THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Reportable
Case No:  250/06

In the matter between:

VERIMARK (PTY) LTD

Appellant
and

BAYERISCHE MOTOREN WERKE
AKTIENGESELLSCHAFT

Respondent
and in the matter of a cross-appeal between:
BAYERISCHE MOTOREN WERKE
AKTIENGESELLSCHAFT

Appellant
and
VERIMARK (PTY) LTD

Respondent

Coram :

Harms ADP, Streicher, Cloete, Ponnan and Combrinck JJA
Heard :

2  MAY 2007

Delivered :          17 MAY 2007

Summary:  Trade mark infringement – use as a trade mark – unfair advantage of a
well-known trade mark.

Neutral Citation: This judgment may be referred to as Verimark (Pty) Ltd v BMW
AG [2007] SCA 53 (RSA)

HARMS ADP
[1] This case is about trade mark infringement. The well-known BMW
logo1 is registered in different classes and those in contention are
registered (a) in class 3 for, amongst others, cleaning and polishing
preparations and vehicle polishes (the polish mark, TM 1987/05127); and
(b) in class 12 for vehicles, automobiles and the like (the car mark, TM
1956/00818/1).

The owner of the mark, the present respondent (Bayerische Motoren
Werke AG, in short BMW) applied in the high court under the provisions
of s 34(1) of the Trade Marks Act 194 of 19932 for an interdict restraining
the respondent (the present appellant, Verimark (Pty) Ltd) from
infringing these two trade marks. The court (per de Vos J) found in

1 The representation of the logo below is of a better quality than the one on the registration certificate.
2  It reads as follows:
‘34(1)  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;

(b)
the unauthorized use of a mark which is identical or similar to the trade mark
registered, in the course of trade in relation to goods or services which are so similar to the goods or
services in respect of which the trade mark is registered, that in such use there exists the likelihood of
deception or confusion;

(c)
the unauthorized use in the course of trade in relation to any goods or services of a
mark which is identical or similar to a trade mark registered, if such trade mark is well known in the
Republic and the use of the said mark would be likely to take unfair advantage of, or be detrimental to,
the distinctive character or the repute of the registered trade mark, notwithstanding the absence of
confusion or deception: Provided that the provisions of this paragraph shall not apply to a trade mark
referred to in section 70 (2).’

favour of BMW in relation to its claim based on the polish mark (a) but
dismissed the application in relation to its car mark (b).3 This gave rise to
an appeal and cross-appeal with the leave of that court.

[2] Verimark is the market leader in the field of direct response
television marketing in which demonstrative television commercials are
used. Two of its many products are its Diamond Guard car care kit and
Diamond Guard car polish. These have been widely advertised and sold
since 1996. Throughout this period Verimark used vehicles of different
makes, but more particularly BMW cars, to demonstrate the wonders of
these products. In one particular television flight a BMW car is first
treated with Diamond Guard and then an inflammable liquid is poured
onto the hood of the car and set alight without causing any damage to the
car’s paintwork. In another instance an older and cheaper car is treated
with Diamond Guard and it then metamorphoses into a shining BMW.
The complaint of BMW is that its logo on the BMW car is clearly visible
and because of this its case is that Verimark is infringing its trade mark
registrations. The same complaint is directed at the use of a clip from the
first flight as background on its packaging material and in its internet

3 Two other marks were also in contention but they did not figure during argument on appeal and, in
any event, the outcome of this appeal makes it unnecessary to consider them separately. BMW’s
reliance on passing-off was abandoned during the appeal hearing.

advertisement. A representation of the packaging material is annexed to
this judgment.

[3] BMW relies on the provisions of s 34(1)(a) for its allegation that its
class 3 trade mark for polishes has been infringed. This paragraph
provides (to the extent relevant) that the rights acquired by registration of
a trade mark are infringed by the unauthorized use of an identical mark in
the course of trade in relation to goods in respect of which the trade mark
is registered. The argument is simply that the BMW logo appears on the
packaging material and in the advertisements; the logo is identical to the
registered trade mark; the use by Verimark is not authorised; and it is use
in the course of trade in relation to polishes. Therefore there is
infringement.

[4] Verimark, on the other hand, argues that ‘use’ in this context must
be ‘trade mark use’ meaning

‘use of a registered trade mark for its proper purpose (that is, identifying and
guaranteeing the trade origin of the goods to which it is applied) rather than for some
other purpose’4

4 R v Johnstone [2003] UKHL 28, [2003] 3 All ER 884, [2004] ETMR 2, [2003] 1 WLR 1736, [2003]
FSR 42, [2003] 2 Cr App R 33 at para 76.

and that its use of the BMW logo does not amount to trade mark use
because it is not used as and cannot be perceived to be a badge of origin.
It argues that the product is clearly identified as Diamond Guard and
nothing else and that the BMW logo identifies the car on which the
product is being used and not the polish. In this regard Verimark relies on
recent developments in the European Court of Justice (the ECJ) and the
English courts5 and on a dictum of this Court in Bergkelder.6 Against this
are two high court judgments7 that were based on a literal interpretation
of the provision and on the reasoning in British Sugar plc v James
Robertson & Sons Ltd [1996] RPC 281 (Ch), which has since been
overruled in this regard.

[5] It is trite that a trade mark serves as a badge of origin and that trade
mark law does not give copyright-like protection. Section 34(1)(a), which
deals with primary infringement and gives in a sense absolute protection,
can, therefore, not be interpreted to give greater protection than that
which is necessary for attaining the purpose of a trade mark registration,
namely protecting the mark as a badge of origin. In Anheuser-Busch8 the
ECJ was asked to determine the conditions under which the proprietor of

5 Especially R v Johnstone. As for Scotland: Procurator Fiscal v. Gallacher [2006] ScotSC 40.
6 Bergkelder Beperk v Vredendal Koöp Wynmakery 2006 (4) SA 275 (SCA), [2006] 4 All SA 215
(SCA) footnote 15.
7 Abbott Laboratories v UAP Crop Care (Pty) Ltd 1999 (3) SA 624 (C) 632B-C and Abdulhay M Mayet
Group(Pty) Ltd v Renasa Insurance Co Ltd 1999 (4) SA 1039 (T) 1045I-J
8 Anheuser-Busch Inc. v Budĕjovický Budvar, národní podnik Case C-245/02 of 16 November 2004.

a trade mark has an exclusive right to prevent a third party from using his
trade mark without his consent under a primary infringement provision.
The ECJ affirmed (at para 59) that

‘the exclusive right conferred by a trade mark was intended to enable the trade mark
proprietor to protect his specific interests as proprietor, that is, to ensure that the trade
mark can fulfill its functions and that, therefore, the exercise of that right must be
reserved to cases in which a third party’s use of the sign affects or is liable to affect
the functions of the trade mark, in particular its essential function of guaranteeing to
consumers the origin of the goods.’

That is the case, the ECJ said (at para 60), where the use of the mark is
such that it creates the impression that there is a ‘material link in trade
between the third party’s goods and the undertaking from which those
goods originate’. There 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.

[6] As far as English courts are concerned, I do not intend to trawl
through the development of the law9 but shall limit myself by referring to

9 See Arsenal Football Club Plc v Reed [2003] EWCA Civ 696 (21 May 2003). There are many cases
under this name.

some of the observations of the House of Lords in Johnstone.10 Lord
Nicholls of Birkenhead stated (at para 13):

‘But the essence of a trade mark has always been that it is a badge of origin. It
indicates trade source: a connection in the course of trade between the goods and the
proprietor of the mark. That is its function. Hence the exclusive rights granted to the
proprietor of a registered trade mark are limited to use of a mark likely to be taken as
an indication of trade origin. Use of this character is an essential prerequisite to
infringement. Use of a mark in a manner not indicative of trade origin of goods or
services does not encroach upon the proprietor's monopoly rights.’

Taking his cue from the ECJ jurisprudence, Lord Walker said (at para
84):

‘The [ECJ]11 has excluded use of a trade mark for "purely descriptive purposes" (and
the word "purely" is important) because such use does not affect the interests which
the trade mark proprietor is entitled to protect. But there will be infringement if the
sign is used, without authority, "to create the impression that there is a material link in
the course of trade between the goods concerned and the trade mark proprietor"  . . .’

[7] This approach appears to me to be eminently sensible. It gives
effect to the purpose of the Act and attains an appropriate balance

10 R v Johnstone [2003] UKHL 28. Although delivered at approximately the same time the House was
apparently unaware of the proceedings in the Court of Appeal mentioned in the preceding footnote, and
vice versa.
11 In Arsenal Football Club plc v Reed [2003] RPC 144; [2002] EUECJ C-206/01 (12 November 2002).

between the rights of the trade mark owner and those of competitors and
the public. 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.

[8] Turning then to the facts of this case, I am satisfied that any
customer would regard the presence of the logo on the picture of the
BMW car as identifying the car and being part and parcel of the car. It is
use of the car to illustrate Diamond Guard’s properties rather than use of
the trade mark.12 No-one, in my judgment, would perceive that there
exists a material link between BMW and Diamond Guard or that the logo
on the car performs any guarantee of origin function in relation to
Diamond Guard.

[9] Counsel for BMW sought to escape this conclusion by relying on
dicta in Adidas13 where AS Botha J dealt with the distinction between
trade mark infringement and passing-off and where he mentioned that in

12 Cf Jeremy Phillips Trade Mark Law (2003) para 8.52-8.55.
13 Adidas Sportschuhfabriken Adi Dassler KG v Harry Walt & Co (Pty) Ltd 1976 (1) SA 530 (T) 535E-
536A

the former instance one simply has to compare the two marks as
registered without reference to the get-up whereas in the latter case one
has to have regard to the whole get-up when determining whether or not
there is a probability of confusion or deception. This dictum is, in context,
correct although it has from time to time been used to blur the distinction
between added matter extrinsic to a defendant’s mark and added matter
that is intrinsic thereto.14 In any event, the dictum dealt with the issue of
determining identity or the likelihood of confusion or deception and not
with the determination of the public’s perception of what the defendant’s
mark is.15 Here the issue is whether the public would perceive the BMW
logo to perform the function of a source identifier and for that purpose
one cannot simply isolate the logo on the bonnet of the car and ignore the
context of use.

[10] The effect of this is that BMW’s claim based on s 34(1)(a) was
misconceived and that the high court erred in granting an interdict in
relation to the polish mark. Verimark’s appeal must therefore be upheld.

14 For an explanation of the difference see: Standard Bank of SA Ltd v United Bank Ltd 1991 (4) SA
780 (T); Bata Ltd v Face Fashions CC 2001 (1) SA 844 (SCA) para 6; Reed Executive plc v Reed
Business Information Ltd [2004] EWCA Civ159, [2004] RPC 40; Compass Publishing BV v Compass
Logistics [2004] EWHC 520, [2004] RPC 41 (Ch).
15 Cf Miele et Cie & Co v Euro Electrical (Pty) Ltd 1988 (2) SA 583 (A) 596F-I; Apple Corps Ltd v
Apple Computer Inc [2006] EWHC 996 (Ch).

[11] This brings me to BMW’s case based on s 34(1)(c) – the anti-
dilution provision – which provides (to the extent relevant) that the
unauthorized use in the course of trade in relation to any goods of a mark
identical to a registered trade mark, if the latter is well known in the
Republic and the use of the mark would be likely to take unfair advantage
of, or be detrimental to, the distinctive character or the repute of the
registered
trade
mark
amounts
to
trade
mark
infringement,
notwithstanding the absence of confusion or deception.

[12] It is common cause that the BMW logo is well known16 and that
the issue is whether Verimark’s use as described is likely to take ‘unfair
advantage’ of the distinctive character or the repute of the BMW mark, in
other words, whether there is the likelihood of dilution through an unfair
blurring of BMW’s logo, it being accepted that Verimark’s use is not
detrimental to nor does it tarnish BMW’s logo.

[13] Contrary to rather wide dicta in Johnstone (at para 17)17 stating the
opposite, the position in our law is that this provision does not require
trade mark use in the sense discussed as a pre-condition for liability. In

16 Whether the logo is well known in relation to polishes has not been established but this fact has no
bearing on the outcome of the case.
17 These appear to require trade mark use for the anti-dilution provision also. The dicta are explicable
because the case dealt with counterfeiting and counterfeiting is concerned with primary infringement
and does not concern dilution.

other words, the provision ‘aims at more than safeguarding a product’s
“badge of origin” or its “source-denoting function”.’18 It also protects the
reputation, advertising value or selling power of a well known mark.19
But that does not mean that the fact that the mark has been used in a non
trade mark sense is irrelevant; to the contrary, it may be very relevant to
determine whether unfair advantage has been taken of or whether the use
was detrimental to the mark.
[14] The following points made by Lord Menzies with reference to a
number of authorities are in this context apposite:20 the provision is not
intended to enable the proprietor of a well-known registered mark to
object as a matter of course to the use of a sign which may remind people
of his mark; there is a general reluctance to apply this provision too
widely; not only must the advantage be unfair, but it must be of a
sufficiently significant degree to warrant restraining of what is, ex
hypothesi, non-confusing use; and that the unfair advantage or the
detriment must be properly substantiated or established to the satisfaction

18 Laugh It Off Promotions CC v SAB International (Finance) BV t/a Sabmark International 2006 (1)
SA 144 (CC) para 40.
19 Laugh It Off Promotions CC v SAB International (Finance) BV t/a Sabmark International 2005 (2)
SA 46 (SCA) para 13.
20 Pebble Beach Company v Lombard Brands [2002] ScotCS 265.

of the court: the court must be satisfied by evidence of actual detriment,
or of unfair advantage.21
[15] The high court found that although Verimark may be taking
advantage of the reputation of the BMW logo, this is not done in a
manner that is unfair. It mentioned that Verimark’s emphasis is on the
effectiveness of its own product sold under established trade marks and
found that one cannot expect Verimark to advertise car polish without
using any make of car and it would be contrived to expect of Verimark to
avoid showing vehicles in such a way that their logos are hidden or are
removed. I agree. As before, the question has to be answered with
reference to the consumer’s perception about Verimark’s use of the logo.
Once again, in my judgment a consumer will consider the presence of the
logo as incidental and part of the car and will accept that the choice of car
was fortuitous. In short, I fail to see how the use of the logo can affect the
advertising value of the logo detrimentally. A mental association does not
necessarily lead either to blurring or tarnishing.22

21 Depending on the primary facts these may be self-evident. On the requirement of proof of actual
detriment see Laugh It Off Promotions CC v SAB International (Finance) BV t/a Sabmark International
2006 (1) SA 144 (CC) para 49.
22 Cf Moseley v V Secret Catalogue  537 US 418 (2003), 4 Mar 2003 per Stevens J:  ‘We do agree,
however, with that court’s conclusion that, at least where the marks at issue are not identical, the mere
fact that consumers mentally associate the junior user’s mark with a famous mark is not sufficient to
establish actionable dilution. As the facts of that case demonstrate, such mental association will not
necessarily reduce the capacity of the famous mark to identify the goods of its owner, the statutory
requirement for dilution under the FTDA. For even though Utah drivers may be reminded of the circus
when they see a license plate referring to the “greatest snow on earth,” it by no means follows that they
will associate “the greatest show on earth” with skiing or snow sports, or associate it less strongly or

[16] This means that the high court was correct in its dismissal of the
claim for an interdict in relation to the car mark and that the cross-appeal
stands to be dismissed. The resultant order is the following:

(a)
The appeal is upheld and the cross-appeal dismissed with costs,
such costs to include the costs of two counsel.
(b)
The order of the court below is amended to read:
‘The application is dismissed with costs.’

___________________________
L T C  HARMS
ACTING DEPUTY PRESIDENT

AGREE:

STREICHER JA
CLOETE JA
PONNAN JA
COMBRINCK JA

exclusively with the circus. “Blurring” is not a necessary consequence of mental association. (Nor, for
that matter, is “tarnishing.”)’

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:
17 MAY 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

VERIMARK (PTY) LTD v BAYERISCHE MOTOREN WERKE
AKTIENGESELLSCHAFT

The SCA today upheld an appeal against a judgment in the High Court in terms of
which the High Court held that Verimark infringed BMW’s trade mark, the well-
known BMW logo, registered in respect of vehicle polishes, by using a picture of a
BMW car on which the logo is visible, on packaging and advertisements in respect of
the Diamond Guard vehicle polish being marketed by it.

The SCA stated that a trade mark serves as a badge of origin; that the car was being
used to illustrate Diamond Guard’s properties and that no-one would perceive that
there existed a material link between BMW and Diamond Guard or that the logo on
the car performed any guarantee of origin function in relation to Diamond Guard. It
therefore concluded that the logo was not being used as a trade mark and that no
infringement of the trade mark was committed in terms of s s 34(1)(a) of the Trade
Marks Act 194 of 1993. The section provides that the unauthorised use of a mark
identical to a registered trade mark, in the course of trade, in relation to goods or
services in respect of which the trade mark is registered, constitutes an infringement
of the registered trade mark.

The SCA at the same time dismissed an appeal against the dismissal by the High
Court of BMW’s claim that Verimark’s use of the BMW logo, being a well-known
registered trade mark in respect of vehicles, would be likely to take unfair advantage
of the distinctive character or repute of the registered trade mark, thereby infringing
the registered trade mark in terms of s 34(1)(c) of the Trade Marks Act. The SCA
agreed with the High Court that although Verimark may be taking advantage of the
reputation of the BMW logo, it is not done in a manner that is unfair; Verimark’s

emphasis is on the effectiveness of its own product sold under established trade marks
and cannot be expected to advertise car polish without using any make of car; it would
be contrived to expect of Verimark to show vehicles in such a way that their logos are
not visible. It concluded that it failed to see how the use of the logo could affect the
advertising value of the logo detrimentally.

--ends--