Plaintiff obtains cancellation of competitor’s mark, but fails to establish goodwill

Singapore

In Al Mahamid v Global Tobacco Manufacturers (International) Sdn Bhd ([2015] SGHC 42), the Singapore High Court has invalidated a trademark for cigarettes two years after it was registered, finding that the mark was likely to cause confusion as to the origin of the cigarettes, as it was similar to an earlier mark registered for identical goods.

The plaintiff and defendant each owned registered trademarks in respect of cigarettes. The plaintiff's mark (depicted below) was registered in Singapore on June 7 2005, and is used on cigarettes sold duty-free, usually to ship chandlers and sailors. The mark is registered in over 34 countries and was first used in Singapore in 2010.

The defendant's mark (depicted below) was registered in Singapore on November 29 2012. At the time of registration, no objections were raised by the Intellectual Property Office of Singapore, and no opposition was filed. The defendant’s cigarettes have been sold in Singapore since November 2012.

In 2014 the plaintiff commenced proceedings seeking the invalidation of the defendant's mark. The plaintiff argued that the defendant's mark should be invalidated on four grounds, namely:

  1. Section 23(3)(a)(i), read with Section 8(2)(b) of the Trademarks Act (Cap 332) - the defendant's mark was similar to the plaintiff's mark, and there was a likelihood of confusion;
  2. Section 23(3)(b), read with Section 8(7)(a) of the act - use of the defendant's mark amounted to passing off;
  3. Section 23(1), read with Section 7(6) of the act - the defendant's application for the registration of the defendant's mark had been made in bad faith; and
  4. Section 23(3)(a)(iii), read with Section 8(4) of the act - given that the plaintiff's mark was well known in Singapore, use of the defendant's mark indicated a connection between the parties, and there was a likelihood of confusion because of such use.

The court applied a step-by-step methodology, assessing:

  • the similarity between the trademarks in question;
  • the goods covered by the marks; and
  • the existence of a likelihood of confusion among the public owing to the similarity between the marks.

On the similarity of the marks, the court found that the plaintiff's mark and the defendant's mark were visually, aurally and conceptually similar. The word 'Manchester' was the dominant visual feature in both marks and, when read, both marks were aurally similar. Conceptually, the court found that some ambiguity may have been intended, as the image to be evoked by the marks was "whatever is triggered in the minds of the consumer by the word 'Manchester'"; however, ultimately, the ideas triggered revolved around the city of Manchester, England or Great Britain, and the Manchester football teams.

Since there was no dispute that the goods in question were identical, the court then considered whether there was a likelihood of confusion as to the origin of the goods. The court was satisfied that the relevant consumers would be confused, since the two marks covered identical goods, and there was a high degree of similarity between the marks. Both marks are dominated by the word 'Manchester', and a consumer would be hard put to recall the differences between them, which are only minor.

As such, the court declared that the registration for the defendant's mark was invalid.

However, the court found that the other three grounds for invalidity had not been made out.

In order to establish that there was bad faith on the part of the defendant when registering its mark, the plaintiff had to show that the defendant's conduct fell short of normally accepted standards of commercial behaviour, and that the defendant was aware of facts which, if known to an ordinary honest person, would have made that person realise that those standards would be breached. The mere fact that the defendant was aware of the plaintiff's earlier mark was insufficient to constitute bad faith, and something akin to exploitation of dishonesty was required. This had not been shown in the present case.

In relation to passing off, the court found that the evidence adduced by the plaintiff was not sufficient to establish goodwill in his mark. The court held that goodwill is the “attractive force” that pulls consumers to a particular business. Goodwill may be shown through various means, including sales figures, in appropriate circumstances. However, although the plaintiff adduced evidence to show that his sales of cigarettes rose from $85,000 in 2010 to over $400,000 in 2012, the court held that sales alone do not establish goodwill. It explained that, whilst sales may be indicative of goodwill, they would not, in and of themselves, constitute goodwill. There must be evidence that consumers were attracted to the plaintiff’s product. The court held that, beyond these sales, there was scant evidence that the plaintiff’s product had any attractive force. The plaintiff referred to the use of marketing materials but, again, this was held to be insufficient to establish attractive force.

In addition, the court held that there was insufficient evidence of damage. In order to make out damage for passing off, the plaintiff had to show that there was either blurring of the plaintiff’s and the defendant’s goods, or tarnishing of the plaintiff’s product. Here, whilst the plaintiff adduced evidence of a drop in sales from 2012 to 2013, the court held that there can be many explanations for a drop in sales, with misrepresentation by the defendant being only one of the various possible causes.

Thus, the claim for invalidation on the grounds of passing off was also dismissed.

With regard to the claim for invalidation based on the fact that the the earlier mark was well known, this failed largely because the plaintiff had not adduced sufficient evidence to prove that his mark was well known in Singapore. In this regard, no survey evidence was adduced, the sales information relating to sales in Singapore was limited, and the evidence of distribution of marketing material was also held to have fell short. Here, the court emphasised that it was not sufficient to merely show that the plaintiff's mark was "known"; it must be "well known".

The fact that the marks were registered in respect of identical goods was of significance in this case. Since both marks covered cigarettes, the degree of similarity between the marks inevitably gave rise to a finding of a likelihood of confusion.

What was more interesting was the court's comments in relation to the analysis of passing off. The court commented on the need to show a certain "attractive force" before goodwill can be established, and it has previously been accepted that such "attractive force" can be established by showing substantive sales. As acknowledged by the judge, any individual can decide to purchase a particular brand of products for a variety of reasons, including "price and quality". However, could it not also be argued that such indications of price and quality are intrinsically linked to a brand recognised by a customer? It was also suggested that sales to ships may not be particularly compelling, as customers there may not have had a choice. Nevertheless, could it not be that these customers, having been "forced" to purchase such a brand, may end up getting used to it and start looking for such brand even when a selection of brands is available?

There is thus some concern that the court may have raised the test for proving goodwill to a level that is unduly onerous for a potential plaintiff. It remains to be seen the extent to which such requirements of proof will impact a case outside the invalidation context. 

Angeline Lee and Cheah Yew Kuin, Baker & McKenzie. Wong & Leow, Singapore

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