between whom, when and where; if tacit, an allegation to that effect with the facts that gave rise to the tacit
agreement would not have been out of place. In any event, the grant of a licence to the Group is not only
improbable but also incompatible with the perception that existed within the Group that the trade marks
belonged to the Group.
[32] There is more. User agreements in the names of the first and second appellants were registered on 21
January 1999 and, consequently, use by either of them during the period 21 January to 13 May 1999 would
have
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amounted to permitted use. Although we were told that the Group had sales of GAP clothing to the tune of
R8m for the 1999 year, we were not informed whether these sales were by the first and second appellants or
by other members of the Group. In fact, there is evidence of the existence of a company in the Group with the
name The Gap Clothing Manufacturers (Pty) Ltd, which, according to advertisements, may have been the user
of the trade marks.
[33] The mystery deepens if regard is had to the first appellant's annual report for the year 1998. It starts off with
an allegation that the GAP trade marks are its registered brands but then, under the heading "Gap, Gapstar
and Gapkids", the statement is made that:
"the Sterling division intends launching a high class range of men's and ladies casualwear/sportswear during the
1999 summer season and has concluded a User Agreement with the registered owner to market these products
under a separate division called Gap Clothing Manufacturers."
The problems with this statement are manifold. It was not confirmed under oath. There is no evidence that
the intention to produce the goods came to fruition. According to the trade mark registry the user agreement
was between the first appellant and the proprietor whereas if this
View Parallel Citation
statement is to be taken at face value it means that it was between the first appellant and one of its
divisions. To complicate matters, during 1999 a company called Sterling Clothing (Pty) Ltd was joined as an
applicant in proceedings launched by the Group to interdict the infringement of the GAP trade marks,
presumably because it was a registered user (only proprietors and registered users have legal standing to
enforce registered trade mark rights), something not explained in the papers.
[34] Similar problems are encountered with the unsubstantiated allegation by Dr Vahed that at a time when the
first appellant sought listing on the Johannesburg Stock Exchange, during 1997, licence agreements were
entered into with both the first and second appellants. However, the prelisting statement made no reference
to these agreements. On the assumption that the prelisting statement contained a frank disclosure of the
state of the first appellant's business the omission was left unexplained. But again, there is no evidence that
since the conclusion of the licence agreements either of these licensees had used the GAP trade marks.
Taking into account all these facts I have to conclude that the appellant failed to discharge its onus.
[35] The respondent raised the issue of lack of quality control as an independent factor under section 27(1). The
submission was that unless a licence agreement provides for quality control by or on behalf of the trade mark
owner, use by a licensee cannot qualify as permitted use. While the appellants agreed with the legal
proposition they submitted that the issue was not properly raised by the respondent in the founding affidavit
and that there is in any event sufficient evidence on record to gainsay the allegation. I may interpose to note
that both parties have dealt with the matter in bald terms and that if quality control were essential to prove
permitted use, it would have been for the trade mark proprietor to have raised the issue in discharge of its
overall onus.
[36] Daniels J accepted the correctness of the contention that some form of quality control was required:
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"since the licensor must have regard to the provisions of sections 10(1) and (2)(a) of the Act which require that
whatever use is made of a mark it should still remain 'capable of distinguishing'. Use, which results in a loss of
distinctiveness, cannot qualify as bona fide use. It is for that reason that cogent evidence of quality control is
required."
[37] To assess the cogency of the contention it is necessary to have regard to some basic principles and to the
history of trade marks, much of which was dealt with by the House of Lords in a judgment not brought to the
attention of Daniels J, namely, Scandecor.33 The judgment is relevant not only for its persuasive reasoning
but also because the history of our trade mark law mirrors the developments in the United Kingdom in most
respects. For instance, the repealed 1963 Act (section 48(2)) provided that use by a licensee could only
qualify as permitted use if it were in
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terms of a registered user agreement.34 The same was the position under the 1938 UK Trade Marks Act. And,
as mentioned, the current section 27 (as did the UK Trade Marks Act of 1994) abolished this requirement by
providing that use by any licensee is��permitted use.
[38] In principle, there does not appear to be any reason at present to require quality control by or on behalf of