SKYWORLD HOLDINGS SDN BHD & ORS v SKYWORLD DEVELOPMENT SDN BHD & ANOR [2022] 3 MLJ 426

 

SKYWORLD HOLDINGS SDN BHD & ORS v SKYWORLD DEVELOPMENT SDN BHD & ANOR [2022] 3 MLJ 426

Federal Court (Putrajaya)

Infringement of Trademark

Facts

1.     The subject matter in this case is the intellectual property under a type of trademark.

2.     For convenience of referencee, referred to as the Appellants were the Defendants, meanwhile the Respondents were the Plaintiffs in the High Court.

3.     The Respondents were in the business of real estate development industry.

4.     The First until Fourth Appellants were connected and affiliated enterprises engaged in real estate, project development, retail construction material sales, and even tourism-related industries.

5.     The sole directors and stockholders of the corporate appellants were the fifth and sixth Defendants (App).

6.     Two “SkyWorld” registered trademarks in Class 37 were owned by the Respondents.  In actual fact, the Plaintiff had started using such marks in 2014 and applied to MyIPO to regulate the same on 13 July 2017.

7.     One mark read “SkyWorld” with the words “create the experience” below the word “Sky,” as well as the term “Sky” itself; and the second mark read “create the experience” underneath four additional Chinese characters while being otherwise identical to the first.

8.     Meanwhile, the Respondents, who worked in the real estate development industry, said that the word “SkyWorld” appeared in the titles of their organisations and they had also applied to MyIPO for registration of their mark on 23 Aril 20218.

9.     The Respondents claimed that the Appellants’ use of the word “Skyworld” as their corporate name, in the domain name of their website, and in the name of a development project they had proposed to carry out in Sabah were infringing theirs because they were similar enough to the Respondents’ registered trademarks to be likely to cause confusion or deceive the public.

10.  After the trial, the High Court decided that –

(a) the Respondents’ registered trademarks were not registered as “word marks,” which might have granted them monopoly on the word “Skyworld”; and

(b)   even though the word “Skyworld” used by both parties sounded similar audibly, visually they were so dissimilar from one another that there was no chance the public would be confused or deceived, especially since the Appellants and Respondents were engaged in different businesses.

11.  The trial court determined that there was no basis for misrepresentation because there was no chance of confusion or deceit, and that the Respondents had not sufficiently established the tort of passing off against the Appellants.

12.  The High Court denied the petition of the Respondents, but the Court of Appeal (the “COA”) overturned the judgement and upheld their claims.

13.  The COA’s decision was the subject of the current appeal.

14.  In the lawsuit, the Respondent’s allegations against the Appellants are as follows :

(a)  trademark infringement with regards to the use of the company names, domain name and the name of the alleged development project, “Sky World City Sabah,” in Karambunai, Sabah, which was not authorised by the appropriate authorities;

(b)  using the infringement-causing names to misrepresent the Plaintiff’s company and/or activities as those of the Defendants’ (App);

(c)   the Defendants’ (App)) use of the trademarked names caused illegal interference with the Plaintiffs’ business.

15.  The learned High Court judge found that the Plaintiffs’ (Rs) claim lacked merit after hearing from the witnesses and the arguments of the parties, so she ruled in the defendant’s favour.

16.  The learned High Court judge concluded that, in terms of the trademark infringement allegation, the public was not likely to be misled or confused by the uses of the infringing names.

17.  The learned High Court judge concluded that the Plaintiffs had failed to prove that the reputation of the SkyWorld names and marks is “well known” with regards to the passing off issue.

18.  Therefore, the Court found that the Plaintiffs had failed to prove the necessary element of deception under the tort of passing off since there was no probability of confusion resulting from the use of the infringing names.

19.  The question of whether the corporate Defendants’ name, which is similar to the Plaintiffs’ trademarks, can be held liable for trademark infringement in regard to the use of the SkyWorld registered trademarks as part of their company name, was the only one presented to the Court of Appeal after carefully reviewing the appeal records and the parties’ arguments.

20.  The High Court judge erred, according to the Court of Appeal, by, among other things –

(a) incorrectly comparing minute differences between competing marks, specifically whether the infringing names are used in uppercase or lowercase, when deciding on the question of confusion;

(b) failing to determine whether the use of the infringing names fell within the specification of services covered by the registration of the SkyWorld marks; and;

(c)  disregarding the evidence presented by the parties.

21.  Hence, the Court of Appeal found that the Defendants (App) were guilty of trademark infringement, on the pretext that it is not essential to prove that the infringing mark is similar to the registered mark in order to bring a claim for trademark infringement.

22.  The Court of Appeal also held that the corporate Defendants’ (App) business operations, such as real estate development and/or construction, fall under the purview of the SkyWorld marks’ descriptions of services.

23.  As a result, the Court of Appeal unanimously overturned the whole judgement of the High Court and upheld the Plaintiffs’ claims.

24.  Accordingly, the Defendants appealed to the Federal Court.

Issue

Whether it is considered a trademark infringement when generic terms that are part of a company, corporate, trade, or domain name are also included in another party’s registered trademark (but are not registered as a word mark or disclaimed)?

Ratios

1.     According to the Malaysian law, the following actions qualify as trademark infringement under Section 38 of the Trade Marks Act 1976 (“Act 175”) –

   “Section 38 Infringement of a Trade Mark

(1) A registered trade mark is infringed by a person who, not being the registered proprietor of the trade mark or registered user of the trade mark using by way of permitted use, uses a mark which is identical with it or so nearly resembling it as is likely to deceive or cause confusion in the course of trade in relation to goods or services in respect of which the trade mark is registered in such a manner and to render the use of the mark likely to be taken either:

(a) as being use as a trade mark;

(b) in case in which the use is use upon the goods or in physical relation thereto or in an advertising circular, or other advertisement, issued to the public, as importing a reference to a person having the right wither as registered proprietor or as registered user to use the trade mark or to goods with which the person is connected in the course of trade; or

(c) in a case on which the use is use at or near the place where the services area available or performed or in an advertising circular of other advertisement issued to the public, as importing a reference to a person having a right wither as registered proprietor or a registered user to use the trade mark or to services with the provision of which the person is connected in the course of trade.

(2) (Deleted by Act A1078).”

2.     The High Court provided the following explanation of this section 38 clause in the illustrious case of Aspect Synergy Sdn Bhd v. Banyan Tree Holdings Ltd [2008] MLJU 1101 by citing the Consitex SA v. TCL Marketing Sdn Bhd [2008] 3 MLJ 574 case:

“Based on Section 38 of the Act, to establish an action for trademark infringement, the plaintiff would need to establish the following ingredients:

(a) the defendant used a mark identical with or nearly resembling the registered trademark as is likely to deceive or cause confusion;

(b) the defendant is not authorized or licensed to use the registered trademark;

(c) the defendant is using the offending trademark in the course of trade;

(d) the defendant is using the offending trademark in relation to goods in respect of which the trademark is registered;

(e) the defendant uses the mark in such a manner as to render the use of the mark likely to be taken as being used as a trademark.”

3.     The Court also found in Low Chi Yong (t/a Reynox Fertichen Industries) v. Low Chi Hong & Anor [2018] 1 MLJ 175 that the appellant in that case must prove that the respondents violated Section 38 of Act 175, which outlines the definition of a trademark infringement and the circumstances under which the infringement occurred.

“[37] Under Section 38 of the TMA 1976 the appellant needs to establish the following ingredients, inter alia:

(a) the respondent used a mark identical with or so nearly resembling the trademark as is likely to deceive or cause confusion;

(b) the respondent is not the registered proprietor or the registered user of the trademark;

(c) the respondent was using the offending trademark in the course of trade;

(d) the respondent was using the offending trademark in relation to goods or services within the scope of the registration; and

(e) the respondent used the offending mark in such a manner as to render the use likely to be taken either as being use as a trademark or as importing a reference to the registered proprietor or the registered user or to their goods or services.

4.     In general, Act 175 governs Malaysian trademark law, while passing off legislation has its roots firmly planted in common law. The House of Lords determined at p. 880 in Reckitt & Colman Products Ltd v. Borden Corp and Others [1990] LRC (Comm) 417 that the following components must be present to establish passing off:

“the law of passing off can be summarised in one short general proposition, no man may pass off his goods as those of another. More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number. First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying ‘get-up’ (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff’s goods or services. Second, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiff’s identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff. For example, if the public is accustomed to rely on a particular brand name in purchasing goods of a particular description, it matters not at all that there is little or no public awareness of the identity of the proprietor of the brand name. Third, he must demonstrate that he suffers or, in a quia timet action, that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant’s misrepresentation that the source of the defendant’s goods or services is the same as the source of those offered by the plaintiff.”

[Emphasis is added]

5.     It was also held by the High Court judge as follows:

“[33] It is common ground that there is no dispute in respect of the plaintiffs’ registered trademarks and the defendants’ ‘S’ trademark. There is no resemblance between them whatsoever. The principal similarity is in the defendants’ corporate name and domain name and the plaintiffs’ registered trademarks arising from the word ‘skyworld’ audibly. In other words, the plaintiffs are contending that the offending or infringing marks are the defendants’ corporate name and domain name.

On close and careful scrutiny, I nonetheless see that they are visually different because the defendants’ corporate name in their business documents as well as their web site domain name used the word ‘sky world’ either wholly in uppercase or lowercase but not in mixed uppercase and lowercase as in the plaintiffs’ registered trademarks. I observed that the plaintiffs’ registered trademarks are not registered as word marks which might have otherwise conferred monopoly on them on the ‘skyworld’. In fact, I am of the further view from the evidence adduced by the plaintiffs in their projects advertisement that the dominant mark in the trade names used by them is the (sic) only the word ‘Sky’ with a wavy underline beneath it as seen in all their project names SkyArena, SkyAwani, etc.

[34] The ascertainment as to whether there has been the likelihood of deception or confusion is fact sensitive depending on the (sic) all the circumstances of each case. There were numerous case authorities put forth before me by the parties in advancement of their respective positions. Ultimately on my reading of them, I discern that it centres on the degree of similarness as well as the associated business usage of the marks especially the consumer knowledge and association with them

[Emphasis is added]

6.     Following that, the learned High Court judge found that the Plaintiffs had not established that the Defendants had committed the tort of passing off.

“[42] It is therefore firstly necessary to determine whether the plaintiffs here have established sufficient reputation or goodwill that is known to the public. This is a matter of fact that has been to be substantiated by cogent evidence.

[43] From both the oral and documentary evidence adduced by the parties, I find that the first plaintiff has used the trade name and plaintiffs’ registered trademarks in their development projects in the Klang Valley. I am further satisfied that the first plaintiff expended time, efforts and money amounting to several million ringgit to promote its development projects through using the trade name through dedicated websites, social media platforms, newspapers, promotional leaflets and pamphlets, etc. The trade names was also displayed on signage and billboard at the plaintiffs’ property galleries. These promotional efforts seem sufficient to confer the requisite reputation and goodwill based on the cases of Compagnie Generale Des Eaux v Compagnie Generale Des Eaux Sdn Bhd and Portcullis Trustnet (Singapore) Pte Ltd v George Pathmanathan a/l Micheal Gandhi Nathan & Ors [2017] MLJU 223. In addition, I observed that this has also not been seriously challenged by the defendants save that it would only reside with the plaintiffs’ registered trademarks but not the trade name”

[Emphasis is added]

7.     In relation to trademark infringement, the Court of Appeal however dissented from the learned High Court judge.

8.     Meanwhile regarding the issue on passing off, the Court of Appeal found that there was sufficient evidence to demonstrate that the plaintiffs (Rs) did have the necessary reputation for quality work and that misrepresentation was proven, but the Court of Appeal found that there was no evidence that the respondents had endured any loss or damage as a result of the appellant’s actions.

9.     In the present case, the alleged infringement was not brought about by the defendants’ use of the infringing mark in their goods or services, but rather in the names that corresponded to such goods or services.

10.  Therefore, in the appeal before the Federal Court, the Respondents claimed that the Appellants’ corporate names and web domain names violated their rights because they are so similar to the Respondent’s registered trademark that doing so could lead to consumer misunderstanding or deception.

11.  The Court of Appeal’s finding of similarities or resemblances not only was aurally but also visually emphasised by the Respondents.

12.  The Federal Court then discovered that the learned High Court judge had clearly provided his reasoning for concluding that the Defendants’ (App) company name and domain name did not bear any resemblance to the Respondent’s registered trademarks.

13.  After reviewing the appeal records and the parties’ arguments, this Court is confident that the learned High Court judge was right to conclude that, aside from an oral resemblance between the registered trademark and the corporate and domain names, there was no real resemblance for purposes of infringement under Section 38(1) of Act 175.

14.  In order to fulfil the element of infringement, a mark must be identical to or so substantially similar to the registered mark as required by Section 38(1) of Act 175.

Decision 1.    The Federal Court has set aside the decision made by the Court of Appeal and allowed the appeal with costs.
Key Take Away

1.     There are two types of trademark infringement in Malaysia-

(a)  Registered trademark infringement under Section 38 of Act 175

(b)  Unregistered trademark infringement under the common law torts of passing off.

2.    The Malaysia Trademarks Act 2019 (“Act 815”) and the Trademarks Regulations 2019, which recently took effect on December 27, 2019, are currently in charge of regulating Malaysia’s trademark rules.  However, the above case referred to Act 175 as the original case was filed in the High Court before the Act 175 came into force.

3.    In general, Act 175 grants registered trademark owners the power to take legal action to prohibit others from using a similar or identical mark without their consent.

4.    As comparison, the Common Law of passing off still provides legal redress in cases involving unregistered marks.  The goal of passing off law is to defend a company’s brand and goodwill against theft by dishonest rivals.

5.    In order to win a passing off lawsuit, the plaintiff must prove the components of goodwill, misrepresentation, and damages on a balance of probabilities.

 

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