Merchandise Marks Act – false track descriptions, prohibited marks and ambush marketing

The Merchandise Marks Act no. 17 of 1941 is an Act mainly aimed at preventing the application of false trade descriptions to goods, and their sale, and also allows the Minister of Trade and Industry to prohibit the use of certain marks. The Act was amended in recent years, mainly to repeal provisions relating to counterfeit goods in view of the Counterfeit Goods Act. The Act creates a number of criminal offences in relation to the unlawful use of trade descriptions and emblems.

In addition, the Act provides for the protection of prohibited marks and continuous provisions relating to ambush marketing.

Where a trader conducts business in contravention of the provisions of the Act, any person may lay a complaint with the South African Police Service and institute criminal proceedings. Such a person may also approach the High Court for suitable relief even if criminal proceedings are not instituted.

For the full text of the latest version of the Act, please click here.

Definition

“Trade description” is defined in the Act to mean any description, statement or other indication, direct or indirect, as to the number, quantity, measure, gauge or weight of any goods, or as to the name of the manufacturer or producer, or as to the place or country in which any goods were made or produced, or as to the mode of manufacturing or producing any goods, or as to the material of which any goods consist, or as to any goods being the subject of an existing patent, privilege or copyright, and includes any figure, word or mark which, according to the custom of trade, is commonly taken to be an indication of any of the aforementioned matters, but does not include a trade mark.

“False trade description” means any trade description which is false in a material respect as regards the goods to which it is applied, and includes every alteration of a trade description, whether by way of addition, effacement or otherwise, if that alteration makes the description false in a material respect.

The following acts are deemed to amount to the application of a trade description to goods:

• the application of a trade description to the goods themselves or to any covering, label or reel in or with which the goods are sold;
• the placement, enclosure or annexure of the goods in, with or to any covering, label, reel or other thing to which that trade description has been applied;
• the use, in connection with the goods, of a trade description in such a manner as to be likely to lead to the belief that the goods are designated or described by that description.

The following acts are deemed to amount to the application of a false trade description to goods:

• the application to goods of any word, name, letter, figure or mark, or arrangement or
• the sale of goods which having been used, have been reconditioned, rebuilt or remade, whether in the Republic or elsewhere, and which bear the registered trade mark of the original maker or seller of the goods, without having applied to them in a conspicuous manner words stating clearly that the goods have been reconditioned, rebuilt or remade, as the case may be
• a combination thereof, other than a trade mark, as is likely to lead to the belief that the goods are the manufacture or merchandise of some person other than the person whose manufacture or merchandise they really are.

Prohibited acts

Acts that constitute offences in terms of the Act include:

• the application of any false trade description to goods
• the alteration of any trade mark, whether by addition or effacement or in any other manner
• the sale, letting, offering for sale or hiring of any goods bearing false trade descriptions or in relation to which a trade mark has been altered in any manner
• the sale of imported goods bearing the name or mark of a South African manufacturer or trader that are unaccompanied by an indication of origin
• the sale of imported goods bearing marks or trade descriptions in an official language of the Republic that are unaccompanied by an indication of origin
• the use by any person, in connection with his or her trade, business, professional occupation, or in connection with a registered trade mark or mark or trade description applied by him or her, of certain emblems, such as the coat of arms of the Republic, the name or portrait of any current or former president of the Republic or any other marks or emblems prohibited by the Minister of Trade and Industry
• the purchase or sale of any container to which have been indelibly applied words in any official language of the Republic stating plainly that the container is the property of a named person
• the sale of any goods contained in any such abovementioned container without the consent, in writing, of the person so named, unless those goods are the property of or have been produced or manufactured by the person so named

Ambush marketing

Section 15A was added with effect from 30 December 2002. The Minister of Trade and Industry may declare an event (which means a show, exhibition or competition of a sporting, recreational or entertainment nature which is held in public as newsworthy or attracts public attention and is financed or subsidised by commercial sponsorship and includes a broadcast) a “protected event” if he is satisfied that the staging of the event is in the public interest and creates sufficient opportunities for small businesses and particularly those of previously disadvantaged communities.

Once an event is so declared, for a specific time (which may not be longer than the month after the termination of the event), no person may use any mark or trade mark in relation to that event and thereby derive special promotional benefit from the event, without the prior authority of the organisers of the event. Any person not complying is guilty of an offence.

The prohibition extends to the use of visual reproduction and available reproductions of the trade marks or marks or use in promotional activities which directly or indirectly bring the trade mark or mark into association with or allude to the event.

Criminal complaints

Procedure

• Any interested person may lay an appropriate complaint with an inspector, which is any officer of the South African Police Service, the Commissioner for Customs and Excise, any officers defined in the Customs and Excise Act, or any other officer appointed by the Minister of Trade and Industry.
• The inspector may, under authority of a warrant issued by a magistrate or a judge, enter and search any premises, examine any documents, request the person in control of the premises to furnish information and seize, for further examination and safe custody, any document which has a bearing on the alleged offence. Any such search and seizure shall be executed by day unless the execution thereof by night is justifiable and necessary and any document or thing so seized shall be open for an inspection by any interested person.
• The inspector may also seal or otherwise safeguard any premises and take any steps that he or she considers necessary to terminate the commission of an offence.
• If the inspector believes that there are reasonable grounds for believing that an appropriate warrant would be issued if such inspector were to apply for that warrant, but that the delay in obtaining the warrant would only defeat the purposes of entry, such inspector may enter any premises (other than private dwellings), and perform any of the acts set out above without a warrant. In that instance, the inspector must, within 10 days, approach a magistrate or a judge to confirm the steps so taken.
• If criminal proceedings are not instituted in connection with any document or thing seized under the Act within a reasonable time, it shall be returned to the person from whom it was seized if he or she may lawfully possess it, alternatively, it may be returned to the person who may lawfully possess it.
• After completion of any such criminal proceedings, the court may order that the document or the thing referred to above be destroyed or that it be released to a specified person.

Penalties

In the case of a first conviction, the penalties include a fine not exceeding R5 000 per article or item, or imprisonment for a period not exceeding three years, or both.

In the case of a second conviction, a fine not exceeding R10 000 may be imposed per article or item, or imprisonment for a period not exceeding five years, or both.