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Malaysia: For interim relief, serious question and the balance of convenience must be proved

28th June, 2012

In the case of Ken Holdings Berhad & Ors v Sriseltra Sdn. Bhd, the Malaysian High Court in Kuala Lumpur allowed the Plaintiffs’ application of interlocutory injunction to restrain the Defendant from committing the act of passing-off and dismissed with cost the Defendant’s claim of restraining the Plaintiffs to seek verification as to the truthfulness of affidavits submitted by the Defendant.

The Plaintiffs are the proprietors of the mark ‘KEN’ in relation to the property development business. The 1st Plaintiff incorporated in 1983 was listed on the 2nd Board of Kuala Lumpur Stock Exchange since 1996 and was elevated to the Main Board in 2003. The 1st Plaintiff has seven major subsidiary companies, namely the 2nd Plaintiff, Ken Grouting Sdn. Bhd., the 3rd Plaintiff, Ken Property Sdn. Bhd., the 4th Plaintiff, Khidmat Tulin Sdn. Bhd., the 5th Plaintiff Ken Rimba Sdn. Bhd,, the 6th Plaintiff, Ken Link Sdn. Bhd., the 7th Plaintiff, Ken-Chec Sdn. Bhd. and the 8th Plaintiff, Ken TTDI Sdn. Bhd.

The Plaintiffs are part of the KEN Group. KEN Group started from the formation of a sole-proprietorship company KEN Grouting in 1980. It was named after its founder known as Mr. Kenny Tan. KEN Grouting had been using the trade mark ‘KEN’ in the provision of its engineering services which was closely related to the construction and property development sector.

The Defendant is a company involved in property development and is part of Ken City Group of Companies which was previously known as City Motors Group of Companies. The Defendant was incorporated in 1975 and its nature of business was property development.

The Plaintiffs claimed that the Defendant in June 2011 used the mark ‘Ken City’ in its advertisement in the newspaper to promote its development project called D’Pines@Ampang. The Plaintiffs discovered from an interested purchaser about Ken Group’s D’Pines@Ampang. The Plaintiffs had informed the Court that the interested purchaser was under the impression that this was a new development project by the Ken Group as the mark ‘Ken City’, appeared in the newspaper advertisement. The Plaintiffs thus, sent a cease and desist letter to the Defendant in July 2011 to cease the use of the mark ‘Ken City’.

The Defendant contended that Ken City Group began its operation since 1965 with the incorporation of City Motors Sdn. Bhd. The Defendant further stated that the Ken City Group had created a corporate identity to encompass all the companies bearing, inter alia, the “City” and “Ken” names.

The Court held that for interim relief the plaintiffs must establish that there is a serious question to be tried, and that the balance of convenience lies in favor of granting of relief. The Court also held that the affidavits filed in the Court are public documents.

The Court found that if the interim injunction is not granted, the Plaintiffs will suffer loss of goodwill and reputation which cannot be compensated easily by damages. In instant case the Defendant had been using the mark ‘Ken City’ to promote the development project although it is not the project name and is not the name of the developer.

The Court found that Plaintiffs through affidavits succeeded in raising the serious question of an infringement by the Defendant. However, the questions of law regarding infringement will be resolved at the full trial.

The Court while assessing the balance of convenience found that various factors are taken into account while deciding on the balance of convenience which varies from case to case. This is an equitable remedy; and the Court must produce a just result. The Court finally, accepted the Plaintiffs’ submission that as the Defendant’s project name had nothing to do with Ken City and no harm would come to the Defendant if the interlocutory injunction is granted since it is not required to change their project name. Based on facts the Court found that, the balance of convenience lies in favor of the Plaintiffs.

The Defendant had filed an application to restrain the 1st Plaintiff from using any document obtained as a result of this suit and restrain the 1st Plaintiff further from publishing of the words “Confusion of D’Pines@Ampang As A Development Of The Ken Holdings Berhad Group” in various newspapers. The Court found that the Defendant’s development name is D’Pines@Ampang and has nothing to do with Ken City. The Defendant’s use of the words “Ken City” has brought confusion to the public and the Defendant’s advertisements have not been approved by the relevant government bodies. Moreover, the affidavits filed by the parties in Court are public documents and hence the Plaintiffs can seek verification as to the truthfulness of the affidavits i.e. the approved version of the advertisement. Thus, the Court dismissed the Defendant’s application with costs.

This case clearly explained that for an interim or interlocutory injunction based on an alleged infringement of trade mark or passing off there must be a reason to believe that the plaintiffs would suffer damage or that there was some reason for maintaining the status quo. Also, the balance of convenience is an equitable remedy which varies from case to case.

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