| LOW CHI YONG v LOW CHI HONG & ANOR [2017] MLJU 1657
Federal Court (Putrajaya) Trademark – Subsection 35(1) of the Trade Marks Act 1976 (TMA) |
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| Facts | 1. The Appellant and 1st Respondent were siblings. Together, they acquired the liquid fertiliser business from RH One Marketing and used “Reynox” for their family business’s trademark (“the said trademark”).
2. Subsequently, they formed a partnership firm (“2nd Respondent) to take over the production, business operations, sale and distribution of the said fertiliser by using the trademark. Both parties held an equal share in the 2nd Respondent. 3. After resigning from the 2nd Respondent, the Appellant issued notices to both Respondents asserting that he had been the sole owner over the said trademark since 2005. The Appellant demands that the Respondents stop using the said trademark. However, the Respondents did not comply or take any action in response to these notices. 4. To settle the dispute, the Appellant filed a claim at the High Court (“HC”) against the Respondents for trademark infringements of the said trademark and passing off. 5. The Respondents filed a counterclaim alleging that the Appellant committed fraud in registering the trademark for liquid fertiliser. They contended that the trademark, being part of the partnership business, should not have been registered solely in the Appellant’s name. 6. The HC allowed the Appellant’s claim and dismissed the Respondent’s counterclaim with costs of RM 20,000.00. 7. Aggrieved by the decision, the Respondents appealed to the Court of Appeal (“COA”). The COA allowed the appeal and set aside the entire decision of the HC. 8. Dissatisfied with the outcome, the Appellant then appealed the case to the Federal Court (“FC”).
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| Issue | 1. Whether the Appellant had abandoned his exclusive rights to the trademark in perpetuity by consenting to its use by a company or partnership in which he was a shareholder/director or partner, even though he later withdrew and derived no further benefit from it.
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| Ratio | 1. Whether the Appellant had abandoned his exclusive rights to the trademark in perpetuity by consenting to its use by a company or partnership in which he was a shareholder/director or partner, even though he later withdrew and derived no further benefit from it.
(a) The FC opined that the Appellant must demonstrate by a preponderance of evidence that he owns the said trademark, which has already been proven due to the registration dated 13.05.2005. (b) To rebut the conclusiveness of the registration under section 36 of the Trade Marks Act 1976 (“TMA”), the Respondent must prove the elements stipulated in section 37 of the TMA, namely- (i) The original registration was obtained by fraud; (ii) The trademark offends against section 14 TMA; and (iii) The trademark was not, at the commencement of the proceedings, distinctive of the goods or services of the registered proprietor. (c) However, based on the facts before the FC, the Respondents failed to provide evidence in establishing the ingredients of section 37 of the TMA. Therefore, the said trademark was valid. (d) Pursuant to subsection 35(1) of the TMA, the FC concluded that the Appellant has the exclusive right to use the said trademark and has the right to prevent the unregistered users from using his trademark or any mark identical to the said trademark. (e) The FC also relied on section 38 of the TMA in viewing the infringement of the trademark and the circumstances when the infringement took place. Hence, the Appellants must prove the elements as follows- (i) The respondent is not the registered proprietor or the registered user of the trademark; (ii) The respondent was using the offending trademark in the course of trade; (iii) The respondent was using the offending trademark in relation to goods or services within the scope of the registration; and (iv) The respondent used the offending mark in such a manner as to render the use likely to be taken either as being used as a trademark or as importing a reference to the registered proprietor or the registered user or to their goods or services. (f) The FC was satisfied that the Appellant had established a prima facie of infringement of his trademark by the Respondents since there was evidence revealed that the Respondents used the Appellant’s trademark on notice boards, brochures, receipts, and business cards. (g) Referring to the case of Boh Plantations Sdn Bhd v Gui Nee Chuan & Ors (1975) 2 MLJ 213, the FC noted that the consequences of the unlawful usage of the trademark owned by the Appellant caused deception or confusion among the prospective customers. (h) Moreover, the FC found that the defence raised by the Respondents in regard to the “consent” to use the said trademark was as follows: (i) It was inconsistent with the Appellant’s evidence; (ii) Any alleged consent was withdrawn when the Appellant left the partnership (as per Black’s Law Dictionary); and (iii) No evidence of assignment to the Respondents pursuant to section 55 of the TMA. (i) In relation to the doctrine of abandonment (“the said doctrine”) as claimed by the Respondents, the FC cited Narayanan on the “Law of Trademarks and Passing Off” as follows- “To ‘abandon’ means to give up absolutely and irrevocably. Although a long period of non-use might indicate an intention to abandon, non-use alone is not enough…”. (j) In reliance on the above source, the FC, in its opinion, held that the Appellant had not abandoned his rights over the said trademark, neither absolutely nor in perpetuity. (k) Based on the totality of the evidence, the FC concluded that the Respondents failed to establish their defence under the said doctrine, considering their failure to establish consent on the part of the Appellant.
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| Decision | The FC allowed the appeal, set aside the decision of the COA, and reinstated the decision of the HC.
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| Key Takeaways | 1. A clear, written agreement should be executed between business partners, even between siblings, to avoid future disputes.
2. Personal relationships should not replace formal legal safeguards. A standard or formal application process should be used to protect individual interests in business ventures.
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