Skyworld Development Sdn Bhd & Anor v Skyworld Holdings Sdn Bhd & Ors, is a case which involves trademark infringement, passing off and unlawful interference with trade.
The Plaintiffs are affiliated private limited companies involved in the business of real estate and property development and they are the registered owners of the mark “SkyWorld” in Malaysia since 2014.
The Defendants are affiliated private limited companies involved in tourism business, who has been using the marks “Skyworld”, “Sky World”, “Sky World City Sabah” (hereinafter collectively known as “the infringing marks”) in relation to their company names, domain names as well for their purported development project in the Borneo State of Sabah.
The Plaintiffs sued the Defendants for trademark infringement, passing off and unlawful interference with trade in the High Court of Malaya claiming that the infringing marks used by the Defendants closely resemble the Plaintiffs’ registered trademark and that it was likely to cause consumers to be deceived or confused.
The High Court dismissing the Plaintiffs’ claim held that, the infringing marks used by the Defendants were visually different from the Plaintiffs’ registered trademark, and any similarity in the infringing marks were coincidental and not likely to cause deception or confusion. The High Court held that the Plaintiffs, failed to prove the requirements of trademark infringement in accordance to Section 38 of the Trade Marks Act 1976 (hereinafter referred to as “the TMA 1976”) and failed to show their goodwill and reputation in the registered trademark was well enough to prove the tort of passing off.
The Plaintiffs dissatisfied with the finding of the High Court, contended that the learned Judge had erred both in law and on finding of facts and appealed to the Court of Appeal (hereinafter referred to as “the CoA”)
The CoA unanimously allowed the appeal and set aside the High Court’s decision, deciding in favor of the Plaintiffs.
The CoA in coming to its decision, listed plethora of cases from Malaysia and other jurisdictions such as Singapore, Australia, United Kingdom, and India which held that unauthorized use of a trademark as part of the corporate name or trading style would amount to trademark infringement.
The CoA, revisited the essential matters which need to be proved in a trademark infringement, passing off and unlawful interference action. The CoA of also went on to look at the difference of a company name, business name and domain name with trademark before deciding on point of law and facts which were wrongly decided by the High Court.
Trade mark infringement: matters which need to be proved and burden of proof
Matters which need to be proved in a trademark infringement case in accordance with Section 38 of the TMA 1976 are the proof of ownership over a valid registered trademark, the use of the trademark without consent by an infringer in the course of business and the use of the trademark by the infringer has cause deception or confusion among prospective customers. The burden of proving of the elements lies with the Plaintiff.
In accordance to Section 3(2) of the TMA 1976, the meaning of the word ‘use’, in reference to the use of a trademark shall be construed as references to the use of a printed or other visual representation of the mark, in references to the use of a mark in relation to goods shall be construed as references to the use thereof upon, or in physical or other relation to goods and in references to the use of a mark in relation to services shall be construed as references to the use thereof as a statement or as part of a statement about the availability or performance of services.
In order to bring action under trademark infringement, there must be actual use of the marks on good or services in Malaysia.
Trademark, Business Name, Company Name and Domain
The CoA appreciated the importance of understanding the scope and difference between trademark, business name, company name, domain name and made the following observations.
Trademark
Trademark refers to marks which are used to identify a product and to distinguish it from other products. A registered trademark is accorded protection under the TMA 1976, and general law where else an unregistered trademark can avail itself to the protection of general law only.
Business Name
Business name is a name that is used to identify a business. It is the name used by business owners, to promote their business. If the name of the owner of the business and the business are different then the business name must be registered. A trademark that is the same as a business name can be registered but the object of registration of the both differs with the registration trademark identifying and distinguishing a product from another and registration of a business name is to identify the legal entity that owns a business.
Company Name
Company name refers to the legal entity that owns the business. A company that wants to identify a business in a name other that its own name must register a business name. It is possible to register a trademark that is the same as a company name.
Domain Name
Domain name is an internet address which allows an internet user to visit a specific website. It is common for domain name to be same or similar to a trademark, business name or company name. A domain name is registered to obtain an internet address.
Similarities between the infringing and registered trademark.
The High Court in finding there was no infringement of the trademark held that there were no significance similarities between the infringing marks and the registered trademark, save to the similarities in the words used. The registered trademark had other extra features attached to it such as the word was spelled in upper and lower case, the word was companied with a stroke underneath the word etc. In light of these extra features, the High Court was of the view the registered trademark and the infringing marks did not resemble each other.
CoA disagreeing with the High Court, held that the requisite element for trademark infringement pursuant to Section 38 of the TMA 1976, as stated in the Federal Court case of Low Chi Yong (t/a Reynox Fertichem Industries) v Low Chi Hong & Anor [2018] 1 MLJ 175, is an unauthorized use of a sign that is substantially identical with, or deceptively similar to, a registered trademark. An infringing mark is deceptively similar to another trademark, if it so nearly resembles the other trademark such as to likely deceive or cause confusion to prospective customers.
In a trademark infringement action, the court is not required to look at the minute differences between the marks. In deciding the similarities between the marks, what is of relevance is, if the infringing mark so nearly resembles the registered trademark, to cause confusion or deceive the prospective customers.
Significance of registering a company name by the Registrar of Companies
It was conceded the by the Defendants that the fact of registration of the Defendants’ company names by the Registrar of Companies (hereinafter referred to as “the ROC”), shows the validity of the names and it should not be challenged. The Plaintiffs rebutted, contending that the ROC should have rejected the Defendants’ applications to register their company names under Section 26 of the Companies Act 2016 (hereinafter referred to as “the CA 2016”), on the ground that names were identical to the Plaintiffs’ names. The Plaintiffs also contended that registration of the company names by ROC does not preclude the Plaintiffs from bringing an action for trademark infringement.
The CoA disagreeing with the Plaintiffs, held that the names of the Defendants were not identical to the Plaintiffs’ names. Hence, there was no contravention of Section 26(2) of the CA 2016. It further stated that the ROC’s power under Section 26(2) of the CA 2016, did not include to refusing an application for registration of a company on the ground the company’s name offended any existing registered trademark.
However, registering of a business name does not preclude a person from brining an action for trademark infringement. The purpose of registering a business is to identify the legal owner of the business. Registering of trademark on the other hand allows one to avail to the protection of the TMA 1976 as well as the protection of the general law.
In reference to registering of a business names, company names or domain names, the CoA also made reference to an Australian Article by Murfett Legal Professionalism. Understanding. Result. (w.w.w.murfett.com.au), which in essence stated that, registration of business name, company name or a website domain does not confer some form of ownership or exclusive rights to the use of the name. Such rights are only conferred by registration of a trademark. Business name that infringes an existing trademark, could subject a person to legal proceeding for trademark infringement and be disallowed from using the business name. A domain name, is a unique website address on the Internet, which serves as an online identity of the business. Though another person can’t register a domain name which is already registered, it does not accord exclusive right to the use of the domain name. Similar to a business name, a domain name which infringes a registered trade mark may be subject to trademark infringement action.
Usage of trademark in relation to goods but not company name
The Defendants submitted that Section 30 of TMA 1976 read with Section 3(2) of the TMA 1976 provide that in order to constitute infringement the usage of identical or similar mark must in relation to goods or services. It is insufficient to show that there was only usage of an identical or similar mark. Referring to cases from European Court of Justice, (hereinafter referred to as ECJ), the Defendants submitted that usage of infringing marks in the company/trade name is not in itself usage in relation to goods or service.
In addressing the Defendants’ submission, the CoA referred to the judgment of the ECJ in Celine SARL v Celine SA (2007) C-17/06, which held that: –
‘the purpose of a company, trade or shop name is not, of itself, to distinguish goods or services where, it is limited to identifying a company or designating a business which is being carried on, such use cannot be considered as being ‘in relation to goods or services’ However, if the sign is also affixed to goods which are marketed or is used in such a way that a link is established between the sign and the goods or services, there is use ‘in relation to goods or services’.
In deciding if a company name infringes a trademark, the ECJ applied a ‘two stage’ test, the first to determine if the use of a company name, trade name or shop name affects or is liable to affect the functions of the mark. If that is the case, is the use by the third party of his company name, trade name or shop name is in accordance with honest practices in industrial or commercial matters. If it is then the mark can be rightfully used by the third party accordingly.
Applying the ‘two stage’ test, the CoA disagreed with the findings of the learned Judge which held the use of the infringing marks by the Defendants were coincidental. In light of the evidence presented before it CoA found that the Defendants were not in honest practice, and were tortfeasors attempting to ride on the Plaintiffs’ goodwill in the registered trademark.
Construing confusion/deception: Business activities vs trademark specifications
An integral element in establishing trademark infringement, is that if the use infringing mark has caused deception or confusion. This is to be determined by analyzing the two sign by their look and sound and considering all surrounding circumstance. There is no need to show actual confusion though it would be beneficial.
The High Court in determining the confusion/ deception of the trademarks, enquired into similarities in the business activities of the parties.
The CoA, differed with the approach of the High Court and held that the enquiry should be whether the use of the infringing marks comes within the specification covered by the registered trademark.
In determining the specification of the registered trademark, and in ascertaining if the infringing mark comes within the scope of the of that specification, the words/phrases in the specification of goods and services should be given its natural and ordinary meaning within the context of which they are used.
Admission of computer generated documentary evidence
The Plaintiffs, adduced two emails attempting to show that the public was actually confused. The makers of the email were not called as witness, and the High Court found the email dubious and discarded it.
The CoA disagreeing with the findings the High Court, referred to Section 90(A) of Evidence Act 1950 (hereinafter referred to as “the EA 1950”), and held that document produced in the course of a computers ordinary use may be admitted in evidence without the need to call the maker. Based on decides case and as envisaged by Section 90A of the EA 1950, a document can be proved to be produced by a computer in the ordinary course of use, either by a certificate in accordance to Section 90A (2) or oral evidence by the witness. Based on the facts of the case the requirements were rightfully made and the High Court should have admitted the emails in evidence.
Passing off
The requirements required to establish tort of passing off, as laid down in Reckitt & Colman Products Ltd v Borden Inc. [1990] 1 WLR 491 are:
(a) the plaintiff has goodwill or reputation attached to the goods or services
(b) the defendant has misrepresented to the public which leads or is likely to lead the public to believe that the defendant’s goods or services are the goods or services of the plaintiff; and
(c) the plaintiff must prove that he suffers, damage by reason of the defendant’s misrepresentation.
The High Court found that the Plaintiffs had the requisite goodwill and reputation, but they failed to establish that the goodwill is well known and accordingly held that they had failed in establish the tort of passing off.
The CoA differing with the High Court, held that there were not such requirements in law that the Plaintiffs’ goodwill must be well-known. The Plaintiffs are only required to show business identifiers are distinctive to Plaintiffs.
In coming to its decision the CoA also held that the even though the business activities of the Plaintiffs and the Defendants were not in common, they both were engaged in a business that is of an allied field and therefore use the of the infringing mark by the Defendants would naturally amount to a misrepresentation. Agreeing with the Plaintiffs, the CoA held that the law imposes an obligation on business newcomers to ensure no confusion would arise from use of infringing marks or names.
In addressing the issues of damages the CoA agreed with the finding of the High Court that the Plaintiffs did not suffer any damages.
The CoA referring to decided held that in an action for tort of passing off, damage is an essential element which the Plaintiffs must establish. Nevertheless, the courts may infer the likelihood of damage in cases where the business are in direct competition with one another.
Though the Defendants were engaged in a business that is of an allied filed with the Plaintiffs, CoA did not infer damages in light of the evidence before it.
Unlawful interference with trade
The CoA agreeing with Plaintiffs held it was settled law that once a claim for trademark infringement and/or passing off is established, automatically the tort of unlawful interference with trade will also be made out.
The CoA clarified and revisited the requirements in establishing trademark infringement, passing off and unlawful interference with trade action. The CoA also studied the difference between a business name, company name, domain name with trademark, with emphasize on protections enjoyed by a trademark.
In addition to clarifying point of law the decision of CoA, serves as a reminder to business entities to be mindful when choosing a business name to avoid conflict with other preexisting marks or name.