A multinational company with a global reach challenged a small Sri Lankan entrepreneur making and selling bakery items, on the basis that one of the multinational company's trademarks was being used. The action of the multinational company under the Intellectual Property Act (Colombo HC /Civil/26/2014/IP) was unsuccessful and was dismissed with cost by the Provincial High Court of the Western Province in the exercise of its commercial jurisdiction ("Commercial High Court").

The decision of the Commercial High Court in the said case is of interest, particularly in relation to the factors to be considered when establishing a well-known mark.

Facts of the case

In summary, the facts were as follows - The Defendant, a young Sri Lankan businesswoman, was carrying on a small business producing high quality bakery items like cakes, desserts, and pastries under the name and style of "Munchkin" from on or around the year 2010.

She had made an application to register her mark in August 2011 under "class 30" at the National Intellectual Property Office. This was accepted by the Director General of Intellectual Property and subsequently published in the Government Gazette in December 2016.

The Plaintiff, DD IP holder LLC, owning the trademark "Dunkin Donuts" and the trademark "MUNCHKINS" which is registered in 62 countries, made application in March 2013 to register the mark "MUNCHKINS" under "class 30". This application was rejected by the National Intellectual Property Office.

The Plaintiff also filed notice of opposition at the National Intellectual Property Office in February 2017 in respect of the application made by our client, and the matter was fixed for inquiry. The parties filed their observations and affidavits and the matter proceeded for inquiry. However, after several hearings which extended over a considerable period of time, on 6th of June 2019, the opponent DD IP holder LLC withdrew their opposition and the matter was concluded.

Parallelly to the above mentioned proceeding at the National Intellectual Property Office, in August of 2014, the Plaintiff obtained an injunction and an enjoining order from the Commercial High Court restraining the Defendant from using the said "Munchkin" mark or any other similar mark. However, following the subsequent "inter partes" inquiry, the Commercial High Court by order dated 18 December 2014, dismissed the Plaintiff"s application for the interim injunction with costs.

The Plaintiff filed a leave to appeal against the said order in the Supreme Court of Sri Lanka. This application was eventually dismissed by the Supreme Court in February 2016 for failure to exercise due diligence in prosecuting the application for leave.

In the primary case initiated by plaint dated 05 August 2014 in the Commercial High Court, the Plaintiff had prayed for a declaration that the use by the Defendant of the "Munchkin" mark constitutes an act of unfair competition in terms of the Intellectual Property Act No. 36 of 2003, and a declaration that the Defendant is not entitled to use the said mark.

The Defendant in her answer prayed for dismissal of the Plaintiff"s action for the reasons, among others, that the Plaintiff is not the registered owner of the trademark "Munchkin" in Sri Lanka and the Plaintiff"s mark is not known in Sri Lanka. The Defendants also averred that its mark was well known in the country and was associated with her products.

After trial the learned Judge of the Commercial High Court dismissed Plaintiff"s action with costs. Attorneys-at-Law Trehani Wickramaratne, Thevuni Amaradasa, and Sahan Perera from Varners appeared for client and represented her interests.

Decision

In a lengthy judgment, the learned Judge of the Commercial High Court considered the applicable law pertaining to trademarks, including several foreign judgments and concluded inter alia that:

"The purpose of a trademark is to designate the source of a good or service, providing information to consumers regarding the particular good that helps to distinguish the goods from others..."

'The Plaintiff has shown that the two marks resemble with each other, but totally failed to establish that the Plaintiff's "MUNCHKINS" mark is well known in Sri Lanka at the time when the Defendant entered the market, and also failed to adduce positive evidence of spill over of actual or likelihood of consumer confusion between the two marks..."

"The mere fact that the Plaintiff's mark had acquired reputation in a foreign jurisdiction by itself is not sufficient to prove that the Plaintiff's mark acquired reputation in Sri Lanka unless it can be shown that the Plaintiff's mark acquired a reputation amongst a substantial section of the relevant purchasing public in Sri Lanka at the time when the Defendant entered the market..."

In this case the Plaintiff's trademark was not registered in Sri Lanka nor had the Plaintiff sold or marketed goods in Sri Lanka. In such a situation, the Commercial High Court held that the owner of the mark must prove that the mark is well known to a substantial sector of the purchasing public within the jurisdiction.

Related proceedings

While these matters were ongoing, DD IP holder LLC (Dunkin Donuts) attempted to introduce itself into the Sri Lanka market through an Instagram page.

Varners was instructed by our Client to institute proceedings in the Commercial High Court (Colombo HC /Civil/09/2018/IP) praying for a declaration that she is entitled to use the mark "Munchkin", and for a further declaration that the use of such a mark by the Defendant (Dunkin Donuts), either identical or similar, is unlawful. She further prayed for an enjoining order and an injunction preventing the Defendant from using the same.

The second proceeding arose while the aforementioned Colombo HC /Civil/26/2014/IP) matter was yet proceeding.

After inquiry, the Commercial High Court granted an interim injunction in favour of our client. Meanwhile, the lawyers for Dunkin Donuts informed the Commercial High Court that they have no further instructions from their client and duly withdrew from the proceedings. Subsequently, the Commercial High Court proceeded to give judgment in favour of our client confirming her exclusive right to the mark.

This publication is solely for the purposes of general information of our clients and other interested persons. The aim is to provide a general overview of the topic and this should not be construed as legal advice.

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