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Malaysia: Philip Morris v Goodness

23rd July, 2013

In the case of Philip Morris Brands Sari v Goodness For Import and Export & Ors, the High Court of Malaysia sided with Goodness For Import and Export & Ors by discharging the injunction order and ordering the release of containers owned by Goodness For Import and Export & Ors.

Philip Morris Brands Sari (hereinafter referred to as ‘the Plaintiff’) is the registered proprietor and owner of the “Marlboro”, “Marlboro Roof Device” and “Marlboro Roof Line” trade marks for tobacco, raw or manufactured and other such products. The Plaintiff has exclusive right to the marks in relation to cigarettes.

Goodness for Import and Export (hereinafter referred to as ‘the First Defendant’) is an Egyptian entity and is the owner of Malimbo cigarettes. In 2011, the Royal Malaysian Customs (RMC) had detained and searched 10 containers being transshipped from Vietnam towards Egypt. The containers were declared to contain Omani Marbles. However, the RMC had found the containers to contain Malimbo brand cigarettes. The RMC had seized the goods for the offense of making a false declaration and the First Defendant and other Defendants (who are Malaysian registered companies) then paid the appropriate penalty to the RMC.

The Plaintiff considered the Malimbo brand cigarettes and its packaging to be an infringement of the Plaintiff’s trade mark rights and other intellectual property rights in the Marlboro brand around the world, and had filed the Writ of Summons and the Statement of Claim against the Defendants. The Court had given an order of injunction on the Plaintiff’s application resulting in the goods being prevented from release.

The Defendants applied for an order setting aside the Plaintiff’s Writ of Summons, for the discharge of the injunction order and protection and release of the containers. The High Court noted that the Plaintiff had not applied for leave to serve a notice of the Writ out of jurisdiction. The High Court stated that as the First Defendant was an Egyptian entity, the Court had no jurisdiction over the First Defendant unless the leave of Court had been applied for and granted or the First Defendant and other Defendants had submitted to this Court’s jurisdiction. The Court also adjudged that although the Defendants did enter an appearance to the case after becoming aware of the injunction, the Defendants did so in order to challenge the jurisdiction of the Court and therefore any such appearance did not constitute the Defendants’ waiver of rights to challenge the jurisdiction of this Court.

The Court concluded that the First Defendant, being an Egyptian entity, sold cigarettes in Middle East and North Africa and as such, the Malimbo brand cigarettes were never sold to the public in Malaysia. The Plaintiff stated that it intended to take action in Egypt, Middle East and North Africa to protect its trade mark in Marlboro vis the sale of Malimbo cigarettes. Therefore, the Court found that the only link between the Plaintiff and the Defendants were the presence of 10 containers of Malimbo cigarettes which were to be exported to Egypt. Under such circumstances, the High Court concluded that Malaysia and the High Court were not the forum non coveniens to try this matter.

As a result, the High Court ruled in favor of the First Defendant and other Defendants, setting aside the injunction and ordering release of the Defendants’ containers.

The Plaintiff had appealed the High Court’s decision in the Court of Appeal. The Court of Appeal has recently reversed the High Court’s decision. At time of writing of this article, we have not received the written judgment of the Court of Appeal and will update our readers about this as soon as the written judgment is available.

The Plaintiff had, at the same time of appealing the High Court’s decision in the Court of Appeal, made an application for the High Court’s decision to be stayed/suspended pending the disposal of the Plaintiff’s appeal to the Court of Appeal. The High Court stated that in order for the Court to grant a stay, the Plaintiff needed to show that there existed special circumstances for the Court to do so.

Hence, the Plaintiff contented that if the Court’s order be enforced/executed, the Defendants could remove or deal with the Malimbo cigarettes in such manner which would infringe the intellectual property rights of the Plaintiff and/or which would render the Plaintiff’s appeal to the Court of Appeal nugatory and academic.

The High Court accepted this argument and further stated that on the balance of convenience the status quo of this matter be maintained lest the appeal be rendered nugatory. The High Court further held that the Plaintiff had established a good reputation in the industry and as such any infringing act of the Defendants might cause irreparable damage to the Plaintiff’s goodwill, credit and business reputation which may not be adequately compensated by damages. Also, the High Court ruled that, should the decision of the Court of Appeal be in the favor of the Defendants, monetary compensation should be an adequate remedy for it and the Plaintiff was in the position to compensate the Defendants.

The High Court also agreed with the Plaintiff’s submission that their appeal was not frivolous on the grounds that the Plaintiff had taken all reasonable measures to effect service of the Writ and Statement of Claim on the Defendants. The High Court pointed out that even though the First Defendant was a foreign entity, there was no necessity to effect service of the Writ of Summons on the First Defendant out of jurisdiction as the Court had directed that the Writ of Summons be served on the Defendants’ solicitors within the jurisdiction of Malaysia based on the representation of the Defendants’ solicitors in Court.

The Plaintiff further prayed for an Erinford injunction, pending the Plaintiff’s appeal, restraining the Defendants from claiming or seeking release of the containers containing Malimbo cigarettes. On this issue, the High Court noted that where the application was for an injunction pending an appeal, the question was whether the judgment that had been given was one upon which the successful party ought to be free to act despite the pendency of appeal. Also, High Court rejected the Defendants’ submission that with the judgment of the High Court, there was now no Writ in existence and therefore the Plaintiff’s prayers be dismissed in limine as it presupposes the existence of Writ of Summons.

Hence, the High Court allowed the Plaintiff’s application to stay the order and imposed Erinford injunction on the Defendants, on the condition that the Plaintiff undertakes to compensate the Defendants in damages in the event the Plaintiff’s appeal fails in the Court of Appeal.

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