National Aerated Water v Monarch: Trademark License, Restraint of Trade & Beverage Distribution

In National Aerated Water Co Pte Ltd v Monarch Co, Inc, the Singapore Court of Appeal heard an appeal regarding the High Court's decision that Monarch was entitled to terminate a licensing agreement with NAWC involving the trademarks 'Kickapoo Joy Juice' and 'Kickapoo'. The primary legal issues were whether a clause in the agreement constituted an unreasonable restraint of trade and whether NAWC breached the agreement by selling a product called 'Kick'. The court dismissed NAWC's appeal, finding that NAWC had breached the agreement, but amended the injunction to be less broad.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal dismissed with costs, but the injunction was amended to be less broad.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore Court of Appeal case regarding termination of a trademark license for 'Kickapoo Joy Juice' and alleged restraint of trade.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
National Aerated Water Co Pte LtdAppellantCorporationAppeal DismissedLost
Monarch Co, IncRespondentCorporationAppeal DismissedWon

3. Judges

Judge NameTitleDelivered Judgment
Chao Hick TinJustice of the Court of AppealYes
L P TheanJustice of the Court of AppealNo
Yong Pung HowChief JusticeNo

4. Counsels

Counsel NameOrganization
Vinodh CoomaraswamyShook Lin & Bok
Lim KhoonLim Hua Yong & Co
Howard CashinLim Hua Yong & Co

4. Facts

  1. NAWC entered into a licensing agreement with KJJ in 1966 to produce and sell 'Kickapoo Joy Juice'.
  2. KJJ's rights were assigned to Monarch.
  3. The 1966 agreement contained a clause restricting NAWC from selling any product that was an imitation of the beverage.
  4. Monarch granted NAWC permission to sell the beverage in PET bottles and cans.
  5. Differences arose between the parties over sales performance.
  6. Monarch purported to terminate NAWC's canning license, which was later conceded to be wrongful.
  7. NAWC began selling a product called 'Kick'.
  8. Monarch issued a notice of termination based on NAWC's breach of the agreement by selling 'Kick'.
  9. NAWC continued to sell the beverage after the termination notice.

5. Formal Citations

  1. National Aerated Water Co Pte Ltd v Monarch Co, Inc, CA 445/2000, [2000] SGCA 2

6. Timeline

DateEvent
Licensing agreement entered into between Kickapoo Joy Juice Ltd and NAWC
Monarch's predecessor orally granted NAWC permission to sell the beverage in clear plastic polythene bottles (PET bottles)
Monarch's predecessor granted NAWC permission to also produce, distribute and sell the beverage in cans
Monarch sent a letter to NAWC expressing concerns about sales performance
NAWC replied to Monarch stating there was nothing to discuss about the development of the beverage in the returnable bottle form
Monarch reminded NAWC and NAWC (KL) that the licence by acquiescence granted to NAWC (KL) to sell the canned beverage was expressly terminated on 29 March 1994
Monarch informed NAWC and NAWC (KL) that the licence to distribute the canned beverage in Singapore was also terminated
Monarch discovered that NAWC was selling and distributing a product called 'Kick'
Monarch issued NAWC with an instanter notice of termination under cl 8 of the 1966 agreement
Monarch commenced the present action in respect of NAWC's breach under cl 8 of the 1966 agreement
Decision Date

7. Legal Issues

  1. Restraint of Trade
    • Outcome: The court found that the restraint clause was too wide but allowed severance of the offending portion.
    • Category: Substantive
    • Sub-Issues:
      • Reasonableness of restraint
      • Severance of unenforceable portion
    • Related Cases:
      • [1914] AC 461
      • [1919] AC 548
      • [1968] AC 269
      • [1894] AC 535
      • [1966] Ch 146
      • [1974] 3 All ER 616
      • [1916] 1 AC 688
      • [1965] NSWR 1242
      • [1970] 1 All ER 1227
      • [1899] 2 Ch 13
      • [1920] 3 KB 571
      • [1915] 1 Ch 292
  2. Breach of Contract
    • Outcome: The court found that NAWC was in breach of contract by selling the 'Kick' beverage.
    • Category: Substantive
  3. Trademark Infringement
    • Outcome: The court found that NAWC had infringed Monarch's trademark by continuing to sell the beverage after the termination of the agreement.
    • Category: Substantive

8. Remedies Sought

  1. Declaration that the 1966 agreement was terminated
  2. Injunctive relief
  3. Discovery, delivery up and destruction of infringing goods
  4. Inquiry for damages

9. Cause of Actions

  • Breach of Contract
  • Trademark Infringement
  • Passing Off

10. Practice Areas

  • Commercial Litigation
  • Intellectual Property Law

11. Industries

  • Beverage Industry

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
North Western Salt Co Ltd v Electrolytic Alkali Co LtdHouse of LordsYes[1914] AC 461United KingdomCited for the principle that a court may refuse to enforce an illegal contract, even if the illegality is not pleaded, if the illegality is apparent on the plaintiff's case.
McEllistrim v Ballymacelligott Co-operative Agricultural and Dairy Society LtdHouse of LordsYes[1919] AC 548United KingdomCited as an example of a case where rules preventing a member from selling milk to anyone except the society were held to be in unreasonable restraint of trade.
Esso Petroleum Co Ltd v Harper`s Garage (Stourport) LtdHouse of LordsYes[1968] AC 269United KingdomCited for the principle that an agreement restricting a party's right to sell other brands of petrol at their garage was within the scope of the doctrine of restraint of trade.
Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co LtdHouse of LordsYes[1894] AC 535United KingdomCited for the classic statement of the rule that all interference with individual liberty of action in trading is contrary to public policy and void, but with exceptions.
Petrofina (Great Britain) Ltd v MartinChancery DivisionYes[1966] Ch 146United KingdomCited for the definition of a contract in restraint of trade as one where a party agrees to restrict their liberty to carry on trade with others.
A Schroeder Music Publishing Co Ltd v MacaulayHouse of LordsYes[1974] 3 All ER 616United KingdomCited to support the point that the mere fact that a restraint of trade is confined to the life of the agreement does not render the clause any less subject to the doctrine.
Morris v SaxelbyHouse of LordsYes[1916] 1 AC 688United KingdomCited for the principle that a restraint is only valid if it goes no further than is reasonably necessary for the protection of the covenantee's interest.
Hawkesbury Bakery Pty Ltd v MosesSupreme Court of New South WalesYes[1965] NSWR 1242AustraliaCited as an illustration where a restriction on a baker was held unreasonable as it went beyond the products in which the plaintiffs possessed goodwill.
Home Counties Dairies Ltd v SkiltonCourt of AppealYes[1970] 1 All ER 1227United KingdomCited for the principle that a restraint clause is valid if it is valid in all the ordinary circumstances of the case which could have been contemplated by the parties.
Haynes v DomanHigh Court of JusticeYes[1899] 2 Ch 13United KingdomCited for the principle that agreements in restraint of trade must be construed with reference to the object sought to be attained by them.
Attwood v LamontCourt of AppealYes[1920] 3 KB 571United KingdomCited as a case where severance of a restraint clause was not permitted because it would alter the nature of the covenant.
Goldsoll v GoldmanHigh Court of JusticeYes[1915] 1 Ch 292United KingdomCited as a case where severance of a restraint clause was permitted in terms of territorial extent and scope of activities.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Kickapoo Joy Juice
  • Trademark
  • Licensing Agreement
  • Restraint of Trade
  • Severance
  • Termination
  • Beverage
  • Canning Licence
  • PET Bottles
  • Concentrates

15.2 Keywords

  • trademark
  • licensing agreement
  • restraint of trade
  • beverage
  • Kickapoo Joy Juice
  • contract termination

17. Areas of Law

Area NameRelevance Score
Contract Law90
Trademarks85
Trademark Infringement80
Breach of Contract75
Licensing Agreements70
Restraint of Trade65
Passing Off60
Contractual Interpretation50
Severance40
Estoppel30
Waiver30
Damages25

16. Subjects

  • Contract Law
  • Intellectual Property
  • Trade Marks
  • Licensing
  • Restraint of Trade