Singapore: Case Update – Sarika Connoiseur Cafe Pte Ltd v Ferrero SpA [2012] SGCA 56

Last Updated: 18 November 2012
Article by Soo Ling See Tow and Beverly Wee
Most Read Contributor in Singapore, July 2019

Introduction

Sarika Connoiseur Cafe Pte Ltd ("the Appellant") is the owner and operator of the The Conoisseur Concerto ("TCC") chain of café outlets in Singapore. The Appellant promoted and offered for sale a coffee beverage containing Nutella hazelnut spread under the NUTELLO sign. Ferrero SpA ("the Respondent") successfully sued for trade mark infringement of its NUTELLA trade mark under Sections 27(2)(b), 55(2), 55(3)(a) and 55(3)(b)(i) of the Trade Marks Act (Cap. 332, 2005 Rev Ed) ("TMA") and for passing off. The Appellant failed on all points of the issues it raised in the appeal and the decision of the High Court was upheld.

The Appeal

(a) Section 27(2)(b) TMA

Section 27(2)(b) provides that:

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 —

  1. the sign is identical with the trade mark and is used in relation to goods or services similar to those for which the trade mark is registered; or
  2. the sign is similar to the trade mark and is used in relation to 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.

The Court of Appeal ("CA") agreed with the High Court that the NUTELLO sign and NUTELLA word mark were visually and aurally similar but did not think that the marks were conceptually similar. Since NUTELLA and NUTELLO are invented words, void of meaning and underlying ideas, it would be difficult if not impossible to determine a concept common to the two. The CA also commented that the distinctiveness of the registered trade mark is a factor to be considered when analysing the three aspects of similarity viz. visual, aural and conceptual. Given the significant degree of inherent distinctiveness that the NUTELLA word mark possessed as an invented word, the mere alteration of the last letter would not lend support to a finding of dissimilarity. In the final analysis, the visual and aural aspects of similarity were considered more important than that of conceptual dissimilarity because only verbalization and recognition of the word-only NUTELLO sign and NUTELLA mark respectively were necessary to purchase products sold under the same. As such, the sign and mark were found to be similar.

The respective goods of parties were also found to be similar as the CA was persuaded by the market survey and Internet blogs evincing consumer perception of the NUTELLO beverage as falling within the ambit of the fairly broad "chocolate products" specification for which the NUTELLA mark was registered.

The CA found that final requirement of likelihood of confusion was made out. In coming to its decision, it considered (i) that the 30% of the relevant public likely to be confused as shown by survey evidence tendered by both parties constituted a substantial portion of the relevant public; and (ii) the similarity between the NUTELLO sign and NUTELLA word mark and the distinctive character of the latter.

Accordingly, the finding of infringement under Section 27(2)(b) TMA was upheld.

(b) Section 55(2) TMA

Section 55(2) provides that the proprietor of a well-known trade mark shall be entitled to restrain by injunction the use in Singapore, in the course of trade and without the proprietor's consent, of any trade mark which, or an essential part of which, is identical with or similar to the proprietor's trade mark, in relation to identical or similar goods or services, where the use is likely to cause confusion.

Save for the additional requirement that the earlier registered NUTELLA mark is a well-known trade mark, the remaining requirements under this section are largely the same as those under Section 27(2)(b) TMA. The Appellant did not dispute that NUTELLA is a well-known mark. In view of this and its earlier conclusion on similarity of marks, goods and likelihood of confusion, the CA agreed with the High Court's finding of infringement under this section.

(c) Infringement by damaging connection under Section 55(3)(a) TMA

Section 55 (3) provides that:

(3) ... the proprietor of a well known trade mark shall be entitled to restrain by injunction the use in Singapore, in the course of trade and without the proprietor's consent, of any trade mark which, or an essential part of which, is identical with or similar to the proprietor's trade mark, in relation to any goods or services, where the use of the trade mark —

  1. would indicate a connection between those goods or services and the proprietor, and is likely to damage the interests of the proprietor; or
  2. if the proprietors trade mark is well known to the public at large in Singapore —
    1. would cause dilution in an unfair manner of the distinctive character of the proprietor's trade mark;

To establish infringement of Section 55(3)(a) TMA, it had to be shown that the use of the NUTELLO sign on goods would indicate a confusing connection likely to damage the interests of the Respondent. However, unlike the previous two sections, it is not necessary for the proprietor of a well-known trade mark to show that the goods and services of the defendant are similar to its own. The CA noted that the test for a "connection" that is "likely to damage the interests of the proprietor" is largely the same as that of misrepresentation and damage respectively in an action for passing off. The distinction, however, is that this section concerns the claimant's interests and not goodwill. It accepted the High Court's finding of a confusing connection. It also agreed that the Appellant's use of the NUTELLO sign would allow them to capitalize on a mark similar to the NUTELLA mark in the drinks business in Singapore and therefore, restrict the Respondent's expansion into the same and thereby, damage its interests. As such, the claim under Section 55 (3)(a) TMA was also successful.

(d) Dilution by blurring under Section 55(3)(b)(i) TMA

Section 55(3)(b)(i) grants protection to trade marks that are well-known to the public at large in Singapore if it can be shown that use of a trade mark (or an essential part of which) which is similar or identical to that well-known mark on any goods or services has the effect of causing unfair dilution of the distinctiveness of that wellknown mark. A mark which is well-known is protected under this section regardless of whether there is confusion.

On what damage is necessary to ground a dilution action, the CA concluded that it suffices to show "a real or serious probability of damage to the well-known trade mark's advertising quality or symbolic function in order to establish a dilution claim". It was therefore not necessary to show actual injury to the NUTELLA mark or a change in the Respondent's consumers' economic behaviour in a literal sense as the Appellant contended.

For the purpose of succeeding in a claim for dilution by blurring, it had to be shown that the relevant public would make a connection or establish a link between the NUTELLO sign and the NUTELLA mark. The CA found that the NUTELLA mark would indeed be called to mind on sight of the NUTELLO sign. It took into account (i) the wide recognition of the NUTELLA mark in Singapore; (ii) the similarity between the NUTELLO sign and the NUTELLA mark - not only did the NUTELLO sign incorporate a substantial part of the distinctive NUTELLA mark, the former had also been derived from the latter; and (iii) the similarity of goods and likelihood of confusion.

In view of the foregoing, the CA concluded that use of the NUTELLO sign over time would have the effect of diminishing the distinctiveness of the NUTELLA mark and weakening its ability to invoke instant association with the Respondent's products. The dilution by blurring claim was therefore successful.

(e) Damage element under the tort of passing off

The CA pointed out that it is not appropriate to require proof of actual damage since the heads of damage claimed by the Respondent related to the anticipated loss of future opportunities and profit. As actual damage would not be immediately apparent, a real likelihood of confusion would suffice. It then went on to consider the only head of damage found to be made out by the High Court viz. restriction of the Respondent's expansion into the drinks business in Singapore. Under this head, it is necessary to show "a close connection between the [Respondent's] established activity and the extended activity". Expansion into the extended activity abroad could demonstrate such a connection. In this regard, the Respondent had adduced evidence of advertisements, preparation instructions and witness testimony to show that it offered a Nutella Milk Shake product in France. The CA found that the Respondent had taken real steps to expand into the drinks business in France. Further, the fact that the Respondent had not taken similar steps in Singapore more than 30 years after registration could not be said to reveal a lack of intention to undertake such expansion, as this was ultimately a commercial decision. In view of this and the close connection between parties' respective businesses, the CA found that the element of damage was established and the Respondent's claim in passing off was successful.

Conclusion

The CA's affirmation of the High Court's decision is a cautionary tale to businesses of the potential liability in attempting to modify the trade mark of another to become its own. This practice has been observed to be particularly prevalent in, though not limited to, the food and beverage industry. It is good practice for businesses to have a general awareness of the circumstances in which the use of a sign in the course of business can constitute trade mark infringement.

This update is provided to you for general information and should not be relied upon as legal advice.

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