In an August 27, 1996 judgment, the Appellate Division of the Supreme Court, overturning the lower court decision of October 6, 1995 against McDonald's Corporation (reported in our November 1995 Newsletter (N.S. 186)), held that the MCDONALD'S trademarks were well-known within the meaning of the new Trade Marks Act, thereby enabling McDonald's to restrain their unauthorized use, and also held that McDonald's trademark registrations should not be expunged on the ground of non-use.

The appellate court reviewed both the legal and factual findings of the lower court. The court held that, in order for a mark to be "well-known", within the meaning of the new Trade Marks Act, the trademark owner need not actually use the mark in South Africa, nor must the mark be known to all ethnic groups at all economic levels, as the lower court had reasoned. Instead, the court held that it is sufficient that the mark had become well-known, even through means other than actual use, to those interested in the particular goods or services at issue, and that such persons would be confused by the unauthorized use by third parties. In this case the interested parties were potential fast food purchasers and prospective franchisees.

The court held that the survey evidence submitted by McDonald's was admissible, under an exception to the hearsay rule, and also found that the evidence was probative in this case, contrary to the decision of the lower court. In view of all the evidence presented, and the "zeal shown" by the infringers "to appropriate the MCDONALD'S trade marks for themselves," the Court held that the MCDONALD'S marks were well-known within the meaning of the new Act and the court granted injunctive relief in favor of McDonald's.

The court also addressed the expungement actions brought against the MCDONALD'S marks on the ground that the marks had never been used in South Africa. Although the court avoided deciding the merits of the claim of non-use in the expungement actions, the court held that it has a general discretion to refuse expungement applications. In view of the overall circumstances of the case, including its holding that the MCDONALD'S marks were well-known, the court exercised its discretion in McDonald's favor and upheld the registrations.

This new decision alleviates many of the fears aroused by the original lower court decision with respect to the vulnerability of well-known, albeit unused, trademarks to misappropriation in South Africa. The appellate decision also sets precedent in respect of the admissibility and probative value of survey evidence in South African trademark proceedings. However, the court's reluctance to entertain the merits of the non-use issue, still leaves open certain questions regarding the vulnerability of well-known, but unused, trademark registrations in South Africa that will undoubtedly need to be addressed in future litigation.