13 October, 2016
Singapore Court of Appeal considers passing off and groundless threat of legal proceedings in a case of mimicry of packaging of goods
Singsung Pte Ltd v LG 26 Electronics Pte Ltd (trading as L S Electrical Trading) [2016] SGCA 33 (Singapore, Court of Appeal, 23 May 2016)
Facts
The present appeal arises out of proceedings commenced by Singsung Pte Ltd and See Lam Huat (“Appellant”), against LG 26 Electronics Pte Ltd (trading as LS Electrical Trading) and See Lam Seng (“Respondent”) on the grounds of passing off and copyright infringement.
The Appellant’s business consists primarily of the export of new electrical appliances manufactured in China to African and Asian markets. The bulk of these sales are made to trade buyers who are not resident in Singapore and who purchase the Appellant’s products for export to foreign countries. The Respondent, on the other hand, initially dealt in second-hand electrical appliances only, but subsequently began to deal in new electrical appliances as well.
The Respondent’s products bear striking visual similarities to the Appellant’s products across a range of goods, and in some cases are sourced from the same Chinese manufacturers. In most cases, the only discernible difference was the logo affixed to the goods, which was the “SINGSUNG” mark in the case of the Appellant, and the “LS” mark in the case of the Respondent.
Besides the similarities in the range and appearance of the products sold, the Respondent targeted the same export markets as the Appellant, namely, trade buyers from Africa and Southeast Asia. The Respondent’s position is that, save for the sale of a handful of units of DVD players and rice cookers, its products are sold only to foreign (primarily African) customers.
The Appellant claims, under the action for passing off, that it has goodwill in its business and that this is sufficiently associated with the get-up of the household appliances marketed and sold by the Appellant, which, among other things, include:
- A DVD player packaged in a white carton box with an image of a DVD player, guitar and sitting room, among other things (the “White Get- Up”); and
- A DVD player packaged in a blue carton box with an image of the DVD model, among other things (the “Blue Get-Up”). (collectively, the “Singsung Get-Up”)
Aside from the action for passing off, the Appellant brings a concurrent action against the Respondent for copyright infringement in the following artistic works, among other things:
- The picture of a DVD player, guitar and sitting room on the White Get-Up (the “White Get-Up Picture”);
- The picture of a DVD player on the Blue Get-Up (the “Blue Get-Up Picture”); and
- A sticker indicating that the television sets offered by the Appellant is ultra- slim (the “TV Sticker”). (collectively, the “Works”)
Pictures illustrating the relevant Get-Up and Works: to view the pictures please click here.
At first instance, the Judge in the High Court dismissed the Appellant’s claims for passing off and its claim for copyright infringement in respect of the Works, and allowed the Respondent’s counterclaim for groundless threats of copyright proceedings under Section 200 of the Copyright Act (Cap 63, 2006 Rev Ed) (the “Act”) in respect of the Works.
Passing off
In relation to the claim for passing off, the Judge identified two types of passing off claims. The first was the “straightforward” passing off claim, where the relevant misrepresentation occurred in Singapore, and the second was based on the doctrine of “instruments of deception”, in which the relevant misrepresentation occurred through the deception of end users in the foreign jurisdictions to which the products were exported.
For the first of these passing off claims, the Judge held that the Appellant had goodwill in its export business in Singapore, but that there was no association of the Singsung Get-Up with the Appellant by local and foreign trade buyers alike. In any case, the foreign buyers were aware that the Appellant and Respondent were separate companies competing in the same line of products. Thus, the Judge found that the Singsung Get-Up was not distinctive and that there was no passing off on this ground.
For the second of these passing off claims, the Judge held that there was insufficient evidence to suggest that members of the public in Cameroon (the only market for which evidence was produced at trial) viewed the Singsung Get-Up as distinctive of the Appellant or that the Respondent’s get-up amounted to a misrepresentation. As such, the Judge similarly dismissed this claim of passing off.
The Appellant also submitted that proof of deliberate copying of its get- ups and an intention to deceive on the Respondent’s part would be sufficient to prove goodwill in that which was copied. In this respect, the Judge held that the Respondent’s intention was to compete directly with the Appellants in the same market with the same range of products, in which case there was no intention to deceive notwithstanding the Respondent’s conscious decision to choose the same range of products and models and the virtually identical get-up as the Appellant.
Copyright infringement
In relation to the claim for copyright infringement, the Judge found that:
- The Appellant failed to establish that it owned the copyright in the White Get-Up;
- There was insufficient copying to justify infringement in relation to the Blue Get-Up; and
- The Respondent did not know or ought reasonably to have known that the TV Stickers bearing the Respondent’s mark had been manufactured without the consent of the copyright owner at the time of the first order, and was thus not liable for the order, importation and sale of the television sets bearing the TV Sticker as a matter of secondary infringement.
Consequent to these findings, the Judge allowed the Respondent’s counterclaim for groundless threats of copyright infringement as consequential relief in respect of the claims dismissed above.
The Appellant appeals in respect of all the findings above.
Decision
Distinctiveness of the Singsung Get-Up
As a general rule, goodwill exists in Singapore when a business offers a product or service for sale in this jurisdiction, and a customer purchases the product or consumes the service in Singapore. This meant that goodwill subsisted in the Appellant’s export business, notwithstanding the fact that its foreign trade buyers were not nationals of or resident in Singapore.
The next question then was whether the Singsung Get-Up was distinctive of the Appellant’s goods, and whether
there was a misrepresentation made by the Respondent in adopting get-ups that were highly similar to the
Appellant’s and whether actual confusion or a sufficient likelihood of confusion arose as a result.
On the first point, there was little direct evidence that end users of the Appellant’s goods in Cameroon associated the Singsung Get-Up with the Appellant. However, the Court of Appeal (“Court”) found that there was deliberate copying by the Respondent, and that there was an intention to deceive given the Respondent’s representations that it was or used to be associated with the Appellant. Thus, taking in the factors as a whole, the Court found that there was indirect evidence of distinctiveness.
Given this finding of distinctiveness, the Court then held that the Respondent’s products were inherently deceptive, as they had adopted the same or similar get-ups that were distinctive of the Appellant. Hence, by supplying its trade buyers with such “instruments of deception”, the Respondent had completed the tort under this doctrine and was liable to the Appellant for passing off.
Copyright infringement
The Court accepted the Appellant’s claim that the White Get-Up Picture was commissioned by the Appellant, and that the Appellant had copyright in the White Get-Up Picture by virtue of Section 30(5) of the Act. This was accepted as the statement by the factory producing the DVD Player in the White Get-Up indicated, as a matter of construction, that the exclusive right to use and to exclude others from using the White Get-Up Picture would vest in the Appellant.
As for the Blue Get-Up Picture, the Court found that there was insufficient copying to amount to an infringement. The pictures in the Appellant’s and Respondent’s respective get-ups were straightforward representations of commonplace objects, in which case nothing less than identical copying or “almost an exact reproduction” would amount to an infringement.
As a matter of secondary infringement, the Court held on the evidence that the Respondent knew or ought to have known that the making of the TV Sticker was without the consent of the copyright owner under Section 32 of the Act.
This was because the Respondent’s sole shareholder and director (“Seng”) did in fact visit the manufacturer of the Appellant’s television sets. During his visit, Seng came across the Appellant’s television sets bearing the TV Sticker, and requested the same television sets with a similar sticker. In the Court’s view, the presence of the “SINGSUNG” mark on the TV Sticker should have alerted Seng to the possibility that the material on the sticker might have belonged to the Appellant, in which case Seng would have or ought to have known that the Respondent might have been infringing copyright. Hence, there was secondary infringement of the TV Sticker by the Respondent.
Groundless threats of legal proceedings
In determining the scope of Section 200 of the Act, the Court held that it was bound to apply a purposive approach as mandated by Section 9A of the Interpretation Act (Cap 1, 2007 Rev Ed).
In this regard, the Court held that the legislative intention behind Section 200 of the Act was to prevent the making of unjustified threats to damage or harass others, in which case there was no restriction in principle that threats had to be made publically or in writing before it could constitute a groundless threat. Rather, it was for the Court to consider in all the circumstances (and in its discretion) if there was any reason for the court to grant relief upon a claim of groundless threat founded on a failed allegation of infringement, with the cost consequences flowing from a failed claim being a relevant consideration.
Having outlined the approach above, the Court determined that letter of demand sent by the Appellant’s solicitors, in so far as it concerned the Blue Get-Up Picture, did not call for an order to be made under Section 200 of the Act. It thus set aside the Judge’s order in relation to the Respondent’s counterclaim for groundless threat. This was because no conceivable damage flowed from the demand having been made, and a declaration that the threat was groundless was unnecessary as the claim for infringement had failed.
Comments
The above judgment is a useful example demonstrating the difficulty of establishing direct proof of distinctiveness in get-ups for products, and the operation of the “instruments of deception” doctrine in which proof of inherent deceptiveness and the supply of such instruments can, on their own, amount to a complete action in the tort of passing off.
This judgment is also important as it involves a closer examination of the scope and application of Section 200 of the Act, and establishes that a grant of relief under this section is discretionary in nature. Similar provisions can be found with respect to Sections 35, 77 and 44 of the Trade Marks Act, Patents Act and Registered Designs Act respectively.
A copy of the decision may be accessed at:
http://www.commonlii.org/sg/cases/SGCA/2016/33.pdf
For further information, please contact:
Chung Nian Lam, Partner, WongPartnership
chungnian.lam@wongpartnership.com
