brand BATSA may well have had difficulty in discharging the burden of proving bona fide use of the marks. The
suspicion, supported by a number of references in the documents, that the use of the PARLIAMENT mark was
directed at the preservation of the marks on the register and nothing else may not have been dispelled.
BATSA's case at trial
[17] But BATSA's case did not rest on the original explanations. When properly analysed it was based on an
entirely different explanation of the launch of PARLIAMENT cigarettes. It took that new direction after
Ms Heglund, who was no longer an employee of BATSA, fortuitously discovered a document that she had been
asking the company to produce. Searches at the company had failed to unearth it, but she found it on a
memory stick inside an old handbag of hers, when her child was playing with the handbag. It contained a
presentation made by the local BATSA marketing team in relation to concerns they had about the growth of
the low price segment of the market. The presentation was made in December 2006 to the Africa Middle East
group (the "AME group") within BATSA's international operations. The AME group consisted of the regional
director responsible for Africa and the Middle East and a team that accompanied him. It met with a local group
lead by the head of strategy in South Africa, Ms Steyn.
[18] The presentation addressed the problems being experienced in the cigarette market in South Africa. Studies
revealed a trend of reduced sales generally, but increasing sales in the low price market and sales of illicit
cigarettes. These trends posed a threat to BATSA's business, as smokers who were experiencing difficult
economic times were moving from the popular and midprice segments of the market towards the low price
sector. BATSA had never particularly traded in the low price sector of the cigarette market. Its principal brand,
Peter Stuyvesant, was positioned as a popular brand between the midprice and the premium sectors of the
market and represented forty five percent of all cigarettes sold in South Africa. BATSA's fear was that, if it
introduced a quality low price cigarette into the market, its effect would primarily be to draw smokers away
from Peter Stuyvesant towards the less profitable low price brand, rather than gaining market share from the
plethora of low price brands that had come into the market. An analysis it had done on the likely
Page 397 of [2017] 2 All SA 389 (SCA)
impact of recategorising Pall Mall, one of its existing brands, as a lowprice brand suggested that whatever
competitive advantage it gained as against lowprice competitors would be offset by a significant level of
cannibalisation of the Peter Stuyvesant brand. These problems were highlighted in the presentation.
[19] The final page of this document is headed "outcome of the discussion". Ms Heglund testified that Ms Steyn,
who was present and was head of strategy at BATSA, typed it at the end of the meeting. Counsel for Philip
Morris accepted that this was so and that the document was genuine and reflected the outcome of the
discussions at that meeting. Ms Steyn's note read as follows:
"LOW
.
Do not enter given profit erosion
.
Tactical execution
ILLICIT
.
Continue with AIT strategy and government engagement is KEY
.
Do not manage through pricing strategies."
[20] The heading "LOW" related to the low price sector of the market and the heading "ILLICIT" to the counterfeit
and duty avoiding sector. The clear statements under the latter head put paid to Mr Joubert's suggestion that
one of the purposes of the launch of the PARLIAMENT brand was to deal with the problem of illicit sales. He
accepted this in a supplementary witness statement delivered on the Friday before the commencement of the
trial and again in his oral evidence.
[21] The first entry under the heading "LOW" reflected a clear decision not to enter the lowprice sector of the
market, because of the risk of profit erosion arising from the cannibalisation of the Peter Stuyvesant brand.
This was compatible with the outcome of the marketing and strategy team's analysis of the situation as
reflected in the presentation. That left the possibility of "tactical execution". The meaning, purpose and
implementation of this decision assumed central importance in the conduct of the trial and the arguments that
were addressed to us.
[22] Although, as was repeatedly emphasised in both written and oral argument, the case presented by BATSA at
the trial was transformed by the discovery and production of this document, it could not have come as a
complete surprise to Philip Morris. Its vastly experienced legal team did not think it necessary to seek an
adjournment to reflect on its implications. No doubt that was because the bundle already contained
documents, to which I will turn in a moment, which used the expression "tactical execution" or a similar
expression. Ms Fleming's witness statement expressly recognised that there was an intention to use it for
that purpose, although she dated it to August 2009 and a relaunch of the PARLIAMENT brand.12 She also
analysed the documents referring to the use of the brand for tactical purposes. But for so long as BATSA
continued to run its case in accordance with Ms Heglund's answering
Page 398 of [2017] 2 All SA 389 (SCA)
affidavit these documents did no more than rebut that case. It was only once the summary of the decisions at
the meeting with the AME group in December 2016 emerged that they assumed far greater significance.
[23] While the discovery and production of this document by Ms Heglund caused her a measure of discomfiture