A. Introduction
In early October, the Federal Court solved the battle of the biscuits by ruling in Munchy Food Industries Sdn Bhd v Huasin Food Industries Sdn Bhd [2018] MLJU 407 that the Huasin Food Industries Sdn Bhd LEX biscuits have infringed the trademark held by Munchy Food Industries Sdn Bhd for its LEXUS biscuits. The court was set aside the earlier decision of the Court of Appeal and reinstated that of the High Court.
B. Background Facts
The Plaintiff, Munchy Food Industries Sdn. Bhd. is a manufacturer and seller of biscuits and confectionary since its incorporation in 1991. As such, under the Munchy Food brand, the company has registered a variety of trademarks one of it being the LEXUS mark. It has held the LEXUS trademark since 23rd January 1998.
On the other hand, the Defendant, Huasin Food Industries Sdn Bhd, is also a manufacturer and seller of biscuits and confectionary. One such item, is the LEX biscuit. Their LEX mark is in a circular design with a curved stalk of wheat for the Defendant’s cream sandwich biscuit products.
In August 2015, Munchy Food received a complaint from a customer who had wrongly associated the Defendant’s biscuit with that of the Plaintiff. The following month, Huasin Food attempted to apply to the Registrar of Trade Marks to register their LEX mark. Consequently, the Plaintiff filed an opposition to the Defendant’s trade mark application.
Subsequent to these events, Munchy Food then brough an action in the High Court for trade mark infringement and passing-off against the Defendant. The main argument raised by the Plaintiff here was that the Defendant has infringed the Plaintiff’s registered trade Mark by using their LEX mark which was deceptively similar as it was in relation to the Plaintiff’s products which also include biscuits and/or cream sandwich. The passing-off claim was based on the Defendant’s trade mark which was confusingly similar to the Plaintiff’s trade mark.
As a response to this action, the Defendant then proceeded to file a counterclaim for a court order to remove the LEXUS registered mark of the Plaintiff. This counterclaim was brought for two reasons; (i) that the public is likely to be deceived and/or confused between Plaintiff’s LEXUS mark and Toyota’s LEXUS mark; and that the Plaintiff’s LEXUS Mark is not distinctive of Plaintiff’s Biscuits.
At this juncture, it is pertinent to highlight that Toyota was never a party to this suit, nor is their LEXUS mark used for the production of biscuits that are produced by the Plaintiff.
C. Decision of the Lower Courts
High Court
In this High Court, the learned judge found that the Defendant’s LEX biscuits could be passed off as the Plaintiff’s LEXUS biscuits. The court further held that the Defendant is unable to apply to remove the Plaintiff’s LEXUS mark from the register as Munchy Food is the 1st use of the Plaintiff’s mark.
On the counterclaim raised by the Defendant’s, primarily the court found that there is no likelihood of deception/confusion between the Plaintiff’s LEXUS mark and Toyota’s LEXUS mark. To this end, the learned judge stated:
“the Defendant’s Counterclaim based on a Likelihood of Deception/Confusion between Plaintiff’s LEXUS Mark and Toyota’s LEXUS Mark, cannot succeed. If this court has decided otherwise, this means a defendant can infringe a plaintiff’s registered trade mark by relying on a Stranger’s Mark for a class of Goods/Services which is different from the class of Goods/Services for which the plaintiff’s trade mark is registered. Such an outcome is neither just nor desirable.”
On the second point of the counterclaim, the High Court found that the Plaintiff’s LEXUS mark is capable of distinguishing the Plaintiff’s biscuits from other brands of cream sandwich biscuits. The court also stated that “the fact that Toyota’s LEXUS Mark is used for cars does not negate the factual distinctiveness of Plaintiff’s LEXUS Mark for Plaintiff’s Biscuits”.
Court of Appeal
On appeal, the Court of Appeal ruled in favour of the Defendant’s. To this end, the Court found that the High Court had “failed to consider whether on the totality of the evidence, it should have allowed the marks in dispute to co-exist and dismissed both the claim and the counterclaim. In the instant case, ‘co-existence’ was an option with suitable variation being made to the marks under the Trade Marks Act”.
The court also looked further into the Trade Marks Act 1976 (Act 175) (“TMA”), and found that trade mark law was in no way meant to give any form of monopoly to traders at the expense of the public. The court also found that the TMA was framed in such a way that the court could consider whether the parties should have sought orders for co-existence of the marks to avoid confusion and generate healthy competition for the benefit of the public as opposed to indulging in minute technical arguments and relying on cases from jurisdictions where ‘co-existence’ might not be part of the law there.
The court also considered Section 45 of the TMA and held that this section did not recognise per se the substantive rights of the parties, but it was more discretionary in nature. As such, the court was required to take a holistic approach, taking into consideration other provisions of the Act. A pertinent point that the court highlighted was that if the plaintiff was seeking a declaratory relief, the court should be slow to grant equitable relief if the plaintiff had not shown to the court that other provisions of the Act had been exhausted.
D. Apex Court Decision
Ultimately, this case was brought to the apex court where a three-panelled bench were tasked with deciding whether honest concurrent rights under the TMA and variation of a registered trade mark under the TMA are relevant considerations that need to be taken into account in an action for trade mark infringement and/or passing-off. The second leave question was whether a variation of a registered trade mark is a remedy that a Plaintiff should seek as an option before commencing an action for trade mark infringement and/or passing-off even if the trade mark of the Defendant is not registered.
Leave Question 1
In answering this question, the court held that in a trade mark infringement case, the burden lies with the plaintiff to prove that he owns a valid registered trade mark and that the defendant had used the plaintiff’s trade mark in the course of trade without consent. Further, it must be shown that unlawful usage of the trade mark owned by the plaintiff caused deception or confusion among the customers.
To establish such an infringement, the essential ingredients, provided under Section 38 of the TMA must be established. These are as follows;
Section 38. Infringement of a trade mark
(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.
The Federal Court held that the Court of Appeal was wrong considering issues that were not pleaded resulting in its conclusion that the parties should have sought orders for co-existence of the marks to avoid confusion and generate healthy competition for the benefit of the public. To this end, the Federal Court reinstated the decision of the High Court in stating that;
[51] In deciding the existence of a likelihood of deception and /or confusion, the Court cannot rely merely on a visual comparison between the packaging of the Defendant’s biscuits and that of Plaintiff’s biscuits. In this regard, the High Court Judge considered the evidence before him meticulously and concluded that despite the differences that there is a likelihood of deception/confusion based on the following reasons:
(1) both the packagings of Defendant’s Biscuits and Plaintiff’s Biscuits have the following three striking similarities –
(a) the packagings of Defendant’s Biscuits and Plaintiff’s Biscuits have the same first three letters in the same sequence (LEX) (3 Letters). The 3 Letters are given the biggest prominence in both the packagings of Defendant’s Biscuits and Plaintiff’s Biscuits. In comparison to Lex Mark, the SAMUDRA Mark and Banana Logo are inconspicuous in packets containing Defendant’s Biscuits
(b) both the packagings of Defendant’s Biscuits and Plaintiff’s Biscuits have a “cream sandwich biscuit device” which is given prominence; and
(c) the packets of Defendant’s Biscuits and Plaintiff’s Biscuits is in the same rectangular shape; and
(2) the same reasons which support a Likelihood of Confusion/Deception (Trade Mark Infringement) between the Plaintiff’s LEXUS Mark and Lex Mark also support a Likelihood of Deception/Confusion (Passing Off).
Leave Question 2
In answering the second leave question, the learned Judge found that The Plaintiff need not seek as an option before commencing an action for trade mark infringement and/or passing-off to vary its registered trade mark as remedy under any circumstances especially if the trade mark of the Defendant is not registered.
As such, the Federal Court set aside the decision of the Court of Appeal and reinstated the decision of the High Court. In summarising the judgement, Justice Datuk Seri Hasnah Mohammed Hashim stated that “the plaintiff (Munchy Food) has exclusivity over the registered trademark and (that the trademark) will not create a monopoly by the company (Munchy Food) of the biscuits.”
E. Comments and Conclusion
In sum, the decision of the court in this case answered a few novel issues in relation to the locus standi of an aggrieved person. Although infringement had yet to be established in this case, the High Court found that the Defendant’s did have locus standi as an “aggrieved person”. In rationalising this finding, the court stated that there will be locus standi so long as he can prove that he (a) used his mark as a trade mark; or (b) a genuine and present intention to use his mark as a trade mark in the course of a trade which is the same as or similar to the trade mark of the owner of the registered trade mark that he wants to have removed from the register. Disentitling such an aggrieved party applying to expunge a particular trade mark would not be in line with the intentions of Sections 45(1)(a) and 46(1)(a) and (b) of the TMA. The court further clarified that a party pay rely on a third party’s trade mark to expunge a registered trade mark, as was the contention by the Defendants in relation to Munchy Food’s and Toyota’s LEXUS mark.
The outcome of the Federal Court decision here was that Huasin Food was required to pay RM50,000 in costs to Munchy Food. The Defendants have also been instructed to refrain from using the LEX mark in their packaging and to not use any marks similar to that of the LEXUS brand and packaging. As such, the LEXUS mark remains that off Munchy Food’s and has been clarified to be distinct from Toyota’s LEXUS mark.
legalatte.com 