Guangzhou Light Industry & Trade Group Ltd & Ors v Lintas Superstore Sdn Bhd [2022] 5 MLRA 245 

Guangzhou Light Industry & Trade Group Ltd & Ors v Lintas Superstore Sdn Bhd [2022] 5 MLRA 245 

Federal Court (Putrajaya) 

The Legal Limits of Parallel Importation under Malaysian Trademark Law Regarding Territorial Restrictions and Material Product Differences

1. The case involved a dispute over the unauthorized sale of “Eagle Coin” canned fried dace in Malaysia. 
2. The First Appellant (“P1”) is a China-based company that owns the “Eagle Coin” trademark registered in both China and Malaysia. The Second Appellant (“P2”), a subsidiary of P1, is assigned to use the mark outside China. The Third Appellant (“P3”) is the registered trademark user and the sole authorized distributor of these products in Malaysia. 
3. The Respondent, Lintas Superstore, runs a supermarket in Kota Kinabalu, Sabah. The Respondent purchased “Eagle Coin” products directly from P2’s retail outlet in China and shipped them to its supermarket in Malaysia for resale.
4. Although the products were genuine, they were intended only for the China market and were explicitly labeled “to be sold in China only”. 
5. Furthermore, these products were materially different from those authorized for the Malaysian market. They had different fish content ratios and failed to comply with Malaysian halal requirements and food labelling regulations (Food Regulations 1985).
6. The Appellants sued for trademark infringement and passing off. The Respondent relied on the defense of parallel importation under paragraph 40(1)(dd) of the Trade Marks Act 1976 (“TMA”).

1. Whether a trademark owner’s rights are exhausted worldwide once goods are put on the market, even if the packaging explicitly restricts sale to a specific geographical area (such as “to be sold in China only”).
2. Whether the sale of parallel imports can be prohibited if the goods are materially different in contents, quality or packaging from those authorized for the Malaysian market.
3. Whether a bulk purchase of goods from a manufacturer’s retail outlet can be used to infer implied consent to resell those goods in a different country.

(1) Whether a trademark owner’s rights are exhausted worldwide once goods are put on the market, even if the packaging explicitly restricts sale to a specific geographical area (such as “to be sold in China only”).

(a) The Federal Court ruled that a brand owner’s trademark rights are not exhausted worldwide when goods are put on the market with an explicit territorial restriction (such as “to be sold in China only”).

(b) The Federal Court affirmed that trademark law is territorial in nature, meaning each country grants protection within its own specific territorial limits. Consequently, putting goods on the market in one jurisdiction (like China) does not automatically renounce the proprietor’s right to oppose the sale of those same goods in another jurisdiction (like Malaysia) if a restriction was clearly stated.

(c) The Federal Court noted there is no international treaty compelling a standard of international exhaustion. Thus, proprietors can legally use their exclusive rights in Malaysia to prevent the importation of goods meant for a different geographical area.

(d) The Federal Court referred to the Malaysian High Court decision in Tien Ying Hong Enterprise Sdn Bhd v Beenion Sdn Bhd [2009] 4 MLRH 790, which established that trademark law is territorial and parallel imports are only permitted if the registered proprietor consented to their sale in the local market.

(e) The Federal Court also followed the English case Colgate-Palmolive Ltd & Anor v Markwell Finance Ltd & Anor [1989] RPC 49, which held that rights were not exhausted for goods meant for specific overseas territories.

(2) Whether the sale of parallel imports can be prohibited if the goods are materially different in contents, quality or packaging from those authorized for the Malaysian market.

(a) The Federal Court held that the sale of parallel imports in Malaysia can be prohibited if the goods are materially different in contents, quality or packaging from those authorized for the Malaysian market.

(b) The Federal Court adopted the “material differences” standard, reasoning that even a single material difference creates a presumption that the goods have the potential to mislead or confuse consumers about the nature or quality of the product.

(c) Therefore, such confusion damages the registered user’s goodwill and reputation, as consumers may associate the inferior or different parallel import with the authorized local version. In this case, differences in fish content ratios and non-compliance with Malaysian halal and food labeling regulations were deemed material.

(d) The Federal Court referred to PT Garudafood Putra Putri Jaya TBK (Applicant) [2019] MLRHU 141, this Malaysian High Court approach, which protected products meant specifically for the Malaysian market against materially different versions meant for Indonesia.

(e) The Federal Court adopted the protective approach from US cases like Societe Des Proouits Nestle v Casa Helvetia 982 F.2d 633 (1 Cir 1992) and Lever Brothers Co v United States of America 981 F.2d 1330 (DC Cir 1993), which prohibit the importation of physically different foreign goods bearing identical marks to prevent consumer deception.

(3) Whether a bulk purchase of goods from a manufacturer’s retail outlet can be used to infer implied consent to resell those goods in a different country.

(a) The Federal Court ruled that a bulk purchase of goods from a manufacturer’s retail outlet cannot be used to infer implied consent to resell those goods in a different country.

(b) Consent relates not just to the act of reselling, but to where the products can be resold. The mere act of selling a large quantity at a retail level does not equate to an unequivocal renunciation of rights to control international distribution.

(c) When packaging contains a clear territorial objection (such as “to be sold in China only”), it is “absurd” to rely on the sheer quantity of the purchase to imply consent for importation into a restricted territory like Malaysia.

(d) The Federal Court referred to Zino Davidoff SA v A & G Imports Ltd [1999] RPC 63 on the principle that consent can only be implied if the facts unequivocally show the proprietor has renounced their right to oppose the placing of goods on the market in the importing jurisdiction.

1. The Federal Court unanimously allowed the appeal, setting aside the Court of Appeal’s decision and restoring the High Court judgment in favor of the Appellants. 
2. The Federal Court held that the defense of parallel importation failed because there was no express or implied consent from the Appellants for the products to be resold in Malaysia. The Respondent infringed the trademark rights of the plaintiffs by importing and selling products restricted to the China market. The Respondent was liable for the tort of passing off because the identical marks misled the Malaysian public into believing the Respondent’s products were the same as the authorized local versions, thereby damaging P3’s reputation.

1. Explicit territorial restrictions on packaging (such as “For Sale in China Only”) are legally effective in preventing unauthorized parallel importation into Malaysia.
2. Genuine goods can still be infringing if they are materially different from the local authorized version, particularly regarding quality, ingredients or mandatory local legal standards like halal certification and food regulations.
3. Simply buying a large quantity of a product from a manufacturer’s retail store does not give a buyer the right to resell those goods in a restricted territory.
4. Trademark law protects not just the mark, but the reputation and goodwill of the authorized local distributors, which is damaged when consumers are confused by unauthorized sources.