KZN court settles Playboy condom sale row

A Durban judge has handed control over the sale of Playboy-branded condoms, lubricants and vapour products back to the US-based licensee after a legal row with a South African distributor.

Durban - A legal row over the sale of Playboy-branded condoms, lubricants and vapour products has come to an end with the US-based licensee regaining control over the distribution and marketing of the products in South Africa.

This is the effect of a recent ruling by Durban High Court Acting Judge Sharon Marks in which she set aside an earlier order granted in favour of the South African distributor, Blue Rock Capital Limited, to attach the rights and title to the Playboy and Rabbit trademarks.

This was done to confirm the court’s jurisdiction to hear its dispute with Californian-based licensees United Medical Devices and United Convenience Limited, which had cancelled the distribution agreement, apparently because of non-performance.

In terms of the 10-year agreement signed in April 2014, Blue Rock had to order and sell two containers’ worth of condoms and lubricants and $1.2 million (about R19 million) worth of electronic, smoke-free vapour products every year in South Africa and $500 000 worth of condoms in India.

If these minimum annual purchases were not met, Blue Rock would be considered to be in default.

Blue Rock, in its urgent ex parte (with notice to the other side) application to establish jurisdiction last December, claimed that the California companies unlawfully cancelled the agreement. Blue Rock said this was unfair because the products had not been delivered with the master licensor’s official hologram, as per the agreement.

It also claimed that another distributor, “Kelvin of China”, had also been distributing the vapour products at lower prices.

Judge Sharmaine Balton granted the interim order which, the US companies then complained, effectively prevented them doing any business in South Africa.

They launched a counter application to have the order set aside, arguing that the potential loss of revenue was more than $1 million, and the cancellation was lawful because Blue Rock had not met its annual quotas.

Judge Marks, in setting aside the order, said Blue Rock had not been frank in its initial application and had failed to disclose that the agreement stipulated that any dispute had to be resolved by a court in California.

In fact, there was already a case pending there.

“The utmost good faith must be shown by litigants in making ex parte applications. The urgent court sometimes has to decide these matters on the basis of commercial urgency. Had the other side been given an opportunity to answer the allegations, the judge would have been better placed to arrive at a decision au fait with all the facts.

“It is doubtful whether the Judge would have made an order in the terms that she did.”

She said if the order was not set aside it would “clearly amount to an injustice”, and ordered Blue Rock to pay costs on a punitive scale.

The Mercury

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