19. INTELLECTUAL PROPERTY LAW

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1 (2014) 15 SAL Ann Rev Intellectual Property Law INTELLECTUAL PROPERTY LAW TAN Tee Jim SC LLB (Singapore), LLM (London); Advocate and Solicitor (Singapore). Introduction 19.1 There are three intellectual property cases reported in Two of them are High Court cases, namely, Motherhood Pte Ltd v Lau Elaine [2014] 1 SLR 1008 and Invenpro (M) Sdn Bhd v JCS Automation Pte Ltd [2014] 2 SLR They apply well-established principles of trade mark and copyright laws respectively and do not cast new light on these laws. The third case emanated from the Court of Appeal and has become a very significant case in the local law on trade marks. The case is Staywell Hospitality Group Pty Ltd v Starwood Hotels & Resorts Worldwide, Inc [2014] 1 SLR 911 ( Staywell ). This year s review will focus on this case and its guidance on three areas of the law on determining a likelihood of confusion. Determining a likelihood of confusion in the Trade Marks Act Different approaches in opposition and infringement proceedings 19.2 The relative grounds set out in s 8(2) of the Trade Marks Act (Cap 332, 2005 Rev Ed) ( the Act ) correspond to the grounds set out in s 27(2) upon which a trade mark infringement action may be instituted. The language of these two provisions is also similar in material respects. For easy reference, these provisions are set out below: Section 8(2) Section 27(2) A trade mark shall not be registered if because (a) it is identical with an earlier trade mark and is to be registered for goods or services similar to those for which the earlier trade mark is protected; or (b) it is similar to an earlier trade mark and is to be registered for goods or services identical with or similar to those for which the A person infringes a registered trade mark if, without the consent of the proprietor of the trade mark, he uses in the course of trade a sign where because (a) the sign is identical with the trade mark and is used in relation to goods or services similar to those for which the (b) trade mark is registered; or the sign is similar to the trade mark and is used in relation to

2 406 SAL Annual Review (2014) 15 SAL Ann Rev earlier trade mark is protected, there exists a likelihood of confusion on the part of the public. goods or services identical with or similar to those for which the trade mark is registered, there exists a likelihood of confusion on the part of the public There is no indication in the Act itself that these provisions are to be interpreted differently for the purposes of determining a likelihood of confusion in the opposition as well as the infringement contexts. This led the Court of Appeal in Valentino Globe BV v Pacific Rim Industries Inc [2010] 2 SLR 1203 to state categorically (at [16]) that: Whilst we recognised that the case of Polo was concerned with the question of confusion relating to infringement under section 27(2) of the [Trade Marks Act (Cap 332, 1999 Rev Ed)], we were unable to see why the approach to be taken for determining confusion for the purposes of opposition to a proposed registration under section 8(2) should be any different from that applicable to determine confusion under section 27(2). Moreover, and more importantly, the material words of the two provisions are identical The identity of the material words of the two provisions is beguiling. There is in fact an important difference between them in the way in which the element of a likelihood of confusion is to be determined. For the purposes of s 27(2), the determination of a likelihood of confusion must be based on the use of a sign that is, amongst others, similar to a registered trade mark in relation to identical or similar goods or services for which the mark is registered. In contrast, the word use is significantly absent in s 8(2); specifically, a likelihood of confusion is to be determined based on the prospective registration ( to be registered ) of an identical or similar trade mark in relation to identical or similar goods or services. In O2 Holdings Ltd v Hutchison 3G Ltd [2008] RPC 33 at [66] [67], the Court of Justice of the European Union ( CJEU ) explained, in relation to the equivalent provisions in Directive 2008/95/EC of the European Parliament and of the Council (22 October 2008) (to approximate the laws of the Member States relating to trade marks) ( the EC Directive ), that the consequence of this difference in language is that there is in fact a difference of approach in determining a likelihood of confusion: Article 4(1)(b) of [the EC Directive] concerns the application for registration of a mark. Once a mark has been registered its proprietor has the right to use it as he sees fit so that, for the purpose of assessing whether the application for registration falls within the ground for refusal laid down by that provision, it is necessary to ascertain whether there is a likelihood of confusion with the opponent s earlier mark in all the circumstances in which the mark applied for might be used if it were to be registered.

3 (2014) 15 SAL Ann Rev Intellectual Property Law 407 By contrast, in the case provided for in Article 5(1)(b) of [the EC Directive], the third party user of a sign identical with, or similar to, a registered mark does not assert any trade mark rights over that sign but is using it on an ad hoc basis. In those circumstances, in order to assess whether the proprietor of the registered mark is entitled to oppose that specific use, the assessment must be limited to the circumstances characterizing that use, without there being any need to investigate whether another use of the same sign in different circumstances would also be likely to give rise to a likelihood of confusion. [emphasis added] 19.5 Recently, in relation to the UK Trade Marks Act 1994 (c 26), the difference in approach in determining a likelihood of confusion in the opposition as well as the infringement contexts was succinctly summarised by Arnold J in the infringement case of Och-Ziff Management Europe Ltd v Och Capital LLP [2011] FSR 11 at [76] as follows: It is now clear that there is an important difference between the comparison of marks in the registration context and the comparison of mark and sign in the infringement context, namely, that the former requires consideration of the notional fair use of the mark applied for while the latter requires consideration of the use that has actually been made of the sign in context. [emphasis added] In other words, whilst the element of a likelihood of confusion in the infringement context is to be determined by reference to the actual use of the offending sign, the element in the opposition context is to be determined by reference to the notional fair use of the application trade mark across the scope of the specification of goods and services in respect of which registration is sought Last year, this difference in approach was drawn to the attention of our Court of Appeal in Staywell (above, para 19.1). The case concerned an opposition by the proprietor of the registered trade mark St Regis against the registration of the mark Park Regis (as shown below) in respect of, amongst others, similar hotel services in Class 43. After an extensive review of the relevant jurisprudence of the CJEU and the UK courts, including those mentioned above, the court agreed that there was a difference and said (at [56]) that: On reflection we are satisfied that there is a difference between the approach to the confusion inquiry in opposition and infringement

4 408 SAL Annual Review (2014) 15 SAL Ann Rev proceedings, although there are considerable overlaps as well. [emphasis in original] The court explained (at [60]) that: in opposition proceedings the inquiry must take into account the full range of the competing monopoly rights that are already enjoyed on the one hand, namely, the actual and notional fair uses to which the incumbent proprietor has or might fairly put his registered trade mark, and compare this against the full range of such rights sought by the applicant by reference to any actual use by the applicant (assuming there has been prior use) as well as notional fair uses to which the applicant may put his mark should registration be granted. Thus, according to the court, the comparison is to be made between the various possible types of uses by the parties marks. Specifically, for opposition proceedings, the comparison is to be made between: (a) the actual use (assuming there has been such use) and the notional fair uses of the application trade mark in relation to the goods or services for which the mark is sought to be registered; and (b) the actual and notional fair uses of the registered trade mark in relation to the goods or services for which the mark is registered with As regards infringement proceedings, the court stated (at [61]) that: there is no question of the alleged infringer seeking to establish any monopoly rights. The only question is whether the actual use of a similar or identical sign by the infringer encroaches on the registered proprietor s monopoly rights under section 26 of [the Act] to use the mark in relation to goods or services for which he is already using it as well as the penumbra of fair uses for which he might want to use it. There is therefore no need to examine any notional fair use by the alleged infringer because he is not seeking to acquire or assert any rights in respect of such penumbral uses. That is, the comparison in infringement proceedings is simply between: (a) the actual use of the alleged infringer s mark in relation to the goods or services for which the mark is used; and (b) the actual and notional fair uses of the registered trade mark in relation to the goods or services for which the mark is registered It is noticeable that the scope of comparison in opposition proceedings is wider than that in infringement proceedings. Another

5 (2014) 15 SAL Ann Rev Intellectual Property Law 409 important practical effect of the difference is that in the opposition proceedings, the applicant for trade mark registration will have to meet a higher threshold, in that he has to establish that not only would his actual use (if any) of the application trade mark not conflict with the registered trade mark but also any notional fair use to which he may put his mark after registration would likewise not conflict with the registered trade mark In the event, the Court of Appeal held that the trial judge was wrong to have focused on the actual and particular circumstances and the way in which the application mark ( Park Regis ) was used in respect of the hotel services in question, stating that she ought to have gone further to make a comparison between the range of notional fair uses of each of the parties marks. The judge s error is evident from the following hypothetical posed by the court (at [98]): What, for instance, if one party should exploit its right to use its mark in a segment in which the other operates (for instance, if Staywell applied the [ Park Regis mark] in the luxury hotel market, or if the Opponents applied the ST. REGIS mark in the business hotel market)? Extraneous factors The conceptual difference between the test for ascertaining a likelihood of confusion on the part of the public for the purposes of determining infringement in ss 8(2) and 27(2) of the Act and the test for establishing the element of misrepresentation in the common law tort of passing-off has not often been deeply appreciated. This is unsurprising, given that in practice, both tests would often lead to the same outcome It is respectfully suggested that the lack of appreciation is attributable to the seminal decision of Lai Kew Chai J in the infringement case of The Polo/Lauren Co, LP v Shop in Department Store Pte Ltd [2005] 4 SLR(R) 816 ( The Polo/Lauren Co (HC) ) that, in determining the likelihood of confusion globally and holistically under the Act, the factors that are to be taken into account include not only the similarities of the marks, goods or services in question but also extraneous factors. Such factors, which the Court of Appeal in the case referred to as beyond matters relating to similarity of marks and products (see [2006] 2 SLR(R) 690 ( The Polo/Lauren Co (CA) ) at [32]), include the disparity in the prices of the parties goods, the differences in the packaging of the goods, the different target consumers and the nature and location of the parties retail outlets. Specifically, the learned judge held (The Polo/Lauren Co (HC) at [21]) that a proper construction of s 27(2)(b): does not reject the court s discretion in assessing so-called extraneous factors when deciding whether there is a likelihood of

6 410 SAL Annual Review (2014) 15 SAL Ann Rev confusion. The only thing that the statute calls for is that the likelihood of confusion arises from the similarity. But where the user of a potentially infringing sign has taken pains to distinguish his products from the registered proprietor s goods and services, the effect may be that the likelihood of confusion, if any, is merely hypothetical or speculative Section 27(2)(b) also does not forbid the court taking into account various factors in deciding the degree of similarity required in order to find that there exists a likelihood of confusion. Lai J was not deterred by the plaintiff s submission that taking into account the extraneous factors would amount to adopting an approach that is used in a passing-off action for establishing the second element of the tort (namely, misrepresentation). He maintained that there was a difference between the two causes of action, stating (The Polo/Lauren Co (HC) at [23]) that: In a passing-off action, the requirement of misrepresentation is satisfied if there is a finding that ordinary sensible members of the public would be confused. This, of course, is a question to be decided in the light of all the surrounding circumstances In an infringement action under section 27(2)(b) [of the Trade Marks Act (Cap 332, 1999 Rev Ed)], the confusion must stem from the similarity between the mark and the sign as well as the goods to which they are applied. If the confusion is caused by other factors, there is no infringement. It is only where the likelihood of confusion is made out by reason of the similarity that the courts can go on to examine whether the likelihood is a real one. Needless to say, this is an important distinction The learned judge s extraneous factors approach was endorsed upon appeal by the Court of Appeal which said (The Polo/Lauren Co (CA) at [28]) that: The question of likelihood of confusion has to be looked at globally taking into account all the circumstances including the closeness of the goods, the impression given by the marks, the possibility of imperfect recollection and the risk that the public might believe that the goods come from the same source or economically-linked sources. But that is not all. Steps taken by the defendant to differentiate his goods from those of the registered proprietor are also pertinent. The extraneous factors approach was also subsequently endorsed by the Court of Appeal in City Chain Stores (S) Pte Ltd v Louis Vuitton Malletier [2010] 1 SLR 382, Sarika Connoisseur Café Pte Ltd v Ferrero SpA [2013] 1 SLR 531 and Hai Tong Co (Pte) Ltd v Ventree Singapore Pte Ltd [2013] 2 SLR These endorsements provided stimulus to the ensuing perception that there is a risk that the tests for determining a likelihood of confusion on the part of the public under the statutory trade mark

7 (2014) 15 SAL Ann Rev Intellectual Property Law 411 regime and for establishing misrepresentation in the common law tort of passing-off are, if not conceptually similar, well on the way towards reaching confluence, with the consequence that the two causes of action would in effect be conflated. The perception also gained traction as a result of the observations by V K Rajah JA in Novelty Pte Ltd v Amanresorts Ltd [2009] 3 SLR(R) 216 at [234] that the tests to be adopted for the purposes of the connection requirement and the likelihood to damage the plaintiff s interests in s 55(3)(a) of the Act are substantively the same as the tests relating to the misrepresentation and damage elements under the law of passing-off It is suggested that this development is undesirable. The clear distinction between the causes of action of trade mark infringement under the Act and the tort of passing-off should continue to be maintained. This is because they protect different interests and rights of the trade mark proprietor. As is well known, the Act protects a registered trade mark as such whilst the tort of passing-off protects the goodwill of the business generated by the use of the mark. Also, there are misrepresentations (such as inverse passing-off and use of images of celebrities and fictional characters) which the tort can protect against due to its flexibility and other redeeming features but which the statutory regime under the Act has yet to extend its reach Last year, in Staywell (above, para 19.1), the Court of Appeal was invited to eschew the extraneous factors approach in order to mitigate the risk of conflation. It will be recalled that the case concerned an opposition by the proprietor of the registered trade mark St Regis against the registration of the mark Park Regis (as shown above at para 19.6) in respect of, amongst others, similar hotel services in Class 43. The trial judge had concluded that there was no likelihood of confusion arising from the similarity between the marks and the parties services and had relied on extraneous factors, such as the different star ratings of the parties hotel services and how the services were actually marketed, in coming to that conclusion The Court of Appeal said that the plain words and scheme of s 8(2) (as well as s 27(2) of the Act) do not preclude the court s discretion to consider extraneous factors to the extent that these inform the assessment of the effect of the requisite similarity on consumer perception. However, it acknowledged (at [65]) that there are significant limits to applying the extraneous factors approach in the Act, more than we may previously have acknowledged, and that the approach must be managed so as to strike a balance between the competing goals of the trade mark registration regime which are to prevent confusion on the one hand and promoting business certainty on the other. It then proceeded to make some significant refinements to the admissibility of extraneous factors relating to the three elements in

8 412 SAL Annual Review (2014) 15 SAL Ann Rev ss 8(2) and 27(2) of the Act: at [80]. It is suggested that these refinements, which we shall now review, do mitigate the risk of conflation of the causes of action of trade mark infringement and passing-off in Singapore As regards the element concerning the similarity of marks, the court held (at [81]) that it is not permissible to have regard to extraneous factors. This is because the determination as to the similarity of marks is to be based on a mark-for-mark comparison. In this regard, the court noted that extraneous factors had previously been adduced in order to show that, although the marks are found to be similar based on a mark-for-mark comparison, there is no likelihood of confusion by reason of the factors. According to the court, this approach is wrong in principle because it is inconsistent with the principle that the comparison is to be conducted without the aid of any extrinsic material: at [88] As regards the element concerning the similarity of goods or services, extraneous factors may be relevant to establish the degree of similarity. These factors may include those identified in the English High Court case of British Sugar plc v James Robertson & Sons Ltd [1996] RPC 281, such as the physical nature of the goods or services concerned, the respective uses and users of the goods or services, and the respective trade channels through which the goods or services reach the market. However, if the goods or services are identical, extraneous factors are not to be considered because there would then be no need to determine how similar they are. In this regard, the court said that goods and services will be regarded as identical if they are registered or to be registered in the same class and specification and added that in the infringement context in s 27(2), it will be permissible to have regard to the classification in which the allegedly infringing item or service would have been inserted had the alleged infringer sought registration of his mark : Staywell at [82] It is axiomatic the similarities of marks as well as goods or services would have an effect on the consumer s perception as to the origin of the goods or services. Here, the court said that extraneous factors may be considered to the extent that they inform the court as to how the similarities are likely to affect the perception: Staywell at [83]. This, however, is subject to some important qualifications: (a) In opposition proceedings, it will generally not be relevant to consider extraneous factors that relate to the actual and particular circumstances and ways in which the goods or services have been affixed or used with the mark and are then being marketed. This would thus exclude consideration of such factors as differences in the intended market segments, trading

9 (2014) 15 SAL Ann Rev Intellectual Property Law 413 strategies employed, websites used or the trader s chosen limitations as to his use of the mark: Staywell at [84]. (b) In infringement proceedings, there is a need to exercise vigilance because, if the competing marks and goods are found in an antecedent inquiry to be sufficiently similar such that, having regard to the characteristics of the consumer, the court concludes that there would be a likelihood of confusion, it would then be not permissible (and in fact be wrong in principle ) to have regard to yet further extraneous factors, which might have the effect of diminishing the likelihood of confusion: Staywell at [84]. The court reasoned (Staywell at [89] [90]) that: once the determination is made that [the goods] are similar, then it would be wrong in principle at the confusion stage of the inquiry to examine whether the trader by means of his superficial trading choices has differentiated his goods in some way from those of the owner of the incumbent mark even though in substance the goods are similar or even identical for the purposes of trade mark law. Otherwise a subsequent trader would be able to enter the market using a trade mark that was very similar to the senior mark, applied to similar if not identical goods and yet avoid liability by means either of an express disclaimer, or by using cheaper materials and selling his goods at a much lower price and saying that because of these steps, there is no likelihood of confusion notwithstanding the high degree of similarity or even of identity having been found at the antecedent stages of the inquiry The court observed that extraneous factors are generally of two types, namely, those that motivate the consumer to exercise care in the purchasing process (including as to the origin of the goods) and those that enable the consumer to exercise such care: Staywell at [93]. Examples of these types of factors include the prices of the goods (that is, whether they are expensive or inexpensive); whether they are usually purchased on impulse with fleeting attention or require greater attention on the part of the consumer; the nature of the typical purchasing process for the goods; whether the purchasing process is generally attended with sales personnel, discussion or negotiation; and whether the transactions are routine or infrequent. However, as the court cautioned, there must be a limit to the range of external factors that may be taken into account to determine whether a likelihood of confusion exists: Staywell at [95]. In the event, it identified the permissible extraneous factors as those which (Staywell at [95]):

10 414 SAL Annual Review (2014) 15 SAL Ann Rev (a) are intrinsic to the nature of the goods; and/or (b) affect the impact that the similarity of marks and goods has on the consumer Such factors are those that relate to: (a) the impact of the similarity of the marks concerned on consumer perception, such as the degree of similarity of the marks, the reputation of the marks, the impression given by the marks and the possibility of imperfect recollection of the marks; and (b) the impact of the similarity of the goods concerned on consumer perception, such as the nature of the goods, whether the goods are expensive or inexpensive, whether the goods would tend to command a greater or lesser degree of fastidiousness and attention on the part of prospective purchasers, the normal way in or the circumstances under which consumers would purchase goods of that type, the likely characteristics of the relevant consumers and whether they would or would not tend to apply care or have specialist knowledge in making the purchase The impermissible factors are those differences between the competing marks and goods which are created by a trader s own differentiating steps. These are factors which are not intrinsic to the nature of the goods, but are susceptible to changes that can be made by a trader from time to time. The court robustly dismissed the relevance of such factors in the inquiry into a likelihood of confusion in these terms (Staywell at [95]): [W]e are satisfied that it is unnecessary, unworkable and impermissible for the court to have regard to such issues as pricing differentials, packaging and other superficial marketing choices which could possibly be made by the trader. Thus, in general, whether or not it is permissible to have regard to an extraneous factor depends on whether it is intrinsic to the nature of the goods or services concerned and whether it relates to steps taken by the trader to differentiate his mark or goods or services from those of the registered trade mark proprietor. The Court of Appeal has helpfully provided guidance in this regard by listing a number of the permissible and impermissible extraneous factors. The list is, of course, not exhaustive The following observations may be made concerning the court s significant refinements. It is noticeable that there is emphasis on the effect of the similarities of the marks as well as goods or services on the consumer s perception as to the trade origin of the goods or services.

11 (2014) 15 SAL Ann Rev Intellectual Property Law 415 This stems from our courts earlier adoption of the step-by-step approach in construing s 27(2) of the Act. That approach entails a finding of trade mark infringement only if because of the use of an identical or similar sign in relation to identical or similar goods or services there exists a likelihood of confusion on the part of the public. That is, the likelihood of confusion must be the effect of the similarities of the marks as well as goods or services. As can be seen above, the court had to grapple with how to ascertain such an effect from a myriad of factors. The result, as has been noted, is the novel distinction drawn by the court between factors which are intrinsic to the nature of the goods or services concerned and those that relate to the differentiating steps taken by the offending trader This approach is to be contrasted with the EU s global assessment approach under which all relevant factors are to be considered at the same time when determining a likelihood of confusion. Unlike our Court of Appeal, the CJEU has provided very general guidance as to how the determination is to be made. There is no close consideration of the effect of the similarities of the marks as well as of the goods or services upon consumer perception. A few general principles have been identified as relevant, such as that there is a greater likelihood of confusion where the earlier trade mark has a highly distinctive character, either per se or because of the use that has been made of it. It may be said that, under such an approach, ascertaining a likelihood of confusion is a matter of feel, in contrast to our court s significant refinements which call for a rather technical analysis. Initial interest confusion Typically, for purposes of establishing trade mark infringement and passing-off, the critical moment for determining a likelihood of confusion on the part of the average consumer is at the point of sale, after he has had a chance to examine the goods carefully. This may be illustrated in the Court of Appeal case of McDonald s Corp v Future Enterprises Pte Ltd [2005] 1 SLR(R) 177 in which the plaintiff failed to prevent the registration of the defendant s MacTea mark. One of the reasons adduced by the court was that there was no likelihood of confusion at the point of sale. The court said (at [65]) that: While we recognise that in oral communications the public will refer to [the defendant s] product as MacTea rather than the tea with the eagle device, we think whatever impression that may arise will evaporate immediately upon seeing the product in the supermarket. That is the critical moment. This is because a person with MacTea in mind will be seeing the actual product at the time of purchase and at that point he would not have failed to see the entire trade mark. If at all he had any thought that MacTea might be related to McDonald s, that impression would have dispelled by then. [emphasis added]

12 416 SAL Annual Review (2014) 15 SAL Ann Rev Thus, it would appear futile to advance an argument based on the notion that to establish trade mark infringement or passing-off, it is relevant to consider the likelihood of confusion at a stage prior to the point of sale or the purchase of goods as a result of the use of an identical or similar mark (eg, in advertising or promotional materials). Such a notion has, however, found acceptance as a doctrine under US trade mark law The doctrine can be traced to an amendment to the US Lanham (Trademark) Act (15 USC 1051 et seq (1946)) ( Lanham Act ). Prior to the amendment, 32(1) of this Act granted protection against the use of similar marks only where the use was likely to cause confusion or mistake or to deceive purchasers as to the source or origin of such goods or services. In 1962, Congress amended the Lanham Act by deleting the phrase purchasers as to the source or origin of such goods or services so that the relevant confusion language reads likely to cause confusion or mistake to deceive. The avowed purpose of the deletion was to clarify the provision and was explained as follows (see S Rep No 2107, HR Rep No 1108, quoted in Michael J Allen, Who Must Be Confused and When? The Scope of Confusion Actionable Under Federal Trademark Law (1991) 81 Trademark Reporter 209 at ): [T]he provision actually relates to potential purchasers as well as actual purchasers. The word purchasers is eliminated so as to avoid the possibility of misconstruction of the present language of the statute. Aside from this clarification, the legislative history of the amendment is scant and provides no further guidance. As a result, the courts in the US were left to grapple with the significance and effect of the amendment. Some courts interpreted the amendment as evincing congressional intention to proscribe the use of trade marks that is likely to cause confusion of any kind, not merely of actual purchasers or simply as to the origin of goods or services: see, eg, Syntex Labs, Inc v Norwich Pharmacal Co 437 F 2d 566 at 568 (2nd Cir, 1971); Marathon Mfg Co v Enerlite Product Corp 767 F 2d 214 at 221 (5th Cir, 1985); and Boston Professional Hockey Association v Dallas Cap & Emblem, Mfg, Inc 510 F 2d 1004 at 1012 (5th Cir, 1975). This led to the expansion of the protection under the amended Lanham Act against initial interest confusion as well as post-sale confusion The seminal US case on the protection of a trade mark against initial interest confusion is generally acknowledged to be the Court of Appeals for the Second Circuit case of Grotrian, Helfferich, Schultz, Th Steinweg Nachf v Steinway & Sons 523 F 2d 1331 (2nd Cir, 1975). In that case, the plaintiff, a German piano manufacturer who sold pianos in the US, sought a declaratory judgment that the name Grotrian- Steinweg did not infringe the defendant s trade names Steinway and

13 (2014) 15 SAL Ann Rev Intellectual Property Law 417 Steinway & Sons. The plaintiff asserted that purchasers were unlikely to be confused because of the great amount of care that they were expected to exercise due to the high price of the goods involved. The assertion did not, however, gain the sympathy of the court which stated (at 1342) that: We recognise that in a trademark infringement action the kind of product, its cost and the conditions of purchase are important factors in considering whether the degree of care exercised by the purchaser can eliminate the likelihood of confusion which would otherwise exist. We decline to hold, however, that actual or potential confusion at the time of purchase necessarily must be demonstrated to establish trademark infringement under the circumstances of this case. The issue here is not the possibility that a purchaser would buy a Grotrian-Steinweg thinking it was actually a Steinway or that Grotrian had some connection with Steinway and Sons. The harm to Steinway, rather, is the likelihood that a consumer, hearing the Grotrian- Steinweg name and thinking it has some connection with Steinway, would consider it on that basis. The Grotrian-Steinweg name therefore would attract potential customers based on the reputation built up by Steinway in this country for many years. The harm to Steinway in short is the likelihood that potential piano purchasers would think that there is some connection between the Grotrian- Steinweg and Steinway pianos. Such initial confusion works an injury to Steinway. [emphasis added] Thus, the court held that even though there was no confusion as to who manufactured the piano at the time of purchase, a customer might initially think there was some relationship between Grotrian-Steinweg and Steinway & Sons; hence, there would be confusion in this respect The then nascent initial interest confusion doctrine did not really take root for several years until the 1987 decision of the Second Circuit Court of Appeals in Mobil Oil Corp v Pegasus Petroleum Corp 818 F 2d 254 (2nd Cir, 1987). In that case, the defendant company was held liable for infringing the plaintiff s flying horse trade mark by adopting the name Pegasus for its oil trading business. The defendant did not use a flying horse symbol similar to the plaintiff s familiar horse logo but an interlocking double P as its logo. The court held (at 259) that although consumers would not be confused at the time of purchasing the defendant s products, there was trade mark infringement because it was likely that the defendant: would gain crucial credibility during the initial phases of a deal. For example, an oil trader might listen to a cold phone call from [the defendant] when otherwise he might not, because of the possibility that [the defendant] is related to [the plaintiff]. [emphasis added]

14 418 SAL Annual Review (2014) 15 SAL Ann Rev It is observable from these cases that the courts were concerned with a range of factual situations in which initial interest confusion could arise and yet be dispelled by the time of purchase. They extend from, at one end of the spectrum, initial attraction of consumers based upon some kind of association of advertised goods or services with those of the trade mark proprietor through to the situation in which the consumer s confusion is momentary or fleeting and has no impact at all on the subsequent purchase of the goods or services. At the other end of the spectrum is the situation in which the initial confusion gives rise to a real risk that consumers will actually purchase the advertised goods or services even though they know that they are not the goods or services of the trade mark proprietor. For instance, although the initial confusion may be dispelled at the point of sale, it is too late or too difficult for the consumer to switch to the trade mark proprietor s goods or services that he had originally intended to purchase, thus causing a diversion of sales from the proprietor (the bait and switch situation). This situation was well illustrated by Judge O Scannlain in Brookfield Communications v West Coast Entertainment Corp 174 F 3d 1036 at 1064 (9th Cir, 1999) as follows: Suppose West Coast s competitor (let s call it Blockbuster ) puts up a billboard on a highway reading West Coast Video: 2 miles ahead at Exit 7 where West Coast is really located at Exit 8 but Blockbuster is located at Exit 7. Customers looking for West Coast s store will pull off at Exit 7 and drive around looking for it. Unable to locate West Coast, but seeing the Blockbuster store right by the highway entrance, they may simply rent there. Even consumers who prefer West Coast may find it not worth the trouble to continue searching for West Coast since there is a Blockbuster right there. Customers are not confused in the narrow sense: they are fully aware that they are purchasing from Blockbuster and they have no reason to believe that Blockbuster is related to, or in any way sponsored by, West Coast. Nevertheless, the fact that there is only initial consumer confusion does not alter the fact that Blockbuster would be misappropriating West Coast s acquired goodwill The issue before the court was whether the use of the plaintiff s trade mark MovieBuff as a metatag and as a domain name in the defendant s website was likely to cause consumer confusion. In ruling in the plaintiff s favour, the court held that the initial interest confusion doctrine could be used to find trade mark infringement even if there was no likelihood of confusion. It said (at 1062) that: Although there is no source confusion in the sense that consumers know they are patronizing West Coast rather than Brookfield, there is nevertheless initial interest confusion in the sense that, by using moviebuff.com or MovieBuff to divert people looking for MovieBuff to its web site, West Coast improperly benefits from the goodwill that Brookfield developed in its mark. [emphasis added]

15 (2014) 15 SAL Ann Rev Intellectual Property Law The fact is that, in each of these situations, initial interest confusion manifests itself in three ways: (a) the diversion of the prospective customer s initial purchase interest; (b) the potential effect of that diversion on the customer s ultimate purchasing decision caused by an erroneous impression that the defendant s goods or services are associated with those of the trade mark proprietor; and (c) the initial credibility the customer may accord to the defendant s goods or services as a result of the erroneous impression The adoption of the initial interest confusion doctrine gained momentum in the US in the wake of the development and prominence of the Internet. It was felt that the doctrine was well suited to address the unauthorised use of a trade mark as a domain name for a website promoting or offering for sale the goods or services of a competitor. The courts deployed the doctrine in a situation where (Trans Union LLC v Credit Research, Inc 142 F Supp 2d 1029 at (ND Ill, 2001): customers seeking a particular website are diverted by allegedly infringing domain names to a competing website and then realise that the website that they have accessed is not the one they were looking for. For instance, in Victoria s Secret Stores v Artco Equipment Co 194 F Supp 2d 704 (SD Ohio, 2002), the court found that the defendant s sale of lingerie at a website under the domain name created initial interest confusion with the plaintiff s trade mark Victoria s Secret. In dismissing the defendant s argument that consumers would not actually be confused once they accessed the website, the court said (at 729) that: [t]he use of a mark which misdirects consumers to a competitor s goods constitutes infringement, even if consumers later dispel confusion on their own power or with the assistance of a disclaimer The initial interest confusion doctrine has gained a measure of acceptance in the CJEU. In Die Bergspechte Outdoor Reisen under Alpinschule Edi Koblmuller GmbH v Gunter Guni [2010] ETMR 33, the plaintiff sued the defendant for using its trade marks bergspechte and edi koblmüller as keywords in Google s Adword service which enabled the defendant s goods to be advertised using the trade marks. The CJEU opined (at [41]) that for the purposes of Art 5(1) of the EC Directive, there could be a likelihood of confusion where the keyword advertisement:

16 420 SAL Annual Review (2014) 15 SAL Ann Rev does not enable an average internet user, or enables that user only with difficulty, to ascertain whether the goods or services referred to therein originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party. This opinion was reiterated by the court in Portakabin Ltd v Primakabin BV [2010] ETMR 52 where the defendant was sued for using the plaintiff s trade mark Portakabin and variations of the mark (such as portocabin and portacabin ) as keywords to advertise its rival mobile cabins in Google s Adword service. After referring to the opinion, the court said (at [53]) that: On that point the Court has also stated that, in the case where a third party s ad[vertisement] suggests that there is an economic link between that third party and the proprietor of the trade mark, the conclusion must be that there is an adverse effect on the function of indicating origin. Similarly, in the case where the ad[vertisement], while not suggesting the existence of an economic link, is vague to such an extent on the origin of the goods or services at issue that normally informed and reasonably attentive internet users are unable to determine, on the basis of the advertising link and the commercial message attached thereto, whether the advertiser is a third party vis-à-vis the proprietor of the trade mark or, on the contrary, economically linked to that proprietor, the conclusion must also be that there is an adverse effect on that function of the trade mark This is language which indicates that initial interest confusion can constitute trade mark infringement, irrespective of whether the keyword advertisement leads to a sale and whether the consumer remains confused at the time of any such sale, so long as the confusion has an adverse effect on the function of a trade mark of indicating origin In Singapore, it is provided in s 27(2) of the Act that in order for trade mark infringement to arise, there must be a likelihood of confusion on the part of the public as a result of the use of the offending sign. The term use is defined in s 27(4) and relates to a wide range of different activities, such as applying the sign to goods or their packaging, using the sign in advertising and on catalogue and price list, offering or exposing goods for sale, as well as offering or supplying services under the sign. It may be observed that such activities invariably occur prior to sale or purchase It is also of importance to note that there is no requirement in s 27(2) for the likelihood of confusion to occur at any particular point in the use of the sign, still less any requirement for actual confusion. It may, therefore, be argued that any confusion harboured at any point in time prior to sale or purchase is sufficient to constitute trade mark infringement for the purposes of s 27(2). Another premise for the

17 (2014) 15 SAL Ann Rev Intellectual Property Law 421 argument is that confusion at any point in time prior to sale or purchase can damage the trade mark proprietor s interests even if the confusion is dispelled prior to the sale or purchase. Further, there is force in the argument that, in the interests of trade mark policy, the process of buying goods or services should, from selection through to purchase, be free of the distorting effects of confusion : Whirlpool Corp v Kenwood Ltd [2009] RPC 2 at [75], per Geoffrey Hobbs QC, sitting as a Deputy High Court Judge. It would, therefore, seem that there is ample legal basis for the initial interest confusion doctrine to be deployed for purposes of determining trade mark infringement in s 27(2) However, these arguments did not appeal to our Court of Appeal in Staywell (above, para 19.1). In that case, the trial judge acknowledged that there was a likelihood of consumers being confused between the parties St Regis and Park Regis hotels when bookings were made through a travel agent or over the telephone. She, however, held that any such confusion could be clarified by an Internet search or by seeking clarification from the travel agent, thus in effect rejecting the initial interest confusion doctrine. Her rejection was upheld by the Court of Appeal At the outset, the court declared (at [105]) that the doctrine is not currently part of our law and said that [t]he question before [it] is whether it should be [emphasis in original]. It then reviewed at length the origin and evolution of the initial interest confusion doctrine and how it has been applied by the US as well as the CJEU and UK courts. It noted that the focus of the doctrine as applied by the US courts was on protecting the reputation and the goodwill of the prior, registered marks and preventing the mischief which lay in misappropriating or freeloading off the goodwill or attractive force of others. It discerned (at [112]) that the concern of the courts was to protect the trade mark proprietor against damage to his goodwill by dilution, even if no diversion of sales resulted The Court of Appeal, thus, concluded that the initial interest confusion doctrine was directed at a different purpose from that of s 8(2) (as well as s 27(2), the corresponding infringement provisions) of the Act. It said (at [113]) that: The rationale underlying the doctrine is very much the protection of the reputation of a well-known mark from dilution or the prevention of misappropriation of the owner s goodwill. [emphasis added] The purpose of protecting a well-known mark, the court noted, is the sole province of s 8(4)(b)(ii) of the Act and is inconsistent with the statutory scheme and objective of s 8(2) (as well as s 27(2)), which is

18 422 SAL Annual Review (2014) 15 SAL Ann Rev concerned with the origin and source of goods, and not their reputation or associative properties. The court held (at [113]) that: If a consumer is initially confused but this is unlikely to persist to the point of purchase because of a lack of sufficient similarity in the marks or the goods then the purpose of the trade mark as a badge of origin has not been undermined. Moreover, the doctrine will often or even generally be incompatible with the threshold requirements of marksand goods-similarity. Any dilution of the trade mark due to initial confusion is not actionable under s 8(2) of our Act, which is directed at protecting trade mark proprietors from origin-based confusion The court added that there are also policy concerns against extending trade mark protection against initial interest confusion. Such a protection would not only stifle competition without corresponding benefit to consumer choice or access to information but would also be at odds with the goal of trade mark law which is to protect the source-identifying function of a trade mark and the resulting benefits to consumer welfare : at [114]. The court was also not convinced that the benefits of adopting the initial interest confusion doctrine would outweigh the costs, after noting a report by the International Trademark Association which concluded that the application of the doctrine by US courts had been hopelessly confused, inconsistent and sometimes incoherent : at [115]. It thus concluded (at [116]) that the initial interest confusion doctrine: should not be introduced into our law because it is inconsistent with the purpose of s 8(2) of the Act which is only to protect the trade mark as an indication of origin. [emphasis added] With respect, it is debatable that the purpose and rationale of the initial interest confusion doctrine are indeed concerned with the protection of the reputation of a well-known mark, given that, as mentioned earlier, the legislative history and materials of the 1962 amendment to the Lanham Act are, in fact, vague as to the purpose and rationale of the amendment. The resulting uncertainty troubled the courts across the US and, as mentioned earlier, it was left to them to gradually develop the doctrine to address the unauthorised use of a trade mark (particularly in the Internet context) in a manner that captured consumer attention, even though no sale was consummated as a result of any initial confusion. Indeed, they characterised initial confusion on the Internet as a distinct harm, separately actionable under the Lanham Act : see, eg, Harris & Co v Kassel 253 F Supp 2d 1120 at 1124 (ND Cal, 2003). Further, the US and UK court cases which had deployed the doctrine were not focused on the plaintiffs marks in question being well known or famous in order to be deserving of protection as such. For instance, in the seminal US case of Grotrian, Helfferich, Schulz, Th Steinweg Nachf v Steinway & Sons (above, para 19.27), the court was concerned with a potential diversion of

19 (2014) 15 SAL Ann Rev Intellectual Property Law 423 business situation as it held that the actionable harm was that consumers would likely believe, at least initially, that the mark Grotrian-Steinweg was affiliated with the owner of Steinway & Sons and would consider purchasing Grotrian-Steinweg pianos on that basis. In the UK case of Och-Ziff Management Europe Ltd v Och Capital LLP [2011] FSR 11, Arnold J analysed the doctrine in the context of Art 9(1)(b) of the Council Regulation (EC) No 207/2009 (26 February 2009) (Community trade mark), not Art 9(1)(c), which is concerned with mark with a reputation. In both cases, there was no express finding that the plaintiffs trade marks were well known or famous Nevertheless, our Court of Appeal s policy concerns are, with respect, well founded. The historical and dialectical foundations of trade mark law clearly indicate that it has been closely concerned with protecting consumers, as well as the proprietor of a trade mark, against confusion or a likelihood of confusion as to the trade origin of goods or services as a result of the use of an offending sign that is identical with or similar to the trade mark. It follows that if there is no possibility of such confusion or likelihood of confusion arising, there would be no necessity to provide the protection. In particular, extending the protection to a situation in which the consumer s initial confusion as to the trade origin of the goods is dispelled by or at the time of purchase would involve some curious analysis for its justification. It is also difficult to conceive that the proprietor s interests would be harmed in such a situation. His interests essentially lie in avoiding harm due to the unauthorised use of the offending sign which is likely to be confused with his trade mark by the consumer. The contention that such interests would be harmed by such use even though there is no diversion of sales from the proprietor due to the fact that the consumer s initial confusion has been dispelled by or at the time of the sale does pose something of an enigma The initial interest confusion doctrine also does not serve an important function of a trade mark, namely, the promotion of consumer welfare by providing reliable information about the goods and services offered by competing sellers. Such information enhances consumers ability to choose between reasonably priced goods and services and is crucial to the efficient operation of competitive markets and a vibrant economy. The application of the doctrine would deprive consumers of such ability as well as harm them by eliminating or limiting the choices and information Further, in the context of Internet searches, it is counterintuitive to allow a finding of trade mark infringement merely on the basis of initial interest or initial confusion. It is a fact of modern life that search engines are now common and have become part of our culture : see Louis Vuitton Malletier SA v Google France SARL [2010]