DHKW Marketing and Another v Nature's Farm Pte Ltd

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 02 November 1998
• Neutral Citation: [1998] SGHC 359
• Docket Number: Suit No 24 of 1997
• Date: 02 November 1998
• Published date: 19 September 2003
• Year: 1998
• Plaintiff Counsel: Thio Shen Yi and Ernest Lau (Thio Su Mien & Partners) and Tasneem Haq (Haq & Namazie Partnership)
• Citation: [1998] SGHC 359
• Defendant Counsel: Rabi Ahmad and Mylene Chia (PK Wong & Advani)
• Court: High Court (Singapore)
• Subject Matter: Whether defamation established,Damages,Whether advertisement aimed at determinate class,Malice,Defamation,Tort,Effect on quantum of damages when statements made in malice

Judgment:

JUDITH PRAKASH J

In today`s increasingly health conscious world, there is a big market for dietary supplements which are believed not only to increase the body`s own health but also to help it combat the deleterious effects of a polluted environment. Pycnogenol, a substance extracted from the bark of the French maritime pine tree, is advertised as a powerful antioxidant which helps neutralise environmental toxins in the body. It was first discovered by one Professor Jack Masquelier but at present there are two companies which manufacture it and claim proprietary rights to it, namely, Horphag Research Ltd, a Guernsey corporation (`Horphag`), and INC BV, a Liechtenstein company (`INC`).

2.In Singapore, the plaintiffs and the defendants are among the organisations which seek to exploit for commercial benefit the growing interest in health food products. The defendants have their own brand name `Nature`s Farm` and about 20 shops in Singapore through which they sell health food and dietary supplements. The first plaintiff is a sole proprietorship owned by one Daniel Hwee Kum Weng, a pharmacist. The first plaintiff trades in health care products which he purchases from Europe and sells to clients in Asia. One of his clients is the second plaintiff, a company involved in the retail of pharmaceutical and health care products. It is an authorised sub-distributor and wholesaler for various well known brands and supplies products to doctors, hospitals, clinics, pharmacies and medical laboratories as well as engaging in direct retail sales through its one retail outlet.

3.The defendants first started selling pycnogenol in Singapore in 1989. At the time, they sold pycnogenol produced by Horphag. A few years later, however, they ceased selling Horphag pycnogenol and switched to pycnogenol produced by INC. By 1996, apart from the Nature`s Farm brand of pycnogenol, the supplement was also sold in Singapore under the Kordel, Nature`s Sunshine, Irwin`s Natural and New Image brands.

4.In about May 1996, the plaintiffs entered the market. The first plaintiff imported Horphag pycnogenol tablets from a company in Finland and in June 1996, he signed an agreement with Horphag which made him the sole distributor in Singapore for the Horphag pycnogenol raw material (which the first plaintiff wanted to incorporate into a cream) for the period up to June 1997. At the same time the first plaintiff appointed the second plaintiff as his sole distributor of the Horphag pycnogenol. In pursuance of their commercial objectives, the plaintiffs published and distributed numerous brochures and newspaper advertisements. By July 1996, the plaintiffs had successfully persuaded about 20 retail pharmacies with 70 retail outlets islandwide to stock the Horphag pycnogenol that they dealt in.

5.On 14 August 1996, the defendants procured the publication of an advertisement in the Straits Times . A copy of the full advertisement is attached to this judgment. The advertisement contained a photograph of the defendants` INC pycnogenol and some material about it as well as extracts from a letter written by Professor Masquelier. The material part of the advertisement read as follows:

... BEWARE PYCNOGENOL The Powerful Antioxidant ...

... In Singapore, the only PYCNOGENOL that is manufactured per Professor Jack Masquelier`s technical standards and that is being sold under his explicit trademark authorization is the original PYCNOGENOL that is delivered to you by (the defendants) ...

Under authorization of Professor Masquelier, PYCNOGENOL is a trademark of (the defendants`) supplier INC/Vaduz/Liechtenstein. ...

PYCNOGENOL is available exclusively at all (the defendants`) stores ...

`... Dear Users of PYCNOGENOL

... As you know, I am the inventor of the process of extraction of substances coming from the bark of the pine trees and the seed of grapes, and the sole keeper of the name PYCNOGENOL which I created in 1979 and registered as a commercial trademark in France no 1522228 ...

I have discovered that the trademark has been fraudulently used and registered in various countries by non-authorised companies. We have taken legal action to end these fraudulent acts ...

Yours sincerely,

(signature)

Professor Jack Masquelier ...`

It would be noted that the main assertion in the advertisement was the trademark `pycnogenol` belonged to INC under authorisation of Professor Masquelier and that in Singapore the only pycnogenol that was manufactured according to Professor Masquelier`s standards and that was being sold under his explicit trademark authorisation was the original pycnogenol that was sold by the defendants. At this time the trademark `pycnogenol` had not been registered in Singapore.

6.According to the plaintiffs, although the advertisement did not refer to either of them directly, many people understood that it referred to them and as a result both plaintiffs received many phone calls and correspondence from the public as well as their clients making enquiries as to the truth of the advertisement. The plaintiffs alleged that from the date of the advertisement through to 1997, each of them suffered embarrassment, distress, actual loss of reputable and a general loss of business in relation to the sale of Horphag pycnogenol.

7. Course of the proceedings

In January 1997, the plaintiffs and Horphag commenced this action against the defendants. All three parties sued the defendants for defamation and malicious falsehood based on the advertisement. Horphag, claiming to be the owner of the pycnogenol trademark, also sued the defendants for passing off the INC product as being pycnogenol.

8.The defendants filed their defence in early February. They admitted placing the advertisement but denied that the words complained of referred or were understood to refer or were capable of referring or of being understood to refer to the plaintiffs or any of them. They further denied that the words were defamatory but, as an alternative, pleaded that the occasion of the publication of the words was an occasion of privilege. A further alternative defence was that the words complained of were true in substance and in fact.

9.At the time when the advertisement was placed, the defendants were run by a lady named Cynthia Poa. In August 1997, she left the defendants and joined a company owning a chain of health food retail outlets known as GNC. At about this time the defendants ceased to be the distributors for the INC pycnogenol and GNC took over as the new distributor.

10.In early 1998, there was a dramatic turn of events: the defendants themselves started selling Horphag pycnogenol. They began to publish promotional literature stating in unequivocal terms that pycnogenol was the trademark of Horphag. They did not, however, apologise for the advertisement and they maintained the justification plea in their defence. In June 1998, pursuant to a commercial settlement between the two parties and the defendants` appointment as Horphag`s distributor, Horphag discontinued their claim against the defendants.

11.On 17 July 1998, the defendants filed a substituted defence in reply to the plaintiffs` substituted statement of claim which had been necessitated by discontinuance of the Horphag suit. It was only then, in the substituted defence, that the defendants abandoned the defence of justification.

12.At the beginning of the trial, the plaintiffs` stand was that the advertisement was defamatory in its natural and ordinary and/or inferential and/or innuendo meaning and referred to each of them. Pointing to the sections of the advertisement quoted in para 5 above, the plaintiffs asserted that the advertisement in its natural and ordinary and/or inferential and/or innuendo meaning meant and was understood to mean that the first plaintiff and/or the second plaintiff: (a). conducted and were conducting fraudulent businesses;

(b). misled and/or were misleading the public into purchasing counterfeit pycnogenol products or Horphag pycnogenol products;

(c). distributed, promoted and/or sold or fraudulently distributed, promoted and sold counterfeit pycnogenol product or Horphag pycnogenol product to the public; and/or used or fraudulently used the pycnogenol trademark without authority.

13.In their opening statement, the defendants characterised the issues which the court had to decide as follows: (a). whether the advertisement or the words contained therein were defamatory of the plaintiffs or either of them;

(b). whether the advertisement or the words contained therein referred to or were understood to refer to or were capable of referring or of being understood to refer to the plaintiffs or either of them;

(c). whether the advertisement or the words contained therein bear or were understood to bear or were capable of bearing or being understood to bear any meanings pleaded by the plaintiffs; and

(d). whether the defendants` publication of the advertisement was protected by privilege.

On the third day of the trial, the defendants withdrew the defence of qualified privilege. At the end of the plaintiffs` case, the defendants elected not to call any witnesses although originally they had intended to adduce evidence from Cynthia Poa, her successor one Chan Chong Leong and one Egbert Mensse Schwitters, the principal director of INC. The defendants were left with the technical defences arising from the law of defamation.

14. First issue: was the advertisement defamatory?

The defendants` closing submissions on this point were perfunctory. Mr Rabi`s main contention was that the plaintiffs had not either in their pleadings or in their closing submissions made any reference to specific defamatory words. Although the plaintiffs were claiming to be drawing a defamatory imputation from the phrase `the only pycnogenol that is manufactured per Professor Jack Masquelier`s technical standards` that and the advertisement as a whole were trade puffs and not defamatory.

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