Singapore Trade Marks - Teraoka Seiko Co., Ltd Succeeds on 3 out of 4 Opposing Grounds - Digi International Inc. v Teraoka Seiko Co., [2020] SGIPOS 1

Intellectual Property News

In a decision rendered by the Intellectual Property Office of Singapore (IPOS), it was held that the Opponent had succeeded on the following grounds:

• that the mark and the goods and services were similar in that there would be a likelihood of confusion amongst the public (Section 8(2)(b) Trade Mark Act);
• that based on the law of passing off, goodwill, misrepresentation and likelihood of damages was established (Section 8(7)(a) Trade Mark Act); and
• that it’s mark is well known in Singapore and in registering the Applicant’s mark damage would be caused to the Opponent’s interest (Section 8(4)(b)(i) read with 8(4)(a) of the Trade Mark Act).  

However, the Opponent did not succeed in proving that the Applicant’s intention of registering its mark is one that was made in bad faith (Section 7(6) of the Trade Mark Act).

 

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

Digi International Inc. (“Applicant”)

The Applicant is an American company that applied to protect the trade mark under class 9, 38 and 42. The Applicant engaged in a variety of business-critical machine to machine and internet of things connectivity products and services around its “DIGI” mark.

 

Teraoka Seiko Co., Ltd (“Opponent”)

The Opponent is a Japanese company dealing in electronic price-computing scales and has long established their products and services around its mark “DIGI”.

 

(B)       What actually happened?

The dispute between both parties involves a trade mark opposition in Singapore.

The Applicant and the Opponent have been engaged in disputers over their respective “DIGI” marks for over 17 years. With the intention to settle their series of trade marks disputes  concerning their respective “DIGI” marks in Germany, both parties entered into a co-existence agreement in 2002 (“Agreement”) which primarily contained the following key terms:

First, that the Applicant agrees not to attack the Opponent’s existing or new registrations of Digi so long as the registration is for a list of goods and services specified in the Agreement namely digital or analog display devices, keyboards, writer, printer data-processing devices and computers.

Second, that the Opponent agrees not to attack the Applicant’s registrations of Digi so long as the registration is for a separate list of goods and services specified in the Agreement., Namely, data processing devices which included software programme brought on data carriers provided that it does not include the uses by the Opponent such as goods and services which relates to weighing and/or measuring purposes or transfer of data connected to weighing and/or measuring processes.

The 2002 Agreement was not in dispute but was used a guide in determining the ground of opposition in the present case.

 

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

The Opponent relied on four grounds of opposition under the Trade Marks Act which primarily reads as follow:

• Section 7(6) of the Act: a trade mark shall not be registered is the application is made in bad faith;
• Section 8(2)(b) of the Act: that a trade mark shall not be registered if it is similar to an earlier protected trade mark of similar or identical goods or services as there exists a likelihood of confusion on the part of the public;
• Section 8(7)(a) of the Act: that a trade mark shall not be registered if its use in Singapore is liable to be prevented by virtue of any rule of law (in particular, the law of passing off) protecting an unregistered trade mark or other sign used in the course of trade; and
• Section 8(4)(b)(i) read with section 8(4)(a): where an application of whole or essential part of a trade mark is made on or after 1st July 2004 and the mark is identical or similar to an earlier mark, then the later mark shall not be registered if the earlier mark is well known in Singapore and use of the later mark would indicate a connection that is likely to damage the interests of the proprietor of the earlier mark.

 

(D)       Holding

Out of the four grounds, the Opponent successfully opposed the Applicant’s trade mark application in classes 9, 38 and 42 under section 8(2)(b), 8(7)(a) and 8(4)(b)(i) read with 8(4)(a) of the Trade Marks Act on the basis of the opponent’s prior mark in class 9 covering “balance, and scale, scale equipped with printer and printer”.

 

(E)        Rationale for holding

Decision on Section 7(6):

The Opponent first relied on Section 7(6) of the Trade Marks Act in opposing the Applicant’s trademarks applications by arguing that the Applicant had acted in bad faith by applying to register a new design of their DIGI mark which the Opponent deemed as an even more similar to theirs.  Secondly, that the Applicant had exercised bad faith by applying to register the new mark for a broader list of goods and services that was provided for in the Agreement.

In the present case, the hearing officer held that the facts and the lack of evidence that there was a common understanding between parties did not indicate that the Applicant had exercised bad faith by not informing the Opponent of its intention of registering the new design of their Digi mark.

The law on bad faith is well established in the Court of Appeal case of Valentino Globe BV v Pacific Rim Industries Inc [2010] 2 SLR 1203 (“Valentino”) which established the following key principles:

That the onus is on the Opponent to show that the application was made in bad faith and the burden of disproving any element of bad faith shifts to the Applicant;
That bad faith does not only deal with actual dishonesty (subjective element) but also dealings that would be considered commercially unacceptable by a reasonable and experienced person in a particular trade (objective element); and
That it must be fully and properly pleaded and should not be upheld unless it is distinctly proved which is rarely possible by a process of inference.

The Hearing Officer also distinguished two case law cited by the Opponent in support of its arguments – a decision by the UK Registrar of Trade Marks in Case O-006-17 Trade Mark Application No. 3134673 by Cold Black Label Ltd (“Cold Black Label”) and a decision by the Australian Trade Marks Office in Ceravalo Premium Wines Pty Ltd v MA Kirkby TRPL Pty Ltd [2018] ATMO 43 (“Ceravalo”).

In Cold Black Label, it was held that even if the agreement prohibited use and not registration of similar marks, the application was made in bad faith because it was “plainly contrary to the spirit of the agreement” and that the marks were so highly similar that the Applicant ought to have realized that.

In Ceravalo, the applicant had agreed not to use terms that were deceptively similar to the opponent’s mark “Red Earth Child”. However, the applicant proceeded to apply for the term “OCHRE EARTH CHILD” without notifying the opponent. Although the marks were not similar, it was held that by deliberately informing the application was deemed to be made in bad faith.

In both of the cases cited by the Opponent, the timeframe between the offending registrations and the signed agreement between the respective parties were not too far. However, in the present case, the application made by the Applicant was 14 years after the Agreement and during this period both parties had continued to oppose each other’s trade mark application in various jurisdictions.

Taking the above into consideration and the lack of evidence on the common understanding of informing either parties when making a trade mark, the Opponent ground of opposition under section 7(6) failed.

 

Decision on Section 8(2)(b)

In making its decision under section 8(2)(b), the Hearing Officer relied on the step by step approach set out by the Court of Appeal in Staywell Hospitality Group v Starwood Hotels & Resorts Worldwide [2014] 1 SLR 911 (“Staywell”):

• Similarity (or identity) of marks;
• Similarity (or identity) of goods or services; and
• Likelihood of confusion arising from the two similarities;

 

Similarity of marks

The three established aspects of similarity in marks is aural, visual and conceptual similarity. Applying the facts of the present case, the Hearing Officer found that the aural similarity of both the Applicant’s and Opponent’s marks ‘DIGI’ are identical.

As for visual similarity, the Hearing Officer found that taking both the Applicant and Opponent’s marks as a whole and in a side by side comparison, both marks are visually similar in terms of the textual presentation and use of similarly shaped device. Applying the test of Hai Tong Co (Pte Ltd) v Ventree Singapore Pte Ltd [2013] 2 SLR 941 (“Hai Tong”) that an average consumer with an imperfect recollection, it would be understandable if a consumer considered the Applicant’s Application Mark to be similar to, like a more modernized version of, the Opponent’s DIGI Mark.

Turning to conceptual similarity, following the case of Hai Tong and Staywell, conceptual similarity requires consideration of the ideas that lie behind and inform the understanding of the mark as a whole. In light of this, the Hearing Officer stated that the text DIGI evokes the word digital and connects a relation to the products and services with a digital element which is consistent to what is offered by both parties. Hence, there is a clear similarity in the conceptual aspect of both the marks.

 

Similarity of Goods and Services

The test adopted in comparing the goods and services of the competing marks registered is set out in the English case of British Sugar plc v James Robertson & Sons Ltd [1996] RPC 281 (“British Sugar”) where the following factors were held to be relevant considerations in determining the question of similarity of goods and services:

The respective used of the respective goods or services;
The respective end users of the respective goods or services;
The physical nature of the goods or services; and
The respective trade channels through which the goods or services reach the market;

In the case of self-serve consumer items, whether in practice they are respectively found or likely to be found on the same or different shelves; and
Whether the respective goods or services are competitive or complementary. This inquiry may take into account how those in the trade classify goods, for instance whether market research companies who act for the industry put the goods or services in the same or different sectors.

Comparing the goods and services registered under the parties’ respective marks, the Opponent’s DIGI Mark is registered in Class 9 only for “balance and scale, scale equipped with printer, printer” while the Applicant’s Application Mark is being sought to be registered in Classes 9, 38 and 42.

The Hearing Officer found that the Applicant’s Class 9 specification is defined extensively in comparison to the Opponent’s shorter specification. Applying the 2002 Agreement, it can be seen that both the parties recognized that their respective descriptions can encroach into the goods and services covered by the other party. In the Applicant’s evidence, it was further stated that its products were used wherever connection with machines is required which the Hearing Officer found that it included products sold by the Opponent such as machines relating to weighing or measuring elements of connectivity.

Furthermore, the other classes that the Applicant had sought to register in are Classes 38 (telecommunications) and 42 (scientific and technological services and research and design relating thereto, industrial analysis and research services, design and development of computer hardware and software). The hearing Officer found that services specified by the Applicant in Class 38 and 42 to be closely related to goods offered by the Applicant under Class 9.

The Applicant did make a late amendment to Class 9 where the reference to computer printer servers was removed and the words “none of the aforementioned gods relating to balance and scale, scale equipped with printer, printer” was added.  The Hearing Officer agreed with the Opponent that this amendment did not make the types of goods and services that can be covered less similar.

In concluding under Goods and Services, the Hearing Officer found that there is similarity between the Opponents goods in Class 9 and the Applicant’s goods and services in Classes 9, 38 and 42. This was substantiated with the point that the fact that parties had their respective demarcated areas of goods and services in the 2002 Agreement, did not make each of their respective goods and services dissimilar to the other party’s.

 

Likelihood of confusion

Under likelihood of confusion, the Hearing Officer agreed with the Opponent’s argument that although the goods and services marketed by both parties are somewhat specialized and not typically marketed and sold to the general public at large, similar group of consumers could still be targeted.

In assessing likelihood of confusion, the Hearing Officer took into consideration the conclusion on the aural, visual and conceptual similarity of the marks and the similarity of goods and services of both the marks and found that all these factors formed an economic link between the Applicant’s goods and services and the Opponent’s.

Taking all of the above into consideration the Hearing officer found that the ground of opposition under Section 8(2)(b) succeeds.

 

Decision on Section 8(7)(a)

In assessing the ground of opposition under section 8(7)(a), the Hearing Officer went through the element of goodwill, misrepresentation and damage which are required to be successful on the ground of invalidation based on the tort of passing off.

 

Goodwill

In Singsung Pte Ltd v LG 26 Electronics Pte Ltd (trading as L S Electrical Trading) [2016] 4 SLR 86 (“Singsung”), it was held that goodwill would clearly exist in Singapore if it is shown that a business offers a product or service for sale here and a customer purchases the product or consumes the service here.

The Opponent’s evidence of prove of sales, profits, expenses incurred in promoting the goods and services of it’s DIGI mark both in Singapore and worldwide was sufficient to establish goodwill.

 

Misrepresentation

In applying Singsung test on misrepresentation, which is whether the goodwill is distinctive of the Opponent’s goods and services there are further two questions to be considered. That is whether the misrepresentation made by the Applicant is in using products which are strikingly similar or identical and that actual confusion or likelihood of confusion arose because of that misrepresentation made.

Following its conclusion on likelihood of confusion under section 8(2)(b), the Hearing Officer was satisfied that the element of misrepresentation was met.

 

Damage

Following the Singsung, the Hearing Officer held that it is not necessary for the Opponent to show actual damage so long as a real tangible risk of substantial damage is present which could also occur by way of blurring or tarnishment. Hence, following the earlier finding that the competing marks are similar, the similarity of the products and services by the competing marks and the likelihood of confusion, that is a real tangible risk of the Opponent’s goodwill being affected and that the element of damage is also made out.

 

Decision on Section 8(4)(b)(i)

In order to succeed under section 8(4)(b)(i), the Opponent had to establish all four of the following elements:

• The whole or an essential part of the Application mark is identical with or similar to an earlier trade mark;
• The earlier trade mark is well known in Singapore;
• Use of the Application mark in relation to the goods and services for which the Application Mark is registered would indicate a connection between those goods or services and the proprietor of the earlier mark; and
• Such use of the Application Mark is likely to damage the interests if the proprietor of the earlier trade mark. 

 

Earlier trade mark and well known earlier trade mark

The Hearing Officer had already determined the similarity of the two marks earlier and went on to explain that section 2(7) and 2(9) of the Trade Marks Act points out what amounts to a well-known trade mark. These two sections essentially states that whether a trade mark is well known in Singapore, inferences will be made to degree to which the trade mark is recognized in the relevant section, the use, duration and geographical extent of the mark, registration or application of the trade mark outside of Singapore, and the value associated with the trade mark itself.

The Opponent argued that it had acquired distinctiveness of its mark which would support that it is well known and they further showed that it’s mark has been used on products sold in Singapore since 1987 together with the sales and advertising figures of the products.

In the case of Novelty Pte Ltd v Amanresorts Ltd and another [2009] 3 SLR(R)216 (“Amanresorts”), it was acknowledged that section 8(4) grants proprietors of well-known trade marks in Singapore protection from the registration and/or use of identical or similar trade marks on dissimilar goods or services. Thus, the Hearing Officer as satisfied that the well-known status of the Opponent’s DIGI mark was sufficiently made out.

 

Indicate a connection and likely to damage the interests of the proprietor

Following Amanresorts, where the Court of Appeal held that the tests relating to misrepresentation and damage under the law of passing off is the same as to indicate a connection and likely to damage the interests if the proprietor requirement under section 8(4), the Hearing Officer was satisfied that this element was also made out.

 

(F)        Point of interests

This decision demonstrates that to establish and succeed under section 7(6) of the act in facts that involve co-existence Agreements, it would not be sufficient to argue that the Opponent’s unilateral expectation fell outside of the agreement but that the Applicant had breached a common understanding between parties.