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The Squiggly Dispute

THE SQUIGGLY DISPUTE

Lee Quin examines a significant Federal Court decision on section 46(1) of the Trade Marks Act 1976

 

The Federal Court in LB (Lian Bee) Confectionery Sdn Bhd v QAF Ltd [2012] 4 MLJ 20 reaffirmed the decisions of the High Court and the Court of Appeal which held that the use of a registered trade mark by a licensee is deemed to be use by the proprietor of the said trade mark, even though the licensing agreement is pending registration by the Registrar of Trade Marks.

BACKGROUND FACTS

QAF Ltd ("QAF") is a public listed company in Singapore and is a manufacturer and seller of bakery products. QAF had registered its "Squiggles" trade mark in 2004 for various products, including cream-filled buns.

By a licensing agreement made sometime in July 2003, QAF authorised its subsidiary, Gardenia Bakeries (KL) Sdn Bhd ("Gardenia"), to use the "Squiggles" trade mark in relation to various products, including cream-filled buns. The application for registration of Gardenia as the registered user of the "Squiggles" trade mark was made on 3 April 2008, and the certificate of registered user was issued on 8 April 2008.

Sometime in 2007, LB (Lian Bee) Confectionery Sdn Bhd ("LB") started to use the mark "Squiggle", a mark which was claimed to be deceptively and confusingly similar to QAF's registered "Squiggles" trade mark, in relation to cream-filled buns.

LB sought to expunge QAF's "Squiggles" trade mark pursuant to section 46(1)(b) of the Trade Marks Act 1976 ("TMA") on grounds that:

  1. it was an aggrieved party as it was prevented by QAF's registered "Squiggles" trade mark from using its "Squiggle" trade mark for cream-filled buns; and
  2. for a period up to one month before its application to expunge QAF's registered "Squiggles" trade mark, there had not been any use in good faith of that trade mark by QAF, as the registered proprietor, or by any registered user, in relation to cream-filled buns for a period of not less than three years.

In connection with the second contention raised by LB, it is to be noted that under section 48(5) of the TMA, the use of a registered trade mark by a registered user thereof is deemed to be use by the registered proprietor of the mark to the same extent that the mark has been used by the registered user. However, the TMA is silent as to the effect of the use of a trade mark by a licensee prior to its registration as a registered user of that trade mark.

LB contended that the effective date of Gardenia's use of QAF's trade mark was the date of its registration as the registered user thereof in 2008 and could not be backdated to an earlier date.

QAF applied for a trade descriptions order against LB under section 16(1) of the Trade Descriptions Act 1972 for infringement of QAF's "Squiggles" trade mark.

Both the High Court and Court of Appeal decided in favour of QAF.

DECISION

The Federal Court dismissed LB's appeal and upheld the findings of the High Court that use of the trade mark by QAF's licensee, Gardenia, was equivalent to use by QAF even though Gardenia was not a registered user under section 48(1) of the TMA before 2008.

The Federal Court held that the TMA must be applied purposefully and meaningfully, and must meet commercial realities and objectives. It cannot be right that the 'registered user' status, including the recognised period of use, could take effect only on the date of registration of the user. According to the learned judge, Zulkefli bin Ahmad Makinudin CJ (Malaya):

"As rightly found by the Court of Appeal, there is nothing in s 46 of the TMA or reg 81(2) of the (Trade Mark Regulations) which could be read to preclude the use of a trade mark by a registered user to be in force retrospectively before the date of the application to register the registered user. We are also of the view that s 48 of the TMA must be applied purposely and meaningfully, and must meet commercial realities and objectives."

His Lordship continued:

"It cannot be right that a "registered user" status, including the recognised period of use, takes effect only on the date of registration of the user status. Section 48(1) clearly recognises the pre-existence of the licensing agreement between the proprietor and the intended user by virtue of the opening words ... 'where the registered proprietor of a trade mark grants, by lawful contract, a right to any person to use the trade mark.'"

Accordingly, the Federal Court rejected LB's contention that the effective date of Gardenia's use of QAF's trade mark was the date of its registration as the registered user thereof and not prior to that date.

Besides adopting a purposive reading of section 48, the Federal Court did not consider regulation 81(2) of the Trade Marks Regulations 1997 (which provides that the date on which the application was made for the registration of a registered user, is deemed to be the date on which the registered user was so registered) as affecting the registered proprietor's entitlement to benefit from the use of the registered trade mark by the registered user as of the date on which he grants authorisation or licence for the use of the registered mark.

As QAF's "Squiggles" trade mark was lawfully subsisting and used in good faith in the course of trade by the registered user since 2003 in relation to cream-filled buns, the subsequent use by LB of its "Squiggle" trade mark in relation to the same product in 2007 was tantamount to both infringement and passing off.

The Federal Court agreed with the High Court judge and held that as LB was an infringer, it could not be regarded as an aggrieved party on policy grounds. The Federal Court, relying on the principle of construction in bonam partem, cited Bennion on Statutory Interpretation (2005) (5th Edition) Lexis Nexis, p 792, in the following terms:

  1. It is a rule which developed from the principle that law should serve the public interest. If a statutory benefit is given on a specified condition being satisfied, it is to be preseumed that Parliament intended the benefit to operate only where the required act is performed in a lawful manner; and
  2. It is related to three specific legal principles, namely that (a) a person should not benefit from his own wrong; (b) if a person has to prove an unlawful act in order to claim the statutory benefit, this maxim would preclude him from succeeding; and (c) where a grant is in general terms there is always an implied provision that it shall not include anything is unlawful or immoral.

The Federal Court added that if LB were to be regarded as a 'person aggrieved' for the purposes of section 46(1)(b) of the TMA, it would mean that all infringes may apply to expunge the very trade mark they have been infringing and this would be contrary to principle of not allowing them to benefit from their very own wrong or unlawful act

CONCLUSION

The judgment of the Federal Court in this case is important as it clarifies the law in several respects. Firstly, for the purposes of expungement proceedings under section 46(1)(b) of the TMA, the use of a trade mark by a licensee thereof prior to the registration of a registered user agreement is deemed to be use of the mark by the registered proprietor of the relevant mark. Secondly, an infringer of a trade mark cannot be an 'aggrieved party' who is entitled to have the registered mark expunged on the grounds of non-use under section 46 of the TMA.

This decision reiterates the importance for a proprietor of a registered trade mark who has granted a licence to another party to use his trade mark, to take proactive steps to secure its rights by ensuring that his licensee is registered as a registered user of the mark under the TMA.

Writer's email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

SUBJECT MATTER: CASE COMMENTARY

WRITER'S NAME : TAN LEE QUIN

WRITER'S PROFILE:

Lee Quin is an Associate in the Intellectual Property Division of SKRINE. She graduated from the University of Hertfordshire in 2011.

 

 
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