Health supplements company invalidates tea shop chain's mark based on passing off

Singapore

Redsun Singapore Pte Ltd (the applicant) is the proprietor of the registered trademark RED SUN (depicted below) in Class 5 of the Nice Classification.

 

It sells green tea and health supplements in Singapore, with sales of RED SUN-branded tea accounting for 20 to 25% of its annual sales revenue. 

The mark RED SUN TEA SHOP (the subject mark, depicted below), registered in Class 30, is owned by Tsung-Tse Hsieh (the trademark owner), who owns a chain of bubble tea shops in Taiwan.

  

A local distributor of the trademark owner's goods operated a bubble tea shop in Singapore using the name Red Sun and a device similar to the subject mark.

The applicant sought to invalidate the subject mark based on confusing similarity, passing off, the well-known status of its mark and the bad faith of the trademark owner. It succeeded based on passing off, but not on the other grounds.

Under Section 8(2)(b) of the Trademarks Act, a registered trademark can be invalidated based on confusing similarity if it is similar to an earlier registered trademark, covers identical or similar goods and there is a likelihood of confusion among the public. The registrar found the subject mark and the applicant's mark to be similar because the phrase 'red sun' was the most distinctive and memorable component of both marks. However, Section 8(2)(b) did not apply because the goods were not identical nor similar. 

In assessing the similarity of goods under Section 8(2)(b), a comparison must be made between the specification of the goods claimed under the respective marks. In this case, the subject mark is registered in Class 30, with the specification relating to general goods and beverages, while the applicant's mark is registered in Class 5 for health food supplements and herbal preparations. Therefore, the goods were not similar, as the applicant's goods sought to improve the quality of life of consumers, while the goods covered by the subject mark concerned "bread and butter sustenance". In addition, the goods were generally not in direct competition with each other.  

Under Sections 8(4)(b)(i) and (ii), a registered trademark can be invalidated based on an earlier well-known trademark if its use would result in a damaging connection being drawn between the marks or in the dilution of the distinctive character of the earlier mark, or if its use would take unfair advantage of the earlier mark. The applicant failed on this ground as the registrar did not consider that its mark was well known in the relevant section of the public as of the subject mark's registration date.  

Under Section 8(7)(a), a registered trademark can be invalidated if its use is liable to be prevented based on the law of passing off, which seeks to protect the goodwill of a business. To succeed on the ground of passing off, three elements have to be shown: goodwill, misrepresentation and damage.

The applicant was found to have established goodwill in the RED SUN trademark as of the subject mark's registration date based on use and promotion. When assessing the presence of goodwill, the registrar is not confined to considering only the use of registered trademarks. 

In relation to misrepresentation, the question was whether use of the subject mark was likely to mislead the public into believing that the goods of the trademark owner were those of the applicant. This was found to be the case. The subject mark was very similar to the applicant's mark, as it contained the dominant component 'red sun'. The subject mark and the RED SUN mark also had a product in common: tea. In contrast to the assessment of confusing similarity, the applicant's sale of green tea was relevant in passing off and the registrar found that goodwill in the RED SUN mark extended to tea products. Finally, although the applicant did not sell green tea in a prepared form (unlike the local distributor of the trademark owner who operated a bubble tea outlet), the evidence showed that it was common practice in Singapore for businesses to sell both prepared and unprepared tea under the same name.  Therefore, it was likely that the public would be misled into thinking that the trademark owner's goods belonged to the applicant.

The applicant also succeeded in showing a likelihood of damage due to the restriction of its expansion into another commercial activity, since the activity of selling tea that is ready for consumption is closely connected to the established activity of selling tea in an unprepared form. Accordingly, the applicant succeeded in invalidating the subject mark based on passing off under Section 8(7)(a).

Finally, under Section 7(6) a registered trademark may be invalidated if the application was made in bad faith. As the parties had started their businesses in different countries and only four years apart, the registrar did not consider that the subject mark had been chosen in bad faith.

This case illustrates the importance of securing a sufficiently broad list of goods when registering a trademark. In the event of a business expansion, it is often necessary to re-examine existing registrations and consider filing fresh registrations to enhance the scope of protection. In the present case, the applicant was fortunate to be able to rely on its goodwill to invalidate the mark on the basis of passing off. 

Angeline Lee, Baker & McKenzie. Wong & Leow LLC, Singapore

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