case update

Stemlife Berhad v Bristol-Myers Squibb (M) Sdn Bhd & Arachnid Sdn Bhd

First published on 10 August 2009

CIVIL SUIT NO S6-23-95-2008 (HC)

Arachnid Sdn Bhd (“Arachnid”) provides web development and related services. In 2003, Bristol-Myers Squibb (M) Sdn Bhd (“Bristol-Myers”) engaged Arachnid to set up a website, (“the website”). Arachnid thereafter also provided maintenance services for the website.

The website hosts a forum known as the Asian Mom Network (“the forum”), a platform for Asian parents to share tips and views on parenting.

In 2007, Stemlife Berhad (“Stemlife”) brought an action against Arachnid for online defamation, alleging the latter was responsible for certain defamatory statements made by users of the forum.

Arachnid sought to strike out Stemlife’s suit on the basis that it disclosed no reasonable cause of action or was frivolous, vexatious and an abuse of process of the court.

The High Court in Kuala Lumpur struck off the claim by Stemlife. This case highlights the extent of liability for online defamation in Malaysia.

The court held that Stemlife’s suit had no reasonable cause of action on the grounds that:

a) Arachnid’s role was simply to set up and maintain the website for Bristol-Myers. Arachnid is Bristol-Myers’ web agency and the website belongs to Bristol-Myers;

b) Arachnid was not the author and editor of the words complained of. Stemlife had identified the authors as being the forum users, and one of the defamatory statements did not appear on the website but through a hyperlink to another website. Therefore, Arachnid could not be the publisher of the words complained of; and

c) Arachnid, which merely provides the service of setting up and maintaining a website, could not be held responsible as a “publisher” under the law of defamation.

Further, the suit by Stemlife was frivolous, vexatious and an abuse of process of the court in that:

(a) Arachnid was engaged by Bristol-Myers to set up the website;
(b) Arachnid provided maintenance services, including providing updates and upgrades upon the instruction of Bristol-Myers. The court held that it was not sufficient to attach liability on the part of Arachnid;
(c) There was no participation by Arachnid in the promotion of the forum;
(d) The contents of the website would not be within the knowledge of Arachnid, unless informed by Bristol-Myers;
(e) Arachnid did not control content posted on the forum, nor did it moderate or monitor the forum. Any postings on the website would only be removed upon the instruction of Bristol-Myers; and
(f) Stemlife had not shown as to how Arachnid contributed to, or was “knowingly” involved in, the publication of the words complained of.

The court also held that Arachnid had no control over the contents of the website, and had never played an active role in respect of the publication. Neither would Arachnid have knowledge of the contents of the words posted on the website.

Based on the above reasons, the High Court allowed the application by Arachnid to strike out Stemlife’s writ and statement of claim, which it dismissed with costs.

Philip Morris Products SA v Ong Kien Hoe & Ors

First published on 22 October 2009

CIVIL SUIT NO S6-23-95-2008 (HC)

Philip Morris Products SA (“Philip Morris”) is a manufacturer and distributor of cigarettes and tobacco products under the trade mark of ‘MARLBORO’ throughout the world and the proprietor of the registered trade mark “MARLBORO” in Malaysia.

On 10 September 2002, the officers of the 3rd Defendant (Director General of the Customs and Excise Department of Malaysia) detained 2 containers containing 1350 unmarked bale boxes containing cigarettes bearing the trade mark of ‘MARLBORO’.

These cigarettes were subsequently found to be counterfeit cigarettes. Philip Morris initiated an action against the 3 defendants but finally went to trial only against one, the 2nd defendant, who is a forwarding agent. Along the way, the claims against the 1st and 3rd defendants were withdrawn.

According to the declaration forms completed by the 2nd defendant and filed with the 3rd defendant, the consignors of the 2 containers were the 1st defendant. The declaration forms, packing and shipping of the goods in the containers were arranged by the 2nd defendant.

Philip Morris claimed against the 2nd defendant for infringement of Philip Morris’s trade and proprietary rights over the registered trade mark of ‘MARLBORO’. The infringement was said to have been committed by the 2nd defendant by passing off or attempting to pass off counterfeit cigarettes

(a) by its action in the transshipment, loading, unloading, reloading, transloading, storing, transitional storing, transiting, transporting, transshipping, transferring and/or dealing in any other manner in the course of trade with the counterfeit cigarettes;

(b) without the consent, authorisation or knowledge of Philip Morris dealt in or with the counterfeit cigarettes and/or counseled, instigated, procured, enabled, directed or assisted in the doing of those same acts.

The 2nd defendant is also alleged to have shown its direct complicity with the counterfeit cigarettes not only with regard to the importation and customs clearance but also in claiming ownership to obtain release and delivery of the counterfeit cigarettes to itself.

The 2nd defendant’s defence was that, among others:

(a) that it was merely carrying out its duties and obligations as a forwarding agent for a named principal;
(b) that it was not responsible or liable for the infringement; and
(c) the counterfeit cigarettes were seized within the free zone which is deemed to be a place outside Malaysia. That being so, not only is there no levy within this zone, the laws in Malaysia including the Trade Marks Act 1976 do not apply. Further, the ‘goods in transit’ are also exempted from seizure.

The High Court allowed Philip Morris’s claim with costs and held the following:

(1) The trade mark on the cigarettes seized from the 2 containers bore a trade mark identical to Philip Morris’s registered trade mark. Since Philip Morris had not authorised or licensed the 2nd defendant to use that registered trade mark there was infringement.

(2) The 2nd defendant was not a mere forwarding agent. On the facts the 2nd defendant did a lot more. In this regard:

(a) Firstly, the whole process from documentation to the handling of the cigarettes or the consignment is part and parcel of the course of the 2nd defendant’s trade or business as a forwarding expert. The 2nd defendant’s use is not as a private consumer. The documentation work related to the clearance of the cigarettes was an integral part of the expertise and trade of the 2nd defendant. It is the 2nd defendant who represented to others including the 3rd defendant that the goods in the 2 containers were cigarettes. Obviously these cigarettes must have a brand or be of a particular make, whatever that may be. The fact that the contents of the 2 containers cleared the Free Zone authorities indicates that these authorities must have believed that the 2nd defendant was authorised or licensed to ‘use’ in the sense of handling the cigarettes and clearing them in the course of its trade as a forwarding agent.

(b) Secondly, the 2nd defendant unstuffed counterfeit cigarettes and later consolidated these cigarettes with the other consignment of counterfeit cigarettes and paper bags. This required the 2nd defendant to open up the containers and deal with their contents. Although there is no need for the 2nd defendant to know for a fact that these cigarettes bore some particular registered trade mark, it is naive to suggest that the 2nd defendant is not aware at that time that it is handling cigarettes bearing the trade mark ‘MARLBORO’. Having being in the forwarding business for almost 15 years it is fair to impute that the 2nd defendant is at least generally aware of trade marks and counterfeiting or infringements of trade marks. Having opened the containers to consolidate their contents the trade mark must have been obviously displayed.

(c) Thirdly, the use of fictitious names and addresses admitted by the 2nd defendant indicates the existence of some element of complicity. Given that s 133(1) of the Customs Act 1967 (Act 235) makes it an offence to, among others, make a declaration which is untrue or incorrect in any particular, The Court held that the 2nd defendant’s argument that they are not obliged to ensure accuracy of the particulars in the documents presented for clearance of the cigarettes is unsustainable both in law and on the facts. On the contrary, ss 80 and 90 mandate the 2nd defendant with certain duties and liabilities for ensuring the completeness and accuracy of the details of the goods declared.

(3) The Free Zone is not free for all area, free of all laws or, that there is lawlessness in this zone. The enforcement agencies continue to hold jurisdiction over and in these Free Zones. In any event the issue of the validity of the seizure was immaterial and irrelevant to the success or otherwise of Philip Morris’s claim. Philip Morris’s rights in the registered trade mark were rights in rem.

Lew Cher Phow @ Lew Cha Paw & Ors v Pua Yong Yong & Anor

First published on 10 March 2010

(Johor Bahru High Court Suit No. MT4-22-510-2007)

In this case, the Plaintiffs and the Defendants were neighbours. The High Court had dismissed an application by the Plaintiffs who applied for an order for interlocutory injunction to restrain the Defendants from installing any CCTV cameras at the Defendants’ house which faced the Plaintiffs’ house as well as also for an order to compel the Defendants to remove their CCTV cameras that were installed facing the Plaintiffs’ house.

The Plaintiffs alleged that the act of the Defendants installing the CCTV cameras had intruded their livelihood and daily activities. The Defendants on the other hand alleged that the CCTV cameras were for security reasons as their house had been intruded before and also that the CCTV cameras only showed the Plaintiffs’ house as background.

The grounds given by the High Court in dismissing the Plaintiffs’ application are, among others, as follows:

(a) there is no evidence to show that the CCTV cameras intruded the livelihood and daily activities of the Plaintiffs. Further, there is no evidence in the Plaintiffs’ affidavit to show that the CCTV cameras recorded the Plaintiffs’ activities.

(b) the Defendants are entitled to install CCTV cameras for security and safety purposes.

(c) if the interlocutory injunction is granted this will bring a legal implication to the general public especially when CCTV cameras are installed at residential and commercial premises to protect the safety of the general public.

(d) there is no right of privacy in Malaysia thus the Plaintiffs do not have the right to institute an action against invasion of privacy rights.

Giordano defeats Giordano

Published on 14 September 2010

Walton International Limited v Yong Teng Hing B/S Hong Kong Trading Co & Anor (Civil Appeal No: W-02-685-2008)

The appellant is the registered proprietor of “GIORDANO” trade mark and other related trade marks in Class 25 (for garments and wearing apparels; jeans, T-shirts, pouch, accessories, trousers, clothing, footwear and headgear and articles of clothing), Class 18 (for leather and imitations of leather, and goods made of these materials and not included in other classes, animal skins, hides, trunks and traveling bags, umbrellas, parasols and walking sticks, whips, harness and saddlery); and Class 13 (for GIORDANO ladies).

The appellant’s predecessor in title, Giordano Limited has sold and exported substantial quantities of goods bearing “GIORDANO” trade mark, such as articles of clothing, watches with leather straps, leather belts, eyewear including sunglasses, bags, wallets umbrellas and fashions accessories, to many countries including Malaysia. All the “GIORDANO” trade mark and other related trade marks worldwide together with the goodwill and reputation in connection with the trade marks were assigned to the appellant in 1991.

The respondent on the other hand, is the sole proprietor of Hong Kong Trading Co. He ventured into businesses of selling watches with leather and imitation leather straps in 1986, and selling optical and sun glasses, and cases made of leather or imitation leather in 1992, in Malaysia. All the goods sold and dealt with by the respondent used the “GIORDANO” trade mark. He had in fact applied to register the “GIORDANO” trade mark for goods in Classes 9, 14 and 18 and had obtained registration of “GIORDANO” trade mark in Class 14.

The respondent filed an application for registration of the trade mark “GIORDANO” at the Registry of Trade Marks, Malaysia in 1992 for optical and sun glasses in Class 9. The appellant filed an opposition against the respondent’s application on the grounds, inter alia, that the “GIORDANO” trade mark applied for by the respondent is identical or similar to the appellant’s “GIORDANO” trade mark.

The Registrar dismissed the said opposition and the appellant filed an appeal to the High Court against the Registrar’s decision in dismissing the said opposition. The learned High Court judge dismissed the appeal and decided in favour of the respondent i.e. rejecting the appellant’s opposition and accepting the respondent’s application for registration of “GIORDANO” trade mark for Class 9. The appellant then appealed against the High Court decision to the Court of Appeal.

Allowing the appeal, the Court of Appeal held the following:

1. In the present case, the appellant had adduced unchallenged documentary evidence that the appellant and/or its licencees have been using the “GIORDANO” trade mark extensively in Hong Kong and in other countries around the world, in respect of goods such as articles of clothing, watches with leather straps, leathers belts, eyewear including sunglasses, bags and wallets. The appellant and/or its licencees first used the said trade mark in Malaysia in relation to goods such as articles of clothings, leather belts, bags, wallets, umbrellas and other fashion accessories sometime in 1990, before the respondent’s alleged date of first use of the trade mark in Malaysia in 1992.

2. The appellant had acquired substantial goodwill and reputation in the “GIORDANO” trade mark in Malaysia and in other countries in respect of those goods. The High Court should have taken into account the appellant’s significant use and registration of the said trade mark, particularly in relation to Class 25 goods in considering whether confusion or deception would arise.

3. Under section 14(1)(a) of the Malaysian Trade Marks Act 1976 (“Act”), registration of a trade mark should be refused if there is likelihood of confusion or deception to the public or customers. It is for the person applying for registration (the applicant) to establish that there is no likelihood of such confusion or deception; or that the result of the use of the mark will not cause a number of persons to wonder whether the products of the respondent and of the appellant came from the same source.

4. It is not enough for the applicant to negate the likelihood of confusion in relation to the actual trade carried on by the opponent at the time of the registration and to the manner in which the latter then uses his work. The applicant must also take into account all legitimate use of which the opponent may reasonably make of his mark within the ambit of his registration.

5. It may be important to see whether the registered mark is of a general or special character and to ascertain the extent of its reputation. Again, it may be important to determine whether the goods in respect of which it is registered constitute a narrow class or wide variety of goods as also will be the question of whether the goods of both the applicant and the opponent will be likely to find market substantially in common areas and among the same classes of people.

6. In the present case, both the appellant’s and respondent’s goods are fashion apparels which are targeted at the same class of customers and market areas. It is highly likely that members of the public will wonder if the appellant’s and respondent’s goods, both bearing the “GIORDANO” trade mark, might originate from the same source. There is sufficient evidence to show that the appellant is the originator or bona fide proprietor of the “GIORDANO” trade mark, particularly when the appellant has commenced use of the said trade mark in Malaysia prior to the date of the respondent’s application.

7. The evidence indicates that the respondent did not independently devise the mark himself. The respondent in truth is not the true proprietor of the “GIORDANO” trade mark. The respondent is trying to obtain the benefit of the worldwide reputation of the appellant. The respondent has failed to proffer any plausible explanation on his choice of mark which is identical to the appellant’s mark.

8. If at the date of application for registration of the trade mark by the respondent, the trade mark, although it has not been used in Malaysia, has become associated in the mind of the public with the appellant’s goods, then the respondent cannot claim or appropriate proprietorship of the said trade mark. There are no artificial limits on geographical areas to which reputation or goodwill can or cannot extend. Thus, the appellant’s reputation or goodwill in the “GIORDANO” trade mark outside Malaysia prior to the respondent’s use of the said mark in 1992 reinforces and supplements the reputation and goodwill of the appellant’s “GIORDANO” mark in Malaysia.

9. Modern technology and communications have improved to such an extent that the public in Malaysia would be aware of foreign marks even though such marks had not been previously used in Malaysia. Confusion and deception have no boarders in these days of information technology age. A small amount of use of the “GIORDANO” trade mark by the appellant is sufficient to prevent the respondent or any other party from claiming proprietorship in the said mark if its use by the respondent is likely to cause confusion to the public. The appellant in the present case has through its licencees used the “GIORDANO” trade mark in Malaysia prior to the filing date of the respondent’s application for registration.

10. In the present case, the learned Registrar, should refuse registration of the application by the respondent as there is a real risk of confusion or deception in that members of the public, as opposed to persons in the trade alone, might erroneously suppose that the respondent’s goods or products originated from or in are some way connected with the appellant.

11. The respondent as an applicant for registration of the “GIORDANO” trade mark bears the onus of proof to satisfy that the said trade mark is registrable and should be registered under the Act.

12. In law it is not a pre-requisite under section 14(1)(a) of the Act that the appellant must have acquired goodwill or reputation in the mark in Malaysia prior to the application for registration. It is sufficient so long as the mark has been in use in Malaysia by the appellant prior to the respondent’s application for registration. Going by the words of section 14 (1)(a) of the Act, the court has to determine whether the use of the “GIORDANO” trade mark by the respondent is likely to deceive or cause confusion to the public. If there are people who are likely to be deceived or confused by the use of the trade mark by the respondent, then it can safely be concluded that such use is likely to deceive or cause confusion to the public. Thus it is not necessary to find whether the appellant had acquired a reputation or goodwill in respect of its use of the trade mark on its products in order to get protection under section 14(1)(a) of the Act.

13. The issue of ‘first user’ of the said trade mark was raised before this court. The learned High Court judge concluded that the respondent was the first person who used the “GIORDANO” mark in Class 9 in Malaysia, hence the appellant has no reputation or goodwill in the “GIORDANO” mark in connection with goods in Class 9. However, the Court was of the view that the learned judge’s finding on this ‘first user’ issue is not supported by sufficient evidence adduced by the parties.

14. The Court is satisfied that there is no evidence to support the respondent’s allegation that he has been selling sunglasses, eye wear or fashion accessories bearing the “GIORDANO” trade mark in or before 1992. As such, based on the available evidence, the court is convinced that the appellant (not the respondent) is the first user and therefore the bona fide proprietor of the “GIORDANO” trade mark.

15. The Court was of the view that even if the respondent’s goods are not exactly the same with the appellant’s goods, nevertheless all their goods are in the same description. Therefore the prohibition under section 19(1)(a) of the Act is applicable and the respondent’s trade mark should not have been registered. The Registrar is duty bound to enforce the prohibition under section 19(1)(a) of the Act strictly, even without any opposition to the registration by the proprietor of the trade mark.

16. In the present case, the Court was of the view that “optical and sunglasses” (in Class 9) and “garment and wearing apparels” (in Class 25) are goods of the same nature in that both can be commercially described as “personal wear” or articles meant to be worn on the body. From a practical and commercial point of view, both categories of goods are considered to be fashion wear.

17. Both categories of goods have common practical purpose of acting as articles of adornment for personal wear. From a commercial stand point both categories of goods are used and sold as articles which portray one’s sense of fashion and preference. Sunglasses (Class 9) can be used as a form of fashion statement. One may choose square or oval-shape sunglasses purely based on preference and taste. Similarly, one may choose to buy clothes or pants (Class 25) of a particular design or colour based on one’s preference and taste.

18. In today’s business environment and practice, both categories of goods are more often than not manufactured, distributed and sold through the same sources or channels. For instance, many famous brands such as Giorgio Armani, Dunhill, Cartier, Nike, Calvin Klien, Dolce and Gabbano, Channel, Christian Dior, Hugo Boss, Versace, Gucci, Coach, Guess, manufacture and distribute both categories of goods. Further, a visit at any shopping complexes would show that such goods are commonly sold at the same places next to each other in departmental stores, fashion boutiques and retail stores.

19. The goods covered by the respondent’s application, i.e. optical and sunglasses, and the appellant’s goods, i.e. articles of clothing, watches with leather straps, leather belts, eyewear including sunglasses, bags, wallets, umbrellas and fashion accessories, are closely related as these are goods commonly sold together or next to each other in departmental stores or fashion boutiques. Further, those goods are likely to be manufactured, distributed and sold through the same sources or channels. It is also likely that the respondent and the appellant share the same market.

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