Intellectual Property Law

• Author: TAN Tee Jim SC LLB (Singapore), LLM (London); Advocate and Solicitor (Singapore). [The author acknowledges the assistance of Jasper Lim Shih Hao in preparing this article.]
• Date: 01 December 2015
• Published date: 01 December 2015
• Citation: (2015) 16 SAL Ann Rev 529

Introduction

19.1 Last year, there were 12 reported cases concerning intellectual property law. In general, they applied well-established principles of trade mark, copyright, patents and confidential information laws. However, two of them are of particular note. The case of Guy Neale v Ku De Ta SG Pte Ltd[2015] 4 SLR 283 (‘Ku De Ta’) is unique in that the nature of an exclusive trade mark licence was considered for the first time by the Court of Appeal. In Golden Season Pte Ltd v Kairos Singapore Holdings Pte Ltd[2015] 2 SLR 751 (‘Golden Season’), the High Court considered a phenomenon which seldom arose in Singapore courts and took the opportunity to expound its boundaries and scope. The author will focus on these cases in this year's Ann Rev.

Nature of an exclusive licence of a registered trade mark

19.2 It is expressly acknowledged in the Trade Marks Act (Cap 332, 2005 Rev Ed) (‘TMA’) that a registered trade mark is a ‘property right’ which is obtained by the registration of the mark under that Act (s 4(1)) and that it is also a ‘personal property’ (s 36). These acknowledgements are significant as they indicate that, like other forms of personal or movable property, a registered trade mark can be licensed and be the subject of other commercial dealings such as an assignment and a charge.

19.3 It is also generally recognised that a licence is not property. It is merely permissive. As stated by Lord Diplock in Allen & Hanburys Ltd v Generics (UK) Ltd[1986] RPC 203 at 246:

A licence passes no proprietary interest in anything; it only makes an action lawful that which would otherwise have been unlawful.

Thus, in the case of land, a licence to enter upon land is not binding on a successor in title to the licensor (such as a purchaser of the land) even if the successor had notice of the licence. In contrast, the TMA expressly provides at s 42(5) that a licence to use a registered trade mark is binding on the licensor's successor in title (except a purchaser for value in good faith and without notice of the licence). This is akin to an agreement conferring an equitable proprietary interest. Hence, it would seem that a licence of a registered trade mark is proprietary in nature. If so, it would have the concomitant effect of binding third parties.

19.4 Further, under the TMA, the licence may be exclusive. An exclusive licence is defined in s 43(1) to mean:

[A] licence (whether general or limited) authorising the licensee to the exclusion of all other persons, including the person granting the licence, to use a registered trade mark in the manner authorised by the licence.

19.5 Section 45(1) allows the licensor to give greater substantive rights to the exclusive licensee than those allowed by the general law. It provides that an exclusive licence may provide that the exclusive licensee shall have, to such extent as may be provided by the licence, the same rights and remedies in respect of matters occurring after the grant of the licence ‘as if the licence had been an assignment’. The licensee's rights and remedies are to be considered to be concurrent with those of the proprietor of the trade mark (s 45(3)) and he can even institute infringement proceedings in his own name (s 45(2)) without having to join the proprietor as a plaintiff or add him as a defendant unless the court orders otherwise (s 45(5)). Further, s 45(4) provides that any defence available against the proprietor of the registered trade mark is also available to the exclusive licensee – that is, the exclusive licensee is enforcing the proprietary rights of the proprietor. Additionally, the remedies (namely, damages, account of profits and statutory damages) available to the exclusive licensee in an infringement action are the same as those for the proprietor (see s 45(7)).

19.6 Thus, it might be thought that the effect of this statutory scheme in s 45 is to confer a proprietary interest on the exclusive licensee. This was precisely the respondent's argument in Ku De Ta (above, para 19.1). It was the assignee of an exclusive licence of the mark ‘Ku De Ta’ registered in respect of restaurant services (‘the Registered Trade Mark’) and used the mark to operate a dining and nightlife establishment in Singapore. The appellants were members of a partnership (the ‘Partnership’) that owned and operated a popular restaurant, bar and club in Bali under an identical mark. The Partnership's business was managed by a company known as Nine Squares Pty Ltd (‘Nine Squares’) which was set up by two equal shareholders, Chondros and Ellaway. Nine Squares applied for and obtained the registration of the Registered Mark in Singapore. After the shareholders fell out, Ellaway caused Nine Squares to enter into a licence agreement with one Chris Au (‘Au’) without Chondros's knowledge. The licence agreement purported to grant to Au an exclusive licence to use the Registered Trade Mark. It was this exclusive licence that was assigned to the respondent.

19.7 In an earlier action, the Court of Appeal had declared that Nine Squares held the Registered Trade Mark on trust for the Partnership and ordered Nine Squares to transfer the registration of the mark to the Partnership. Subsequently, the appellants sued the respondent for trade mark infringement and passing off to prevent it from using the mark in respect of its establishment. The respondent argued that its exclusive licence was proprietary in nature and that it was a bona fide purchaser for value and without notice of any interest that the Partnership may have had. As such, its licence was effective against any third party, including the Partnership.

19.8 Hitherto, while there was no authoritative pronouncement in Singapore on the respondent's argument, there was also some support for it in academic legal circles. For instance, in the authoritative text, Kerly's Law of Trade Marks and Trade Names, it is stated that s 31(2) of the English Trade Marks Act 1992 (c 26) (in pari materia with s 45(3) of the TMA) ‘leave[s] open the argument that the nature of the interest enjoyed by an exclusive licensee is more than a bare permission’: James Mellor QC et al, Kerly's Law of Trade Marks and Trade Names (Sweet & Maxwell, 15th Ed, 2011) at para 13–083. Further, it is asserted that s 31 ‘suggests that exclusive licensee may nevertheless enjoy proprietary rights in some circumstances’: Neil Wilkof & Daniel Burkitt, Trade Mark Licensing (Sweet & Maxwell, 2nd Ed, 2004) at para 10–17.

19.9 In dismissing the respondent's argument, the Court of Appeal traced a line of English cases which had uniformly held that a licence to exploit the various types of intellectual property is non-proprietary in nature. The cases include Northern & Shell plc v Condé Nast & National...