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Singapore Court of Appeal Affirms Protection of Well Known Marks in Novelty Pte. Ltd. V. Aman Resorts Ltd.

Should a cluster housing project in a relatively affordable, middle class housing estate – Yio Chu Kang be allowed to share the same name as an ultra-exclusive luxury resort in Bali when that name is not a registered trademark in Singapore?

In the landmark case of Amanresorts Limited v Novelty Pte Ltd [2008] 2 SLR(R) 32 (“the Judgment”), the High Court of Singapore found that the “Aman” names were well known marks. Both claims of Passing Off and the Infringement of a Well Known Mark S55(3)(a) were satisfied by Amanresorts Limited.

Novelty Pte Ltd, (the “Appellants”) decided to appeal against this High Court decision, and requested that the Court of Appeal consider the case from two angles. First, at common law under the tort of passing off and second, under Section 55 of the Trade Marks Act (“the current TMA”). The TMA provides for the protection of well-known trademarks. Unfortunately for the Appellants, the Court of Appeal dismissed their claim and affirmed the High Court’s Decision.

Importantly, the Court of Appeal clarified the distinction between the law of passing off and Well-Known marks, while leaving the backdoor slightly ajar for further interpretation. The Court confirmed that International and Foreign Companies who do not conduct their business in Singapore, but have an office within Singapore (i.e., are not totally removed from this island because of business contacts) may still receive the full gambit of protection of their trademarks.

The further elucidation of the Court of Appeal is set forth below:

Brief Facts of Novelty Pte Ltd Vs. Aman Resorts Ltd.

The Respondents

The Respondents (“Amanresorts Ltd”) operate under the Amanresorts group of companies (“the Amanresorts Group”). The Amanresorts Group operate ultra-luxury resorts in many exotic locations in the world. “Amanusa” is a fancy resort that opened in Bali in 1992. The Respondents are also in the residential accommodation business and they license the prefix “Aman” to real estate projects in return for a fee.

In addition to their real estate and hospitality companies, the Respondents have luxury goods and services associated with the “Aman” name. While the word “Aman” was not currently registered as a trademark in Singapore, the name “Amanusa” was registered as a trademark in 1998, and lapsed in 2001. The Appellant developed housing projects in Singapore, in contrast to the Respondents, and are known for reasonably priced housing developments in convenient locations.

In 2005, the Appellant named a Balinese themed housing project in Singapore as “Amanusa”. The Respondents took legal action against the Appellant under the law of passing off, and Section 55(3)(a) of the “TMA”. The High Court held that the ‘Aman’ names were well known trademarks in Singapore, and that both arguments were valid. The Appellant appealed against the High Court’s decision.

The Court of Appeal dismissed the Appellant’s appeal, and affirmed the High Court decision on the grounds of passing off and well known marks.

A claim under the law of Passing Off requires three elements to be established:

  1. presence of goodwill;
  2. misrepresentation; and
  3. damage to goodwill

Presence of Goodwill
a) Limited Sector of Public is Sufficient

Goodwill may exist in specific, limited sectors of the public, as long as these sections are not negligible. Just how small a sector of the Public is negligible? The Court of Appeal explains that:

  1. One of the more striking features about the present appeal is that the main part of the Respondent’s business is not based in Singapore;
  2. The Respondent’s resorts are all located overseas;
  3. The Respondent’s physical presence in Singapore is limited to their international corporate office, and international reservations office;
  4. The Respondent’s resorts are all located in exotic or relatively remote locations;
  5. The Respondent’s, however, have their own policy of not advertising their resorts in the mainstream media. Their advertising targets an elite traveler, the very rich and extremely well heeled; and
  6. The Respondent’s resorts were only available to extremely wealthy individuals, with room rates averaging USD $00 to USD $1,500 per night, with exclusive rooms at the exorbitant rate of USD $10,000 per night.

Despite the Respondent’s exclusive customer base, they satisfied the requirement of goodwill based on exposure to the limited section of the public. The Respondents had goodwill in Singapore although the goodwill of the “Aman” name was limited to an elite group with a high income who would have been exposed to the Respondents’ advertising.

b) How relevant is the Internet in relation to Public Exposure?

While the presence of the “Aman” name on the Internet was a relevant factor in determining the presence of goodwill, the Internet’s power of exposure was only a potential power. This was because it could not be determined conclusively whom had browsed the website, from which countries and in what numbers.

Therefore, just as putting a trade mark on the Internet did not translate into “use” of that trade mark in a jurisdiction, the mere existence of domain names and websites featuring the “Aman” name was not in itself sufficient evidence of exposure. Additional proof to show exposure of the “Aman” name in Singapore was required. In the instant case, there was ample evidence of marketing in trade shows, advertisements with the airline industry and credit card companies to the tune of US $3.5 million dollars in 2006.

Misrepresentation

The target audience of misrepresentation in a passing off action was the actual and potential audience of the claimant.

Misrepresentation was actionable only if it caused confusion. While there was no need to show actual confusion, the Court had to assess whether or not there was a likelihood of confusion from the surrounding facts based on the average reasonable person with characteristics that reflect the relevant section of the public.

Another factor in this case included whether or not there was any fraudulent intention by the Appellants in using the name “Amanusa” for their housing project. The Court determined that there was no fraudulent intention.

However, the identical names, similar Balinese themes, and presentation of the Appellant’s housing project as a high-quality accommodation were factors that increased the likelihood of confusion. The Court also held that on the facts of the case, the businesses of the Appellant and Respondent were similar – as famous hotel chains were delving into the residential market – gradually there would be a merging of the two separate businesses.

Are Surveys useful in determining the Actual and Potential Audience?

An important point to note concerns the strong argument from the Appellants is that the actual and potential audience of the Respondents, such as the very well-heeled Singaporeans would not mistake a low cost residential housing project with the exclusive Aman Resorts. Further, these individuals were not likely to be actual or potential purchasers of units in the Project.

The Appellant conducted an in-house and informal survey to prove that its customers who were interested in purchasing its apartments were not aware of the Respondent’s luxury resorts. For example, out of the 50 surveys, only two persons noted that “Amanusa” sounded like a famous resort.

The judges stated:

the exposure which the Respondents have succeeded in establishing is plainly limited to the well heeled. It is these people who visit the Respondents’ resorts; it is also this group which has been and continues to be the target of the Respondents’ selective marketing campaign. In contrast, exposure of the “Aman” names has not been established for other income groups in Singapore. Some indication of this can be found in the survey carried out by the Appellant among the visitors to the Showflat, the overwhelming majority of whom had not heard of the Amanusa Bali or any other Aman resort.

The judges went on further to say:

the survey was rather unscientific and do not place much weight on the results obtained. Further, the drafting of the questionnaires for the survey left a great deal to be desired. The use of surveys in trade mark disputes and passing off actions is a very technical matter and, if evidence based on surveys is to be relied on, it should be adduced in the form of expert evidence.

Thus, a valuable lesson to be derived from the Appellant’s approach is that a professional survey firm must be used in order for the Court to give weight to submitted evidence.

The judges concluded that as long as the name Amanusa would create the impression – in the minds of a reasonable person that the Project is somehow related or connected to the Respondents via a license to use the name or endorsement of the Project, the use constituted Misrepresentation.

The Court then goes on to state that it is not a defence that a relevant section of the public would tend to be more intelligent and verify matters that they are not certain about. The mere indication that a verification is necessary, establishes a likelihood of confusion.

c) Was there Damage of the Respondent’s Goodwill?

There are two important distinctions that need to be taken into account when assessing damage to the Respondent’s goodwill. Damage is defined as a real tangible risk of substantial damage that could occur by blurring or tarnishment.

Blurring

Blurring occurs when the plaintiff’s get-up is indicative of the defendant’s goods or services as well as their own goods and services. Blurring requires that the plaintiff and the defendant be in competition, or are at least substitutes for each other. There was little likelihood of Blurring in this case as the Appellants goods were residential apartments and the Respondent’s services are that of providing Hotel Services.

Tarnishment

On the other hand, tarnishment occurs when the goods or services of the defendant were of an inferior quality or if they had some undesirable characteristic. Tarnishment does not require the plaintiff and the defendant to be in competition with each other. The term “dilution” should be used with caution in passing off cases, especially when referring to a blurring or tarnishment of goodwill.

In this case, there was tarnishment of the Aman Resorts’ goodwill because the Appellant’s housing project was not in the same luxury or class.

Restriction of Expansion

A Plaintiff who had established goodwill in one form of commercial activity might claim as damage, any restriction of its expansion into another form of commercial activity, provided that the latter was a natural expansion of the first commercial action and there was a close connection or nexus between the two commercial activities.

The Respondents’ field of business was closely connected with the Appellant’s field of business as both concerned accommodation. Therefore, the Respondents were restricted by the Appellant’s use of the name “Amanusa” from expanding into the residential accommodation business in Singapore.

Well Known Trade Mark – Section 55

For a claim under the TMA, a proprietor of a well-known trademark under Section 2(1) of the TMA did not need to carry on business or possess any goodwill in Singapore.

Whether or not a trademark was “well known in Singapore” was assessed objectively based on the factors stated in Section 2(7) of the TMA. A “relevant sector of the public in Singapore” under Section 2(9)(a) of the TMA covered the actual consumers and potential consumers of the plaintiff’s goods or services only, as opposed to all actual consumers and potential consumers of the type of goods or servicesto which the plaintiff’s trademark was applied.

Considering the factors under Section 2(7)(a) and Section 2(7)(b) of the TMA, the Court held that the “Aman” names were well known in Singapore.

Likelihood of Confusion must be proved

Although Section 55(3)(a) of the TMA did not explicitly state that there had to be a likelihood of confusion, this was an implicit requirement of “a connection between [the defendant’s] goods or services and the [plaintiff]” under Section 55(3)(a).

In other words, there had to be a confusing connection between the plaintiff and the defendant’s goods or services. A survey of international agreements, from which Section 55(3)(a) was derived, showed that the requirement of confusion was not dispensed with.

The widespread availability of protection to trademarks that were “well known marks in Singapore” should be balanced by requiring confusion to be shown under Section 55(3)(a).

Unfair Dilution – only strong marks need apply

This is in contrast to an exclusive class of trademarks that are “well known to the public at large in Singapore”, which are afforded more protection. These exclusive trademarks are protected against unfair dilution and the taking of unfair advantage of their distinctive character, even in the absence of a likelihood of confusion. Good examples of marks that would fall under this class are “Coca-cola” and “Nike”.

Difference between Passing Off Claim and Section 55 of the TMA

The tests for the “connection” requirement and the “likely to damage the [plaintiff’s] interests” requirement in Section 55(3)(a) of the TMA yielded the same result as tests for “misrepresentation” and “damage to goodwill”, under the passing off claim. However, the judges, did not go into an extensive examination of what would satisfy the connection requirement in Section 55(3)(a).

In the test for Passing Off – a plaintiff is required to show that it has established goodwill within the relevant jurisdiction, however under S55(3)(a) of the TMA, a plaintiff is only required to show that its interests may be damaged to prove infringement of its Well-Known trademark.

Therefore, a proprietor of a well known trademark who finds it difficult to prove goodwill in Singapore, may alternatively use Section 55 of the Trademarks Act to protect its mark.

In Summary

Novelty Pte.Ltd Vs. Aman Resorts Ltd. establishes once and for all that famous well-known marks for brands developed outside of Singapore can be protected even if the marks have not been registered in Singapore. Further, despite having a limited customer base in Singapore, a Company may still prove that it has established goodwill, thereby satisfying a requirement under the common law action of Passing Off. Alternatively, an owner may rely on Section 55 of the TMA to prove infringement of a well-known mark in Singapore if it finds it difficult to prove goodwill exists.

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