CANTO v. CANTI: South Africa’s Supreme Court of Appeal weighs in on trademark confusion

By CANTO - Sunday, 04 May 2025

In a recent decision that may prompt reflection among international trademark practitioners, South Africa’s Supreme Court of Appeal (SCA) addressed the ever-tricky question of how similar is too similar when it comes to trademarks in the wine industry.

Very often, in development we speak about what countries need more of – more investment, more financing, more infrastructure, more and better institutions and policies.

But today, we will talk about what we need less. We need less Illicit financial flows, less financing of illegal activities and tax avoidance, all of which drain our resources for development and our capacity to live in a peaceful and secure environment.

Today we are discussing development in terms of what is being taken away: about the money that should have served the public “good”, but which is not only not there – but worse still, is money that is going to serve the public “bads”.

Every year, billions of dollars that could build schools, staff hospitals and create opportunities for young people simply vanish. In some countries, what we lose to illicit financial flows (IFFs), equals twice their education budget, or five times what they spend on health. Africa alone loses nearly 100 billion dollars every year to IFFs. That is twice the amount the continent receives in foreign direct investment (FDI) or foreign aid.

I want to make three points.

My first point is about definition.

The question of how we define IFFs seems technical, but it really isn’t. Largely speaking, there are two camps: those who want to measure only the illegal financial flows versus those who argue that the problem is about not only illegal but also illicit financial flows.

Some people argue that we should only measure IFFs that derive from clearly illegal activities, such as organized crime or drug trafficking. But this misses a huge part of the problem.

Take for example aggressive tax avoidance, done in a technically legal way. When a company uses complex accounting to shift their profits from a developing country to a tax haven, the impact on that country's schools and hospitals is exactly the same. Many developing countries lose through these technically legal but harmful practices a significant percentage of what they receive in development finance.

Our research shows that up to a quarter of all FDI in developing countries has no real economic activity associated with them, indicating the magnitude of potential phantom structures.

This is why at the UN Statistical Commission, all Member States agreed to a broader definition that goes beyond the term “illegal” including, and I quote, "financial flows that are illicit in origin, transfer or use." So, not just illegal but illicit. The difference matters.

My second point is about data.

No one can fight blindfolded. This is why UNCTAD is at the forefront of international efforts to correctly measure IFFs.

Working with partners across three continents, we have conducted detailed studies with 22 countries, including Brazil, Mexico and South Africa. We found that trade-related illicit financial flows may be valued between 5% to 30% of official goods’ trade value. This is only for goods trade-related illicit finance, not considering tax or crime-related flows. Think about that for a moment. Up to a third of what crosses some borders may be masking illicit activity.

Also recently, in partnership with the UN Office on Drugs and Crime (UNODC), we developed the world's first official national estimates of illicit financial flows related to migrant smuggling, human trafficking and trade misinvoicing.

For example, UNODC estimates that smuggling foreign migrants from Mexico to the United States generated over $1.1 billion in illicit financial flows per year – just from 2016 to 2018. This is equivalent to the value of total air passenger transportation from Mexico to the rest of the world during the same period.

Or take Nigeria, where we saw many multinational companies shift close to 100% of their profits to tax havens. Some transfers amounted to close to 3% of the GDP of such tax havens.

While it is encouraging that we are making progress in measurement, this is just the beginning. The scale and magnitude of these losses highlight the urgent need to support these countries in reclaiming their rightful share of resources.