Authored By: Ayabulela Mqetheba
University of Stellenbosch
Case summary: Distillers Corporation (SA) Ltd v SA Breweries Ltd & Another; Oude Meester Groep Bpk & Another v SA Breweries Ltd 1976 (3) SA 514 (A).
Ayabulela Mqetheba
LLB (University of Fort Hare),
LLM student, Stellenbosch University, South Africa.
- Introduction
This vigorously contested litigation involved appeals heard by the supreme court of South Africa, appellate division.1 The matter adjudicated concurrent proceedings concerning trade mark infringement and the expungement of registered trade marks.2 The principal parties were Distillers Corporation (SA) Limited (Distillers),3a subsidiary of Oude Meester Groep Beperk, and the South African Breweries Limited (Breweries) and its subsidiary, Ohlsson’s Cape Breweries Limited (Ohlssons).4
In the court of first instance, both applications were dealt with together by COLMAN J COLMAN.5Judge held that Breweries had infringed Distillers trade marks and granted an interdict, while dismissing most of Breweries applications for expungement and disclaimers.6 This outcome was substantially reversed upon appeal to the full bench of the division (the court a quo), which set aside the interdict and granted the relief sought by Breweries regarding expungement and the entry of disclaimers.7 Distillers and Oude Meester Groep subsequently appealed the reversal to the appellate division.8
- Facts and origin of the dispute
Distillers, whose business is the large scale production and sale of wines and spirits,9held registrations for several trade marks, including variations involving the words OUDE MEESTER, OLD MASTER, and MEESTER.10 Breweries and Ohlssons have long been engaged in brewing and selling beer and other malt liquors.11
The litigation commenced on 28 August 1972 when Distillers and Oude Meester Groep applied for an interdict to restrain Breweries from infringing 13 of Distillers trade marks.12 The alleged infringement stemmed from Breweries extensively advertising and marketing a beer under the name MASTERBREW.13 Breweries admitted using the name MASTERBREW but denied infringement.14
Within a month, Breweries and Ohlssons launched a counter application seeking the expungement of Distillers 13 marks specifically registered for beer, ale, and porter.15 This application was based on section 36(1)(b) of the Trade Marks Act 62 of 1963 (“the Act”), alleging continuous non use of the marks for those beverages during the relevant period.16
The relevant period for proving non-use was five years preceding one month prior to the expungement application, specifically 22 August 1967 to 21 August 1972.17
A critical fact underpinning the expungement proceedings was that it was common cause that none of Distillers trade marks had ever been used for beer, ale or porter.18 Although registered for these goods, Distillers marks were primarily used for products such as liqueurs and brandy (e.g marks VIII and XVII).19
- Legal issues
The appellate division led by TROLLIP JA was required to determine the correctness of the court a quo’s rulings on three main issues:
3.1. Whether Distillers trade marks, registered for beer, ale, and porter, should be expunged for non-use under section 36(1)(b) of the Act.
3.2. Whether the use of Distillers associated trade marks for wines, spirits, or liquors (equivalent use) was sufficient grounds, under the first proviso to section 36(1), to refuse expungement for the goods (beer, ale, porter) for which the marks were not used.
3.3. Whether the court a quo correctly ordered the entry of disclaimers regarding the exclusive use of the word MEESTER in certain registered marks under section 18(b).
3.4. Whether Breweries use of the MASTERBREW mark infringed Distillers trade marks
- Reasoning and judgment on expungement
The core of the expungement proceedings rested on the judicial discretion granted under the first proviso to section 36(1).20 Once the applicant (Breweries or Ohlssons) established continuous non use for the statutory period, they were prima facie entitled to expungement.21 Distillers defence relied on the proviso, arguing that actual or equivalent use on related goods (wines, spirits) should save the registration for the non used goods (beer, ale, porter).22
The appellate division found that COLMAN J in the court of first instance had fundamentally misdirected himself.23 COLMAN J had adopted a general approach heavily influenced by the policy underlying section 53 (defensive trade marks), suggesting that the registered proprietor should be afforded the widest possible protection, including the penumbra of their mark, even for non used goods to avoid confusion.24
TROLLIP JA countered that this approach was too one-sided.25 The general policy of trade mark legislation remains rooted in the prerequisite of use or intention to use.26 Section 53 is a special exception and should not be inferred as generally affording a wider protection that neutralises the applicant’s prima facie entitlement to expungement.27 The discretion requires a judicial weighing up of the applicant’s statutory right to removal versus the proprietor’s interests in retention.28
The court proceeded to weigh the relevant factors concerning the expungement of marks registered for beer, ale, and porter.29 Factors supporting expungement, Breweries and Ohlssons are established producers of malt liquors,30 and they have a prima facie entitlement to expungement because Distillers had never used the marks for beer, ale or porter, despite many having been registered for 10 to 25 years.31 Distillers held no intention of using the attacked marks for beer, ale or porter.32 Breweries and Ohlssons would be substantially prejudiced if the registrations were maintained (potentially leading to a successful infringement suit against their MASTERBREW operations).33 Distillers had not sought protection for most marks under section 53 (defensive registration).34
Distillers used marks VIII and XVII extensively for liqueurs and brandy making OUDE MEESTER well known to the public and the liquor trade.35 There is some similarity between the beverages (both alcoholics, sold in the same shops). Potential prejudice to Distillers goodwill if the mark is expunged and subsequently used by another trader causing confusion.36
The court accorded little weight to the similarity of goods, noting that while both are alcoholic, they are different beverages, made by different processes and were historically produced by different concerns in South Africa.37 Furthermore, the prejudice risk was deemed negligible because the common law remedy of a passing-off action (section 43) serves as a practical and effective deterrent against confusing use of the mark after expungement.38 Distillers’ failure to use section 53 indicated a low perception of risk.39
TROLLIP JA concluded that the balance of factors did not favour refusing expungement if anything, the balance is in favour of expungement.40 On other side, the court held that the court a quo correctly expunged the attacked trade marks and Distillers appeal on this issue failed.41
- Reasoning and judgment on disclaimers
Breweries and Ohlssons applied for the entry of a disclaimer regarding the exclusive use of the word MEESTER in marks XII, XIII, and XIV.42 This claim was made under section 18(b) which concerns matter common to the trade or otherwise of a non-distinctive character.43 The court determined that the word MEESTER falls into the category of being of a non distinctive character.44 MEESTER or its English equivalent, MASTER is not coined or invented.45 It is an ordinary, well-known, laudatory word that implies a superior person or quality when used in relation to goods.46 Evidence showed that many trade marks on the register contain MEESTER or MASTER.47
The court reasoned that MEESTER, as incorporated into the marks under inquiry was neither inherently adapted nor had it become adapted by use to distinguish Distillers registered goods.48 Thus, the entry of disclaimers for marks XII, XIII, and XIV was correctly granted by the court a quo.49 The appellate division maintained that the form of the entry ordered should be construed as a disclaimer meaning Distillers disclaimed the right to the exclusive use of the word MEESTER.50
- Conclusion
The appeal in the infringement proceedings (concerning Breweries use of MASTERBREW) was contingent upon the validity and scope of Distillers trade marks.51 Since the marks alleged to have been infringed were either correctly expunged (I to XI) or subjected to a disclaimer regarding the core contested element (XII, XIII), the appellate division concluded that the appeal in the infringement proceedings must also fail and be dismissed.52
In the result, the appeals in both cases were dismissed with costs.
Comment
I agree with the judgment delivered by TROLLIP JA which affirmed the appellate division’s decision to grant expungement of Distillers trade marks and order disclaimers. This decision upholds the fundamental principles of trade mark legislation, ensuring that the statutory monopoly granted by registration is rooted in legitimate commercial use not merely in the registration itself. The successful application for expungement hinged on section 36(1)(b) which allows for removal if a continuous period of five years or longer elapsed without bona fide use. It was common cause that Distillers had never used any of the attacked trade marks for beer, ale or porter.
The critical issue was the judicial discretion under the first proviso, where Distillers argued that the use of associated marks for spirits and liqueurs (marks VIII and XVII) should save the beer registrations. The court correctly found that the court of first instance had erred by according to undue weight to the concept of defensive marks (Section 53), thereby misdirecting itself concerning the core purpose of trade mark law. The basic principle remains that the proprietor must use or intend to use the mark. Given that Distillers had shown no intention of using the marks for beer, ale or porter, and the non use had persisted for many years, the balance of equities favoured expungement against the proprietor’s claims for retention.
Furthermore, the appellate division was correct in ordering the disclaimer of the word MEESTER in marks XII, XIII, and XIV under section 18(b). MEESTER, being an ordinary word equivalent to MASTER is laudatory, connoting superior quality and is thus of a non distinctive character in trade parlance. Requiring a disclaimer ensures that Distillers cannot claim exclusive rights to this common descriptive term. The judgment reinforces that trade mark protection must align with the proprietor’s actual trade and restricts the ability to maintain registrations purely for the purpose of preventing other traders (like Breweries) from operating in a field where the mark is not used.
Reference(S):
1 Distillers Corporation (SA) Ltd v SA Breweries Ltd & Another; Oude Meester Groep Bpk & Another v SA Breweries Ltd (1976) (3) SA 514 (A).
2 Page 1 and 2.
3 Page 2.
4 Page 6.
5 Page 5.
6Ibid
7 Page 5 and 6.
8 Page 6.
9 Page 2.
10 Page 10 to 18.
11 Page page 3 and 55.
12 Page 2.
13 Page 2 and 3.
14 Page 3.
15 Page 3 and 4.
16 Page 3,4,23 and 24.
17 Page 8,9 and 24.
18 Page 10 and 24.
19 Page 10 and 65.
20 Page 28 and 29.
21 Page 38,40 and 41.
22 Page 24 to 27.
23 Page 45.
24 Page 33 to 35.
25 Page 36.
26 Page 37 and 38.
27 Page 41 and 42.
28 Page 40.
29 Page 71 and 72.
30 Ibid.
31 Page 52,53,72 and 73
32 Page 72 and 73.
33 Ibid.
34 Ibid.
35 Page 65,73 and 74.
36 Page and 74.
37 Page 62 and 65.
38 Page 68.
39 Page 70 and 71.
40 Page 75.
41 Ibid.
42 Page 75 and 76.
43 Page 76.
44 Page 78 and 79.
45 Page 80.
46 Page 80 and 82.
47 Page 81.
48 Page 82 and 83.
49 Page 83 and 84.
50 Page 86 and 87.
51 Page 87.
52 Ibid.
