McDonald’s Corporation v. Joburgers Drive-Inn Restaurant (PTY)

In the Supreme Court of South Africa, 1996

Case No. 547/95, 1996.

E M GROSSKOPF, JA

This is a dispute about the use and continued registration of the appellant's trade marks. The appellant, to which I shall refer to as McDonald's, is a corporation incorporated in the state of Delaware in the United States of America. It is one of the largest franchisers of fast food restaurants in the world, if not the largest. It first commenced business in the United States of America in 1955 and has carried on business internationally since 1971. It operates its own restaurants and also franchises others to do so. It sells hamburgers and other fast foods. The McDONALD'S trade mark is widely used in relation to restaurants owned by McDonald's as well as those that are franchised.

McDonald's obtained registration of its trade marks in South Africa in 1968, 1974, 1979, 1980, 1984 and 1985. It is now the registered proprietor of fifty-two marks. Of these, twenty-seven consist of or incorporate the word "McDONALD" or "McDONALD'S". Also used is the letter "M" in the form of so-called golden arches, with or without the word "McDONALD'S". Others consist of the words BIG MAC, EGG McMUFFIN and McMUFFIN. There are also two clown devices. The trade marks are registered in respect of goods, mainly in classes 29 and 30, and for services in class 42.

When the present proceedings commenced, McDonald's had not traded in South Africa nor, we may assume for present purposes, had it used any of its trade marks here.

Joburgers Drive-Inn Restaurant (Pty) Limited ("Joburgers") is a South African company with its principal place of business in Johannesburg. Its managing director is Mr George Sombonos. Mr Sombonos has been engaged in the fast food industry since 1968. In 1979 he registered a company called Golden Fried Chicken (Pty) Limited ("Chicken Licken"). He holds 90% of the shares in the company and is its managing director. In 1979 Chicken Licken applied for the registration of a number of trade marks, including CHICKEN LICKEN. Since then it has franchised the Chicken Licken business so that today there are more than 177 stores throughout South Africa. Mr Sombonos says that Chicken Licken is the biggest fried chicken fast food franchise chain in the world not having its origins in the United States of America.

During 1992 Mr Sombonos on behalf of Joburgers decided to establish fast food outlets and restaurants using the trade marks McDONALD'S, BIG MAC and the golden arches design. In 1993 Mr Sombonos applied for the registration of these and some other McDonald's marks. At the same time he applied to the Registrar of Trade Marks in terms of Section 36(1)(a) and (b) of the Trade Marks Act, No. 62 of 1963 ("the old Act") for the expungement of the trade marks which are held by McDonald's. McDonald's opposed these applications and filed its counter-statements in the expungement applications during August 1993. During the same period McDonald's applied again for the registration of all the trade marks in its name.

On 29 August 1993 there appeared an article in the Sunday Times newspaper reading inter alia as follows :

"Big Macs may soon be eaten all over South Africa, but not because American hamburger giant McDonald's is entering the market. Nor will they be on sale before judgment in which could be SA's biggest trade mark battle.

Chicken Licken franchise owner George Sombonos plans to start his own national McDonald's hamburger chain. Sites have been chosen and an advertising campaign is being prepared.

Mr Sombonos' lawyer Shaun Ryan of Ryans Attorneys, says the first restaurant will open in Johannesburg 'as soon as physically possible'.

The chain will serve McMuffins and Big Mac burgers.

Restaurants will also be decorated with a large M device similar to two joined arches."

In response to this article McDonald's wrote through its attorneys to Joburgers' attorney inter alia as follows :

"We are instructed that the intended use of McDonald's trade marks [which were listed in an annexure to the letter] constitutes an infringement of our client's trade mark rights. Your client has unequivocally expressed a clear intention to use such trade marks.

We have been instructed to demand as we hereby do that your client unequivocally undertake that it will not use our client's registered trade marks or any other marks which are deceptively or confusingly similar to our client's registered trade marks."

Failing an undertaking as demanded in this letter McDonald's threatened legal proceedings.

Joburgers' reply was uncompromising. It read, inter alia,

"We are aware that your client is the Registrant for the trade marks listed in the Annexure to your letter. Your client is not the Proprietor of these trade marks. The true proprietor of the subject matter of these registrations is Joburgers Drive-Inn Restaurant (Pty) Limited. You may take it that it is our client's intention to both use and register its trade marks in the Republic of South Africa. ... Your client is invited to take legal proceedings as threatened."

On 23 September 1993 McDonald's launched an urgent application against Joburgers in the Transvaal Provincial Division for relief on the grounds of infringement of its trade marks, passing off and unlawful competition. I shall refer to this application as the Joburgers application. On 28 September 1993 Swart J granted an order by agreement, the relevant part of which read as follows :

"The respondent undertakes pending the determination of this application and the proposed counter-application, not to infringe the applicant's registered trade marks ... which undertaking is made an order of court."

On 1 May 1995 the Trade Marks Act, No. 194 of 1993 ("the new Act") come into force. Section 35 of the new Act provides for the protection of "well-known" trade marks emanating from certain foreign countries. On 20 June 1995 McDonald's brought an application against Joburgers under Sec. 35 of the new Act. It claimed that all 52 of its trade marks were well-known marks in terms of the section, and sought an order that Joburgers be interdicted and restrained from imitating, reproducing or transmitting those marks in the Republic of South Africa. I shall call this the "well-known marks application".

Sec. 71 of the new Act repealed the old Act. However, Sec. 3(2) of the new Act provides that all applications and proceedings commenced under the repealed Act shall be dealt with in accordance with the provisions of that Act as if it had not been repealed. The Joburgers applications must therefore be dealt with in accordance with the old Act. The well-known marks applications, on the other hand, must be decided according to the new Act.

The three applications were heard together by Southwood J. He found in favour of Joburgers. Accordingly, in the Joburgers application, the application by McDonald's for an interdict was dismissed and Joburgers' counter-application for expungement granted; and the well-known marks application by McDonald's was refused. In all cases appropriate costs orders were made.

With the leave of the court a quo McDonald's now appeals against these orders.

For convenience I start with the well-known marks application. Sec 35 of the new Act reads as follows :

"(1) References in this Act to a trade mark which is entitled to protection under the Paris Convention as a well-known trade mark, are to a mark which is well known in the Republic as being the mark of -

(a) a person who is a national of a convention country; or

(b) a person who is domiciled in, or has a real and effective industrial or commercial establishment in, a convention country,

whether or not such person carries on business, or has any goodwill, in the Republic.

(2) A reference in this Act to the proprietor of such a mark shall be construed accordingly.

(3) 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."

There was a large area of agreement between the parties about the meaning and application of this section. Thus it was common cause that McDonald's in fact is a person such as is described in paragraphs (a) and (b) of sub-section (1). The parties were also agreed on what it is that has to be "well known" in the Republic. In this regard the court a quo had said :

"... it is not sufficient that the mark simply be well-known in the Republic. It must be established that the mark is well-known as the mark of a person who is (a) a national of, or (b) is domiciled in, or (c) has a real and effective industrial or commercial establishment in, a convention country: i.e. it must also be well known that there is a connection between the mark and some person falling in categories (a), (b) or (c)."

This seems to suggest that the section only applies if what is well known is not only the mark itself but also the nationality, domicile, or place of business of the mark's owner, and moreover the fact that the relevant country is a convention country. Before us counsel were ad idem that such an interpretation could not be supported. If it were correct the section would be a dead letter. It is difficult to imagine any mark, however well known, in respect of which such further facts would be common knowledge. The parties accordingly accepted (I think correctly) that it would be enough for a plaintiff to prove that the mark is well known as a mark which has its origin in some foreign country, provided that as a fact the proprietor of the mark is a person falling within sub-section (1)(a) or (b).

The essential dispute between the parties was what level of awareness in the public mind is required for a mark to qualify as "well-known" in terms of section 35. In this regard it is useful to look at the background to the section.

The Paris Convention, to which reference is made in Sec. 35, is the Paris Convention on the Protection of Industrial Property of 20 March 1883 as revised or amended from time totime (sec 2 of the Act). For present purposes art 6bis(1) of the Convention is apposite. Its relevant portion read as follows :

"The countries of the Union undertake, ex officio if their legislation so permits, or at the request of an interested party, to refuse or to cancel the registration, and to prohibit the use, of a trade mark which constitutes a reproduction, an imitation, or a translation, liable to create confusion, of a mark considered by the competent authority of the country of registration or use to be well-known in that country as being already the mark of a person entitled to the benefits of this Convention and used for identical or similar goods."

Although art 6bis was inserted into the convention as far back as 1925, neither Britain nor South Africa gave legislative effect to it until recently - South Africa in sec 35 of the new Act, and Britain in sec 56 of the Trade Marks Act, 1994 (42 & 43 Elizabeth 2 C. 26). The two sections are very similar. Section 35(1) and (2) of the new Act, in particular, is, for practical purposes, identical to sec 56(1) of the British Act, save for the substitution of "the Republic" for "the United Kingdom" wherever it appears. The reason why Britain did not legislate earlier was that previously it claimed to be honouring the article by means of its common law of passing off. See Richard C Abnett, AIPPI : Famous Trade Marks Require a New Legal Weapon, Trademark World, Dec 1990/Jan 1991, p. 23.

The protection granted to foreign marks by the law of passing off was limited, however, by the requirement that a plaintiff had to establish a goodwill in the country. In a well known passage from The Commissioners of Inland Revenue v Muller & Co's Margarine Ltd [1901] AC 217 (HL) at 223-4 Lord Macnaghten defined goodwill as follows :

"It is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old-established business from a new business at its first start. The goodwill of a business must emanate from a particular centre or source. However widely extended or diffused its influence may be, goodwill is worth nothing unless it has power of attraction sufficient to bring customers home to the source from which it emanates ... For my part, I think that if there is one attribute common to all cases of goodwill it is the attribute of locality. For goodwill has no independent existence. It cannot subsist by itself. It must be attached to a business. Destroy the business, and the goodwill perishes with it, though elements remain which may perhaps be gathered up and be revived again." (Emphasis added)

The "attribute of locality" mentioned in this passage led to a result described as follows in Kerly's Law of Trade Marks and Trade Names, 12th ed (1986) p 358 para 16-18 :

"... since an essential ingredient of passing-off is damage ... to goodwill, he [i.e, the plaintiff in an action founded on passing-off in the United Kingdom] must show that he had ... in this country not merely a reputation but also a goodwill capable of being damaged. Goodwill, however, is local; it is situated where the business is. Thus a foreign plaintiff may have a reputation in this country - from travellers on the one hand, or periodicals of international circulation, for instance, on the other - yet still fail in an action for passing-off because he has here no business and so no goodwill. Such cases have been not uncommon in recent years, and have caused considerable difficulty."

Examples of such cases are Alain Bernardin et Compagnie v Pavilion Properties Ltd [1967] RPC 581 (the "Crazy Horse" case), The Athletes Foot Marketing Associates Inc v Cobra Sports Ltd and Another [1980] RPC 343 (Ch) and Anheuser-Busch Inc. v Budejovicky Budvar NP (trading as Budweiser Budvar Brewery) and Others [1984] FSR 413 (CA).

In the Alain Bernardin case the plaintiff was the proprietor and operator of a bar and cabaret in Paris known as the "Crazy Horse Saloon". The bar had been continuously and extensively publicised in the United Kingdom for sixteen years. The defendant commenced a place of entertainment in London under the name of "Crazy Horse Saloon" and issued an advertisement stating "Crazy Horse Saloon comes to London" - The plaintiff applied for an interlocutory injunction against the defendant on the grounds of passing-off. The application was refused. The court referred inter alia to the Muller case (supra) and stated (at 584 lines 30 - 47)

"... that a trader cannot acquire goodwill in this country without some sort of user in this country. ... I do not think that the mere sending into this country by a foreign trader of advertisements advertising his establishment abroad could fairly be treated as user in this country. ... If that were so, the range of the action of passing-off would be extended far beyond anything which has hitherto been treated as its proper scope. That observation applies I think particularly to such establishments as hotels and even more to restaurants. It may well be that the owner of a foreign hotel or restaurant acquires in this country a reputation for the name of his hotel or restaurant in a wide sense, that the travel agents or other persons to whom he sends advertisements know of his establishment. Again he may acquire a reputation in a wide sense in the sense of returning travellers speaking highly of that establishment, but it seems to me that those matters, although they may represent reputation in some wide sense, fall far short of user in this country and are not sufficient to establish reputation in the sense material for the purpose of a passing-off action. It is very clear that in such circumstances the foreign trader has not acquired anything which in law could be described as goodwill in this country."

In the Athletes Foot case the plaintiffs carried on in the United States of America and elsewhere, but not in Great Britain, an extensive business in which they granted franchises to independent stores to sell footwear for athletes under the name "The Athlete's Foot". During 1978 and 1979 they had taken steps to secure a franchise agreement for the United Kingdom and a prospective franchisee had gone so far as to order goods and stationery with a view to establishing a chain of stores under the name "The Athlete's Foot". However no franchise contract had been concluded and no sales had in fact been made under that name. There was nevertheless an awareness of the plaintiffs' trade name and trading activities in a substantial section of the public in England as a result of over-spill publicity through American journals circulating there.

In the Anheuser-Busch case the plaintiffs and their predecessors were brewers of beer in the United States of America. Their beer had been sold since 1875 under the "Budweiser" trade mark. The first defendants were from 1895 brewers of beer in Ceske Budejovice, a town in Czechoslovakia formerly known by its German name of Budweis. In sales in Europe the first defendants used the word "Budweiser" in relation to their beer.

Before 1973, when the first defendants first sold a significant quantity of beer in the United Kingdom, the plaintiffs exported no beer to the United Kingdom for normal commercial sale and domestic consumption. Between 1974 and 1979, when action was taken against the first defendants, the plaintiffs' sales in the United Kingdom were minimal, failing to exceed 240 000 cans a year, the principal outlets for which were American-style restaurants and clubs. However, from the years 1962 to 1973, an annual average of more than 5 million cans of their beer were imported for use and sale in United States military and diplomatic establishments in England. These cans were available for purchase, duty free, by serving Americans and by British employees of American service establishments, but were not available for general purchase.

In 1973 the first defendants actively entered the United Kingdom market, and by 1980 their sales amounted to some 300 000 bottles per annum.

In 1979 the plaintiffs issued a writ by which they sought, inter alia, by injunction to prevent the first defendants from selling or dealing in any beer by the name of "Budweiser" except for the plaintiffs' own beer. By counterclaim the defendants sought by injunction to prevent the plaintiffs from selling or dealing in any "Budweiser" beer unless it was brewed by the first defendants or otherwise originated from the town of Budweis. Whitford J in the Chancery Division refused both the claim and the counterclaim. He held that neither brewery could be disentitled to use the word "Budweiser" since neither was employing it improperly and neither was making a misrepresentation, notwithstanding the fact that some degree of public confusion was apparent. The plaintiffs appealed.

On appeal it was accepted that the plaintiffs' Budweiser beer enjoyed a significant reputation among members of the public in the United Kingdom as a result of visits to the United States and spill-over advertising. Such reputation was, however, not enough. What was required was a goodwill in the United Kingdom, which could not exist without a business there. This was expressed by Oliver L J as follows (p 470) :

"Mr Kentridge argues that once a goodwill exists it is for the owner of the goodwill to choose when and how he will go into the market with his product. But this, with respect, begs the question, because it assumes the existence of the goodwill apart from the market, and that, as it seems to me, is to confuse goodwill, which cannot exist in a vacuum, with mere reputation which may, no doubt, and frequently does, exist without any supporting local business, but which does not by itself constitute a property which the law protects."

And O'Connor L J said (at p 471)

"As a result of the plaintiffs' enormous business in the U.S.A. expanded by ever increasing advertising, I am in no doubt that the evidence showed that ... the plaintiffs' Budweiser beer enjoyed a significant reputation among members of the public in this country. That is not sufficient to found an action for passing off. It is the goodwill of a business carried on in this country that can be protected, not the reputation - goodwill if you like - of a business carried on in another country."

On the facts the Court of Appeal held that the activities of the plaintiffs in the United Kingdom did not amount to the carrying on of a business there.

Whether the above cases were right or wrong, they demonstrate that the courts in this country and the United Kingdom have in fact not protected the owners of foreign trade marks who did not have a goodwill within the country. To that extent the common law of passing off has not been sufficient to constitute compliance with art 6bis of the Paris Convention.

It seems clear that sec 35 of the new Act and the corresponding provision in the United Kingdom were intended to remedy this lack. Thus sec 35(1) pertinently extends protection to the owner of a foreign mark "whether or not such person carries on business, or has any goodwill, in the Republic". And the type of protection which is granted by sub-sec (3) is typical of that which is available under the common law of passing off; a prohibition on the use of the mark in relation to goods or services in respect of which the mark is well known and where the use is likely to cause deception or confusion.

It is against this background that the expressions "well-known trade mark" and "well known in the Republic" must be interpreted. Counsel for McDonald's contended that the legislature intended to impose no more than the ordinary requirement for passing off actions, namely that the reputation must extend to a substantial number of members of the public or persons in the trade in question. See Webster and Page, South African Law of Trade Marks, 3 ed, 417; Kerly's Law of Trade Marks and Trade Names, supra, para 16-10; John Craig (Pty) Ltd v Dupa Clothing Industries (Pty) Ltd 1977 (3) SA 144 (T) at 150 in fin and the Conagra case, supra, at 237 lines 14 to 37.

Of course, the mere fact that the legislature intended to provide some protection for a foreign trader who does not have a goodwill or a business inside the country does not necessarily mean that such protection must be coterminous with that afforded to local businessmen. It is accordingly conceivable that, in order to receive protection, the foreigner might have to prove a greater public awareness of his mark than is required of a local businessman claiming a remedy against passing off. And, indeed, the respondents argued that the legislature in giving protection only to well-known marks, did impose a higher standard. On the ordinary meaning of language, so the argument went, a mark is well known in the Republic only when known to a large part of the population as a whole.

This argument raises two questions, namely

(a) must the mark be well-known to all sectors of the populations; and

(b) whatever the relevant sector of the population may be, what degree of awareness within that sector is required before a mark can properly be described as well-known.

The answer to question (a) is, I think, clear. Section 35 of the new Act was intended to provide a practical solution to the problems of foreign businessmen whose marks were known in South Africa but who did not have a business here. The South African population is a diverse one in many respects. There are wide differences in income, education, cultural values, interests, tastes, personal life styles, recreational activities, etc. This was obviously known to the legislature when it passed the new Act. If protection is granted only to marks which are known (not to say well-known) to every segment of the population (or even to most segments of the population) there must be very few marks, if any, which could pass the test. The legislation would therefore not achieve its desired purpose. Moreover, there would not appear to be any point in imposing such a rigorous requirement. In argument we were referred as example to a mark which might be very well known to all persons interested in golf. Why should it be relevant, when deciding whether or not to protect such a mark, that non-golfers might never had heard of it? I consider therefore that a mark is well-known in the Republic if it is well-known to persons interested in the goods or services to which the mark relates.

The next question then is : how well should it be known to such persons? (question (b) above). On behalf of McDonald's it was argued that the test in this regard is qualitative and not a quantitative one. The question is not, it was argued, how many of the relevant persons know the mark, but how profound the knowledge of the mark is among those who do know it. In my view this argument is untenable. I suppose that knowledge of a mark could be so vague or superficial as hardly to count as knowledge at all, but apart from that I would not have thought that there would normally be great differences in the degree of knowledge of the mark by members of the public, or that such differences, if they existed, would be of any relevance. In the present context the important practical question is not whether a few people know the mark well but rather whether sufficient persons know it well enough to entitle it to protection against deception or confusion.

How many people are sufficient? The only guideline provided by the legislature lies in the expression "well-known". This is in itself so vague as hardly to provide any assistance at all. It is certainly capable of bearing the meaning urged upon us by counsel for McDonald's, namely a substantial number as used in the law of passing off generally. In this regard the judge a quo commented that if it was the object of the sub-section to require knowledge only of a substantial number of persons, "it is strange that this was not simply stated to be the requirement instead of merely adopting the terminology of section (sic) 6bis (1) of the Paris Convention". With respect, I do not agree. The purpose of the legislature clearly was to give legislative force to article 6bis of the Paris Convention. To this end it was natural to repeat the language of the Convention, leaving it to the courts to give practical effect to the vague expressions used.

On behalf of the respondents it was contended that a greater extent of public knowledge is required. The difficulty here is one of definition and practical application. If a substantial number is not sufficient, what is? To require one hundred percent would clearly be excessive, but how must less would suffice? Seventy-five percent, fifty percent? What logical basis is there for laying down any such requirement? And how does one prove any such arbitrary percentage?

It seems to me that McDonald's contention must be sustained. The legislature intended to extend the protection of a passing off action to foreign businessmen who did not have a business or enjoy a goodwill inside the country provided their marks were well-known in the Republic. It seems logical to accept that the degree of knowledge of the marks that is required would be similar to that protected in the existing law of passing off. The concept of a substantial number of persons is well established. It provides a practical and flexible criterion which is consistent with the terms of the statute. No feasible alternative has been suggested.

I turn now to the evidence concerning the extent to which the McDonald's trade marks are known in the Republic. As I have stated earlier, McDonald's is one of the largest, if not the largest, franchiser of fast food restaurants in the world. At the end of 1993 there were 13 993 McDonald's restaurants spread over 70 countries. The annual turnover of McDonald's restaurants amounts to some $23 587 million. McDonald's trade marks are used extensively in relation to its own restaurants as well as to those that are franchised. The level of advertising and promotion which has been carried out by McDonald's, its subsidiaries, affiliates and franchisees in relation to McDonald's restaurants exceeds the sum of $900 million annually. Their international marketing campaigns have included sponsorship of the 1984 Los Angeles and 1992 Barcelona Olympics. McDonald's has also been a sponsor of the 1990 soccer World Cup Tournament in Italy and the 1994 World Cup Soccer Tournament in the United States of America. Mr Paul R Duncan, the vice president and general counsel of McDonald's, stated on affidavit that, in view of the vast scale of his organisation's operations, the McDonald's trade marks are in all probability some of the best known trade marks in the world. This was not denied. Although there was no evidence on the extent to which the advertising outside South Africa spilled over into this country through printed publications and television, it must, in all probability, be quite extensive. In addition the McDonald's trade marks would be known to many South Africans who have travelled abroad. This again would not be an insignificant number.

Spontaneous acts by South Africans have confirmed that there is a general level of knowledge in this country about the operations of McDonald's. Thus McDonald's disclosed that, between 1975 and 1993 it received 242 requests from South Africans to conclude franchising agreements. Some of these applicants were prominent companies. For reasons which are not relevant at present, none of these applications were acceded to.

The conduct of Joburgers in the present case confirms the reputation attaching to the McDonald's mark. Intrinsically the word McDonald has no attractive force. It is a fairly common surname. Had it not been for the reputation it has acquired over the years nobody would wish to appropriate it. It is therefore significant that Joburgers have gone to considerable trouble and expense to obtain control over the McDonald's marks. Joburgers announced its intention of operating under the name McDonald's in a provocative manner through an article in the Sunday Times which was bound to stimulate legal action against it. It may be noted in passing that the article in the Sunday Times, which is quoted above, itself clearly presupposes that its readers would be aware of McDonald's, its business, products and marks. 

The basic theory of market research is that from a given representative sample of the consumer public it is possible to project, by means of acceptable mathematical methods, results of such sampling to a general population or "universe" within certain statistical limits. In other words, the researcher first determines the class of persons (or universe) which is sought to be tested, and then questions individuals from that universe. The confidence that one has in a projection from the samples to the universe varies according to the number of persons interviewed in the survey, the sampling technique used and the level of response. Statisticians commonly use the term "inference" to denote the process of generalising sample evidence to the universe from which the sample is selected. The basis of inferential statistics is probability theory. A theorem in probability theory, namely the Central Limit Theorem, which applies in this case, states that if a large number of independent samples are drawn from a universe, the individual results will be different, but that they will have a "normal" distribution around the real value being measured in the universe. Based on this theorem, and standard and accepted statistical tables in relation to normal distribution, one can calculate the probability of the real value in the universe being within a specific interval of variation, which Mr Corder referred to as the confidence level.

During September 1993 Mr Corder was instructed to conduct a market survey on behalf of McDonald's. He was informed that the objectives of the study were to establish awareness of the name McDonald's, to measure recognition of the McDonald's trade marks, to ascertain the association of McDonald's with certain products or types of business undertakings, and to establish the awareness of McDonald's hamburgers. The method used by him was the conducting of personal interviews using a structured questionnaire and interviewing aids. The interviewing aids consisted of two text show cards and one colour picture show card featuring the main McDonald's trade marks. Copies of the questionnaires and show cards were before the Court.

The universe for the survey was defined as white adult males and females, aged 16 years and over, living in houses in high income suburbs of Pretoria, Verwoerdburg, Johannesburg, Bedfordview, Randburg and Sandton. A sample of 202 persons was taken. Mr Corder gave details about the manner in which the sample was selected. I need not repeat them - there is no suggestion that the sampling was not scientifically correct. The fieldwork was conducted from 7 December to 24 December 1993 by trained interviewers under the supervision of field supervisors. Twenty-one percent of the interviews were back checked in order to ensure reliability. Affidavits of supervisors and interviewers were filed to confirm their actions. Mr Corder, who was in overall control, also confirmed that the survey was properly conducted.The relevant conclusions were set out as follows :

"A large majority of respondents were aware of the name McDonald's, and/or the McDonald's logos/trademarks (77%). More than half had heard of both McDonald's, and knew the logos/trademarks too (57%).

Most respondents spontaneously associated McDonald's with hamburgers, knew of 'McDonald's Hamburgers' (80%).

The results indicate that the majority of white adults, aged 16 and over, living in households in high income suburbs of Johannesburg and Pretoria are aware of the McDonald's brand name, and associate McDonald's with hamburgers."

During January and February 1995 a similar survey was conducted among white males and females, aged 16 years and over, living in selected higher income suburbs of Durban. The conclusions were stated as follows :

"A large majority of respondents were aware of the name McDonald's, and/or the McDonald's logos/trade marks (90%). More than half had heard of both McDonald's, and also knew the logos/trade marks (52%).

Most respondents spontaneously associated McDonald's with hamburgers, or knew of McDonald's Hamburgers (87%).

The results indicate that the majority of white adults, aged 16 and over, living in the higher income Durban suburbs of Broadway, Essenwood, Morningside and Musgrave are aware of the McDonald's brand name, and associate McDonald's with hamburgers.

As I have said above, I consider that it would be enough for McDonald's to show that its marks are known to a substantial number of persons who are interested in the goods or services provided by it. On behalf of McDonald's its was contended, correctly in my view, that there are two categories of such persons - potential customers and potential franchisees. Potential customers would cover a wide field. It would include all persons who like fast food of this type and have the money to buy it. Since the cost is not high there would be many such people. Potential franchisees would be a smaller group, namely persons who can finance and run a McDonald's franchise, or consider that they can.

The evidence adduced by McDonald's leads, in my view, to the inference that its marks, and particularly the mark McDONALD'S, are well known amongst the more affluent people in the country. People who travel, watch television, and who read local and foreign publications, are likely to know about it. They would have seen McDonald's outlets in other countries, and seen or heard its advertisements there or its spillover here in foreign journals, television shows, etc. Although the extent of such spillover has not been quantified it must be substantial. Moreover, as has been shown, McDonald's has also received publicity in the local media. The market survey evidence specifically related to two groups of adult white persons living in relatively affluent suburbs of Gauteng and KwaZulu Natal. It is reasonable to suppose that much the same results would be achieved elsewhere among persons of all races who have a similar financial and social background. These are also the type of people who would have heard about McDonald's and its marks from Collins, or who would have discussed these matters with him, or would have written to McDonald's to solicit a franchise agreement.

By the same token, people who are poor, do not travel abroad, do not read foreign publications or, possibly do not read at all, and are not exposed to television, are likely not to have heard of McDonald's or its marks. It is accordingly not surprising that market surveys commissioned by Joburgers showed a low awareness of McDonald's and its marks among black persons generally.

These conclusions must be applied to the relevant categories among the public. Potential franchisees, I consider, would be the type of persons who would almost without exception have heard of McDonald's and know its marks. Among potential customers the level of awareness would be lower. Many people who would be interested in buying a hamburger would not have heard of McDonald's. However, a certain degree of financial well-being is required for the purchase of prepared food. Extremely poor people are not likely to patronise McDonald's establishments. Of the persons who are likely to do so, at least a substantial portion must be of the category who would probably have heard of McDonald's and know its marks, or some of them. This inference is supported by the zeal shown by Joburgers to appropriate these marks for themselves.

I consider therefore that at least a substantial portion of persons who would be interested in the goods or services provided by McDonald's know its name, which is also its principal trade mark. At least this mark is in my view well-known for the purposes of sec 35 of the new Act. Since McDonald's has not in fact carried on business in South Africa, people who know its mark will also know it as a foreign (and, more particularly, American) business. It almost goes without saying that if the McDonald's mark is used as contemplated by Joburgers in relation to the same type of fast food business as that conducted by McDonald's, it would cause deception or confusion within the meaning of sec 35(3) of the new Act. In the result McDonald's has in my view satisfied all the requirements of this sub-section.

In the result the following order is made.

In the well-known marks application (case number 11700/95) : The First and Second Respondents are hereby interdicted and restrained, with costs, from imitating, reproducing or translating in the Republic of South Africa any of the Applicant's trade marks in which the word McDONALD or McDONALD'S appears.

 

The full version of the judgment can be found at: http://www.sdaweb.com/lib/judgment.html