Singapore – Case Commentary on Guy Neale and others v. Nine Squares

by mirandah

In Guy Neale and others v. Nine Squares [2013] SGHC 249, the Singapore High Court dismissed a trade mark invalidation suit and confirmed the requisite attributes for the establishment of goodwill in Singapore.

The Plaintiffs in that case comprises fourindividuals and two companies which carry on business as a partnership operating the restaurant, bar and club business known as “Ku De Ta” in Bali, Indonesia. The “KU DE TA” trademark was registered in Indonesia on March 20, 2001.

The Defendant is the registered owner of two trademarks in Singapore bearing the name “KU DE TA” (the SG marks). The 5th Plaintiff was a shareholder of the Defendant and was involved in its activities. He was made a party as the 5th Plaintiff because the action was brought by the “partnership” of which he was a party to. However, he gave evidence on behalf of the Defendant.

The 1st SG mark was registered on February 16, 2004, in Class 43 (restaurants, etc) as a trademark in Singapore. The 2nd SG mark was registered on June 30, 2009, as a trademark in Singapore to protect Ku De Ta-branded apparel, jewellery and music. The Plaintiffs instituted proceedings against the Defendant for:

  1. a declaration that the SG marks are held on trust for the Plaintiffs and should accordingly be transferred to the Plaintiffs; or
  2. an invalidation of the SG marks on the grounds of, inter alia, passing-off, breach of fiduciary duties, registration of the SG marks in bad faith and usurpation of corporate opportunity.
  3. At the outset, the High Court found that it was indeed conceivable for the Indonesian trademark to be owned legally and beneficially from parties different from those that legally/beneficially owned the SG marks. In this connection, the High Court agreed with the Plaintiffs that the name and the goodwill would be the most valuable asset of the partnership; and that from the outset, the parties had agreed that the name and goodwill would belong to the partnership.
  4. Be that as it may, the High Court found that there was no creation of an express trust as the Plaintiffs did not establish the requisite certainty of intention, that there was no usurpation of corporate opportunity and that there were no breaches of fiduciary duties.

With respect to ascertaining whether the applications to register the SG marks were made in bad faith, the High Court reiterated that an application for the registration of a trademark would be made in bad faith if the defendant’s conduct in applying for the registration of the trademark fell short of the normally accepted standards of commercial behaviour; and if the defendant subjectively knew of facts which would have made an ordinary honest person realize that what the defendant was doing would be regarded as breaching those standards.

To establish goodwill in Singapore, the Plaintiffs have to show the presence of actual or potential customers in Singapore at the material time. Indeed, the Plaintiffs’ grounds for invalidating the SG marks have a common denominator – the Plaintiffs must show that their “KU DE TA” trade mark was an earlier trademark within the meaning of the Trade Marks Act (Cap. 332).

In respect of the 1st SG mark, while the international publicity of Ku De Ta cannot be discounted in considering whether the trademarks were well known in Singapore, such publicity cannot be as relevant and significant as the publicity and advertising conducted in Singapore. Indeed, the ultimate inquiry is whether the trademark is well known in Singapore. Online travel guides and newspaper articles from other jurisdictions are of limited assistance unless there is proof of their distribution in Singapore or that they were read by Singapore residents. Mere publication of a book in Singapore does not imply that it was distributed here at all. In the circumstances, the court found that the evidence did not show on a balance of probabilities that Ku De Ta enjoyed goodwill in Singapore as at February 16, 2004.

In respect of the 2nd SG mark, the Plaintiffs submitted that Ku De Ta Bali enjoyed goodwill in Singapore when the Defendant applied to register the 2nd SG mark on June 30, 2009. In this respect, the High Court agreed that it was likely for Ku De Ta Bali (as a restaurant operating in Bali) to be well-known to the relevant sector of the Singapore public as well. However, the High Court noted that the 2nd SG mark was registered to only protect Ku De Ta-branded apparel, jewellery and music. In the circumstances, while the High Court was prepared to find some goodwill in Singapore as at June 30, 2009, for Ku De Ta as a restaurant, the High Court found that the evidence did not support the finding of goodwill as at that date for Ku De Ta-branded apparel, jewellery or music.

By reason of the above, the Plaintiffs’ claims vis-á-vis invalidation of the trade marks and the tort of passing-off also failed.