Stepping to Different Beats: How the “step-by-step” test led to different outcomes for Apple’s “Beats” trademark in Singapore and Australia

Alban Kang and Gene Kwek, Bird & Bird ATMD

This article focuses on two trademark opposition actions in Singapore and Australia by Apple’s subsidiary Beats Electronics LLC against LG Electronics concerning the same trademarks, “Beats” and “QuadBeat”, owned by the respective parties. With specific reference to the opponent’s grounds based on the alleged well known status of its “Beats” trademark, the authors opine that Singapore’s step-by-step approach to marks-similarity led to a premature failure of these grounds in the Singapore proceedings. Contrasted against the opponent’s robust success in Australia, does the application of the “step-by-step” test undermine the protection for well-known trademarks in Singapore? 

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SINGAPORE DECISION

In the Singapore proceedings (Beats Electronics, LLC v LG Electronics [2016] SGIPOS 8), the hearing officer rightly noted concerning section 8(4) of the Trade Marks Act:

In order for an opposition to succeed under one or more of the different heads of infringement under section 8(4), it is necessary for the opponent to establish first of all that the whole or an essential part of the applicant’s mark is identical or similar to the earlier mark. If that first and essential element is proven, the other parts of the provision need to be established.

The requirement of identity, or similarity, as regards “the whole or an essential part” of the applicant’s mark has been held to be no different from the marks-similarity assessment under section 8(2)(b) of the Trade Marks Act.

One of the leading cases on the interpretation and application of the step-by-step approach under section 8(2)(b) is the Court of Appeal’s decision in Staywell Hospitality Group Pty Ltd v Starwood Hotels & Resorts Worldwide [2014] 1 SLR 911 (Staywell). The key principles to be highlighted are these:

  • The test proceeds in stages beginning with an assessment of marks-similarity (followed by goods-similarity, before proceeding to the assessment of a likelihood of confusion).
  • At the first stage of mark-similarity, the mark-for-mark comparison excludes the consideration of any extraneous matter. 
  • If the answer to the inquiry as to marks-similarity is in the negative, the inquiry ends and it is not necessary to proceed to the subsequent stages. 

Another recognised principle in assessing marks-similarity is the relevance of the distinctiveness of the earlier mark. The greater the distinctiveness of the earlier mark, the higher the threshold that a competing sign must cross before being considered dissimilar. Greater distinctiveness can therefore – at least in principle – support a finding of marks-similarity. 

However, the step-by-step approach imposes limits on the extent to which distinctiveness is relevant to the marks-similarity assessment, because it must be remembered that no extraneous matter is to be considered at this stage of the inquiry. Accordingly, the factual, or acquired, distinctiveness of an earlier mark is irrelevant because this is necessarily established through “extraneous” evidence such as marketplace reputation, consumer recognition, and the nature and extent of the mark’s use and promotion. 

It follows that under the step-by-step approach, the well-known status of an earlier mark also has no place in the marks-similarity assessment because such considerations venture once again into the realm of extraneous matter.

Returning to the opponent’s Singapore proceedings, perhaps unsurprisingly, making his comparison “solely between the mark applied for and the earlier mark, without reference to any other matter”, the hearing officer found that “the applicant’s mark ‘QuadBeat’ and the opponent’s ‘Beats’ mark are dissimilar rather than similar”. 

Having determined the issue of marks-similarity in the negative, all of the opponent’s section 8(4) grounds were given short shrift since the first and essential element of marks-similarity was absent. The hearing officer stated (at [39]-[40]):

I am bound to transpose my finding under Section 8(2)(b) that the two marks are dissimilar to one that there is for the purpose of Section 8(4) not the requisite similarity between the Opponent’s BEATS Mark and “an essential part” of the Application Mark.

On the facts, as the Opponent has failed to establish the first and essential element, it is again unnecessary to proceed to consider the different heads of infringement under Section 8(4) that may apply if there is such marks-identicality/similarity. The absence of marks-similarity means that, first, there cannot logically be a connection likely to damage the interests of the proprietor of the earlier mark (contrary to Section 8(4)(b)(i)) and secondly, the Application Mark could not (contrary to Section 8(4)(b)(ii)(A)) cause dilution to the distinctive character of, or (contrary to Section 8(4)(b)(ii)(B)) take unfair advantage of, the earlier trade mark (even were I to have found that it was well known to the public at large in Singapore at the relevant time).

 

AUSTRALIA DECISION

The opponent’s failure in its Singapore proceedings stands in contrast to its success just two months later before the Australian Trade Marks Registry in Re: Opposition by Beats Electronics, LLC to registration of trademark application nos. 1504324 - QuadBeat - and 1662449 – QuadBeat3 - in the name of LG Electronics Inc. 2016 ATMO 104. The opponent relied on, inter alia, section 60 of the Australian Trade Marks Act 1995.

The statutory language of the Singapore and Australian provisions differ. In particular, the latter imposes no marks-similarity requirement. This is seen from the Hearing Officer’s remarks (at [8]):

Unlike section 44 of the Act, section 60 does not require that the goods upon which the opponent has used its trade mark be “similar” to the goods of interest to the applicant, nor is there a requirement that the trade marks be substantially identical or deceptively similar. Therefore, it is for me to determine whether the opponent has established that … its trade mark(s) were recognised by the public generally, or at least by a significant number of persons in the speaker and headphone marketplace and whether because of that, the use by the applicant of its trade marks for the designated goods would be likely to deceive or cause confusion amongst relevant purchasers.

That said, it is possible to draw some parallels between section 60 of the Australian Act, and section 8(4) – at least section 8(4)(b)(i) – of the Singapore Act. 

Notably, the Australian hearing officer considered the recognition of the opponent’s mark “by the public generally” as well as “by a significant number of persons in the speaker and headphone marketplace”. This parallels the notion of “well known to the public at large” and “well known to any relevant sector of the public” respectively in the Singapore context. The Australian hearing officer also considered whether, because of such fame, if any, “the use by the applicant of its trademarks for the designated goods would be likely to deceive or cause confusion amongst relevant purchasers”. Section 8(4)(b)(i) of the Singapore Trade Marks Act speaks of whether the use of the later trademark in relation to the goods or services for which the later mark is sought to be registered would “indicate a connection” between those goods or services and the proprietor of the earlier trademark. The Court of Appeal in Staywell confirmed the analysis in Novelty Pte Ltd v Amanresorts Ltd [2009] 3 SLR(R) 2016 that the “indicate a connection” requirement will be satisfied where there is a likelihood of confusion. 

Further, even though marks-similarity was not an express requirement under section 60, the hearing officer held that the competing marks indeed bore similarities. Having assessed the opponent’s evidence of fame in its “Beats” trademark, the hearing officer concluded (at [20]):

Given the significant reputation of the BEATS trade marks and the abovementioned degree of similarity between the respective trade marks I am satisfied use of the applicant’s QuadBeat trade mark would be likely to cause confusion. Consumers are likely, as the opponent submitted, to believe that this is a related product or new product line from the maker of the well known BEATS branded headphones, speakers and earphones.

 

SAME MARKS, DIFFERENT OUTCOMES

What can we make of the opponent’s failure under section 8(4) in the Singapore proceedings? It is interesting to note that the Hearing Officer acknowledged (at [10]) that “as at the date of application by the Applicant for the application mark, 26 July 2012, the opponent’s ‘Beats’ mark had already acquired a degree of notoriety in Singapore”. He even recognised that there was “little doubt that  ‘Beats’ headphones were popular and recognised in Singapore at the time the applicant applied for the application mark”. 

But there was no necessity in the assessment framework for this evidence to be fully considered; it was irrelevant at the marks-similarity stage under the step-by-step test; and once the marks were deemed dissimilar (having been deprived of that extra measure of distinctiveness which could have lent support to a finding of similarity), section 8(4) became a non-starter. Any evidence of fame would have proved futile anyway. 

The two different outcomes illustrate that assessing marks-similarity within the step-by-step framework and transposing that finding into the section 8(4) framework can potentially undermine the protection afforded to an opponent under section 8(4).

On the other hand one might say that the step-by-step approach to marks-similarity commends itself to conceptual clarity. As the hearing officer in Clarins Fragrance Group fka Thierry Mugler Parfums SAS v BenQ Materials Corp [2018] SGIPOS 2 (Clarins v BenQ) explained:

The advantage of such an approach is that it preserves the conceptual clarity of the step-by-step test. It allows the first stage to be focussed on the crucial question of whether the competing marks are similar, instead of being side tracked by the additional question of whether the earlier mark enjoys sufficient acquired distinctiveness so as to have an impact on the marks-similarity enquiry.

Section 8(4) should not be over-reaching in the protection it affords. Even if fame is established, protection is undeserved unless the threshold marks-similarity requirement is met. The step-by-step approach to marks-similarity prevents well-known mark owners from wielding section 8(4) as an instrument of oppression.

But it is artificial to circumscribe the marks-similarity assessment in this way. If we accept the principle that there is a link between distinctiveness and marks-similarity, we should allow the full measure of distinctiveness – which includes factual/acquired distinctiveness along with well-knownness – to be relevant towards the issue of marks-similarity. Fame and distinctiveness are, after all, entwined. Distinctiveness has to do with recognition of a mark as a source identifier; it harks back to the fundamental purpose of a trademark to enable a consumer to recognise goods as being from one trader rather than another. And recognition is also integral to fame. Section 2(7) of the Trade Marks Act expressly provides that it is relevant to take into account “the degree to which the trademark is known to or recognised by any relevant sector of the public in Singapore”. Simply put, a well-known mark is necessarily also highly distinctive. Therefore, disregarding evidence of fame in the step-by-step approach unduly suppresses distinctiveness when it could potentially lend some measure of support towards a finding of marks-similarity. 

The assurance offered to an opponent is that factual/acquired distinctiveness (and fame/reputation) are matters that can be considered at the likelihood of confusion stage. As expressed by the hearing officer in Clarins v BenQ (at [25]):

This is not to say that evidence of acquired distinctiveness through use is irrelevant. It is not. Rather, as with reputation, it can be considered at the likelihood of confusion stage. 

But lest we forget, the step-by-step test dictates that if the answer to the marks-similarity inquiry is in the negative, the inquiry ends and it is not necessary to proceed to the subsequent stages. It seems a cold comfort to an opponent to kick his ball just a little farther down the road, yet never permit him to venture on to retrieve it.

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