Legal Advice

A patent is an exclusive right for an invention that provides a new solution or way of doing something.

A copyright is an exclusive legal right granted to an author, designer, or similar creator of an original work. This is automatic except in respect of cinematographic films which must be registered with CIPC.

A design relates to new and original shapes and features that are aesthetic or functional. It must be able to be produced through an industrial process.

A trademark is relevant for our purposes. A trademark is a brand name, slogan, or logo that identifies and distinguishes your business and its goods and service from others.

Registering your trademark allows you to protect it when it is used by another without your consent. When you register your trademark, you are issued a registration certificate which has legal status and allows you to enforce your rights easily.

Registration also allows you to rely on the Trademarks Act, 1993. If your trademark is not registered, you can protect it using common law but this will be more onerous, expensive, and time-consuming.

A registered trademark must be renewed every ten years. Provided that it is renewed, the trademark can be registered indefinitely.

In order to register your trademark, you must meet the following requirements:

• “It does not consist exclusively of a sign or an indication which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin or other characteristics of your goods or services, or the mode or time of their production or of rendering of the services;
• It has not become customary in your field of trade;
• It does not represent protected emblems such as the national flag or a depiction of a national monument such as Table Mountain;
• It is not offensive or contrary to the law or good morals or deceptive by nature or way of use; and
• There are no earlier conflicting rights.”

See: https://www.cipc.co.za/?page_id=4118

Certain trademarks cannot be registered because they cannot distinguish your business from others. If CIPC registered these trademarks, nobody but the trademark holders would be able to use these standard and commonly-used phrases. Examples include “24 hours”, food names like “pizza” or “cheese”, or any other word that is commonly used in a specific industry, such as “server” in the computer services industry (note, “server” could be registered for another industry like the clothing industry where the word is not commonly used).

CIPC recommends that you invent and add distinct words to your trademark that are not customary in your business’ industry. The distinct word can then be added to a non-distinctive word or phrase such as “ZiZi’s Pizza Palace”.

The process for registering your trademark is detailed on the CIPC website and summarised below:

Step 1: You must register your business as a customer on their e-service platform.

Step 2: You must deposit R590 into CIPC’s bank account using your customer code as a reference.

Step 3: Conduct a trademark search. You can search CIPCs trademarks register yourself or apply for a Special Search by CIPC at a cost of R190 per Special Search, subject to the submission of a form TM2 to CIPC.

Step 4: Apply for a trademark. Your application can be electronic or manual.

When you apply for a trademark, you must file a separate application for each international class of goods or services that you trademark will apply to. For example, two applications must be lodged if you manufacture and sell cosmetics. One in class 3 for manufacturing of non-medicated cosmetics and one application in class 35 for selling cosmetics.

The classes can be viewed at: https://www.cipc.co.za/wp-content/uploads/2023/01/12-23-class-headings-expl-notes.pdf.  CIPC can also assist you to identify the relevant classes.

Ensure that your applications include a correct address for service, This is where CIPC will communicate with you regarding your applications.

If your applications meet CIPCs requirements and you have made the required payments, CIPC will allocate and application date and number which should be used as a reference in your communications with CIPC.

If you elect to submit a manual application, you must complete form TM1 and submit the original to CIPC via post, courier service or in the CIPC drop box at the DTIC Campus, 77 Meintjies Street, Sunnyside, Pretoria.

The same rules regrading classes ad number of applications above, applies to manual applications. The class relevant to each separate application is identified in Field 51 of form TM1. You will also note all goods and service that the trademark will be used for in Field 57 of form TM1.

Registering your business’ logo, slogan and name provides you with added protection in competitive industries. It protects your business when nefarious competitors use your business’ name or logo, with which your success and goodwill is associated, to direct business away from you and to them. CIPC provides detailed guidance and valuable resources for intellectual property applications. If you are unsure how to proceed, contact an attorney to provide necessary guidance.

What is Business Rescue?

Business Rescue refers to proceedings which facilitate the rehabilitation of a company that is financially distressed by providing for—

(i) the temporary supervision of the company, and of the management of its affairs, business, and property;

(ii) a temporary moratorium on the rights of claimants against the company or in respect of property in its possession; and

(iii) the development and implementation, if approved, of a plan to rescue the company by restructuring its affairs, business, property, debt and other liabilities, and equity

in a manner that maximises the likelihood of the company continuing in existence on a solvent basis or, if it is not possible for the company to so continue in existence, results in a better return for the company’s creditors or shareholders than would result from the immediate liquidation of the company.

Business Rescue is facilitated by a Business Rescue Practitioner who formulates a Business Rescue Plan tailored to rescuing your business.

What is the test for Business Rescue?

To be placed under Business Rescue, a company must be financially distressed.

“Financially distressed” is defined in the Act to mean that:

- it appears to be reasonably unlikely that the company will be able to pay all of its debts as they become due and payable within the immediately ensuing six months (commercial insolvency); or

- it appears to be reasonably likely that the company will become insolvent within the immediately ensuing six months (factual insolvency).

What is the process for Business Rescue?

Our Courts have clarified that Business Rescue proceedings must be instituted at the first signs of financial distress, to allow the company time to be rescued (see Welman v Marcelle Props 193 CC JDR 0408 (GST)).

Business Rescue can be initiated voluntarily by your business or by an affected person obtaining a court order to commence Business rescue. An affected person is a shareholder, creditor, employee, or registered trade union representing employees of your business.

To start Business Rescue proceedings, your business must file a CoR 124.1 form, a resolution by your Board resolving to commence Business rescue proceedings, and a statement setting out the facts leading to the resolution, with CIPC.

Your business must then, within 5 days of filing these documents with CIPC, publish a notice and statement detailing why the company is financially distressed, the prospects of recuing the business, and listing affected persons.

Your business must also appoint a Business Rescue Practitioner, file a notice of appointment with CIPC within 2 days of the appointment, and publish a notice of appointment within 5 days thereafter.

Business Rescue proceedings and the appointment of the Business Rescue Practitioner may be opposed by an affected person.

Business Rescue proceedings should last three months. Business Rescue commonly ends if the Business Rescue Practitioner submits a notice of termination to CIPC or if a Court converts the proceedings to liquidation proceedings.

The Effects of Business Rescue

During Business Rescue proceedings, there is a general moratorium on legal proceedings against the company. This means that no legal proceedings may be instituted against the company or its property except in the limited circumstances specified in section 133 of the Act. Guarantees or sureties in favour of a third party against the company cannot be enforced unless the Court grants leave. Prescription of claims is also suspended during the Business rescue proceedings.

Directors retain their position at the company but are required to assist and cooperate with the Business Rescue Practitioner. Directors’ powers and duties, particularly in relation to the management of the company, are limited. Any action not approved by the Business Rescue Practitioner is void. The Business Rescue Practitioner may apply to a Court to have a director removed from office if they impede the Business Rescue.

Employees remain employees during Business Rescue on the same terms and conditions as immediately prior to the commencement of the Business Rescue proceedings, unless agree otherwise. Shareholders are similarly protected by the Companies Act during Business Rescue.

With respect to contracts, section 136(2) provides that the Business Rescue Practitioner “may-

(a) entirely, partially, or conditionally suspend, for the duration of the business rescue proceedings, any obligation of the company that –

- arises under an agreement to which the company was a party at the commencement of business rescue proceedings; and

- would otherwise become due during those proceedings; or

(b)apply urgently to a court to entirely, partially, or conditionally cancel, on any terms that are just and reasonable in the circumstances, any obligation of the company contemplated in paragraph (a).”

Business rescue is a complicated process which takes your business out your hands, but, if successful, ensures that your business is rescued and continues to trade. Business rescue must be carefully considered and its consequences managed to ensure that Business Rescue meets your business’ requirements and does not result in liquidation.