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3rd May, 2016

In Maestro Swiss Chocolate Sdn. Bhd. v Chocosuisse Union Des Fabricants Suisses De Chocolat, Kraft Food Schweiz AG and Nestle Suisse S.A., the Federal Court of Malaysia dismissed the appeal filed by the Appellant and allowed the appeal filed by the Respondents.

Maestro Swiss (hereinafter be referred to as “ the Appellant”) manufactures and sells various types of chocolates under the brand names ‘Vochelle’ and ‘Maestro Swiss’ in Malaysia.

Chocosuisse Union Des Fabricants Suisses De Chocolat (hereinafter be referred as “the First Respondent”) is a cooperative society established in Switzerland. Its responsibility is to protect the worldwide reputation and goodwill of its members who are chocolate manufacturers in Switzerland. The Kraft Food Schweiz AG (hereinafter be referred as “the Second Respondent”) and Nestle Suisse S.A. (hereinafter be referred as “the Third Respondent”) are the members of the First Respondent. They are in the business of manufacturing supplying, selling and exporting for sale of Swiss Chocolates namely Toblerone and Nestle and have seen supplying chocolate to Malaysia for at least 10 years.

The Respondents had earlier initiated an action in High Court of Malaya in Kuala Lumpur for Appellant’s wrongful usage of the mark “Maestro Swiss”. They pleaded that such usage led to misrepresentation to the public and deceived as to the true place of origin and that the Defendants’ chocolate products were associated with theirs which shared the goodwill and reputation of being known as ‘Swiss Chocolate’ manufactured in Switzerland. They argued that the Appellant’s acts have led to passing off in extended form.

On the other hand Appellants put forth their argument that they never mentioned or signified that their chocolates were associated with Switzerland. Also, they pleaded that Respondents had no goodwill associated with to their business activities in Malaysia as they do not sell or manufacture chocolates here in Malaysia.

The High Court had dismissed the claim of the Respondents and found that the First Respondent had no locus standi to be a party in the claim as it has ‘no business interest or goodwill to protect’ in Malaysia. It was held that there was no misrepresentation as to the chocolate products were associated with Respondents’ chocolate products and that the words ‘Maestro Swiss’ were distinctive and does not deceive the public with regard to its origin as Switzerland.

However the Court of Appeal allowed the claim against the Appellants for passing off in extended form and held that the First Respondent has requisite locus standi under common law and of the Malaysian Geographical Indications Act, 2000 (GIA).

The Appellants filed an appeal in the Federal Court of Malaysia against the decision of Court of Appeal followed by another appeal that was filed by the three Respondents. Federal Court overruled Court of Appeal’s decision on locus standi. Further, it held that the claim for passing off in extended form is therefore confined to the Second and Third Respondents. This was deduced by the Court by relying on the decision in Chocosuisse v Cadbury [1999] EWCA Civ 856 wherein it was held that mere trade association did not provide locus standi to sue.

Reaffirming that the test for both forms of passing off is same, the Federal Court held that the Court of Appeal was not misled and sustained that the use of the mark by the Appellant has the likelihood of inducing the members of the buying public to associate the product with the trade name ‘Swiss Chocolate’. The demerits of the public survey as an evidence for Respondents i.e. leading questions in the survey form as a presupposition of existence of SWISS chocolate concept, survey conducted four years prior to the filing of the action, false cross section representation chosen as universe for conducting survey was pointed out by the High Court which was overruled by the Court of Appeal stating that mere cautiousness doesn’t implicate total disregard of such surveys. The Federal Court upheld the Court of Appeal’s opinion that the results of the survey shows that some members of the public are likely to be confused with regard to the origin of Maestro Swiss from Switzerland or Swiss Chocolates and is acceptable as evidence.

The Federal Court held that the Respondents have locus standi to initiate proceedings under Section 5 as “interested persons” of GIA. The Court reaffirmed the Court of Appeal’s view that the impugned words were geographical indications. Furthermore it was found that the trial judge did not deal with Section 27(2) of GIA but the Court of Appeal took a different view and decided that with the application of Section 27(2) of the GIA the Respondents’ claim under GIA fails. Such approach taken by the Court of Appeal was erred upon by the Federal Court with an explanation that Section 27(2) is only with respect of things done before the GIA came into force on 15 August 2001 and that the Respondents seek to restrain the Appellants from continuing use of the Swiss Mark logo post the commencement of GIA.

With regard to the application of section 28(2) of GIA, the Federal Court held that of the trade mark “Maestro SWISS” on the front of the packaging intentionally gave the impression that it has a Swiss connection. Despite its usage before GIA’s commencement, the marketing strategies and witness statements adduce that the use was not in good faith. Hence, Section 28(2) is not applicable and the appeal by the Appellant was dismissed and the Respondents appeal was allowed.

This case holds importance with respect to application of passing off in extended form for class of goods with a valuable and recognised goodwill. It also protects interest of the owners of geographical indications.