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MALAYSIA: HIGH COURT HELD THAT THE REGISTRAR HAS POWERS TO INVESTIGATE FRAUD INVOLVING REGISTRATION OF TRADE MARKS

25th June, 2018

In this case, we discuss about a case in which the High Court heard a judicial review application as to whether the Registrar of Trade Marks has all the powers to investigate or take action in respect of complaints in relation to fraud involving registration of trade marks.

The Applicant, Adabi Consumer Industries Sdn Bhd is the registered owner of the trade mark no. 85/02021 in Class 30 and the mark is represented as below (hereinafter referred to as the “1985 mark”).

The First Respondent is the Registrar of Trade Marks and the Second Respondent is the registered owner of the Trade Mark No. 89001729 in Class 30 and the mark is represented as below (hereinafter referred to as the “1989 mark”).

By way of background, the Applicant and the Second Respondent had an agreement made in 1988 through which the Applicant had allowed the Second Respondent the right to use the 1989 mark in respect of oyster sauce products and to apply for registration of the same. In 1994, the Second Respondent filed an application to assign the 1985 mark submitting the agreement made in 1988 and the First Respondent had allowed the assignment application and record the Second Respondent as the registered owner of the 1985 mark. The Applicant became aware of the assignment in 1999 and wrote to the First Respondent complaining about the wrongful assignment of the 1985 mark. The First Respondent had subsequently issued a letter cancelling the assignment and reinstating the Applicant of the owner of the 1985 mark. The Second Respondent had initiated a court action to declare the First Respondent’s letter null and void and to reinstate the Second Respondent as the owner of the 1985 mark. The Second Respondent succeeded on both counts and sought to enforce the court order. The Applicant and Second Respondent had entered into another agreement in 2003 wherein the Second Respondent undertook not to enforce the court order and will not claim any rights to the 1985 mark.

In 2012, the Applicant discovered that the Second Respondent had filed the trade mark application for the mark identical in design to the 1985 mark in respect of oyster sauce. The mark is represented as below (hereinafter referred to as the “2012 mark”).

The Second Respondent had signed a sworn declaration that it was the owner of the 2012 mark and the Applicant has opposed to the registration of the trade mark. The Applicant and First Respondent conducted further investigation and found that there were discrepancies in the documents that were submitted to the Trade Mark Office by the Second Respondent to support the registration of the 2012 mark. A set of the 1988 agreement that were submitted is alleged to be false whereby the schedule identifying the trademark permitted for use and registration had been replaced with the 1985 mark rather than the 1989 mark.

Upon discovery of the discrepancies, the Applicant wrote a letter to the First Respondent to complaint regarding the alleged fraud and requested the First Respondent to take action and rectify the affected trademarks of the Applicant. The First Respondent replied to the Applicant stating that the matter was beyond its power, jurisdiction and capacity to determine and initiate criminal case involving fraud. The First Respondent has also stated that the Applicant is the rightful party to file an action in court to determine fraud.

The Applicant then initiated an action for judicial review stating the decision of the Registrar of Trade Marks to not to any take action and stating that the matter was beyond its power, jurisdiction and capacity is blatantly irrational and unreasonable act when it is in the public interest to do so.

The Applicant submitted that the Registrar’s scope of duty power and capacity to investigate fraud is pursuant to the Trade Marks Act 1976, particularly Section 45 (1) (c) and Section 25 (12) which read as follows:

Section 45. Rectification of the Register
(1) Subject to the provisions of this Act—

(c) in case of fraud in the registration, assignment or transmission of a registered trade mark or if in his opinion it is in the public interest to do so, the Registrar may himself apply to the Court under this section;

Section 25. Registration

(12) Without prejudice to subsection (10) where after the acceptance of an application for registration of a trade mark but before the registration of the trade mark the Registrar is satisfied
(a) that the application has been accepted in error; or
(b) that in the special circumstances of the case the trade mark shall not be registered or shall be registered subject to additional or different conditions or limitations,

the Registrar may withdraw the acceptance and proceed as if the application had not been accepted or, in respect only of a trade mark which shall be registered subject to additional or different conditions or limitations, reissue a new acceptance subject to additional or different conditions or limitations.

The Applicant submitted that the First Respondent had clearly made a wrong decision in accepting the 2012 mark as it is identical with the 1985 mark and that this will cause serious confusion to the public. Therefore, it was further submitted by the Applicant that the First Respondent had failed to perform a statutory duty under Section 25(12) and have been blatantly irrational and unreasonable in stating that Section 45(1) (c) is only applicable for registered trade marks and is not applicable to the 2012 mark as the 2012 mark is still in the opposition proceedings and pending for registration.

After hearing the submission of the Applicant and the First and Second Respondents, the Judge opined that when there is a complaint or information involving fraud, the onus is on the First Respondent, with whom all necessary documents are kept with, to study or examine the facts complained of by checking all the documents in its possession and call for information/evidence to determine whether the complaint of fraud is true. The Judge further opined that the duty to rectify trademarks and duty to investigate the discrepancies of documents that were filed the Trade Mark Office are duties manifestly clear from the Trade Marks Act 1976. It was concluded that the decision of the First Respondent that it does not have any power, jurisdiction or capacity in making a finding that there was fraud is wrong.

Accordingly, the Court issued an order to quash the decision of the First Respondent stating that the matter was beyond its power, jurisdiction and capacity to determine and initiate criminal case involving fraud. Also, the Court issued an order to the First Respondent to investigate or take action in respect of the Applicant’s complaint in relation to fraud.

At the time of writing, we understand that the matter is in appeal before the Court of Appeal in respect of the costs awarded by the High Court against the First Respondent and not the entire decision as handed down by the High Court which remains enforceable.