MALAYSIA: COURT OF APPEAL AFFIRMED DEPUTY REGISTRAR ASSESSEMENT OF COSTS AND DAMAGES

This is an appeal filed by Eng Hin Aquatics Sdn. Bhd. (hereinafter referred as “the original Defendant”) at the Court of Appeal (COA) against the decision of the learned Deputy Registrar (hereinafter referred as “the DR”) who awarded compensatory damages to Pets Global Pte. Ltd. and AS Frost Sdn. Bhd. (hereinafter referred as “the original Plaintiffs”) pursuant to an assessment of damages proceedings. The proceedings was conducted pursuant to the decision of the High Court that the original Defendant was guilty of passing-off the original Plaintiffs’ Malaysia trade mark “FUSSIE CAT” mark and ordered for damages or account of profits.

The original 1^st Plaintiff was the manufacturer and supplier of cat litter products bearing the name “FUSSIE CAT” in many countries including Malaysia since 2006 whereas the original 2^nd Plaintiff is the authorised sole distributor of the original 1^st Plaintiff’s products.

The original Defendant engaged in business relating to products of fish and trading in all kinds of tropical fishes, aquarium products and related services. The original Defendant started using the mark “FUSSIE CAT” for cat litter products in 2012.

The original Defendant in June 2013 filed a trade mark application for a composite mark, comprising a device and the word “BETTAS FUSSIE CAT” whereas the original 1^st Plaintiff in August 2013 filed word mark “FUSSIE CAT” and a composite mark, comprising a device and the word “PREMIUM FUSSIE CAT”.

The original Plaintiffs had filed a passing-off action against the original Defendant seeking, among others:

• a declaration that the defendant is passing-off the plaintiff’s “FUSSIE CAT” mark;
• a permanent injunction to restrain the original Defendant from passing-off cat litter products not of the original Plaintiffs as and for cat litter products of the original Plaintiffs by use of the mark “FUSSIE CAT” by among others, manufacturing, advertising, marketing, selling, importing, exporting litter products bearing the mark “FUSSIE CAT”; and
• damages and/or account of profits.

The High Court found that the Plaintiffs have successfully proven the tort of passing-off and allow the Plaintiffs’ claim and ordered for damages to be assessed.

The original Plaintiffs had claimed for a total amount of MYR1,190,000 (approximately USD300,000.00) from the original Defendant. However, the DR had only awarded the original Plaintiffs a total amount of MYR739,000.00 (approximately USD185,000.00)

The original Defendant had then filed an appeal against this decision by the DR.

Assessment Proceedings

The original Plaintiffs had proved that the loss of business profit is due to the introduction of the defendant’s infringing products into the market between the years of 2012 to 201. Hence, the DR had conducted an assessment to determine the total amount to be rewarded to the original Plaintiffs. The DR has applied the formulation laid down in the Federal Court case of Taiping Poly (supra) as well as Schwan-Stabilo (supra) method.

The original Defendant’s contentions

1. The DR’s calculation to determine the loss of business profits by adopting the loss of sales suffered by the original Plaintiffs is wrong as it was not compliance with the principle laid down in the case Taiping Poly (supra);
2. The original Plaintiffs failed to prove their loss of sales. The table prepared by the Plaintiffs was not reliable as there was no evidence to explain how the figures were derived.
3. The computation of loss of sales did not take into account customers who were not misrepresented by the original Defendant.
4. The documents on which the original Plaintiffs relied to prove cost of one pack of “FUSSIE CAT” was not admissible because the source of the data contained in the said documents were not known.

The original Plaintiffs’ contentions

2014. The duration for calculating damages should start from January 2012 to December 2014.
2015. Methods of calculating the loss of business profits
      1. Method 1 – multiplying the total sales of the original Defendant from 2012 to 2014 with the profit margin of the original Plaintiffs.
      2. Method 2 – referring to Taiping Poly (supra) case. Loss of sales is first determined, then multiple by the profit margin.
2016. The original Plaintiffs’ reliance on the original Defendant’s invoices showing the sale of the infringing product is sufficient to prove the loss of customer caused by misrepresentation by the original Defendant or confusion to the public.
2017. The original Plaintiffs have proven the loss of business profit suffered by them was caused by the sale of the infringing products.
2018. There is a loss to the original Plaintiffs’ goodwill arising from the original Defendant’s commission of the tort of passing off.
2019. The original Defendant’s position that the original Plaintiffs are not entitled to damages for loss of goodwill is inconsistent with the findings of fact and law made by the DR.

Summary

The COA has summarised the following facts which are significant to this case:

1. The original Plaintiffs had used their mark “FUSSIE CAT”” since 2006 i.e. 6 years before the original Defendant;
2. The original Plaintiffs had acquired sufficient reputation or goodwill in the trade mark;
3. Misrepresentation of the original defendant to the public could cause confusion;
4. The products involved are the same. Hence, it’s a direct competition with the original Plaintiffs’ products;
5. The original Plaintiffs had established that they have suffered actual damages due to passing-off by the original Defendant;
6. Loss of sale by the original Plaintiffs were due to cheaper products bearing the mark “FUSSIE CAT” by the original Defendant; and
7. Damages suffered by the original Plaintiffs were a results of loss of exclusivity and damages to their goodwill and reputation.

COA had indicated in the judgment that it will be reluctant to intervene in the exercise of judicial discretion by a court of first instance unless the court had applied a wrong principle or had made an entirely erroneous estimate of the damages. If that was the case, then the COA was justified to intervene by reassessment.

In the present appeal, the COA held that all the methods or principles used by the DR were appropriate. As such, the COA had confirmed that there was no error in the methods or principles adopted by the DR and had affirmed the DR’s decision and dismissed the original Defendant’s appeal.