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MALAYSIA: EFFECT OF DISCLAIMERS IN THE SCOPE OF TRADEMARK

15th May, 2020

On 17 July 2019, the Court of Appeal delivered a judgement in a case of Nor Yanni bt Adom & Anor v Ortus Expert White [2020] 1 MLJ 101 concerning breach of dealership agreement, trademark infringement and passing-off.

Ortus Expert White (hereinafter referred to as “the Respondent”) is the owner of a registered trademark of “Royal Expert White” that had a crown device. One Ms. Nor Yanni Binti Adom (hereinafter referred to as the “1st Appellant”) entered a Dealership Agreement dated 9 September 2015 with the Respondent, whereas one Ms. Noorfaezal Bin Romli (hereinafter referred to as “the 2nd Appellant”) is the sole proprietor of Rafica Resources and had distributed the Respondent’s products and a skin whitening cream bearing the Respondent’s registered trademark together with the 1st Appellant. Further, the 1st and 2nd Appellants were also selling a whitening cream bearing the mark “Real Expert White” with a diamond-shaped device.

The Respondent initiated an action against the 1st and 2nd Appellants, whereby the Respondent alleged that the 1st Appellant had breached the dealership agreement, infringed the Respondent’s registered trademark and passed off Respondent’s trademark. The High Court ruled that the 1st and 2nd Appellants were liable on all three causes of actions.

The Appellants filed an appeal in the Court of Appeal against the decision of the High Court on the ground that specific disclaimer attached together with the register that the registration shall give no right to the exclusive use of the words “Royal” and “Expert White”.

The Court of Appeal was of the view that the comparison of essential features by the High Court was flawed. The Court of Appeal opined that the only striking similarities between the two marks are the disclaimed words “Expert White”. However, as disclaimed words are not protected under the trademark registration, it was held that the two marks are distinct and different, which shall not be confused with each other. Hence, the 1st and 2nd Appellants do not infringe the Respondent’s mark and not likely to cause a confusion or deception. Further, the Court of Appeal also held that the Respondent did not fully discharge their burden of proof with respect to the trademark infringement and passing off by the 1st and 2nd Appellants.

With regards to the issue of passing off, the 1st and 2nd Appellants argued that the product “Royal Expert Whitening Cream” was not a product registered under the Respondent, but under another non-party, namely Ortus Expert Cosmetics Sdn Bhd. The High Court judge failed to notice that the CDCR list of registered products contains not just products of the Respondent, but also some products from the non-party. 

According to the High Court’s judge, the Respondent enjoyed goodwill in its business related to the Respondent’s mark and the Respondent’s get-up. The High Court judge also deemed that the Respondent’s witnesses are credible and held that the Respondent had proven to have suffered loss caused by the 1st and 2nd Appellants’ misrepresentation by taking into account the evidences given by the Respondent’s witnesses.

Contrary to the High Court judgement, the Court of Appeal had considered the 1st and 2nd Appellants submission at the trial, which is a press statement issued by the Ministry of Health (MOH) that banned the product “Royal Expert Whitening Cream” for containing mercury. The press statement acts as a warning not only to all sellers and distributors to stop the sale and distribution of the product, but also to the public to immediately seek medical advice for any adverse reactions from using the product “Royal Expert Whitening Cream”. In view of the press statement, the Court of Appeal agreed with the 1st and 2nd Appellants that this destroyed the element of goodwill in the Respondent’s business related to the “Royal Expert” branding and the Respondent’s product. Hence, it was concluded that the Respondent had suffered loss due to this matter and not caused by the 1st and 2nd Appellants’ misrepresentation.

Given the above, the Court of Appeal ruled that the element of misrepresentation also failed as the Respondent could not establish goodwill in its trademark and there was non-infringement of the Respondent’s trademark. Further, as there was non-infringement of the Respondent’s trademark and the Respondent failed to prove passing off by the 1st and 2nd Appellants, the Court of Appeal held that there was no breach of the dealership agreement. As a result, the Court unanimously decided that the appeal was allowed with cost and the High Court’s decision was set aside.