Help! Someone is using my brand name without my consent!

In any commercial industry, the brand name of a product is often of utmost importance. This is because the brand name of the product often carries with it the reputation and/or goodwill of the company owning the product. Players in a specific industry would purchase a product solely because of the reputation of the product or the company owning the said product. 

It is therefore pertinent that a company has the exclusive use of its brand name and is able to protect it from third parties who intend to capitalise and/or exploit the goodwill and/or reputation of the brand name. One of the most effective way is to have the product’s brand name registered as a trademark (“trademark”). 

However, if a trademark is successful and/or has a long-standing reputation, there is always a risk that it will be misused by ill-intentioned third parties. These third parties could, without the proprietor’s consent:

1. Associate the trademark to their products;
2. Represent to the industry that they are the manufacturer and/or trader and/or reseller of products bearing the trademark; or
3. Represent to the industry that their business is associated and/or affiliated with that of the trademark’s proprietor.  

In such circumstances, the reputation and the exclusive goodwill of a trademark could be injured and/or damaged. On top of that, the sale of the products could also be diverted to these third parties, as players in the industry would assume that these products are associated with or are the same as that of the trademark’s proprietor. 

So, the question is - What legal recourse is available to the proprietors of the trademark, against such perpetrators?

The first step would be to send a cease and desist letter to the perpetrator. The said cease and desist letter, may demand that the perpetrator:

1. Stops using the trademark and removes the same from their products;
2. Issues a public clarification that they have been misusing the trademark without the proprietor’s consent, and that their products are not related to the proprietor’s products;
3. Provides an account of revenue or profits that they have obtained through the sale of products bearing the proprietor’s trademark; and
4. Pays a certain amount of damages for infringing the trademark proprietor’s exclusive rights to the use of the trademark.

Chances are, the perpetrator will choose to settle and cease using the trademark. However, in the event the perpetrator refuses to cease and desist from using the trademark, the proprietor would be left with no choice but to initiate civil proceedings against the perpetrator, should they wish to protect the goodwill and reputation associated with the trademark.

Legal action may be brought against the perpetrators based on, among others, trademark infringement under the Trademarks Act 2019 (“Act 815”) and/or passing off.

The elements of trademark infringement have been propounded and reaffirmed in a string of cases from the Federal Court, the most recent being the case of Ortus Expert White Sdn Bhd v Nor Yanni Bt Adom & Anor [2022] 2 MLJ 67, where reliance was placed on a previous Federal Court case of Low Chi Yong (t/a Reynox Fertichem Industries) v Low Chi Hong & Anor [2018] 1 MLJ 175. 

In brief, an aggrieved registered proprietor of a trademark would be required to prove the following elements in a trademark infringement claim:

1. The perpetrator used the trademark which so nearly resembled the registered trademark so as to cause a likelihood of confusion or deception among consumers;
2. The perpetrator is neither the registered proprietor nor the registered user of the trademark;
3. The perpetrator used the trademark in the course of trade;
4. The perpetrator used the trademark in relation to goods or services within the scope of registration of the proprietor’s trademark; and
5. The perpetrator has used the trademark in such a manner as to render its use likely to be taken as referencing to the trademark or the trademark’s proprietor.

In addition to a claim of trademark infringement, a proprietor may also mount a claim based on the tort of passing-off.

However, the elements to be fulfilled in a claim based on the tort of passing-off are different from the elements of trademark infringement. The Federal Court in Ortus Expert White Sdn Bhd cited the case of Reckitt & Coleman Products Limited v Borden Inc [1990] 1 AER 873 and summarised the elements of passing-off as follows:

1. Establishing goodwill or reputation in the goods or services by association with a particular ‘get up’ which would be recognised by the public as distinctive of the proprietor’s goods and services;
2. Demonstrating a misrepresentation which is likely to lead the public to believe that the goods offered are those of the claimant; and
3. Establishing that damage has or will be caused.

The 3 elements are also known as the ‘classic trinity’.

Similar elements were also reiterated by the Federal Court in Mohammad Hafiz bin Hamidun v Kamdar Sdn Bhd [2021] 4 MLJ 878.

If a registered proprietor of a trademark successfully proves a claim for trademark infringement and/or tort of passing-off, the court will then proceed to assess the damages to be paid to the proprietor by the perpetrator as compensation. 

The High Court in Warmal Wil Heavy Duty Pumps Sdn Bhd v Pump Matrix Engineering Sdn Bhd [2019] 11 MLJ discussed in detailed the principle of assessment of damages in a claim for trademark infringement and/or tort of passing-off as follows:

“[12] Generally, the object of the assessment of damages is compensatory are explained by Edgar Joseph Jr FCJ in Tan Sri KhooTeck Puat&Anor v Planitude Holdings Sdn Bhd [1994] 3 MLJ 777 as follows in respect of a breach of contract:

At common law, the general principle which constitutes the starting point in the assessment of damages for breach of contract is … where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation with respect to damages, as if the contract had been performed …

Likewise in the Court of Appeal case of Wembley Gypsum Products Sdn Bhd v MST Industrial Systems Sdn Bhd [2007] 7 MLJ 193, Low Hop Bing JCA held as follows in respect of infringement of trademark and passing off:

The general object of an award of damages is to compensate the plaintiff for the losses, pecuniary and non-pecuniary, sustained as a result of the defendant’s tort.

[13] The law of assessment of damages for passing off has been set out in the Federal Court case of Taiping Poly (M) Sdn Bhd vWong FookToh (t/a KongWah Trading Co) & Ors [2018] Supp MLJ 312 wherein Richard Malanjum CJ (Sabah and Sarawak) (later CJ) held as follows:

[15] The current potential civil remedy against an infringer of an intellectual property right is either an assessment of the profit made by the infringer or an award of damages representing the lost profit suffered by the originator. And in an action for infringement of a trademark and passing off it is trite law that the same principle applies when considering the award of damages.”

The onus or burden lies on the proprietor of the trademark to prove that losses were suffered as a result of the perpetrator’s unauthorized use of the proprietor’s trademark. However, it should be noted that it may not be assumed that the number of goods sold by the perpetrator under the infringing trademark would have been sold by the proprietor if the perpetrator had not unlawfully used the trademark.

Conclusion

In addition to infringement of trademark and tort of passing-off, a trademark proprietor could also consider mounting a claim of unlawful interference of trade, and the necessary elements will have to be proven. 

Hence, when a proprietor’s exclusive rights are infringed, it is pertinent to know what recourse is available to secure and/or preserve those rights and the requirements that have to be fulfilled.