The Importance of a Trade Mark Licence – Jöst v Joest
12 Sep 2016
In an appeal matter before the Supreme Court of Appeal (“SCA”) relating to a trade mark matter between local company, Joest (Pty) Ltd (“Joest South Africa”) and German corporation Jöst GmbH+Co.KG (“Jöst Germany”), an interdict was granted against Joest South Africa allowing Jöst Germany to now launch an enquiry into damages dating back to 2012.
“This case highlights the pitfalls of not having a written trade mark licence, which can result in expensive and lengthy litigation,” explained Andrew Papadopolous, Director and Trade Mark Attorney at KISCH IP representing Jöst Germany. “Concluding a written licence agreement with a wholly-owned subsidiary is not on the priority list of most businesses and this carries significant risks as businesses evolve and company structures inevitably change over the years.”
Jöst Germany entered the South African market in the 1970s, with vibration equipment for mines, under the English spelling of the JÖST name and logo, “JOEST”. It opened up a wholly-owned local subsidiary to which it licensed the name and trade mark “JOEST” and technology know-how in terms of a written know-how licence agreement. However, no explicit terms relating to a trade mark license was contained in the agreement. Subsequently, this subsidiary was transferred to Joest South Africa.
Over the years Jöst Germany sold off its entire shareholding to the local company’s directors. During that time both parties had registered the brand in South Africa with Jöst Germany having registered rights to the JÖST name and logo, and Joest South Africa having registered the derivative name “JOEST” and corresponding logo.
In 2012 the parties had a falling out and the parties’ business relationship terminated. Jöst Germany demanded that Joest South Africa stop all use of the name and trade mark JOEST while Joest argued that they were not a licensee and they were acting as the principal in South Africa.
Legal proceedings ensued wherein Joest South Africa brought an application to the High Court to cancel Jöst Germany’s trade mark registrations and to interdict them from using the JÖST/JOEST trade marks in South Africa. Jöst Germany launched a counter-application, requesting the corresponding relief against Joest South Africa.
The High Court had to evaluate the parties’ relationship to determine whether there was a licensing relationship (absent of a formal licence agreement), in order to determine the rightful owner of the JOEST trade mark in South Africa. The court held that there was indeed a trade mark licence from Jöst Germany to Joest South Africa.
Joest South Africa appealed this decision in the SCA with the SCA agreeing with the High Court’s finding that the trade mark originated in Germany by Jöst Germany and was merely licensed to Joest South Africa. Jöst Germany was always the owner of the trade mark.
This also highlights the fact that if a trade mark is registered in the wrong name it could invalidate the trade mark registration, even if subsequently transferred to the correct name, as dealt with by the SCA,” concluded Papadopolous.(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)