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MALAYSIA: BISCUITS BATTLE IN COURT

15th May, 2020

In the High Court of Malaya case of Munchy Food Industries Sdn Bhd v Huasin Food Industries Sdn Bhd, Munchy Food Industries Sdn Bhd (hereinafter referred to as “the Plaintiff”) brought an action against Huasin Food Industries Sdn Bhd (hereinafter referred to as “the Defendant”) for trademark infringement and passing off.

The Plaintiff is the owner of LEXUS Mark, which was registered on 23 Jan 1998 and had been used on the packages of the Plaintiff’s biscuits since then. The Defendant had applied for registration for LEX Mark on 25 September 2015 and the Plaintiff had subsequently filed an opposition to the Defendant’s mark. The Plaintiff alleged that the Defendant had infringed the Plaintiff’s mark and that the Defendant had committed passing off in respect of the Plaintiff’s mark and get-up of its biscuit products. On the other hand, the Defendant counterclaimed to apply for an expungement application on the Plaintiff’s mark on the grounds that a likelihood of deception/confusion between the Plaintiff’s mark and Toyota’s LEXUS Mark and the Plaintiff’s mark was not distinctive over the Plaintiff’s biscuits.

This case highlighted the following key issues for consideration by the High Court:

  1. whether the Defendant as an infringer is aggrieved by the Plaintiff’s mark and entitled to file for expungement;
  2. whether the prohibition of a likelihood of deception/confusion applies to the first bona fide user (1st user) of a mark on goods or services in the course of trade;
  3. whether the Defendant can rely on a stranger’s trademark to expunge the Plaintiff’s registered trademark;
  4. whether internet searches such as Wikipedia search can be relied on as an evidence in the Court; and
  5. whether there is any effect on the distinctiveness of the goods or services when a house brand and a sub-brand are used together.

Firstly, the Court dismissed the counsel for Plaintiff’s submission that an infringer is disentitled from applying for expungement based on the Federal Court decision in LB (Lian Bee) Confectionary Sdn Bhd v QAF Ltd. The Court is of the view that disqualification of an infringer from being an aggrieved party and disentitlement from applying an expungement would defeat the purpose of sections 45(1)(a) and 46(1) (a) and (b) of the Trade Marks Act 1976 (TMA), which may also cause injustice to parties who have legitimate grounds to apply for an expungement. Subsequently, although the Court held that the Defendant satisfied the meaning of an aggrieved party in section 45(1)(a) TMA.

The Court then went on to decide that the Plaintiff is indeed the 1st user of the Plaintiff’s mark on the Plaintiff’s biscuits in the course of trade of Malaysia, which leads to the next key issue of whether the prohibition of a likelihood of deception/confusion applies to the 1st user. In reference to section 14(1)(a) of the TMA, the Court is of the view that the likelihood of deception/confusion did not apply to the 1st user, whereby only a second or subsequent user of an identical or similar trade mark for the same or similar goods or services may cause the likelihood of deception/confusion. Consequently, pursuant to section 14(1)(a) of the TMA, the Court dismissed the Defendant’s counterclaim to remove the Plaintiff’s mark from the Register.

In addition, the Court held that the Defendant may rely on a stranger’s trademark as a ground in the expungement application due to the fact that it is not mention anywhere in the TMA which prevents the consideration of a likelihood of deception/confusion between a registered trademark and a stranger’s trademark in an expungement application. However, the Defendant failed to discharge the burden to prove a likelihood of deception/confusion between the Plaintiff’s mark and Toyota’s LEXUS mark and hence did not warrant expungement of the Plaintiff’s mark.

In addition, the Court addressed the issue whether Internet searches such as Wikipedia search could be relied on as an evidence in the Court. The weight of internet search results including Wikipedia search in this case was deemed as doubtful as the Court was not informed of the authorship and the source of information relied by the author of the website. Further, the Court ruled that results of internet search and Wikipedia search are not considered by the Court in cases related to trademarks and tort of passing off.

The Court also addressed the issue whether there is any effect on the distinctiveness of the goods or services when a house brand and a sub-brand are used together. The Court held that the Defendant had failed to discharge the burden to prove that the Plaintiff’s mark is not distinctive over the Plaintiff’s biscuits. Further, the Court is of the view that the house brand and the sub-brand are in law “stand alone” trademarks that have their own distinctiveness when both of the house brand and the sub-brand are used together in respect of the same goods or services, given that the trademarks falls within the criteria of distinctiveness within the meaning under section 37(c) TMA.  

In regard to the issue of passing off, the Plaintiff proven that the Plaintiff did enjoy goodwill in its business related to the Plaintiff’s mark and the get-up of the plaintiff’s biscuits. The Court opined that although there are differences between the Plaintiff’s get-up and the Defendant’s get-up, they share striking similarities and consequently concluded that the Defendant had misrepresented to the public which leads or likely to lead the public to believe that the Defendant’s biscuits are that of the Plaintiff’s. As such, the Court ruled that the Defendant passed off the Defendant’s biscuits as the Plaintiff’s biscuits by the use of the Defendant’s mark and the Defendant’s get-up. Further, the Plaintiff also proved a likelihood of damage to the Plaintiff’s goodwill caused by the Defendant’s misrepresentation. In conclusion, the court decided that the Plaintiff’s claim was allowed with cost and the Defendant’s counterclaim was dismissed, hence the Defendant failed in expunging the Plaintiff’s mark.

Dissatisfied with the outcome of the case in the High Court, Huasin Food Industries Sdn Bhd (from now onwards referred as “the Appellant”) had filed an appeal with the Court of Appeal. The Appellant argued that the High Court had (i) failed to properly assess a likelihood of deception or confusion in respect of trademark infringement; (ii) misrepresentation of the mark for the purposes of passing-off; and (iii) failed to compare the whole of the Appellant’s packaging bearing the Appellant’s Trademark to the whole of the product packaging of Munchy Food Industries Sdn Bhd (from now onwards referred as “the Respondent”) bearing the Respondent’s Trademark, and their relevant circumstances of use.

Upon reviewing the appeal records and the submissions by both parties, the Court of Appeal held that:

  • that both the Appellant and the Respondent are genuine traders and the TMA is not meant to give any form of monopoly to traders that will affect the consumers. The TMA itself provides provision for genuine traders who claim probable confusion may arise to seek suitable orders from the registrar of trade marks to vary the mark itself; and
  • that the TMA is framed in such a way for the Court to consider whether the parties should have sought orders for co-existence of the marks to avoid confusion and generate healthy competition for the benefit of the public as opposed to exercise minute technical arguments and reliance of cases from jurisdiction where ‘co-existence’ may not be part of the law.