Light & Delight 光与悦

 

 

On 20 January 2020, the Court of Appeal in SkyWorld Development Sdn Bhd & Anor v Skyworld Holdings Bhd & 5 Ors (Civil Appeal No.: W-02(IPCv)(W)-383-02/2019) unanimously ruled, among others, that an action for infringement can be founded upon the unauthorised use of a registered mark as part of a trade or company name.

Background

The Appellants, SkyWorld Development Sdn Bhd and its related company, are renowned property developers in Malaysia. The 1^st Appellant is the registered proprietor of three stylised trademarks consisting of the word “SkyWorld” together with accompanying tag-lines (“SkyWorld Marks”) as shown below. The word “SkyWorld” also forms part of the Appellants’ company name and the name of their property development projects.

 

 

 

 

 

 

Sometime in 2017, the Appellants discovered that the Respondents had used the words “Sky World” or “Skyworld” as part of their company names, domain name and the name of their proposed theme park project in Karambunai, Sabah. After failed attempts to resolve the issue, a civil action was brought against the Respondents for trademark infringement, passing off and unlawful interference with trade.

At the High Court, the Appellants’ claims were dismissed on, among others, the grounds that (i) the Appellants do not have monopoly over the word “SkyWorld” as the SkyWorld Marks are not registered as word marks; (ii) the competing marks are visually different as the Respondents’ use of the word “skyworld” was either wholly in uppercase or lowercase but not in mixed uppercase as in the SkyWorld Marks; and (iii) the parties are not engaged in the same trade.

The crux of the appeal rests on the issue of whether an action for infringement could be instituted for the use of a registered mark as part of a trade or company name. While there have been previous cases in Malaysia of similar nature, such actions were premised on the tort of passing off rather than trademark infringement.

Court of Appeal’s decision

At the outset, the Court found it useful to distinguish the functions of a trademark, trade name and domain name as follows:

• a trademark serves as the source identifier of a product or service in the marketplace;
• a trade name is used to identify the business offering the said product or service; and
• a domain name is the online identity of the business and is usually the same or similar to the trademark as part of the branding strategy.

Given the dearth of Malaysian cases on the issue, the Court turned to precedents from other common law jurisdictions and the European Court of Justice as reference in deciding that an action for infringement could indeed be founded upon the unauthorised use of a registered mark as part of a trade or company name. The Court was also persuaded by the recent amendment to Section 10(4) of the UK Trade Marks Act 1994 which expanded the scope of use of a sign to include use as a trade or company name.

The Court ventured further in clarifying the applicable tests in an infringement action. First, there should not be a microscopic comparison of the minute differences between the competing marks in deciding the likelihood of confusion. Thus, whether the infringing mark was used in uppercase or lowercase was immaterial.

Second, the trial judge had erred by enquiring whether the parties are in the same business. Instead, according to the Court of Appeal, the correct approach in deciding whether there is trademark infringement is to first enquire whether the Respondents’ use of the infringing marks came within the specification of services covered by the registration of the SkyWorld Marks. In this respect the Court opined that the words in a specification of services should be given their natural and ordinary meanings. Thus, the registered services of the SkyWorld Marks, namely “real estate development”, “property development”, and “building and construction of real property” would encompass the Respondents’ proposed theme park development. A clear case of infringement has thus been established.

Comments

We believe this is the first appellate decision which lays down the proposition that a registered mark could be infringed through the use of a registered mark or an essential part of it as a trade or corporate name. The grounds of judgment contain clear exposition on the tests to be applied when dealing with the issue of trademark infringement, passing off and unlawful interference with trade. It is novel and noteworthy that among the relief granted by the Court is an order directing the Respondents, including the directors, to publish apology notices in three national dailies to express their regret over the infringing acts.

In light of this decision, it is advisable for prospective business owners to conduct proper due diligence before deciding on their business name. Simple and cost-effective measures such as conducting a name search at the business or company registry, a domain name search or at the very least a search on Google may avert any unnecessary legal proceedings that may result in the cancellation of the business name, the publication of apology notices to the public, the changing of marketing materials and the loss of any goodwill built under the infringing name.

Mr Wong Chee Wai, Mr Eugene Ee and I acted as counsel for SkyWorld at the High Court and the Court of Appeal.

Write-up contributed by Teo Bong Kwang and Eugene Ee

14 February 2020

On 9 April 2019 the Malaysian Parliament tabled a new, totally revamped Trademarks Bill 2019 for its first reading. The proposed bill could bring about significant changes to the existing regime for trademark protection and enforcement in Malaysia. It will replace the Trade Marks Act 1976 and, among other things, seeks to put in place the necessary and long-overdue legislative framework for Malaysia’s accession to the Madrid Protocol. On top of this, the bill will introduce new provisions with regard to:

•  the protection of non-traditional marks;
• an express provision for the securitisation of registered mark;
• enhanced statutory protection for registered marks; and
• improved enforcement mechanisms against counterfeit goods.

1. Accession to the Madrid Protocol

The bill contains express provisions to pave the way for Malaysia’s imminent accession to the Madrid Protocol. In this regard, it seeks to empower the Minister of Domestic Trade and Consumer Affairs to prescribe the relevant regulations that will enable Malaysia to full its international obligations under the protocol. The regulations would govern matters relating to the applications for the international registration of marks and the protection accorded to such registrations, among other things.

2. New definition of ‘trademark’ and recognition of non-traditional marks

One of the significant changes proposed by the bill is the new definition of ‘trademark’, removing the definition promulgated by the UK Trademarks Act 1938. The term ‘trade mark’ is now spelled as ‘trademark’ and its definition has been updated to be in line with the modern definition of the word as found in the UK Trademarks Act 1994. A ‘trademark’ is defined as “any sign capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of other undertakings (Section 3(1)). And ‘sign’ is widely defined to include the following new items:

• shape of goods or their packaging;
• colour;
• sound;
• scent;
• hologram;
• positioning; and
• sequence of motion.

This brings about a significant yet welcome change in trademark practice, as the bill expressly recognises and accordingly grants protection to non-traditional trademarks in keeping with new developments. Owners of such non-traditional marks will soon be able to register them under the new legislation.

3. Trademarks as personal or moveable property and the securitisation thereof

With the objective of further developing a knowledge-based economy and to facilitate the creation of a viable ecosystem for IP trading, the Malaysian Parliament will introduce a new Part IX, which recognises trademark rights as a subject for securitisation. Pursuant to the provisions in this new part, a registered mark will be treated as personal or moveable property and “may be subject of a security interest in the same way as other personal and movable property” (Section 62). Charges may be placed on registered marks, in the same manner as personal or moveable property (Section 64(5)). As a result, the owner of a registered mark will be able to tap into its value and pledge it as a form of security or collateral in any financing arrangement. This would create an added incentive for owners to register their marks, aside from the usual rights accrued from the trademark’s registration.

4. Strengthened statutory relief and remedies for trademark infringement

The bill has also codified the remedies that are ordinarily awarded to successful claimants in an infringement action. These include damages, account of profits, injunctions (including interim injunctions) and mandatory orders. The bill empowers the courts to grant damages to the claimant, as well as to compel the defendant to provide an account of the profits made in cases of flagrant counterfeiting. This is not currently the case, as successful claimants are still required to elect which of the two heads of damages they wish to claim based on common law principles. The courts will also be empowered to grant mandatory orders against defendants, including handing down an order to erase the defendant’s offending sign and the delivery or disposal of the infringing goods, material or articles. With regard to civil actions against counterfeiters, the courts will be given the discretion to grant additional damages to the claimant depending on the flagrancy of the infringement, the benefit gained by the counterfeiter, the need to punish such counterfeiters and other relevant considerations. The bill will also provide relief to any person who is subjected to groundless threats of infringement proceedings. In the circumstances, a claimant may claim for a declaration that the threats are unjustified, an injunction to prevent the threat from continuing and damages for the loss suffered.

5. Enhanced legal enforcement of trademark rights

Under the existing enforcement regime, criminal charges in respect of the false application of trademarks to goods and services is governed by the Trade Descriptions Act 2011, in particular Section 8. However, it appears that the legislature intends to include and consolidate all the relevant provisions for criminal sanctions against counterfeiting activities involving registered trademarks within the ambit of the bill. A new Part XV titled “Offence” will be introduced, which will consist of extensive provisions relating to trademark counterfeiting offences and the false application of a registered mark to goods or services. With the concurrent introduction of the proposed bill and the Trade Descriptions (Amendment) Bill 2019, it appears that the Malaysian legislature intends to transfer the provisions relating to enforcement of a registered trademark found in the Trade Descriptions Act to the bill. This is evident by the removal of Section 8 (offence relating to application of false trade description involving a registered mark) and placing it under the purview of the bill. This appears to be a logical move given that the subject of protection of Section 8 concerns a registered mark. For the first time, the bill will criminalise the act of counterfeiting a registered mark and falsely applying a registered mark to goods or services. It also criminalises acts of making an article specifically designed or adapted for making copies of a registered mark or a sign likely to be mistaken for it. Any person who imports, sells or exposes for sale or has in their possession, custody or control for the purpose of trade or manufacture any goods to which a registered trademark is falsely applied is guilty of an offence. Hefty penalties for the offences under Part XV are prescribed. Following the above proposed changes, Part XVI, titled “Investigation and Enforcement”, has adopted a substantial part of the provisions in the Trade Descriptions Act with regard to the powers of the enforcement authority. Similar to the powers under the act, enforcement officers will be armed with the powers to investigate, arrest suspects and search and seize goods suspected of being the subject of an offence.

6. Attempts to modernise and streamline registration procedures

As a measure to modernise trademark registration procedures, the bill will introduce the publication of the Intellectual Property Journal (presumably in lieu of the possibly more time-consuming Government Gazette ), electronic ling and issuance of documents via electronic means and issuance of guidance and practice directions. It also seeks to clarify some of the administrative powers of the registrar of trademarks. Besides that, as a bulk of the work of the registrar or assistant registrar is to determine whether the use of a trademark is likely to cause confusion, the bill introduces a new Section 9, which provides that in determining whether the use of a trademark is likely to cause confusion, the registrar may take into account all relevant factors,
including whether the use is likely to be associated with a registered or earlier mark. It is believed that the original intention of this section is to codify guidelines for determining the issue of confusion between two marks. However, as the current wording stands, it appears too brief and general and risks imposing upon the registrar an additional requirement of expanding the scope of such inquiry to include the issue of confusion by association. It is highly doubtful whether the proposed and rather briefly worded Section 9 will provide much assistance to the registrar. The statutory mandate to take into account confusion by association may instead prove to be an additional burden on it.

Conclusion

The bill contains substantial changes to the existing law and practice relating to trademarks in Malaysia. It is a welcomed development as it will bring Malaysian trademark law in line with international standards

Teo Bong Kwang, Wong Jin Nee & Teo
Eugene Ee,  Wong Jin Nee & Teo

June 2019 

Postscript: The Trademark Bill 2019 went through its second reading at the lower house of the Malaysian Parliament with some minor changes on 2 July 2019. The upper house (Senate) approved it on 23 July 2019.  It is expected that the new bill may come into force in early part of 2020.

This article first appeared on WTR Daily, part of World Trademark Review on 18 June 2019. For further information, please go to www.worldtrademarkreview.com. The images found in this post were inserted by the authors.

by Teo Bong Kwang and Eugene Ee

In Shizens Cosmetic Marketing (M) Sdn Bhd v LVMH Perfumes and Cosmetics (M) Sdn Bhd (Kuala Lumpur High Court Civil Suit No WA-24IP-21-11/2017), the local company of luxury goods producer LVMH was faced with a trademark infringement suit in respect of its line of products known as “Dior Addict Lip Tattoo” in Malaysia. However, the fame and strength of its DIOR mark helped LVMH to ward off the action brought against it.

Background

Shizens, a local cosmetics manufacturer, is the registered proprietor of the LIP TATTOO mark in Class 3 for, among others, cosmetics, make-up preparations and lipsticks. Shizens instituted proceedings against the local chapter of LVMH on the basis that LVMH’s use of the DIOR ADDICT LIP TATTOO mark infringed its LIP TATTOO mark. LVMH launched a counterclaim to remove the LIP TATTOO mark from the Register of Trademarks on the grounds that the words ‘lip tattoo’ were, among other things, not invented words, which is a ground for removal.

High Court decision

The Intellectual Property High Court of Kuala Lumpur disagreed with LMVH’s contention that the LIP TATTOO mark had been wrongly registered. It held, among other things, that the words ‘lip tattoo’ are newly coined words, which are not generic and are not commonly used words that have no obvious meaning until a meaning is assigned to them. In the circumstances, the LIP TATTOO mark could not be removed from the register as it consisted of “invented words” within the meaning of Section 10(1)(c) of the Trademarks Act.

However, Shizens’ success in resisting LVMH’s application for removal or expungement was meaningless as the court did not rule in its favour on the issue of trademark infringement. In essence, the court did not agree with Shinzens that there was a likelihood of confusion between LVMH’s mark and the LIP TATTOO mark. The court took the following stand on the issue of the likelihood of confusion between the marks:

• The presence of the identical word ‘lip’ in the competing marks was inconsequential given that the registration of the LIP TATTOO mark was subject to a disclaimer whereby the registration did not give any right to the exclusive use of the word ‘lip’;
• The LVMH products, including the Dior Addict Lip Tattoo products, have a relatively better reputation than the Shizens products;
• The competing marks are phonetically and visually different;
• The Shizens and LVMH products are sold via different trade channels, in that the latter’s products are sold in boutique outlets in leading department stores, while the former’s products are sold at ‘Shizens’ counters; and
• Consumers of cosmetic products are generally better informed and more discerning.

Further, it was held that LVMH did not use the words ‘lip tattoo’ as a trademark. Instead, the word or mark DIOR was found to be the indicator of origin of LVMH’s products, including the Dior Addict Lip Tattoo products.

Comment

One of the central issues in this case was what constitutes trademark use. The court held that LVMH’s use of the words ‘lip tattoo’ does not amount to use as a trademark, as the words are prefixed by LVMH’s famous DIOR house mark. This reasoning seems wanting since ‘lip tattoo’, being a non-descriptive and non-generic word element, has no other apparent signification apart from the name of a product marketed by LVMH. This seems to contradict the court’s earlier pronouncement that the words ‘lip tattoo’ are invented words which are therefore capable of being registered as a trademark.

Further, it appears that the court placed great emphasis on the finding that the LVMH brand or products are relatively more famous than Shizens’ and that LVMH’s DIOR mark will distinguish it from Shizens’ LIP TATTOO mark. This seems to be a departure from the well-established principle laid down in Saville Perfumery Ld v June Perfect Ld ([1941] RPC 147), where it was held that, once a mark has been shown to offend, the infringer cannot escape liability by showing that something outside the actual mark distinguishes the infringing goods from those of the registered proprietor.

 

 

 

By Teo Bong Kwang*

0n 26 September 2010, Jimi Heselden, a British businessman who recently bought the Segway company was happily riding the famed “Segway” scooter in his huge Yorkshire estate. In a tragic turn, the Segway scooter ran over the cliff and into a river and Heselden was immediately killed. At that time, Segway scooter was a much touted invention of US inventor Dean Kamen.

Surely not every invention has tragic consequence. On the contrary, many inventions brought much happiness, fame and fortune to their inventors or owners. Take the example of the “One Click” patent of Amazon which was granted by the US Patent Office in 1999. It has reportedly generated billions for Amazon.

The Hidden Value of Patent

Many of us are totally oblivious to the immense commercial value of an invention or for that matter, the importance of an intellectual capital in the form of a patent in any business enterprise.  The vast majority of companies are simply unaware of the often-enormous economic and competitive values that lie untapped within their patent portfolios.  To borrow the euphemism popularized by Kevin Rivette and David Kline, it is like you have Rembrandt paintings lying dustily in the attic.

Balancing Market Monopoly and Public Interest  

The modern history of protecting one’s invention started in Venice in 1474. In the UK, the first piece of legislation which attempted to protect invention was The Statute of Monopolies, 1623. In its own archaic language, it allowed “patent monopolies” for 14 years upon “any manner of new manufacture”. Stripped of legal niceties, it merely meant that the State would grant a monopolistic right in the form of “letters patent” to the inventors.  As a trade-off, the inventors must disclose their inventions in a clear manner so that it can be used by a ‘person ordinarily skilled in the art’. The philosophy of protecting patent is pretty simple:  the State will grant a limited protection for any invention for a period of between 15 to 20 years in exchange of the full technical information related to it. Once the protection period has expired, the inventions are free to be exploited by anyone.  It is believed that with the required statutory protection given by the Government, inventors would be encouraged to engage in more inventive activities and come out with more novel inventions.  This will ultimately benefit the society at large as the innovative ideas as disclosed in the patents will add to the pool of existing technological knowledge in a particular field.  In this manner, society will progress in innovation and it will enjoy the fruits of the inventive members within it.

 

Flash of Genius can be Present in Mundane Objects 

The image Thomas Edison or Albert Einstein or a mad scientist with fuzzy hair will immediately come to mind when we talk about invention.  This is of course a myth.  The reality is that not every invention needs to be Einstein-que or earth-shattering like the atomic bomb. On the contrary, a cursory search at Google Patent will show that many mundane objects have been or are still protected by patents. For instance, a gadget to boil eggs, the yellow “post-it” note and the ubiquitous paper clip are subject matters of granted patents. Indeed flash of genius can be present in many mundane objects.

The Requirements for Patenting a New Invention

In 1983, Malaysia has its own national patent legislation.  It is called the Patents Act, 1983.  It came into force on 1 October 1986. Before the passage of this legislation, we could only obtain patent protection by first registering a patent in the United Kingdom and then re-register it in the three component regions of Malaysia. With the passage of the 1983 Act, we could obtain a national patent by filing an application with our local patent office.

The most frequently asked question which an intellectual property law practitioner like me has encountered is: how do I get a patent?

The answer is to first get your invention written down clearly in a document which is commonly called “patent specification”.  However, before this is done, it is imperative that the invention must possess the following requirements:

• the invention must be “new” in the sense that it has not been disclosed to the public anywhere in the world. The disclosure can be in the form of written publication, actual usage, actual article or even oral presentation or even sample shown in an exhibition;
• the invention must involve “an inventive step”. The question whether an invention involves an “inventive step” can be asked in another manner: whether the so-called “inventive step” (i.e. the “inventive feature or element”) of the invention is obvious to a person who has ordinary skill or experience in the subject matter; and
• the invention must be “industrially applicable”. This last requirement is normally easily satisfied as long as the invention can be commercially or industrially exploited. The rationale of this requirement clear, that is it is to prevent granting of patent for some theoretical invention which cannot be put into practical use.

In order for a patent to be valid, all the above three requirements must be present.  Anyone who has some experiences in patent litigation will inform you that most patent litigation are fought on the above three issues.  If a patent is proved to have been lacking in any of the above requirements, it can be cancelled or invalidated. Thus as a prudent measure, before an eager inventor spend enormous money in getting its patent specification drafted, it is advisable to ask the patent drafter to conduct the necessary “searches” to ensure that there are no other prior publications or disclosure which will nullify the invention.

Once the patent specification is properly drafted, the other steps of getting a patent granted are relatively straight-forward. The first step is to fill up the prescribed forms and then file them with the patent office.  You should of course consult a patent lawyer or agent for this important step.

The obtaining of a patent for any innovative breakthrough is an indispensable step to secure a cutting edge for achieving continuous growth of a business in this competitive environment.

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* This article first appeared in “Focus” Magazine in 2018.

By Teo Bong Kwang and Eugene Ee

The Malaysian Court of Appeal has recently decided that the courts are not bound by “hard and fast” legal principles when it comes to deciding on the proprietorship of a trademark among related entities.

Background

In Pathmanathan v Portcullis (Singapore) Pte Ltd (Civil Appeal No W-02(IPCV)(W)-1798-09/2016), which concerned a dispute between different entities that were previously part of the Portcullis group of companies, the Court of Appeal was faced with the thorny issue of the proprietorship of a trade mark used within the group.

The corporate structure of the Portcullis group is rather elaborate:

• the Portcullis companies in Malaysia – the third to twelfth appellants/defendants in this appeal were owned by Portcullis Holdings (Malaysia) Sdn Bhd (‘PH’), the second appellant/defendant; and
• the respondent, Portcullis (Singapore) Pte Ltd, and PH were both owned by Portcullis Holdings International Limited (‘PHIL’), which in turn was wholly owned by First Finance Holdings Ltd.

On 2 April 1998 a memorandum of agreement was signed by the first appellant/defendant, George Pathmanathan, and PHIL, whereby George was given 25% of the shares in PH. Sometime in 2006, George filed a minority oppression petition against PHIL, among others. The High Court ruled in George’s favour and ordered PHIL to transfer 75% of its shares remaining in PH to George. As a result, PH and the Portcullis Malaysian entities became wholly owned by George.

Subsequently, George filed two applications to register the PORTCULLIS marks in Malaysia. However, he was outdone by the respondent, Portcullis (Singapore), which managed to register twelve PORTCULLIS word and device or pictorial marks in various classes in Malaysia. Armed with the registrations, the respondent proceeded to sue the appellants for passing off, trade mark infringement and copyright infringement. The respondent contended that, when PH ceased to be part of the Portcullis group, its right to use the PORTCULLIS marks and logo also ceased.

In response, the appellants argued that the acquisition of PH by George was together with the goodwill and the other IP rights of the respective companies by virtue of the memorandum of agreement. Accordingly, the appellants led a counterclaim to expunge the twelve registered trade marks registered in the name of the Singaporean entity from the register.

In an extensive decision, the High Court ruled in favour of the Singaporean entity, based predominantly on the factual finding that it was the first user of the PORTCULLIS marks and logo in Malaysia.

Court of Appeal decision

At the appellate level, the Court of Appeal summarised the issue at hand in the following manner:

In the context of a corporate group, how is the issue of ownership of trade marks, corporate names and goodwill determined, including whether the principle of ‘first user’ is applicable when determining such ownership within a corporate group?

In answering this question, the court referred to the English Court of Appeal’s decision in Scandecor Development AB v Scandecor Marketing AB ((1998) EWCA Civ 1282). It held that, while the ‘first user’ principle is useful when determining any issue relating to the use of trade marks between unrelated competitors, such approach would not apply to cases involving related entities. If the court were to adopt the conventional approach, then the Singaporean entity would obviously prevail as it was the first user of the PORTCULLIS marks.

Instead, the court examined the facts of the dispute and highlighted one of the clauses in the memorandum of agreement, which provided that the goodwill and other IP rights shall vest in the respective Malaysian companies. Given that the ownership of PH was transferred to George, the goodwill in the PORTCULLIS marks and logo remained with the Malaysian entities. The High court’s decision was therefore overturned.

Comment

Interestingly, the Court of Appeal chose to deviate from a long line of cases – including the apex court’s decision in Mesuma Sports Sdn Bhd v Majlis Sukan Negara Malaysia ([2015] 6 MLJ 465), which held that proprietorship of a trade mark is established by first use of the mark within the country. In arriving at its conclusion that the Malaysian entities retained goodwill in the PORTCULLIS mark, the Court of Appeal placed great emphasis on a contractual provision in the memorandum of agreement. This raises the important question of whether contractual provisions on the alleged ownership of a trade mark should take precedence over the exclusive rights of a registered trade mark owner.

(This article first appeared on WTR Daily, part of World Trademark Review on 26 November 2018. For further information, please go to  www.worldtrademarkreview.com. )