In brief

The dispute involved two marks, "COFAN" and "CO-FAN". The plaintiff, who is the registered owner of the "COFAN" mark commenced infringement proceedings against the defendant, who was using the "CO-FAN" mark. In response, the defendant counterclaimed and sought to invalidate the plaintiff's "COFAN" mark on the ground of bad faith, and that the plaintiff made groundless threats of trade mark infringement.

The High Court ruled in favor of the defendant with respect to its counterclaim for invalidation but dismisses its claim on groundless threats of infringement.

Both the plaintiff and the defendant are in the business of selling fans. The plaintiff company was incorporated on 1 June 2017 and the defendant company was incorporated on 17 May 2013. Mr. Phua, the plaintiff company's the sole director and shareholder, worked for the defendant company for seven years before he left to incorporate the plaintiff company.

Bad faith - section 7(6) of the Trade Marks Act

The defendant put forth two arguments that the plaintiff has registered the mark "COFAN" in bad faith. First, they contended that the plaintiff has knowledge of the defendant's plans to use the "CO-FAN" mark and alleged that Mr. Phua was present at two meetings, in February 2016 and March 2016 respectively. Secondly, they contended that the plaintiff intended to ride on the goodwill and reputation of the defendant's "FANCO" mark when it applied to register its mark.

On the first contention, the Court held that the defendant failed to discharge its burden that the two meetings took place, hence its first ground of bad faith that Mr. Phua gained knowledge of the plans to use the "CO-FAN" mark failed.

On the second contention, the Court was of the view that the "COFAN" mark was not Mr. Phua's independent and original creation. It did not believe Mr. Phua that he was not aware of the fact that the "COFAN" mark was a mere reversal of the defendant's "FANCO" mark. Further, there was evidence that the defendant took preparatory steps in relation to the "CO-FAN" mark as early as November 2018. Hence, Mr. Phua's assertion that the defendant created the "CO-FAN" mark in 2019 could not be true. Shortly after the defendant launched its CO-FAN HELI-marked fans, the plaintiff launched its COFAN HALI-marked fans and used packaging and brochures similar to the defendant's.

In light of the above, the Court held that the plaintiff had registered the "COFAN" mark in bad faith. The plaintiff was clearly aware of the goodwill that the defendant enjoyed under the "FANCO" mark. The Court also found that the launch of the COFAN-HALI-marked fans was a clear attempt to act on the defendant's goodwill. As such, the plaintiff's conduct did not meet the standards of acceptable commercial behavior.

Groundless threats - section 35 of the Trade Marks Act

On groundless threats, the Court held that "threats" should be construed objectively and there are no requirements in the Trade Marks Act that specific language needs to be adopted before it can constitute threats of infringement proceedings.

Section 35(1) of the Trade Marks Act adopts an exclusionary language. Any aggrieved person may bring an action when threatened with proceedings for infringement in relation to acts "other than" those listed in sections 35(1)(a)-(c). Specifically, section 35(1)(a) provides that where the impugned mark is applied to goods or materials used / intended to be used for labelling or packaging goods, the aggrieved person may not bring proceedings for relief. Nothing in sections 35(1)(a)-(c) suggests that threats made in relation to other acts like the sale of goods bearing the impugned mark are not actionable.

The plaintiff argued that the literal interpretation of section 35(1)(a) would lead to an absurd result as it suggests that A can warn B against applying its mark to B's goods but A cannot tell B to stop selling its goods under A's marks without facing a possible threats claim. In response, the Court acknowledged that the provision "as-is" is not an accurate reflection of commercial reality, and may even hinder the settlement of disputes. However, as changes to the legislation are not within the Court's purview, the Court was of the view that section 35(1)(a) should be given its natural meaning. Here, the plaintiff alleged that the defendant had marketed and advertised its products under the mark "CO-FAN", which falls outside of the scope of section 35(1)(a).

The Court ultimately dismissed the defendant's claim on groundless threats as it failed to show that it was an aggrieved person.

In response, the Court acknowledged that the provision "as-is" is not an accurate reflection of commercial reality.

Key Takeaways

This case presented an opportunity for the Court to examine in greater detail, section 35 of the Trade Marks Act, specifically sections 35(1)(a)-(c). The Court acknowledged that this may not accurately reflect the commercial reality and could even hinder the settlement of disputes. However, it remains to be seen how the legislative framework may develop in this area.