Craftop Canada Limited v Grace Capital International Limited (Miscellaneous Cause 10 of 2024) [2024] UGCommC 312 (27 September 2024)

### THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION)

## **MISCELLANEOUS CAUSE NO. 0010 of 2024**

CRAFTOP CANADA LIMITED ::::::::::::::::::::::::::::::::::::

#### **VERSUS**

GRACE CAPITAL INTERNATIONAL LIMITED ::::::::::::::::::::::::::::::::::::

#### (Before: Hon. Justice Patricia Mutesi)

### **RULING**

### **Background**

The Applicant brought this application by notice of motion under Section 45 of the Trademarks Act and Order 52 Rules 1 & 3 of the Civil Procedure Rules seeking orders that:

- 1. The trademark "CRAFTOP" registered by the Respondent under TM No. 72768 in Class 7, Part A be removed from the Register of Trademarks. - 2. Costs of this application be provided for.

Briefly, the grounds of this application are that:

- 1. The Applicant and its affiliates have been in the business of designing, manufacturing and distribution of tools for agriculture and gardening for over 20 years using the "CRAFTOP" trademark internationally. - 2. The Applicant is the bonafide owner of the distinctive mark "CRAFTOP" which consists of the word "CRAFTOP" in a stylized font and is derived from the Applicant's corporate name "Craftop Canada Ltd". - 3. The Applicant's "CRAFTOP" trademark is registered and is still protected in several countries around the world where it and its affiliates operate. - 4. The Applicant through its affiliates also owns the registered domain name and an active website that features the trademark "CRAFTOP". - 5. The Applicant uses its trademark "**CRAFTOP**" in distinguishing its goods and products through its online shopping portals. - 6. The Applicant's trademark "**CRAFTOP**" is present on various social media networks with several followers, subscribers and viewers.

- 7. Following the growing demand for the Applicant's products in Uganda, the Applicant commenced the process of identifying potential distributors in Uganda. It engaged the Respondent for that purpose sometime in 2020. - 8. Unfortunately, the parties' discussions were not fruitful and, in 2022, the Applicant engaged lawyers to register its said trademark in Uganda. - 9. The Applicant did not know, at the time, that the Respondent had already registered an identical trademark in Uganda under Class 7. - 10. The Applicant has never consented to the registration of its "CRAFTOP" trademark in Uganda by the Respondent. - 11. There has been bonafide use of the Applicant's "CRAFTOP" trademark in connection with the Applicant's products in Uganda. - 12. The Respondent acted in bad faith when it registered a mark identical to the Applicant's "CRAFTOP" in Uganda. - 13. The Applicant conducted investigations in Uganda and discovered that the Respondent is not using the said trademark. - 14. It is just and equitable that this application is allowed.

The application is supported by an affidavit sworn by Ms. Ling Ou, a director in the Applicant. She told the Court that the Applicant and its affiliates have been engaged in the business of designing, manufacturing and distribution of tools for agriculture and gardening for over 20 years using the "CRAFTOP" trademark internationally. The Applicant is the bonafide owner of that mark which consists of the word "Craftop" written in a stylized font. The word "Craftop" is derived from Applicant's corporate name. The trademark is registered to the Applicant in the several countries around the world where it operates, including China, Canada, Nigeria, Chile, Peru, Lao People's Democratic Republic, Kenya, Algeria, Philippines, Malaysia, United States of America, among others.

She stated that the Applicant, through its affiliates, also owns the domain name www.craftop.com and has an active website https://craftop.com which features the captioned trademark "CRAFTOP" and this is accessible to anyone around the world, including in Uganda. That the Applicant has used its trademark "CRAFTOP" in distinguishing itself and in connection with its goods through its online shopping portals like Alibaba.com and Amazon.com which are accessible in Uganda and around the world. Additionally, the Applicant's trademark "CRAFTOP" is present on various social media networks such a Facebook,

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Instagram and LinkedIn with several followers, subscribers and viewers around the world.

Ms. Ling Ou revealed that following the growing demand for the Applicant's products in Uganda, the Applicant started the process of identifying potential partners in Uganda for a distributorship arrangement. Sometime in 2020, the Applicant engaged the Respondent for that purpose but, unfortunately, their negotiations later failed. In 2022, the Applicant engaged lawyers to register its trademark in Uganda so as to protect its interests. Unknown to the Applicant, the Respondent had already registered an identical trademark in Uganda under Class 7. The Applicant attempted to obtain registration of its trademark under Class 8 but that attempt was rejected due to the similarity of its mark with the Respondent's trademark under TM No. 072768.

Finally, Ms. Ling Ou stated that, owing to the Respondent's registration of its mark in 2021 vide Trademark No. UG/T/2021/072768, the Applicant has been unable to process the registration of its trademark in Uganda despite being the rightful and bonafide owner thereof. She confirmed that the Applicant has never consented to the registration of the impugned trademark "CRAFTOP" in Uganda yet the one registered by the Respondent is identical in terms of look, colour, design, stylisation and font to the Applicant's trademark. She averred that the registration of the "CRAFTOP" trademark by the Respondent was in bad faith since the negotiations between the parties over a distributorship arrangement had fallen through. She maintained that the Applicant is interested in registering its trademark "CRAFTOP" in Uganda to enhance its protection and consolidate its market presence.

The application is also supported by the affidavit of Mr. Martin Mugisha who told Court that he is an investigator in Black Rock Security Solutions. He stated that he was instructed by M/S Ivory Advocates who represent the Applicant to investigate the Respondent's operations and the use of the mark "**CRAFTOP**" in Uganda. He and his team found out that the Respondent is a company registered in Uganda with 2 directors (Jerome Chigozie Aliba and Chisom Lynda lkejiofor). The Respondent's contact person for tax purposes is Jerome Chigozie Aliba and that the Respondent's place of business is Shop G10, Ground Floor, Nabugabo Plaza, Kampala. The Respondent is the registered owner of the trademark/logo "CRAFTOP" which is very similar to the logo of the Applicant.

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Mr. Mugisha further revealed that, on conducting a physical search of the shop said to belong to the Respondent, he noticed that the shop is actually called "Grace Capital Auto Spare Parts" and not "Grace Capital International Limited". The shop deals in motor spare parts and engine parts which are imported from China. There were no physical goods with the trademark or logo "CRAFTOP". On cross-checking with Uganda Revenue Authority ("URA"), there was no record of "Grace Capital Auto Spares". One of the phone numbers on the business card obtained from the shop is registered in the names of Jerome Chigozie Aliba.

Mr. Mugisha concluded that, according to his findings, the Respondent exists as a company on paper but not physically. The Respondent has no physical location though the records from Uganda Registration Services Bureau ("URSB") and URA indicate that it does. The owners of the Respondent are the owners of "Grace Capital Auto Spare Parts". Although the shop claims to sell chain saws, there did not seem to be any sale of the same at the shop as the shop majors in motor auto spare parts. Specifically, no chain saws were found in the shop and there was no sale of any products with the name "CRAFTOP" by the Respondent or at "Grace Capital Auto Spare Parts".

The Respondent opposed the application through an affidavit in reply sworn by its director, Aliba Chigozie Jerome. Mr. Aliba stated that the Respondent is the registered owner of the impugned trademark and that this application does not meet the statutory criteria for removal of trademarks from the Register of Trademarks. He averred that the Applicant's said trademark registered in China has not had bonafide use in Uganda in connection to the Applicant's products as required by law since his first and only time of importing spare parts for chainsaws from the Applicant into Uganda was sometime in 2020. Further that at the time when the Respondent registered the mark in Uganda in 2021, the Applicant had no valid trademark in China as it expired in 2017 and was purportedly re-issued in 2023.

Mr. Aliba stated that the Respondent is actively using the trademark in connection with spare parts for chain saws in Uganda. That the Applicant has been engaging the Respondent's director to buy off the trademark and brought this application in bad faith after the Respondent's director objected to the Applicant's offer.

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Mr. Aliba clarified that the Respondent operates stores for its goods and only displays few goods on shelves due to limited space in the shop, and that Martin Mugisha could have visited the shop before the Respondent replenished had the shelves. The Respondent remains a tax compliant going concern and it has never changed its registered address. On the other hand, the Applicant is a foreign company with no physical address/presence, properties, distributor, franchise and, or, agent in Uganda.

The Applicant filed an affidavit in rejoinder to the affidavit in reply that was also sworn by Ms. Ling Ou. She reiterated that the Applicant is the bonafide owner of the impugned trademark. She averred that the Respondent, having engaged with the Applicant since 2020, obtained confidential information relating to the Applicant's products that were being distributed in Uganda. The Respondent then used that information to unlawfully register the Applicant's trademark as its own to mislead the public into believing that its products were those of the Applicant. Ms. Ling Ou reiterated the other contents of her earlier affidavit.

## Issues arising

Whether the "CRAFTOP" trademark registered by the Respondent in Class 7, Part A of the Register of Trademarks vide TM No. 72768 should be removed from the Register of Trademarks.

# **Representation and hearing**

At the hearing of the application, the Applicant was represented by Mr. Daniel Bagonza of M/s Ivory Advocates while the Respondent was represented by Mr. Agaba Gerald Kakima of M/s Ntegyereize, Inguria & Musimenta Advocates. I have carefully considered all the materials on record, the submissions of the Applicant and the laws and authorities cited while deciding this application.

# Determination of the issue

Whether the "CRAFTOP" trademark registered by the Respondent in Class 7, Part A of the Register of Trademarks vide TM No. 72768 should be removed from the Register of Trademarks.

The Applicant filed this application under **Section 45 of the Trademarks Act Cap 225.** Sections 44 and 45 of the Trademarks Act address the situations in which the same or similar marks are registered in Uganda and also in another country.

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Section 44 of the Trademarks Act protects foreign trademarks by empowering the Registrar of Trademarks to refuse an application to register a trademark if it resembles or is identical with a trademark registered in another country prior in time. On its part, Section 45 protects foreign trademarks by empowering courts to remove from the Register of Trademarks, any and all trademarks that are registered but which resemble or are identical to trademarks earlier registered outside Uganda.

In Nairobi Java House Ltd V Mandela Auto Spares Ltd, HC Civil Appeal No. 13 of 2015, this Court concisely summarised Sections 44 and 45 of the Trademarks Act as follows:

"The general principle that emerges from sections 44 and 45 of the Trademarks Act 2010 of Uganda is that the mark registered first in time takes priority to a later trademark in case of resemblances."

Sections 44 and 45 of the Trademarks Act are a domestication of Article 6 of the Paris Convention for the Protection of Industrial Property, 1883 (as amended) to which Uganda became a party on 14<sup>th</sup> June 1965. Specifically, Article 6 of the Paris Convention deals with how a State party to the Convention is meant to deal with a trademark registered in and by another State party. In relevant part, the provision states that:

"Every trademark duly registered in the country of origin shall be accepted for filing and protected as is in the other countries of the Union, subject to the reservations indicated in this Article. Such countries may, before proceeding to final registration, require the production of a certificate of registration in the country of origin, issued by the competent authority. No authentication shall be required for this certificate." Emphasis mine.

Thus, just like Article 6 of the Paris Convention, the idea behind the Sections 44 and 45 of the Trademarks Act is that trademarks registered other countries shall be respected and protected in Uganda as long as those countries have reciprocal arrangements assuring the same privilege to trademarks registered in Ugandan. This is a manifestation of the national treatment principle which lies at the very heart of modern intellectual property law and practice. This principle posits that states must treat intellectual property registered in other countries in the same

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way as they treat that registered by their own domestic institutions. (See Article 3 of The General Agreement on Tariffs and Trade, 1994).

The reciprocity of treatment of intellectual property (which is espoused in the national treatment principle) is actually meaningful in many practical ways. In the case of trademarks, that reciprocity encourages free movement of goods and services across several international markets with the assurance that the names, marks and reverence attached to them cannot be misappropriated by any person to confuse potential customers. This, in turn, on a macro and micro economic level, improves the marketability and profitability of our goods and services in international markets. As such, for both legal and practical reasons, courts have an enduring duty to protect the reciprocity of treatment of intellectual property which the national treatment principle demands.

As I have already intimated, although Sections 44 and 45 of the Trademarks Act are rooted in the same cause, Section 44 is preventive in nature in that it ensures that no trademark is registered in Uganda if it is the same or if it is similar to a trademark already registered in another country that offers the same privilege to trademarks registered in Uganda. On the other hand, Section 45 is remedial in nature in that it allows the Court to correct the error of registering a mark that is the same or that it is similar to a mark registered earlier in another country which offers the same privilege to marks registered in Uganda.

Having carefully analysed Section 45 of the Trademarks Act in its entirety, I find that, for one to succeed in an application for removal of a trademark from the Register of Trademarks brought under the Section 45 of the Trademarks Act, one has to satisfy the Court that:

- 1. The Applicant is aggrieved by the registration of a trademark in Uganda. - 2. The trademark in issue is identical with, or nearly resembles, a trademark earlier registered in another country outside Uganda. - 3. The prior trademark was registered in respect of the same goods/services; the same description of goods/services; or services or a description of , services associated with the same goods/services or goods/services of the same description as the trademark registered in Uganda. - 4. The goods/services in respect of which the trademark issued in Uganda originate from the country in which the prior trademark was registered. - 5. The Applicant did not give consent to the registration of the trademark in Uganda. - 6. There is no conclusive evidence, if at all, proving that the owner of the trademark registered in Uganda or his or her predecessors in business have continuously used that trademark in Uganda in connection with the goods/services from a date before the date of the registration of the prior trademark in the country or place of origin of the goods. - 7. Within the 5 years immediately preceding the making of the application to Court, there has been bonafide use of the trademark by the Applicant in connection with the goods in Uganda; that the special circumstances of the trade or affecting the provision of the goods/services account for the non-use of that trademark in Uganda within the same period; or the prior trademark was first registered within that period of five years. - 8. The Applicant has given an undertaking to the satisfaction of the Registrar of Trademarks that he or she will, within 3 months from the making of the application, apply for registration of the trademark in Uganda and take all necessary steps to complete the registration. - 9. The country or place of origin of the goods where the prior trademark is registered equally recognises and protects, in the same or similar manner, trademarks registered in Uganda.

## (See Kampala Stocks Supermarket Co. Ltd v Seven Days International Ltd, HCCS No. 112 of 2015).

There are now a number of cases in which the Court has interpreted and applied Section 45 of the Trademarks Act in respect to applications for removal of trademarks. The facts in the case of Tecno Telecom Ltd V Kigalo Investments Ltd, HCMC No. 0017 of 2011 were similar to the facts of this dispute. Tecno Telecom Ltd had been registered as proprietor of the "TECNO" trademark in Hong Kong, China on 5<sup>th</sup> October 2005. The mark had been registered in respect of various electronic products, like mobile phones, which Tecno Telecom Ltd manufactures and sells all over the world. In 2010, it learnt that Kigalo Investments Ltd had obtained registration as the proprietor of an identical "TECNO" trademark in Uganda in 2008. The Court was, therefore, called upon to decide whether the said 2008 registration by Kigalo Investments Ltd ought to have been cancelled.

At the hearing of that case, evidence was led to prove that Tecno Telecom Ltd was the owner of the "TECNO" trademark having registered the same in China in 2005 before the then impugned 2008 registration in Uganda. The Court found that the Tecno phones with which the trademark is associated in Uganda are manufactured in China. In its decision, the Court reasoned that since both China and Uganda are States party to the Paris Convention that demands reciprocity of treatment of trademarks across all Paris Convention countries, the earlier registration of the "TECNO" trademark in China in 2005 had to take precedence over the later registration of the identical mark in 2008 in Uganda. The Court ordered the removal from the Register, of the impugned trademark which had been registered by the Respondent therein in 2008.

The facts in Tecno Telecom Ltd V Kigalo Investments Ltd (supra) are on all fours with those of the present dispute. The Applicant and its affiliates have been engaged in the business of designing, manufacturing and distribution of agriculture and gardening tools for over 20 years now. The Applicant adduced various certificates of trademark registration which proved that the Applicant is the registered proprietor of the "CRAFTOP" trademark in countries like China, Canada, Nigeria, Chile, Peru, Lao People's Democratic Republic, Kenya, Algeria, Philippines, Malaysia, Thailand, Sri Lanka and the United States of America.

The certificates also showed that the said registrations of the "CRAFTOP" mark are in respect of machines including chain saws, earth augers, lawn trimmers, electric generators and lawn mowers, among others. According to the Nice Classification established by the Nice Agreement Concerning the International Classification of Goods and Services for the Purporses of Registration of Marks, 1957, this is typical of the calibre of goods in respect of which trademarks are registrable under Part A, Class 7 of the Register of Trademarks. That position is domesticated in Uganda by Regulation 12 and by the Third Schedule to the Trademark Regulations.

It is noteworthy that the Respondent's "CRAFTOP" trademark is also registered in Part A, Class 7 of the Register of Trademarks in Uganda. This confirms that the registration of the Applicant's "CRAFTOP" trademark in China is in respect of the same goods as the registration of the Respondent's "CRAFTOP" trademark in Uganda. Since both parties deal in the same calibre of goods, there is a high

likelihood of confusion in the market if both of them are allowed to use the same trademark to identify their goods.

Furthermore, it was an uncontested fact that the machines in respect of which the "CRAFTOP" mark is registered, are manufactured in China and sold across the world. The certificate of registration of the mark in China is dated 21<sup>st</sup> June 2007 and it is said to be valid for 20 years until June 2027. It is also not disputed that both Uganda and China are Paris Convention countries which share in the common cause of reciprocating protection of trademarks across international borders.

The institution of this application, in and of itself, is proof that the Applicant is dissatisfied with the registration of the "CRAFTOP" mark by the Respondent. The Applicant also annexed a copy of the Exam Report from URSB to Ms. Ling Ou's supporting affidavit. The Report indicated that the Applicant's Trademark Application for registration of the "CRAFTOP" trademark under Part A, Class 8 of the Register of Trademarks had been rejected because of the stark similarity between that mark and the one earlier registered by the Respondent in 2021 under Class 7.

In Mohamed Allibhai V W. E. Bukenya Mukasa, SCCA No. 56 of 1996, it was held that "an aggrieved party" includes a person who has been deprived of his or her property. In the instant facts, it is clear to me that, while the Applicant obtained proprietorship of the "CRAFTOP" trademark in China where its machines are manufactured in June 2007 and is the owner thereof, the registration of an identical mark by the Respondent in Uganda in 2021 has deprived the Applicant of the ownership of the mark in Uganda.

The Respondent has neither proved that the Applicant consented to the 2021 registration of its mark nor that it had been using the mark before the Applicant registered it in China in June 2007. In paras. 12 and 18 of the affidavit in support, the Applicant proved that it has already applied, once before, for registration of its "CRAFTOP" trademark in Uganda but, although that application was rejected, the Applicant is still ready and willing to re-apply for registration of the mark ac soon as possible so that it consolidates its market presence in Uganda. This was repeated in para. 25 of the affidavit in rejoinder. I am therefore satisfied that the Applicant is eager to re-apply for registration of the mark soon after the decision in this application.

Finally, as far as the Applicant's bonafide use of the "CRAFTOP" mark in Uganda within the last 5 years, the Applicant has adduced several screenshots from its website, online shopping portals like Alibaba.com and social media accounts like Facebook and Instagram on which it markets its goods. The Applicant contended that these sites and portals are accessible to all persons around the world. The Respondent admitted in para. 6 of its affidavit in reply that it imported machines from the Applicant's affiliate situate in China sometime in 2020. Nevertheless, the Respondent has pointed out that the Applicant is a foreign company with no physical address/presence, properties, distributor, franchise and, or, agent in Uganda which implies that the Applicant is not doing business in Uganda.

I note that the literal construction of Section 45(3)(c)(i) of the Trademarks Act is that the owner of the trademark in the country of origin of the goods ought to have had bonafide use of that trademark in connection with his or her goods or services physically within Uganda. That construction would, however, cause an obvious absurdity in light of the contemporary technological developments of the internet age which have enabled greater connectivity of people around the world and which have turned the world into a global village, enabling people in one country to buy and sell goods from others in another country through the internet. In more ways than one, the necessity of a physical address in a place has been whittled down since a seller can market and sell his goods and receive payment all through electronic means. As such, the insistence on marketing one's goods physically within a particular geographical location would appear unreasonable since one can still be able to have bonafide use of one's trademark within a country by marketing one's goods or services through portals, websites and accounts that are accessible to people in that country but are managed from servers outside that country.

This hypothesis is aptly exemplified by the Respondent's admission in para. 6 of its affidavit in reply. Therein, the Respondent's director admitted that it has ever imported goods from the Applicant in 2020. That admission was corroborated by Annexures E and F to the affidavit in support which are the proforma invoice and the bill of lading/consignment note for the said shipment purchased by the Respondent from the Applicant, respectively. This proves that, even without a physical presence in Uganda, the Applicant was able to market its products using

its online portals and means and secured the attention and trust of a Ugandan customer who duly purchased its machines and imported them into Uganda.

In The Commissioner General, Uganda Revenue Authority V Edulink Holdings Ltd & 2 Ors, HCCA No. 0178 of 2021, this Court held that legislation should be interpreted purposively in light of all the logical implications necessary to fully effectuate and implement its purpose. Additionally, it is the duty of the Court to decipher and conclusively ascertain the true intention behind legislation that is brought before it. I am convinced that Section 45(3)(c)(i) of the Trademarks Act ought to be read in a way that accommodates use of trademarks in Uganda both physically and virtually through electronic means. This is the construction which would best effectuate the ultimate purporse of Section 45 of the Trademarks Act which is to ensure that prior trademarks are recognised and protected over and above identical or similar trademarks later registered in Uganda.

If the owner of an earlier trademark in the country of origin of goods uses that mark to market those goods using the internet and is able to secure customers in Uganda to whom the goods are shipped upon payment, in my view, it should not matter, in the context of Section 45(3)(c)(i) of the Trademarks Act, whether or not that owner has a physical presence in Uganda. The "bonafide use of a trademark in Uganda" includes both physical and online marketing of the goods with which that mark is associated and it is possible for an owner of a trademark registered outside Uganda to actually use that mark by marketing his or her goods in Uganda through electronic means, notwithstanding his or her lack of physical presence in Uganda. It is only such a progressive interpretation that shall safeguard the reciprocity of treatment of trademarks which is the ultimate statutory purpose behind Section 45 of the Trademarks Act.

In view of all the above findings, I am certain that the Applicant has satisfied all the requirements for the grant of this application. It seems to me that the true sequence of the events leading up to this application is that the Respondent purchased machines from the Applicant's affiliate in China. When the Applicant wanted to get a dealer/distributor for its goods in Uganda sometime in 2020, it got in touch with the Respondent. Unfortunately, their negotiations fell through and the Respondent cunningly proceeded to register the Applicant's "**CRAFTOP**" in 2021 as its own, as a bargaining chip and in order to get an unfair advantage over the Applicant in the Ugandan market. At all times, the Respondent was,

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aware that the Applicant is the rightful owner of the said trademark because it had bought goods from the Applicant before and it had also had negotiations with the Applicant for a dealership, but it still registered proceeded to register the mark in Uganda as its own anyway.

The Respondent literally appropriated the Applicant's intellectual property and now seeks to hide under the Trademarks Act to continue proudly and cunningly holding the Applicant at ransom. Luckily for the Applicant, this Court, under Section 45 of the Trademarks Act, is empowered to end to the Respondent's tyranny.

I have found that it would be superfluous for the Court to delve into the claims and evidence of non-use of the impugned "CRAFTOP" mark by the Respondent. This is because such claims and evidence are beside the point when it comes to an application under Section 45 of the Trademarks Act which primarily considers whether there was registration of a trademark in Uganda in respect of imported goods or services which was effected after the producer or dealer of those goods or services had registered the same or a similar mark in the country or place of origin of those goods or services. It is in an application seeking the cancellation of registration of a trademark on grounds for non-use under Section 46 of the Trademarks Act that such claims and / or evidence of non-use would be relevant.

Consequently, this application succeeds and I make the following orders:

- An order is hereby issued directing the Registrar of Trademarks to ì. remove, from the Register of Trademarks, the Respondent's "CRAFTOP" trademark No. UG/T/2021/072768 which is registered in Class 7, Part A of the Register of Trademarks. - Costs of this application are awarded to the Applicant. ii.

readerles

Patricia Mutesi JUDGE $(27/09/2024)$