Rights Under A Licence Agreement Are Contractual And Not Proprietary In Nature

Guy Neale and others v Ku De Ta SG Pte Ltd [2015] SGCA 28

SUMMARY

A licence of a registered trade mark is a registrable transaction under the Trade Marks Act ("TMA") as "an interest in or under a registered trade mark" (ie ss39(1) and (2) of the TMA) and is capable of affecting third parties in certain situations. For example, a licence to use a trade mark is binding on every successor in title to the grantor's interest except a bona fide purchaser without any notice (actual or constructive) of the licence or unless the licence provides otherwise (ie s42(5) of the TMA).

Considering the "almost proprietary" effects of a trade mark licence, it is not surprising that it has been argued that a licence might be proprietary in nature. On the other hand, it is equally possible to say that a licence is simply a contractual bundle of rights that has been given some in rem effects by statute and this would not warrant the wholesale adoption of property doctrines from the common law or in equity.

In this case, the Singapore Court of Appeal adopted the position taken by the English courts in holding that a licence to exploit a registered trade mark is purely contractual in nature and does not confer any proprietary rights on the licensee.

BACKGROUND

The Appellants are members of a partnership ("Partnership") which owns and operates a restaurant, bar and club which bear the "Ku De Ta" name in Bali. The Partnership is also the beneficial owner of two registered trade marks in Singapore relating to the "Ku De Ta" name ("Singapore Marks"). Up till recently, the registrations for the Singapore Marks were held by Nine Squares Pty Ltd ("Nine Squares") on trust for the Partnership. The Respondent is a company that operates a restaurant, bar and club which bear the "Ku De Ta" name in Singapore ("Ku De Ta Singapore").

In June 2009, Nine Squares entered into a licence agreement ("Licence Agreement") with a Hong Kong businessman named Chris Au ("Au"), purporting to give Au an exclusive licence for the use for one of the two Singapore Marks ("1st Singapore Mark"). In November 2009, Au assigned his rights under the Licence Agreement to the Respondent.

In September 2010, the Respondent opened Ku De Ta Singapore. In December 2010, the Appellants commenced proceedings against the Respondent seeking, among other things, to restrain the Respondent from continuing to use the "Ku De Ta" name in Singapore ("Suit 955"). The Appellants also commenced proceedings against Nine...