Ortus Expert White Sdn Bhd v NYA & Anor [2022] 2 MLRA 368

Ortus Expert White Sdn Bhd v NYA & Anor [2022] 2 MLRA 368

Federal Court (Putrajaya) 

The Entirety of Trade Marks and the Resilience of Goodwill

1. The Appellant, Ortus Expert White Sdn Bhd, was a distributing company for “Royal Expert” beauty products. It held a registered trade mark “Royal Expert White” under Class 3 for goods including skin whitening and wrinkle creams.
2. The First Respondent (‘D1’) entered into a dealership agreement with the Appellant to distribute these products. D1 and her husband, the Second Respondent (‘D2’) was the sole proprietor of Rafica Resources, through which they distributed the plaintiff’s products. 
3. However, D1 began selling a skin whitening cream under the trade mark “Real Expert White,” utilizing packaging that the Appellant alleged was confusingly similar to its own. Consequently, the Appellant sued for breach of the dealership agreement, trademark infringement under paragraph 38(1)(a) of the Trade Marks Act 1976 (‘TMA’) and the tort of passing off.
4. The High Court initially allowed all three claims by the Appellant. However, the Court of Appeal reversed this decision, holding there was no infringement or passing off, partly because a Ministry of Health (MOH) press release banning “Royal Expert Whitening Cream” for containing mercury had allegedly destroyed the Appellant’s goodwill. The Appellant then appealed to the Federal Court.

1. Whether the Court ought to consider the disclaimed words in juxtaposition or in combination with the essential features of the registered trade mark to decide if there is a likelihood of confusion and/or deception.
2. Whether the goodwill of a business be destroyed completely by mere publication(s) of documents that make no specific reference to the business owner.

(1) Whether the Court ought to consider the disclaimed words in juxtaposition or in combination with the essential features of the registered trade mark to decide if there is a likelihood of confusion and/or deception.

(a) The Federal Court answered in the affirmative, holding that in a trade mark infringement action, the Court must consider disclaimed words in juxtaposition or combination with the essential features of the mark to determine the likelihood of confusion.

(b) The Federal Court held that a trade mark is a “whole thing” and must be considered in its entirety. It is legally incorrect to break a mark down into parts and compare them in isolation, rather the proper course is to look at the marks as wholes and not disregard parts that are common or disclaimed.

(c) While a proprietor has no exclusive right to disclaimed words (often referred to as “common marks”), the Court must look at the collocation and arrangement of these different matters. If common features are inserted in a similar position, form and arrangement so as to make the whole combination calculated to deceive, infringement is established.

(d) Likelihood of confusion is judged through the eyes of a consumer with an average memory and imperfect recollection. Such consumers rely on a “general impression” or a striking detail rather than a photographic memory of the whole mark. 

(e) The Federal Court followed LCY v LCH & Anor [2017] 6 MLRA 412 whereby this case established the five ingredients for trade mark infringement, specifically the “test of Likelihood of Confusion or Deception”.

(f) The Federal Court referred to M I & M Corporation & Anor v A MI [1964] 1 MLRA 439 in which established the general recollection test, noting that confusion is judged by whether a person seeing a mark in the absence of the original would be deceived.

(g) The Federal Court emphasized that infringement occurs if the Respondent uses one or more essential features of a mark, those striking features that fix themselves in the customer’s recollection. In this case, the Crown device and the rectangle were identified as the Appellant’s essential features. The Respondents’ use of a Diamond-shaped device in the same position as the Crown, combined with a similar rectangle, created a likelihood of confusion.

(h) The Federal Court followed Tohtonku Sdn Bhd v Superace (M) Sdn Bhd [1992] 1 MLRA 350, adopted the Re Pianotist test, which requires considering the look, sound, nature of the goods and all the surrounding circumstances.

(i) The Federal Court referred to J S Staedtler & Anor v Lee & Sons [1993] 5 MLRH 433 which illustrated that essential features (like striking black and yellow stripes on a pencil) are the primary indicators of resemblance, even if the brand names differ.

(2) Whether the goodwill of a business be destroyed completely by mere publication(s) of documents that make no specific reference to the business owner.

(a) The Federal Court answered in the negative, ruling that the goodwill of a business cannot be destroyed completely by mere publications that do not specifically reference the business owner.

(b) The Federal Court referred to YSF & Anor v Syarikat Zamani Hj Tamin [2012] 2 MLRA 404 which defined goodwill as the “benefit and advantage of the good name, reputation and connection of a business”.

(c) There is a fundamental difference between a trade mark as an intangible intellectual property right and the physical contents of the actual goods. Statutory rights attached to a trade mark are distinct from the goods bearing that mark.

(d) Goodwill is the “attractive force which brings in custom” and is attached to the brand/reputation, not the physical ingredients of the goods. Therefore, a ban on a specific product for a content issue (like mercury content) does not automatically extinguish the established brand’s goodwill.

(e) The Federal Court referred to The Commissioners of Inland Revenue v Muller & Co’s Margarine, Limited [1901] AC 217 which established that goodwill includes everything that adds value to a business by reason of name and reputation.

(f) The Federal Court held that accepting the destruction of goodwill via negative press would lead to an absurd and untenable situation where trade mark owners could not protect their brands against infringers simply because of negative publicity.

(g) The Federal Court noted that the MOH press release in question referred to a different legal entity and was insufficient to prove that the specific Appellant’s legal notifications had been cancelled or their specific business reputation destroyed.

1. The Federal Court unanimously allowed the appeal and set aside the Court of Appeal’s judgment. 
2. The Federal Court answered the first issue in the affirmative and second issue in the negative. 
3. The Federal Court affirmed the High Court’s decision, finding the Respondents liable for trade mark infringement, passing off and breach of contract. The case was remitted to the High Court for the assessment of damages.

1. In infringement cases, Courts must not ignore disclaimed words. They must analyze how those words work in tandem with essential features to create a likelihood of confusion. 
2. The ‘Imperfect Recollection Test’ is the benchmark and standard for determining confusion. The Court looks at the general impression left in the mind of a consumer of average intelligence rather than side-by-side comparisons at the point of purchase.
3. Regulatory issues or negative press regarding product safety (such as mercury content) do not automatically invalidate or destroy the statutory property rights of a registered trademark.
4. Dealers have a strict contractual duty to enhance and protect the reputation of the brands they distribute, selling a confusingly similar competing product is a clear breach of this duty.