfied that on the face of it the thing is calculated to deceive, he cannot but be influenced by the question of whether there has been any actual deception. I wish to have the benefit of that evidence, if it exists, before I make up my mind. I think I am entitled to say that because this is an interlocutory application. At the trial I have to accept such evidence as the parties like to put before me and not ask for more, but I do not think I am bound to make up my mind on this type of case on motion in the absence of materials which are almost certain to be forthcoming at the trial but which are not before me."
I am satisfied on the evidence placed before me by the applicant that the respondent's get-up is calculated to deceive.
It was argued on behalf of the respondent that the applicant has acquiesced in the existence of the respondent trading as "Hyperama"
since 1963 and made no attempt until 1983 to prevent such trading. Consequently the applicant has waived any rights it might have.
Alternatively, applicant is estopped from enforcing any right it might have to prevent the respondent from trading as Hyperama. It is common cause that the applicant is a 50% shareholder of O.K. Bazwwars (Lesotho) Limited which operates the store in Maseru under the name O.K. Bazaars. It was submitted that the
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managers and employees of O.K. Bazaars (Lesotho) Limited must have been aware of the respondent's use of the name "Hyperama" for the five years but did nothing.
One of the managers of O.K. Bazaars (Lesotho) Limited a Mr. M.J. Prins admits that in June, 1987 when he was transferred to Maseru he saw one of the respondent's stores and was told by his staff that it had been there for some years. He thought it was not necessary to inform any one of his superiors on the Board of O.K. Bazaars (Lesotho) Limited. I am of the view that Mr. Prins was under no obligation to inform the applicant because O.K. Bazaars (Lesotho) Limited is a separate entity from the applicant. The. mere fact that the applicant holds 50% of the shares of O.K. Bazaars (Lesotho) Limited does not mean that it (Applicant) owns the company. If Mr. Prins was negligent in not informing the applicant about the existence of the respondent's Hyperama stores, I do not think that the applicant can be blamed for that. Mr. Prins is not an employee of the applicant.
I am satisfied by the evidence before me that the applicant became aware that the respondent was trading under the name "Hyperama"
in May, 1988 and took immediate steps to stop the respondent. Acquiescence/waiver or estoppel cannot apply to the applicant.
The respondent's case is that there is a vast difference between the operations of an O.K. Hyperama and the respondent's stores. The O.K. Hyperama stores are enormous retailing stores which can be situated only in densely populated areas in large shopping centres where there is provision for parking. Not one of
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O.M. Hyperamas is less than 8000 sq. metres in size. There is a great disparity in the size and type of operation of the O.M. Hyperama and the respondent's stores.
It seems to me that the disparity in size does not make much difference in the action for passing off. Looking at the name "Hyperama" on the front of respondent's stores (Annexures "GM8" and "GM9") and comparing them with the applicant's stores
Annexure "GM6"), there is very striking similarity which is likely to confuse the customers or potential customers of the applicant.
For the reasons stated above I make the following order;
The RULE NISI in paragraph 2 of the Order of Court dated the 8th June, 1988 is confirmed,
In regard to damages the application is postponed to date to be arranged with the Registrar in order that the question of damages
suffered by the applicant may be investigated and determined by the Court.
J.L. KHEOLA
JUDGE
17th October, 1988.
For the Applicant - Mr. C.J. Pearson
For the Respondent Mr. Du Toit
