SINGAPORE TRADE MARKS – USA PRO IP LIMITED’S APPLICATIONS FOR INVALIDATION AND REVOCATION OF MONTFORT SERVICES’ WERE SUCCESSFULLY MADE OUT - MONTFORT SERVICES SDN. BHD. V. USA PRO IP LIMITED [2018] SGIPOS 3

Published 24 April 2018 by Alpha & Omega Law Corporation

In a decision rendered by the Intellectual Property Office of Singapore (IPOS), it has held that USA PRO IP Limited’s applications for invalidation and revocation succeeded on the ground of bad faith and non-use respectively.

(A) Who are the parties involved in this case?

  • USA Pro IP Limited (“Applicants”)
  • The Applicants deposed that they are in the business of manufacturing, distributing and promoting sporting wear and equipment under the mark “USA PRO”. Through the years, the Applicants have become recognised as a high quality brand providing an innovative range of fitness wear.  Their products are sold across many countries worldwide.
  • Montfort Services Sdn. Bhd. (“Proprietors”)
  • It is the registered proprietor of Singapore Trade Mark No. T0805183J for “USAPRO” in Classes 18, 25 and 28 (“Subject Mark”)

(B) What actually happened?

The Applicants instituted two post-registration actions against the Subject Mark, i.e. applications for (a) invalidation and (b) revocation.

The Applicants relied on the following grounds of the Trade Mark Act (Cap. 332) (“TMA”) in support of its application for invalidation and revocation:

Invalidation

  • Section 23 read with Section 7(6): The application for registration of the Subject Mark was made in bad faith.
  • Section 23 read with Section 8(7)(a): The registration of the Subject Mark should not have been granted by virtue of the law of passing-off protecting unregistered trade mark.

Revocation

  • Section 22(1)(a) and (b): The Subject Mark should be revoked on the ground of non-use.

*At the oral hearing, the Proprietors conceded that there was no use of the Subject Mark.

(C) What is/are the present issue(s) in dispute?

Invalidation

  • Whether the Applicants have met the high threshold to establish bad faith.
  • Whether the Subject Mark should have not been registered by virtue of the existence of an unregistered trade mark.

Revocation

  • Whether the reasons proffered by the Proprietors qualify as “proper reasons for non-use” of the Subject Mark.

 

(D) Holding

Invalidation

  • Section 7(6): The Hearing Officer found that application for registration of the Subject Mark was made in bad faith.
  • Section 8(7)(a): In view of the finding of bad faith on the part of the Proprietors, this issue was no longer dealt with in further detail.

Revocation

  • Section 22(1)(a) and (b): In view of the Proprietors’ admission of non-use, the issue that was dealt with was whether there were proper reasons for non-use. The Hearing Officer found that the delay in the launch of the product line bearing the Subject Mark by the Proprietors due to the numerous actions taken out by the Applicants against them across the world constituted ordinary commercial delays. As such, it was held that the Proprietors failed to discharge their burden of showing that there were valid reasons for the non-use of the Subject Mark.

(E) Rationale for Holding

Invalidation

The law

Under Section 101(c)(i) of the TMA, “the registration of a person as proprietor of a registered trade mark shall be prima facie evidence of the validity of the original registration”.  Therefore, the burden of proof lies on the Applicants to establish the grounds of invalidity. The standard of proof is that of a balance of probabilities.

The legal test in determining the presence of bad faith was been settled in the case of Valentino Globe BV v. Pacific Rim Industries [2010] 2 SLR 203 as cited in the case of Christie Manson & Woods Limited v. Chritrs Auction Pte. Limited [2016] SGIPOS 1, wherein it was laid that:

“Bad faith embraces not only actual dishonesty but also dealings which would be considered as commercially unacceptable by reasonable and experienced persons in a particular trade, even though such dealings may otherwise involve no breach of any duty, obligation, prohibition or requirement that is legally binding upon the registrant of the trade mark.

The test for determining bad faith is the combined test of bad faith which contains both a subjective element (viz, what the particular applicant knows) and an objective element (viz, what ordinary persons adopting proper standards would think).  Thus, “bad faith” as a concept is context-dependent.  In the final analysis, whether bad faith exists or not hinges on the specific factual matrix of each case.”

Once the Applicants have established a prima facie case of bad faith, the burden will shift to the Proprietors to disprove any element of bad faith.

Additionally, in the case of Festina Lotus SA v. Romanson Co Ltd [2010] 4 SLR 552, it was held that bad faith is to be determined as at the date of application and matters which occurred after the date of application which may assist in determining the applicant’s state of mind as at the date of application can be taken into consideration.

 

Section 7(6)

The Hearing Officer opined that bad faith inquiry is a multi-factorial one. The Hearing Officer cited Kerry’s Law of Trade Marks and Trade Names (Sweet & Maxwell, 15th Edition at 8-264 and 8-265 wherein the learned authors laid down the following consideration in assessing bad faith, as follows:

  • A presumption of knowledge may arise from inter alia general knowledge in the economic sector concerned of such use and that knowledge can be inferred from inter alia the duration of such use. The more that use is longstanding, the more probable it is that the applicant will, when filing the application, have knowledge of it.
  • The fact that the applicant knew or must have known of the third party use in at least one member state of a similar sign for the similar product capable of being confused with the sign for which registration is sought is not sufficient, in itself, for a conclusion that the applicant was acting in bad faith.
  • Consideration must also be given to the applicant’s intention at the time of filing the application for registration. This is subjective factor which must be determined by reference to the objective circumstances of a particular case.
  • The intention to prevent a third part from marketing a product may, in certain circumstances, amount to bad faith. This would be so when it becomes apparent subsequently that the applicant applied for a mark without intending to use it, his sole objective being to prevent a third party from entering the market.
  • The fact that the third party has long used a sign for a similar product capable of being confused with the mark applied for and that the sign enjoys some degree of legal protection is one of the factors relevant to the determination. In such a case, the applicant’s sole aim in applying for the mark might be to compete unfairly with the competitor.

The factual narrative attendant to the case are as follows:

  • The Applicants were the owners of variants of the mark in several jurisdictions since as early as 1994;
  • The Applicants’ predecessor, USA PRO Limited were the first user of the mark in Singapore;
  • The Proprietors’ attempt to acquire the Applicants turned sour during the period of year 2006 to 2008, indicating a pre-existing relationship between the parties;
  • There was no use at all of the Subject Mark by the Proprietors (as conceded by them at the oral hearing);
  • Marks sought to be registered and/or transferred to the Proprietors were also taken off the register, whether as a result of non-use or not (e. two marks in the USA and one mark in Canada);
  • The Applicants successfully enforced several actions against the Proprietors on the non-use of the Subject Mark.

Based on the above, the Hearing Officer found the Applicants have met the high threshold to establish bad faith for the following reasons:

  • The Proprietors had knowledge of the Applicants’ right in the mark on or before the relevant date of 22 April 2008 (e. when the Proprietors applied to register the Subject Mark);
  • Despite such knowledge, the Proprietors proceeded to apply to register the Subject Mark;
  • The Proprietors did not use the Subject Mark at all; and
  • The Proprietors’ actions in other jurisdictions support the proposition that they do not intend to use the Subject Mark at all.

The burden of proof was then shifted onto the Proprietors to disprove the prima facie case of bad faith but they failed to so do for the following reasons:

  • They failed to raise any positive factual allegation that conflicts with the Applicants’ account of the prior negotiations; and
  • They failed in their justification with regard to the conceptualisation of the Subject Mark.

Section 8(7)(a)

On the second issue, the Hearing Officer clarified that the following elements should be determined:

  • Goodwill;
  • Misrepresentation; and

However, in view of the findings in relation to bad faith, the Hearing Officer ruled that there is no need to look into this ground of objection in further detail.

The application for invalidation based on Section 7(6) succeeded.

Revocation

The Law

Under Section 105 of the TMA, the Proprietors have the burden of showing that use has been made of the Subject Mark.

The law pertaining to “proper reasons for non-use” has been settled in the case of Nation Fitting (M) Sdn Bhd v. Oystertec plc [2006] 1 SLR 712 at 129, wherein it was held that “[t]he onus to show that it had proper reasons for not using the trade marks concerned during the relevant period is on the proprietor of the mark.  If obstacles to use existed, these must have arisen independently of the will of the said proprietor and ordinary commercial delays in producing a new product bearing the trade mark in question would not constitute a valid excuse”.

In addition, the High Court also noted Mr M J Tuck’s observations in INVERMONT Trade Mark that, “[t]he term ‘proper’… is intended to cover abnormal situations in the industry or the market, or even perhaps some temporary but serious disruption affecting the registered proprietor’s business. Normal delays occasioned by some unavoidable regulatory requirement, such as the approval of a medicine, might be acceptable but not, I think, the normal delays found in the marketing function. These are matters within the businessman’s own control and I think he should plan accordingly.”

Section 22(1)(a) and (b)

The Hearing Officer found that the Proprietors’ excuse(s) for non-use were far from satisfactory.  Thus, the Proprietors’ contention that they could not be expected to incur significant costs to use the Subject Mark or to sell their products in Singapore under the Subject Mark in view of the pending trade mark proceedings involving the Subject Mark across the world failed. 

The Hearing Officer held that there were no proper reasons for non-use.  The Hearing Officer is of the view that such actions (i.e. the trade mark actions initiated by the Applicants across the world against the Proprietors) constitute ordinary commercial delays which are not valid excuse for non-use.  Whether there are proper reasons for non-use must be assessed in a business sense such that it would not cover routine difficulties in the business world such as normal delays in the marketing arena. It was found that it was not commercially reasonable for the Proprietors to wait for all the global disputes to be resolved before initiating to use the Subject Mark. 

The Hearing Officer went on further to consider the scenario where such a reason proffered by the Proprietors is acceptable as an excuse for non-use. She found that the Proprietors’ evidence lacked in detail.  Not only did the Proprietors fail to provide dates for the alleged opposition and cancellation proceedings such that it is entirely possible that all or most of them were launched after the relevant period, they also failed to provide any supporting documents and any specifics as to how such proceedings could have prevented the genuine use of the Subject Mark in Singapore (i.e. how the proceedings have impaired the Proprietors’ financial ability to launch their products). As the burden of proof lies on the Proprietors to prove that they were prevented to use the Subject Mark in view of the Applicants’ actions, it would be reasonable to expect from the Proprietors to provide sufficient details to show that they were indeed prevented to use the Subject Mark.

The application for revocation based on Section 22(1)(a) and (b) succeeded.

 

Commentary:

 

Invalidation

The Hearing Officer clarified that while the law in the area of bad faith is clear, the application of the law may not be so clear and much depends on the actual circumstances surrounding the case.

Revocation

Trade mark proprietors should be mindful that the trade mark monopoly granted to them carries with it the corresponding obligation to use the trade mark notwithstanding any pending disputes involving the trade mark. Otherwise, the same will be vulnerable to attack due to non-use.