In August 2016, Iconic Locations Singapore Pte Ltd, (formerly known as Ku De Ta SG Pte Ltd) ("Iconic") served a third party notice on its once director and chief executive Chris Au ("Au") in relation to proceedings by the partners of Ku De Ta Bali (the "Partnership") against Iconic to recover damages and profits arising from the use of the "Ku De Ta" name. This recent development follows protracted litigation which culminated in two Court of Appeal ("CA") decisions surrounding the right to use the "Ku De Ta" name.
The Partnership was the beneficial owner of two registered trade marks in Singapore relating to the "Ku De Ta" name (the "Singapore Marks"). The registrations for the marks were held by Nine Squares Pty Ltd ("Nine Squares"). Nine Squares had two equal shareholders and directors, namely, Arthur Chondros ("Chondros") and Daniel Ellaway ("Ellaway"). Chondros was also a member of the Partnership. Subsequently, the relationship between Chondros and Ellaway soured. Chondros informed Ellaway that he was prohibited from entering into any agreements on Nine Square's behalf. In contravention of Chondros' express instructions, Ellaway caused Nine Squares to enter into a licence agreement with Au, granting Au an exclusive licence to use one of the marks (the "1st Singapore Mark"). The licence agreement was eventually assigned to Iconic, which would go on to operate the Ku De Ta club in Singapore.
The Partnership commenced an action against Nine Squares claiming that the Singapore Marks were held by Nine Squares on trust for the Partnership and should be transferred to the Partnership1. The Partnership also commenced a separate action against Iconic seeking to restrain the further use of the "Ku De Ta" name in Singapore2.
The CA's Decisions
The CA found that Nine Square held the Singapore Marks on an express trust for the Partnership and ordered Nine Squares to transfer the registration of the marks to the Partnership.
In separate proceedings between the Partnership and Iconic, Iconic sought to rely on the licence which it had procured from Nine Squares on the basis that the licence granted, being an exclusive licence, was proprietary in nature.
However, the CA held that a trade mark licence was merely a personal right and not proprietary in nature. Section 45 of the Trade Marks Act (the "TMA"), which conferred on an exclusive licensee of a trade mark the right to sue in his own name under certain circumstances, was a facilitative device that did not create a separate substantive right to exclude third parties from using the mark. The CA recognised that under Section 42(5) of the TMA, a licence to use a trade mark was binding on every successor in title to the grantor's interest except a bona fide purchaser without any notice of the licence.
However, the provision did not apply in the present case, where the licensee obtained its rights under a licence that had been granted in breach of the earlier rights of the equitable owners of the trade mark, who subsequently perfected their title by becoming the registered proprietor.
Consequently, Iconic did not have any valid and enforceable licence as against the Partnership. Their continued use of the "Ku De Ta" name subsequent to the transfer of the legal title to the Partnership constituted clear infringement of the 1st Singapore Mark, thus leading to the present claim in damages by the Partnership against Iconic. Iconic had in turn served their third party notice against Au on the basis that Au, being the company's then CEO and director, had "solely or primarily caused the losses" being claimed by the Partnership.
The Ku De Ta saga serves as a useful reminder for licensees and assignees to make every effort to verify the grantor's right to use. On the facts, Au had argued that he took comfort from representations from Ellaway that Nine Squares was the true owner of the 1st Singapore Mark. However, Ellaway was merely one of several partners in the Partnership who did not have the authority to grant the right to use the Singapore Marks on behalf of the Partnership. Accordingly, the onus is on licensees and assignees to distinguish between the officers of a company and ascertain who is able to grant a right to use.