In this case, Inner Mongolia Little Sheep Catering Chain Co. Ltd (the "Applicant"), a China-incorporated entity in the business of franchising hotpot restaurants and the subsidiary of a leading hotpot chain in China, sought a declaration of invalidity under section 23 of the TMA in respect of the "XIAO FEI YANG" word mark registered in Class 43 (the "Subject Mark"), owned by Grassland Xiao Fei Yang Pte Ltd (the "Registrant"). The Registrant is a Singapore-incorporated entity which operated a single hotpot restaurant in the Geylang neighbourhood.
The Applicant based its invalidity application on four separate grounds, namely sections 8(2)(b) (similar marks and goods), 7(6) (bad faith), 8(4)(b)(i) and/or (8(4)(b)(ii)(B) (mark well known in Singapore and/or to the public at large), and 8(7)(a) (passing off) of the TMA. The Applicant relied on three earlier registered marks (the "Earlier Marks") which it used on hotpot soup bases sold at local supermarkets. All three Earlier Marks registered in Class 43 contain stylised Chinese characters for "XIAO FEI YANG" (meaning "little fat sheep"), as follows:
Assistant Registrar Gabriel Ong (the "AR") found the Applicant successful as the marks were similar and the ground of bad faith was established. The AR did not consider it necessary to decide on the remaining grounds.
In arriving at his decision, the AR held that the Registrant knew, or ought to have had known of, the Earlier Marks by virtue of the Applicant's commercial success outside of Singapore. Notwithstanding this knowledge, the Registrant took steps to advertise its own restaurant in a manner that misled or deceived consumers into thinking or believing that it was the Applicant's first attempt to enter the Singapore market or at least some commercial relationship existed between the Applicant and Registrant. By registering an exact transliteration of the Chinese characters in the Earlier Marks, the Applicant had fallen short of the appropriate standard of acceptable commercial behaviour, resulting in a finding of bad faith.
This decision is significant, as it is the first decision where a tribunal had to consider whether earlier trade marks registered in Chinese characters are similar to a later registered mark which is essentially its transliteration in English. The AR's decision confirms that visual dissimilarity does not eliminate a finding of similarity, as transliterations of Chinese characters can still be found to aurally and conceptually similar. Such findings are specific to context, and requires an analysis of the words and characters in issue.