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McDonald’s Loses Trademark Case in South Africa

October 6, 1995 GMT

PRETORIA, South Africa (AP) _ Fast-food giant McDonald Corp.’s lost an important court case today to use its world-famous name on hamburger restaurants it plans to open in South Africa.

Pretoria Supreme Court Judge B.R. Southwood, saying McDonald’s had waited too long without doing business here, upheld a lawsuit by a South African businessman who wishes to use the McDonald’s name on his own chain of restaurants.

The trademark ruling could jeopardize foreign investment in South Africa that has been boosted by the end of anti-apartheid sanctions following historic all-race elections last year.

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``The United States is surprised, dismayed and concerned about the court verdict reached against McDonald’s,″ the U.S. Embassy said in a terse statement.

The ruling comes a day after McDonald’s celebrated the completion of its first South African restaurant in a suburb of Johannesburg. The restaurant and another in Cape Town are due to open in November under South African franchisees.

McDonald’s described itself as ``disappointed″ and said an appeal would be filed immediately or that the McDonald’s name would be re-registered with the South African trademarks office.

``We are confident that the rightful ownership of our world-famous trademarks in South Africa will ultimately be confirmed,″ the company said in a statement.

But McDonald’s said the ruling would not stop it from selling hamburgers in South Africa and it would press ahead with its plans to build additional restaurants.

The dispute arose when South African George Sombonos, who owns the local Chicken Licken restaurant chain, went to court seeking to bar McDonald’s from using its name.

Under South African law dating from the days of white minority rule, any foreign company not using its trademark for five years could lose the right to use its name here.

McDonald’s trademark had been registered here since 1968, but the company never opened a restaurant due to international economic sanctions aimed at bringing down the apartheid regime.

A new Trademarks Act was passed in March that brought South Africa’s economy, now open to the world, in line with international law and offered protection to world-recognized names.

Sombonos, who has indicated he wants to open his own restaurants under the McDonald’s name, filed suit before the new law’s cutoff date.

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McDonald’s replied that sanctions had kept it from exercising its trademark in the past and counter-sued to keep Sombonos from using its name. McDonald’s lost on all counts Friday.

Judge Southwood ruled that McDonald’s might be well known wherever it operated, but that alone did not justify a conclusion that the trademarks were known here and worthy of protection.

Southwood upheld Sombonos and another plaintiff, a company called Dax, claims that McDonald’s had unfairly registered the trademarks since 1968 with no intention of opening in South Africa.

The judge rejected the argument that McDonald’s had been prevented from investing because of sanctions, saying it could have done so through black-owned businesses.

South Africa is the 85th country in which McDonald’s will do business. The company operates 15,700 restaurants worldwide and is one of the best-known maker of hamburgers in the world.