YES X1R, IT’S A WELL-KNOWN MARK

Loke Sin Wei highlights the first reported case on well-known trade marks in Malaysia

 

 

In line with the Paris Convention for the Protection of Industrial Property, Malaysia introduced the protection of marks which are well-known in Malaysia through the enactment of the Trade Marks (Amendment) Act 2000. To achieve this, new provisions, namely sections 14(1)(d) and 14(1)(e) were introduced to the Trade Marks Act 1976 (“Act”).

 

Section 14(1)(d) of the Act stipulates that a mark shall not be registered if it is identical or so nearly resembles a mark which is well-known in Malaysia for the same goods or services of another proprietor.

 

Section 14(1)(e) of the Act prohibits the registration of a mark if (i) the mark is well-known and registered in Malaysia for different goods or services from those in respect of which registration is applied for; and (ii) the use of the mark in relation to those goods or services would indicate a connection to the proprietor of the well-known mark and the interests of the proprietor of the well-known mark are likely to be damaged by such use.

 

In Y-Teq Auto Parts (M) Sdn Bhd v X1R Global Holding Sdn Bhd & Anor [2017] 2 MLJ 609, the Court of Appeal reviewed the application of section 14(1)(e) of the Act.

 

THE FACTS

 

The 1st Respondent was the registered proprietor and the 2nd Respondent the registered user, of the mark depicted in Figure 1 (“Respondents’ Mark”) for goods in Class 4 (industrial oils, greases, other oil lubricants) (“Respondents’ Goods”).

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Figure 1
The Respondents’ Mark

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Figure 2
The Appellant’s Mark

The Appellant was the registered proprietor of the mark depicted in Figure 2 (“Appellant’s Marks”) for goods in Classes 7 (air filters, fan belts, oil filters for engines and vehicles), 9 (audio apparatus, batteries for vehicles), 12 (automobiles, vehicles, motor and engines for vehicles) and 35 (advertising, business management, business administration, office functions) and had a pending application for the same mark in Class 25 (clothing, footwear, headgear) (“Appellant’s Goods”).

 

The Respondents applied to the High Court for, inter alia, an order to expunge and remove the Appellant’s Marks from the Register of Trade Marks pursuant to sections 45 and 46 of the Act. It was the Respondents’ case that the Appellant’s Marks were entries made without sufficient cause or were wrongfully remaining in the Register. The Respondents relied on section 14(1)(e) of the Act to argue that the use of the Appellant’s Marks were likely to cause confusion and deception to the public as they were identical to the Respondents’ Mark, which is well-known in the same industry, albeit for different goods.

 

DECISION OF THE HIGH COURT

 

The High Court elaborated on the four conditions the Respondents must prove, on the balance of probabilities, to rely on section 14(1)(e) of the Act, namely that:

 

(a)      the Respondents’ Mark is well-known;

 

(b)      the Respondents’ Mark is registered for goods which are not the same as the Appellant’s Goods;

 

(c)       the use of the Appellant’s Marks on the Appellant’s Goods would indicate a connection between the Appellant’s Goods and the Respondents’ Goods (“connection condition”); and

 

(d)      the Respondents’ interests are likely to be damaged by the Appellant’s use of the Appellant’s Marks (“damage condition”).

 

Whether the Respondents’ Mark is well-known

 

Regulation 13B of the Trade Marks Regulations 1997 sets out the general criteria that may be taken into account to determine whether a mark is well-known in Malaysia:

 

(a)      the degree of knowledge or recognition of the mark in the relevant sector of the public;

 

(b)      the duration, extent and geographical area of any use of the mark;

 

(c)       the duration, extent and geographical area of any promotion of the mark, including advertising or publicity, and the presentation, at fairs or exhibitions, of the goods or services to which the mark applies;

 

(d)      the duration and geographical area of any registrations, or any applications for registration, of the mark to the extent that they reflect use or recognition of the mark;

 

(e)      the record of successful enforcement of rights in the mark, in particular, the extent to which the mark was recognised as well known by competent authorities; and

 

(f)       the value associated with the mark.

 

The trial judge took the view that the criteria laid down in Regulation 13B were not exhaustive, but act as guidelines to assist the courts to reach a determination. When deciding whether a mark is well-known, the courts may consider other factors which were not specifically provided for in Regulation 13B. The Court also took the view that the criteria is not mandatory as the provision uses the permissive term “may”.

 

The trial judge was satisfied that the Respondents’ Mark was a well-known mark as the Respondents had adduced sufficient evidence in support thereof, such as (i) the Respondents’ Mark was used on the Respondents’ Goods in more than 30 countries and had been certified by various established centres, such as the US’s National Aeronautics and Space Administration (NASA); (ii) the establishment of a research and development centre and a laboratory in the US for the Respondents’ Goods; and (iii) the Respondents’ successful enforcement of their rights to the Respondents’ Mark via a consent order.  

 

Whether the Respondents’ Goods are different

 

There was no dispute that the Respondents’ Goods (i.e. lubricant oil) differed from the Appellant’s Goods (i.e. motorcycle parts). Thus the Respondents had satisfied this condition.

 

The connection condition

 

The High Court held that this condition would be satisfied if the Respondents could prove any of the following connections:

 

(a)      an ‘origin connection’, where use of the Appellant’s Marks would indicate that the Appellant’s Goods emanated from the same source as the Respondents’ Goods;

 

(b)      a ‘quality connection’, where use of the Appellant’s Marks would indicate that the Appellant’s Goods have the same quality as the Respondents’ Goods; or

 

(c)       a ‘business connection’, where the public may perceive that the Respondents and Appellant were related companies or there is some kind of business relationship between the Respondents and Appellant.

 

Based on the evidence adduced by the Respondents, the High Court found that there was a connection as to the origin of the goods as a distributor had mistakenly thought that the Respondents’ Goods were from the Appellant. The High Court also found a connection in quality in that the relevant public would assume the Appellant’s Goods were of the same high quality as the Respondents’ Goods.

 

The damage condition

 

Lastly, the Court also had to consider the damage condition. The High Court held that the damage condition would be satisfied if the Respondents could prove any of the following:

 

(a)      the Respondents suffered a dilution to their goodwill in Malaysia;

 

(b)      there is a loss in the sales of the Respondents’ Goods;

 

(c)       the Respondents were restricted from expanding the use of the Respondents’ Mark to goods in the classes in which the Appellant’s Marks were registered; or

 

(d)      the Respondents were exposed to the risk of incurring legal liability from purchasers who obtained the inferior goods in the mistaken belief that they had acquired the Respondents’ Goods.

 

The High Court found that the Respondents had proven the damage condition as they had adduced evidence of confusion where (i) a distributor had refused to distribute the Respondents’ Goods thinking that they originated from the Appellant; and (ii) purchasers had obtained the Appellant’s Goods in the mistaken belief that they had acquired the Respondents’ Goods known for their high quality, and these purchasers may claim damages from the Respondents due to the inferior quality of the Appellant’s Goods.

 

As all four conditions had been fulfilled, the High Court held that the Appellant’s Marks had been entered without sufficient cause or had wrongfully remained in the Register and ordered that the Appellant’s Marks be expunged and removed from the Register.

 

DECISION OF THE COURT OF APPEAL

 

The Court of Appeal declined to interfere with the High Court’s findings of fact and affirmed the High Court’s decision on, amongst others, the following grounds: (i) reading sections 14(1)(a) and 14(1)(e) of the Act together, if the mark complained of would give rise to unfair advantage or impinge the distinctive character or repute of the complainant’s mark, the former should be refused registration; (ii) the conclusiveness of a registered mark as provided by section 37 of the Act will not ordinarily be applicable to a mark which has been registered in breach of section 14; and (iii) the High Court had correctly applied the legal principles based on the facts and evidence adduced at trial.

 

CONCLUSION

 

This case is noteworthy as it is the first reported Malaysian case which elaborated on the application of section 14(1)(e) of the Act. The case serves as an important development in the law on trade marks in Malaysia as it provides guidance on the applicability and interpretation of provisions in the Act with respect to the protection of well-known marks.

 

The case also signals that the Malaysian courts may be ready to accept the concept of trade mark dilution.

 

 

 

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