9 March, 2017
The recent case of Calvin Klein, Inc and another v HS International and others [2016] SGHC 214 sheds some light on the liability that intermediaries may incur if they are involved in the sale of infringing goods. Facts The 1st plaintiff, Calvin Klein, Inc., is a leading fashion design and marketing company. The 2nd plaintiff, Calvin Klein Trademark Trust, is a business trust and the registered proprietor in Singapore of the 1st Plaintiff's trademarks. Meanwhile, the 1st defendant, HS International Pte Ltd, is a freight forwarding company.
The 2nd defendant, Global PSM Pte Ltd, is a company which operates the website www.sgbuy4u.com ("SGbuy4u Website"). The SGbuy4u Website is an e-commerce platform from which customers can buy a wide variety of goods. The product listing of goods sold are obtained from the Chinese online shopping website, Taobao.com ("Taobao").The SGbuy4u Website, does not store, manufacture or possess any of the products listed. Rather, it facilitates customers' purchases in the following manner: once a customer makes a purchase, the operators of the SGbuy4u Website would make a corresponding purchase from Taobao, which would be delivered to a specific warehouse in the People's Republic of China.
Thereafter, the 2nd defendant would ship the purchase to Singapore and deliver it to the customer. The 3rd defendant, Tan Keng Hiang Jeffrey, is the sole shareholder and director of the first two defendants as well as the administrator of the SGbuy4u website.
The plaintiffs made sample purchases from the SGbuy4u Website and subsequently sued the defendants for offering for sale on the website goods that bore the plaintiffs' trademarks, without first obtaining the plaintiffs' permission. Trademark infringement Under section 27(1) of the Trade Marks Act ("TMA”), a person infringes a registered trade mark if, without the consent of the proprietor of the trade mark, he uses in the course of trade a sign which is identical with the registered trademark and the use is in relation to the same goods and services for which the mark was registered. On the facts, the High Court found that the "double identity" requirement (i.e., use of identical trademarks for identical goods) was satisfied as the products obtained from the sample purchases bore the plaintiffs' registered trademarks and were used for items for which those trademarks were registered.
The main issue before the Court was whether the marks were "used in the course of trade" under s. 27(4)(b) of the TMA. The plaintiffs argued that the sample purchases were goods that the defendants had offered for sale. As such, the statutory requirement of "used in the course of trade" was satisfied. In response, the defendants raised 2 main defences, namely (1) the defendants were merely offering a courier or freight forwarding service; and (2) they were merely providing a customer-to-customer platform to facilitate the sale and purchase of goods. The crux of the inquiry therefore lay in the proper characterisation of the activities of the SGbuy4u Website. The defendants' argument that they were mere intermediaries was rejected by the Court as the SGbuy4u Website provided more services than traditional courier companies.
Specifically, the defendants received payment for the products and placed the order for them with the seller. In addition, the defendants' argument that they were merely providing a platform for sellers to connect with buyers was rejected by the Court. Unlike the SGbuy4u Website, other platforms did not liaise with individual sellers who posted product listings, place orders with sellers, or receive products and send them to the buyers. The Court ultimately decided that the defendants' sale of the goods bearing the plaintiffs' registered trademarks constituted an infringement under s. 27(1) of the TMA.
This decision was based on the following findings: (i) Instances of sale and purchase There were 2 instances of sale and purchase whenever a user bought an item from the Sgbuy4u Website. The first contract of sales arose between the buyer and the 2nd defendant when a customer browsed the SGbuy4u Website and made a purchase. The second contract of sale arose when the 2nd defendant purchased from a Taobao seller and subsequently arranged for the purchase to be delivered to Singapore.
This was supported by the fact that users of the SGbuy4u Website did not interact with sellers on Taobao (or, conversely, that such sellers were not aware of the users of the Sgbuy4u Website). (ii) Profitability from an arbitrage on exchange rates The Court also concluded that the 2nd defendant made a profit from an arbitrage in the exchange rate offered. Based on the plaintiffs' sample purchases, the exchange rate offered to the users of the SGbuy4u Website was distinct from the prevailing market exchange rate. The Court therefore decided that goods were offered for sale (and actually sold) via the SGbuy4u Website.
The contracts between customers and the 2nd defendant were not mere contracts for services, but constituted contracts for the sale of goods. Liability of the defendants Having decided that the plaintiffs' trademarks were infringed, the Court had to consider the specific liability of each of the 3 defendants. The Court held that the 2nd defendant was liable for trademark infringement and granted the plaintiffs summary judgment against the 2nd defendant. The court however declined to award summary judgment against the remaining defendants. As such, the 1st and 3rd defendants were granted leave to defend the plaintiffs' claims. The 1st defendant's only connection to the SGbuy4u Website was that its address and contact number were listed on the website. However, this was not enough to prove that the 1st defendant had carried out an infringing use of the plaintiffs' registered trademarks under s. 27(4)(b) of the TMA.
The 3rd defendant was the sole director and shareholder of the 2nd defendant. However, there was insufficient evidence to prove that the 3rd defendant was personally involved in the infringing use of the plaintiffs' trademarks. While the plaintiffs attempted to argue that the 3rd defendant was guilty of secondary trademark infringement, the Court recognised that this was an area of undecided law and was inappropriate for determination at a hearing for summary judgment.
Comments
Due to the increasing challenges in combating foreign manufacturers that offer IP infringing goods, trademark holders may increasingly target Singapore-based intermediaries that facilitate the sale of infringing goods.
This case demonstrates that intermediaries can no longer disclaim liability merely because they do not physically manufacture or stock the products. The courts will not hesitate to scrutinise an e-commerce platform's purported business model to determine liability.
While the Court declined to make a ruling on the applicability of secondary trademark infringement in Singapore, its observations in this regard may be pertinent should the plaintiffs file an appeal against the 1st and 3rd defendants. More broadly, the Court's acknowledgement of the doctrine may provide trademark holders with more options to pursue infringement claims.
For further information, please contact:
Andy Leck, Principal, Baker & McKenzie.Wong & Leow
andy.leck@bakermckenzie.com
