Case Update

Rainforest Coffee Products Pte Ltd v Rainforest Café, Inc [2000] 2 SLR 549
Court Of Appeal — Civil Appeal No 118 of 1999
LP Thean and Chao Hick Tin JJA and Lai Kew Chai J
24 January, 14 April 2000

Infringement — Admissions that appellants had infringed respondents’ registered trade mark if trade mark found to be valid — Interim injunction restraining appellants from using mark ‘Rainforest’ apart from their full corporate name — Interim injunction discontinued — Injunction in similar terms substituted

Register — Rectification — Whether respondents entitled to apply for registration of trade mark — Trade mark not used in Singapore at time of application — Whether trade mark proposed to be used — Whether registered user provisions mandatory or permissive — Evidence as to preparatory steps taken with regard to user — Whether trade mark registered with bona fide intention to use — Bona fides assessed subjectively not objectively — Whether choice of name by appellants bona fide — Whether respondents guilty of trafficking in trade mark — Whether trade mark lacked distinctiveness — Whether trade mark a word having direct reference to character or quality of respondents’ services — Ambit of term ‘services’

Tan Hee Liang and Raymond Tan Chee Siang (Tan See Swan & Co) for the appellants.
Sukumar Karuppiah and Vicky Heng Su Lin (Ella Cheong & G Mirandah) for the respondents.

This was an appeal against the decision of the judicial commissioner which allowed the respondents’ claim against the appellants for infringement of their registered trade mark and dismissing the appellants’ counterclaim for cancellation of the trade mark. The respondents were in the business of developing and operating a chain of restaurants under the name of ‘Rainforest Café’. These restaurants have a rainforest theme. Presently, the respondents operate outlets in the United States and their licensees operate in Canada, Mexico, the United Kingdom and Hong Kong.

On 16 October 1995, the respondents filed a trade mark application for ‘Rainforest Café’ (‘the trade mark’) in Class 42 covering ‘restaurant and nightclub services’. The application was successful and the trade mark was placed on the register on 30 April 1998, subject to the disclaimer that it did not give the proprietor the exclusive right to use the word ‘Café’.

The respondents gave evidence of their plans to open their first restaurant in Singapore. First, they appointed a master franchisee for Southeast Asia. Second and in turn, a sub-franchisee, RFC Far East Café Pte Ltd, was identified. On 15 April 1999, RFC Far East Café entered into a tenancy agreement with Liang Court Pte Ltd for the tenancy of premises at Liang Court for the new restaurant. According to the respondents, the parties were in the process of preparing the Sub-Franchise Agreement.

The appellants were incorporated in 1996 and commenced operations in January 1997 at 6 Fisher Street, Merchant Square. They sold a selection of salads, sandwiches, soups, desserts, speciality coffees and teas, soft drinks and beer. The respondents learnt of the appellants’ outlet from an article in the July 1997 issue of the trade magazine Retail Asia. In the course of investigations, it was found that the appellants had used the word ‘Rainforest’ alone without the rest of their registered name, ie ‘Coffee Products Pte Ltd’, in their signboards, menus and on certain documents such as receipts. The respondents in these proceedings obtained an interim injunction against them restraining the use of the word ‘Rainforest’ alone and apart from their full corporate name.

The respondents’ claim against the appellants was for the infringement of their registered trade mark. They sought an injunction to restrain the appellants from infringing their trade mark and certain ancillary orders. The appellants denied infringing the respondents’ trade mark. They raised several defences, including one under s 52(a) of the Trade Marks Act (Cap 332, 1992 Ed), ie that their use of the word ‘Rainforest’ was a bona fide use of their name. The grounds on which the appellants denied liability were as follows: (a) the respondents did not use the trade mark, nor did they have any intention to use it when they applied for registration; (b) the transaction between the respondents and their master and sub-franchisee amounted to trafficking in the trade mark; (c) the nature of the services provided by the appellants did not fall within the classification in which the respondents’ trade mark was registered; (d) the word ‘Rainforest’ was not registrable; and (e) the appellants’ use of the word ‘Rainforest’ was a bona fide use of their own name in connection with their business by virtue of s 52 of the Trade Marks Act (Cap 332, 1992 Ed) (‘the repealed Act’) or s 28 of the Trade Marks Act (Cap 332, 1998 Ed) (‘the Act’).

The judicial commissioner held as follows: (a) that the respondents had, and continue to have, an intention to establish an outlet in Singapore to be operated by their sub-franchisee as they claimed, and that such intention amounted to sufficient intention to use the trade mark; (b) that the arrangement between the respondents and their master and sub-franchisee did not amount to trafficking, as the trade mark was not dealt with primarily as a commodity in its own right but rather to identify and promote a chain of restaurants associated with a certain type of dining experience all over the world; (c) the appellants’ services clearly fell within the description of ‘restaurant’; (d) the word ‘Rainforest’ was registrable as it had no direct reference to the character or quality of the goods or services provided by the respondents; and (e) that the respondents had not proved that the appellants’ choice of name was not bona fide. The judicial commissioner therefore gave judgment in favour of the respondents and made, inter alia, the following orders: (a) the granting of a certificate of validity under s 102(1) of the Act; and (b) the granting of an injunction against the appellants prohibiting them from using the word ‘Rainforest’ unless it was used as part of their full name.

The appellants appealed, raising essential ly the same contentions canvassed before the judicial commissioner. There was no appeal against the finding of the judicial commissioner that the appellants had infringed the respondents’ trade mark. Counsel for the appellants had admitted before the judicial commissioner that if the respondents’ trade mark was valid, the appellants would have infringed it. The concession was in such terms that if the trade mark was held to be valid, the appellants would have infringed it, unless their full name was used.

Held, dismissing the appeal:

The first issue of intention to use was incorrectly classified as the respondents’ ‘capacity to sue’. The respondents were entitled to sue for trade mark infringement by virtue of their being the lawful proprietors of the trade mark, pursuant to s 45(1) of the repealed Act. Moreover, by s 47, the fact that a person was registered as the proprietor of a trade mark shall be prima facie evidence of the validity of the original registration of the trade mark and of all subsequent assignments and transmissions thereof.

The substance of the main argument was that the trade mark was not ‘proposed to be used’ by the respondents within the meaning of s 12(1) of the repealed Act as they did not file an application for their sub-franchisee, RFC Far East Café, to be the registered users thereof. The issue raised, in turn, was whether the registered user provisions were mandatory or permissive. In this regard, the interplay between s 12(1) and s 12(8)(b) of the repealed Act was relevant. Whether the words ‘proposed to be used’ in s 12(1) of the repealed Act necessarily imported a reference to s 12(8)(b), thus requiring a registered user application to be made, was a question of construction. There may be a definite and present intention to use by a registered user (and so by the proprietor) even though no registered user agreement was immediately available for presentation to the registrar. Registration of a registered user was thus merely permissive, not mandatory. On this view, registration conveyed certain advantages to the parties but did not establish the validity of the licence. As long as it could be shown that a trade mark licence arrangement was not deceptive, it would not be invalidated simply because the licensee had not been registered as a registered user.

Therefore, the fact that the respondents intended to use the trade mark indirectly through a franchisee, and the agreement with the sub-franchisee had yet to be concluded, did not mean that the respondents did not have the intention to use the trade mark at the time of registration. The respondents had a bona fide intention to use the trade mark and were not disentitled from applying for registration thereof, as the evidence as to the preparatory steps taken by them evidencing their intention to use the trade mark was clear.

The contention that the respondents were guilty of trafficking in the trade mark was plainly without merit. The definition of the term ‘trafficking’ could not by any stretch of the imagination be applicable in the present case. The trade mark was not being dealt with primarily as a commodity in its own right, but was being used to identify and promote a chain of restaurants associated with a distinct type of dining experience.

The criteria in s 40(1)(a) of the repealed Act were cumulative, so that there must be both the absence of bona fide intention to use, as well as bona fide use. In the light of the finding that there was a bona fide intention to use, the argument failed.

The reference must be a direct one in order to debar the word in question from registration: one that seriously affected the word’s capacity for distinguishing goods or services from a particular source, as distinct from the sort of reference that could be found only as an academic exercise. As a practical matter, almost every immediately attractive trade mark would be in some sense descriptive or laudatory of the goods or services in question, and whether or not the mark was directly descriptive must always be a question of fact and degree.

The resolution of the question in the instant case depended on the level of generality (or specificity) to be attached to the term ‘services’: whether it was to be restaurant services generally, or restaurant services with a certain theme. The former construction was preferable, as it would be overly unrealistic and unduly technical to descend into different categories of ‘restaurant services’. Therefore, the word ‘Rainforest’ was not descriptive of the ‘character or quality’ of the respondents’ restaurant services.

The effect of s 10(3) of the repealed Act was that the criterion of ‘distinctiveness’ of the trade mark required consideration of both its inherent adaptation (or aptitude) to distinguish and the extent to which it was shown by evidence (if any) to be distinctive. A word that was inherently adapted to distinguish was one which, as a word, was adapted to distinguish the goods or services, and not one which may by the user acquire the capacity of distinguishing the goods. As for distinctiveness in fact, a relevant consideration was whether other traders were likely, in the ordinary course of their business and without any improper motive, to desire to use the same mark. On the facts of the instant case, both requirements were met.