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29th May, 2012

In the case of Doctor’s Associates Inc. v Lim Eng Wah (trading as SUBWAY Niche) the Singapore High Court held that for visual and aural similarity, one must bear in mind the “imperfect recollection” of customer and “the ideas that lie behind” for conceptual similarity.
Doctor’s Associates Inc. (hereinafter referred to as “the plaintiff”) is an American corporation with its head office in Florida and owns and operates the franchise for the popular sandwich chain named “SUBWAY”. At the time of this decision, there are 34,891 SUBWAY stores in 98 countries and 92 SUBWAY outlets in Singapore selling inter alia, sandwiches.

Lim Eng Wah (hereinafter referred to as “the defendant”) operates a chain of stalls in Singapore under the name “SUBWAY Niche” which sells nonya kueh (local delicacies), bubble tea and other local snacks. The defendant first applied the alleged offending “SUBWAY Niche” sign in 1987 at an outlet in Wisma Atria, Singapore. The first SUBWAY Niche outlet opened in Singapore two years before the defendant registered its first two SUBWAY marks and nine years before the first SUBWAY outlet opened in Singapore.

The plaintiff complains the infringement of its SUBWAY marks registered under classes 30 (T8903282C) and (T0511829B) viz the defendant’s sale of sandwiches, and class 43 (T0511831D) viz the defendant’s operation of a SUBWAY Niche cafe. Initially, the plaintiff began legal proceedings in 2008 but the action was struck off in 2009 due to the plaintiff’s failure to comply with order to furnish security for the defendant’s costs.

The present action was started in 2010 claiming infringement of the SUBWAY mark in Singapore. The defendant resisted the proceedings and several affidavits were filed by both sides.

The Court held that the infringement will be found, if the offending sign is similar to the registered mark, both the sign and the mark must be in relation to similar goods or services and if there exists a likelihood of confusion on the part of the public. The interdependence of these factors need only be assessed once a ‘minimum level of similarity’ of marks or a ‘slight’ similarity of goods/services has been reached.

The relative importance of each type of similarity depends on the circumstances at hand. The court is to consider the two signs/marks
“as a whole” and compare the “mark for mark”. Court held that similarity is proved if the marks fell within the same class of products. The defendant argues that the addition of “Niche” distinguishes the offending mark from the plaintiff’s SUBWAY mark which consists of two syllables while offending mark comprises three syllables.

The plaintiff submitted that the first word of the SUBWAY Niche mark is identical to the infringing mark. The Court found that the applicability of the “first syllable” principle is reserved for cases where the marks comprise only one word. The Courts however undertake a quantitative assessment of the marks, such that a slight variation in pronunciation or length can render marks different. The Court held that both the marks use the subway/train/rail concept. Though, addition of “Niche” conveys a ‘narrowing’ effect, it does not alter the texture of or impression evoked. Thus, the marks have aural, conceptual and visual similarities.

For the requirement of identity or similarity of goods the plaintiff relied that similarity of goods is prima facie established if the specifications of the goods are identical. The goods sold by the defendant would qualify to be registered under class 30 and 43. The sandwiches comprising variants of white bread with fillings fulfill the British Sugar test of similarity as well. While the defendant states the sale, display and handing over, interior design of SUBWAY outlets, prices of the sandwiches differed to customers.

Given the lack of any real evidence (apart from bare assertions, evidence from the bar and haphazard recollections of isolated incidents) of a likelihood of confusion, the Court concludes that the likelihood of confusion is hypothetical or speculative. The plaintiff’s worldwide advertising proves that its customers can distinguish Subway Niche as a separate enterprise unrelated to SUBWAY.

The Court held that if the requirements for infringement have not been met, it is not strictly necessary to consider the defense of prior use. The plaintiff made claims like free-riding, financial, legal type, loss of licensing opportunity or income, and misappropriation of the plaintiff’s goodwill and reputation, dilution of goodwill and tarnishment, and restriction of its planned expansion of menu under various heads of damages. The Court found insufficient evidence of damage to plaintiff’s interest and the damages identified as merely hypothetical.

For passing off, the Court held that the preliminary issue of fact was that when the defendant began selling sandwiches under the alleged infringing mark. When complained conduct commenced, the defendant had not begun trading in Singapore. The plaintiff avers that goodwill was extended to Singapore even before the registration of the first SUBWAY mark in 1989 and before the first SUBWAY outlet opened in 1996. The Court found it unclear whether one can have goodwill without having any business presence or actual customers locally and referred this as the “foreign business problem”.

The Court described that in Singapore the choice between the hard-line approach and a softer approach to the “foreign business problem” is “not of much significance”, suggesting against an increase of protection for trade mark proprietors and against whittling down the hard-line approach. The plaintiff provided no real evidence of any goodwill, reputation or base of customers in Singapore in or before 1987. On this basis, Court found no need to go on to consider whether there was any actionable misrepresentation or damage to goodwill.

The Court thus, dismissed with costs the plaintiff’s claims in relation to trade mark infringement and passing off. Court sets precedent suggesting against an increase of protection for trade mark proprietors and against whittling down the hard-line approach in “foreign business problem”.