THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

Reportable
Case No:  331/06

In the matter between:

COMMERCIAL AUTO GLASS (PTY) LTD

Appellant

and

BAYERISCHE MOTOREN WERKE
AKTIENGESELLSCHAFT

Respondent

Coram :
Harms ADP, Cloete, Heher, Combrinck, Cachalia JJA

Heard :
17 August 2007

Delivered :  7 September 2007

Summary:  Trade marks ─ infringement ─ use in relation to unauthorised spare parts

Neutral Citation: This judgment may be referred to as Commercial Auto Glass
(Pty) Ltd v BMW AG [2007] SCA 96 RSA

JUDGMENT

HARMS ADP/

HARMS ADP:

[1] The appellant, Commercial Auto Glass (Pty) Ltd, applies for leave to
appeal against a judgment of Prinsloo J in the high court, Pretoria, which held
that the appellant infringes certain trade marks belonging to the respondent,
Bayerische Motoren Werke AG, also known as ‘BMW’. Leave to appeal
depends on the appellant’s prospects of success and it is accordingly
necessary to consider the merits of the proposed appeal.

[2] This case was argued on behalf of the appellant as a matter of principle
with profound constitutional implications whereas, on analysis and shorn of all
the unnecessary adornment, the issues are factual and fall within a narrow
compass. First the statutory setting: BMW’s claim is based primarily on the
provisions of s 34(1)(a) of the Trade Marks Act 194 of 1993, which is in these
terms:

‘The rights acquired by registration of a trade mark shall be infringed by—

(a)
the unauthorized use in the course of trade in relation to goods or services in
respect of which the trade mark is registered, of an identical mark or of a mark so nearly
resembling it as to be likely to deceive or cause confusion’.

The appellant relies mainly on the statutory ‘exception’ contained in s 34(2)(c),
namely:

A registered trade mark is not infringed by—

. . .
(c)
the bona fide use of the trade mark in relation to goods or services where it is
reasonable to indicate the intended purpose of such goods, including spare parts and
accessories, and such services;
. . .
provided further that the use contemplated in paragraph . . . (c) is consistent with fair
practice.’

[3] This means that BMW had to establish (a) its trade mark registrations;
(b) unauthorised use in the course of trade by the appellant of those trade

marks; (c) of an identical mark; (d) in relation to the goods in respect of which
the mark is registered. Concerning (c), BMW could, on different facts, have
relied on the use of a mark so nearly resembling its registered trade mark ‘as
to be likely to deceive or cause confusion’ but that is not its case. It relies on
use of an identical mark and that by its very nature deceives and confuses.1 In
addition, as this Court recently held in line with developments in Europe and
the United Kingdom, the defendant’s use must have been ‘trade mark use’,
meaning that –

‘[t]here can only be primary trade mark infringement if it is established that consumers are
likely to interpret the mark, as it is used by the third party, as designating or tending to
designate the undertaking from which the third party’s goods originate.’2

‘What is, accordingly, required is an interpretation of the mark through the eyes of the
consumer as used by the alleged infringer. If the use creates an impression of a material link
between the product and the owner of the mark there is infringement; otherwise there is not.
The use of a mark for purely descriptive purposes will not create that impression but it is also
clear that this is not necessarily the definitive test.’3

[4] BMW relied on three registration certificates4 relating to goods in class
12 (schedule 3) described as ‘vehicles . . . [and] . . . parts of and accessories
for all the aforegoing.’ The registrations are all for word marks, namely ‘BMW’,
‘BM’ and ‘3 Series’. It should be noted that the appellant did not attack the
validity of any of these marks and did not ask for the rectification of the
register. The registrations are, accordingly, deemed to be in order.

[5] The appellant is in the business of supplying and fitting accessories
and spare parts for all types of vehicles but the main part of its business (if
regard is had to its name and the signage on its premises) is the supply of
windscreens for motor cars. It is apparently not a manufacturer. It is fair to

1 Cf Berman Brothers (Pty) Ltd v Sodastream Ltd 1986 (3) SA 209 (A) at 232H-233A.

2 Verimark (Pty) Ltd v BMW AG [2007] SCA 53 (RSA) para 5.

3 Verimark (Pty) Ltd v BMW AG para 8.

4 TM 79/06501, TM 98/17028, and TM84/01620 respectively.

conclude from the affidavits and the argument that the appellant is not in the
business of supplying ‘original equipment’, i.e., spare parts made by or under
the control or with the authorisation of the vehicle manufacturer. Instead, it
supplies what is sometimes referred to as ‘pirate’ or ‘counterfeit’ parts
although these terms fit uncomfortably because unauthorised parts may be
legitimate because they may not infringe any rights of the original
manufacturer.

[6] In the course of its business the appellant supplies and fits
unauthorised windscreens for different BMW models, something about which
BMW cannot and does not complain.  BMW’s case concerns the manner in
which this business is conducted. The appellant advertises windscreens under
its name, Commercial Auto Glass, and it lists them with their prices in this
fashion:

‘BMW E30 3 Series 83-92

R355
BMW E36 3 Series 91-97

R460
BMW E46 3 Series 98

R490’

It likewise lists windscreens for some other motor car series such as Fiat, Ford
and Honda and also for some trucks and bakkies. On the windscreen itself
one finds an embedded marking with the appellant’s name, a statement that
the glass is laminated and shatterproof, and serial numbers. There is also a
stick-on label which includes the mark ‘BM E 36’. In quoting it undertakes to fit
a ‘BMW E36’ windscreen and its invoices will describe the goods sold as
‘BMW E36 2 DR 92-97 WS’ (WS obviously meaning windscreen).

[7] It follows that the appellant is using BMW’s registered trade marks
without authority in the course of trade in relation to the goods in respect of
which the mark is registered.5 But, says the appellant, it is using the trade
marks to inform the public that it is selling windscreens that fit BMW cars and
not that the windscreens are original BMW windscreens and that its use is,

5 The somewhat faint argument that there is no evidence that windscreens may be registered
in class 12 need not be considered.

accordingly, not trade mark use. In other words, it is not misleading the public
and, in any event, speech that is not misleading is constitutionally protected
speech.

[8] The object of trade mark law as reflected in s 34(1)(a) and(b) is to
prevent commercial ‘speech’ that is misleading. Trade mark use that is not
misleading (in the sense of suggesting provenance by the trade mark owner)
is protected, not only constitutionally but in terms of ordinary trade mark
principles. As Justice Holmes said: 6

“When the mark is used in a way that does not deceive the public, we see no sanctity in the
word as to prevent its being used to tell the truth.”

[9] The European Court of Justice pointed out that the question whether
advertising may create the impression that there is a commercial connection
between someone like the appellant and the trade mark owner is a question of
fact to be decided in the light of the circumstances of each case.7 Especially
when dealing with spare parts and alleged counterfeits, the issues are not
always black and white. It all boils down to a question of trade mark use
because, as Webster & Page8 point out,

‘a phrase such as “XYZ Spare Parts” [where XYZ is the registered trade mark] would not be
protected by the section while “Spare parts for XYZ goods” would clearly fall within the
provisions of section 34(2)(c).’

[10] At best for the appellant, its use of the BMW mark is capable of two
constructions: on the one hand it may be interpreted as informing the public
that it is supplying unauthorised windscreens that fit BMW cars or, on the

6 Prestonettes Inc v Coty 263 US 359 at 368 (1924). Quoted by Jonathan Moskin
‘Frankenlaw: The Supreme Court’s Fair and Balanced Look at Fair Use’ 95 (2005) The
Trademark Reporter 848 at 851.

7 Bayerische Motorenwerke AG (BMW) and BMW Nederland BV v Deenik Case C-63/97.

8 South African Law of Trade Marks (loose-leaf edition) para 12.40. The authors quote
Bayerische Motoren Werke AG v BW Tech 2004 Burrell’s IP 170 and Aktiebolaget Volvo v
Heritage (Leicester) [2000] FSR 253. For further case-law guidance see Bayerische
Motorenwerke AG (BMW) and BMW Nederland BV v Deenik Case C-63/97 (ECJ).

other hand, it may mean that it is supplying BMW windscreens. It may be that
some customers will realize, having regard to the price or the fact that the
appellant does not advertise itself as an ‘authorised dealer’, that the goods are
not genuine BMW parts. But that is not the test. If, on balance (as I find), a
substantial number of persons may be deceived by interpreting the actions of
the appellants as representing that the windscreens are genuine BMW parts,
the argument that the use is not trade mark use must fail. This is not really an
issue in the case because, as the high court mentioned, the appellant did not
dispute BMW’s allegations in the founding affidavit that its use ‘is likely to give
the impression to a substantial number of potential customers that the
windscreens being offered for sale by the [appellant] emanate from or are in
some way connected with or associated with [BMW]’ or that ‘the impression is
created that these are genuine BMW windscreens’.

[11] The question of trade mark use under s 34(1)(a) is closely connected to
the ‘exceptions’ listed in ss (2), more particularly the one relied in para (c)
quoted earlier because the provisions of ss (2) are in a sense the mirror image
of the trade mark use requirement of ss (1)(a) and (b). The next question is
whether the appellant’s use of the marks on spare parts amounted to bona
fide and reasonable use consistent with fair practice. Once again, whether the
use by the appellant is bona fide, reasonable and consistent with fair practice
is a factual question9 on which the court below held against the appellant. On
appeal we should generally defer to the judgment of a lower court unless that
court clearly erred. The appellant did not seek to discharge that burden but
simply reargued the matter as if the lower court had not spoken.

[12] On the question of bona fides the high court (correctly in my judgment)
relied on and applied a dictum of du Plessis J in an unreported case where
the learned judge said the following: 10

9 The Gillette Company and Gillette Group Finland Oy v LA-Laboratories Ltd Oy [2005] FSR
37, Case C-228/03 (ECJ).

10 Bayerische Motoren Werke AG v Autostyle Retail (TPD case 5887/2005).

‘Use will not be bona fide, however, if the user does not unequivocally make it clear that his
goods are not connected in the course of trade with the proprietor of the trade mark. It follows
that bona fide use in s 34(2)(c) means honest use of a trade mark, without the intention to
deceive anybody and while unequivocally making it clear that the goods are not connected in
the course of trade with the proprietor of the trade mark.’

[13] The European Court of Justice in the Gillette case11 espoused a similar
approach:

‘In that regard [dealing with honest practices], account should be taken of the overall
presentation of the product marketed by the third party, particularly the circumstances in
which the mark of which the third party is not the owner is displayed in that presentation, the
circumstances in which a distinction is made between that mark and the mark or sign of the
third party, and the effort made by that third party to ensure that consumers distinguish its
products from those of which it is not the trade mark owner.’ [At para 46. Emphasis added.]

[14] The question that arises is why the appellant insists on conducting its
business in the manner described. Why can it not, through the use of a few
words, convey the true facts to the public? The answer does not appear from
the papers and none was suggested during argument save for relying on the
appellant’s ‘right’ to act in the manner it does. From this one can only deduce
that the appellant wishes to obtain an unfair advantage from the use of the
trade marks and does not wish to inform the public of the true facts
concerning the origin of the windscreens. In other words, the argument that
the advertisements ‘consist wholly of descriptive, truthful commercial speech’
is without factual foundation. On that finding the use cannot be bona fide or
consistent with fair trade practice and it follows that the high court’s finding
that the appellant is infringing BMW’s trade marks under s 34(1)(a) was
correct.

11 The picture of the packaging can be found on the following website (the Finnish Supreme
Court's subsequent decision applying the ECJ’s judgment):
http://www.finlex.fi/fi/oikeus/kko/kko/2006/20060017.

[15] From the narrative above it appears that the appellant also uses the
designations E30, E36 and E46. These are not registered trade marks but
BMW relied on s 35 of the Act which deals with the protection of an
unregistered trade mark which may be entitled to protection under Article 6 bis
of the Paris Convention as a well-known trade mark (i. e., well known in the
Republic as being the mark of person who is a national of a convention
country). Section 35(3) provides that:

‘The proprietor of a trade mark which is entitled to protection under the Paris Convention as a
well-known trade mark is entitled to restrain the use in the Republic of a trade mark which
constitutes, or the essential part of which constitutes, a reproduction, imitation or translation of
the well-known trade mark in relation to goods or services which are identical or similar to the
goods or services in respect of which the trade mark is well known and where the use is likely
to cause deception or confusion.’

[16] It is not necessary to traverse all the aspects of this provision because
of the finding of the high court that BMW has established its entitlement to
protection and because the appellant has restricted its argument to one
aspect only, namely that these marks cannot be trade marks. They are,
according to the submission, merely descriptive of certain models of BMW
cars and purely descriptive marks cannot be trade marks because they cannot
serve to distinguish in the trade mark sense by serving as a badge of origin. I
disagree that these marks are purely descriptive. They perform in my view two
functions: to distinguish one BMW model from the other and to serve as a
badge of origin. To use a classic example, the mark ‘E Type’ not only
described a specific model Jaguar car but also identified the car as being of a
particular provenance. It follows that the appellant has also in this regard no
prospects of success on appeal.

[17] It is, however, necessary to grant leave to appeal because of the form
of the order issued. In the first instance, it contains two obvious errors, namely
it granted an order also under s 34(1)(b) – it is not possible to infringe under
para (a) and (b) at the same time and there was no finding in the judgment of
such an infringement – and it granted an order based on passing-off,
something that was not in issue during the hearing in the court below. These

errors occurred because an order was issued in terms of the notice of motion
without reformulation considering the terms of the judgment itself. These
errors could have been rectified by the court below under Uniform rule 42 and
do not justify a costs order in favour of the appellant on appeal.

[18] In addition, during the course of argument this Court raised the
question whether the orders granted were capable of misinterpretation and
misapplication. This issue was not raised by the appellant and, accordingly,
does not justify a costs order in its favour. For the sake of good order leave to
appeal consequently has to be granted, the appeal has to succeed in the
limited respects mentioned, and a new order will issue.

[19] The following order is made:

1.
Leave to appeal is granted.
2.
The appeal is upheld to the extent that the following order is substituted
for the order of the court below:
‘(a)
The respondent is restrained in terms of s 34(1)(a) of the Trade
Marks Act, 1993, from infringing the rights of the applicant in any of its
trade mark registrations 1979/06501, 1998/17028 and 1984/01620 in
relation to windscreens and windows for motor vehicles.
(b)
The respondent is restrained in terms of s 35 of the Trade
Marks Act, 1993, from infringing the rights of the applicant in any of its
unregistered well-known trade marks E30, E36 and E 46 in relation to
windscreens and windows for motor vehicles.
(c)
The respondent is to pay the costs, including the costs of two
counsel.’
3.
The appellant is to pay the costs, including the costs of two counsel in
relation to both the application for leave to appeal and the appeal.

_______________________
L T C HARMS
ACTING DEPUTY PRESIDENT

AGREE:

Cloete JA
Heher JA
Combrinck JA
Cachalia JA
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From: The Registrar, Supreme Court of Appeal

Date:
7 September 2007

Status:
Immediate

Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal

COMMERCIAL AUTO GLASS (PTY) LTD v BMW AG

The SCA dismissed this appeal and confirmed the infringement of the BMW trade mark by
a dealer in unauthorised (‘pirate’) windscreens that fit BMW vehicles. The case concerned
the method by which the appellant advertised and marketed its windscreens.

At best for the appellant, its use of the BMW mark was capable of two constructions: on
the one hand it could be interpreted as informing the public that it is supplying
unauthorised windscreens that fit BMW cars or, on the other hand, it may mean that it is
supplying genuine BMW windscreens.
However, the court found that its use was likely to give the impression to a substantial
number of potential customers that the windscreens being offered for sale by the appellant
emanate from or are in some way connected with or associated with BMW and are
genuine parts.

The court further held that the appellant’s use of the BMW marks on spare parts did not
amount to bona fide and reasonable use consistent with fair practice. It would have been
very easy for the appellant to inform the public of the true state of affairs.
---ends---