Legal Bulletin December 2016

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Published date: 21 Dec 2016

Singapore High Court grants summary judgment for infringing goods bought off defendant’s website

Calvin Klein, Inc & Anor v HS International Pte Ltd & Ors [2016] SGHC 214
 
The case of Calvin Klein, Inc & Anor v HS International Pte Ltd & Ors provides useful guidance on the liability of an operator of a shopping website which sells trade mark-infringing goods.
 
Facts
 
The plaintiffs were Calvin Klein, Inc (“First Plaintiff”), a fashion design and marketing company, and Calvin Klein Trademark Trust (“Second Plaintiff”), the registered proprietor in Singapore of several marks with the words “Calvin Klein” and “ck” (“CK Marks”). The defendants were HS International Pte Ltd (“First Defendant”), Global PSM Pte Ltd (“Second Defendant”) and Mr Jeffrey Tan (“Third Defendant”), who was the sole shareholder and director of both the First and Second Defendants.
 
The website concerned, sgbuy4u.com (“SGbuy4u Website”), is an e-commerce platform. It “mirrors” that of the Chinese online marketplace Taobao (“Taobao Website”) in that the listings on the SGbuy4u Website are also listings on the Taobao Website. On the SGbuy4u Website, a user may run a search for a desired good, select an item from the results page, and pay for it. Payment is made to the Second Defendant. The “SGbuy4u Business” (a convenient term used by the court as the identity of the legal entity that operated the SGbuy4u Website was disputed) will then place a corresponding order and pay for the good on the Taobao Website. Upon receipt of the good in its warehouse in China, the SGbuy4u Business freights the good to Singapore. The good is then either delivered to the user’s doorstep or collected by the user at the Singapore warehouse.
 
Investigators instructed by the Plaintiffs successfully ordered wallets, belts and underwear bearing CK Marks from the SGbuy4u Website. The packaging of these items, as well as paper bags seized in a raid on the Defendants’ premises, also bore CK Marks. It was not disputed that the Plaintiffs did not authorise or license the application of any of the CK Marks to any of the goods purchased or seized.
 
The Plaintiffs commenced an action seeking, among other things, an inquiry as to damages against the Defendants for trade mark infringement under sections 27(1) and (2) of the Trade Marks Act (“Act”) and an injunction restraining the Defendants from further infringement. The Plaintiffs later applied for summary judgment under Order 14 of the Rules of Court on the basis that the Defendants had no defence to the claim for trade mark infringement under section 27(1) of the Act. The Defendants’ case was that first, it was the individual Taobao sellers and not the Defendants that committed the infringement, and secondly, the First and Third Defendants were not involved in the SGbuy4u Business or SGbuy4u Website.
 
Summary judgment may be granted if there is no issue or question in dispute which ought to be tried and there is no other reason why there ought to be a trial. The burden lies on the plaintiff to show that he has a prima facie case for summary judgment. Once he has succeeded in doing so, the defendant must, in order to obtain leave to defend, establish that there is a fair or reasonable probability that he has a real or bona fide defence.
 
Decision
 
Section 27(1) of the Act provides: “A person infringes a registered trade mark if, without the consent of the proprietor of the trade mark, he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered.”
 
There was no dispute that if the CK Marks were indeed used, such use was in the course of trade and without the consent of the Plaintiffs. The court therefore had to decide:
 
·         Whether the requirement of double identity under section 27(1) of the Act was satisfied;
 
·         Whether the relevant signs had been “use[d]” within the meaning of section 27 of the Act; and
 
·         Which, if any, of the Defendants carried out the infringing use.
 
Requirement of double identity
 
Section 27(1) of the Act requires double identity, i.e. identity between: (i) the sign and the trade mark; and (ii) the goods or services for which the trade mark is registered and those in relation to which the sign was used.
 
In this case, double identity was established in respect of the “Calvin Klein” trade mark. The mark, which was registered by the Plaintiffs for, among other things, wallets, underwear and paper and printed materials, appeared clearly on the wallet and underwear purchased, as well as the cover of the boxes containing them.
 
The Defendants did not dispute the identity of the “ck” trade mark applied to the belts purchased. However, the court observed a “palpable visual dissimilarity” between the marks. The asymmetry in size between the letters “c” and “k” in the registered “ck” trade mark was absent in the belt purchased.
 
Notwithstanding this, the court found, with respect to the “Calvin Klein” trade marks, that the Plaintiffs had established a prima facie case on the issue of double identity and the Defendants had not shown a fair or reasonable probability that they had a real or bona fide defence in this regard.
 
Use of the relevant signs
 
Section 27(4) of the Act provides that a person “uses” a sign if, among other things, he offers goods for sale under the sign.
 
In this regard, the court found that the Plaintiffs had shown a prima facie case that goods had been offered for sale under the sign “Calvin Klein” on the SGbuy4u Website. This was because the SGbuy4u Website informed users of the price of the good and gave them the option to “Buy Now” or “Add to Cart”. Payment was made and confirmed on the SGbuy4u Website.
 
The Defendants however sought to argue that the true culprits were the individual sellers on the Taobao Website who had infringed the CK Marks by advertising and selling the goods. However, for the following reasons, the court was of the view that the Defendants did not have a real or bona fide defence:
 
·         The SGbuy4u Business was not merely a courier or freight forwarding service. Unlike traditional delivery services like FedEx, DHL or SingPost, the SGbuy4u Business received payment from the user of the SGbuy4u Website, logged on to the Taobao Website, ordered the good from the individual Taobao seller and paid him, and directed him to send the good to the warehouse.
 
·         The SGbuy4u Business was not merely a customer-to-customer platform facilitating the sale and purchase of goods. Unlike the services provided by electronic platforms like eBay and Carousell, the SGbuy4u Business played a far more active role by: (i) liaising with and receiving product orders from the buyer; (ii) receiving payment directly from the buyer; (iii) liaising with the individual seller who posted the product listing; and (iv) receiving the goods from the seller and conveying them to the buyer.
 
·         It was inaccurate to characterise SGbuy4u’s activities as a service that procured and delivered goods to the user without any sale of the good to the user. Rather, there were two sale and purchase contracts involved: the first between the user and the Second Defendant, and the second between the SGbuy4u Website and the Taobao Website. Moreover, the prices on the SGbuy4u Website were marked up so as to generate a profit from sales.
 
·         Finally, it was also not proper to characterise SGbuy4u’s activities as a sale to the user of goods that were advertised on the Taobao Website. The user agreement on the SGbuy4u Website had expressly disclaimed any agency relationship with the user.
 
Entity carrying out the infringing use
 
The remaining question was which, if any, of the Defendants offered the infringing goods for sale.
 
The court found that the Second Defendant did commit the infringing use of the Plaintiffs’ trade marks. It operated and managed the SGbuy4u Website, which displayed product listings of the infringing goods and allowed users to purchase those goods directly from the Second Defendant on the SGbuy4u Website.
 
However, in respect of the First and Third Defendants, although there was evidence of some involvement in the SGbuy4u Business and SGbuy4u Website by the First Defendant (it was the registrant of the domain of the SGbuy4u Website and its registered address was the self-collection point in Singapore for the goods) and the Third Defendant (he had registered the domain name of the SGbuy4u Website and signed a cheque for the Second Defendant), this was not sufficient to establish a prima facie case that they had offered the infringing goods for sale.
 
As a consequence, summary judgment was granted in respect of the Plaintiffs’ claim for trade mark infringement against the Second Defendant.
 
Practical impact
 
This case demonstrates the willingness of the Singapore courts to protect the rights of trade mark owners by deterring infringement via e-commerce given the proliferation of e-commerce platforms in recent years and the decline in physical transactions involving infringing products in Singapore. Operators of e-commerce platforms should be prepared to face the courts’ scrutiny of the roles they play in the transaction and/or supply chain should it be alleged that infringing products are being transacted via e-commerce platforms under their operation. Claiming that the e-commerce platform is a mere conduit/intermediary between the seller and ultimate buyer of infringing products is unlikely to absolve an operator from trade mark infringement if payment for the infringing products were made directly to an operator who purchased and delivered the infringing products to the ultimate buyer on the seller’s behalf.
 
 
If you would like to discuss the impact of this case on your business, please contact:
 
+65 6890 7883
 
+65 6890 7520
 
+65 6890 7568
 

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