9 March, 2017
The case of Lim Ching Kwang v Audi AG [2016] SGIPOS 2 concerned the revocation and invalidation of a registered trade mark. Facts The registered proprietor, Lim Ching Kwang, registered the following trade mark (the "Mark") on 5 October 2009 in Classes 7 and 12:
Class 12 covers vehicles, apparatus for locomotion by land, air or water, motor and engines for land vehicles as well as parts and fittings for vehicle. On 31 March 2015, the applicant, Audi AG, applied for the following: (1) The revocation of the Mark on grounds of non-use for a continuous period of 5 years as per ss. 22(1)(a) and (b) of the Trade Marks Act (the "TMA"); and (2) The invalidation of the Mark on the basis that it was applied for in bad faith as per under s. 23(1) read with s. 7(6) of the TMA.
Revocation of the Mark Based on the evidence, the Registrar decided that the registered proprietor has shown genuine use of the Mark only in respect of "torque rod bushes". The registration of the Mark in Class 12 was therefore revoked, save for "torque rod bushes". The registered proprietor did not register the Mark in bad faith The Registrar decided that the registered proprietor did not breach s. 7(6) of the TMA as it had not acted in bad faith.
The test to determine if a trademark was registered in bad faith is a combined one which contains both a subjective element and an objective element. To prove bad faith, the applicant must show that: (1) The registered proprietor's conduct in applying for registration of the trademark fell short of the normally accepted standards of commercial behavior; and (2) The registered proprietor knew of facts, which, to an ordinary honest person, would have made the latter realise that such conduct would be regarded as breaching those standards.
The applicant chiefly argued that the registered proprietor had registered the Mark for an overwhelmingly wide class of goods, and that the paid-up capital of the company was of such "minor scale" that they would not have the capacity to use the Mark on the whole range of goods covered by the registration.
The Registrar was not convinced by the applicant's arguments as there was a lack of evidence to show that the registered proprietor's conduct in registering the Mark to cover a broad class of goods was commercially unrealistic. Notably, the Registrar recognised that it was legitimate for businesses to seek registration for trademarks for both categories of goods and services to which the company currently marketed to and categories to which the businesses intended to market in the future.
The Registrar also recognised that the paid-up capital of a company does not accurately represent the types of goods in which the company can trade. The capital of a business is not static and the amount of paid-up capital in and of itself cannot be indicative of whether the company can trade in the various classes for which it has registered the trademark.
The fact that the Registrar found that the registered proprietor had made genuine use of the Mark in respect of one class of goods was enough to show a bona fide intention to use the Mark. Moreover, the Registrar held that even though there was non-use of the Mark in respect of the other classes of goods, this did not necessarily lead to a conclusion that there was a lack of a bona fide intention to use the Mark at the point of application.
Comments
This case reaffirms the fact that the courts will require a high standard of proof to establish bad faith before a registered trademark will be invalidated. The courts are generally cognisant of business realities and would generally not question commercial decisions. Therefore, the fact that companies decide not to use trademarks for all the classes of goods for which they register will not give rise to an adverse inference.
As for the issue of revocation, the courts will scrutinise whether marks have been used in accordance with s. 22(1) of the TMA and will revoke such marks in relation to goods that have not been used for a continuous period of 5 years. This strikes an important balance between preventing trademark hoarding and allowing companies a degree of leeway in making commercial decisions.
For further information, please contact:
Andy Leck, Principal, Baker & McKenzie.Wong & Leow
andy.leck@bakermckenzie.com
