In the first judicial decision to be examined under Singapore’s Trade Mark Act (Chapter 332, Revised Edition 2005) (the TMA) the interplay between the rights of registered trademark proprietors to pursue infringement proceedings under section 27 and the recently enhanced border enforcement provisions of Part X of the statute regarding the interdiction of infringing goods that flow through Singapore in the course of international trade, the High Court of the Republic of Singapore addressed the trademark infringement claims of five famed international brand owners in consolidated lawsuits against a Singaporean freight forwarder.
In Louis Vuitton Malletier v Megastar Shipping Pte Ltd (PT Alvenindo Sukses Ekspress, third party) and other suits  SGHC 305, Louis Vuitton Malletier, Guccio Gucci SPA, Burberry Limited, Hermès International and Sanrio Company Ltd (proprietor of the ‘Hello, Kitty’ menagerie of marks) (together, the plaintiffs), sued freight forwarder Megastar Shipping Pte Ltd (the defendant), which in turn made third-party claims against PT Alvenindo Sukses Ekspress (the third party), an Indonesian firm, ostensibly a freight forwarder, which did not enter an appearance in the lawsuits.
The claims arose out of shipments from two seaports in China to Singapore of two containers destined, had the China shipper had its way, for transshipment to the Indonesian island of Batam, a free trade zone and tourism venue with multiple busy seaports, located some 60 nautical miles (110 kilometres) from Singapore across the Singapore Strait.
Both containers were intercepted, detained, inspected and seized by Singapore Customs under the provisions for assistance by border authorities set out in Part X of the TMA. The containers held counterfeit goods bearing various trademarks of Louis Vuitton and the other plaintiffs registered in Singapore. Singapore Customs’ inspection of each container was conducted in response to a request by Louis Vuitton. Following inspection, the counterfeit Louis Vuitton goods were seized by Customs under section 82 of the TMA, since Louis Vuitton gave notice that it objected to the importation of infringing goods that it expected to be imported in the two containers, whereas the counterfeit Burberry, Gucci, Hermès and Hello, Kitty goods were detained ex officio under section 93A(1)(a) of the TMA.
The plaintiffs commenced proceedings for trademark infringement against the defendant, alleging that it had imported the counterfeit goods into Singapore. The defendant denied importing the goods, and asserted that even if the counterfeits had been imported into Singapore, the defendant in any case was not the importer.
Section 27 of the TMA provides that trademark infringement arises if a person without consent of the proprietor uses in the course of trade a sign identical or similar to the registered trademark in relation to identical or similar goods for which the trademark is registered. Section 27(4)(c) of the TMA provides that a person uses a sign if, in particular, he or she ‘imports or exports goods under the sign’.
Thus, the prime question at stake in Louis Vuitton et al. v Megastar Shipping was whether the defendant was liable for importing or exporting the counterfeit goods within the meaning of section 27(4)(c). The answer to this turned principally on three legal questions:
- had the counterfeit goods been imported into Singapore within the meaning of section 27?;
- was the defendant the importer and therefore liable for infringement under section 27?; and
- was the defendant liable for exporting the counterfeit goods under the sign?
Crucially, the court observed that terms such as ‘import’ and ‘export’ can mean different things in different pieces of legislation. In particular, the court asked, do these words have the same meaning when used in respect of customs measures concerned with control of goods brought into and out of Singapore as they have when used in legislation setting out the exclusive rights of intellectual property right owners in Singapore?
The plaintiffs argued that transshipment of counterfeit goods through Singapore constituted importation into Singapore. On this point, the court agreed that the term ‘import’ in section 27(4)(c) of the TMA does not require, as the defendant had contended, that the goods be intended for free circulation in the Singapore market.
Although section 27(4)(c) provides that a person uses a sign if he or she ‘imports or exports goods under the sign’, the TMA does not set out a general definition of ‘import’ or ‘export’. That being so, section 2(1) of the Interpretation Act comes into play, because the Interpretation Act supplies definitions of various terms that control all Singaporean legislation, unless something in the subject matter or context of a given legislative act is inconsistent with the definition set out in the Interpretation Act. Section 2(1) of the Interpretation Act states that the term ‘import’, with its grammatical variations and cognate expressions, means ‘to bring or cause to be brought into Singapore by land, sea or air’. Applying this definition, a transshipment of counterfeit goods could be an ‘import’ for trademark infringement purposes under section 27.
Thus, the court found that the containers and the counterfeit goods within were imported into Singapore in the sense that they were brought into Singapore by sea, and that the bringing of the goods in transit through Singapore was clearly done in the course of trade.
The court said, however, that this does not mean that the defendant is liable for infringement, because the second question was whether the defendant was the importer of the goods and therefore liable for infringement under section 27.
The plaintiffs contended that the defendant was the importer, arguing that section 93A of the TMA (enacted to address the requirements for ex officio procedures contained in the United States-Singapore Free Trade Agreement, which entered into force in 2004) is concerned with detention and examination by customs authorities, and extends to goods that are imported into or that are to be exported from Singapore, including goods in transit, provided that these are consigned to a local consignee. Section 93A(5)(b)(v) of the TMA provides that, in the case of goods in transit consigned to a local consignee, references to import or importation are to be read as a reference to the import, importation or export of the goods by the consignee for the purposes of the border enforcement provisions of the TMA. The plaintiffs argued that this supports the case that the defendant was the importer, and that it would have been the exporter had the goods not been seized and detained by Singapore Customs.
The court disagreed. The effect of section 93A(5)(b)(v) of the TMA is that the local consignee of goods in transit is to be regarded for the purposes of applying those provisions as the importer. However, this does not mean that the local consignee must be regarded as the importer for all purposes, such as for deciding whether it is the importer in an infringement action under section 27. After all, under section 93A(2) of the TMA, notice must be given to the ‘importer, exporter or consignee, as the case may be, of the detained goods’, phrasing which suggests that a consignee is not necessarily the importer or exporter.
The court said that the fact that the defendant would have been named as the importer in the relevant permits and declarations required by Customs or port authorities says nothing about whether the defendant is liable for trademark infringement under section 27 of the TMA.
The court put this issue in context of the actual normal role of a freight forwarder. Operations at the port of Singapore, the world’s largest transshipment hub, are highly computerised through the Portnet system (see www.portnet.com) operated by the Port of Singapore Authority (PSA). Users of the Portnet system include various participants involved in the movement of containers in and out of Singapore. Users are each assigned a unique operator code and have the right to access Portnet for the purpose of synchronising operational processes between the various players in the maritime service community, including carriers, the port authorities and freight forwarders. Under the Portnet system, it ordinarily would not be necessary for the freight forwarder in a transhipment transaction to take physical possession of the containers or even to have sight of the containers. Once the relevant instructions are entered into the system, the PSA essentially undertakes the necessary operations, such as unloading of the containers, placement into transhipment stacks and loading of the containers on board the outward-bound vessel.
The containers in this case would have been under the control of the carrier as the vessel approached Singapore. Once the defendant accepted appointment by the third party to arrange for transshipment to Batam, the defendant notified the carrier to declare ‘transhipment status’ for each container, and to transfer the operator code for each container from the carrier to the defendant. Once this was done, the defendant would then use Portnet to provide instructions as per the information it had been provided by the third party. The letter of instructions from the third party provided details, including the identity of the carrier to be used to transport the containers to Batam, the name of the vessel and the port code. Using Portnet, the defendant would be able to input such information so that the PSA could take the necessary operational steps.
Hence, the defendant’s role was simply to follow the instructions of the third party. The reason the goods were not shipped directly from China to Batam was that larger container vessels are unable to enter the relatively shallow Batam ports. This made it necessary to ship the goods to Singapore and arrange for onward carriage of the sealed containers to Batam on smaller ‘feeder’ vessels or barges. Once the containers reached Batam, they were to be received and unpacked by the third party.
The goods were inside sealed containers. There was no evidence at all that the defendant had a common design with the importer to infringe. The steps required of the defendant were largely concerned with documentation and entry of the necessary details into the Portnet system. The transshipment process did not entail the defendant taking physical possession or control of the containers or their contents.
The defendant had no part in making the shipping arrangements, packing or loading the containers on board the inbound vessels. These arrangements and acts were done by the shippers in China or by the third party. The instructions to the defendant to declare transshipment status also came from the third party.
Therefore, the court agreed with the defendant that in these circumstances it could not be said that the defendant was the importer. It certainly had not brought or caused to be brought the counterfeit goods into Singapore.
If anyone was the importer, it was either the China shippers or the third party.
This brought the court to deal with the third key question: whether or not the defendant was the exporter of the counterfeit goods for purposes of trademark infringement liability.
Assessing the detention, inspection and forfeiture provisions for counterfeit trademarks now found in the TMA, the court focused on the fact that the Customs Act is essentially concerned with controlling goods entering or passing through Singapore for the purposes of revenue matters (import and export duties) and detection or interdiction of ‘prohibited items’, including but by no means limited to counterfeits.
There are many different procedures, forms and permit applications involved when goods are sought to be brought into or out of Singapore. Someone obviously must apply for the necessary permits, make the requisite declarations, pay the required fees or charges and provide information which may be required by the authorities. That person need not necessarily be the shipper, consignor, consignee or the master of the vessel. The person may be an agent of the shipper, consignor or consignee, often taking the form of a freight forwarder. In some cases, perhaps many, forms or permit applications issued by the relevant authorities will include a box or heading describing the person submitting that form or application as an importer or exporter.
Against this backdrop, one of the questions arising was whether and how the court should take account of the terminology used in such forms, declarations and applications in deciding who is an importer or exporter within the context of an alleged trademark infringement.
In this instance, the court noted, the defendant received letters from the third party, the letters requested the defendant to arrange transhipment of the two containers to Batam, setting out brief details of the incoming shipments and identifying the name of the carrier and the vessel to be used for carriage to Batam. The letters also contained undertakings to indemnify the defendant against all consequences and liabilities. The defendant also received from the third party the sea waybills, commercial invoices, packing lists and arrival notices in respect of both containers. The defendant was neither involved in the packing of the containers nor the arrangements to ship the containers from China to Singapore, simply acting as the freight forwarder on the instructions of the third party.
As with the term ‘import’, the court noted, there is no definition of ‘export’ under the TMA. Instead, ‘export’ must be understood in accordance with section 2(1) of the Interpretation Act. The question, therefore, was whether the defendant was the party who would have ‘take[n] or caused to be taken out of Singapore by land, sea or air’ the counterfeit goods.
The defendant’s engagement by the third party was for the limited purpose of arranging for transshipment of the inbound containers. The defendant acted as agent for the third party in taking the action and steps that it took. It was the third party who engaged the defendant to declare the goods for transshipment. It was the third party who instructed the defendant on which vessels were engaged to perform the transshipment to Batam. The commercial invoices supplied by the third party made clear that the containers’ final destination was Batam and that the third party was the ultimate consignee. All the preparations were made by the third party and carried out by the defendant as the Singapore freight forwarder by virtue of its ability to access PSA’s Portnet system. On that basis, the court concluded that if any party was the exporter of the counterfeit goods, it was the third party, and not the defendant, and thus the defendant could not be held liable for trademark infringement as the exporter of the counterfeits.
In conclusion, since the counterfeit goods being transshipped were imported into Singapore for purposes of Trademark Act section 27’s infringement provisions, but the defendant in its role as a conventional freight forward was neither an importer nor exporter for the purposes of those provisions, the claims against the freight forwarder were dismissed and the freight forwarder was awarded costs.
The counterfeit goods were seized and destroyed. Yet if the brand owners wanted satisfaction in terms of damages, fees and costs, they needed to bring to court the shipper based out of China or the exporter of the counterfeit goods or its agent based in Indonesia - easier said than done.
In its extensively reasoned and informed opinion, very much in touch with the transnational shipment of branded goods globally, the court recognised that international brand owners are in a sense on the horns of a dilemma. Litigation against the manufacturers of counterfeits in the country of manufacture can be problematic to say the least, yet on the other hand, commencing litigation against importers in the country of importation presents difficulties. Desirable as interdiction at an intermediate port through which a consignment of counterfeits passes in the course of carriage may be, a conventional freight forwarder handling a transshipment in good faith in the Port of Singapore in the ordinary course of trade will be neither the trademark infringement culprit nor an effective pressure point for anticounterfeiting enforcement.
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