MALAYSIA: MALAYSIAN COMPANY TOOK ON US COMPANY

November 30th, 2016

 

In the case of Huan Schen Sdn. Bhd vs SRAM, LLC, Huan Schen Sdn. Bhd,., the Plaintiff – a Malaysian company that sells bicycles, bicycle spare parts and accessories had filed an originating summons (OS) against SRAM, LLC - a US-based company.

Plaintiff’s trade mark contains the word “SRAM” which is the Defendant’s company’s name who happens to be in the same industry. An opposition was filed by the Defendant against the Plaintiff’s trade mark application on ground that the Plaintiff’s trade mark was confusingly similar to the Defendant’s trade marks and will likely to confuse the public.

However, the opposition was dismissed and this OS was filed in 2015 against the Defendant for the removal of the Defendant’s trade marks from the Register.

By way of history, since 1995, the Plaintiff, has become one of the leading distributors, importers and retailers for bicycles and their respective parts and accessories in Malaysia. The extensive use of the Plaintiff’s trade mark on the Plaintiff’s goods has allowed the Plaintiff to be the first user of the trade mark.

On the other hand, the Defendant was established in 1987 whose company name is “SRAM” which is an acronym of the founders of the company – Scott, Ray and Sam. Since then, the company has managed to build its name and become a well-known name in the USA and worldwide, including Malaysia especially in the manufacturing of bicycle parts. The goods and five of the Defendant’s trade marks i.e. SRAM RIVAL (class 12), SRAM VIA (class 12), SRAM APEX (class 12), SRAM RED (class 12) and SRAM RED (class 25) were filed in Malaysia between 2005 to 2007 and they had been featured several major sports event such as the Olympic Games, Men’s World Cup XC, National off-road Bicycle Association (NORBA), National Championships XC and Iron Man Triathlon.

In 2003, the Plaintiff had filed a trade mark application for the mark “SRAM” for similar goods in class 12 as claimed by the Defendant i.e. bicycles, bicycle parts and accessories thereof. Prior to the Plaintiff’s application, the Defendant had already introduced “SRAM grip shifts” in Malaysia since 1999. Since then, the Defendant’s trade mark had been used extensively in Malaysia including publication in newsletters for a local distributor for a promotion between 2013 to 2015.

During the opposition stage, to oppose the Plaintiff’s trade mark application, the Defendant had raised several concerns: (i) Malaysians had been exposed to the Defendant’s five trade marks since 1988; (ii) the Plaintiff did not tender any evidence to show how the Plaintiff had coined the “SRAM” mark; (iii) the invoices exhibited by the Plaintiff did not contain any acknowledgement or signatures by the recipients of those invoices and (iv) the Plaintiff’s invoice dated 12 February 2002 was issued to a company Perniagaan King Soon was fabricated because the date it was issued was the first day of Chinese New Year which is a public holiday.

Nevertheless, the opposition was dismissed under the following grounds. Firstly, the Defendant had failed to produce the evidence of use of its trade marks in Malaysia before 2003 – they only managed to provide the earliest invoice only in 2005. Secondly, the Plaintiff was the first user of its trade mark in Malaysia, therefore, the Plaintiff is the proprietor of its trade mark under Section 25 of the Trade Marks Act. Any act of trading outside Malaysia is irrelevant.

As a result of the Defendant’s opposition dismissal, the Plaintiff’s trade mark “SRAM” was registered on 26 December 2003. Further to the dismissal of the Defendant’ opposition, the Plaintiff had filed this OS in 2015 against the Defendant to declare that the Defendant’s trade marks had been wrongfully registered in Malaysia and the trade marks must be removed from the Register.

With regards to the OS, one of the questions raised was whether the Plaintiff could file this OS in order to strike five of the Defendant’s trade marks from the Register when the Plaintiff did not oppose the Defendant’s trade marks while the marks were gazetted in the Trade Mark Journal. This argument was used by the Defendant’s counsel in order to revoke this OS filing by the Plaintiff. However the Court found that the argument provided by the Defendant’s counsel was unacceptable due to several reasons. The Court held that if the Defendant’s trade marks had been wrongfully registered and therefore they must be removed from the Register and therefore the fact the Plaintiff did not oppose the Defendant’s trade marks during the opposition stage did not bar the Plaintiff from filing the OS.

It is also a fact that the Defendant had come up with the “SRAM” mark. However that does not determine who the first user of the mark was during the course of trade in Malaysia. The Defendant had provided evidence that the mark “SRAM” was first used in Malaysia back in 1988. However during the application at the Registrar, the Defendant had claimed that the mark was first used in Malaysia in 2000. This created a confusion and inconsistency as it showed a lack of good faith and credibility of the Defendant. Apart from that, the Defendant failed to adduce the evidence that indicate that the marks had been used extensively in Malaysia before 2 January 2002 (as this was when the Plaintiff’s mark was applied at the Intellectual Property Corporation of Malaysia).

Another issue that raised a question was whether four out of five of the Defendant’s trade marks have infringed Section 14(1)(a) when read together with Section 37(a) of the Act. The Plaintiff successfully provided evidence on a balance of probabilities that Defendant’s trade marks had been obtained illegally. In addition to that, the Plaintiff had also proven that the use of the Defendant’s trade marks on the Defendant’s goods was more likely to confuse and trick the consumers with the Plaintiff’s trade mark and not the other way around.

As Plaintiff had no locus standi to expunge the Defendant’s fifth trade mark which claimed clothing, the Plaintiff’s request to expunge the fifth trade mark failed.

Based on the evidence provided by the Plaintiff, the Court had accepted the filing of this OS by the Plaintiff. The Court had also granted a declaration that the Defendant’s four trade marks were registered wrongly and to remove these trade marks from the Register within 14 days from the date of filing of the order.