High Court: no likelihood of confusion between HAN'S and HAN

Singapore

In Han’s (F&B) Pte Ltd v Gusttimo World Pte Ltd ([2015] SGHC 39), the owner of a well-known Singapore café chain called Han’s had brought an action against the owner of a high-end Japanese restaurant for trademark infringement and passing off.

The plaintiff’s trademarks registrations

The defendant’s sign

 

 

 

 

The plaintiff is the registered proprietor of the four marks depicted above on the left. The first two are word marks, while the last two are composite marks. The defendant’s restaurant is named HAN Cuisine of Naniwa and trades under the sign depicted above on the right.  

The plaintiff argued that the HAN sign infringed the HAN’S marks. In addition, the plaintiff claimed that the defendant’s use of the HAN sign constituted passing off.   

The defendant denied the allegations and counterclaimed that the plaintiff had made groundless threats of infringement proceedings. The defendant also sought a declaration that the HAN’S marks were invalid as they were devoid of distinctiveness.

George Wei JC of the Singapore High Court dismissed the claims and counterclaims of both parties and held that, while the HAN’S marks are valid, there was no trademark infringement and passing off. There was also no groundless threat of infringement proceedings on the part of the plaintiff.

The issues that arose fall broadly into four categories:

  1. validity of a trademark;

  2. trademark infringement;

  3. passing off; and

  4. groundless threats of infringement proceedings.

Wei JC first considered whether the HAN’S marks should be declared invalid under Section 23(1), read with Section 7, of the Trademarks Act (Cap 332). The defendant argued that the HAN’S marks were registered in breach of Sections 7(1)(a) and 7(1)(b) and, consequently, should be invalidated.

Wei JC referred to the statutory definition of ‘a trademark’, as stated in Section 2(1) of the act, which makes it clear that the main purpose of trademark registration is to safeguard signs which can serve to indicate the origin or source of goods in the marketplace. Wei JC observed that this threshold requirement is not difficult to satisfy and that those cases where the mark is held to fall foul of this threshold requirement were so decided because the sign was nothing more than a generic description of the product or service.

The defendant submitted that ‘Han’ is a common surname in Singapore and is thus incapable of distinguishing goods and services for which they are registered. Wei JC disagreed and held that a surname, even a common one, possesses the capability to distinguish the goods and services of a trader from those of others. He referred to Section 28(1)(a), which provides that infringement does not arise where the defendant uses its own name, provided that the use is in accordance with honest practices in industry and commerce.

It follows that a name, or part of it, may be registered as a trademark. Wei JC thus found the HAN’S marks capable of distinguishing the plaintiff’s goods and services from those of other traders.

Wei JC then held that the requirement of distinctiveness is relevant to the registrability of a trademark, as well as to a challenge to the validity of a trademark, albeit in slightly different ways. At the registration stage, a trademark that lack distinctive character shall not be registered. However, registrability can still be saved if, at the date of the application, the mark has acquired distinctiveness through use (Section 7(2)).

In a challenge to the validity of a trademark’s registration on the basis that the mark lacked distinctive character, its registration may be saved if it has, through use, acquired a distinctive character in relation to the goods or services for which it is registered (Section 23(2)). Therefore, in deciding whether to grant an application for invalidity, the court must take into account the use of the mark subsequent to registration in deciding whether it has distinctive character.

Wei JC emphasised that the examination of whether a trademark possesses distinctive character is done in terms of its ability to distinguish the goods and services on which it is to be applied - either inherently or as a result of use.

Wei JC observed that the grounds for refusal in Sections 7(1)(b), (c) and (d) are in reality connected, despite being listed as distinct grounds: the objections in Sections 7(1)(c) and (d) are essentially particular aspects of Section 7(1)(b). Wei JC went on to discuss the concept of inherent distinctiveness of a trademark, which is embodied in Sections 7(1)(b)-(d). The expression ‘inherent distinctiveness’ refers to distinctiveness arising from the trademark alone without reliance on use. Some trademarks carry a high level of inherent distinctiveness in that they will be understood by the public as bearing a trademark meaning, even if they have not yet been used or promoted to the public. On the other hand, other marks may have low levels of inherent distinctiveness - often, this will include a mark or symbol that is at least partially descriptive of the goods or services. Wei JC also observed that the act only requires that the mark be distinctive for the purposes of registration and there is no requirement that the trademark reaches a “high” level of distinctiveness.

In cases where a sign possesses a capability to distinguish but is regarded as not possessing distinctiveness at the time it is chosen and first used, members of the public may, over a period of time, be taught, through advertising and brand promotion exercises, to recognise the mark as indicating the origin of the goods or services in question. In this way, the trademark has acquired distinctiveness through use under Section 7(2), which sidesteps the grounds for refusal in Sections 7(1)(b), (c) and (d). The investment in time and money justifies allowing protection by registration. Wei JC also stated that the question of whether there is sufficient use and brand development such that ordinary consumers in Singapore recognise the expression as an indicator of trade origin will require careful examination of the evidence.

Wei JC highlighted that one problem with a common surname is that the surname may well be a name which honest traders may also wish to use. However, he also affirmed the principle that there are no special rules for, or automatic bias against, surnames, even common ones. While Wei JC acknowledged that the word ‘Han’s’ is not descriptive of the goods and services that the plaintiff provides, he also considered that due to the fact that ‘Han’ is a relatively common surname, the HAN’S word marks had a low level of inherent distinctiveness.

Further, the defendant’s evidence showed various possible allusions of the word ‘Han’. In Japanese, it can be taken as a reference to Osaka. In Korean or Chinese, it can refer to Korea or Korean people. In Chinese, it can refer to the Han Chinese, an ethnic group from East Asia. Such allusions were not inconsistent with a registration for restaurant services (especially so given that the food served in the plaintiff’s cafés is a mixture of local fare and western sets).

In light of the above, the HAN’S word marks did not meet the criteria for distinctive character as set out in Section 7(1)(b). Wei JC added that there was no easy answer to the question of how distinctive a mark must be in order to be registrable. On the other hand, Wei JC found that the unique stylisation and typeface of the HAN’S composite marks were sufficient to support the conclusion that they possessed distinctive character.

In any event, Wei JC held that all the HAN’S marks would have acquired distinctiveness through use under Section 7(2). The evidence showed that HAN’S was a Singapore brand familiar to many Singaporeans. HAN’S had been used in conjunction with the cafés in question since 1980 and the plaintiff now operates 21 Han’s café outlets island-wide.

Therefore, there were no grounds for invalidating any of the HAN’S marks.

Second, Wei JC applied a three-step test to determine whether the defendant’s use of the HAN sign infringed the HAN’S marks under Section 27.

  1. whether the HAN sign was similar to the HAN’S marks;

  2. whether the HAN sign was used in relation to goods or services identical with, or similar to, those for which the HAN’S marks are registered; and

  3. whether there was a likelihood of confusion on the part of the public.

With regard to the first point, Wei JC relied on the Singapore Court of Appeal case of Hai Tong Co (Pte) Ltd v Ventree Singapore Pte Ltd ([2013] 2 SLR 941), which set out the principles relevant to the similarity analysis.

While Wei JC accepted the plaintiff’s submission that the word ‘Han’ is the most prominent element of the defendant’s HAN sign, he disagreed that the rest of the components of the HAN sign are negligible to the extent that they can be disregarded in the similarity analysis. While the phrase ‘Cuisine of Naniwa’ was significantly smaller than the word ‘Han’, Wei JC was of the opinion that its inclusion suggested that ‘Han’ is used to refer to food originating from a particular place or of a particular people. While this bears a descriptive connotation, the phrase was encircled by the Kushikatsu device to form a unitary whole. Despite the principle of the imperfect recollection of the average consumer, Wei JC was of the opinion that the phrase would have affected consumers’ perception of ‘Han’ and their recollection of it.

Wei JC also found that the Kushikatsu device was not merely a badge or graphic element that was placed next to the dominant word ‘Han’. Instead, the juxtaposition of the brisk, free-hand brush strokes of the Kushikatsu device against the precise and neat typeface of ‘Han’ and ‘Cuisine of Naniwa’, and the obvious asymmetry of the Kushikatsu device contrasted with the apparent symmetry of the word elements, added to the overall “feel” of the HAN sign.

In light of the above, Wei JC found that the phrase ‘Cuisine of Naniwa’ and the Kushikatsu device were not negligible.

With regard to visual similarity, Wei JC accepted the general proposition that registration of a word in block capital letters should cover use of the word in every font or style possible (Sarika Connoisseur Café Pte Ltd v Ferrero SpAI ([2013] 1 SLR 531)). With the above principle in mind, Wei JC went on to hold that the HAN sign was visually similar to the HAN’S word marks due to the shared common denominator ‘Han’, which was the substantial and prominent part of the marks and the sign. The inclusion of the other elements, while decreasing the similarity, was insufficient to render the HAN sign visually dissimilar to the HAN’S word marks.

In relation to the HAN’S composite marks, Wei JC was of the opinion that there were no visual similarities due to the addition of the stylisation which produces two effects:

  1. it decreases the similarity between the ‘Han’ text in the HAN sign, which is in plain and minimalist font, and the ‘Han’s’ words, which are set out with considerable stylisation; and

  2. it emphasises the presence of the other visual elements in the HAN sign - the Kushikatsu device and ‘Han’ in gold lettering.

Wei JC further held that there was phonetic similarity between the HAN sign and the HAN’S marks. This was because the main phonetic component of the HAN sign is ‘Han’, while ‘Cuisine of Naniwa’ is subsidiary and the average consumer is unlikely to constantly refer to the seven-syllable phrase. ‘Han’ and ‘Han’s’ are both single-syllable words which share similar pronunciations. While ‘Han’s’ has the additional ‘s’ at the end, Wei JC stated that adequate allowance must be made for imperfect recollection, careless pronunciation and speech (Future Enterprises Pte Ltd v McDonald’s Corp ([2006] 4 SLR(R) 629)); the slightest mispronunciation would result in complete identity.

Further, it is well established that conceptual similarity involves the consideration of the ideas that lie behind the earlier mark (Sarika Connoisseur Café Pte Ltd v Ferrero SpA ([2013] 1 SLR 531)). Wei JC was of the opinion that, while the possessive modifier played a minor role in assessing the visual and phonetic similarity, its significance was greatly amplified where conceptual similarity was concerned.

Wei JC went on to elaborate that the word ‘Han’ in the HAN sign evokes a group of people or a cuisine in a cultural or geographical sense. ‘Han’s’, on the other hand, gives the concept of possession or ownership and the immediate impression is of a house or restaurant owned by a person named ‘Han’. This conceptual distinction was reinforced by the inclusion of the phrase “Cuisine of Naniwa” in the subtext of the HAN sign, which suggests that ‘Han’ was being used in its geographical and cultural form.

In relation to the HAN’S composite marks, the conceptual dissimilarity was even more pronounced. The HAN sign evokes a sense of simple sophistication, while the HAN’S composite marks, with their loud and eye-catching style, coupled with the possessive modifier, evoke a sense of warmth, comfort and familiarity.  

Overall, Wei JC held that the HAN sign was similar to the HAN’S word marks due to the weak visual and strong phonetic similarity, notwithstanding the conceptual dissimilarity. On the other hand, the HAN’S composite marks were dissimilar to the HAN sign.  

With regard to the second point, Wei JC applied the principles laid down by the Singapore Court of Appeal in the seminal decision of Staywell Hospitality Group Pty Ltd v Starwood Hotels & Resorts Worldwide Inc ([2014] 1 SLR 911), which held that, as long as the goods and services to which the infringing sign was applied fell into one of the specifications that the registered mark covered, there would be a prima facie case of identity of goods and services. The market segment that the goods and services are targeting is not a relevant consideration.

As the HAN’S marks covered “food preparation” and “restaurants”, Wei JC held that the goods and services were identical and there was no need to consider the degree of similarity between the goods and services.

With regard to the third point, Wei JC cited Staywell v Starwood, which reigned in the extraneous factors that may be considered in determining the existence of a likelihood of confusion. The extraneous factors that may be examined include:

  • Factors relating to the impact of the marks’ similarity on consumer perception, including:

    • the degree of similarity of the marks;

    • their reputation;

    • the impression given by the marks; and

    • the possibility of imperfect recollection.
       

  • Factors relating to the impact of the goods’ similarity on consumer perception, which include:

    • the nature of the goods;

    • the normal way or circumstances under which consumers would purchase goods of that type;

    • whether the goods are expensive or inexpensive items;

    • whether the goods would tend to require attention on the part of prospective purchasers; and

    • the characteristics of the consumers and whether they are likely to be specialists.

Impermissible factors are those differences between the marks and goods which are created by traders’ differentiating steps.

With this in mind, Wei JC held that there was no likelihood of confusion on the facts of the case. While there was phonetic similarity, visual and conceptual similarity was more important. This was because both the plaintiff’s cafés and the defendant’s restaurant are brick-and-mortar establishments and potential patrons will have a direct perception of the respective marks as they are displayed.

Wei JC also observed that the reputation of the mark did not necessarily equate to a higher likelihood of confusion (Staywell v Starwood; Mobil Petroleum Co Inc v Hyundai Mobis ([2010] 1 SLR 512); and McDonald’s Corp v Future Enterprises Pte Ltd ([2005] 1 SLR(R) 177)). In his view, the success of the Han’s chain of cafés was tied to the success and prominence of the HAN’S marks.

Wei JC also highlighted the contrast between the plaintiff’s cafés and the defendant’s restaurant, which was considered irrelevant at the inquiry concerning the goods’ similarity, with the former offering good-quality and affordable local and western food, and the latter serving high-end Japanese food. Restaurant services embrace a broad-range of different types of food outlets and, in the present case, the significant differences in style, price, range and type of food and services offered were relevant and could not be considered as superficial marketing choices. Therefore, while the HAN sign was similar to the HAN’S word marks, it was not confusingly so and the plaintiff’s claim for trademark infringement was dismissed.

Third, turning to the claim of passing off, Wei JC considered whether the defendant was liable for passing off its business as being connected to, or associated with, the plaintiff’s. Wei JC held that, in order to succeed in a claim in passing off, the “classical trinity” of goodwill, misrepresentation and damage must be present (Novelty Pte Ltd v Amanresorts Pte Ltd ([2009] 3 SLR(R) 216)).

Goodwill consists of two essential features under Novelty v Amanresorts:

  1. the association of a business on which a mark has been applied with a particular source; and

  2. an attractive force arising from that association which brings in custom.

Wei JC accepted that there was goodwill in the HAN’S marks amongst the general public due to the evidence of large revenue and volume of sales. The plaintiff’s cafés also have wide exposure with a chain of 21 outlets operating throughout Singapore. All this was evidence that the general public in Singapore had come to associate the outlets which trade under the HAN’S marks as emanating from the same source.

The defendant argued that, since the actual business of running the cafés was conducted by the plaintiff’s subsidiary, the plaintiff could have no goodwill to speak of. Wei JC held that the HAN’S marks were used by the subsidiary for the benefit of the Han’s Group, which is headed by, and under control of, the plaintiff. Therefore, goodwill generated by use of the HAN’S marks also attached to the plaintiff and, in this sense, goodwill was jointly and severally owned by the plaintiff and the subsidiary.  

The second element of passing off is a misrepresentation by the defendant through use of a mark or get-up similar to that used by the plaintiff and in which goodwill is enjoyed. The misrepresentation must also give rise to a likelihood of confusion that the goods and services of the defendant originate from the same source or are somehow connected to the source of the plaintiff’s goods and services (Novelty v Amanresorts).

Wei JC had earlier found that there was no likelihood of confusion in respect of trademark infringement. However, he highlighted that the analysis of confusion in respect of a passing-off action is not entirely similar to that in an action for trademark infringement. The court, in ascertaining whether a likelihood of confusion exists for the passing-off tort, is entitled to take a broader view of the context within which the respective marks are employed and, accordingly, consider factors extraneous to the marks that would be impermissible in a trademark infringement action.

Wei JC considered the following factors and concluded that there was no misrepresentation giving rise to confusion:

  • The defendant’s evidence that the name ‘Han’ was chosen because there was a long association with his family. ‘Han’ was also a good match with the cuisine that the restaurant served.

  • Only one of the four HAN’S marks has actually been used as an indicator of origin for the plaintiff’s goods and services (ie, the red composite mark which was found to be dissimilar to the HAN sign).

  • The stark difference in the market segments targeted by the plaintiff and the defendant.

  • The difference in the fare and dining experience provided by the plaintiff’s cafés and the defendant’s restaurants.

The plaintiff argued that the defendant had misrepresented that there was a connection or association between the plaintiff and the defendant by using the name ‘Han’. In support of this argument, the plaintiff submitted that, in the food and beverage industry, it is common for investment holding companies like the plaintiff to provide a wide range of goods and services under different brands which target and cater to different market segments. As such, the average Singaporean would believe that the plaintiff and defendant’s establishments are managed by the same corporate group.

Wei JC stated that the plaintiff’s argument missed the point. There are many corporate groups (eg, the Paradise Group) which own different restaurants with similar names, as well as many corporate groups (eg, the Breadtalk Group) that own restaurants with vastly different names, concepts and cuisines. The fact that it may be one or the other does not affect the likelihood of confusion.

Accordingly, Wei JC concluded that there was no misrepresentation on the part of the defendant.

While the question of damage had become academic due to the absence of misrepresentation, Wei JC went on to consider the arguments raised by the plaintiff that it had suffered damage because the defendant’s restaurant had placed a restriction on the plaintiff’s expansion into the high-end market.

Such a head of damage was recognised by the Singapore Court of Appeal in Novelty v Amanresorts, which states that “the plaintiff who has established goodwill in one form of commercial activity may be entitled to protection from passing off vis-à-vis another form of commercial activity which is a natural expansion of the first”. The Court of Appeal nonetheless stressed the importance of “the close connection which must exist between the established activity and the extended activity”.

In deciding whether this form of damage has been suffered as a consequence of passing off, it is necessary to take into account, amongst others:

  • the closeness of the fields of activity;

  • how well-known the plaintiff’s mark has become; and

  • whether the plaintiff has started to use, licence or endorse the use of its marks on other goods or services and the degree of similarity between the plaintiff’s and defendant’s marks.

Wei JC went on to hold that, in the present case, even though there was a connection between the goods and services of the plaintiff and defendant, the market segments targeted by the plaintiff’s cafés and the defendant’s restaurant are far apart. The HAN sign, while bearing some similarity to the HAN’S marks, was not the same and, in the case of the red HAN’S composite mark, the marks were so far apart as to be virtually different. It therefore followed that, even if the plaintiff decided to expand into the fine dining sector, it was not immediately apparent why he could not do so under its own HAN’S marks. Furthermore, the plaintiff’s evidence did not make mention of any plan or intention to expand into a different market segment.

Therefore, Wei JC held that the plaintiff had failed to prove that it had suffered, or was likely to suffer, any loss. The plaintiff’s claim in passing off was therefore dismissed.

Finally, Wei JC considered the defendant’s counterclaim for damages from the plaintiff under Section 35 of the act, which provides remedies for groundless threats of infringement. Section 35 applies where a person threatens another with proceedings for infringement of a registered trademark on grounds other than:

  1. the application of the mark to goods or to material used or intended to be used for labelling or packaging goods;

  2. the importation of goods to which, or to the packaging of which, the mark has been applied; or

  3. the supply of services under the mark.

The rationale for the limitation of this provision has been explained as an attempt “to strike a balance between the legitimate interests of the trademark owner in warning infringers and the right of others not to be vexed by the threats without actually being sued”. In this case, the groundless threat that the defendant relied on was a letter from the plaintiff’s solicitors to the defendant’s solicitors where the former alleged that the defendant had infringed the plaintiff’s registered marks.

Wei JC held that the threat of proceedings, if any, was in relation to infringement arising from the application of the mark to the goods and the supply of services under the mark. As such, the requirements for invoking Section 35 were not satisfied on the present facts, and the counterclaim was dismissed. 

Regina Quek and Kwee Yi Jia, One Legal LLC, Singapore

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