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Wednesday, 22 March 2017

Welcome clarification on the Malaysian law of well-known marks; but there is still judicial work to be done


The law of well-known marks continues to develop apace in various countries in Asia. Kat friend NG Kim Poh has offered a summary of an important decision in Malaysia on this dynamic topic.

The Court of Appeal of Malaysia had recently provided its grounds of judgment for an important decision in Y-Teq Auto Parts (M) Sdn Bhd v X1R Global Holdings & Anor (CACA NO. W-02(IPCV)(A)-511 -03/2016). The case dealt with the well-known mark provision under the Trade Marks Act 1976, prohibiting registration of a mark even where the goods or services of the parties are not the same.

The two respondents (the claimants in the action filed in the High Court) were the registered proprietor and registered user, respectively, of a mark in Class 4. A representation of the respondents’ mark is shown below:
The appellant (the defendant in the action filed in the High Court) was the registered proprietor of a mark in Class 7, Class 9, Class 12, and Class 35. The appellant also had a pending application for the same mark in Class 25. A representation of the appellant’s mark is shown below:
The respondents’ action in the High Court sought to expunge the appellant’s registrations and application, alleging that their use is likely to deceive or cause confusion to the public or would be contrary to law. The respondents further relied on Section 14(1)(e), which provides protection for a well-known mark.

The respondents prevailed at the High Court. In a relatively detailed judgment, the High Court delved into the applicability and scope of various provisions under the Trade Marks Act on protection of well-known marks in Malaysia. At the outset, the High Court ruled that the respondents had the necessary locus standi, notwithstanding that the parties’ respective goods fell under different classes.

There was evidence showing that the respondents were adversely financially affected because a third party declined to distribute their goods due to the mistaken belief that the goods originated from the appellant, which was a competitor of the third party. Further, there was likelihood of confusion and deception between the use of the respondents’ mark and the appellant’s mark.

The High Court ruled that the respondents’ mark was a well-known mark, inter alia, because:
(a) the public and people involved in the trade had identified the respondents’ mark with the respondents’ goods distributed by them. This assertion by the respondents was not denied by the appellant;

(b) the respondents’ mark had been used in more than 30 countries around the world, including in Malaysia;

(c) the respondents’ mark had been registered in various countries throughout Asia;

(d) the respondents had extensively promoted, advertised, publicized and presented goods to which the respondents’ mark had been applied; and

(e) there was clearly value associated with the respondents’ mark.
With respect to question of the connection between the mark and goods of the appellant and those of the respondents, the High Court ruled that this had been made out, based on showing either there was a “connection” as to the origin of the goods or in respect of the quality of the goods, or there was a business “connection” that might be perceived by the public.

Regarding likelihood of damages, the High Court held that this would be satisfied when:
(a) the claimant suffered a dilution to its goodwill in this country (i.e. Malaysia);

(b) there was a loss in the sales of the claimant’s goods;

(c) the claimant was restricted from expanding the use of its mark to goods in other classes; or

(d) the claimant was exposed to the risk of incurring legal liability from traders and consumers who had purchased the inferior goods of the defendant in the mistaken belief that they had acquired the claimant’s goods.
Consequently, the High Court ordered the appellant’s registrations and application be expunged from the Register.

The appeal was dismissed by the Court of Appeal.The Court of Appeal did not address the applicable legal principles in any detail, which is perhaps a bit unfortunate. Still, it is important to note that, in affirming the decision, the Court of Appeal in no uncertain terms held that the High Court had identified the correct legal principles and applied them to the facts of the case based on the evidence adduced by the parties.

Comment

These decisions are an important development in the law on protection of well-known marks in Malaysia, particularly because they have provided much welcome (indeed needed) guidance on the applicable principles and interpretation of important provisions of the TMA with respect to the protection to the protection of a well-known mark.

That said, the decisions appear to have missed an opportunity to discuss and provide guidance on the scope of the words “mark or part of a mark” in the context of Section 14(1)(e), TMA. For instance, would the provision apply to an impugned mark that is not identical with and is not part of the well-known mark in question? The decisions appear to have left this question unanswered.

Perhaps the answer to that question lies in Regulation 13A(b). The provision states:
"13A. The Registrar shall not register a mark or part of a mark where –

(b) the mark or part of the mark is identical with, or confusingly similar to, or constitutes a translation of a mark considered well-known under
regulation 13B, which is registered in Malaysia with respect to goods or services whether or not similar to those with respect to which registration is applied for, provided that use of the mark in relation to those goods or services would indicate a connection between those goods or services, and the proprietor of the registered mark, provided further, that the interests of the proprietor of the registered mark are likely to be damaged by such use”(emphasis added).
Time will tell whether reliance on this provision will be made in a relevant future case.

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