Singapore Maintains Hard-Line Take on Goodwill in Million-Dollar Wonton Noodle Feud

In Singapore, popular eatery “ENG’S Wonton Noodles” is known for its springy noodles, luscious wonton dumplings and fiery chilli sauce. Its popularity attracted more than S$1.6 million in revenue one year, but a fallout between the founder’s children and their business partners led to multiple disputes, including a dispute over trade mark rights to the “ENG’S” name in Pauline New Ping Ping v Eng’s Char Siew Wantan Mee Pte. Ltd. [2022] SGIPOS 10.

Ng Ba Eng (Eng) inherited the wonton noodle business from his father around 1962 and operated it with his son, Desmond Ng (Desmond) using the signboard “ENG’S CHAR SIEW WANTAN MEE”. The signboard also contained the Chinese phrase below which signified that the wonton noodle business was the pride and glory of the Ng family.

In 2012, a businessman and customer named Jason Sim (Jason) approached Eng and Desmond to propose a collaboration. The parties incorporated Eng’s Noodle House Pte Ltd (ENH) with Desmond and Jason’s wife (the Opponent in this case), as shareholders and directors.

The collaboration saw the wonton noodle business expand from a stall at a food centre to a shop at 287 Tanjong Katong Road in February 2012 and the business enjoyed immense success during its operation.

Eng passed away in 2013 and the relationship between Desmond and Jason deteriorated around 2017. ENH ceased operations in 2018 and became dormant. Following the breakdown in relationship, two main competing businesses bearing the ENG’S name were created in Singapore.

Jason and the Opponent incorporated Eng’s Wanton Noodle Pte Ltd (EWN) on 28 February 2018 and rented the shop at 287 Tanjong Katong Road for the operation of its wonton noodle business.

Desmond and his sisters, on the other hand, formed Eng’s Char Siew Wantan Mee Pte Ltd (ECSWM) on 5 March 2018 and operated its business along the same road at 248/250 Tanjong Katong Road.

ECSWM, the Applicant, filed applications to register three trade marks which were elements from the signboards used at Eng’s previous stall and the ENH business as follows:

(Trade Marks)

The applications were opposed by the Opponent on the grounds that: (i) there was passing off; and (ii) the applications were made in bad faith.

Passing off Claim
To succeed on this claim in Singapore, the Opponent must satisfy the three elements in the “classic trinity” test:
(i) goodwill;
(ii) misrepresentation; and
(iii) damage or the likelihood of damage.

The Opponent contended that the Singapore public recognised the Trade Marks as ENH’s business indicia because they were used continuously and exclusively in ENH’s business from 2012 to 2018, and the Opponent and EWN continued to perpetuate ENH’s goodwill in the Trade Marks after the company ceased operations.

IP Adjudicator Andy Leck disagreed and decided that there was no goodwill attached to ENH as at the filing dates of the Trade Marks because the business had ceased operations in 2018.

Mr Leck further noted that the Opponent did not establish that the Trade Marks were associated exclusively with ENH as they were used by ENH for only six years, a fraction of the length of Eng’s prior use of the marks. He also opined that the physical presence of Eng and Desmond previously at ENH and Desmond now at the Applicant would more likely result in the public associating the marks with the Ng Family, rather than ENH. As such, no misrepresentation was found in this case.

Since ENH was a dormant business, there was no real risk of damage.

Bad Faith Claim
The Opponent’s case based on bad faith also failed. Evidence was adduced by the Applicant to show that the Ng family had used the Trade Marks for a prolonged period of time. Mr Leck was satisfied that the Applicant truly believed it had the right to register the Trade Marks as a means to protect itself against third parties who sought to prevent it from operating the business and carry on the Ng family legacy.

The applications were allowed to proceed to registration. The decision is currently pending appeal by the Opponent to the High Court.

Key Takeaways
This decision reaffirms the traditional “hard-line” approach as the applicable test for the goodwill element under passing off in Singapore. The “hard-line” approach differentiates goodwill and reputation. It requires a plaintiff to show that it has goodwill in the form of a business in the jurisdiction. In other words, goodwill is inseparable from a business and once a business ceases to operate, goodwill is lost, even if reputation for the goods or services remains.

This approach has been criticised as being impractical and incompatible with today’s modern commercial landscape, with many common law countries such as Australia, New Zealand and Canada now favouring the “soft-line” perspective to goodwill.

The “soft-line” approach interprets goodwill as “an international commodity”1 and acknowledges that in this day and age, goodwill may “transcend territorial boundaries”.2 With “easy worldwide travel and global electronic communication” , it is not inconceivable that a trader’s reputation can spread to various parts of the world and serve as an “attractive force which brings in custom”3, even in places where it does not have business activity.

For the time being, however, it seems unlikely that Singapore will depart from the traditional approach any time soon, especially considering the availability of “well-known trade mark” provisions under the Trade Marks Act 1998 which protects a trader with an international reputation regardless of whether it carries on business or has any goodwill in Singapore.

By Chris Round and Jian Hui Gu


Footnotes

1 ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 23 IPR 193 at 223 to 234
2 Dominion Rent A Car Ltd v Budget Rent A Car Systems (1970) Ltd [1987] 2 NZLR 395 at 406; Caterham Car Sales and Coachworks Ltd v Birkin Cars Ltd [1998] SA 938 at 20
3 Starbucks (HK) Ltd v British Sky Broadcasting Group plc [2015] UKSC 31 at 63.
4 Commissioners of Inland Revenue v Muller & Co’s Margarine Ltd [1901] AC 217 at 223.

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