Can failure to take action pose a bar to later action?

By Larissa Holtzhausen on 11 June 2018

The recent High Court decision in Honda Giken Kogyo Kabushiki Kaisha t/a Honda Motor Co Ltd v Big Boy Scooter [2017] ZAGPPHC 513 is a lesson to all businesses and trade mark proprietors to keep a wary eye on the market as well as the Registry and ensure that the use of confusingly similar marks by competitors is attended to swiftly and without hesitation. 

According to the court in this case, failure by a trade mark proprietor to timeously assert rights could have exceptionally detrimental consequences. 

In the above-mentioned case, the applicant, Honda, sought an interdict in terms of sections 34(1)(a) and 34(1)(c) of the Trade Marks Act, against the respondent, Big Boy Scooter.

The applicant, a well-known Japanese company and one of the world's largest motorcycle manufacturers, has been trading in South Africa since 1964, and using the registered trademarks CGL and CRF in respect of motorcycles with various engine capacity sizes. Depending on the engine size, numerals would attach to these letters (for example CGL125). 

The respondent, Big Boy Scooter, imports and distributes motorcycles to retailers within South Africa, and had been using variations of the marks CGL, CCL and CRF in relation to these goods (similarly attached to numerals designating engine size of the vehicle). 

Honda alleged that this use constituted an infringement of its trade mark registrations and sought and interdict based on the contention that use of the marks by Big Boy was both likely to cause confusion and likely to take unfair advantage of, or be detrimental to, the distinctive character or repute of the Applicant's well-known trade marks. 

A standard examination of the similarity of the marks lead to an expected conclusion; that the respondent had essentially replicated the dominant feature of the applicants mark and as such use by the respondent was likely to lead to consumer confusion as to the source of the goods. The court further held that the mere fact that the respondent added matter, in this case different numbers, to the trademark did not detract from the fact that the striking and dominant feature of the marks was the same.

The respondents argument that the presence of the Big Boy mark alongside the affected mark would eliminate confusion was rejected by the court as per the dicta in Lucky Star Ltd v Lucky Brands (Pty) Ltd and others 2017 (2) SA 588 (SCA) that a similarity enquiry “is confined to the marks themselves and that no regard should be had to other features of the get-up or other indications of origin of the goods as actually marketed by the [appellant] and the [respondents] respectively”.

The most interesting part of the judgement, however, comes towards the end, where the court discusses the possible defences of acquiescence and estoppel. Acquiescence has been described as the “equitable principle that if a person lies by with a full knowledge of his rights and of the infringement of those rights, he is precluded from afterwards asserting them”.  Essentially, the principle dictates that if a party does not act timeously in enforcing its rights, it may forfeit the rights or be precluded from enforcing them. 

Big Boy submitted that it introduced the brands CGL125 and CRF in 2006 and 2010 respectively, and that Honda had been aware of the use of CGL since 2008 and since 2010 in respect of the use of CRF but did not take action until 2015. 

Had Honda, by allowing the use of the mark by Big Boy to go on for such an extended time, become disentitled to restrain it?  The court relied on Turbek Trading CC v A & D Spritz Ltd and Another to reject this argument confirming that acquiescence no longer forms a part of our law. 

Estoppel, however, is still an established defence according to the court, and has application in trade mark infringement cases.  Estoppel becomes relevant where one party makes a representation to another party, either by way of words or conduct, and the latter party, taking this representation to be truth, acts on it to his detriment, or would suffer prejudice if the first party could deny the truth of the representation. In such cases the first party may be estopped (precluded) from denying the truth of his representation. 

It is clear from this that some sort of misrepresentation is required to ground a defence of estoppel. However, it is established law that silence can indeed, in certain circumstances, amount to a representation. This is so in situations where the silent party should have foreseen that the other party would interpret the silence in a certain way, in which event the silent party had a duty not to merely remain silent but to speak out. 

As you can see, the line between acquiescence and estoppel is by no means obvious. The vital element distinguishing the two is that in cases where no active representation has been made, estoppel will become a valid defence only if the relevant party had, in the circumstances, the obligation to speak out. This brings a reasonableness test into the equation. In such situations the enquiry will turn on whether a reasonable person in the trade mark proprietor’s position should have known that the other party (the infringing party) would see the proprietors silence and lack of objection regarding the use of the trade mark as acceptance or even as an implied license and would act on this to its detriment.  

What does this mean for trade mark proprietors? Essentially it constitutes a warning.

Though it may not be a simple task for a party invoking the defence of estoppel in a trade mark infringement case to succeed, the defence is a valid one in our trade mark law. Trade mark proprietors should therefore guard against this eventuality by making timely objections to infringements. The crucial take-away from the case is that trade mark proprietors should actively monitor of the state of the Trade Marks Register and the marketplace for impingements upon their rights, and object to potentially infringing use at the earliest possible moment. 

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