Tomy Inc. v Dentsply Sirona Inc.

• Jurisdiction: Singapore
• Judge: Dedar Singh Gill JC
• Judgment Date: 20 May 2020
• Neutral Citation: [2020] SGHC 105
• Year: 2020
• Date: 20 May 2020
• Published date: 27 May 2020
• Hearing Date: 09 January 2020
• Plaintiff Counsel: Foo Maw Jiun, Desmond Chew and Lee Ai Ming (Dentons Rodyk & Davidson LLP)
• Defendant Counsel: Suhaimi bin Lazim and Khoo Lih-Han (Mirandah Law LLP)
• Court: High Court (Singapore)
• Citation: [2020] SGHC 105
• Docket Number: Tribunal Appeal No 18 of 2019

Dedar Singh Gill JC:

This is an appeal against the Adjudicator’s decision dated 2 September 2019 (the “Decision”) to invalidate the appellant’s three trade marks, namely “MICROARCH” (Trade Mark No. T1301268F), “SENTALLOY” (Trade Mark No. T1301266Z), and “BIOFORCE” (Trade Mark No. T1301267H), all in Class 10 (collectively, the “Subject Marks”). In the Decision, the Adjudicator held that the Subject Marks were invalid because the appellant had filed the applications for the Subject Marks in bad faith pursuant to s 23(1) read with s 7(6) of the Trade Marks Act (Cap 332, 2005 Rev Ed) (the “Act”).

The parties

The appellant, Tomy Incorporated (“Tomy”), is a prominent Japanese innovator and manufacturer of orthodontic devices. The Subject Marks are applied to orthodontic devices manufactured by the appellant. Founded in 1959 and incorporated in 1966, the appellant markets and collaborates with distributors to distribute products manufactured by it to dental professionals worldwide.¹ The Subject Marks were registered in favour of the appellant on 22 January 2013 in Class 10 in respect of the following goods:²

Orthodontic brackets, orthodontic bands, orthodontic tubes, orthodontic wires, orthodontic hooks, orthodontic stops, orthodontic lingual buttons, orthodontic elastics, orthodontic attachments, orthodontic appliances.

The respondent, Dentsply Sirona Inc. (“Dentsply Sirona”), is the result of a 2016 merger between two orthodontic manufacturers and suppliers, the US company Dentsply International Inc (originally founded 1899) and the German company Sirona Dental Systems, Inc (originally founded 1877).³ The respondent is the holding company of GAC International Inc. (now known as GAC International LLC) (“GAC”).⁴ GAC distributes the appellant’s orthodontic devices in Singapore. These devices bear the Subject Marks.⁵

Background to the dispute

This dispute arises from a longstanding relationship between Tomy and GAC spanning five decades.⁶ In 1967, Tomy appointed GAC to distribute orthodontic products manufactured by it.⁷ In the subsequent years, the relationship between Tomy and GAC has been governed by several successive agreements. Four of these agreements are relevant to the present dispute and illustrate the development of the parties’ relationship over time. These four agreements (collectively, “the Agreements”) were signed on 4 January 1986 (the “1986 Agreement”), 1 September 1998 (the “1998 Agreement”), 1 December 2004 (the “2004 Agreement”) and 22 March 2012 (the “2012 Agreement”) respectively. Each agreement superseded the former. For example, Art 27.1 of the 2012 Agreement states that upon its effective date, the prior 2004 Agreement would terminate.⁸

The essential points to be gleaned from the 1986 Agreement are set out here:In terms of the distribution relationship, Art 1 specified that “GAC’s Territory” covered countries in North America, South America, Europe and Africa, as well as Israel and Turkey, while “Tomy’s Territory” covered countries in Asia and the Middle East, as well as New Zealand and Australia.⁹ Art 2 provided that GAC was the “exclusive sales representative and distributor of Tomy Products in GAC’s Territory” and the non-exclusive distributor of the “Tomy Products” in “Tomy’s Territory”.¹⁰ Art 9 of the 1986 Agreement imposed on GAC certain minimum purchase targets of “Tomy Products”.¹¹Where trade marks are concerned, Art 11 of the 1986 Agreement provided that “Tomy Products” purchased by GAC were to be sold under the “Tomy” and “Orth-Tomy” trade marks.¹² GAC had the “right to use such names and trademark and, at its option, [could] register them as a trade name or trademark”. GAC was also obligated under Art 11 to “use the name ‘Tomy’ or ‘Orth-Tomy’ in all advertisements and catalogs when referring to Tomy Products manufactured by Tomy”.¹³ Other than “Tomy” and “Orth-Tomy”, no other trade marks were mentioned in the 1986 Agreement.

The 1998 Agreement was signed against the backdrop of a restructuring arrangement in which GAC returned shares to the appellant and vice versa. The 1998 Agreement superseded the 1986 Agreement and marked the following changes:As regards the distribution relationship, GAC had, under Art 2.1, the exclusive right to sell and distribute the “Products” in the “Exclusive Territory” (covering all countries other than Japan and the “Non-Exclusive Territory”) and the non-exclusive right to sell and distribute the “Products” in the “Non-Exclusive Territory” (defined as Korea, Taiwan, Thailand and the People’s Republic of China).¹⁴ Singapore was therefore an “Exclusive Territory”. Under Art 1.1, the term “Products” was defined as “orthodontic materials, equipment and products now or hereafter developed and/or manufactured by Tomy, its subsidiaries or affiliated companies”.¹⁵In relation to trade marks, the 1998 Agreement established for the first time two categories of trade marks, namely the “Existing Trademarks” (which consisted of the marks listed in Exhibit 4) and the “Tomy Trademarks” (which included the marks “Tomy” and the logo mark of “Orth-Tomy”).¹⁶ Exhibit 4 included the marks “MICROARCH”, “SENTALLOY”, and “BIOFORCE” (hereinafter referred to as the “Disputed Marks”, used in the general sense and distinct from the Singapore-registered Subject Marks).¹⁷ Under Art 14.1, GAC could sell the “Products” under its own trade marks. In addition, GAC had the right to use the “Tomy Trademarks” in connection with the “Products” manufactured by the appellant in all countries except Japan, but (unlike in the 1986 Agreement) could not register the “Tomy Trademarks” without obtaining the appellant’s written consent.¹⁸ Art 14.4 provided that the “Existing Trademarks” would be maintained by GAC at its expense, and it further granted “a non-exclusive and royalty-free license to Tomy to use the Existing Trademarks in connection with and for the purpose of producing and selling the Products”.¹⁹ However, Art 14.4 also stated (unlike the two subsequent agreements) that this non-exclusive license to use the “Existing Trademarks” for selling “Products” in the “Non-Exclusive Territory” would end by 1 January 2000.²⁰ Art 14.6 provided that neither party would “do anything which is likely to impair the value or validity” of the other party’s marks, including future marks.²¹

The 2004 Agreement superseded the 1998 Agreement.²² The following features of the 2004 Agreement are relevant:With regard to the distribution relationship, parties relocated “Singapore” from the category of “Exclusive Territory” under the 1998 Agreement to a “Non-Exclusive Territory” under Art 1.3 of the 2004 Agreement.²³ As such, both GAC and the appellant had non-exclusive rights to sell and distribute the “Products” in Singapore. But since Art 2.3 stipulated that the appellant “shall not directly or indirectly compete with GAC in the bidding for the National Dental Centre’s contracts in Singapore”, GAC still retained a degree of exclusivity.²⁴In relation to trade marks, the 2004 Agreement substantially mirrored the 1998 Agreement. However, Art 14.4 of the 2004 Agreement removed the final sentence of the equivalent provision in the 1998 Agreement, namely that “[n]otwithstanding anything herein to the contrary, Tomy shall not directly or indirectly use any of GAC’s Existing Trademarks for the purpose of producing and selling the Products in the Non-Exclusive Territory as from January 1, 2000”.²⁵ The 2012 Agreement also does not contain this provision.

The 2012 Agreement was the subsisting agreement at the time when the appellant registered the Subject Marks in Singapore on 22 January 2013. It is titled “Non-Exclusive Supply and Distributorship Agreement”.²⁶ At the time that the respondent filed its submissions on 20 December 2019, GAC was still the appellant’s distributor.²⁷ The following observations may be made from the 2012 Agreement:As regards the distribution arrangement, the 2012 Agreement abolishes the distinction between “Exclusive” and “Non-Exclusive” territories. For example, GAC can now sell and distribute the “Products” in Japan. In addition, GAC now only has a non-exclusive right to sell and distribute “Products” under Art 2. “Products” are defined under Art 1.1 as “such orthodontic materials, equipment and products manufactured by Tomy or its Affiliates (defined below) as are set forth on Exhibit 4 hereto and such other orthodontic materials … as may be subsequently agreed by the parties in writing”.²⁸In relation to trade marks, Arts 13.1 and 13.4 of the 2012 Agreement mirror Arts 14.1 and 14.4 of the 2004 Agreement. Art 13.1 of the 2012 Agreement specifies that GAC may sell the “Products” under its own brands or tradenames and states that “GAC shall own all rights to its brand, tradename, trademarks and trade dress owned by it and Tomy shall claim no rights or interest therein”.²⁹ Likewise, the appellant owns all rights to the Tomy Trademarks (including “Tomy” and “Orth-Tomy”). Art 13.4 establishes that all “trademark registrations owned or licensed by GAC or any of its Affiliates” include those in Exhibit 3, which lists the Disputed Marks.³⁰ Additionally, Art 13.6 states that neither party may “directly or indirectly do anything which is likely to impair the value or validity of any of the other party’s trademarks, trade names, brand names … which the other party now owns or possesses or will hereafter own or possess”.³¹ Finally, Art 13.7 of the 2012 Agreement (which mirrors Art 14.7 of the 2004 Agreement) provides that GAC’s use of the Tomy Trademarks (but not GAC’s use of “Existing Trademarks”) discontinues upon the expiration of the 2012 Agreement.³²

Arts 1.1, 2 and 13 as well as Exhibit 3 of the 2012 Agreement are reproduced below for ease of reference:³³Article 1.Definitions1.1“Products” shall mean such orthodontic materials, equipment and products manufactured by Tomy or its Affiliates (defined below) as are set forth...