A trademark should be well known: The battle of Dunkin Donuts’ MUNCHKINS Vs Sri Lanka’s Munchkin

A multinational company with a global reach challenged a small Sri Lankan entrepreneur making bakery items on the basis that the local company was using one of their trademarks. Their action under the Intellectual Property Act was unsuccessful and dismissed with cost by the Commercial High Court (Colombo HC /Civil/26/2014/IP).The decision of the court is of interest to both the legal practitioner as well as the general public.

In summary, the facts are – the Defendant, a young Sri Lankan businesswoman was carrying on a small business producing high quality bakery items like cakes, desserts, pastries since about 2010 under the name ‘Munchkin”. She had made an application to register her ‘mark’ in August 2011 under ‘class 30’ at the National Intellectual Property Office.

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.

In August of 2014, the Plaintiff obtained an injunction and enjoining order from the Commercial High Court restraining the Defendant from using the said ‘Munchkin’ mark or any other similar mark. However, on subsequent ‘inter parties’ inquiry, the court, by order of 18 December 2014, dismissed the Plaintiff’s application for interim injunction with costs. Whereupon the Plaintiff filed a leave to appeal against the said order in the Supreme Court which application was eventually dismissed by the Supreme Court in February 2016 for failure to the exercise due diligence to prosecute the application for leave.

In the primary case initiated by plaint dated 5 August 2014 in the Commercial High Court (Colombo), the Plaintiff 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 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 its mark is not known in Sri Lanka. It was also averred that the Defendants mark is well known in the country and is associated with her products. After trial, the learned High Court Judge dismissed Plaintiff’s action with costs.

Several important issues pertaining to trademarks were examined in the lengthy judgment. “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.”

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 owner of the mark must prove that the mark is well known to a substantial sector of the purchasing public in the local jurisdiction (in Sri Lanka).

In a lengthy judgment, the learned High Court Judge considered the relevant law including several foreign judgments and concluded that, “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.”

The Plaintiff did not appeal the judgment. In the Commercial High Court, the Defendant was represented by Romesh de Silva PC with Shanaka Cooray instructed by Varners.