Staywell Hospitality Group Pty Ltd v Starwood Hotels E Resorts Worldwide, Inc & Anor [2013] SGCA 65

In Staywell Hospitality Group Pty Ltd v Starwood Hotels E Resorts Worldwide, Inc & Anor, the Singapore Court of Appeal considered an opposition to the registration of a trade mark in Singapore on the basis that the mark was substantially similar to another existing trade mark. The court overturned the decision of the High Court and reinstated the decision of the Trade Mark Registrar that the trade marks in question were strikingly similar and there was therefore a likelihood of confusion as both trade marks were used for very similar services.

Facts

Sheraton International ("Sheraton") and Starwood Hotels ("Starwood") (collectively, the "opponents"), both being hotel and leisure companies incorporated in the United States, began proceedings opposing the application by Staywell Hospitality ("Staywell"), an Australian hotel operator, to register two trade marks in Singapore in respect of marketing and hospitality services.

The opponents own and operate 32 ST. REGIS hotels worldwide and in Singapore, Sheraton has been the registered proprietor of the word trade mark "ST. REGIS" in Classes 36 and 37 of the International Classification of Goods and Services since 2005 (relating to real estate and construction services) and in Classes 41 and 42 since 1995 (relating to entertainment services and hotel and hospitality services). Staywell owns and operates 27 hotels under its two brands, Park Regis and Leisure Inn. These hotels are mainly located in Australia and New Zealand. Staywell applied to register the mark  "PARK REGIS" with a fleur-de-lis motif (the "applicant mark") in Singapore in respect of marketing and hospitality services. The opponents filed a notice of opposition to Staywell's application under sections 7(4)(b), 7(6), 8(2)(b), 8(4)(b) and 8(7)(a) of the Trade Marks Act (the "Act").

Decisions below

The Principal Assistant Registrar (the "PAR") allowed part of the opposition, finding that the competing marks and the parties' services were similar, and that such similarity resulted in a likelihood that the public would be confused into thinking that the Park Regis Singapore was economically linked to the ST. REGIS Singapore. The PAR also found that the ST. REGIS mark was not "well known to the public at large in Singapore" and  that the opponents were unable to show that goodwill attached to the ST. REGIS Singapore at the date of the application. The High Court disagreed that there would be a likelihood of confusion resulting from the similarity of the competing marks and the similarity of the parties' services and as a result, the applicant mark was allowed to proceed to registration. The opponents appealed. Staywell also appealed against the decision of the High Court judge (the "judge") on aural and conceptual similarity between the competing marks.

Issues before the Court of Appeal

The Court of Appeal identified the issues before it as whether the judge had erred in finding that the competing marks were aurally and conceptually similar, whether a likelihood of confusion arose from the similarity between the competing marks and the parties' services ("similarity and confusion grounds"), whether the use of the applicant mark in relation to hotel services was likely to damage the opponents' interest, and whether there was goodwill in the ST. REGIS Singapore as at the date of the application ("interest and goodwill grounds").

Similarity and confusion grounds

Aural and conceptual similarity

The Court of Appeal agreed with the step-by-step approach as applied in The  Polo/Lauren Co, LP v Shop in Department Store Pte Ltd [2006] 2 SLR(R) 690. Under the step-by-step approach, the three requirements of similarity of marks, similarity of goods or services, and likelihood of confusion arising from the two similarities, are assessed systematically. The court here noted that the first two elements are assessed individually and the final element is assessed "in the round".

The court noted that in relation to assessing marks as a whole, case law both in  Singapore and elsewhere has stated that the "visual, aural or conceptual similarity of the marks in question, must be based on the overall impression given by the marks, bearing  in mind, in particular, their distinctive and dominant components".

Staywell argued that the judge had erred in considering the dominance of "REGIS" because the opponents had never used or registered the component "REGIS" alone. The Court of Appeal disagreed, stating that a component can be dominant even if it is part of the mark as whole and is not and has never been used on its own. The Court of Appeal agreed with the judge's finding that the marks had aural similarity, finding that there was a high degree of such similarity because of the distinctiveness of the common "REGIS" component and that it stood out in the recollection of the consumer.

Unlike the aural analysis, which involves the utterance of the syllables without exploring the composite meaning embodied by the words, the conceptual analysis seeks to uncover the ideas that lie behind and inform the understanding of the mark as a whole. The court found that "REGIS", with its connotation of royalty, was not a dominant component on a conceptual analysis but that there was a conceptual similarity between the marks based on the evocation of geographical places or locations. The prefix "ST." has a saintly connotation but in Singapore is most commonly seen in names of places (roads, schools, condominiums) and the term "Park" as used in the applicant mark can also refer to geographical locations.

The Court of Appeal therefore held that the marks had a fair degree of conceptual similarity.

The Court of Appeal disagreed with the judge's finding that the difference in hotel star rating between the parties was significant. Staywell's hotels are generally rated four-star whereas the opponents' hotels are six-star. The court found that this difference did not change the fact that they offer similar goods and services.

Likelihood of confusion

The Court of Appeal noted that the parties were offering products which were not qualitatively different. This, together with the findings of aural and conceptual similarity, led the court to conclude that it was not unlikely for the public to be induced by the similarity of the marks and the common industry in which they are used into believing that there is at least some economic link between the ST. REGIS Singapore and the Park Regis Singapore. This was especially so as it is common for large hotel chains to operate differently branded hotels carrying different logos, united only by the use of a common denominator in their names, such as "Regis".

The court found that there was a sufficient likelihood of confusion due to the above.

The court also took the opportunity to confirm that the doctrine of "initial interest confusion" is not part of Singapore law. This doctrine refers to confusion which arises initially but which would have been dispelled by the time of the purchase - such confusion may or may not lead to the consumer purchasing the good. The court held that this is not currently part of Singapore law and nor should it be as it would be inconsistent with Singapore's statutory scheme and objectives.

Interest and goodwill grounds

Damage to opponents' interest

The opponents argued that there was likelihood of damage to their interests as it would limit or preclude their ability to expand into the four-star hotel market in Singapore. The High Court judge had agreed with Staywell, finding that there was no basis for finding that the opponents' as yet non-existent expansion plans were likely to be prejudiced. The Court of Appeal disagreed, noting that where the field in which the defendant or applicant operates is in close proximity to, or is a natural extension of, the incumbent's business, damage in the form of a restriction of business expansion opportunities will more readily be inferred.

Goodwill and passing off

The High Court judge refused the opposition on the basis of passing off. A mark may be refused registration because its use would result in liability for the tort of passing off. To demonstrate passing off, goodwill, misrepresentation and damage must be proven. In Singapore, it has been well-established that such goodwill must exist in Singapore as at the date of the application for the registration of the later mark.

In this case, Staywell had filed its application for registration of the applicant mark one month prior to the opponents' ST. REGIS hotel opening in Singapore. A month after the opponents' hotel had opened, the application was accepted and published for opposition purposes. Staywell's hotel, the Park Regis Singapore, only opened for business two and a half years after the application filing.

The opponents argued that the activity conducted prior to the official opening of the ST. REGIS Singapore constituted relevant pre-trading activity whereas Staywell contended that they were "mere preparations to trade". The Court of Appeal disagreed with Staywell, noting that pre-trading activity need not be revenue-generating and this is consistent with goodwill which is not focused on the income of the trader per se but the response of the consumer. The pre-trading business or pre-business activities should unequivocally evince the intention of the trader to enter into the Singapore market. To show goodwill, the pre-business activities should also generate an attractive force that will bring in custom when the business eventually materialises.

The Court of Appeal found that the opponents' securing of restaurant tenants and hiring of employees did not constitute relevant pre-trading activities because such activities did not inform and attract the public to consume the opponents' hotel and dining services. The opponents' advertisements promoting the ST. REGIS brand in general and the  opening of the ST. REGIS hotel in particular were also found, on their facts, to be insufficient to generate an attractive force that would bring in custom in Singapore at   the date of the application.

The opponents also argued that there was goodwill in the ST. REGIS hotel in Singapore prior to its launch by virtue of the international reputation of the ST. REGIS brand, coupled with the presence of Singapore customers who had used ST. REGIS hotels abroad. The Court of Appeal considered the position in a variety of jurisdictions, noting that for instance in the United Kingdom a foreign trader can claim goodwill only when he has customers in the country and bookings for its services made within the country. The opponents were unable to prove that the room bookings for the ST. REGIS hotels abroad had originated in Singapore thus generating goodwill in the opponents' mark in   Singapore.

Judgment

The Court of Appeal, whilst not accepting that the tort of passing off had been committed, allowed the opponents' appeal on the basis of similarity of the marks and the goods and services provided, all of which were likely to cause confusion.