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Its #IPThursday again good people. Some of you know this case. But its basically about how the owner of Chicken Licken hijacked the McDonald’s trade mark in South Africa.
Q: Should a trademark be known by everyone in a country to be considered famous or just a minority?
Q: Should a trademark be known by everyone in a country to be considered famous or just a minority?
Lets start our story right at the beginning, sometime in 1940. Two siblings, Richard and Maurice McDonald decided to open a restaurant, a hamburger restaurant.
They had good success in the past with a hotdog stand so they decided to turn their focus on what Americans love the most, Hamburgers, French Fries and Milkshakes. They named it McDonald’s and it was a pretty good success.
So the McDonald’s brothers decided to follow a business model which they hoped would bring them millions before they turned 50, Franchising!
They weren’t wrong, it worked. McDonald’s quickly became the biggest fast food restaurant in the US and many places around the world....except one country, South Africa.
For all its success worldwide and as the 1970s came along, McDs had not started trading in SA. This was because of the sanctions imposed by the US government on SA for apartheid.
But McDs did what most businesses in that position would do, they still went and got trade mark registrations in SA, even though they weren’t using any of their trade marks. This will be important later.
They registered everything, the name McDonalds, the big M, names of their burgers and all the logos they used. The idea behind this was mainly to prevent other people in SA from using their trade marks and in case they wanted.....
...To register it later. Which brings us to the real star of our story today. I’m sure we all remember my good friend George Sombonos from the KFC v Chicken Licken story. George was a South Aftican businessman who got into the food industry from managing his father’s roadhouse.
His big success came after he travelled to the US and came back with a special Chicken recipe. It was off the back of this recipe that he opened Chicken Licken, arguably the best chicken takeaway in the country.
Anyways, sometime in 1992, George got an idea. He knew that McDonald’s was not trading in SA, so he decided to open a few restaurants himself. He called them McDonald’s, with the golden M and everything.
This wasn’t all though, George went the next step and decided to register trade marks for his McDonald’s. I mean if you’re gonna steal a brand, may as well go all the way right?
George was making waves, the Sunday Times featured a story of how McDonald’s was finally opening in South Africa. They said the Chicken Licken owner will be serving McMuffins and Big Macs, like McDonalds. People in SA were excited, they were finally going to get a McDs
As soon as the Sunday Times article aired, George was met with a letter of demand from the real McDonalds in the US. They were not happy. They accused George of trade mark infringement and demanded that he stop using their registered trade marks.
Now, most people would shake at the sight of a letter of demand from one of the biggest companies in the world, but not George. George decided to write back to McDs. He told them that he is the true proprietor of the McDonalds trade mark in South Africa and they should go ahead.
McDonald’s were very upset and naturally, they rushed to the High Court and filed a lawsuit against George for trade mark infringement. They also wanted an interdict to stop him from using their trade marks.
George filed a countersuit, and applied to have the McDonald’s trade marks removed from the register due to “non-use”. Lemme explain a very important concept of trade mark law so listen up!....
Just because you have registered your trade marks, it does not mean you are done. You have to use your trade mark, or you will lose it. Use It or Lose It. If you don’t use it for 5 years after registration, then anyone can apply to have it removed from the register.
Using your trade mark is basically selling goods with it or providing a service under the brand in a particular country. Simple. Its making commercial use of your brand name or logo.
George said that although McDs had registered the mark, they had not used it in SA so their registrations should be removed. He really knew all the loopholes of trade mark law.
During this case however, the new trade marks act came into force and it included one important rule. Section 35 of the Trade Marks Act....The Protection of Well Known (Famous) Marks
The new act gave effect to rule in the Paris Convention which said that if you can prove that your trade mark is famous in SA, then you don’t really need to use it to keep it valid. So McDs argued that they were famous and so they had protection in terms of the new rule.
The High Court judge didn’t agree. He dismissed their claim for trade mark infringement and upheld George’s case. The judge said that the McDs trade marks should be cancelled and George is not infringing on anyone.
This was huge problem for the American company. Apartheid had ended and McDs wanted to open outlets in SA. If George kept his trade marks, he was going to stop them from using it in SA. So they obviously appealed.....
The matter went to the Supreme Court of Appeal. The case centered around whether or not McDs was well known in South Africa. If McDs could prove that they were famous in SA, then their trade marks would not be cancelled for non-use and they could stop George from using it.
If they were not famous, then they would lose their marks. In most countries, it is easy for big brands to prove that they are famous. However 1990s SA was a bit difficult.
This is because people lived different lives in Mandela’s South Africa. Only a small urban white minority of South Africans were familiar with McDs. They had travelled a lot and most black people were not. Hard to imagine when you think about it now right? 
So the court had to decide whether or not to say McDs was well known in SA or not. What percentage of the population should know a brand for it to be famous? McDs argued that it shouldn’t matter how many people know the brand, just as long as its a lot of people.
George said for a mark to be well known, it must be known by the majority of the population. Who do you side with.
Anyways, sensing that the case may go against him, George decided to buy a small shop in Durban called McDonalds. His thinking was that if he lost this case, then he could say he already has a business called McDonald’s and they cant stop him. He was sly as a fox!
It didn’t work. The SCA heard all the evidence and held that the McDs marks are indeed well known in South Africa, even if its by an urban minority and George was in fact infringing on McDonald’s rights.
The Court also said that he setup the brand solely for the purpose of riding off McDs reputation. That was the only reason why he tried to buy another shop called McDonalds in Durban.
After this, McDonalds opened up shop in SA and they have not looked back. There is a McDs everywhere you look in SA and it has become of their biggest markets.
After this failed attempt at hijacking the McDs trade mark, George went back to what he was truly good at, selling Chicken and trolling KFC. He passed away in 2016 at the age of 67.
This case is the go to case in trade mark law for big companies who haven’t registered their trade mark in a particular country. What usually happens is, someone will do exactly what George did. So their best plan is to claim that they are well known and get protection that way.
Back to my question. What if a brand or trade mark is only known by a minority? Can they be considered well known? A recent example is the case of Truworths v Primark.
Primark had registered trade marks in SA but had never opened a shop. Truworths applied to have their trade marks cancelled and they won. The court said that most people in SA don’t know Primark, even though a very large minority knew the brand from having travelled overseas.
This was almost the opposite McDonalds. Another case is Edgars v Victoria’s Secret also in SA. It dealt with the same issues, but I’ll do this one in future!
Big Lesson: Today’s big lesson is short and sweet good people, Use It or Lose It!! If you don’t use your mark for 5 years, people can have it removed! 
NB: McDonald’s case was a little unique because of the apartheid situation. So they could argue that they genuinely tried to enter the market but couldn’t. I think you could be sympathetic with them....somewhat.
