Singapore Trade Marks – Opposition on the sole ground of bad faith failed – CTBAT International Co. Limited v N.V. Sumatra Tobacco Trading Company [2019] SGIPOS 8

Intellectual Property News

In a decision rendered by the Intellectual Property Office of Singapore (IPOS), it was held that CTBAT International Co. Limited had failed in its opposition against N.V. Sumatra Tobacco Trading Company, although they have been successful in revoking the mark in Japan and South Korea.

 

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

(a) CTBAT International Co. Limited (“Opponent”)

The Opponent is a joint venture between BAT and the China National Tobacco Corporation (“CNTC”) incorporated in Hong Kong in 2012. Both BAT and CNTC are major providers of tobacco products globally. BAT is the world’s second largest independent cigarette manufacturer and the most internationally recognised tobacco company since its engagement in the tobacco industry in 1902 whilst CNTC is a Chinese state-owned manufacturer and distributor of tobacco products and it accounts for approximately 98% share of the Chinese tobacco market. CNTC is also the world’s single largest tobacco manufacturer.

The Opponent has registered its “Shuang Xi” trade marks in Singapore whilst it has also applied to register several trademarks which are comprised of the element “XiXi” with “Xi” meaning “Happiness” and the combination of two “Xi” was one to be read as “Shuang Xi” (translated to mean “Double Happiness”) but these applications are now withdrawn.

(b) N.V. Sumatra Tobacco Trading Company (“Applicant”)

The Applicant is a company organised and existing under the laws of Indonesia and it was established in Indonesia in 1952. One of the Applicant’s main businesses involves the manufacturing, marketing and sale of cigarettes and tobacco related products. Prior to the application for registration of its “XiXiXi” trade mark (“Subject Mark”), the Applicant had registered an earlier mark (“Old Tri-Happiness Mark”) in Singapore. The Old Tri-Happiness Mark was however not used in Singapore. In the present time, the Applicant holds the registration of its “XiXiXi” trade mark in several jurisdictions.

 

(B) What actually happened?

The Opponent has successfully revoked the Applicant’s registrations of its “XiXiXi” trade mark in many jurisdictions. In similar fashion, the Opponent sought to revoke the Applicant’s registration of the Subject Mark in Singapore. The sole ground of opposition in this case as brought by the Opponent is that the application for registration of the Applicant’s Subject Mark was made in bad faith under Section 7(6) of the Trade Marks Act (Cap 332, 2005 Rev Ed) (“the Act”).

In the present case, the Opponent pleaded case of bad faith under the following heads:

The Applicant has no bona fide intention to use the Subject Mark in Singapore;
The Applicant’s track record of applying other tobacco proprietors’ trade marks;
The Applicant did not discharge its duty to investigate into the bona fides of the Subject Mark before seeking registration; and
The Applicant’s knowledge of third-party registration and use of similar marks.

 

(C) What are the issue(s) in dispute?

(a) Whether the Opponent can succeed on the ground of opposition under Section 7(6) of the Act, that the Subject Mark was made in bad faith by the Applicant.

 

(D) Holding

The Registrar found that the Opponent fails on its sole ground of opposition (that the Subject Mark was made in bad faith) and the Applicant’s Subject Mark will therefore proceed to registration.

 

(E) Rationale for holding

The Registrar highlighted the leading case of Valentino Globe BV v Pacific Rim Industries Inc [2010] 2 SLR 1203 in setting out the key principles of bad faith as follows:

(i) once bad faith is established, the application for registration of a mark must be refused even though the mark would not cause any confusion;

(ii) the legal burden of proof needed to substantiate an action on the ground of bad faith lies on the party bringing the application of invalidation;

(iii) 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 if no breach of any duty or obligation is found in such dealings;

(iv) the test for bad faith is case-by-case and involves both a subjective element and an objective one: i.e. subjectivity based on what the particular applicant knows and objectivity based on what an ordinary person adopting proper standards would think; and

(v) the ground of bad faith is a serious claim and must be supported with sufficient evidence.

The Registrar found, as according to the Opponent’s pleaded heads, that:

Despite the Opponent’s allegations that the Applicant has applied to register the Subject Mark with no bona fide intention to use the Subject Mark in Singapore, the Applicant has nevertheless been using the Subject Mark in Indonesia since 2011 (this is supported by Applicant’s submissions). The Registrar hence accepts the Opponent’s explanation that it had plans to launch its products bearing the Subject Mark since 2012 but it has not done so due to its decision to further survey the market patterns (this is also supported by Applicant’s submissions to show that the Applicant has undertaken efforts to prepare its launch in Singapore). As such, the Registrar found that the Applicant has reasonable commercial justification for applying to register the Subject Mark in Singapore.

Despite the Opponent’s allegations that the Applicant has a track record of applying to register other tobacco proprietors’ trade marks (which the Applicant has supported with its submissions of nine such trade marks), the Registrar found some difficulties with this particular head pleaded by the Opponent as follows:

Whilst the Opponent alleged that the Applicant has applied for nine other trade marks in bad faith, the Registrar was however meant to decide on the application of the Subject Mark and yet the Opponent provided no actual allegation of bad faith against the Subject Mark.

Even if the Registrar was to consider the Opponent’s allegations, the Registrar noted that the Opponent did not produce sufficient evidence to show that the nine other proprietors have objected or are objecting to the registered marks.

Even if the Opponent succeeds in showing that the nine other marks were made in bad faith, it did not mean that the Subject Mark would naturally follow as one made in bad faith as the Registrar still ought to consider the facts of the case and would have found that the Applicant’s registration was one made to protect its business interest in Singapore rather than one made in bad faith.

Whilst the Opponent contends that the Applicant did not discharge its duty to investigate into the bona fides of the Subject Mark before seeking registration, the Registrar was unable to agree with the Opponent and rejected the Opponent’s claim as follows:

Whilst the submission may show that the Applicant knew about the “Shuang Xi” marks, there is nothing to suggest that the Applicant’s knowledge existed at the time of its application to register the Subject Mark.
Even if the Applicant knew of the “Shuang Xi” marks at the relevant date, the Subject Mark is neither “Shuang Xi” (XiXi) nor “Double Happiness”. The Subject Mark is comprised of three “Xi” (XiXiXi) which would be understood as “Triple Happiness”.
There is generally no duty imposed on an applicant to conduct trade mark searches before an application to register a mark.

Despite the Opponent’s allegations that bad faith exists since the Applicant must have known of third-party registrations and use in Singapore of similar marks and nevertheless proceeded with registration, the Registrar emphasised that knowledge of a trade mark belonging to a third party is not sufficient in and of itself to constitute bad faith.

Based on the findings above, the Registrar found that the ground of opposition under Section 7(6) would therefore fail.

 

(F) Point of Interest

It was demonstrated that the threshold to succeeding a claim of bad faith is a high one as there is generally no duty imposed on an applicant to conduct trade mark searches prior to its registration and the absence of such searches would not render the registration to be in bad faith. Furthermore, whilst an applicant may have a track record of applying marks in bad faith, it does not naturally follow that the threshold for bad faith would be easily met as each case were to be considered on its own and such track record would not be the primary consideration.