This case is a stark reminder that an essential characteristic of goodwill is its inseparable connection to a business. If a business ceases operations, the goodwill it has acquired perishes along with it.
It also underscores the importance of understanding the chronology of events and the relevant dates when commencing opposition proceedings. Goodwill has to be established as at the date the acts complained of were carried out.
This case also clarifies that under Section 7(6) of the Trade Marks Act 1998 ("Act"), it is not bad faith for a party to apply to register a mark merely because it is aware that third parties are using a similar or identical mark in relation to identical or similar goods or services. The applicant may believe they have a superior right to registration and/or use, or simply that they are entitled to registration.
An applicant also only has a duty to make further inquiries into the bona fides of a mark before seeking registration if the circumstances would lead a reasonable person to harbour suspicions as to the propriety of the proposed mark.
In any case, there is a high threshold for establishing bad faith; and bad faith by inference is only possible in rare cases.
For further information and to discuss what this development might mean for you, please get in touch with your usual Baker McKenzie contact.
The "Eng's" family wantan mee business started as a pushcart business and eventually evolved into a hawker stall at Dunman Food Centre, operated by Mr. Ng Ba Eng ("Mr. Ng"). Mr. Ng’s son (“Desmond”) joined him in operating the Eng’s hawker business in 2009.
In 2012, Mr. Ng and Desmond were approached by a businessman customer, Jason Sim (“Jason”), (also, the Opponent’s husband). Jason proposed a collaboration with the Eng’s hawker business. Following successful negotiations, Eng's Noodle House Pte Ltd ("ENHPL") was incorporated, with Desmond and the Opponent as shareholders and directors.
From February 2012 to February 2018, ENHPL operated the wantan mee business from the 287 Tanjong Katong Road premises ("287 TKR Premises"). ENHPL enjoyed considerable success during this period.
In or around 2017, the relationship between Jason and Desmond started to take a turn for the worse. On 8 February 2017, Desmond's sister, Ng Mui Hong ("NMH"), aware of the deteriorating relationship between Jason and Desmond, registered a sole proprietorship for "Eng's Char Siew" in anticipation of having an avenue to carry on the family business. This sole proprietorship was subsequently replaced by the incorporation of the Applicant on 5 March 2018.
ENHPL’s lease for the 287 TKR Premises was due to expire on 15 March 2018. The Opponent, who was supposed to sign the new lease in ENHPL’s name, did not follow up to ensure a new lease was obtained to continue ENHPL’s business at the 287 TKR Premises. Instead, without notification to Desmond, the 287 TKR Premises was eventually rented by Eng’s Wantan Noodle Pte Ltd, a company incorporated on 28 February 2018 and run by Jason, the Opponent and their business associates.
ENHPL ceased business operations on 28 February 2018 and is currently dormant with no business whatsoever.
In or around May 2018, the Applicant began operating its own wantan mee business at 248/250 Tanjong Katong Road, where it continues to carry on operations to this date.
The Applicant filed applications to register the Application Marks in Class 43 in June and July 2018.
The effect of the above is that there are now two competing businesses in Singapore selling wantan mee under the "Eng's" name: (a) Eng’s Char Siew Wantan Mee Pte Ltd, which is operated by the Applicant and the Ng family; and (b) Eng’s Wantan Noodle Pte Ltd, which is operated by Jason, the Opponent and their business associates.
Preliminary issue: Standing to bring opposition proceedings
The Applicant argued that the Registrar should have the inherent discretionary power to dismiss the opposition based on the fact that the Opponent had brought the opposition purportedly for and on behalf of ENHPL.
The Adjudicator disagreed, holding that Section 13(2) of the Act entitles "[a]ny person" to give notice to the Registrar of that person's opposition to a trade mark registration. Accordingly, the Registrar did not have the power to dismiss the oppositions solely on the basis that the Opponent is not a director of ENHPL nor received any mandate from ENHPL to initiate the opposition.
Opposition under Section 8(7)(a) of the Act: Passing off
The Adjudicator held that the ground of opposition under Section 8(7)(a) of the Act failed because the Opponent failed to establish the elements passing off, namely: (a) goodwill; (b) misrepresentation; and (c) damage.
Firstly, goodwill must attach to a business and cannot exist independently. Further, the relevant date for establishing goodwill is the date that the acts complained of were carried out. Given that the applications to register the Application Marks were made after ENHPL had ceased operations, there was no goodwill attached to ENHPL at the relevant dates that the Applications were made. Accordingly, the Opponent had failed to make out the element of goodwill.
Secondly, the Opponent had to show that the Applicant's use of the Application Marks would amount to a misrepresentation that caused or was likely to cause confusion among the relevant public. A threshold inquiry was held to determine whether the Application Marks are distinctive of ENHPL and/or its goods/services. The Adjudicator held that the Opponent had failed to establish that the Application Marks were associated exclusively with ENHPL and no other. The Application Marks were used by the Ng family for decades, whereas ENHPL only used such marks for six years, from 2012 to 2018. Thus, the Adjudicator found that there is no misrepresentation by the Applicant.
Thirdly, the Adjudicator held that there was insufficient evidence to show that there was a "real tangible risk" of substantial damage to ENHPL. Further, as it was not disputed that ENHPL was a dormant business with no business operations to speak of, it would be difficult to see how ENHPL had suffered any loss to begin with. Therefore, the Adjudicator found that the Opponent had failed to make out the element of "damage".
Opposition under Section 7(6) of the Act: Bad faith
The Adjudicator held that the ground of opposition under Section 7(6) of the Act failed as the Opponent had failed to adduce sufficient evidence showing conduct falling short of the moral standards observed by a reasonable and honest man. Pertinently, the Adjudicator highlighted the high threshold for establishing bad faith and the established principle that a finding of bad faith by inference, while not impossible, is only allowed in rare cases.
Pertinently, knowledge that a third party is using an identical and/or similar mark in relation to identical and/or similar goods or services does not ipso facto constitute bad faith. An applicant might believe that it has a superior right to register and/or use the mark, or that it is entitled to registration nonetheless.
Further, there is no positive duty on the Applicant to investigate the bona fides of a mark before seeking registration, unless the Opponent is able to produce cogent evidence that the Applicant knew that it did not have the right to register the Application Marks, and/or that the circumstances would lead a reasonable person to harbour suspicions as to the propriety of the proposed mark. In this case, the Adjudicator found that as at the relevant dates, the Applicant genuinely believed that it was entitled to register the Applications Marks in its name and did so out of a genuine concern to protect the "Eng's" family brand.
The Adjudicator also found that even if the Applicant only sought the registration of the Application Marks to prevent the Opponent from using these marks, it was merely one of the factors in the overall bad faith assessment and not by itself determinative of bad faith.
© 2022 Baker & McKenzie.Wong & Leow. All rights reserved. Baker & McKenzie.Wong & Leow is incorporated with limited liability and is a member firm of Baker & McKenzie International, a global law firm with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a "principal" means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an "office" means an office of any such law firm. This may qualify as "Attorney Advertising" requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome.