Maestro Swiss Chocolate Sdn Bhd & Ors v Chocosuisse Union Des Fabricants Suisses De Chocolat (a co-operative society formed under title XXIX of the Swiss Code of Obligations) & Ors and another appeal [2016] 2 MLJ 359

Maestro Swiss Chocolate Sdn Bhd & Ors v Chocosuisse Union Des Fabricants Suisses De Chocolat (a co-operative society formed under title XXIX of the Swiss Code of Obligations) & Ors and another appeal [2016] 2 MLJ 359

Federal Court (Putrajaya)

Trademark Passing Off 

1. Chocosuisse Union Des Fabricants Suisses De Chocolat (“the First Plaintiff”) was a Swiss cooperative responsible for promoting and protecting the international reputation and goodwill of Swiss chocolate manufacturers. Kraft Food Schweiz AG (“the Second Plaintiff”) and Nestlé Suisse SA (“the Third Plaintiff”) were well-known Swiss chocolate producers who exported and sold chocolates worldwide, including in Malaysia.  Both companies were members of the First Plaintiff.
2. The Plaintiffs contended that the Defendants wrongfully used the mark “Maestro Swiss” on their “Vochelle” chocolate products.  According to the Plaintiffs, this use falsely suggested that the Defendants’ chocolates were connected or associated with authentic Swiss-made chocolates, which were reputed for being entirely manufactured in Switzerland and for their premium quality.  The Plaintiffs also relied on statutory protection under the Geographical Indications Act 2000 (“GIA”), arguing that the Defendants’ actions amounted to misuse of a geographical indication namely the reference to Switzerland.
3. The Defendants denied any wrongdoing.  They argued that the Plaintiffs lacked goodwill or business presence in Malaysia and therefore suffered no damage.  They further asserted that they had been using the mark “Maestro Swiss” since 2000 as part of their corporate identity and branding, and not as a representation that their chocolates originated from Switzerland.
4. At the High Court, the trial judge found that the First Plaintiff had no locus standi because it was not a chocolate producer and had no commercial goodwill in Malaysia.  The High Court also held that no misrepresentation had been made and accordingly dismissed the Plaintiffs’ claims relating to extended passing off and under the GIA.
5. On appeal, the Court of Appeal reversed several findings.  It held that the First Plaintiff did have locus standi and allowed the Plaintiffs’ claim for extended passing off.  However, it dismissed the Plaintiffs’ claim under the GIA. Both parties then appealed further.  The Defendants challenged the finding of passing off, arguing that the Court of Appeal had been misled into thinking that the wrong legal test was applied by the trial judge.  The Plaintiffs appealed against the dismissal of their GIA claim, disputing whether subsection 27(2) or subsection 28(2) of the GIA applied.
6. The Federal Court delivered judgment on both appeals.

1. Whether the use of the mark amounted to a misrepresentation that was likely to lead members of the public into believing that the goods bearing the mark formed part of the distinctive category of products known as “Swiss chocolate.”
2. Whether the Plaintiffs could invoke statutory protection under the GIA to prevent the Defendants’ unlawful use of the geographical indication.

Whether the use of the mark amounted to a misrepresentation that was likely to lead members of the public into believing that the goods bearing the mark formed part of the distinctive category of products known as “Swiss chocolate.”

1. The Federal Court began by examining the issue of locus standi of the First Plaintiff.  The trial judge had relied on the English Court of Appeal decision in Chocosuisse v Cadbury [1999] RPC 117, which held that a trade association that does not itself trade in the relevant products does not possess sufficient goodwill to sue for passing off.  The Court found that this legal position was binding and directly applicable. As the First Plaintiff was merely an association and not itself a manufacturer or seller of chocolates, it lacked any protectable commercial goodwill in Malaysia capable of sustaining an extended passing off claim.  Accordingly, the Court overturned the Court of Appeal’s finding on locus standi and restored the High Court’s decision on this point.
2. However, the Federal Court agreed that under the GIA, read together with sections 2, 5 and 11, the First Plaintiff did fall within the meaning of an “interested person” and, on that basis alone, could commence proceedings under the Act.
3. On the substantive issue of extended passing off, the Federal Court affirmed that there is only one cause of action in passing off, applicable both to traditional and extended forms.  The elements set out by the House of Lords in Erven Warnink Besloten Vennootschap v J Townend & Sons (Hull) Ltd [1979] AC 731 (“Advocaat case”) continue to govern the tort.  Those elements include misrepresentation, made in the course of trade, directed to actual or potential customers, foreseeably damaging the claimant’s goodwill and resulting in actual or probable damage.  The Federal Court endorsed the finding that “Swiss chocolate” is perceived in Malaysia as a distinct class of chocolates known for premium quality and originating wholly from Switzerland.  The Second and Third Plaintiffs, being Swiss manufacturers selling such products in Malaysia, possessed established goodwill that warranted protection.
4. The Federal Court found that the Court of Appeal correctly examined the likelihood of confusion.  The evidence, including consumer survey results, demonstrated that the use of “Maestro Swiss” on the Defendants’ packaging gave consumers the impression of an affiliation with Switzerland, although the products were locally manufactured. The trial judge’s dismissal of the survey evidence was found to be erroneous.  The Federal Court held that the Defendants’ use of the mark was capable of misleading consumers and thus amounted to extended passing off.

Whether the Plaintiffs could invoke statutory protection under the GIA to prevent the Defendants’ unlawful use of the geographical indication.

1. Regarding the claim under the GIA, the Federal Court held that the Court of Appeal erred in applying subsection 27(2) of the Act. Subsection 27(2) only bars legal action for matters done prior to the commencement of the Act. The Plaintiffs’ complaint was directed at continued use of the mark after the Act came into force; therefore, subsection 27(2) was wrongly invoked. Further, subsection 28(2), which protects earlier trademarks used in good faith, could not apply because the Defendants’ use of “Maestro Swiss” was found not to be bona fide and was intended to imply a Swiss origin.
2. Ultimately, the Federal Court restored the findings that the Second and Third Plaintiffs succeeded in extended passing off, and reinstated the Plaintiffs’ claim under the GIA. The Defendants’ appeal on passing off was dismissed, and the Plaintiffs’ appeal concerning statutory protection under the GIA was allowed.

The Defendants’ appeal against the Second and Third Plaintiffs was dismissed with costs, while the Plaintiffs’ appeal was allowed with costs.

The Federal Court reaffirmed that passing off is not just about misrepresenting the origin of goods from specific manufacturers. Here, the Plaintiffs could protect the goodwill associated with “Swiss chocolate” as a distinctive, premium product category.