Singsung Pte Ltd ("Singsung") was in the business of exporting household appliances manufactured in China for sale in Cameroon. Singsung mainly sold to non-resident trade buyers who would purchase the goods from his shop and have them shipped to Cameroon for sale to end users there. LS Electrical Trading ("LS Electrical") was incorporated subsequently by the brother of the owner of Singsung.

Singsung claimed that: 

(1) LS Electrical were liable for passing off as the get-up for eight of the LS Electrical's products (LS Get-Up) was identical or confusingly similar to the Singsung's get-up for the corresponding product (Singsung Get-up); and

(2) LS Electrical had infringed the copyright in the Singsung's White GetUp Picture, Blue Get-Up Picture and TV Stickers. 

LS Electrical counterclaimed for amongst others, groundless threat of copyright infringement.

The High Court noted that the LS Electrical's business model was essentially "to shadow the Plaintiffs' business in terms of products, market and packaging". Indeed it was not disputed that the LS Get-Up was identical to the Singsung Get-Up save for the "SINGSUNG" and "LS" marks that were found on the goods of the respective parties. The products were also sourced from the same Chinese manufacturer. However, the High Court dismissed the passing off claim on the basis that there was no goodwill associated with the Singsung Get-Up in Singapore or Cameroon. The copyright claim was also dismissed but the groundless threats counterclaim allowed. The Plaintiffs appealed and the decision was reported in Singsung v. LG26 Electronics [2016] SGCA 33. 

Decision

Passing Off Based on Instruments of Deception 

The law of passing off recognises the doctrine of instruments of deception where a defendant may be held liable for passing off if "a trader puts into circulation goods which are inherently likely to deceive ultimate purchasers or consumers, even though the intermediate purchasers may be middlemen who are not themselves deceived and .. may ultimately dispose of the goods in a manner which does not deceive anyone at all."  

The Court of Appeal first considered if the doctrine was applicable in the present case because the goods were sold to middlemen traders who were not confused as to the origin of the goods in question before being exported to end users in Cameroon. It held the doctrine applied because the LS Get-Up was inherently deceptive, being identical to the corresponding Singsung GetUp. Accordingly, LS Electrical could be liable for passing off even though the middlemen traders were not confused as to the origin of the goods in question. 

Contrary to the High Court, the Court of Appeal found that there was goodwill in the Singsung Get-up. The Court stated that goodwill exists in Singapore when a business offers a product or service for sale in the jurisdiction and a customer purchases the product or consumes the service here. In the present case, the trade buyers bought the goods from the Singsung's shop in Singapore. It was irrelevant to the existence of goodwill whether they resided in Singapore or if the goods purchased were ultimately consumed here. 

As for the issue of misrepresentation, although there was little direct evidence regarding the distinctiveness of the Singsung Get-Up, the evidence presented showed that LS Electrical had taken steps to deliberately copy the Singsung Get-ups with an intention to deceive customers. The Court held that this was sufficient to find misrepresentation. Finally, in view of LS Electrical's misrepresentation and the fact that the parties were competing in the same line of products and export jurisdictions, damage was also likely through the diversion of business from Singsung. Accordingly, Singsung succeeded on the ground of passing off. 

Copyright Infringement and Groundless Threats 

The Court overruled the High Court’s decision and found that LS Electrical had infringed the copyright in the White Get-Up Picture and the TV Stickers. Ownership of copyright in the White Get-Up Picture had been validly assigned to Singsung and LS Electrical knew or ought reasonably to have known that they were infringing the Singsung's copyright in the TV Stickers. However, there was no infringement of the Blue Get-Up Picture which was a straightforward representation of a commonplace object (i.e. a DVD player) and required identical copying for copyright infringement. 

Groundless Threats of Copyright Infringement  

The Court held that although there was no infringement of the Blue Get-Up Picture, Singsung were not liable for groundless threat of infringement under Section 200 of the Copyright Act for sending a demand letter to the LS Electrical. 

The Court noted that it does not necessarily follow that a groundless threat of infringement must be found when an allegation of infringement fails. Rather, the court has to consider whether any relief ought to be granted based on a fact sensitive inquiry into whether the action was warranted and any relief is required at all. It observed the competing interest between providing a relief for aggrieved parties whose business or reputation might be affected by threats of infringement and enforcement of intellectual property rights against, in particular small and medium sized firms. On the facts, there was no conceivable damage flowing from the demand which cannot be compensated by a cost order against Singsung for having made an unwarranted threat. Therefore, a declaration that the threat was groundless is unnecessary.

Comments

The Court's application of the doctrine of instruments of deception is one that will be welcomed by rights owners who find the get-up of their products being copied by competitors. More important is the Court's clarification that it does not follow that groundless threat of infringement must be found when an allegation of infringement fails. This would prevent a rights owner from being penalised merely because he has made a good faith attempt to enforce his rights.