Malaysia: Court of Appeal Found Magic Boo Innocent

April 24th, 2013

 

In the case of Magic Boo Beauty Sdn Bhd v Koh Chui Ngoh T/A Perniagaan Lily, the Malaysian Court of Appeal overturned the High Court’s decision and declared Magic Boo Beauty Sdn Bhd free from the alleged claim of passing off.

Koh Chui Ngoh T/A Perniagaan Lily (hereinafter referred to as ‘the Respondent’) claimed to have imported into Malaysia and sold in the Malaysian market goods with the trade marks ‘Eye Putti’ and ‘Cecil’ since September 1995.

The Respondent filed a suit in the High Court claiming that MagicBoo Beauty Sdn Bhd (hereinafter referred to as ‘the Appellant’) started using the same marks on their goods thereby committing the torts of trade mark infringement and passing off. The High Court had rejected the Respondent’s claim for trade mark infringement stating that the Respondent’s trade marks were never registered under the Trade Marks Act 1976.

The Respondent had also claimed that the design, color, and shape of the box of the product distributed by the Appellant was so similar to the Respondent’s products that they misrepresented to the member of the public that the Appellant’s products originated from the Respondents. According to the Respondent, the Appellant sold eye putty in the packaging bearing the trademark ‘AP-AU’ (hereinafter referred to as ‘the Appellant’s Product’) which closely resembled eye putty in the packaging bearing the trademark ‘Cecil’ (hereinafter referred to as ‘the Respondent’s Product’). The Respondent also claimed that the Respondent’s name, address and Malaysian Product Numbering System number barcode (hereinafter collectively referred to as ‘the Respondent’s Particulars’) appeared on the Appellant’s Product. The High Court had adjudged that the Appellant had committed the tort of passing off, to which the Appellant appealed in the Court of Appeal.

The Respondent stated that it had acquired sufficient goodwill by continuously using, since September 1995, the trademark ‘Cecil’ in the course of its business. However, the Court of Appeal noted that apart from one copy of an advertisement in a page in a magazine, the name and date and circulation of which are unknown, and of which the advertisement for the eye putty is one of several advertisements appearing on that page, the Respondent did not adduce any evidence to show that it had earned goodwill in relation to the trademark ‘Cecil’. The Court of Appeal further noted that the customs declaration furnished by the Respondent did not mention the word ‘Cecil’, thereby was insufficient to conclude that the goods so imported were in face distributed and sold in Malaysia. Also, the Court of Appeal found out that it was only in August 2004 that the Respondent applied to the Ministry of Health for permission to import the product, meaning that the Respondent could have only begun to import the goods after September 2004.

Further, reference was made to the registration in 2005 of the industrial design of the packaging of the Respondent’s product. The Court of Appeal acknowledged that under Section 12 of the Industrial Designs Act 1999, an industrial design is incapable of being registered if it has been disclosed to the public anywhere in Malaysia. Hence, the Court of Appeal adjudged that the Respondent’s product must have only been marketed after 2005. On such grounds, the Court of Appeal held that the Respondent had not acquired the necessary goodwill.

Further, the Respondent had admitted in the High Court that before selling goods with the trademark ‘Cecil’, the Respondent had sold products with the trademarks ‘AP-AU’ and ‘Opera’. The Respondent had also accepted the Appellant’s claim that the Appellant had been appointed an agent in Malaysia by Tai Mei Trading Co. Ltd. based in China to distribute and sell eye putty products bearing the trademark ‘AP-AU’ in Malaysia and that such appointment was non-exclusive. The Court of Appeal further noted that the Respondent, despite having stated that it had sold the product under the trademark “AP-AU” before and knowing that the Appellant was then selling the product with that brand name, did not complain against the use of that trademark by the Appellant. Also, the Court of Appeal acknowledged that the Respondent had failed to furnish evidence showing who the party was from whom the Respondent had purchased the goods and imported in Malaysia. Therefore, the Court of Appeal adjudged that the distribution/sale of the Appellant’s Product must have preceded the distribution and sale of the Respondent’s Product.

Further, the Court of Appeal also considered the trap purchases of the Appellant’s product made by the Respondent bearing the Respondent’s details. The Appellant claimed that it had recalled the products bearing the Respondent’s details on the packaging after the purchases. The Court of Appeal conceded that as the products retailed at only RM 10.00 (approximately USD3.30), it would not be reasonable to expect the Appellant to issue a recall notice to all those who purchased the products. Also, a third trap purchase by the Respondent showed that the Appellant’s products no longer carried the Respondent’s particulars; suggesting that the Appellant did in fact took action to have the Respondent’s details removed from the packaging of the Appellant’s products.

On the subject of damages, the Court of Appeal held that although the Appellant’s product was in direct competition with the Respondent’s product, the Respondent had failed to furnish any evidence suggesting that its products so imported were in fact sold in Malaysia.

Therefore, the Court of Appeal allowed the appeal and dismissed the High Court’s decision and cleared the Appellant from the alleged passing off claim.