MALAYSIA: SUPPLY AND SALE OF INFRINGED PRODUCTS ARE NOT TRADE MARK INFRINGEMENT ACTIONS

May 3rd, 2016

 

In Doretti Resources Sdn. Bhd. v Fitters Marketing Sdn. Bhd., ‘PYRO’-Tech Systems Sdn. Bhd., Teamware Sdn. Bhd., Muetech Sdn. Bhd. and Foo Swee Koon, the High Court of Malaya in Kuala Lumpur allowed striking out the Plaintiff’s claim against the last two Defendants.

Doretti Resources Sdn. Bhd. (hereinafter be referred as “the Plaintiff”) is a registered owner of the trademark ‘PYRO’ associated with iron magnets of keys, locksets for doors and window, locks, lever handle etc. The Plaintiff registered its trademark ‘PYRO’ with the Registry of Trade Marks, Malaysia which is under the jurisdiction of the Intellectual Property Corporation of Malaysia (MyIPO). The application was registered on 25 November 2004. The trade mark registration number as assigned by MyIPO is No. 04018316.

Fitters Marketing Sdn. Bhd. (hereinafter be referred as “the First Defendant”) and Pyro-Tech Systems Sdn. Bhd. (hereinafter be referred as “the Second Defendant”) are the customers of the Plaintiff. They have bought products bearing ‘‘PYRO’’ trademark by ordering from the Plaintiff and have sold the same to the members of public. In April 2015 the Plaintiff visited the warehouse of the First and Second Defendants and found the First and Second Defendants have stored many products that bear trademark ‘PYRO’ and these products were not produced by the Plaintiff.

The Plaintiff lodged a complaint at the Ministry of Domestic Trade, Co-operatives and Consumerism (MDTCC) on 3 June 2015 and on the next day, i.e. 4 June 2015, the MDTCC officials raided the warehouse of the First and Second Defendants and found a quantum number of ‘PYRO’-bearing products which the Plaintiff believed a fake products. The officials seized some documents from the warehouse and out of which, the purchase and delivery orders casted that Teamware Sdn. Bhd. (hereinafter be referred as “the Third Defendant”), Muetech Sdn. Bhd. (hereinafter be referred as “the Fourth Defendant”) and one Mr. Foo Swee Koon (hereinafter be referred as “the Fifth Defendant”) were the suppliers of the products bearing the mark “PYRO” in the warehouse.

The Plaintiff had then initiated a trade mark infringement action against all of the Defendants. In particular, the Plaintiff pleaded that the case against the Fourth and the Fifth Defendants is for trademark infringement. The issue in question was whether the sale and supply of the fake ‘PYRO’ products by the Fourth and Fifth Defendants led to trademark infringement under the Malaysian Trade Marks Act 1976.

The Court relied on precedents Leo Pharmaceutical Products v. Kotra Pharma (M) Sdn Bhd [2012] 10 CLJ 507 where elements to prove infringement were listed. Emphasis was laid down on the use of a mark identical with or so nearly resembling the Plaintiff’s registered trademark as is likely to deceive or cause confusion to the member of the public. By scrutinizing the opinions laid down in Lim Yew Sing v Hummel International Sports & Leisure A/S [1996] 4 CLJ 784 and Acushnet Company v. Metro Golf Manufacturing Sdn Bhd the High Court deduced that there is no issue of deception and confusion on the ordinary consumers as the supply of fake ‘PYRO’ products to the First and Second Defendants is entirely based on the purchase orders and delivery orders which were performed on demand of the First and Second Defendants. This forms no ground to say that Fourth and Fifth Defendants sold their products to the members of public causing confusion and deception. There is no role of general public in the trading between the Defendants and the legal intent of Section 38(1) is to protect the ultimate consumers from confusion and deception.

Furthermore, the Court took into account the English High Court Judgement of Cadbury Ltd v Ulmer Gmbh 1988 FSR 385 where in it was held that mere supplying of the infringing products to distributors or retailers cannot amount to an act of infringement and the Plaintiff’s claim was struck off by the same Court. In addition to the English Court’s judgement, the High Court applied the decision taken in Dunlop Pneumatic Tyre v David Moseley [1904] 1 Ch. 612 that mere knowledge of the vendor (Defendant) that the purchaser intended to use the article i.e. outer detachable covers which is patented by the Plaintiff, to infringe the such patent does not amount to infringement on part of the vendor and such sale does not become patent infringement and no cause of arises out of it.

Similar decision was laid down in Belegging-En Exploitatiemaatschappij Lavender B.V v Witten Industrial Diamonds Ltd [1979] FSR 59 and Amstrad Consumer electronics Plc v The British Phonographic Industry Limited [1986] FSR 159. Under the purview of these judgements of alleged patent and copyright infringement respectively the High Court agreed with the submission made by the Fourth and Fifth Defendants and agreed that the above precedents are equally applicable in cases of alleged infringement of trademarks.

The Court held that mere act of supplying the infringed ‘PYRO’ products to the retailers does not amount to trademark infringement as they were not supplying the infringed products to the member of the public and such supplies were based on purchase and delivery orders from the First and the Second Defendants.

The judgement is intriguing as the suppliers of fake and imitated products have a defence if they are not selling the products to the members of the public directly. Based on this judgement, it appears that suppliers of fake products can avoid infringement action despite their act of sale and supply of infringed products to retailers who plan to sell the product to the members of the public leading to confusion and deception. It is therefore, trade mark owners advised that to be vigilant of such loopholes.