"Many are called but few are chosen": When a claim of bad faith succeeded in a trademark matter in Singapore
Bad faith is often pleaded in trade mark opposition and invalidation cases. In Singapore, both the Registry and Courts have consistently made clear that the enquiry is fact-dependent and the evidentiary threshold is high because of the seriousness of the allegation.
As a result, a claim of bad faith is seldom successful. A rare instance of success is the recent case in Singapore before the Registry, Dentsply Sirony Inc. v Tomy Incorporated [2019] SGIPOS 13, where the applicant (for invalidation) managed to rely on its longstanding relationship and contractual agreements with the registered proprietor to show that the trade mark applications had been filed in bad faith.
Sadly for Othello, Iago knew all about bad faith
Facts
Dentsply Sirona, Inc. (the "Applicant") instituted the invalidation proceedings against three trade marks, "MICROARCH", "SENTALLOY" and "BIOFORCE", registered in the name of Tomy Incorporated ("Tomy" or the "Proprietor"). These marks were filed in Class 10 (for orthodontic products) on 22 January 2013.
The parties had a longstanding relationship, dating back to 1967, when one of the Applicant's subsidiaries ("GAC") was appointed as a distributor of the Proprietor's orthodontic products. There were several agreements delineating the respective rights of the parties regarding distributorship in various territories as well as the use and ownership of trade marks. A brief summary follows:-
a) The 1986 Agreement carved out the parties' respective territories and provided that products would be advertised and sold under the trade marks "Tomy" or "Orth-Tomy". GAC had a right to use these marks and the option to register them. The 1986 Agreement did not deal with any of the impugned marks.
b) The 1998 Agreement carved out the parties' rights to sell and distribute the products in various territories and provided that:
(i) GAC could sell the products under its own trade marks and GAC owned all rights therein;
(ii) The "Tomy" and "Orth-Tomy" marks belonged to the Proprietor, and GAC was prohibited from acquiring registrations for them without approval, although it could use these marks in connection with products manufactured by the Proprietor; and
(iii) A list of marks (including "MICROARCH", "SENTALLOY" and "BIOFORCE") applied/registered in certain specified territories – set out in an exhibit – belonged to GAC, which granted a non-exclusive, royalty-free licence to the Proprietor to use them in connection with producing and selling the products until termination of the agreement.
c) The 2004 Agreement was largely similar to the 1998 Agreement, save that Singapore became a non-exclusive territory (previously, GAC had exclusive rights to sell and distribute the products in Singapore).
d) The 2012 Agreement did away with any division based on exclusive and non-exclusive territories. Instead, GAC had only a non-exclusive right to sell and distribute the products in all territories. More crucially, in relation to trade marks, the agreement provided that:
(i) GAC owned the rights to its own trade marks and the Proprietor could not claim any rights therein;
(ii) The Proprietor owned all rights to its Tomy trade marks, including "Tomy" and "Orth-Tomy", and GAC could not claim any rights therein; and
(iii) Marks applied/registered in certain specified territories, as set out in an exhibit, were the property of GAC and its affiliates.
Registrar's Findings
The relevant date for assessing the grounds of invalidation is 22 January 2013 (i.e., the date of application for registration of the impugned marks). The 2012 Agreement was subsisting and governed the relationship between the parties during this time.
It was disputed whether the trade marks "MICROARCH", "SENTALLOY" and "BIOFORCE" belonged to GAC in Singapore, since the list of marks in the exhibit annexed to the 2012 Agreement did not expressly include Singapore. Nevertheless, upon review of the 2012 Agreement in its totality, the IP Adjudicator was persuaded that the ownership rights of GAC's trade marks, including the impugned marks in Singapore, vested in GAC and its affiliates. The list of countries merely showed the countries in which applications/registrations for the marks had already been made or obtained.
Eventually, with knowledge of the terms of the agreement between the parties as regards ownership of the impugned marks, the Proprietor's action in registering the marks that are the property of GAC and its affiliates (including the Applicant) was found to be "tantamount to hijacking of GAC's trade marks and it clearly falls outside the scope of acceptable commercial behaviour observed by reasonable and experienced persons", i.e., the registrations had been procured in bad faith. The registrations were declared invalid.
Even though the evidence showed that the Proprietor was the first to use the marks "BIOFORCE" and "SENTALLOY" in Singapore in 1993 (and notably this was prior to the 1998 Agreement), there was already a contractual relationship between the parties at the time.
Also, GAC had had registrations for "BIOFORCE" and "SENTALLOY" in the United States whereas the Proprietor did not have any registration for the said marks anywhere in the world. Further, the behaviour of the parties after the 1998 Agreement had come into existence was consistent with the terms delineating two categories of marks belonging to GAC, and the Proprietor, respectively.
Key Takeaways
Case law suggests that actual knowledge of a counter-party's rights, without more, does not automatically constitute bad faith. In this case, the pre-existing relationship between the parties was a crucial factor in finding that there was bad faith. This is reminiscent of the Singapore Registry's decision in USA Pro IP Limited v Montfort Services Sdn. Bhd. [2018] SGIPOS 4. In that case, prior negotiations and commercial dealings between the parties were also key factors considered. These underscore the fact-dependent nature of such bad faith claims.
The case is also a reminder to ensure that contracts set out clearly the intention of the parties as regards intellectual property, including:
• Use and ownership of parties' marks;
• Any prohibition against acquiring rights in these marks in any or all territories; and
• Whether any "list of marks" is exhaustive or intended to be amended from time to time.
The case is currently on appeal to the Singapore High Court.
Bottom picture by George Sommer (1834-1914) and is entitled "Shoesine and Pickpocket"
