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30th September, 2015

In the case of Chongqing Rato Manufacturing Corporation v MP Machinery (M) Sdn. Bhd., the Malaysian High Court allowed the Plaintiff’s claims to expunge the registration of the Defendant’s trade mark.

Chongqing Rato Manufacturing Corporation (hereinafter referred as “the Plaintiff”) was incorporated on 1 June 2007 in China under the name of Chongqing Rato Power Co Ltd. On 19 September 2012, it changed its name to Chongqing Rato Power Manufacturing Corporation. The Plaintiff is a manufacturer of various types of machineries.

The Plaintiff stated that the marks “RATO”, “ rato” and “ rato2” (hereinafter referred as ‘the Rato trade marks’) were created in the mid 2007 by its Chairman, Mr. Zhu Liedong, who was also the founder of the Plaintiff. After its creation, the Rato trade marks were extensively used in the Plaintiff’s corporate name, products, goods, feature, mark, documents, correspondence, bills, invoices, commercials invoices and others. Since its incorporation in 2007, the Plaintiff had invested more than 3.6 RMB and had built the “Rato Industrial Park” in Chongqing, China. The Plaintiff has been supplying, selling and/or distributing their machines and engines not only in China but also to other countries including Turkey, Vietnam, Thailand, Indonesia and Malaysia since 2009.

MP Machinery (M) Sdn. Bhd. (hereinafter referred as “the Defendant”) was incorporated in Malaysia on 2 May 1989, having its business address in Kota Kinabalu, Sabah. The Defendant specialized in the importation, distribution, offer for sale, and/or sale of industrial machineries, such as machineries for agricultural, construction and other general purposes, and spare parts and components. The machines or spare parts were either locally sourced or originated from China, Japan, Korea, Singapore, UK, Thailand and India. The Defendant stated that it introduced machineries with the mark rato (hereinafter referred to as “the Defendant’s trade mark”) to the Malaysian market in the middle of 2009. The Defendant used the Defendant’s trade mark on a range of industrial machineries such as engine, generator, water pump, agricultural machinery, welding machines and construction machinery. According to the Defendant, the products bearing the Defendant’s trade mark consisted of products which were contract manufactured for them or products consisting of an assembly of various component parts sourced from several manufacturers.

The Defendant had filed a trade mark application for the Defendant’s trade mark in Class 7 in 2010. The Defendant had alleged that before it applied to register the Defendant’s trade mark, it has conducted a search at the Registry of Trade Marks, Malaysia and found that no other party had applied for identical or similar trade marks. The Defendant’s trade mark was subsequently registered and the registration number is 20100014464.

The Plaintiff had filed trade mark applications for the Rato trade marks in Malaysia on 6 August 2010. After the applications were filed, it came to the Plaintiff’s of the Defendant’s trade mark and it had filed a suit to expunge the Defendant’s trade mark pursuant to section 45 of the Trade Marks Act 1976,

In order to file a suit under Section 45, the Plaintiff must prove and establish two grounds, namely:-

  • that it is an aggrieved party; and
  • that the Defendant’s trade mark is an entry wrongfully entered or remaining on the Register.

For the first ground, the court held that the Plaintiff’s is an aggrieved party as the Plaintiff has used its trade mark in Malaysia through a collaboration with Anta Industrial Parts Sdn Bhd and also having the bona fide intention to continue marketing their products in Malaysia through Anta Industrial Parts Sdn Bhd. The Defendant’s registration will prevent the Plaintiff from expanding its business in Malaysia, given the fact that both the Plaintiff’s and the Defendant’s trade marks are similar.

For the second ground, the court held that the Plaintiff is the rightful proprietor. Therefore, pursuant to section 25, only the Plaintiff has the legal right to make the application to the Registrar for the registration of the trade mark in the Register. The court found that the trade mark registration by the Defendant was made in bad faith and must not remain in the Register and must be expunged.

The Plaintiff also seek a declaration from the Intellectual Property (IP) Court that it is the rightful copyright owner of the design of rato and rato2. The Plaintiff submitted that it is the owner of the copyright subsisting in the artistic work rato and rato2. The founder of the Plaintiff, Mr Zhu Liedong has commissioned the design of the said RATO trade marks to signify the brand image of the Plaintiff.

The IP Court found that the Plaintiff has successfully established the two grounds under Section 45 of the Act. The Court held that Defendant had copied the Plaintiff’s trade marks in designing the Defendant’s trade mark and ordered that the Defendant’s trade mark to be expunged and removed from the Register. The Court also held that the Defendant had infringed the copyright subsisting in the artwork.

As such, the IP Court allowed the Plaintiff’s claims with costs.