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6th March, 2017

In X1R Global Holding Sdn Bhd and X1R Global Sdn Bhd v Y-TEQ Auto Parts (M) Sdn Bhd, the High Court of Malaya in Kuala Lumpur allowed the Plaintiffs’ claims against Defendant.

X1R Global Holding Sdn Bhd (hereinafter be referred as “the 1st Plaintiff”) is the proprietor of trade mark, “X1R”, bearing the Malaysian Trade Mark Registration Number of 05002405 in class 4 whereas X1R Global Sdn Bhd (hereinafter be referred as “the 2nd Plaintiff”) is a registered user of the 1st Plaintiff’s trade mark, associated with lubricant oil for motorcycle and car parts.

Y-TEQ Auto Parts (M) Sdn Bhd (hereinafter be referred as “the Defendant”) was established in 2006 and was initially in the t-shirts printing business prior to becoming a wholesaler of motorcycles parts and accessories. The Defendant has been using their trade mark extensively on their goods i.e. on motorcycle parts and accessories since 2013, advertisement in motorcycle magazines and sponsoring a team in Petronas AAM Malaysian Cub Prix Championship in 2013-2016. The goods are being sold across Malaysia to many motorcycle workshops and online shops. The Defendant had registered that trade mark “X1R” in classes 07, 09, 12 and 35 and had another trade mark application in class 25 which was still pending for registration.

In August 2013, the 1st Plaintiff’s Sales Manager had visited Meng Kah Auto Parts Trading Sdn Bhd (MKAPT) in order to create a business opportunity between these two companies. Unfortunately, the director of MKAPT refused to seal the deal as there was an existing brand “X1R by YTEQ” in the market.

The following year, 2nd Plaintiff’s General Manager had visited the Defendant’s warehouse as a potential distributor and was “looking” for X1R accessories and this further confirms that the Defendant’s mark was strikingly similar to the Plaintiffs’.
As a result of confusion, the Plaintiffs received several written complaints (formal letters and emails) from their traders and customers due to the confusion in goods between the Plaintiffs’ Trade Mark and the Defendant’s Trade Mark. On top of that, the end users and general public were deceived due to this confusion and hence affecting the Plaintiffs’ business directly.
The Plaintiffs had then initiated a suit against the Defendant in order to expunge the Defendant’s registered trade marks on the grounds of the Defendant’s trade marks were wrongfully registered by the Registrar without sufficient cause and/or wrongfully remains in the Register.

In the same suit, the Plaintiffs had also filed a suit to expunge the above-mentioned marks from the Register of Trade Mark on the ground of non-use. The Plaintiffs’ application is premised on Section 46(1)(b) of the Trade Marks Act 1976.

For the purpose of Section 46(1) of the Trade Marks Act 1976, the Plaintiffs had to prove that they are “aggrieved persons” and that there is a likelihood that confusion and deception have occurred between the Plaintiffs’ trade mark “X1R” for goods in class 4 while the Defendant’s Trade Mark is in respect of goods and services in classes 7, 9, 12, 25 and 35. For example, the Plaintiffs had to prove that distributors, dealers, traders and retailers may believe that the Defendant’s goods are indeed originate from the Plaintiffs’ and if the Defendant’s goods do not meet the high standard of X-1R goods, the general public may assume that the X-1R goods are of lower quality or fake and this has tremendously affect the Plaintiffs’ businesses.

The Defendant submitted that the Plaintiff was not an aggrieved party within the meaning of Sections 45 and 46 of the Act as the Plaintiff is merely making an application for registration relying on the decision of the Federal Court in McLaren International Ltd v Lim Yat Meen [2009] 4 CLJ 749.

The High Court concluded that the Plaintiffs are “aggrieved persons” as the Plaintiffs and the Defendant are dealing in the same trade and the registrations of the Defendant’s marks would prejudice the Plaintiffs’ legitimate business expectations and the Plaintiffs would continuously suffer prejudice in their legitimate expectation to sell its goods if the Defendant’s marks remain on the register.

Based on the evidence provided by the Plaintiffs, the Court had granted the prayers raised by the Plaintiffs including expunging the Defendant’s trademarks from the Register and all costs incurred by the Plaintiffs in the pursuance of this OS as well as the 4% allocator fee are to be paid by the Defendant.

On 11 January 2017, the Defendant (hereinafter referred as the “Appellant”) had filed an appeal at the Court of Appeal against the decision of the High Court. The Appellant argued on that (i) the High Court had allowed the Plaintiffs’ (hereinafter referred as the “Respondents”) claim against the Appellant based on wrong facts; (ii) the High Court had wrongly concluded that the Respondents were “aggrieved persons” under the Trade Marks Act, (iii) the High Court had wrongfully allowed the Respondents’ claim to expunge the Appellant’s marks because the Trade Mark Examiners had earlier decided that the Appellant’s marks were visually and conceptually distinctive and different from the Respondents’ mark before Appellant’s marks were registered in classes 7, 9, 12, 35 and 25.

The Court of Appeal had affirmed the High Court’s decision and held that the Respondents were indeed aggrieved persons based on the facts and evidence provided and agreed that the High Court had correctly applied the legal principles based on the facts and evidence.

The appeal was dismissed with costs.