The outbreak of the COVID-19 pandemic has devastated multiple industries and caused a rapid disruption of global supply chains. In an effort to curb the spread of the virus, South Africa has, like many other countries worldwide, implemented strict lockdown measures which have restricted people’s movement and brought most commercial activity to a standstill.
Many businesses across various industries are currently unable to operate and, in some cases, maintain use of their trade marks. Unfortunately, there is currently no way of knowing how long these businesses will be restricted from trading and, in so doing, make use of their brands, as there is no knowledge of when the outbreak will abate. This pandemic therefore raises the question of whether the trade marks of the impacted enterprises will, in due course, face the risk of cancellation based on non-use, or if the COVID-19 pandemic would constitute a valid defence to a non-use action.
The “use it or lose it” rule is a long-standing principle of trade mark law which requires trade mark owners to make continuous use of their trade marks in order to retain their trade mark rights. In South Africa, this principle is set out in Section 27(1)(b) of the Trade Marks Act, 194 of 1993 which provides that an “interested person” can apply to cancel a trade mark registration if there has been no bona fide (good faith) use of the trade mark for a continuous period of five years or longer, from the date of issue of the registration certificate. Despite this, the Trade Marks Act recognises that there can be special circumstances outside the control of the trade mark proprietor which may prevent use of their mark. According to Section 27(4) of the Act, non-use of a trade mark resulting from special circumstances in the trade will not result in the cancellation of a trade mark.
The defence of special circumstances in the trade was raised in the famous McDonald’s Corporationi case in which McDonalds sought to make out a case that political sanctions against apartheid had prevented it from using its marks in South Africa. The court a quo stated that the proprietor of a trade mark who relies on this defence must show that their failure to use the trade mark was actually due to the special circumstances in trade, and not a mere continuation of their previous inaction.
This defence was also considered in the case of Ronald Leslie Fivelman v Country Road Clothing (Pty) Ltdii, where the Deputy Registrar held the following:
“The circumstances must not be peculiar to an individual trader but must be circumstances in the trade. … Reliance on special circumstances would also have to be coupled with the residual intention to continue trading in South Africa once those circumstances came to an end. Without that, no reliance on special circumstances will assist the trade mark owner. Clearly legislation, whether enacted by the South African Government or by any foreign Government, putting an end to the continued operation of the trade mark owner’s business in South Africa would constitute special circumstances in the trade.”
With the above principles in mind, it appears likely that the non-use of a trade mark due to restrictions brought about by the COVID-19 pandemic could constitute a defence to a non-use cancellation action. However, the trade mark owner would have to provide evidence that they were unable to use their mark due to legal restrictions impacting the sale of goods or offer of services in relation to which their mark has been registered. Furthermore, the trade mark owner would need to demonstrate their intention to resume their use of the trade mark, once the special circumstances no longer exist.
Trade mark owners who are currently restricted from trading are advised to take a considered approach in preserving their trade marks, in order to mitigate against the risk of a cancellation action. Possible ways of doing this include maintaining an online presence and/or a website on which the trade mark is used, and clearly communicating their intent to resume trading activities when the lockdown is lifted.
i McDonald’s Corporation v Joburgers DriveInn Restaurant (Pty) Ltd; Dax Prop CC v McDonalds Corporation; McDonald’s Corporation v Joburgers DriveInn Restaurant (Pty) Ltd (unreported judgment TPD Southwood J 5 October 1995) p 55
ii Ronald Leslie Fivelman v Country Road Clothing (Pty) Ltd (unreported judgment of the Deputy Registrar 11 April 1995 4)