Singapore: Update On Kickapoo Dispute

Monarch Company Inc ("Monarch") owns the registered trademarks "KICKAPOO" and "KICKAPOO JOY JUICE" in Singapore for "non-alcoholic beverages". Monarch’s predecessors had licenced National Aerated Water Co Pte Ltd ("NAW") to manufacture and sell carbonated bottled drinks under the trademark "KICKAPOO JOY JUICE" in Singapore and Malaysia. The licence was immediately terminable by Monarch should NAW use any syllable or part of the term "KICKAPOO JOY JUICE" on any goods other than those belonging to Monarch. Subsequently, NAW started bottling and selling another soft drink called "KICK" for a third party, RCC. Upon discovering this, Monarch terminated the licence. NAW nevertheless continued to bottle and sell "KICK" and "KICKAPOO JOY JUICE" soft drinks.

Pursuant to the High Court trial on the above, NAW filed an appeal against the decision of the learned Judicial Commissioner Amarjeet Singh. The issues raised at trial were once again canvassed in the Court of Appeal on 9th November 1999.

The Court of Appeal’s Grounds of Decision dated 12 January 2000 was largely focused on the issue of restraint of trade. NAW had contended that the prohibition on NAW against using any syllable of "KICKAPOO JOY JUICE" was an illegal restraint of trade. In arriving at its decision, the Court of Appeal considered the following questions :-

a. Whether the clause is a restraint of trade;

b. Whether the restraint is reasonable; and

c. Whether the doctrine of severance applies to save the unreasonable restraint.

At this juncture, it may be pertinent to set out the offending clause :

The Court of Appeal opined that the clause sought to restrict NAW from selling any other product apart from "KICKAPOO" which name contains the term "Kickapoo Joy Juice" or any syllable or part of the term "Kickapoo Joy Juice". While recognising that the restriction was part of the consideration for using the "KICKAPOO JOY JUICE" trade mark, the Court was of the view that NAW did give up some freedom of trade. Accordingly, there was a restraint of trade.

Case law has established that the court will not enforce a restraint which goes further than affording adequate protection to the legitimate interests of the party in whose favour it is granted. This is because too wide a restraint is against public interest. On the facts of the present case, the Court felt that the fact that parties freely entered into the restraint did not matter as the rule against unreasonable restraint is based on public policy and may not be excluded by mutual consent.

Upon a literal reading of the clause, it would mean that NAW could not sell any drink which has any of the syllables of "KICKAPOO JOY JUICE". The Court was troubled that the restriction extended to the words "JOY" and "JUICE", two common English words that were also required to be disclaimed when Monarch sought to register their trade mark. As such, the restraint was held to be ex facie unreasonable.

Finally, the Court invoked the doctrine of severance of its own accord to "cut out the objectionable promise from the contract thus leaving the rest valid and enforceable". An additional purpose was to cut down the objectionable promise as to its scope but not to cut it out of the contract altogether. The clause was therefore saved by the doctrine of severance by the deletion of the words "JOY JUICE".

Aside from the above, the Court of Appeal upheld the trial judge’s ruling and dismissed the appeal accordingly.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.