I have received a letter for trademark infringement. What should I do?
First, it is important not to panic and to immediately succumb to the other party’s demands. Rather, you should give thorough consideration to the following before making an informed decision as to your next course of action:
How much are you willing to spend to resolve the trademark infringement claim?
You have to consider the financial resources that you have, and then decide on the amount of money, as well as the time and effort, that you are able and willing to spend on resolving this case.
- Do you want to reach a settlement quickly with the other party to keep costs in check? Sometimes, when allegations of trademark infringement arise, the parties that make such allegations might not have legitimate grounds for doing so. However, they might have greater financial resources than you, and therefore might leverage that strength to pressurise you into paying damages.While you may win the case should it be resolved in court, the resulting legal expenses and possible reputational losses that you might incur, as well as the time and effort expended on fighting the case, may be disproportionate to any benefits that you might consequently enjoy, e.g. the freedom to continue using the trademark for your products or services in future. Therefore, if you are cash-strapped and/or wish to keep your legal costs in check, it may be more commercially prudent to settle.
- What is the possible business impact of the remedies the other party is seeking? Should the other party seek a prohibitory injunction against you, and the court were to grant such an injunction, you would not be able to use the trademark on your products or services in future without the other party’s authorisation. If your customers have become accustomed to identifying your products or services by your trademark, then the cessation of use of the trademark might adversely and significantly affect the sale of your products.Should the other party seek damages from you that are exorbitant, and the court were to grant such damages, you may consider negotiating for a lower sum. If the other party refuses to lower its demands to a satisfactory level, you may consider pursuing the case via more formal dispute resolution methods instead, especially if the expected costs of arbitrating or litigating the matter is likely to be lower than the sum demanded by the other party.If the other party seeks damages (of a reasonable amount) from you because of your previous use of the trade mark, but is simultaneously willing to license the use of the trade mark to you in future at a reasonable rate, it might be commercially prudent for you to accept the offer and to avoid the costlier route of arbitration or litigation.
- Do you want to litigate the matter for reasons beyond commercial ones? Regardless of the considerations above, parties accused of trademark infringement sometimes choose to litigate the matter in court, even when it may not be commercially prudent to do so. This is because they feel a sense of injustice that they have to settle with opponents whose claims are unfounded, and therefore it is a “matter of principle” that the dispute be resolved in court and the opponents be made to “pay for it”.Also, another motivation to litigate the matter would be to send a statement of demonstration of strength and deterrence to the public that one would not be easily “bullied” into settling cases. While these purposes for litigating the matter are not entirely illogical, they are ill-advised in most situations, especially if you have limited financial resources.
What are the opponent’s financial strength, and track record and possible motivation for suing others?
There are several benefits of examining the other party’s background.
- Opponent’s financial resources: By estimating this, you will be better able to determine the extent of disparity between that party’s resources and yours. Such research can just involve a simple search on the internet. Is the other party a multinational corporation, a small or medium enterprise, or an individual? Has the other party been in any trouble recently, be it financial woes, lawsuits ? If the other party is in dire financial straits, it might be less likely to push through with its demands if you refuse to budge.
- Opponent’s track record and possible motivation for suing alleged infringers: You should try to find out if the other party has a track record of alleging infringement of intellectual property rights (“IPR”) against third parties. While a search on the internet may be of some use, you may be able to obtain more information by asking your industry counterparts, and members of different trade associations if they have had or have heard of similar experiences involving that party making IPR infringement claims. If that party has such a “record”, it may be inferred that the party is aggressive in asserting market dominance or in commercialising its IPR through licensing.Meanwhile, if possible, you should attempt to find out what the strength of the party’s cases were vis-à-vis the third parties on those occasions. Did the former make baseless allegations against the latter, or were the allegations well-founded? The answer to this question may reveal the strategy that the party might be using against you, that is, whether the party is making unreasonable extortions by using intimidation tactics, or whether it genuinely has a claim which it believes should be pursued. Also, what kind of settlement did your opponent accept, if any?
Merits of the trademark infringement allegation
After considering the questions above, you should then objectively examine the merits of the other party’s case, to determine whether to settle or to arbitrate or litigate the matter. At this stage, it would be advisable to seek professional legal advice.
Challenge the validity of the trademark: Your lawyer may challenge the validity of the trademark on numerous basis, among which include the following:
- The trademark has no distinctiveness (section 7(1)(b) of the Trade Marks Act).
- The trademark consists only of components that indicate the “kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of services, or other characteristics” of the good or service to which the trademark is attached (s 7(1)(c)) .
- The trademark consists only of components that have become conventional in the language used or in the genuine industry practices today (s 7(1)(d)).
- The trademark is against public policy or morality, or contains a misrepresentation that deceives the public as to the characteristic of the good or service (s 7(4)).
- The trademark is “identical with an earlier trade mark and the goods or services for which the trade mark is sought to be registered are identical with the goods or services for which the earlier trade mark is protected” (s 8(1)).
- The trademark is (a) “identical with an earlier trade mark and is to be registered for goods or services similar to those for which the earlier trade mark is protected”; or (b) “similar to an earlier trade mark and is to be registered for goods or services identical with or similar to those for which the earlier trade mark is protected”, such that there is a possibility that a portion of the public may be confused (s 8(2)).
- The duration of protection of the trademark has expired.
Apply for a revocation of the trade mark: Your lawyer may apply for a revocation of the trademark on the basis that there has no use of the trademark for a certain period of time, or that the trade mark has become a common name in the trade for the product or service for which it is registered (s 22(1)).
Challenge the other party’s claim that there was infringement: In order to succeed on an infringement claim, the other party will have to prove to the court that you have used (a) an identical sign as his on identical goods or services (s 27(1)); (b) an identical or similar sign as his on identical or similar goods or services (s 27(2)); or (c) an identical or similar sign on dissimilar goods or services (s 27(3)). Meanwhile, your lawyer could be challenging these assertions made by the other party.
Show that your acts do not amount to infringement: Your lawyer may assert that your acts fall under the following categories, which does not amount to infringement, according to the Act.
- You used the name or the name of your place of business, or the name of your predecessor in business or the name of your predecessor’s place of business, and “such use was in accordance with honest practices in industrial or commercial matters” (s 28(1)(a)).
- You used a sign to indicate “(i) the kind, quality, quantity, intended purpose, value, geographical origin or other characteristics of goods or services; or (ii) the time of production of goods or of the rendering of services”, and “such use was in accordance with honest practices in industrial or commercial matters” (s 28(1)(b)).
- You used a sign to indicate the intended purpose of goods or services, “such use was in accordance with honest practices in industrial or commercial matters” (s 28(1)(c)).
- You “have continuously used in the course of trade [an] unregistered trade mark” which is identical with or similar to the other party’s registered trade mark, from a time before the date of registration or of first use of the registered trade mark, whichever is the earlier date (s 28(2)).
- Your allegedly infringing mark is a registered trademark as well (s 28(3)).
- You used the other party’s trade mark for (a) comparative commercial advertising or promotion, which constituted fair use; (b) non-commercial purposes; or (c) for the purpose of news reporting or news commentary (s 28(4)).
For more details on defences to trademark infringement, refer to https://singaporelegaladvice.com/law-articles/defences-trademark-infringement/.
If you have been accused of trademark infringement, do not rush into a settlement, or into arbitration or litigation. Instead, first consider your current financial situation, the other party’s resources and record, as well as the merits of the other party’s case, before adopting your next course of action.
This article is written by Victor Looi, who will be a trainee solicitor in the Intellectual Property practice group of an international law firm in January 2017.
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