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Trademark infringers continue to challenge rights owners and the lawyers who assist them. Johnny Chan shares recent failed attempts by infringers from around the region.
Despite the myriad of measures taken brand owners to defeat infringers, infringers are still willing to take the risk. Lawyers from around the region have shared some recent failed attempts with us.
In Australia, Bauer Consumer Media v. Evergreen Television, is particularly notable in this era of increased international trade, says Christina Cavallaro, special counsel at Eakin McCaffery Cox in Sydney. “This case was a dispute between two television programme production companies in relation to the application to register the trademark Discover Downunder. Evergreen had applied for registration of the trademark in the class for production of television programmes. Upon appeal, the Full Federal Court refused registration of the trademark by Evergreen as it hadn’t shown its intention to use the mark for the purpose of producing television programmes, but rather only as the name or title of a television programme.”
One of the important takeaways from the case is to carefully prepare an application for a trademark to ensure that the intended use of the trademark is properly reflected in the description of the goods/services and registration classes claimed, Cavallaro says. “This will assist in avoiding the risk of the trademark application being opposed on the basis that there is a lack of intention to use the mark for the specified goods or services.”
China has attached unprecedented importance to trademark protection in recent years, says Xiaojun Quo, a patent attorney at CCPIT Patent & Trademark Law Office in Beijing. “We consider the retrial case Compass/Zhongwei Company v. Uniqlo to be the most significant trademark infringement case last year, where the Supreme People’s Court’s judgment was made on December 28, 2018, and served on the parties in 2019. This case is a typical example of curbing trademark litigation lodged in bad faith.”
In the case, the Compass company and the Zhongwei company are co-owners of the Chinese Trademark No. 10619071 covering “clothing, caps, shoes, etc.” in Class 25. UNIQLO Trading Co. is a subsidiary of the Japanese company Fast Retailing Co., established in China. It operates the UNIQLO brand and runs a large number of direct-sale stores throughout China. Through years of operation and extensive publicity, the Japanese company’s registered trademark UNIQLO enjoys high reputation in China. The Uniqlo company was sued by the Compass company and the Zhongwei company for trademark infringement because it used the logo on apparel products, which is similar to the plaintiff’s trademark .
In the retrial, the Supreme People’s Court found that “the Compass company and the Zhongwei company filed more than 2,600 trademarks, which exceeded the amount for normal business use. The two companies always registered trademarks for assignment at a high price rather than for actual use. The trademark-in-dispute was not used by the two companies. After an unsuccessful transfer of their trademark to the Uniqlo company at a high price, the two companies lodged 42 trademark infringement litigations in different cities in China, all with the Uniqlo company or its branches as defendants, forming a batch of litigations nationwide, requesting the courts to order the Uniqlo company and its many stores to stop using the similar trademark and claiming compensation.” The Supreme People’s Court therefore ruled in its judgment that the bad faith of the two companies was obvious, and their misuse of judicial resources for illegal profits through trademark was unprotected by the court.
“In response to the current situation that some businesses have violated the principle of good faith and registered large-scale similar trademarks with other well-known trademarks, and they have a purpose and plan to use judicial procedures in an attempt to obtain improper benefits, the Supreme People’s Court clearly stated that the act of maliciously obtaining and using trademark to obtain improper benefits is unprotected by law,” Guo says. “This judgment is of typical significance for building a healthy trademark order, purifying the market environment and curbing malicious litigation using improperly obtained trademarks.”
China’s new trademark law enacted in November 2019 also introduces judicial sanctions against the bad faith trademark registrant who files malicious litigation against the genuine brand owner in Article 68. “The above-mentioned Uniqlo retrial case was decided before the new trademark law came into effect. Following the implementation of the new trademark law, not only will malicious litigation be rejected by the Chinese courts, but the parties lodging such litigation will also be punished according to the seriousness of the case,” he says. “This should prevent blackmailing of trademark registrants to obtain illegal profits.”
In India, Remfry & Sagar filed a lawsuit on behalf of Nippon Steel against defendants who ultimately admitted to selling counterfeit iron pipes. In its judgment on April 15, 2019, the Bombay High Court set out to make an example of defendants by awarding record costs of Rs50 million (US$716,000).
The suit for permanent injunction against the defendants was based on a complaint by a Saudi Arabian company – YANBU Steel Company – regarding the quality of certain carbon seamless pipes for use in oil plants that it had sourced from the defendants, believing the same to have been manufactured by the plaintiff, Nippon Steel. The pipes supplied by the defendants were accompanied by forged and fabricated certificates purportedly issued by the plaintiff and bearing its trademarks and logos.
The court took cognizance of the fact that the plaintiff’s products were used in extremely sensitive areas where quality of apparatus was of utmost importance and that the defendants’ illicit activities were bound to have disastrous consequences. “Going further, the court observed that the issue at hand was not confined to the damage of the plaintiff’s reputation and goodwill alone but that the defendants’ blatant disregard for ethics made for an irreparable dent to the repute of the nation. Determined to convey that the courts in India are no longer willing to tolerate such activities and shall deal with them with an iron hand,the judge awarded punitive costs of R50s million, which, at the plaintiff’s behest, were directed to be paid (and were paid out on April 23, 2019) to a charitable organization, the Tata Memorial Hospital in Mumbai, a specialist centre for prevention, treatment and research on cancer,” says Udayvir Rana, an IP litigation associate at Remfry & Sagar in Gurugram. “Also, the defendants undertook to write to every entity to whom they had supplied spurious pipes and publish a Caution Notice in Saudi Arabia stating they were in no way associated with Nippon Steel.”
The order passed by the High Court of Bombay is important as it creates a deterrent effect in the minds of infringers especially with the quantum of damages that were directed to be paid by the court, Rana says. “It is interesting to note that while courts limit the quantum of damages to the amount as prayed for by plaintiff in the suit, in the instant case, the High Court of Bombay awarded damages 10 times to that which was actually claimed by plaintiff.”
In Singapore, the Court of Appeal’s decision of Burberry and anor v. Megastar Shipping is of significance. “The case was brought by various trademark proprietors against the freight forwarding company, Megastar Shipping, for counterfeit importation,” says Andy Leck, principal and head of the IP practice at Baker McKenzie Wong & Leow in Singapore. “In this case, the court clarified that freight forwarders weren’t liable for trademark infringement as the importer and/or exporter of counterfeit, if they didn’t know that the relevant goods were counterfeit. The court further clarified that such ‘import’ and ‘export’ included goods in transit.”
However, the court added that freight forwarders had a duty to disclose if they were in possession of counterfeit goods, Leck says. “A duty to disclose on part of freight forwarders/trans-shippers, coupled with the enhanced powers of Customs, will ultimately arm right holders with a better ability to locate and pursue infringement actions.”
In Application for confidentiality safeguards by TWG Tea Company and objection thereto by T2 Singapore & Tea Too, the applicant, in response to an allegation that its mark lacked distinctiveness, sought to adduce evidence of its advertising expenditure and sales figures. However, the applicant requested for confidentiality safeguards to be implemented before disclosure. The opponent refused, and the interlocutory dispute proceeded to a hearing. In finding in favour of the applicant, IPOS provided clarifications on some key issues:
a) The Registrar will not generally impose confidentiality safeguards where a party voluntarily puts forward purportedly confidential information in support of its cases, says Meryl Koh, director of IP and dispute resolution at Drew & Napier in Singapore. “This is unless there is a compelling case for doing so, in light of non-exhaustive factors such as (1) the importance of the information to the dispute; (2) the degree to which the information is confidential; (3) how current the information is; (4) whether the parties are competitors; (5) the extent of prejudice should the confidential information be disclosed to its competitor; and (6) the stage of proceedings.”
b) The Riddick principle (i.e. a litigant who has obtained discovery of a document owes an implied undertaking to the court not to use that document for any collateral or ulterior purpose) should apply to IPOS proceedings.
In Abbott Laboratories v. Societe des Produits Nestle, the applicant sought to register “HM-O” in respect of (among other things) milk, milk-based products and certain non-milk products. The opponent argued that registration should be refused on grounds of descriptiveness (Section 7(1)(c) of the Trade Marks Act) and/or non-distinctiveness distinctiveness (Section 7(1)(b)). In response, the applicant raised the argument that even if “HM-O” was descriptive or non-distinctive in respect of milk and milk-based products, the registration should still be allowed in respect of non-milk products. Rejecting the applicant’s argument, IPOS took the following positions:
a) That the Registrar does not have the power under the Trade Marks Act to order partial opposition under Sections 7(1)(b) and (c) of the act. The opponent needs only to prove its case in respect of at least one of the goods claimed in the specification rather than each and every one of those goods, Koh says. “While seemingly harsh, it remains open to the applicant to amend the specification to address the objection, or to divide the application to increase the chances of success for a certain subset of goods.”
b) That the Registrar may have the power to order partial opposition in relation to multi-class applications. “While this position remains unclear, it was possible for a mark to be descriptive or non-distinctive for one class, but non-descriptive and distinctive for another,” she says. “As this conundrum did not arise on the facts, IPOS left the issue to be resolved at a later time.”
In Aalst Chocolate v. The Patissier, the question arose as to whether The Patissier (French for the pastry chef) was descriptive in respect of baked goods and restaurant services under Section 7(1)(c) of the act such that registration of the mark should be invalidated. IPOS set out the following approach to the evaluation of non-English marks:
a) First, the question is whether the non-English marks will be understood by the average customer of the relevant goods/services in Singapore at the relevant date to have a meaning.
b) Second, if so, the next question was what meaning the average customer would attribute to the non-English mark.
c) Third, if so, the final question would be whether the average customer would understand that meaning to be a descriptor of a characteristic of the goods/services claimed or as a badge of origin.
“On the facts, as it was not established that the average consumer in Singapore would even understand patissier to have a meaning at the relevant date, the first question was answered in the negative and the action for invalidation under Section 7(1)(c) of the act failed,” says Koh.
In Scotch Whisky Association v. Isetan Mitsukoshi, the applicant sought to register “ISETAN TARTAN” in respect of whiskey. The opponent argued that registration should be refused on grounds (inter alia): (1) that use of the word “Tartan” was prohibited under the Geographical Indications Act; and (2) that the mark was of such nature as to deceive the public as to the geographical origin of the good, she says. “This was the first time IPOS had considered a case under the Geographical Indications Act since it came into force in 1999.”
a) In relation to (1), IPOS noted that GIs by their very definition are indications which identify goods with a given quality, reputation or other characteristic attributable to their origin. There was no evidence that “Tartan” was a GI or that it was accorded protection as such in the UK. In fact, the relevant GI in this case was “Scotch” whisky. This decision was upheld by the High Court
b) In relation to (2), IPOS found that “Tartan” was not deceptive insofar as it indicated that the whiskey was of Scottish origin. Tartan patterns were not exclusively used by Scots and the word “Tartan” was not synonymous with Scotland. Further, the word “Isetan” would evoke an impression of Japan more than Scotland. This decision was reversed by the Court for four reasons: (a) tartan was an iconic symbol of Scotland; (b) Singapore public was familiar with tartan, and Scotland more generally; (c) the word “Isetan” in front of “Tartan” did not make the mark any less deceptive; and (d) the average consumer of whisky would attach greater significance to “Tartan” and would thus likely be deceived that the product was from Scotland.
In Taiwan, one of the most significant cases in 2019 was a trademark infringement case launched by a French fashion company. In the case, the defendant used the French fashion company’s products as prizes for its lottery game. The IP court held that, using another’s mark to promote prizes in lottery games in advertisement is not actionable use for trademark infringement. This case demonstrated the court’s position on what would and wouldn’t be considered as actionable use, says Ruey-Sen Tsai, a partner at Lee and Li in Taipei.
In the United States, while the Iancu v. Brunetti holding that the Lanham Act’s prohibition on the registration of “immoral” or “scandalous” trademarks violates the First Amendment certainly received its fair share of attention, the practical effects of this ruling are still to be seen, says Blake Dietrich, an associate at Jackson Walker in Dallas. “In particular, while there seems to have been an overall increase in the amount of trademark filings for what would be considered ‘curse’ words after this ruling, the general marketplace for goods bearing these phrases is unlikely to somehow become more accepting just because of the Supreme Court’s ruling. As such, it may not make much of an impact on the day-to-day operations of most manufacturers and retailers.”
However, the Supreme Court’s 2019 decision to grant certiorari with respect to Romag Fasteners v. Fossil may have a more drastic impact on both trademark litigation and various commercial industries, Dietrich says. “Although there hasn’t yet been a ruling as of this writing, on January 14, 2020, the Supreme Court heard oral argument in this case on the issue of whether a showing of willful infringement is required for a trademark plaintiff to be awarded an infringer’s profits for a violation of Section 43(a) – an issue previously resulting in a circuit split. In the event the court determines that willful infringement is unnecessary for disgorgement of profits, trademark infringement could become a significantly more costly finding for even unknowing or ‘innocent’ offenders. This might result in additional trademark infringement cases with much more at stake.”
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