McDonald’s Corporation, recently secured a landmark verdict in Singapore which cemented protection of its intangible IP rights when the Court of Appeal ruled that they had a right to oppose a trademark application based on sufficient visual, aural and conceptual similarities to their well-known “McCAFE” trademark.

The Background Facts: Future Enterprises Pte Ltd v McDonalds Corp [2007] SGCA 18:

McDonald’s Corporation originally filed an opposition to Future Enterprises Pte Ltd’s trademark application to register the trademark “MacCoffee”. The opposition was based on the former’s prior registration of the “McCAFE” trademark in relation to coffee and coffee substitutes. The opposition was upheld by the Registrar of Trade Marks and, subsequently, when Future Enterprises challenged the Registrar’s decision on appeal before the High Court, the decision was affirmed.

On appeal before the Court of Appeal in Singapore, Future Enterprises argued that since it had acquired a common law right to its mark through local and overseas use, the rights conferred by registration of the “McCAFE” trademark in opposition and invalidation proceedings were statutorily restricted and rendered inoperative under the Singapore Trade Marks Act by virtue of Future Enterprises’ prior unregistered right to proprietorship of the “MacCoffee” mark.

In addition to determining the issue above, the Court of Appeal also had to consider the following issues:

(a) Whether the MacCoffee mark was similar to the “McCAFE” mark; and

(b) Whether the goods specified under the “MacCoffee” mark were similar to those under the “McCAFE” mark; and that there existed a likelihood of confusion on the part of the public.

As to the issues of similarity concerning the trademarks in conflict and the related goods thereto, the Court of Appeal concurred with the decision of the Registrar and the High Court. It was envisaged that an appellate court should not tamper with the findings of fact of a trademark tribunal unless there was a material error of principle. In following the decision in SC Prodal SRL v Spirits International NV [2003] EWHC 2756, the court echoed the similar sentiment of Laddie J that “there must be some significant departure from a proper assessment of the law or the facts”.

The Novel Argument

Counsel for Future Enterprises argued that the rights conferred by the registration of the “McCAFE” trademark were statutorily restrictive and rendered inoperative under the opposition, invalidation and infringement provisions under the Singapore Trade Marks Act. This was founded on Future Enterprises’ common law right to the “MacCoffee” mark, which was alleged to have been acquired through its use in Singapore. It was also argued that a similar right was acquired in Singapore in respect of its international reputation, through its sales in Russia and other Eastern European countries.

In considering whether the appellant’s contention had merits, the Appellate Court had to determine whether Future Enterprises had in fact acquired such a right. In perusing documentary evidence that revealed advertisements and invoices of sales done locally and abroad, a substantial percentage of which highlighted a composite mark bearing an “eagle device” rather than the plain word mark “MacCoffee”, the Court found that the said adduced evidence of invoices were insufficient to prove use of the word mark in Singapore so as to entitle it protection on the basis of prior use.

In a nutshell, the appellant’s argument is that its common law right to use the “MacCoffee” mark for instant coffee mix overrides the right of the respondent as the registered proprietor of the “McCAFÉ” mark to oppose the appellant’s registration of the “MacCoffee” mark for instant coffee mix. There is, of course, a tension inherent in a system of law that recognises at the same time both registered and unregistered interests or rights in property, whether movable or immovable, such as in the law of property or, in this case, the law of trade marks. However, notwithstanding its supposed novelty, the Court of Appeal observed that the argument has, no merit in the context of the legislative framework of the Act in relation to the right to oppose registration of a trade mark.

The Courts Rationale

Reacting to the above novelty argument propounded by the appellant, The Court of Appeal was of the view that it had no merit in the context of the legislative framework of the Singapore Trade Marks Act in relation to the right to oppose registration of a trademark. The appellant had further argued that it was only during the oppositions that the opportunity arises for an applicant to clarify its prior unregistered rights against the opposition mark. The Court rejected this notion and envisaged that the Trade Marks Act does in fact afford ample opening for such proprietors to do so. The Court further held that the proprietors need not worry that such rights are protected by the Act or that registration destroys such rights, as the Act provides an avenue for proprietors of prior unregistered rights to oppose, invalidate or even revoke a subsequent registration. With regards to the appellant’s assertion that the existence of such right disentitles McDonalds Corp from asserting its rights as a registered proprietor of a similar mark in opposition proceedings the Court of Appeal was of the view that this notion was misconceived.

The Court went on to hold that in determining the scope of rights conferred by the system of registration of trademarks, paramount consideration had to be given to the legislative framework and the clear and unambiguous wordings of its provisions. The Singapore Trade Marks Act provides for several distinct types of applications (e.g. opposition, infringement, invalidation, revocation) for good reason. Construing the provisions to create a “defence” for unregistered marks on the basis of prior use in opposition proceedings initiated by proprietors of registered marks, undermined the rights conferred by registration.

In the same breath, the Court observed that the current legal requirements of “actual use” needed to be reconceptualized in the wake of the Internet and the corresponding ubiquitous nature of online advertisements and sales. The concept of the territoriality of a trade mark in terms of its use was likely to be affected by its ubiquitous use online

The final and most compelling argument against the appellant’s case was that, taken to its logical conclusion, it would result in the Trade Marks Register having two similar marks for the same kind of goods in Class 30, which would be the very antithesis of the rationale for having a system of registered rights. Having considered the issues above, the Court of Appeal dismissed Future Enterprises’ appeal.

The Impact

This decision clearly echoes the vision Singapore envisaged towards its recognition of IP as the future engineer of Singapore’s economic growth. Decisions like this and Johnson & Johnson’s “CAREFREE” trademark case (Johnson & Johnson’s v Uni-Charm Kabushiki Kaisha (Uni-Charm Corp) 2006 SGHC 241) have positively affirmed Singapore’s position as one of the best places in Asia for the commercialisation of ideas and innovations because it is clearly evident from cases like these that the nation takes intellectual property protection very seriously.

This is clearly evident as many International companies and foreign investors are leveraging on Singapore’s strong IP protection and legal infrastructure. The Global Competitiveness Report by The World Economic Forum (WEF) which recently ranked Singapore as the fifth most competitive in Asia for IP protection, obviously bears testimony to this.