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Suhaimi bin Arifin v Azneeta bt Yazib

2nd November, 2018

Malaysia: Damages granted for loss of exclusivity of use and loss of goodwill of trade mark

In a recent decision, Suhaimi Bin Arifin (trading as SF Infinity Resources,-hereinafter knows as the Plaintiff) vs Azineeta Binti Yazib (trading as DQistee Health & Beauty-hereinafter knows as the Defendant), the High Court of Kelantan had upheld the Deputy Registrar’s decision in granting damages in respect of (1) loss of exclusivity of use, (2) loss of goodwill.

Factual and Procedural Background

The plaintiff had registered a trade mark under Class 03 in Malaysia for cosmetic related products.

The Defendant, who also manufactures and sells cosmetic products, however, had been conducting her business using the registered trade mark owned by the Plaintiff. It has been established that the defendant has infringed the Plaintiff’s trade mark, which resulted in the plaintiff’s loss of profit and his inability to enjoy the exclusive rights provided by his trade mark. 

In this regard, the Deputy Registrar had awarded damages based on the loss of exclusivity of use and loss of goodwill. Both the plaintiff and the defendant had appealed against this decision. The Plaintiff has argued that he has the right to demand the profit loss of 30% from the defendant. He has also argued that the basis of assessing damages should not be based on the loss of sales, but in fact on the basis of loss of margin of profit and the loss of exclusivity and use of his trade mark under Section 35(1) of the Trade Mark Act. On the other hand, the defendant had submitted that the principle in assessing damages should be based on the actual loss of profit. The High Court of Kelantan then made a decision based on the following issues:

On assessing damages

By applying the cases of Wembley Gymsum Products (supra); Uda Holdings Sdn. Bhd. Vs Koperasi Pasaraya Malaysia Bhd. (2007) 5 AMR 36 CA; Ng See Chong vs Tan Lai Meng & Ors (2017) 9 MLJ 421, the court stated that the principle of assessing damages are as follow:

1) the party seeking compensation must prove that there was indeed a loss on his part as a result of the infringement by the Defendant;

2) the objective of damages is to restore the Plaintiff to his original position if infringement had not occurred;

3) fundamentally, such damages should not be too high resulting in multiple gains on the part of the plaintiff.

The court is of the opinion that the amount of damages granted to the Plaintiff by the Deputy Registrar was reasonable since the Plaintiff had failed to prove the amount of actual loss suffered in relation to his cosmetic products. Based on the goods claimed under the Plaintiff’s trademark, it is not limited to cosmetics only. Therefore, the plaintiff should submit a clear financial statement to enable the court to assess the total profit for cosmetics. Since he had failed to do so, the court upheld the Deputy Registrar’s decision to award lesser damages. The plaintiff’s claim for additional damages is dismissed.

Loss of use and exclusivity

The court had distinguished between the loss of use and exclusivity and the loss of profit. They stated that the Plaintiff does not have to prove actual loss in order to claim for damages in relation to the loss of use and exclusivity, as both are rights guaranteed under the Trade Marks Act. Although in this case it could not be shown the Plaintiff had suffered losses, it is a fact that the Defendant had infringed the Plaintiff’s trade mark.

Loss of goodwill

The court is of the opinion that the Plaintiff has been successful in establishing goodwill. This can be seen based on the fact that the Plaintiff had been in the market since 2011 until now; and the fact that the Plaintiff has many distributors in the market who sells his products. The court found that the damages of RM100,000.00 (approximately USD25,000.00) awarded to the Plaintiff was reasonable considering the Plaintiff’s goodwill and the fact that it was uncertain as to when infringement by the Defendant exactly occurred.

Conclusion

Based on the reasons stated above, and the principle that the court should not interfere with the Deputy Registrar’s findings of fact unless in circumstances where there was a significant error made by the Registrar, the court had no reason to question the findings of the Deputy Registrar. Therefore both claims by the Plaintiff and Defendant were dismissed.