THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 73/2020

In the matter between:
BEYOND PLATINUM (PTY) LTD
APPELLANT
and
ELLIES ELECTRONICS (PTY) LTD                         FIRST RESPONDENT
ROBRIDGE CONSTRUCTION CC
T/A EASY STORE
SECOND RESPONDENT
MINISTER OF TRADE AND INDUSTRY
THIRD RESPONDENT
MINISTER OF POLICE
FOURTH RESPONDENT
CYANRE
FIFTH RESPONDENT
MUHAMMAD MOOLA STORAGE CC

T/A ALLIED STORAGE SOLUTIONS
SIXTH RESPONDENT

Neutral citation: Beyond Platinum (Pty) Ltd v Ellies Electronics (Pty) Ltd [2020]
ZASCA 154 (27 November 2020)
Coram:
NAVSA, PONNAN and CACHALIA JJA and MATOJANE and
MABINDLA-BOQWANA AJJA
Heard:

13 November 2020
Delivered:
This judgment was handed down electronically by circulation to
the parties' representatives by email, publication on the Supreme

Court of Appeal website and release to SAFLII. The date and
time for hand-down is deemed to be 09h00 on 27 November
2020.
Summary:   Counterfeit Goods Act 37 of 1997 – whether search and seizure
warrants lawfully obtained – whether interim interdict to preclude dealing in
offending goods properly sought.

ORDER

On appeal from: Gauteng Division of the High Court, Pretoria (Janse van
Nieuwenhuizen J sitting as a court of first instance):
The appeal is dismissed with costs, including costs consequent upon the employment
of two counsel.

JUDGMENT

Mabindla-Boqwana AJA (Navsa, Ponnan and Cachalia JJA and Matojane AJA
concurring):
[1] This appeal concerns the interpretation and application of provisions of the
Counterfeit Goods Act 37 of 1997 (the Act) in terms of which the appellant, Beyond
Platinum (Pty) Ltd (BP), caused to be issued three search and seizure warrants by a
magistrate in Johannesburg, authorising a search for and the seizure of alleged
counterfeit goods, at the business premises located at Village Deep Johannesburg,
of the first respondent, a listed company, Ellies Electronics (Pty) Ltd (Ellies).

[2] The Act prescribes the procedure to be followed to obtain such a warrant.
‘Protected goods’ in terms of the Act are inter alia defined as ‘goods featuring,
bearing, embodying or incorporating the subject matter of an intellectual property
right with the authority of the owner of that intellectual property right, or goods to
which that subject matter has been applied by that owner or with his or her authority’.
The purpose of the Act is to protect against the unlawful application of intellectual

property rights and against the release of counterfeit goods into the channels of
commerce. ‘Counterfeiting’ is defined in s 1 of the Act.1 Section 2 makes it an
offence to trade in counterfeit goods and to possess them for that purpose. Section 3
provides for the laying of a complaint by a person who has an interest in ‘protected
goods’, whether as owner, licensee, importer, exporter or distributor where such
person reasonably suspects that an offence referred to in s 2 has been or is being
committed or is likely to be committed.

[3] In terms of s 3(1) of the Act, persons identified in the preceding paragraph,
may lay a charge with an inspector, who, may include a police official as defined in
s 1(1) of the Criminal Procedure Act 51 of 1977, holding the rank of sergeant or a
higher rank. The inspector, in turn, in terms of s 4 of the Act, either on the strength
of the complaint or the strength of any other information at his or her disposal, if he
or she has reason to suspect that an offence contemplated in s 2(2) of the Act has
been or is being committed or is likely to be committed, or that an act of dealing in
counterfeit goods has taken or is taking place or is likely to take place, has the power
of search and seizure set out, fairly extensively, in s 4.

[4] The powers of search and seizure referred to in the preceding paragraph may
however, only be exercised if a warrant has been authorised by a judge of the high
court or a magistrate who has jurisdiction in the applicable area, if it appears to the
judge or magistrate, from information presented on oath or affirmation, that there
are reasonable grounds for believing that an act of dealing in counterfeit goods has
taken or is taking place or is likely to take place.

1 In s 1 of the Act: ‘counterfeiting’, inter alia, means ‘without the authority of the owner of any intellectual property
right subsisting in the Republic in respect of protected goods, the manufacturing, producing or making, whether in the
Republic or elsewhere, of any goods whereby those protected goods are imitated in such manner and to such a degree
that those other goods are substantially identical copies of the protected goods’; and ‘counterfeit goods’ are defined
as ‘goods that are the result of counterfeiting, and includes any means used for purposes of counterfeiting’.

[5] Pursuant to a search and seizure the inspector is required to complete an
inventory and to give notice to the parties concerned, including the suspect, in this
case Ellies, of the action taken and of where the goods are being kept.2 The
complainant must also be notified of the right to lay criminal charges with the police
and has three days after receiving such notice in which to do so.3 If upon the expiry
of that three day period a criminal charge has not so been laid, the relevant seized
goods must be released to the suspect.4 Goods must also be released if the State fails,
within ten working days after the date of the notice given to the suspect, to inform
the suspect by further written notice of its intention to institute criminal proceedings
against him or her for having committed an offence. Notice of intention to institute
civil proceedings must similarly be given within ten days by the complainant.5 That
then is the applicable scheme of the Act.

[6] I now turn to the facts of the present case. BP, on its website, describes itself,
in alliance with a company in Korea, as a developer and manufacturer of radio
frequency and infra-red remote controls units (RCUs). These devices are used in a
variety of applications in the domestic space, to control appliances including
television sets and decoders, which receive signals, from a source, that provides the
basis for television channel programmes. In the present case the RCUs in question,
which were the subject of the search and seizure warrants, are used to communicate
with or control a set-top box (a decoder) employed by DSTV, a well-known
broadcaster of television programs.

2 Section 7.
3 Section 7(2)(a) of the Act read with s 9(1)(a).
4 Section 9(1)(b).
5 Section 9(2).

[7] Ellies was established in 1979. It is a leading Southern African manufacturer,
importer, wholesaler and distributor of lighting, electrical and electronic products.
It also supplies aerial and satellite equipment, accessories and hardware to
commercial entities and the public at large. Ellies presently employs hundreds of
people and has a nationwide presence. Its assertion that it is a household name in
South Africa is unchallenged.

[8] For many years Ellies has been buying RCUs from a variety of sources and
packaging them for onward sales as Ellies’ products. They are replacements for
original equipment which get lost, broken, chewed by dogs, dropped in swimming
pools and the like. Judging from this litigation the market in relation to these
products is substantial.

[9] According to Ellies, the technology in respect of RCUs is not new. They have
a long history and are utilised in different forms premised on the same basic
technology, which is that frequencies are used on infra-red emissions to enable
communication between an RCU and a receiving device. Simply put, the RCU and
device talk to each other in binary code by means of an infra-red signal. All that this
means in the digital space is that information is represented in binary form, it allows
for numbers and letters to be represented and transmitted in this case by infrared
light pulses and permits communication between an RCU and a device. Ellies
explained that universal remote controls are becoming common place. RCUs,
according to Ellies, have been around for a long time and their manufacturers are
plentiful.

[10] For some time before the problems in the present case arose Ellies had been
buying RCUs from BP and on-selling them in Ellies’ packaging. The RCUs are
designed to look like the original DSTV RCU. The RCUs were sold through major

retail chains and through Ellies’ own distribution network. During the middle of
2017, Ellies took a decision to source RCUs directly from a manufacturer in China
rather than from BP. This decision was motivated by a lower price resulting in higher
profit margins for Ellies.

[11] On 11 December 2017, shortly before the Christmas period, acting on a
warrant obtained at the instance of BP, which had laid a complaint in terms of s 3 of
the Act and, after the steps set out earlier were followed, Inspector Khubeka, a senior
police official, arrived at Ellies’ head office with a posse of 20 people. They were
there to execute the warrant and to conduct a search and seizure operation on the
basis that Ellies was trading in counterfeit goods, more particularly any RCUs not
sourced from BP. BP claimed that the RCUs that were being seized were counterfeits
of its RCUs. It asserted intellectual property rights in respect of the RCUs.

[12] BP, in its complaint and in the litigation that ensued, claimed that its RCUs
embodied an infra-red protocol, known as MNEC IR protocol that it had developed.
According to BP, the protocol constitutes a computer program or literary work as
defined in the Copyright Act 98 of 1978.6 BP claimed to be the author of the protocol.
It alleged that the MNEC IR protocols were developed in or around 2009 by one
Kim Yong Tae, a citizen of the Republic of Korea who was an employee of a Korean
company known as Seoby Electronics Company Ltd, which BP had instructed to
develop the contested infra-red protocols, by providing the necessary specifications.

[13] The search and seizure operation had apparently, been conducted in a very
abrupt and aggressive manner. This caused panic and embarrassment to the company

6 In terms of the Copyright Act, a ‘computer program’ means ‘a set of instructions fixed or stored in any manner and
which, when used directly or indirectly in a computer, directs its operation to bring about a result’ and ‘literary work’
is defined inter alia to include ‘tables and compilations, including tables and compilations of data stored or embodied
in a computer or a medium used in conjunction with a computer, but shall not include a computer program’.

and its employees. This extended to Ellies’ customers who were apparently written
letters by BP to stop trading in the offending products. At a huge loss to it, Ellies
requested all of its customers to remove the stock from their shelves and return it to
Ellies.

[14] Millions of rands worth of Ellies’ stock was seized as was their entire
accounting record base and email servers. BP’s attorney was also in attendance. The
seized goods were kept in detention at the premises of a designated Counterfeit
Goods Depot7 of the second respondent, Robridge Construction CC t/a Easy Store
(Easy Store).

[15] Following the aforesaid seizure of goods, more RCUs ordered by Ellies from
China arrived in shipping containers. Without admission of liability and in order to
demonstrate good faith, while the copyright issue was being investigated, Ellies’
attorneys addressed a letter to BP’s attorneys, dated 11 January 2018, wherein it
undertook to quarantine the products in question on the following basis:
‘10.1 Remove the products from its shelves at its head office and all branches throughout South
Africa;
10.2 Replace the offending products at retail outlets with the new products ordered from and
supplied by your client which are presently in the process of being packaged by our client.
As soon as the packaging is complete the products will be distributed and swapped out
whereafter the return products will be placed in the caged storage facility controlled by your
client referred to in paragraph 10.3 below. In so doing our client will keep comprehensive
records of the quantity and movement of the products;
10.3 At no charge provide your client with a storage facility at its premises at 94 Eloff Street
Extension Johannesburg which area will be caged thereby securing access/agrees from the

7 In terms of s 1 of the Act ‘counterfeit goods depot’ means ‘a place designated under section 23 to be a counterfeit
goods depot, and includes any place deemed by section 7(1)(c) to be a counterfeit goods depot’. Counterfeit goods
depots are designated by the Minister of Trade and Industry in terms of s 23(1) of the Act.

cage controlled by your client who will hold the keys. Your client is also welcome to appoint
a security guard if it so wishes to ensure compliance with the undertaking.’

[16] This offer was accepted by BP via an email from its attorneys dated
12 January 2018 (the January 2018 agreement). On 29 January 2018 BP issued
summons against Ellies claiming damages for infringement of its alleged copyright.
Ellies filed a notice of intention to defend the action and thereafter in terms of rule
30 a notice that BP’s particulars of claim be set aside as constituting an irregular
proceeding on several grounds. As can be gathered from the letter set out in the
preceding paragraph, Ellies, in order to deal with holiday period demand was, in the
interim, compelled to purchase RCUs from BP.

[17] Three months later, despite the above, without warning, BP sought and
obtained two further search and seizure warrants, one issued on 17 May 2018 (the
second warrant) and the other on 29 May 2018 (the third warrant). The second
warrant related to the goods that were safely stored under lock and key, ie securely
embargoed in terms of the agreement between the parties. The third warrant
concerned goods that were kept at the designated Counterfeit Goods Depot (Easy
Store’s premises) pursuant to the first warrant. Both warrants were executed on
6 June 2018 at the premises of Ellies and Easy Store respectively. The reasons
advanced in the complaint affidavit deposed to by BP’s attorney in support of these
warrants were essentially the following:
‘28.  I was advised by the State Advocate charged with prosecuting the criminal complaint on
behalf of the National Prosecuting Authority that the Specialised Commercial Crime Unit
did not deliver to the Suspects a notice in terms of Section 9(2)(a)(i) of the Counterfeit Goods
Act. For this reason, the State Advocate declined to proceed with a criminal complaint.
29.  The Complainant wishes to have the Suspects prosecuted for the offences under the
Counterfeit Goods Act.

. . .
32.  In the circumstances, the Complainant requires a warrant to perform a search and/or to seize:
(a)  Any remaining counterfeit remote controls that are held by the Suspects at their premises
(94 Eloff Street Ext, Village Deep, Johannesburg) including any such remote controls
in the caged area; and
(b)  The counterfeit remote controls that are identified in the section 7 (1) (d) notice (annexure
“AD 2”) and currently held at the premises of Easy Store (11 Highview Boulevard,
Ferndale Ext 29, Randburg).
33. The search and/or seizure referred to would reinstate the timelines for compliance under the
Counterfeit Goods Act in relation to the counterfeit remote controls already seized and any
further counterfeit remote controls that can be seized from the Suspects premises.’

[18] Earlier, on 6 June 2018, Mr Paul Kampel, Ellies’ attorney, had telephoned
Mr Anthony Dessington, BP’s attorney, to enquire whether BP’s attorneys could
serve on them an application Ellies had launched in the Gauteng Division of the High
Court, Pretoria (high court) for the setting aside of the first warrant. In the founding
affidavit in support of the application, Ellies asserted that BP held no intellectual
property right in the RCU technology, that the technology had been developed by a
Japanese corporation in the past and was commonplace, that the MNEC protocol
was not a computer programme and that if this had been properly explained to the
inspector and the magistrate they would have appreciated that Ellies could
independently have created their own computer programme, which they did, that
generates signals readable by devices which recognise the IR protocol.

[19]  No mention was made by Mr Dessington during the telephone conversation
mentioned above, of the further warrants that were about to be executed on Ellies’
and Easy Store’s premises on that very day. The issuance and execution of the two
further warrants resulted in Ellies supplementing its papers and amending its notice

of motion. In turn, BP brought a counter-application seeking an interim interdict
geared towards preventing Ellies from trading in the seized goods pending the
outcome of the action it had instituted against Ellies.

[20] The application brought by Ellies served before Janse van Nieuwenhuizen J
in the high court, who granted an order setting aside all three warrants and ordering
the release of the goods seized in terms of those warrants. She further directed that
an inquiry be conducted in order to determine damages suffered by Ellies as a result
of such search and seizures. To show her displeasure at the way it had behaved she
granted a punitive costs order against BP and in effect dismissed its counter-
application. The appeal by BP is with her leave.

[21] The first issue for determination is whether the second and third search and
seizure warrants were obtained lawfully. The second is whether BP was entitled to
the interim interdict sought in the counter-application. Counsel for BP rightly
conceded that if the appeal on the first issue failed that disposed as well of the second
issue.

[22] In their papers and written argument, parties devoted much time and attention
to intellectual property rights issues, including the question of copyright and whether
the MNEC IR protocol is a computer program or literary work. This matter has less
to do with those questions (which are issues for the pending action) and more to do
with the interpretation and application of the Act.

[23] The remedies contained in the Act are far-reaching and highly invasive. They
impact negatively upon constitutionally enshrined rights to privacy, property
ownership and fair trial of a suspected trader. It is settled that these provisions should

be resorted to only when it is justifiable to do so.8 That is, when ‘there are reasonable
grounds for believing that an act of dealing in counterfeit goods has taken or is taking
place.’9 As was stated in LA Group Limited and Another v B & J Meltz (Pty) Limited
and Others,10 the use of the word ‘reasonable’ sets a standard that must be met by a
complainant before a warrant can be granted. The remedies are directed at preventing
fraudulent conduct and not ‘to give a party to a genuine trade mark [or copyright]
dispute a weapon to be used in terrorem against its opponent.’11

[24] Having regard to what is set out in the preceding paragraph and considering
that warrants are sought and granted ex parte, it is incumbent on a complainant to
place all the relevant information before the judge or magistrate who has to decide
the matter and to ensure that it is in compliance with the requirements of the Act. 12

[25] It is common cause that no notice of intention to institute criminal proceedings
was ever sent to Ellies. BP says as much in its complaint affidavit when it sought the
issuance of the second and third warrants as quoted in para 17 above. Because of the
criminal proceedings not being pursued at the expiry of the 10-day period after the
notice of seizure was given, Ellies was entitled to have the goods that were kept at
Easy Store’s premises released back to it. The inspector ought to have directed the
release of the goods in terms of s 9(3)(a). BP, instead, sought to have the timelines
for the institution of criminal proceedings reinstated by deceptively seeking a second
and third warrant. There is some force to the contention by Ellies that the first
warrant was unlawfully procured but there is no need to interrogate that question any

8 LA Group Limited and Another v B & J Meltz (Pty) Limited and Others [2005] ZAGPHC 23 (23 February 2005)
para 45. See also Cadac (Pty) Ltd v Weber-Stephen Products Company and Anothers 2005 JDR 0704 (W) para 17.
9 Section 3(1) read with s 6 of the Act.
10 Ibid fn 8.
11 Cadac fn 8.
12 Schlesinger v Schlesinger [1979] 3 All SA 780 (W); 1979 (4) SA 342 (W) at 349A.

further as it was common cause that the first warrant had lapsed and in any event
had been overtaken by the second and third warrants.

[26] As to the second warrant, all the offending goods were still in quarantine when
the warrant was sought and there was no indication that the undertaking to keep the
goods so quarantined would not be kept. Ellies in its undertaking had offered BP the
key to the premises where the goods were being kept and had offered it the option
of placing a security guard there to ensure compliance. There were no reasonable
grounds to suspect that in respect of those goods an act of dealing in counterfeit
goods was taking place. There was no basis for, nor was any provided for suspecting
that there were any more allegedly offending RCUs on Ellies premises.
Significantly, no evidence was presented that any remaining goods were found at
Ellies’ premises.

[27] The third warrant related to the goods that were kept at the depot, subsequent
to the first search and seizure. There was no indication that those goods could then
enter the marketplace at the instance of Ellies. The second and third warrants ought
not to have been sought or granted. All the warrants were correctly set aside and, for
all the reasons set out above the appeal must fail.

[28] As to costs, BP did not seek this court’s interference with the punitive costs
order in the event it were to be unsuccessful in the appeal. In any event, its conduct
justified the granting of that order. On appeal, Ellies sought the costs on the normal
party and party scale.

[29] In the result, the following order is issued:
The appeal is dismissed with costs, including costs consequent upon the employment
of two counsel.

_____________________________
N P MABINDLA-BOQWANA
ACTING JUDGE OF APPEAL

Appearances:

For appellant:

R Michau SC with K D Iles

Instructed by:                Dessington & Dessington Incorporated, Johannesburg
Symington De Kock Attorneys, Bloemfontein

For first respondent:
O Salmon SC with I Learmonth

Instructed by:

Kampel Kaufmann Attorneys, Johannesburg
Matsepes Incorporated, Bloemfontein.
SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

27 November 2020

STATUS

Immediate

Beyond Platinum (Pty) Ltd v Ellies Electronics (Pty) Ltd (Case no 73/2020) [2020] ZASCA
154 (27 November 2020)
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.
Today the Supreme Court of Appeal (the SCA) dismissed the appeal of the appellant, Beyond Platinum (Pty) Ltd
(BP), against the decision of the Gauteng Division of the High Court, Pretoria (the high court).
The matter dealt with the interpretation and application of the Counterfeit Goods Act 37 of 1997 (the Act) which
purpose is to protect against the unlawful application of intellectual property rights and against the release of
counterfeit goods into the channels of commerce. A person who has an interest in such protected goods whether
as an owner or licensee, among others and who reasonably suspects that an act of dealing in counterfeit goods has
taken or is taking place or is likely to take place, may lay a complaint with an inspector who may include a member
of the South African Police Service. Acting on the authority of a warrant, issued by a judge of the high court or a
magistrate, the inspector may search the premises where the offending goods are kept and seize such goods for
detention at a designated depot. Goods must be released to the suspect if upon the expiry of the time stipulated in
the Act, no criminal proceedings have been instituted against the suspect.
In this case BP laid a complaint with the inspector against the first respondent, Ellies Electronics (Pty) Ltd (Ellies),
that remote control units (RCUs) distributed by Ellies embodied an infra-red protocol, known as MNEC IR
protocol (the protocol) that BP had developed. BP contended that the protocol constituted BP’s computer program
or literary work as defined in the Copyright Act 98 of 1978. The protocol communicates with or controls a set-
top box (a decoder) employed by DSTV. Ellies denied that BP owned the protocol contending that the technology
used in RCUs is not new. They have a long history and are utilised in different forms premised on the same basic
technology, which is that frequencies are used on infra-red emissions to enable communication between an RCU
and a receiving device.
On 11 December 2017, after a warrant obtained at the instance of BP, which had laid a complaint in terms of s 3
of the Act, a senior police official conducted a search and seizure operation at Ellies’ premises, on the basis that
Ellies was trading in counterfeit goods. Millions of rands worth of Ellies’ stock was seized and kept in detention
at the premises of a designated Counterfeit Goods Depot of the second respondent, Robridge Construction CC t/a
Easy Store (the depot). Following the seizure of goods, more RCUs ordered by Ellies from China arrived in
shipping containers. Without admission of liability and as a show of good faith, in January 2018, Ellies undertook
to quarantine the offending RCUs pending the resolution of the dispute, which offer was accepted by Ellies.

The time in which to institute criminal proceedings against Ellies, pursuant to the December 2017 warrant, lapsed.
Despite the January 2018 agreement and without warning, BP sought and obtained two further search and seizure
warrants against Ellies on 17 and 29 May 2018 respectively. The purpose for these further warrants, according to
BP, was to reinstate the timelines for compliance under the Act in relation to the alleged counterfeit RCUs already
seized and any further counterfeit RCUs that could be seized from Ellies’ premises, in order to have BP prosecuted
under the Act. Both warrants were executed on 6 June 2018.
Ellies brought an application before the high court to set aside the three warrants which was successful. To show
its displeasure at the way it had behaved the high court granted a punitive costs order against BP. In turn BP’s
counter-application seeking an interim interdict to prevent Ellies from trading in the seized goods pending the
outcome of its action proceedings against Ellies was in effect dismissed. The matter came to the SCA with the
leave of the high court.

The SCA held that the remedies contained in the Act were far-reaching and highly invasive. They impact
negatively upon constitutionally enshrined rights to privacy, property ownership and fair trial of a suspected
trader. It reiterated a settled position that these provisions of the Act should be resorted to only when it is justifiable
to do so. The remedies are directed at preventing fraudulent conduct and not to give a party to a genuine trade
mark or copyright dispute a weapon to be used in terrorem against its opponent. Because the warrants are sought
and granted ex-parte it is incumbent upon the complainant to place all the relevant information before the judge
or magistrate who has to decide the matter and to ensure that it is in compliance with the requirements of the Act.
The SCA found it to have been common cause that the first warrant had lapsed and had been overtaken by the
second and third warrants. All the offending goods were still in quarantine when the second warrant was sought
and there was no indication that the undertaking to keep the goods so quarantined would not be kept. There were
no reasonable grounds to suspect that in respect of those goods an act of dealing in counterfeit goods was taking
place; and there was no basis for, nor was any provided for suspecting that there were any more allegedly offending
RCUs on Ellies’ premises. As to the third warrant (which related to the goods kept at the depot), there was no
indication that those goods could then enter the marketplace at the instance of Ellies. The SCA held that the second
and third warrants ought not to have been sought or granted; and that all of the warrants were correctly set aside.
In the circumstances, the appeal was dismissed with costs.