In a major decision clarifying the legal meaning of counterfeiting, South Africa’s Supreme Court of Appeal (SCA) has ruled that genuine designer products cannot be deemed counterfeit simply because they are imported without the consent of the local trademark holder.

The case involved Yossi Barel, who owns the South African trademark registration for the Italian fashion brand ENRICO COVERI. Barel had attempted to stop the importation of ENRICO COVERI footwear brought into the country by Popular Trading CC, despite the products being authentic and manufactured by the original brand owner in Italy.

Relying on the provisions of the Counterfeit Goods Act, Barel secured a warrant to seize the goods, claiming they infringed his local trademark rights. But the Court found otherwise.

Court Divided on Interpretation

In a close 3-2 split, the SCA grappled with the key legal issue: does importing authentic goods without the local trade mark owner’s permission constitute counterfeiting?

The majority, led by Acting Judge of Appeal Bloem, held that it does not. The judges stressed that the definition of “counterfeit goods” under the Act requires more than simple trademark infringement, it demands proof of intentional deception.

Referencing the use of the term “calculated” in the statute, the Court found that counterfeiting involves a deliberate and fraudulent attempt to mislead the public.

In this case, the ENRICO COVERI footwear was produced by the legitimate rights holder in Italy. As there was no evidence of deceit or imitation, the majority concluded that the goods could not be considered counterfeit.

“The items in question were genuine and produced by the original manufacturer,” the judgment held. “Confusion alone is not enough, there must be a purposeful attempt to deceive.”

Importance of Authenticity in Fashion

A turning point in the case was the affidavit of Enrico Coveri’s sister, who emphasized that authenticity is a core principle in the fashion world. She expressed concern that Barel’s distribution activities distorted the legacy of the ENRICO COVERI name, which her late brother had carefully built.

She wrote that in the fashion industry, “authenticity is everything.” Barel chose not to respond to these claims in his replying papers, an omission that may have contributed to the majority’s decision to place significant weight on her evidence.

A Differing View from the Minority

Two judges, however, dissented. In their opinion, any use of a registered trademark without authorisation, even on genuine goods, amounts to counterfeiting.

Their view focused on Barel’s status as the registered proprietor of the trade mark in South Africa. They argued that Popular Trading’s continued importation of ENRICO COVERI footwear, despite being warned by Barel, constituted intentional infringement.

Counterfeit Goods Act Requires Intent

The majority pointed out that the legal definition of counterfeiting under the Counterfeit Goods Act differs from ordinary trade mark infringement. While the latter is a civil matter assessed objectively, counterfeiting is criminal in nature and demands evidence of intent.

The minority’s suggestion that simply ignoring a demand letter proves intent, was criticised by the majority. They cautioned that such a rigid interpretation could lead to absurd results, where any recipient of a demand letter could be branded a criminal for failing to comply.

Brand Ownership Across Borders

The ENRICO COVERI brand remains an Italian fashion label with global recognition. Although Barel holds the South African registration, the original Italian company continues to produce and distribute products worldwide under the same name.

The High Court had previously ruled in favour of Popular Trading, setting aside the search warrant and finding that the goods were not counterfeit. The SCA has now upheld that ruling and dismissed Barel’s appeal.

The judgment reveals the complexities that can arise in international trade when local trade mark registrations are held by third parties unrelated to the original brand owner. It also clarifies that South African law will not stretch the definition of “counterfeit” to include legitimate goods solely because they were brought in without local authorisation.

Interestingly, Barel’s Instagram profile @enrico_coveri_sa displays the brand’s logo and claims to be the “only official ENRICO COVERI in South Africa.” While the Court did not analyse the meaning of the term “official,” it clearly focused on a more important question: whether the goods themselves were authentic.