TAN KIMHOCK TONG SENG FOOD INDUSTRY SDN BHD v TAN KIM HOCK PRODUCT CENTRE SDN BHD and SIAH SIU ENG is a Malaysian case of trademark infringement and passing-off as tried and decided in the Court of Appeal.
TAN KIMHOCK TONG SENG FOOD INDUSTRY SDN BHD (hereinafter referred to as the Respondent) is a private limited company incorporated in Malaysia which was established by its founder Mr. Tan Kim Hock (TKH) in Melaka. The Respondent primarily manufactures and markets traditional sweets and savories such as dodol, kaya cookies, coconut candies, as well as other local food and health products. The Respondent has five marks – three are variations of a device mark (hereinafter referred to as the Created Mark) comprising a stylized red letter “T” with a coconut tree device inside the “T”. The coconut tree device also has an encircled “S” in the middle. The remaining two marks are the words “TAN KIM HOCK”, as well as the Chinese equivalent of the words “Tan Kim Hock Product Centre”.
Out of the five marks, only one is registered (Registration No. M/72924, hereinafter referred to as the Registered Trademark) while the remaining four marks are unregistered and hence protected under common law (hereinafter referred to as common law marks). The Registered Trademark bears the words “CAP POKOK KELAPA” below the Created Mark.
TAN KIM HOCK PRODUCT CENTRE SDN BHD (hereinafter referred to as the 1st Appellant) was incorporated by the Respondent, and was part of the Tan Kim Hock Group of Companies. SIAH SIU ENG (hereinafter referred to as the 2nd Appellant) was then promoted by the Respondent to be one of the directors and a minority shareholder of the 1st Appellant. The Respondent supplied all its products to the 1st Appellant for sale at its business premises in Melaka. The responsibility of the 2nd Appellant was to promote the business and reputation of the Respondent’s products bearing its various marks, both registered and unregistered.
Background
In 2013, it was discovered that the 2nd Appellant had taken advantage of the Respondent’s reputation and confidential information by practising price cutting of the Respondent’s products. This led to the Appellants removal from the Tan Kim Hock Group of Companies and the Respondent ceased to supply its products to the Appellants. Despite this, the Respondent also discovered that the Appellants had filed eight applications for two highly similar marks. Moreover, the Appellants continued sales and marketing of products similar to the Respondent’s which also bore the Respondent’s marks without the Respondent’s authorization.
The Respondent filed the present suit in October 2014 against the Appellants for infringing the Respondent’s Registered Trademark and/or passed off the Appellants’ products as those of the Respondent.
Prior to the Respondent filing the present suit, the Respondent had already taken the following actions, which have been recorded in other related cases:
- Filed an objection to the Appellants’ applications for the registration of the Appellants’ marks;
- Sent a demand vide a letter to the Appellants, demanding that the Appellants cease and desist from passing off products using the Respondent’s marks and/or get up; and
- Applied for a Trade Description Order (TDO) that the mark of a coconut tree in the shape of a stylized letter “T” containing a red and a white coconut tree which has an “S” logo in the middle of the said coconut tree, on the packaging of durian and coconut dodol, and coconut biscuits (dodol products) be declared a false trademark, due to its confusing similarity to the Respondent’s trademark. The TDO was granted. Then, the Respondent lodged a complaint with the Ministry of Domestic Trade, Cooperatives and Consumerism. As a result, a raid was conducted at the 1st Appellant’s premise and 358 units of products bearing the unauthorized use of the Respondent’s marks were seized by the authorities.
The Appellants’ responses:
- Filed an application for leave to intervene and to set aside the Respondent’s TDO – while this was not objected to by the Respondent, the learned High Court (HC) judge had dismissed the same;
- Filed an appeal – in 2016 the Court of Appeal (COA) affirmed the validity of the Respondent’s TDO; and
- Unsatisfied, an appeal was made to the Federal Court (FC). In 2017, the FC affirmed both the decisions of the HC and COA. The appeal was dismissed with costs to the Appellants and the Respondent’s TDO was ruled by the FC to be valid.
At The High Court
The main suit for this present case was a contest between the Respondent and the Appellants over the ownership of the common law marks bearing the mark and logo of “Tan Kim Hock”.
The Respondent claimed ownership over one of the Appellants’ filed marks, in addition to its own five marks (collectively known as Tan Kim Hock Marks). The Respondent further pleaded that the Appellants had not heeded the Respondent’s letter demanding that the Appellants cease and desist from passing off products using the Respondent’s marks and/or get up.
Meanwhile, the Appellants claimed ownership or co-ownership of the Respondent’s four common law marks. In addition, the Appellants filed an Originating Summons (OS) to expunge/strike-out the Respondent’s Registered Trademark on the ground of non-use, as the Appellants claimed it was never used by the Respondent.
Furthermore, the Appellants made the following statements:
- The Created Mark was jointly created between the Respondent’s founder TKH and the 2nd Appellant – “T” symbolized “Tan” and “S” symbolized “Siah”, in addition to being the acronym of “Tong Seng”.
- TKH had promised to give the 2nd Appellant shares, ownership and goodwill in the Tan Kim Hock businesses due to the 2nd Appellant’s hard work and effort in expanding the business. Once TKH’s business had expanded, the 2nd Appellant, as the co-founder and business partner, was entrusted with several responsibilities which include “Supervisor” in the Respondent’s company, “Personal Assistant” to TKH and the “Group Financial Controller”. Furthermore, in 2001, pursuant to the earlier promise by TKH, the 2nd Appellant established the 1st Appellant, with TKH holding 60% of the shares and the 2nd Appellant holding 40% of the shares. TKH had also made the 2nd Appellant a director of the 1st In 2006, TKH transferred more shares in the 1st Appellant to the 2nd Appellant for valuable consideration, and in 2012, TKH transferred all remaining shares in the 1st Appellant to the 2nd Appellant and the 2nd Appellant’s son. The remaining shares include transfer of ownership, goodwill and business reputation of TKH in the Tan Kim Hock Group of Companies and, in particular, the marks of the Respondent. Thus, the 1st Appellant claimed that it is now the owner or co-owner of the said marks, including the four unregistered marks.
After a full trial and evaluating the evidence in totality from 17 witnesses, the learned HC judge had allowed the Respondent’s claim of ownership of all the Tan Kim Hock Marks. The learned HC judge dismissed the OS, Defence and Counter Claims of the Appellants. Subsequently, the Appellants filed an appeal to the COA.
As COA revisits the same issues raised at the HC, this article will focus on the findings and conclusion of the COA in relation to the HC’s assessment.
The Appellants’ Appeal and the COA Decision
The issues as addressed are discussed below:
(1) Alleged contribution by the 2nd Appellant in the development and promotion of the Created Mark;
While there is evidence showing that the 2nd Appellant was a dodol packer and subsequently a supervisor, there is no cogent evidence showing that the 2nd Appellant played any role in the creation of the Created Mark or any other trademarks. On the other hand, TKH’s son gave evidence of his involvement in the early 1970s in creating the Created Mark together with his father. Moreover, there is the evidence that the Created Mark is a progression from TKH’s first trademark which was registered in 1967 and bore the image of coconut tree.
The 2nd Appellant’s claim that she had joined TKH’s enterprise in 1970 contradicts documentary evidence in the form of monthly returns to the Employee Provident Fund, and the oral testimonies of two employees who were employed by TKH before the 2nd Appellant joined. Both types of evidence show that the 2nd Defendant started her employment only in 1973 as a dodol packer. As such, the 2nd Appellant’s claim that she was involved in the business decisions of TKH and had contributed to the creation of the Created Mark in the early 1970s is not credible.
Therefore, the COA preferred to accept the evidence as presented above, instead of the assertions of the 2nd Appellant.
(ii) Alleged right of TKH and the Appellants to the Tan Kim Hock Marks or any of them;
Based on the Appellants’ statements, since TKH has transferred the ownership, goodwill in all Tan Kim Hock Marks and reputation of TKH in the Tan Kim Hock Group of Companies to the 2nd Appellant, the Appellants are now the owners of the common law marks of Tan Kim Hock Marks.
However, the facts are that in the 1950s, TKH started trading under the style of ‘Syarikat Tong Seng”, the trading style of which had, in 1973, changed to Tong Seng Foodstuff Factory. Sometime in the early 1970s, TKH designated the Created Mark and used it in the course of trade, the Created Mark being a progression from TKH’s first trademark which was registered in 1967. There is evidence to show that the Created Mark was used by TKH as early as 1973. The Respondent had also tendered in photographs of TKH’s participation in a trade fair in Malacca, whereby the Created Mark was used in the advertising hoardings and promotional materials for TKH’s products. In 1974, TKH changed its business name from ‘Syarikat Tong Seng’ to ‘Tan Kim Hock (Chop Tong Seng)’. In 1975, the Respondent was incorporated with TKH and his wife Madam Ngow Swee Yam as the two major shareholders. In 1976, the Respondent bought over the business and goodwill including all the marks of Tan Kim Hock (Chop Tong Seng). The Respondent then registered the Registered Trademark no. M/72924. Since then, the Respondent continued to use the Registered Trademark (albeit without the words “CAP POKOK KELAPA”) together with the word “Tan Kim Hock” and its Chinese equivalent on all products manufactured and marketed by the Respondent to-date. In 2001, the 1st Appellant was incorporated with the sole purpose of distributing and promoting the products manufactured by the Respondent such as dodol, kaya and other foodstuff and souvenirs.
Therefore, the COA is in agreement with the learned HC judge that the ownership of the Respondent’s marks belongs to the Respondent, and that there is ample evidence establishing the facts that the business and goodwill of Tan Kim Hock (Cop Tong Seng) was sold by TKH to the Respondent for valuable consideration in 1976.
As for the Appellants’ claim to joint ownership of the marks, the HC had concluded that since the 2nd Appellant had no involvement in the creation of the Created Mark, the 2nd Appellant cannot claim co-ownership or authorship of the Created Mark.
Moreover, the COA is of the opinion that the 2nd Appellant’s alleged contribution has nothing to do with the claim to proprietorship of the Created Mark. Under the common law, proprietorship of a mark is established by first use. Even if the 2nd Appellant has contributed much to the growth of the Tan Kim Hock Group of Companies, it is irrelevant to the issue of ownership or co-ownership of the Created Mark. Such contribution does not empower the 2nd Appellant to claim any rights over any of the Respondent’s marks.
(iii) Issue of non-use;
The COA referenced another related matter namely Tan KimHock Tong Seng Food Industry Sdn Bhd v Tan Kim Hock Product Centre & Anor, whereby the argument of non-use (or abandonment of trademark) had been raised. No such abandonment had been found for that case. It had been decided then that abandonment is not merely proven by a period of non-use, but there also had to be definite evidence of abandonment without the intention to resume use. Furthermore, it had to be noted that the Registered Trademark had been renewed from time to time and remained valid until 2021.
Even without the words “CAP POKOK KELAPA”, the Registered Trademark still maintained its commercial impression on a customer – that the product was indeed produced by or originated from the Respondent of the present case. This is because such omission did not affect the dominant feature or the main component which is comprised in the Created Mark, namely the large T in red with the coconut tree in white in the middle with the encircled S in white.
Under the circumstances, the COA of the present case concluded that it is not their place to depart from such a definitive finding on this matter.
(iv) Acquisition of goodwill including the Respondent’s Trademarks by the Respondent;
The COA observes that the learned HC judge had accepted as factual evidence, the Company Resolution dated 1976 and signed by TKH and Madam Ngow which shows that the Respondent had bought the business of “Tan Kim Hock (Chop Tong Seng)” including the goodwill and trademarks. The document also showed that the goodwill of the business of “Tan Kim Hock (Chop Tong Seng)” was sold for MYR30,000.00 to the Respondent. This was maintained despite the Appellants questioning the reliability of the recollection of events that led to the drafting of the said resolution. Furthermore, the resolution was photocopied from the Minute Book which was kept for the Respondent. The aforementioned Minute Book was produced in court for the inspection of the Appellants and the court.
Accordingly, the COA found no reason to disturb the learned HC judge’s finding.
(v) Whether the Appellants had infringed the Respondent’s trademark, thus, committing the tort of passing off
The principles of passing off have been clearly laid down by many case laws:
- It is wrong for a trader to conduct his business so as to lead to the belief that his goods or business are those of another trader.
- Passing off does not protect the use of marks, name, get-up or any sign which is distinctive of a business, but the goodwill of the business that uses them. Goodwill accumulated through use is the property right that is protected.
- Goodwill, unlike reputation, does not exist on its own but must be attached to a business.
- Goodwill is the benefit added to the business through extensive trading operations which attract custom.
- The trademark or get-up used in the business is the badge and indicia that signifies, indicates and identifies the business will.
- Goodwill is created through and by means of trading activities. The more extensive the trading activities are, which must necessarily include sales and promotion, the more value attached to the goodwill.
- If the proprietor of a common law or unregistered trademark does not wish to file for registration under the Act, which he is entitled to, his common law right to the mark is nevertheless preserved. There is also nothing in the Act affecting the right of action against any person for passing off goods or services as those of another person.
In order to prove that the tort of passing off has been committed, the following facts are required:
- there is sufficient reputation or goodwill in the Respondent’s mark in question under which the particular goods or services are offered to the public
In this case, the learned HC judge found overwhelming evidence that TKH and the Respondent have used the five marks for a substantial period of time. The COA found the learned HC judge’s decision to be correct.
- a misrepresentation by the Appellants to the public (whether or not intentional) must be demonstrated, leading or likely to lead the public to believe that goods or services by them are goods or services of the Respondent
In this case, the Appellants’ marks and goods are identical to the Respondent’s. As misrepresentation is beyond dispute, the COA will not disturb this question of fact, unless the finding is totally unwarranted or manifestly against the weight of evidence and is plainly wrong.
- the Respondent suffers, had suffered or is likely to suffer damage or injury to his business or goodwill by reason of the erroneous belief and engendered by the Appellants’ misrepresentation
The COA agreed with the learned HC judge that in cases where the goods in question are in direct competition with another, such as in this present case, the court will readily infer the likelihood of damage to goodwill through loss of sales and loss of exclusive use of the name. Therefore, the COA found no error in the learned HC judge’s application of the above to the present case.
Trademark Infringement
According to section 38 of the Trade Marks Act 1976 in Malaysia, anyone who uses a mark which is identical with a registered trademark or a mark so closely resembling it as is likely to deceive or cause confusion in the course of trade in relation to the goods registered, without the permission or authority of the trademark owner, is committing a trademark infringement.
For trademark infringement, the likelihood of confusion between the Respondent’s Registered Trademark and the Appellants’ mark must be demonstrated and is a question of fact.
As it has already been established that the ground of non-use cannot be applied by the Appellants to invalidate the Respondent’s Registered Trademark, the COA agrees with the learned HC judge’s decision that the Respondent’s Registered Trademark has indeed been infringed by the Appellants. This is because the Appellants had adopted an almost identical mark as that found in the Registered Trademark of the Respondent, save for the words “CAP POKOK KELAPA”, for the use on identical goods.
Conclusion
The COA is satisfied that the learned HC judge had assessed all relevant materials and considered all relevant case-laws, prior to arriving at his conclusion. The Respondent has proven its case against the Appellants, and the Appellants’ appeal was dismissed