Intellectual Property Law

Published date01 December 2012
AuthorTAN Tee Jim SC LLB (Singapore), LLM (London); Advocate and Solicitor (Singapore). NG-LOY Wee Loon LLb (Singapore), LLM (London); Advocate and Solicitor (Singapore); Professor, Faculty of Law, National University of Singapore.
Date01 December 2012
Citation(2012) 13 SAL Ann Rev 362
Trade Marks Act

Dilution by blurring

19.1 Section 55(3)(b) of the Trade Marks Act (Cap 332, 2005 Rev Ed) sets out what is called the anti-dilution right. The aim of this right is to protect a special category of trade marks – those which are well known to the public at large – against three types of damage or injury to the distinctiveness or reputation of the trade mark invariably described as follows: (a) dilution by blurring; (b) dilution by tarnishing; and (c) taking unfair advantage. The first two types of injury are set out in s 55(3)(b)(i) whilst the third type of injury is set out in s 55(3)(b)(ii). A criticism often levied at the anti-dilution right is that its ambit is amorphous.

19.2 This is why the Court of Appeal's decision in Sarika Connoisseur Café Pte Ltd v Ferrero SpA[2013] 1 SLR 531 (‘Sarika Connoisseur Café’) was eagerly awaited. This would be the first decision from the Court of Appeal on the meaning of ‘dilution’ in s 55(3)(b)(i) of the Trade Marks Act. (There were two earlier Court of Appeal decisions which had touched on s 55(3)(b). However, discussion of this section in Novelty Pte Ltd v Amanresorts Ltd[2009] 3 SLR(R) 216 (‘Amanresorts’) was obiter, and the dilution claim in City Chain Stores (S) Pte Ltd v Louis Vuitton Malletier[2010] 1 SLR 382 was a non-starter because a basic ingredient in the section – that the plaintiff's trade mark must cross a very high threshold of reputation – was not satisfied.)

19.3 The claim before the Court of Appeal in Sarika Connoisseur Café concerns the first type of injury, namely, dilution by blurring. The brief facts in this case are as follows. The respondent was the proprietor of the trade mark ‘Nutella’ which is well known to the public at large in Singapore for chocolate cream spreads. (This was a finding made by the High Court in this case. There was no appeal against this finding: at [9a] and [12].) The appellant, a coffee chain, had launched a new gourmet coffee-based beverage under the sign ‘Nutello’. The ingredients in this new beverage comprised, inter alia, espresso and the ‘Nutella’ cream spread. The High Court had found that it was likely that the public would be confused into thinking that there was some business connection between the ‘Nutello’ beverage and the ‘Nutella’ cream spread. This finding was upheld by the Court of Appeal. In reaching this conclusion, the appellate court gave some weight to the fact that the survey evidence of both parties showed likelihood of confusion amongst about 30% of the relevant public. In the opinion of the appellate court (at [64]), 30% could not be said to be ‘insignificant’ and that this constituted a substantial portion of the relevant public. On this basis, the respondent was found liable under the classic confusion-based infringement claim under s 27(2) of the Trade Marks Act.

19.4 When the Court of Appeal moved on to consider the respondent's other claim based on dilution, its conclusion on confusion gave rise to a preliminary issue: Is it conceptually incongruous to find both confusion-based infringement and dilution on the same set of facts? As observed above, dilution is not confusion, and confusion is an irrelevant consideration in the dilution inquiry. This preliminary question is very interesting because a positive answer to this question means that not only are dilution and confusion different concepts; dilution is the antithesis of confusion. If this is right, the practical implication is that in cases where the two claims are pleaded, success in the confusion-based infringement claim must necessarily result in failure in the dilution claim. More specifically, in Sarika Connoisseur Café, this means that there would be no need to proceed any further with the dilution inquiry.

19.5 The respondent's case was naturally that an infringement claim and a dilution claim were not mutually exclusive. One of the arguments put forward by the respondents was that the European Court of Appeal in Intel Corp Inc v CPM United Kingdom[2009] ETMR 13 (‘Intel’) had listed confusion as a factor in the global assessment for dilution. The Court of Appeal was not willing to defer to the European Court of Justice (‘ECJ’) on this point because the very question about incongruity was not before the ECJ in Intel; hence, the ECJ might not even have recognised that this essential difference exists between an infringement claim and a dilution claim. Indeed, there is good reason why the Court of Appeal should not give too much weight to the ECJ's approach in Intel. ECJ decisions on trade marks are binding on national courts in the European Union (‘EU’), and yet a quick survey of UK cases will show that the courts in the UK have responded in different ways to the ECJ's guidance in Intel. On the one hand, there are UK cases taking an approach which suggests that confusion and dilution are conceptually antithetical. Two cases will be used to illustrate this point. In Och-Ziff Management Europe Ltd v OCH Capital LLP[2011] FSR 11 (‘Och-Ziff’) and DataCard Corp v Eagle Technologies Ltd[2011] RPC 17 (‘DataCard’), the English High Court found a likelihood of confusion on the facts of the case and the claim for infringement succeeded. When the court considered the plaintiff's other claim for dilution, the judge approached this inquiry on the assumption that there was no likelihood of confusion (see Arnold J's judgment in Och-Ziff at [124] and Kitchin J in Datacard at [339]). On the other hand, there are UK cases taking an approach which suggests that confusion and dilution are intertwined concepts. For example, in Fine & Country Ltd v Okotoks Ltd[2012] EWHC 2230, when the English High Court found confusion on the facts of the case, it held (at [269]) that this finding of confusion seemed to ‘lead inexorably to the further conclusion that dilution is indeed likely’.

19.6 What was relevant for the Court of Appeal were two points. These two points convinced the Court of Appeal that a confusion-based infringement claim and a dilution claim were not conceptually incongruent. First, the court pointed to the definition of ‘dilution’ in s 2(1) of the Trade Marks Act which provides that ‘dilution’ can be established ‘regardless of whether there is any likelihood of confusion on the part of the public’. Second, an argument was made in a piece of academic writing by Kathleen McCabe (‘Dilution-by-blurring: A Theory Caught in the Shadow of Trademark Infringement’(2000) 68 Fordham L Rev 1827) that it is possible for confusion to exist in the minds of some consumers and dilution to exist in the minds of other consumers (those who were not confused).

19.7 These two reasons are sound. On the first reason, whilst the statutory definition of ‘dilution’ is more often taken as a stipulation that confusion is not a necessary ingredient to prove in a dilution claim, it is certainly possible that the draftsman also meant for this definition to convey the message that the presence of confusion does not preclude a finding of dilution. As for the second reason, the facts of Sarika Connoisseur Café can be used to illustrate McCabe's argument. First, however, one should start with the established principle in trade mark infringement law that it is not necessary to prove confusion to exist amongst 100% of the relevant public before the infringement claim can succeed; all that is needed is for confusion to exist amongst a substantial portion of the relevant public (Mobil Petroleum Co Inc v Hyundai Mobis[2010] 1 SLR 512 at [82]). In the case of a dilution claim, there is no good reason to insist that success in a dilution claim requires proof of dilution occurring amongst 100% of the relevant public. It should also be sufficient that dilution is found to occur amongst a significant portion of the relevant public. Returning to Sarika Connoisseur Café, the infringement claim succeeded because there was confusion amongst about 30% of the relevant public, a portion which was substantial in the Court of Appeal's view. This leaves 70% of the relevant public who would not be confused. It is conceivable that dilution can occur in the minds of a significant portion of this 70%.

19.8 The Court of Appeal then went on to consider the respondent's claim that the appellant's use of ‘Nutello’ in relation to a beverage

would cause dilution by blurring the distinctive character of the ‘Nutella’ mark. Here is a summary of the legal propositions governing the dilution by blurring claim laid down by the Court of Appeal:

(a) Dilution by blurring is a process involving ‘“death by a thousand cuts” of a trade mark occurring slowly over time’ (at [92], citing McCabe at 1862). This is when consumers no longer see the plaintiff's well-known trade mark as indicating a distinctive source of a product (at [96]).

(b) It must be shown that the relevant public makes a connection or establishes a link between the defendant's sign and the plaintiff's well-known trade mark, that is, the consumer will ‘call to mind’ the plaintiff's trade mark after seeing the defendant's sign used in relation to the defendant's goods (at [99]).

(c) Whether a link is established and whether there is the consequential damage to the distinctive character of the plaintiff's trade mark are questions to be resolved by considering all the circumstances of the case (at [99]).

(d) Damage in this context means damage to the plaintiff's well-known trade mark's advertising quality or symbolic function (at [94]).

(e) This type of damage can occur as a result of the first use of an identical or similar mark by the defendant (at [93]).

(f) Although the ECJ in Intel (above, para 19.5) opined that this damage...

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