Munchy Food Industries Sdn Bhd v Huasin Food Industries Sdn Bhd [2022] 1 MLJ 377

MUNCHY FOOD INDUSTRIES SDN BHD v HUASIN FOOD INDUSTRIES SDN BHD [2022] 1 MLJ 377

Federal Court (Putrajaya)

Infringement of trademark

Facts

1. The Appellant, is a manufacturer and seller of biscuits and confectionary known as Munchy Food Industries Sdn. Bhd and has been incorporated since 1991.  The Appellant’s trademark house brand is ‘Munchy’s’ trademark (Munchy’s House Brand).

2. The Appellant owns a number of trademarks, including the LEXUS mark, which is used on the packets of the Appellant’s Lexus cookies and was registered on January 23, 1998 (registration number 98013537).

3. The Appellant received a complaint from one of its customers sometime in August 2015 who had mistakenly confused the Appellant’s biscuit with the Respondent’s.

4. The LEX biscuit is one of the several confectionery items that the Respondent also manufactures and sells.  For its cream sandwich biscuit items, Respondent utilises a combination mark that combines a stylized “Lex” in a circular form with a curving stalk of wheat.

5. The Respondent submitted an application to register the defendant’s Lex mark with the Registrar of Trade Marks (registrar) on 25 September 2015.  In response to the Respondent’s trademark application, the Appellant filed an objection.

6. The Appellant then filed a lawsuit against the Respondent in the High Court for trademark infringement and passing off. According to the Appellant, the Respondent violated Section 38(1)(a) of the Trade Marks Act 1976 (“Act 175”) (repealed by Trademark Act 2019 (Act 815)) by using the trademark LEX, which is confusingly similar to the Appellant’s trademark, in connection with its products, which include biscuits and/or cream sandwiches. The Respondent’s trademark and the Appellant’s trademark are confusingly similar, which served as the foundation for the Appellant’s claim of passing off.

7. The Respondent then filed a counterclaim pursuant to Section 45(1)(a) of Act 175 for a court order to remove LEXUS Registered Mark from the Register.

8. The High Court

(a)  The High Court ruled in favour of the Appellant and held that both of the Respondent’s Lex product and their trademark passes off on the Appellant’s Lexus products.

(b)  In deciding so, the learned High Court judge addressed the Respondent’s counterclaim first, for the reason that if the Respondent succeeds to remove the Appellant’s LEXUS mark from the Register, the Appellant’s claim based on the infringement shall consequently be dismissed.

9. The Court of Appeal

(a) The Respondent filed an appeal to the Court of Appeal and the Respondent’s main contention is that the learned High Court judge applied the wrong test to assess the likelihood to deceive or cause confusion narrowly interpreted a single essential feature comparison.

(b) The Court of Appeal was of the view that Section 45 of Act 175 is discretionary in nature and in certain circumstances, the court is obligated to take a holistic approach and must be slow in granting equitable relief when the Appellant has not demonstrated to the court that other provisions of Act 175 have been exhausted.

Issue

1. Whether honest concurrent rights under the trademark registration system is a relevant consideration in an action for trademark infringement/passing off?

2. Whether variation of registered trademark a remedy that a Plaintiff should seek as an option before commencing an action for trademark infringement and/or passing off even if the trademark of the Defendant is not registered?

Ratios

1.    The statutory framework

(a) According to Section 6(4) of the Act 175, the incorporation of the previous registers into the Register shall have the following effect:

“(a) where a trade mark has been registered and entered in all the previous registers by a proprietor for all three component regions of Malaysia, such a trade mark shall in its incorporation into the Register be deemed to be a registered trade mark in the name of such proprietor under this Act;

 (b) where a trade mark has been registered and entered in any of the previous registers by a proprietor for any one or two of the component regions of Malaysia, such a trade mark shall in its incorporation into the Register be deemed to be a registered trade mark in the name of such proprietor under this Act if on the date on which this Act comes into force

(i) no identical trade mark or trade mark so nearly resembling the firstmentioned trade mark in respect of the same goods or same description of goods as is likely to deceive or cause confusion has been registered and entered in the remaining previous register or registers prior to the date of the coming into force of this Act by a different proprietor or proprietors for any of the remaining component regions of Malaysia; and

(ii) no application for the registration of an identical trade mark or trade mark so nearly resembling the firstmentioned trade mark in respect of the same goods or same description of goods as is likely to deceive or cause confusion has been made prior to the date of the coming into force of this Act by another person for any of the remaining component regions of Malaysia or, where it has been made, it is subsequently refused, abandoned or successfully opposed;”

(b) As for identical trademarks, Section 19 of Act 175 provides that-

“(1) No trade mark shall be registered in respect of any goods or description of goods-

(a) that is identical with a trade mark belonging to a different proprietor and entered in the Register in respect of the same goods or description of goods or in respect of services that are closely related to those goods; or

(b) that so nearly resembles such a trade mark as is likely to deceive or cause confusion”.

(c)  However, the court or the registrar may permit the registration of more than one proprietor in respect of trademarks that are identical or so nearly identical to each other as to be likely to deceive or cause confusion where the registration of the different proprietors in the case of honest concurrent use or the circumstances described in Section 6(4)(c) of Act 815 or of other special circumstances that, in the opinion of the court or the registrar, make it proper so to do.

(d) Section 20 of Act 175 provides the registration of a competing trademark if honest concurrent use is shown, and provides as follows:

“(1) Notwithstanding subsection 19(1), in the case of honest concurrent use or of the circumstances described in paragraph 6(4)(c) or of other special circumstances which, in the opinion of the Court or the Registrar, make it proper so to do, the Court or the Registrar may permit the registration of more than one proprietor in respect of trade marks which are identical or so nearly resembling each other as are likely to deceive or cause confusion where the registration of the different proprietors—

(a) is in respect of the same goods or description of goods; or

(b) in the case of at least one proprietor, is in respect of goods, and in the case of the other or others, is in respect of services closely related to those goods, subject to such conditions, amendments, modifications or limitations, if any, as the Court or the Registrar, as the case may be, may think right to impose”.

(e)  The basis of this appeal, which is the infringement of trademark is provided under Section 38 of Act 815-

“(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 as to render the use of the mark likely to be taken either—

(a) as being use as a trade mark;

(b) in a 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 either 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 in which the use is use at or near the place where the services are available or performed or in an advertising circular or other advertisement issued to the public, as importing a reference to a person having a right either as registered proprietor or as 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.     Trademark infringement and passing off

(a) The learned counsel for the Appellant’s argued that the Court of Appeal was erred when it considered the effects of Section 20 of Act 815, which was not part of the pleaded case of the parties.

(b) The learned counsel for the Appellant contended that the main objective of this appeal concerns an action for trademark infringement and passing off and not the registrability or the registration of the Respondent’s trademark.

(c)  It is trite law that in a trademark infringement case, the burden of prove lies on the Appellant (Plaintiff) to prove that he owns a valid registered trademark and that the Respondent (Defendant) had used the Appellant’s trademark in the course of trade without consent that caused deception and confusion among the customers.

(d) The Federal Court made a reference to the case of Low Chi Yong (t/a Reynox Fetichem Industries) v Low Chi Hong & Anor [2018] 1 MLJ 175 where Suriyadi Halim Omar  FCJ delivering the judgment emphasized that the burden of proof in trademark infringement case lies with the party alleging that his trademark has been infringed and must established the following:

(i)             he owned a valid trademark;

(ii)            that the trademark was used in the course of trade without consent; and

(iii)           the unlawful usage of trademark owned by him had caused deception/confusion among the prospective customers.

(e)  The learned counsel for the Appellant further argued that the Court of Appeal failed to consider the issue of passing off as trademark infringement and passing off are two separate and distinct actions.

(f)   In support, the learned counsel for the Appellant referred to the case of Erven Warnink BV and others v J Townend & Sons (Hull) Ltd and others [1979] 2 All ER 927 where to succeed in an action for passing off, five ingredients must be established:

(i)             misrepresentation;

(ii)            made in the course of trade;

(iii)           to prospective or ultimate customers;

(iv)          calculated to injure the goodwill and reputation of the respondent; and

(v)           which has resulted in damages.

(g) The Court of Appeal however adopted a wrong approach by considering the issues which were not pleaded by the parties instead of considering the conflicting tests argued by the parties in determining the likelihood of confusion or deception in action for trademark infringement.

(h)  The defence put forward by the Respondent was honest concurrent that the Respondent had use the trademark bona fide and had no knowledge of the registered trademark which was disregarded by the Court of Appeal.

(i)    Instead, the Court of Appeal opined that if the proposition that the parties were given the opportunity to settle the dispute and that the Respondent did not have objection for both parties’ marks to co-exist were placed before the learned judicial commissioner, the decision may have been different.

(j)    Therefore, the Federal Court was firm that the Court of Appeal misdirected itself and committed an error of law based on the analysis of the provisions in Act 175 as well as having regard to settled law on trademark infringement.

3.     Variation of a registered trademark as a remedy

(a) The Court of Appeal opined that the Appellant  should have sought the option of variation of trademark as provided under Section 44 of Act 175 prior to commencing the action for trademark infringement and passing off.

(b) Section 44 of the Act 175 provides-

“Alterations of registered trade mark

(1) The registered proprietor of a trade mark may apply in the prescribed manner to the Registrar for leave to add to or alter the trade mark in any manner not substantially affecting the identity thereof and the Registrar may refuse leave or may grant it on such terms and subject to such limitations as he may think fit”.

(c)  In establishing an action for trademark infringement, the Appellant must succeeds in proving the ingredients provided under Section 38 of Act 175, a case for trademark infringement would be made out.

(d) The learned counsel for the Appellant urged the Federal Court to consider and reverse the decision made by the Court of Appeal as it introduced an obligation upon those who possessed a registered trademark to apply for variation before initiating an action for trademark infringement.

(e)  The Federal Court then cited Sinma Medical Products (M) Sdn Bhd v Yomeishu Seizo Co Ltd & Ors [2004] 4 CLJ 815 where it was held that a party in a passing off action is not required to prove that the public is actually deceived or confused between the goods or services of both parties.

(f)   The Court in deciding as to whether there is a risk of deception and/or confusion must not solely based on a visual comparison of the packaging of the Respondent’s and Appellant’s biscuits.

(g) Therefore, the Federal Court is satisfied that the Appellant has exclusivity over the registered trademark and will not create a monopoly.  The Appellant need not seek as an option before commencing an action for trademark infringement and/or passing off to vary its registered trademark as remedy under any circumstances especially if the trademark of the Respondent is not registered.

Decision

1.  The Federal Court allowed the Appellant’s appeal with costs and set aside the decision made by the Court of Appeal and thus reinstate the decision made by the High Court.

Key Take Away

1. Based on this case, it is crucial to register your trademark under the Trade Mark Act 2019 (Act 815) as it will become your legally protected asset.

2.  On that note, as a registered trademark owner, you will have the right to commence a legal action for infringement against others who use your trademark without consent.

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