## Facts

- The Gap, Inc. and affiliated companies (Gap) held registered trade marks for “GAP” in several countries, including Lesotho, Swaziland, Zimbabwe, Mauritius, and Madagascar.
- In South Africa, Salt of the Earth Creations (Pty) Ltd held registrations for “GAP” and “THE GAP” for clothing, and it and related companies traded as the AM Moolla Group (Moolla).
- Gap sourced genuine clothing bearing the “GAP” mark from manufacturers in countries where Gap owned the mark, intending to sell those goods in other countries where Gap also owned the mark.
- Because of geography and shipping routes, the consignments moved through South Africa while travelling between foreign origin and foreign destination:
  - Some shipments were carried overland through South Africa to reach a seaport.
  - Other shipments were transshipped through South African harbours as part of their international route.
- Gap did not offer these goods for sale in South Africa and did not place the goods on the South African market; South Africa was used only as a transit/transshipment point.
- Moolla attempted to stop the movement of these GAP-branded goods through South Africa by invoking the Counterfeit Goods Act 37 of 1997 and asking enforcement authorities to detain or impound the consignments as “counterfeit goods,” based on Salt of the Earth’s South African registrations.
- Gap applied in the Durban High Court for declaratory relief that South African law did not bar the transit/transshipment of the goods through South Africa when the goods were destined for markets outside South Africa.
- The High Court granted declaratory relief in Gap’s favor, and Moolla appealed to the Supreme Court of Appeal.

## Issues

1. Whether goods bearing the GAP mark that are merely transiting or being transshipped through South Africa fall within the Counterfeit Goods Act’s prohibitions on “importing into” or “exporting from” South Africa so as to justify impoundment.
2. Whether genuine GAP-branded goods can be treated as “counterfeit goods” under the Act solely because a different entity owns South African registrations for GAP-related marks and the goods are physically present in South Africa during transit.
3. Whether international materials and foreign border-measures approaches can justify reading the Counterfeit Goods Act as extending to transit/transshipment in the absence of clear statutory language.

## Decision

- The Supreme Court of Appeal dismissed the appeal and left the High Court’s declaratory order in place.
- The court held that the Counterfeit Goods Act was not meant to obstruct legitimate international trade and did not prohibit the transit or transshipment through South Africa of Gap’s genuine GAP-branded clothing destined for foreign markets.
- Goods moving through South Africa between foreign states, without being placed on the South African market, were not treated as “imported into” or “exported from” South Africa for purposes of seizure under the Act.
- The court rejected the attempt to use the Counterfeit Goods Act as a tool to detain these in-transit consignments where the goods were genuine and the complained-of conduct did not involve domestic trading in South Africa.

## Legal Principles

- A statute that creates criminal liability and seizure powers is construed strictly; clear wording is required before courts will treat mere transit or transshipment as an “import” or “export” that triggers enforcement measures.
- “Counterfeit goods” under the Counterfeit Goods Act are tied to infringement-type conduct within the Republic; the temporary presence of genuine branded goods in transit does not, by itself, convert them into counterfeit goods.
- Trade mark rights are territorial in operation; ownership of a South African registration does not automatically confer a right to block the passage through South Africa of genuine goods moving between countries where the brand owner holds valid rights.
- International agreements and foreign practice may assist with context, but they cannot expand the reach of South African enforcement powers beyond what the Act’s text authorizes.

## Conclusion

The Supreme Court of Appeal held that South Africa’s Counterfeit Goods Act did not authorize the impoundment of genuine GAP-branded clothing merely because it passed through South Africa en route between foreign countries, affirming that the Act’s border-enforcement mechanisms do not extend to transit/transshipment absent clear statutory language and domestic market activity.


AM Moolla Group Limited v. The Gap, Inc., Case No. 543/03 (2004)