30 June 2005
After 10 years and over R6-million in legal fees, Rooibos Ltd has won the battle over ownership of the generic term “rooibos”, according to a company statement. The name of the tea, an everyday word in South Africa, was registered as a trademark in the US by Forever Young Ltd in 1994.
According to the settlement agreement announced on Wednesday, Forever Young and the new owner of the trademark, Virginia Burke-Watkins, voluntarily and unconditionally agreed to the cancellation of their registration of the word “rooibos” in the US and various other countries. “Rooibos” is Afrikaans for “red bush”.
The tea is grown only in the Cedarberg area of the Western Cape, about 200 kilometres north of Cape Town. There is no alternative source of supply anywhere in the world.
Rooibos Ltd was the main driving force behind the case, with help from the national and Western Cape governments. A tea-processing and marketing company owned by farmers, Rooibos Ltd is the largest producer and marketer of rooibos internationally, handling about 70% of sales.
“The livelihood of all rooibos farmers as well as tea manufacturers was threatened by this name-registration issue,” said Martin Bergh, managing director of Rooibos Ltd. “We had to do something about it.”
In 1994, Forever Young registered the name “rooibos” in the US and numerous other countries, restricting the use the word to only those willing to do business with the company. In 2001, Forever Young sold the registration to Virginia Burke-Watkins of Dallas, Texas.
Business Day reports that in 2004, Burke-Watkins sent letters to rooibos distributors in the US, insisting they stop using the term in their marketing material and demanding $5 000 (over R30 000) compensation from them.
This year a Missouri district court ruled that rooibos was a generic term, the newspaper reports, and could not be used as a trademark. Burke-Watkins lodged an appeal, and the hearing was expected to take place in 2006. Rooibos Ltd also brought an application to the US patents and trademarks office to cancel the registration.
Bergh told Business Day the direct implication of the judgment was that distributors would be able to use the term without having to pay. The indirect effect would be that distributors, who were not investing in marketing in the US because of the uncertainty over the name, would now start building up their market.
Rooibos sales in the US are worth an estimated R70-million at retail level, Bergh said. That compares with about R300-million of retail sales value in South Africa.
According to Business Day, Germany is the biggest market for rooibos tea, importing more than South Africa consumes.
Bergh told the newspaper that although rooibos tea is a dryland – not irrigated – product and vulnerable to weather conditions, the industry produces about 9 000 to 10 000 tons of the tea a year, which could easily be doubled.
The cost of the case to Rooibos Ltd has been astronomical. Because the lawsuit was in the interest of the entire rooibos-producing industry, it was decided to approach the South African government for financial assistance and support. The Department of Trade and Industry pledged R2-million, and the Western Cape provincial government R250 000.
The red bush
Rooibos is a caffeine-free herbal tea with numerous scientifically tested health benefits. It is one of the many indigenous South African plants that make up the Cape Floristic Region. A world biodiversity hotspot and one of South Africa’s six World Heritage sites, the region has more plant species than the whole of the British Isles or New Zealand.
Overall sales of rooibos in the US climbed from just over $1-billion (R6.7-billion) in 1993 to about $5.1-billion (R34.1-billion) in 2003, according to the Tea Council of the US.
“Rooibos sales in America, in spite of the registered name obstacle, have quadrupled every year since 1999,” says Hugh Lamond, president of California-based Herbal Teas International.
Rooibos has a delicate flavour as well as documented health benefits from polyphenols and antioxidants, which may delay the ageing process and help protect against heart attack and certain types of cancer.
Many varieties of rooibos teas are available in grocery, speciality and natural food stores throughout the US, Canada, Europe and Japan. Rooibos Ltd also exports the tea to manufacturers and wholesalers in the US and Canada.