[1997] SGHC 310

In the High Court of the Republic of Singapore

[1997] SGHC 310

Suit 1162/1996

Between

Future Enterprises Pte Ltd

… Plaintiff

And

Tong Seng Produce Pte Ltd

… Defendant

grounds of decision

Tort — Passing off — Goodwill; Tort — Misrepresentation

This judgment is subject to final editorial corrections approved by the court and/or redaction pursuant to the publisher’s duty in compliance with the law, for publication in LawNet and/or the Singapore Law Reports.

Future Enterprises Pte Ltd v Tong Seng Produce Pte Ltd

[1997] SGHC 310

Suit 1162/1996
Judith Prakash J
26 November 1997

1 JUDITH PRAKASH J

2 Cur Adv Vult

3 The plaintiff and the defendant are well-established trading companies in Singapore. In 1994, a fateful year, both decided to venture into the `instant` beverage and food business. That decision led inevitably to both of them making the most popular of such products, the 3-in-1 instant coffee. The plaintiff now claims that the defendant has, since about March 1996, passed off or attempted to pass off the defendant`s brand of 3-in-1 instant coffee mix as and for the plaintiff`s coffee mix both in Singapore and elsewhere.

5 Factual background

6 This account of the facts leading up to the action is taken substantially from the affidavits of evidence-in-chief filed by Mr Tan Wang Cheow, a director of the plaintiff company, and that of Mr Eng Yew Beng who is employed as sales manager by the defendant.

12 World Food `96 , Singapore Food and Beverage Directory and the Singapore Exporters `96/97 Directory .

25 (b). On the red background, the words `A MaxCoffee` appear in yellow/orange. The `A` is about 5cm high. The `MaxCoffee` is about 4cm high and altogether the name `A MaxCoffee` stretches from 22cm.

26 (c). Immediately below the letter `A` is a big blue and white star measuring 10cm high and 10cm wide. On the same line as the star are the words `3-in-1 Instant Coffee Mix` in bright yellow.

27 (d). Below the star are the Chinese words `American Flavour` in blue.

28 (e). The centre portion of the packaging is brown/choco in colour. There is a picture of a coffee cup and saucer surrounded by coffee beans. The banner `True American Taste` appears below the cup and saucer.

34 General principles

35 The elements of the tort of passing off were identified by both Lord Diplock and Lord Fraser in the case of Erven Warnink BV v J Townend & Sons (Hull) Ltd [1979] AC 731 (the Advocaat case). As Oliver LJ put it in Anheuser Busch Inc v Budejovicky Budvar [1984] FSR 413 at pp 462-463:

The most recent and most authoritative exegesis of the essential elements of a claim in passing off is to be found in the speeches of Lord Diplock and Lord Fraser in [the Advocaat case] Lord Diplock identified five characteristics as common to all passing-off actions, although he uttered a caution against assuming that the presence of all five in any factual situation necessarily give rise to a cause of action. No claim could, however, succeed in the absence of all five. Thus there is required to be found:

`(1) a misrepresentation; (2) made by a trader in the course of trade; (3) to prospective customers of his or ultimate consumers of goods or services supplied by him; (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence); and (5) which causes actual damage to a business or goodwill to the trader by whom the action is brought or (in a quia timet action) will probably do so.`

These essentials were expressed slightly differently by Lord Fraser as follows:

`It is essential for the plaintiff in a passing-off action to show at least the following facts: (1) that his business consists of, or includes, selling in England a class of goods to which the particular trade name applies; (2) that the class of goods is clearly defined, and that in the minds of the public, or a section of the public, in England, the trade name distinguishes that class from other similar goods; (3) that because of the reputation of the goods, there is goodwill attached to the name; (4) that he, the plaintiff as a member of the class of those who sell the goods, is the owner of goodwill in England which is of substantial value; (5) that he has suffered, or is really likely to suffer, substantial damage to his property in the goodwill by reason of the defendant selling goods which are falsely described by the trade name to which the goodwill is attached.`

These two statements of principle complement one another, Lord Diplock emphasising what has been done by the defendant to give rise to the complaint, and Lord Fraser what the plaintiff has to show as a prerequisite of complaining. Since the remaining members of its Lordships` House agreed with both speeches, it is not in dispute that the two statements have to be taken as a composite.

37 Goodwill

38 The most generally accepted definition of goodwill is the famous one formulated by Lord Macnaghten in IRC v Muller & Co`s Margarine Ltd [1901] AC 217. It is, I think, worth reproducing his Lordship`s words in full:

What is goodwill? It is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old established business from a new business at its first start. The goodwill of a business must emanate from a particular centre or source. However widely extended or diffused its influence may be, goodwill is worth nothing unless it has power of attraction sufficient to bring customers home to the source from which it emanates.

Goodwill regarded as property has no meaning except in connection with some trade, business, or calling. In that connection I understand the word to include whatever adds value to a business by reason of situation, name and reputation, connection, introduction to old customers, and agreed absence from competition, or any of these things, and there may be others which do not occur to me. In this wide sense, goodwill is inseparable from the business to which it adds value, and, in my opinion, exists where the business is carried on. Such business may be carried on in one place or country or in several, and if in several there may be several businesses, each having a goodwill of its own (at pp 223-224).

40 Anheuser Busch case that this would be so even if the goods sold in Malaysia are made in Singapore as long as they are not available in the market here. O`Connor LJ in that case observed:

I am in no doubt that the evidence showed that by 1973 the plaintiffs` Budweiser beer enjoyed a significant reputation among members of the public in this country. That is not sufficient to found an action for passing off. It is the goodwill of a business carried on in this country that can be protected, not the reputation - goodwill if you like, of the business carried on in another country. [Italics mine.]

41 Advocaat case, stated that the basic question which the court had to consider was how far it was an essential ingredient of a successful claim in passing off that the plaintiffs should have established in England (italics mine) a business in which its services or goods were sold to the general public on the open market (at p 462).

43 Anheuser Busch holdings.

44 Jordache Enterprises Inc v Millennium Pte Ltd [1985] 1 MLJ 281 which was recently followed by Pontiac Marina Pte Ltd v CDL Hotels International Ltd [1997] 3 SLR 726 . In the instant case, the defendant`s position is that it started selling A MaxCoffee in Singapore in October 1995. The plaintiff has not seriously challenged that date although its statement of claim puts March 1996 as the time when the defendant started passing off A MaxCoffee as MacCoffee. The documentary evidence substantiates the defendant`s October 1995 date. Thus, that is the date at which I have to determine whether the plaintiff had any goodwill in MacCoffee. The evidence of such goodwill at that date is meagre, to put it mildly.

50 Singapore Exporters and Singapore Food and Beverage , two local trade publications, Mr Tan`s own testimony was that these advertisements were only placed in 1996. There was no evidence of any such advertisements having been placed in 1995. Further, though Mr Tan claimed that as a result of his 1996 advertisements, the plaintiff had received enquiries on its product from exporters or traders, he also told the court that he would not be calling such exporters or traders to testify.

53 Misrepresentation

54 Although the plaintiff has failed to establish its goodwill, I will consider the issue of misrepresentation briefly. I should say first that I consider that Mr Eng did obtain the inspiration for A MaxCoffee from MacCoffee. His explanation on how he arrived at the name was not convincing especially since he sought to convince me that he himself was the originator of `A Max` as a play on the words `mix` and `Amex`. Mr Eng gave his evidence in Mandarin and although he obviously knew English, he did not appear to me to have the sophisticated command of the language that would have led to him conceiving `A Max` in the way he said he did. I believe that after he was told that his Supreme coffee mix had failed because of stodgy packaging, he was casting around for some new ideas and when he came across MacCoffee, he adopted the name and the idea of promoting an American taste as a marketing tool.

56 (2). the type-faces used by both parties are the same;

57 (3). the gradated colours in the names are similar;

58 (4). the letters comprising `MacCoffee` and `A MaxCoffee` both employ drop shadows and such drop shadows are not found in the letters comprising the names of other coffee mix brands;

59 (5). the plaintiff`s and defendant`s products are the only two coffee mixes which bear the legend `True American Taste`.

65 Tong Guan Food Products Pte Ltd v Hoe Huat Hng Foodstuff Pte Ltd [1991] 2 MLJ 361 [1991] SLR 133 , the test for comparison of confusingly similar names, marks or other distinguishing indicia is not to compare them side by side but to take into account the fact that confusion which may occur will take place when the customer has in his mind his recollection of the plaintiff`s mark which may be only an idea of the whole or actual mark.

Judith Prakash J

Wong Siew Hong and Teresa O'Connor (Chu Chan Gan & Ooi) for the plaintiff/respondent
Sim Yong Chan (Sim Yong Chan & Co) for the defendant/appellant.