Crocs Distributors Limited v Crocodile International (PTE) Limited (Miscellaneous Cause 67 of 2022) [2024] UGCommC 94 (30 April 2024)

### THE REPUBLIC OF UGANDA

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

## **MISCELLANEOUS CAUSE NO. 0067 OF 2022**

CROCS DISTRIBUTORS LIMITED ::::::::::::::::::::::::::::::::::::

#### **VERSUS**

CROCODILE INTERNATIONAL (PTE) LIMITED ::::::::::::::::::::::::::::::::::::

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

#### **RULING**

#### **Background**

The Applicant brought this application by notice of motion under **Section 46** of the Trademarks Act, 2010, Section 98 of the Civil Procedure Act, Regulations 91 and 92 of the Trademark Regulations, 2012 and Order 52 rule 1 of the Civil **Procedure Rules S. I. 71-1** seeking for:

- 1. An order of cancellation of the Respondent's "**CROCODILE**" trademark in class 16 and its removal off the register of trademarks. - 2. An injunction to restrain the Respondent from the use in the course of trade of the mark "CROCODILE" in relation to goods in class 16. - 3. An order awarding the costs of this application to the Applicant.

Briefly, the grounds of this application are that:

- 1. The "CROCODILE" trademark was registered without a bonafide intention by the Respondent that it should be used in relation to goods in the goods in class 16. - 2. Since the registration of the "CROCODILE" trademark on 31<sup>st</sup> July 2000 in class 16 to be used in relation to stationeries, adhesives for stationery and writing instruments, there had not been any bonafide use of the same mark in relation to those goods for at least one month prior to the date of the application and for a continuous period of 3 (three) years. - 3. The requirement of bonafide/genuine use has not been met, in that the trademark has not been used in accordance with its basic functions, which

is to guarantee the identity of the origin of the goods for which it has been registered with the aim of creating or maintaining outlets for these goods.

- 4. The "CROCODILE" trademark is used in a fictitious manner that has the sole purpose of maintaining the right of the trademark. - 5. The Respondent's bad faith registration of the "CROCODILE" trademark is what caused the rejection of the Applicant's registration of the "CROCS" trademark in class 16.

The application is supported by the affidavit of Dipesh Rameshchandra Bid, a director in the Applicant, who stated as follows; That the Respondent is a company incorporated in Singapore and is the proprietor of the "CROCODILE" trademark No. 17885 registered on 31<sup>st</sup> July 2000 in class 16. The mark was registered to be used in relation to, among others, stationeries, adhesives for stationery and writing instruments like pens, pencils, highlighters and markers. On its part, the Applicant manufactures and sells polythene bags and other polythene products under the trademark made up of the "CROCS" name and the crocodile logo.

On 20<sup>th</sup> June 2022, the Applicant applied for registration of the "CROCS" name and crocodile logo as a combined trademark in class 16 of the Register for use in relation to its polythene products. On 28<sup>th</sup> June 2022, the Registrar of Trademarks rejected the Applicant's application on grounds that there is a similar mark UG/T/1993/017885 "CROCODILE" (Word and Crocodile Logo) registered as of 31/07/2000 in class 16 for use in relation to stationeries, adhesives for stationery and writing instruments being pens, pencils, fountain pens, highlighters, markers, among others in the name of the Respondent. The Applicant carried out a market investigation and established that there are no stationeries or writing instruments bearing the "CROCODILE" trademark from the Respondent on the local market. Instead, the Respondent's website shows that the Respondent uses the "CROCODILE" trademark to market clothing.

He concluded that he believes the "CROCODILE" trademark was registered by the Respondent in Uganda without a bonafide intention that it shall be used in relation to stationery and writing instruments and that mark is used in fictitious manner that has no good faith basis.

By order of this Court, the Respondent was served with the application by post but it did not file an affidavit in reply. Where a party is duly served and they do

not respond to the application, there is no other inference that can be deduced from such neglect or failure to respond than that of acceptance or admission (see Wamala Abdu v Commissioner Land Registration, HCMC No. 16 of 2021). However, although this application stands unopposed, it is still pertinent for me to examine it in order to ascertain whether or not there is legal justification for it to be allowed and for the orders sought to be issued.

#### **Issue arising**

Whether the Respondent's registration of the "CROCODILE" trademark on 31<sup>st</sup> July 2000 should be cancelled.

#### **Representation and hearing**

At the hearing, the Applicant was represented by Mr. William Muhumuza of M/S Matrix Advocates. The Respondent did not enter appearance. I have carefully considered the materials on record, the submissions of the Applicant and the laws and authorities cited.

#### Determination of the issue

# Whether the Respondent's registration of the "CROCODILE" trademark on 31<sup>st</sup> July 2000 should be cancelled.

It is trite law that mere adoption or registration of a mark without a bonafide intention to use it in the course of trade is unlawful. (See this Court's decision in Techno Telecom Limited v Kigalo Investments Ltd, HCMC No. 17 of 2011). Since trademark registration accords exclusivity of use to the registered owner of the mark, trademark law emphasises the need for that owner to actually use the mark in the market in relation to the goods or services in respect of which it is registered and prohibits the registration of a trademark for future use. It would simply be selfish and inconsiderate of others for any person to gain exclusive rights over a trademark in the entire market and prohibit anyone else from using that mark yet that person is not using it himself or herself. In order to retain exclusivity, one must use the mark regularly.

In the instant case, since the Respondent has no stationery products on the Ugandan market, it is as clear as day that the registration of the "CROCODILE" trademark is not serving its intended purpose which was to identify and distinguish the Respondent's stationery products on the Ugandan market. The

Respondent's conduct, akin to cybersquatting, seems to have no purpose other than to benefit and profit from exclusive ownership of the "CROCODILE" trademark without putting the same to use in the Ugandan market. This runs counter to the rationale for trademark protection.

Trademarks are not registered for the sake of obtaining registration certificates. The purpose of trademark registration is not to enable a person to stack up various registered trademarks thereby making it impossible for others to use them while putting in no effort on his or her part to use them. As counsel for the Applicant correctly submitted, this is the very essence of the "use it or lose it" principle of trademark law which was the motivation behind Section 46 of the Trademarks Act, 2010.

To put it simply, if one has no products or services on the market with which the registered trademark is associated, one loses the basis for exclusive ownership of the trademark. Again, it should be made abundantly clear that a registered trademark is not a trophy or a medal to be stacked away in a cabinet for future sentimental admiration or for cunning profiteering. A registered trademark is, and must always be, a tool for actually identifying and distinguishing one's goods and, or, services on the market.

Section 46 of the Trademarks Act, 2010 permits the courts, or the Registrar of Trademarks in appropriate cases, to revisit and undo the registration of a trademark in situations where that mark was registered without any bonafide intention of being used to market the goods or services in respect of which it was registered. This implies that the owner of a registered trademark must not only use the trademark after it is registered but he or she must also always use that mark only in relation to the goods or services in respect of which it was registered.

In the context of this case, even if evidence had been presented showing that the Respondent had used and continues to use the "CROCODILE" trademark since its registration, that evidence should still have shown that the trademark is used in relation to stationery and writing instruments and not clothing or any other product or service, in order for the trademark to survive the effect of Section 46 of the Trademarks Act, 2010. This position is drawn from the decision of the Supreme Court of New Zealand in a case involving the same Respondent in this application vide Crocodile International (PTE) Limited v Lacoste [2017]

$\overline{4}$

NZSC 14. In that case, the Supreme Court of New Zealand held that, for an owner of a trademark to be said to have "used" the mark, the mark used must be the same or, at least, in predominantly similar form to the one that was registered.

I am convinced that, in securing the "CROCODILE" trademark in Uganda on 31<sup>st</sup> July 2000, the Respondent simply hoodwinked the Registrar of Trademarks into believing that it was going to use the mark in relation to stationery and writing materials, whereas not. It is now more than 23 years since the trademark was registered but there is no evidence on the Court record that the Respondent has ever used that mark in relation to any stationery and writing materials in the Ugandan market.

Indeed, the Respondent has no known place of business in Uganda to this day. This is what prompted this Court to allow the Applicant to serve the court process in this matter on the Respondent by post. The affidavit of service on the Court record sworn by one Marion Lisa Kirabo confirms that, through DHL Express Uganda Limited, this application was delivered to, and served on, the Respondent's principal place of business in Singapore on 9<sup>th</sup> February 2023. As I noted earlier, the Respondent did not file any reply to the application.

In my considered opinion, if the Respondent had been a genuine business entity in Uganda serious about the use and protection of its "CROCODILE" trademark, there would have been some evidence, over the last 23 years, of it using the mark in relation to stationery and writing materials on the Ugandan market. It would have had a place of business in Uganda or, at least, a known agent in Uganda responsible for managing its business affairs, regulatory compliance and legal matters. It would also have respected the court process in this application when the same was served on it in February 2023 by responding accordingly in order to salvage its trademark. It is improbable that a genuine business person would be served with court process seeking for the cancellation of his or her trademark and that person sits back and fails to put up a fight to avert the cancellation.

My impression of the Respondent's business conduct over the last 23 years of the registration of the "CROCODILE" trademark in its name in Uganda is that the Respondent was never serious, at any one point in time, about using that mark in Uganda in relation to stationery or writing materials. If, for nearly two and a half decades, a foreign owner of a trademark registered in Uganda has not set

up shop in Uganda or started using that mark to market and sell goods or services in respect of which the mark was registered, there is no justification whatsoever for that person to continue his monopoly over that mark, especially when there is another business person, like the Applicant, whose products are already on the Ugandan market and who wants to use a similar mark to market those products.

If the Respondent is not yet here to start using its trademark even after 23 years. I am not sure if the Respondent is still coming to do business in Uganda. It is more probable than not that the Respondent has other business plans and ideas, which do not involve setting up shop in Uganda to start marketing and selling stationery and writing materials using the "CROCODILE" trademark.

For all the above reasons, this application succeeds. Pursuant to Section 46(1)(a) of the Trademarks Act, 2010, I find that the Respondent secured registration of the "**CROCODILE**" trademark without a bonafide intention of using it in relation to any of the goods in class 16. Pursuant to Section 46(1)(b) of the same Act, I also find that a period of more than 23 years prior to the filing of this application has lapsed during which the "CROCODILE" trademark was a registered mark and during which there was no bonafide use of that mark in relation to any stationery or writing materials in the Ugandan market. The Respondent is simply clogging our Register of Trademarks without any good faith intention to use the "CROCODILE" trademark in the ordinary course of trade. As a result, this Court shall direct the Registrar of Trademarks to cancel the Respondent's registration of the "CROCODILE" trademark.

However, at this stage I am hesitant to issue an injunction in favour of the Applicant as prayed for in the notice of motion, restraining anyone including the Respondent, from using the "CROCODILE" trademark in relation to goods in class 16 because this would tantamount to declaring that the Applicant is already the owner of that trademark. The duty of confirming and registering trademark owners is statutorily ascribed to the Registrar of Trademarks. The Applicant is free to reapply for trademark registration and, if that application succeeds, their exclusive rights over the trademarks will legally follow.

Before I take leave of this matter, my other observation is that the Applicant ought to have included the Registrar of Trademarks as one of the respondents in this application since this application essentially seeks an order directing the Registrar of Trademarks to exercise some of her statutory mandate, to wit, cancellation of the registration of a trademark. Although there is nothing in the law which bars this Court from issuing such an order even in the absence of the Registrar of trademarks, it is my firm belief that all persons seeking court orders directing statutory bodies to perform certain actions within their mandate would do well to also bring those statutory bodies to Court while seeking those orders. This would guarantee the right to a fair hearing for all key stakeholders in a matter and also enable the Court to benefit from any technical expertise or guidance which those statutory bodies may have on the matter at hand before any orders are issued.

Consequently, I make the following orders:

- i. An order doth issue directing the Registrar of Trademarks to cancel the trademark registration vide UG/T/1993/017885 "CROCODILE" (Word and Crocodile Logo) as of 31/07/2000 in class 16 for use in relation to stationeries, adhesives for stationery and writing instruments (pen. pencil, fountain pen, highlighter, marker, e.t.c) in the names of **CROCODILE INTERNATIONAL (PTE) LIMITED** - ii. Costs of this application are awarded to the Applicant.

almo admlet

Patricia Mutesi

**JUDGE**

$(30/04/2024)$