No Written Agreement? An Implied Licence May Arise In Non-Commercial Relationships
By Daryl Er and Ashley Chew Lixian (Ella Cheong LLC)
Introduction
In the recent case of Harvard Club of Singapore v President and Fellows of Harvard College [2020] SGHC 77, Ella Cheong LLC represented Harvard University (the “University”) in an appeal to the High Court, successfully defending against the grounds of opposition in relation to two trade marks which the University sought to register. The appellant in this case was the Harvard Club of Singapore (the “Club”), which had been the University’s official alumni club in Singapore since 1969.
In the midst of a dispute between the University and the Club over the governance of the latter, the University applied to register two trade marks – “HARVARD CLUB OF SINGAPORE” and “HARVARD UNIVERSITY CLUB OF SINGAPORE” (the “Marks”). Shortly after, the relationship was terminated. Upon publication of the Marks, the Club filed opposition actions and proceeded with the following main grounds:
- Under s 8(7)(a) of the Trade Marks Act (“TMA”), on the ground that use of the Marks was liable to be prevented under the tort of passing off;
- Under s 7(6) of the TMA, on the ground that the Marks were applied for in bad faith; and
- Under s 7(5) of the TMA, on the ground that use of the “HARVARD CLUB OF SINGAPORE” mark was prohibited under written law or rule of law, in this case under s 4(3)(c) of the Societies Act.
The University had earlier received a favourable decision before the IPOS Tribunal, where the Principal Assistant Registrar rejected the opposition by the Club on all grounds, and ordered that the Marks proceed to registration.
The Club then appealed the IPOS decision to the High Court.
Decision of the Court
No passing off
This is the first time that the Court had the opportunity to consider the test for finding an implied licence between non-commercial organisations, and the ownership of goodwill in an implied licence.
The Court held that the protection that the tort of passing off confers can extend to the goodwill generated by non-commercial organisations (such as charities, non-profit associations, and alumni clubs).
Despite the lack of any written and signed licence agreement between the parties, the Court found that that the University had exerted a sufficient degree of control and supervision of the Club to find that there was an implied licence formed between the University and the Club.
In this connection, the Court found on the facts that the University was the owner of all the goodwill generated by the Club, noting that the ownership of goodwill in an implied licence should be decided on the particular factual matrix, on a case-by-case basis, and there is no “default position” that the licensor owns the goodwill in respect of an implied licence.
No bad faith
The Court found that there was no bad faith by the University in applying for the Marks. In this regard, the Court rejected the Club’s three main arguments – that the Marks were filed for without proper authority from the University; that the University had conducted itself improperly, dishonestly or unacceptably; and that the University did not intend to use the Marks. In particular, there was no bad faith in filing for the same name as the Club’s registered society name as the University was the owner of the goodwill generated in connection with the name.
It was clear on the evidence submitted that the University’s authorised persons/entities had the authority to file for the Marks, and that the University had filed for the Marks as it was the owner of the goodwill generated in connection with the use of the Marks, and had every intention to use the Marks.
No prohibited use under any written law or rule of law
This is the first time the Court had to consider the interplay between the TMA and the Societies Act and one of the rare local cases which touched on s 7(5) of the TMA.
The Court considered first principles and held that a discretion of the Registrar of Societies to disallow registration of a society under s 4(3)(c) of the Societies Act does not fall within the meaning of “written law” or “rule of law”. Additionally, the Court also held that the term “use” within s 7(5) of the TMA refers to “actual use” in the trade mark sense, which does not cover the mere registration of a society.
The Court further cited public policy reasons in disallowing a decision of the Registrar of Societies from blocking a trade mark application, noting that the Societies Act and TMA cover distinct regimes that deal with wholly disparate and non-overlapping subject matter. It would lead to far-reaching implications if trade mark rights (which count as legal property) can effectively be subordinated to the registration of a society name which does not create legal rights.
In that regard, the Court also noted (among other things) that the Registrar of Trade Marks does not conduct prior searches on the societies register in examining a trade mark, and the Registrar of Societies similarly does not have to consider trade mark laws and principles when registering (or refusing to register) a society.
Implications
Implied licences can apply to non-commercial relationships
It is clear that an implied licence may be created from the conduct of the parties if there is some degree of control and supervision involved, even in a non-commercial relationship. The determination as to which party owns the goodwill generated under such implied licence ultimately depends on the facts of each situation.
Even though the holdings and findings of the Court were strictly limited to the facts of the present case, and in the context of a passing off claim in a trade mark opposition dispute, it is opined that the Court’s tests for finding an implied licence, and determining the ownership of goodwill generated through the use of unregistered marks by third parties, could also apply in relation to commercial licensees, distributors or franchisees, apart from third parties in non-commercial relationships.
Apply for trade mark registration and enter into written agreements early
To avoid risking the unnecessary stress and uncertainty of protracted proceedings in securing trade mark ownership and registration rights, trade mark owners should take prompt action to enter into written agreements with relevant third parties setting out the terms of commercial or non-commercial relationships relating to their marks, apart from applying for trade mark registration.This would help to ensure that the parties’ rights and obligations are clearly defined, and provide greater certainty throughout the course of dealings, as well as in the event of termination of the relationship.