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MALAYSIA: UNDERSTANDING THE VALUE OF TRADEMARKS CO-EXISTENCE IN OTHER JURISDICTIONS

12th June, 2020

In the High Court case of Merck KGAA v Xtalic Corporation, Merck KGAA (hereinafter referred to as the Plaintiff) filed an appeal against the Malaysian Registrar of Trade Marks (hereinafter referred to as the Registrar) dismissal of opposition to the application for registration of a trademark on 2 July 2018.

The Plaintiff is a private limited company incorporated in Germany involved in the business of pharmaceutical, chemical and life sciences. In addition, the Plaintiff also produces products in the field of electronics, printing, coatings, cosmetics, food, pharmaceutical and biotechnology. The Plaintiff is the registered proprietor of the trade mark “XIRALLIC” in classes 1, 2, 37 and 42 (hereinafter referred to as the Plaintiff’s mark) in Malaysia. The first use of the Plaintiff’s mark in Malaysia is in August 2002, while in 2000 internationally. Further, the Plaintiff had applied and/or obtained registration of the Plaintiff’s mark in various countries including Argentina, Australia, Brazil, Canada, Chile, Colombia, Germany, Ecuador, European Community, Greece, Hong Kong, Indonesia, Ireland, Israel, India, Japan, Morocco, Mexico, New Zealand, Peru, Philippines, Pakistan, Singapore, South Korea, South Africa, Thailand, Tunisia, Turkey, Taiwan, United States of America and Venezuela.

On the other hand, Xtalic Corporation (hereinafter referred to as the Defendant) is a company incorporated in Massachusetts, US, that uses propriety technologies to custom tailor unique metal alloys to deliver hard refractory nanostructure alloys for metal coating with new levels of performance using reduced high cost raw materials and replaced toxic unsafe materials. On 20 July 2009, the Defendant had filed a trade mark application with the Intellectual Property Corporation of Malaysia (MyIPO) for “XTALIC” in class 2 (hereinafter referred to as the Defendant’s mark). Further, the Defendant had registered the Defendant’s mark in countries including Brazil, Taiwan and US as well as an international registrant under the Madrid Convention designating China, France, Germany, Italy, Japan, United Kingdom, South Korea, and Spain.

The Plaintiff filed a notice of opposition against the Defendant’s mark upon discovered the Defendant’s mark had been applied for register in MyIPO. However, on 03 May 2018, the Registrar had dismissed the Plaintiff’s opposition, which led to the Plaintiff filed the appeal.   

In the appeal, the Plaintiff argued on five grounds of appeal, whereby the Registrar erred in law and/or fact in:

  1. concluding that the issue of first user is irrelevant;
  2. finding that the Plaintiff’s mark is different and distinguishable from the Defendant’s mark;
  3. finding that the goods of the Plaintiff and the Defendant are different in nature for different purposes with completely different sales process and trade channels;
  4. believing that the Defendant’s mark was independently conceived; and
  5. finding that reference made to the co-existence of the respective marks in some other countries is an obvious factor to show that the respective marks are different.

In response, the High Court dealt with each of the aforementioned grounds. Firstly, the High Court held that the Registrar had not erred in her finding that there is no likelihood of confusion or deception between the Plaintiff’s mark and the Defendant’s mark and hence the first use principle is not relevant.

The High Court deemed that the determination of deception or confusion should be based on the probable effects of normal and fair use as enunciated by In the Matter of an Application by Smith Hayden & Co Ltd (Supra) and In the Matter of Broadhead’s Application for Registration of Trade Marks (Supra), whereby it should not be based on notional fair use as enunciated by Staywell Hospitality Group Pty Ltd v Starwood Hotels & Resorts Worldwide Inc. (supra) and O2 Holdings Ltd v Hutchison 3G UK Ltd (supra) due to differing provisions and definitions in the respective trademark statutes of Singapore, European Commission and Malaysia. In addition, the High Court found that there were no opposing parties to the Defendant’s mark in respect of goods registered in Class 2. Hence, the High Court opined that the Registrar has not erred in fact or law that the marks are not strikingly similar. Further, the High Court held that the Defendant’s mark is independently conceived as concluded by the Registrar, in which it is unlikely that consumers would consider the Defendant’s mark as an extension or variant of the Plaintiff’s mark.

In addition, although both of the Plaintiff’s mark and the Defendant’s mark are registered under Class 2 that related to coatings, the High Court deemed that they are functionally different. More specifically, the marks are dissimilar in terms of aesthetics for the Plaintiff’s goods and engineering functionality for the Defendant’s goods. Consequently, as the goods of the Plaintiff and the Defendant are different in nature for different purposes, the goods are deemed to have different trade channels and hence it is unlikely to cause deception or confusion if the marks are registered or co-exist together. In fact, the Korean Intellectual Property Office had also dismissed the Plaintiff’s opposition and deemed that marks are quite distinguishable and not similar in phonetic sound.

Further, the High Court held that the Registrar did not erred in fact and/or law in regard to the co-existence of the parties’ respective marks in other jurisdictions, whereby it serves as an indication that there is no likelihood of deception or confusion between the parties’ respective marks. As a result, the High Court decided that the appeal was disallowed with cost and the Registrar’s decision was retained.