On May 26, 2011, the Supreme Court, in Lacoste v. Crocodile International rendered a decision ordering cancellation of Crocodile International Pte. Ltd.’s (hereinafter, “CI”) registered trademark (Click here to view) ereinafter, the “Subject Mark”).
This dispute began when CI’s local licensees began using the Subject Mark in a way to create confusion with Lacoste’s registered mark (hereinafter, “Cited Mark”) (click here to view). More specifically, CI’s local licensees embroidered the word component of the Subject Mark “Crocodile” with a color that are identical or similar to the color of the background fabric to camouflage the word component while coloring the logo component in green to make it stand out and, thereby, making the overall appearance of the Subject Mark similar to the Cited Mark.
Lacoste filed a claim under Article 73(1)8 of the Trademark Act, a cause for cancellation of a registered mark where a licensee misleads consumers as to the quality of goods or causes confusion with goods of another by using a registered mark or a similar mark, against CI alleging that the licensees’ “altered use” or misuse” creates confusion between Lacoste’s goods and CI’s goods and that CI failed its duty to take precautions or otherwise prevent its licensees from such misuse.
In its defense, CI argued that its licensees’ use was lawful use of the Subject Mark, that Crocodile International is also a well-known brand that there is no likelihood of confusion with Lacoste brand, and that CI distributed brand manuals to its licensees and checked and demanded for their compliance therewith and, thereby, satisfied its duty to take precautions or prevent misuse.
In dismissing CI’s appeal, the Supreme Court affirmed the lower court’s determination that the licensees’ use constitutes an altered use, contrary to the principle that a registered mark must be used in the same form and manner as it has been registered, and that there are objective facts to show that such use creates confusion as to the source of the goods. In particular, the Supreme Court ruled that a trademark owner’s duty to take substantial precautions or otherwise prevent misuse of the licensed trademark by his licensees must be to a degree where the trademark owner, in exercising his supervision over the use of his trademark by his licensee, placed the licensee under his control. In the present case, the Supreme Court upheld the lower court’s determination that providing brand manuals and checking and requesting for compliance alone is insufficient to say that the licensees were under the control of the licensor.
Lacoste is the first Supreme Court case in which all elements of the Article 73(1)8 claim was reviewed comprehensively. The Lacoste court reaffirmed that altering a registered trademark to cause confusion with another’s mark is cannot be tolerated and defined the trademark owner’s duty to supervise its licensees.