Challenger narrowly loses its application for interim injunction: Lessons for brand owners
The Singapore High Court has dismissed Challenger Technologies Limited’s (“CTL”) application for interim injunction restraining Courts (Singapore) Pte Ltd (“CSP”) from running an advertising campaign which allegedly infringed CTL’s registrations.
The decision is significant as interim injunctions are one of the most important brand protection tools. They allow the brand owner to put as quick a stop as possible to the infringing conduct thereby minimizing the damage to its brand. However, interim injunctions are not readily granted by courts and this decision provides some insight regarding the kind of evidence brand owners should lead to persuade the courts. Furthermore, and importantly, the decision raises the issue of what should be taken as the status quo if it is to be preserved in a case (such as this one) where all other factors appear to be evenly balanced.
Background to the case between the Singapore based IT companies
CTL is a well-known Singapore-based IT retailer and the registered owner of the mark CHALLENGER in respect of a variety of electronic products, retail store services and online web store services. It sued CSP, which operates an electrical, IT and furniture retailing business, for engaging in an advertising campaign promoting its new mobile accessories brand 3SIXT containing the words:
Guaranteed At least 10% Cheaper Than Any CHALLENGER
– and –
Guaranteed 10% cheaper than any CHALLENGER
CTL claims CSP’s advertising constitutes trade mark infringement
The first advertisement was published on 2 May 2015 and CTL commenced proceedings on 8 May 2015. CTL alleged, inter alia, that use of the mark CHALLENGER constituted trade mark infringement and that CSP could not rely on the exception for comparative advertising because its use was misleading and dishonest. CTL accordingly sought an interim injunction to restrain CSP from running the campaign.
Relying on the principles set out in American Cyanamid Co v Ethicon Ltd  AC 396 and adopted by the Singapore courts, the Singapore High Court refused CTL’s application on the grounds that:
- Although there was a serious question to be tried in the present matter;
- Damages would be an adequate remedy even if it were subsequently found that an interim injunction should have been granted to CTL; and
- On the balance of convenience, granting an injunction would cause more injustice to CSP.
Serious question to be tried
CSP argued that there was no serious question to be tried as its use of the word CHALLENGER was honest descriptive use to refer to all its competitors as evidenced by the use of the word “any” in the allegedly infringing phrases. Furthermore, it argued that the advertisements did not contain false claims and that its use constituted fair comparative advertising.
However, the Court was not satisfied that these defences rendered CTL’s claims clearly unsustainable. The Court held that there was still a serious question to be tried as there was a prima facie case for infringement notwithstanding that such a claim faced several potential defences.
Damages would be adequate
CTL argued that damages would not be an adequate remedy because it was a publicly listed company with significant goodwill and the infringing conduct would irreparably impair its goodwill and undermine investor confidence.
The Court acknowledged that CTL’s marks enjoyed a substantial reputation and that loss of goodwill may be hard to compensate and difficult to quantify. However, as CTL had failed to lead any evidence of actual or potential damage to its goodwill and its statements about investor confidence were bare assertions unsupported by evidence, the Court was not persuaded that an injunction was necessary.
Balance of convenience
Finally, the Court concluded that the balance of convenience also favoured not granting the interim injunction because:
- CTL’s case was not disproportionately stronger than CSP’s;
- An interim injunction (if granted) would have the effect of a permanent injunction as the advertising campaign was only intended to run for a limited period between 2 May 2015 and 31 July 2015;
- Even assuming other factors were evenly balanced, it would be prudent to maintain the status quo which consists of the state of affairs existing during the period immediately preceding the issuance of the writ. In this case, there was a short 6-day delay between the alleged infringing conduct starting and the writ application being filed. The Court took the view that the state of affairs existing during this period constituted the status quo that ought to be preserved, i.e. CSP should be allowed to continue to engage in its advertising campaign.
Based on the above reasoning, the court found that an interim injunction was not appropriate in the circumstances and awarded costs against CTL.
Take-home lessons for brand owners and those wanting to obtain an interim injunction
The decision highlights the difficulties brand owners face in obtaining an interim injunction even where a prima facie case for infringement has been established. Brand owners seeking immediate injunctive relief should bear the following points in mind:
- Whilst the Court’s assessment of the status quo is debatable, brand owners should act promptly in instituting proceedings against the alleged infringing conduct. In this case, a mere delay of 6 days resulted in a new status quo developing which was then preserved. As such, and unless this decision is overturned on appeal, brand owners should be looking to commence proceedings within a still shorter time frame;
- In order to be able to act promptly, brand owners need to be vigilant about the use of their marks by third parties. There are various online tools, including free tools such as RSS feeds, search alerts and social network alerts, that can be utilized to monitor market activity. We strongly recommend utilizing these tools to monitor the use of brands by third parties; and
- To demonstrate that damages would not be an adequate remedy, it is not sufficient for brand owners to merely establish goodwill or reputation in the mark alleged to be infringed. They must also provide evidence that there has been actual or potential damage to such goodwill and that the damage would be irreparable. Factors which point to more than just financial loss will assist, such as evidence that that brand equity would be tarnished or that investor confidence would be damaged.