Singapore: Court of Appeal Reverses High Court’s Decision

April 24th, 2013

 

Recipients of our e-newsletters will surely recall that we had reported in May 2012 that the Singapore High Court held that Hai Tong Co (Pte) Ltd had failed to discharge its burden of proving that there was damage or a likelihood of damage to its goodwill and therefore dismissed the passing off claim by Hai Tong Co (Pte) Ltd.

Hai Tong Co (Pte) Ltd had since filed an appeal at the Singapore Court of Appeal against the High Court’s decision. The Singapore Court of Appeal allowed Hai Tong Co (Pte) Ltd’s appeal in relation to the tort of passing off and dismissed Ventree Singapore Pte Ltd and Another’s appeal in relation to trademark infringement.

Hai Tong Co (Pte) Ltd (hereinafter referred to as ‘the Plaintiff’) is a company incorporated in Singapore engaged in the business of importing, exporting, distributing and selling cosmetics, sundries and beauty accessories, including a range of cosmetic products that had been marketed under the brand Lady Rose (hereinafter referred to as ‘the Composite Mark’). The Composite Mark was registered by the Plaintiff’s predecessor in 1970 and had been in use since 1960, even before it was registered. Ventree Singapore Pte Ltd and Sky (hereinafter collectively referred to as ‘the Defendants’) distributed and sold beauty products (hereinafter referred to as ‘the allegedly infringing products’) the packaging of which included the words Rose Lady (hereinafter referred to as ‘the ‘Sign’) accompanied by sketches of flowers with five petals in various sizes in the background.

In 2010, the Plaintiff instituted the present suit in the High Court against the Defendants, claiming that they had infringed the Composite Mark by importing and offering for sale the allegedly infringing products. The Plaintiff also claimed that the Defendants had passed off the allegedly infringing products as the Plaintiff’s goods. The High Court allowed the Plaintiff’s claim for trade mark infringement, but dismissed its claim in the tort of passing off. The Plaintiff appealed the High Court’s decision in the Court of Appeal in relation to the tort of passing off. Also, the Defendants appealed the decision of the High Court in relation to trademark infringement.

In regard to the Defendants’ appeal against the High Court’s holding that the Composite Mark had been infringed, the Court of Appeal stated that the Plaintiff must first show that the Sign was used in the course of trade. The Defendants argued that the words ‘Rose’ and ‘Lady’ were not used as trademarks to indicate the origin or source of manufacturers, but were instead used in a descriptive manner to describe the rosa canina ingredient used in the products. However, the Court of Appeal agreed with the High Court’s observation that the combination of two common words could result in a sign that goes beyond merely describing the product in question and serves instead to distinguish it as to its origin. The Defendants further argued that the real badge of origin in this case was the registered mark ‘Vov’. The High Court had dismissed this argument stating that one product might have more than one trademark, which in some cases are used to distinguish between different product lines of the same manufacturer. Hence, the Court of Appeal affirmed the High Court’s findings that the Sign was used in the course of trade as a badge of origin. The Court of Appeal also concluded that the Sign was used on goods which were identical in nature to those for which the Composite Mark was registered i.e. cosmetics, a finding that went unchallenged by the Defendants.

The Defendants argued that the Composite Mark was not distinctive, relying on the High Court’s judgment in relation to the tort of passing off. The High Court had adjudged that the Plaintiff only had ‘trivial’ goodwill stating that the Plaintiff had the failure to conduct any market surveys and unimpressive sales figures indicated the Plaintiff’s market share in the cosmetics industry. The High Court judge also noted that the Plaintiff had failed to advertise its products since 1979. On these findings of the High Court, the Defendants contended that although the Composite Mark had been in use for over 40 years, there was little else to suggest that it had achieved a significant degree of distinctiveness through use. The Court of Appeal suggested that although the words ‘Lady’ and ‘Rose’ are not inventive, the juxtaposition of these words provokes distinctiveness as the words together do not convey a sensible meaning. The Court of Appeal held that the Composite Mark was distinctive stating that the juxtaposed words were inventive and capable of distinguishing the goods dealt with or provided in the course of trade by the Plaintiff from those so dealt with or provided by others.

On the issue of similarity between the Composite Mark and the Sign, the Court of Appeal stated that the three aspects of this evaluation, namely visual, aural and conceptual similarities, do not serve as a mechanistic formula nor they are of equal importance. Rather, the relative importance of each will depend on the circumstances, including nature of goods and the type of marks involved, and a trade-off can be made between the three aspects of similarity.

Ascertaining the visual similarity between the Composite Mark and the Sign, the Court of Appeal sided with the High Court’s finding that the length, structure and the letters used in both were identical and that the marks consisting of inverted words can be visually similar. The Court of Appeal further stated that the textual component of the Composite Mark was the dominant component and that the device component, which consisted of a single simple stylized rose, was relatively insignificant. The Court of Appeal further stated that the device component underscored the textual component by emphasizing the ‘Rose’ portion of ‘Lady Rose’. Further, the Plaintiff stated that flower devices were common to the cosmetics trade and pointed to the use of a flower device on the packaging of the allegedly infringing products. The Court of Appeal also concluded that the floral prints on the packaging of the products seemed clearly decorative in nature, thereby holding that the Sign and the Composite Mark were visually similar.

The Court of Appeal also affirmed the High Court’s judgment that the Sign and the Composite Mark were aurally similar as they consisted of exactly the same syllables. Further, the Court of Appeal concluded that marks were conceptually similar as well as they both evoke the idea of something floral and feminine. Hence, the Court of Appeal upheld the High Court’s decision that the Sign and the Composite Mark were sufficiently similar.

The Court of Appeal laid out two tests to ascertain the element of confusion: firstly, would the relevant segment of the public perceive the marks as two distinct marks and secondly, would the relevant sector of public be confused if there was some economic connection between the goods bearing the marks. The High Court had adjudged that as there was a high degree of similarity between the marks and the goods were identical and marketed in similar retail locations there was a likelihood of confusion on the part of the public. The Court of Appeal further added that the minor differences in pricing or between the specific shades of cosmetics were immaterial since the goods in question were identical. The Defendants argued that the Plaintiff’s products were targeted mainly at women in their 40s while the Defendants’ products targeted at younger women. However, the Court of Appeal rejected this argument stating it to be too artificial and narrow a distinction; thereby, adjudging that there was a sufficient likelihood of confusion. On such grounds, the Court of Appeal upheld the High Court’s decision and held the Defendants guilty of trademark infringement.

Subsequently, the Court of Appeal inquired regarding the Plaintiff’s appeal against the High Court’s decision dismissing its claim against the Defendants for passing off. The Court of Appeal stated that the test in the tort of passing off was probably more demanding than the corresponding test in a trademark infringement action as in the former, it was necessary to show that the defendant’s actions amounted to a misrepresentation that is likely to deceive the relevant segment of the public, whereas in a trade mark infringement action, the question was whether, because of the similarities between the registered mark and the allegedly infringing mark and between the goods or services on which these marks are applied, there was likely to be confusion.

The High Court had held that the Plaintiff had acquired only trivial goodwill with respect to the Composite Mark because the corresponding sales figures were not particularly impressive. However, the Court of Appeal overturned the High Court decision stating that the Plaintiff had developed a substantial business over a period of more than four decades and thereby had acquired sufficient goodwill to warrant invoking the protection of the courts through an action in passing off. Further, due to previously established factor that the Composite Mark and the Sign had a sufficient degree of similarity between them and that there was a likelihood of confusion, the Court of Appeal held that the element of misrepresentation in the tort of passing off was made out.

The Court of Appeal further held that given the identical field of business activity giving rise to direct competition, the similarity between the Sign and the Composite Mark as well as the likelihood of confusion which was established in relation to the trade mark infringement claim, there was a real likelihood of damage to the Plaintiff’s goodwill arising from the diversion of sales its products if consumers of the relevant segment of the public were led to believe that Defendants’ products were the goods of the Plaintiff or were otherwise associated with or connected with the Plaintiff. Hence the Court of Appeal allowed the Plaintiff’s appeal in the tort of passing off.