Kat friend Mervyn Cheong discusses a recent decision from Singapore that considered the interesting legal question of the relationship between cybersquatting and contract enforceability.

Can a finding of cybersquatting impact the enforceability of a contract? In a case of first impression in Singapore, the Singapore High Court has answered "yes", holding that the plaintiff would be precluded by public policy considerations from enforcing an agreement to transfer a registered domain name to the defendant.

Background

The plaintiff, 3 Corporate Services Pte Ltd (“3CS”), is a Singapore incorporated company that provides management consultancy services and the management of web portals. The defendant, Grabtaxi Holdings Pte Ltd (“Grabtaxi”), is part of a group of companies engaged in the business of providing ride-hailing and logistics services under the name GRAB.

The case was commenced by 3CS as a straightforward claim in contract. They asserted that Grabtaxi had agreed to pay them a sum of USD250, 000 to purchase the domain name “grab.co.id” (“Domain Name”) and that there was a Letter of Offer that evidenced the agreement. Grabtaxi breached the agreement when they failed to make payment.

As its primary point in defence, Grabtaxi countered that there was no binding agreement because one of the preconditions in the Letter of Offer was not satisfied. Subsequent to the circulation of the Letter of Offer, Grabtaxi found evidence that 3CS did not own the Domain Name (the Domain Name was owned by another corporate entity, which shared a common shareholder with 3CS).

In addition, Grabtaxi asserted that 3CS was engaged in cybersquatting and that such conduct is contrary to public policy; consequently, any agreement between Grabtaxi and 3CS was unenforceable. In support, Grabtaxi adduced evidence, including testimony from an expert on what constitutes cybersquatting and registrations of other domain names, such as “amyswinehouse.com.sg” and “gooogle.com.sg” by 3CS or its shareholder, which had no connection to 3CS’s business.

At trial, 3CS adduced evidence to show that they were involved in “domain investing” which is acceptable. They also asserted that cybersquatting, in any case, is not illegal in Singapore.

The court’s findings

The court found that there was no binding agreement. It accepted Grabtaxi’s evidence that 3CS was not the registered owner of the Domain Name and so one of the preconditions in the Letter of Offer was not satisfied. With its decision on this point, the court could have already dismissed 3CS’s claim and need not consider the other points raised in Grabtaxi’s defence. However, since the parties had both provided substantial submissions on the issue of cybersquatting, the court also set out its decision on this issue.

The court ruled that the plaintiff was a cybersquatter. The court noted that 3CS’s shareholder had registered 1,232 domain names indiscriminately and thus did not believe that 3CS was a domain investor. The court also observed that the misspelling of registered domain names, such as “gooogle.com.sg”, showed traits of a typosquatter.

While the court did not offer a definition of cybersquatting, it relied on three English cases that considered claims of passing off and trademark infringement concerning cybersquatting. In particular, the court cited the holding in Global Projects Management Ltd v Citigroup Inc and others as to what cybersquatting is:

Persons with no connection with a well-known business name would find some permutation containing the name and a suffix, but where that particular permutation had not been registered by the real owner of the business. The person concerned would then register that permutation himself and try to make money through being bought out by the true owner.

The court also considered the Final Report of the WIPO Internet Domain Name Process, “The Management of Internet Names and Addresses: Intellectual Property Issues”, which stated that cybersquatting is:

the term most frequently used to describe the deliberate, bad faith abusive registration of a domain name in violation of rights in trademarks and service marks.

The plaintiff argued in its closing submissions that it would not be appropriate for the court to establish cybersquatting as a new head of public policy at common law, especially when the legislature had not considered the matter.

The court rejected this argument, noting that:

… in the current world where the reach of the Internet is so wide, and the use of Internet websites is so pervasive, the abusive and/or illegal usage of domain names needs to be controlled and/or curbed. The court takes judicial notice of the fact that the world wide web was invented by Tim Berners-Lee back in 1989; he wrote the first web browser in 1990. … in 1997, the web browser was only in its infancy. The use of the internet has expanded exponentially since with its attendant abuse. Such abuse must be arrested.

Thoughts on the case

It seems that an aggrieved person in Singapore can now rely on passing off or trademark infringement to seek recourse against a cybersquatter. While no definition for "cybersquatter" was offered, the court paid close attention to whether the registrant had any legitimate interest in, or connection with, the domain name that it had registered.

Still, since the court had decided, as a primary issue, that there was no valid agreement between the parties, this is the rationale for the outcome of the case. Thus, the court’s ruling on cybersquatting, and its effect on the enforceability of the agreement, are merely obiter dicta under Singapore’s common law system, which, as such, are not strictly speaking binding as precedent. Nevertheless, the case does give some guidance as to the court’s view that cybersquatting is objectionable.

Always tricky under trademark law is the treatment of full names. Kat friend Darryl Ho discusses how the matter was recently handled under the always interesting trademark jurisprudence in Singapore.

When one uses a full name as a trade mark, to what extent can one rely on that name to prevent others from registering similar marks? In the recent case of Multi Access Limited v Guangzhou Pharmaceutical Holdings Limited [2019] SGIPOS 15, the Registry found that the protection afforded to a full name mark was narrower than one might expect.

On 15 December 2015, Guangzhou Pharmaceutical Holdings Limited ("the Applicant") applied to register the trade mark "WONGLO" ("the Application Mark") in Singapore under International Registration No. 1297792 (Trade Mark No. 40201608455Q) in Classes 5, 30 and 32.

On 5 September 2017, Multi Access Limited (“the Opponent”) initiated opposition proceedings against the Application Mark, relying on a host of earlier trade mark registrations in Singapore, including the mark "WONG LO KAT" registered in Classes 5, 30 and 33 in 2018 (Trade Mark No. T1015993G) ("the Opponent's Mark").

The "王老吉" brand of herbal tea - read as "Wang Lao Ji" (in Mandarin) or "Wong Lo Kat" (in Cantonese) - was founded by Mr Wong Chak Bong in 1853, during the Qing dynasty in China. Wong's herbal tea boasted a secret herbal recipe with medicinal properties. The brand continued to flourish over almost five generations; but fissures in familial relationships, migration out of China, and changes in ownership, gave rise to the parties' competing claims.

In rejecting the opposition, the Registrar's decision focused primarily on the marks-similarity issue. Firstly, the Registrar considered the distinctiveness of the Opponent's Mark, which would influence the visual, aural and conceptual similarity analysis. The Applicant argued that the Opponent's Mark, "WONG LO KAT", was a personal name, citing case law for the principle that personal names enjoy lower inherent distinctiveness.

However, the Registrar considered that "WONG LO KAT" stood out as a full name per Chinese naming convention – "WONG" was Wong Chak Bong's surname and "LO KAT" was his nickname. In line with the CJEU's decision in Nichols Trade Mark Application [2004] ETMR 48, and the UK Trade Marks Work Manual, the Registrar stated the principle that full names, as trade marks, are deemed inherently distinctive, provided they are not extremely common and the number of traders in the relevant trade is not large.

The Registrar's finding that the Opponent's Mark possessed technical distinctiveness as a Chinese full name informed the mark-similarity analysis.

The Opponent argued that visually, the Application Mark and the Opponent's Mark were similar as they shared the dominant feature "WONGLO", and the element "KAT" in the Opponent's Mark was minor and insubstantial. However, the Registrar found that even a consumer with imperfect recollection would remember the Opponent's Mark as a Chinese full name consisting of three words, "WONG", "LO" and "KAT", "KAT" was an integral distinctive element and therefore could not be discounted.

For the same reasons, the Opponent argued that aurally, the average consumer would pronounce both marks in an identical or at least a similar way. However, the Registrar reiterated that the Opponent's Mark was distinctive as a whole, comprising three discreet words with spaces in between. Consumers would enunciate the Opponent's Mark with pauses between the words, and would be unlikely to under-enunciate or slur "KAT".

Lastly, the Opponent argued that both marks were conceptually similar, if not identical, as both were derived from Mr Wong Chak Bong's name and brand. However, the Registrar emphasized that mark-similarity is assessed on a mark-to-mark basis without consideration of external matter. The average consumer would not know of the marks' origins, and would understand the Opponent's Mark as a Chinese full name and the Application Mark as a meaningless, invented word.

Thus, as the marks were visually, aurally, and conceptually dissimilar, the opposition failed.

Discussion

Full names are generally assumed to possess inherent distinctiveness, and therefore they have a higher likelihood of securing registration. However, as illustrated by the Registrar's mark-similarity analysis above, if a mark's distinctiveness turns on it being a full name, its technical distinctiveness may be low, and its scope of protection is circumscribed. Relying on such marks in opposition proceedings on the basis of mark-similarity is risky, as there is a low threshold for a competing sign to be considered dissimilar, i.e. "WONG LO KAT" vs "WONGLO".

The present case is also significant from a broader perspective, as it is the latest instalment in a line of cases that have progressively relaxed the rigid stance against considering acquired distinctiveness in the marks-similarity assessment.

In Staywell Hospitality Group v Starwood Hotels [2014] 1 SLR 911 ("Staywell"), the Singapore Court of Appeal held that the mark-similarity assessment must be conducted purely on a mark-to-mark basis, with extraneous factors such as acquired distinctiveness considered only when assessing likelihood of confusion. However, this approach sits uneasily alongside the principle that the more distinctive an earlier mark, the lower the threshold for a subsequent mark to be found similar to it, as set down in The Polo/Lauren Co.v Shop In [2006] 2 SLR(R) 690.

If the mark-similarity assessment finds the marks dissimilar, the inquiry ends without proceeding to likelihood of confusion, marginalizing the significance and relevance of acquired distinctiveness. A mark with low inherent distinctiveness could be found dissimilar at the outset, with its acquired distinctiveness completely discounted, regardless of how compelling it might be.

Indeed, the position has been called into question:

1. In Beats v LG [2016] SGIPOS 8, IP Adjudicator David Llewelyn applied Staywell, but suggested considering the nature of the relevant goods vis-a-vis the earlier mark's distinctiveness at the mark-similarity stage rather than only at the likelihood of confusion stage.

2. In Clarins v BenQ [2018] SGIPOS 2, Registrar Gabriel Ong considered that Staywell was aimed at confining certain types of arguments to the likelihood of confusion analysis, but it was not a blanket prohibition on all extraneous matter in the mark-similarity analysis. He emphasized that distinctiveness is a critical issue in opposition and invalidation and called for judicial clarification.

3. In Monster v NBA [2018] SGIPOS 16 ("NBA"), IP Adjudicator Burton Ong likewise endorsed considering 'surrounding circumstances' in the mark-similarity assessment. Adopting a nuanced interpretation of Staywell, he commented that it was aimed at distinguishing between the 'issue of resemblance between competing marks' and 'question of the effect of such resemblance', the latter being proper to the likelihood of confusion analysis.

This distinction is not jeopardised by considering the knowledge of the average consumer, which is indispensable in understanding the consumer's perspective when assessing mark-similarity. Excluding this would be 'a highly contrived, and artificially blinkered, approach towards mark-similarity assessment that is incompatible with the commercial realities within which the trade mark regime operates.'

In the instant case, Registrar Anne Loo cited NBA with approval when discussing whether acquired distinctiveness could be considered in assessing distinctiveness at the mark-similarity stage. While recognising that the law was unsettled, she analysed the Opponent's evidence on acquired distinctiveness to assess whether its mark possessed the higher level of distinctiveness that would influence the mark-similarity assessment.

Ultimately, however, the Opponent's evidence was insufficient and acquired distinctiveness did not impact the mark-similarity analysis. It remains to be seen whether subsequent Registrars continue this 'relaxation' until the Court of Appeal revisits the issue.

Picture on left has been released to the public domain by the Los Angeles County Museum of Art.

Picture on left is in the public domain.

Top picture is in the public domain.

Bottom picture is by Ragesoss and it is licensed under the Creative Commons Attribution-Share Alike 4.0 International license.

Photo in lower middle byitguylordofthemilfs and is licensed under the Creative Commons Attribution-Share Alike 4.0 International license.

Top picture by CyberGhostics and is taken from Charles and Mary Lamb, Tales from Shakespeare (1901).

Bottom picture by George Sommer (1834-1914) and is entitled "Shoesine and Pickpocket"