Rodyk acted for Ku De Ta SG Pte Ltd at the High Court.

Introduction

Ku De Ta SG Pte Ltd (KDTSG) opened its doors at the Marina Bay Sands Sky Park in September 2010. KDTSG had acquired the rights to use the "Ku De Ta" mark from an Australian company, Nine Squares Pty Ltd (Nine Squares), the registered proprietor of the "Ku De Ta" trade marks in Singapore.

When the "Ku De Ta" trade marks were registered in Singapore by Nine Squares, Nine Squares was partly owned by Mr. Arthur Chondros, one of the partners of the partnership operating the restaurant known as "Ku De Ta" in Bali, Indonesia (KDT Bali).

In December 2010, the partnership commenced proceedings against KDTSG for infringement of a well-known mark under Section 55 of the Trade Marks Act and in the tort of passing-off. Subsequently in May 2011, the partnership commenced proceedings against Nine Squares for a declaration that the "Ku De Ta" trade marks registered by Nine Squares were held on trust for the partnership, or alternatively that the trade marks be invalidated as the registrations were made in bad faith. The actions are reported in Guy Neale and others v Ku de Ta SG Pte Ltd [2013] SGHC 250 and Guy Neale and others v Nine Squares Pty Ltd [2013] SGHC 249.

Given the intertwined factual matrix of the actions, both actions were heard together and evidence adduced for each action was admitted as evidence for the other.

Findings of the Court

The High Court found that, from the inception of KDT Bali, the partnership intended the "Ku De Ta" name and goodwill, as it grew, to belong to the partnership. Nevertheless, the Court rejected both the imposition of an express trust and an institutional constructive trust of the "Ku De Ta" trade marks registered by Nine Squares.

At law, the creation of an express trust is contingent upon the certainty of an intention to create such a trust. On the facts, the Court found that Nine Squares had expressed no intention of holding the trade marks on trust for the partnership and, therefore, no express trust could arise.

An institutional constructive trust is imposed in equity and is usually declared at the Court's discretion under certain recognised categories of facts or circumstances. The partnership argued for the imposition of an institutional constructive trust on the basis that Mr. Arthur Chondros had breached his fiduciary duties to the partnership (one of the recognised categories for the imposition of an institutional constructive trust) when Nine Squares registered the trade marks because the registrations were: (1) riding on the partnership's goodwill in the "Ku de Ta" name; and (2) a usurpation of the partnership's corporate opportunity to expand in Singapore. The Court rejected the imposition of an institutional constructive trust as the Court found that, on the facts, (1) the partnership did not enjoy any goodwill in the "Ku de Ta" name at the point of registrations of the "Ku de Ta" trade marks by Nine Squares; and (2) there was no real or substantial possibility of the partnership setting up an operation in Singapore under the "Ku de Ta" name and accordingly no corporate opportunity to usurp.

The Court also rejected the partnership's claim for invalidation of the "Ku de Ta" trade marks as registrations made in bad faith. The Court found no bad faith in the registrations because there was no misappropriation of the partnership's goodwill in the "Ku de Ta" name (there being no goodwill at the point of registration), and there being no breach of fiduciary duties by Mr. Chondros in registering these trade marks.

The partnership conceded that dismissal of their action against Nine Squares would naturally lead to a dismissal of their action against KDTSG, which was using the "Ku de Ta" trade marks under a valid license from Nine Squares. Both actions were accordingly dismissed by the Court.

An interesting question of law was also raised in these actions: must a plaintiff have a business presence in Singapore to sue for passing-off? The Court explored this question in detail but declined to decide on this question as it was ultimately unnecessary given the Court's finding that the partnership did not have goodwill in Singapore to even sustain a cause of action in passing-off. The Singapore Court have in recent times flirted with this question (most recently in the Court of Appeal cases of Novelty Pte Ltd v Amanresorts Ltd [2009] 3 SLR(R) 216, Doctor’s Associates Inc v Lim Eng Wah (trading as SUBWAY NICHE) [2012] 3 SLR 193 and Staywell Hospitality Group Pty Ltd v Starwood Hotels & Resorts Worldwide, Inc [2013] SGCA 65). The answer to this question will no doubt become increasingly relevant with the expected rise in trans-boundary cases involving trade marks and trade names.

Future implications

While this case has not fundamentally changed the law relating to trust, trade marks or passing-off, it is a timely reminder for businesses to protect their trade marks and trade names at an early stage through registration and not just in jurisdictions where they directly operate or are looking to expand. As a defensive and pre-emptive measure, businesses should cast their nets wider and consider strategic trade mark registrations in other jurisdictions as well.