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Singapore: Mainfreight v. Mainfreight. Guess who is the winner?

29th October, 2012

In the case of Mainfreight (S) Pte. Ltd. v Mainfreight International Logistics Pte. Ltd., the High Court of Singapore adjudged in favor of Mainfreight (S) Pte. Ltd. granting injunction restraining Mainfreight International Logistics Pte. Ltd. from passing-off its business as that of Mainfreight (S) Pte. Ltd.’s.

Mainfreight (S) Pte. Ltd. (hereinafter referred to as “the Plaintiff”) was incorporated in November 1998 and provides shipping, freight forwarding, and warehousing services to its clients in Singapore and overseas. Mainfreight International Logistics Pte. Ltd. (hereinafter referred to as “the Defendant”) was incorporated in Singapore in 2010 and provides freight forwarding, packing and crating services. The Defendant was set up as a regional office for the international freight forwarding business of Mainfreight Ltd. (collectively known as ‘the Mainfreight Group’ along with its subsidiaries), a company incorporated in New Zealand in 1978.

The Plaintiff, through this trial, sought injunctive relief to restrain the Defendant from passing off by using the name “Mainfreight” for the Defendant’s services. The Defendant conceded that the Plaintiff had goodwill only in the Singapore-Malaysia, Singapore-Borneo and Singapore-Myanmar trade lanes (collectively referred to as “the three trade lanes”). However, the Defendant argued that the Plaintiff had not acquired any goodwill outside the three trade lanes, and as the Defendant operated in other trade lanes, there was no direct competition between the Plaintiff and the Defendant.

In determining the relevant date at which the goodwill was to be determined, the High Court sided with the Plaintiff’s argument that the goodwill should be assessed at the date at which the Defendant commenced business i.e. 1 January 2011 and rejected the Defendant’s notion that the Defendant’s date of incorporation i.e. 20 August 2010 be used instead.

The Plaintiff argued that it had use the name “Mainfreight” for 22 years as a result of which the word “Mainfrieght”, although os a combination of two English words ‘Main’ and ‘Freight’, had acquired a secondary meaning and become distinctive of the Plaintiff. The Plaintiff also stated that both the Plaintiff and the Defendant were engaged in the same business, namely freight forwarding. The Defendant, while had accepted that the Plaintiff enjoyed some goodwill in respect to the three trade lanes, argued that the scope of the Plaintiff’s goodwill must be limited to the three trade lanes. The Defendant further argued that the Plaintiff started trading on the Singapore-Australia and Singapore-New Zealand route after the relevant date. The Plaintiff furnished various evidence, including invoices, notices of arrival of goods, advertisements, correspondence with its clients etc. that showed that the Plaintiff’s business was not confined to the three trade lanes. The Plaintiff also contended that it would not have spent money on advertising outside the three trade lanes had it not expected any business arising from the same. The Defendant argued that such evidence showed sporadic and isolated trade and thus exhibited only trivial goodwill. The High Court, pointing towards the turnover details of the Plaintiff, deduced that the Plaintiff was an established player in the freight forwarding business in Singapore. The High Court further stated that the evidence produced by the Plaintiff were sufficient enough to prove, on the basis of probabilities, that the Plaintiff enjoyed goodwill in other trades lanes as well, including Australia, New Zealand, Taiwan, South Asian nations, Indonesia and the Philippines.

The High Court, next, set out to ascertain whether the Defendant had made a misrepresentation to the relevant section of the public. The Plaintiff asserted that the Defendant engaged in freight forwarding business in all geographical areas, thereby use of the name “Mainfrieght” by the Defendant amounted to misrepresentation that the Defendant is in some way associated with the Plaintiff. The Defendant, while denying this assertion, stated that it was set up as a regional office to handle the Mainfreight Group’s freight forwarding business in Singapore. The Defendant further stated it handled transshipped goods for the Mainfreight Group and in such case, there can be no instance of misrepresentation because such transshipped goods are handled wholly by the Defendant and any relevant documentation would be internal and not communicated to the public at large. The High Court also pointed towards the testimony of Daniel Lim, the Defendant’s branch manager, which stated that the Defendant was established with a view to growing the international freight forwarding business primarily to and from the United States, New Zealand, Australia, China, Hong Kong and South East Asia. Lim further conceded that some of the Defendant’s business overlapped with that of the Plaintiff’s. He admitted that the Plaintiff and the Defendant were in the same trade lane only with respect to Singapore-Australia and Singapore-New Zealand trade routes and that the Defendant did not deal in intra-Asian trade, and in particular did not ship to Malaysia, Brunei or Indonesia.

However, the Plaintiff adduced, based on the taped telephonic conversation between the Defendant and a private investigator employed by the Plaintiff, that the Defendant’s personnel indicated that the Defendant could arrange for shipments to and from Australia, Penang (an island in northern Malaysia), New Zealand, the United States, Saigon (Vietnam) and Sri Lanka. As a result, the High Court admitted that the Defendant, on the basis of probabilities, would be in competition with the Plaintiff in the Plaintiff’s areas of activity.

The Plaintiff produced evidence, consisting of misdirected phone calls and correspondence that referred to instances of alleged confusion. Five of these evidence showed that correspondence meant for the Defendant were mistakenly delivered to the Plaintiff. The Plaintiff also submitted the testimony of Chan Wah Hock who had been employed in the capacity of sales executive with the Plaintiff since 2009. According to his testimony, the Plaintiff’s client – NYK Shipping – had inquired with him about an email from Mainfrieght requesting freight rates for inter-Asian ports, although the Plaintiff had already had a rate agreement with NYK Shipping. Mr. Chan further testified that another company – Mitsui OSK Line – had checked with him whether the Defendant was a subsidiary of the Plaintiff because the Defendant had inquired about the rates for the same countries as the Plaintiff. The High Court, considering such evidence, adjudged that, on a balance of probabilities, the Defendant had made the required misrepresentation to the relevant section of the public.

The Defendant submitted that the Plaintiff had not produced any evidence that showed any actual damage to the Plaintiff resulting from the passing off. The High Court, however, rejected the Defendant’s submission quoting that the claimant does not have to prove actual damages in order to succeed in the action for passing off. Any likelihood of damage is sufficient enough.

Subsequently, the Defendant also submitted that it was entitled to rely on the defense of prior/concurrent use i.e. if a party proves that it is a concurrent user of a trademark, the Court may deny a plaintiff’s claim for passing off. In this regard, the High Court set out to establish whether the Defendant enjoyed any goodwill in Singapore concurrently with that enjoyed by the Plaintiff and, if so, whether the Defendant was entitled to ride on that goodwill. The High Court stated that as the Plaintiff commenced its business in Singapore under the name “Mainfreight” in 1998, the concurrent use would have to be shown from about 1990. The High Court adjudged that Mainfreight Ltd. (the parent company of the Defendant) was primarily a domestic trucking company and did not engage in freight forwarding directly. Therefore, it could not have acquired any goodwill in Singapore. The High Court also rejected two other companies from the Mainfreight Group as these companies started using the name “Mainfreight” in 2001 and 2008, thereby were not the concurrent user of the name.

The only company that was deemed to be using the name “Mainfreight” for as long as the Plaintiff was Mainfreight NZ, incorporated in New Zealand in 1984. Mainfreight NZ carried out the freight forwarding business along various trade lanes including the Singapore-New Zealand under the name “Mainfreight”. The Defendant contested that the Mainfreight NZ had appointed freight forwarders and freight destination agents in Singapore and that it had been using the name “Mainfreight” in the course of trade for over 20 years. The High Court adjudged that Mainfreight NZ had only sparse goodwill in Singapore resulting from its business relationship with its destination agents/counterparts. The High Court further stated that as the Defendant and Mainfreight NZ had no direct corporate relationship other than the fact that they are sister concerns i.e. they both are subsidiaries of the same company, any goodwill enjoyed by Mainfreight NZ would not necessarily be passed on to the Defendant. The High Court expressed no concluded opinion on the same as it found Mainfreight NZ to be accruing negligible goodwill in Singapore.

Hence, the High Court ruled in favor of the Plaintiff granting injunction to restrain the Defendant from the act of passing off and ordered an inquiry as to the damages suffered by the Plaintiff. The High Court also ordered the Defendant to take steps to change its company name, domain name and email addresses to ones which did not have the name “Mainfreight”.