Goods may be manufactured in Malaysia for the purpose of distribution overseas only and not in Malaysia. Such brands are usually known as Export Brands. The question remains as to whether such brand owners could do so safely without being liable to infringement actions.
Historically such “Use” for export purposes only did not constitute infringement as was held in the English Case of La Societe Anonyme Des Verreries de L’Etoiles’s Trade Mark (1893) 10 RPC 436 on grounds that Trade Mark Law is territorial. Subsequent to this decision, the English legislature amended its trademark legislation to provide that an application in England of a trademark for goods to be exported from England would constitute use for the trademark in England. A similar provision was then incorporated into the Malaysian laws under Section 71 Trade Marks Act 1976 when we enacted our legislation on trade mark.
This subject matter has given rise to two most controversial issues in Malaysia amongst local traders and foreign investors namely; firstly, whether this act of manufacturing the said goods in Malaysia for the purpose of distribution oversees amount to sufficient use for the purposes of adequate protection under the Malaysian Trade Marks Act 1976, to avoid expungement of the registered mark; secondly, whether such use protects the said trademark from being infringed by third parties.
The answer to the former lies in Section 71 of the Trade Marks Act 1976 which provides as follows:
The application in Malaysia of a trade mark to goods to be exported from Malaysia and any other act done in Malaysia in relation to the goods which if done in relation to the goods which if done in relation to goods to be sold or otherwise traded in Malaysia would constitute use of a trademark in Malaysia shall for the purpose of this Act be deemed to constitute use of the trade mark in relation to those goods.
Subsection (1) shall be deemed to have had effect in relation to an act done before the date of the commencement of this Act as it has effect in relation to an act done after that date, but does not affect a determination of a Court which has been made before that date or the determination of an appeal from a determination so made
The provision of the Act above obviously provides such use to be good use and within the ambit of the Trade Marks Act 1976 for registration and protection purposes. This also means that use by the export brand proprietor of it’s marks on goods for export purposes only is deemed as sufficient use of the trade mark pursuant to the Malaysian Trade Marks Law and is sufficient to prevent annulment of it’s registrations.
However, as to the latter issue on whether such use would protect the said trade mark from being infringed by third parties, there are two schools of thoughts to this question, the former is based on the provisions of the Act itself and authoritative texts which clearly states that “use of trademarks on goods manufactured in Malaysia for the purposes of Export only is deemed good use and equivalent to “use of the trade mark in the course of trade”. This would mean that a third party who uses a trademark registered for use, as Export brand is liable to be sued for infringement by the Export Brand owner.
The latter view, on the other hand stems from the Case of Lim Yew Sing v Hummel International Sports & Leisure A/S [1996] 3 MLJ 7 (also known in short as The Hummel’s Case) where Mahadev Shankar JCA at page 20 of the decision, upon considering Section 71 in relation to the issue of distinctiveness of a trade mark, held that for the purpose of establishing confusion in the minds of the Malaysian public, such ‘use of the trade mark in Malaysia’ i.e. the application of a trade mark on goods for export purposes only” ‘cannot be factually equated to use of the trade mark in the course of trade in Malaysia because the Malaysian consumers never saw these goods.’
The above case should be limited to its own facts as the Export Brand proprietor in this case could only proof goodwill and reputation in the mark worldwide through a market survey, which the Court deemed as hearsay evidence, which does not amount to cogent evidence without other supporting evidence to corroborate it. The Respondent in this Case was unable to show evidence that the trademark HUMMEL D was applied in Malaysia to the goods establishing confusion in the minds of the Malaysian public.
Therefore, it is pertinent for such manufacturers of goods in Malaysia for the purposes of exporting the goods to apply the trademark on the goods in Malaysia before exporting the same to other countries. It follows that:
It is important to attach the subject trade mark (i.e. brand labels) to the manufactured products itself in Malaysia before it is exported out overseas.
The Export Brand proprietor should also maintain a good record of all documentary evidence showing the manufacturing of the products attached with the brand or trade mark in Malaysia, this includes it’s shipment documents worldwide from Malaysia etc.
The recognition of the “use of trade marks applied on goods for export purposes” as equivalent to “use of the mark in the course of trade in Malaysia” is beneficial to such export brand manufacturers in Malaysia. Indeed there are incentives provided by the Malaysian Government to encourage Foreign Investors to set up manufacturing plants in Malaysia. An Export Brand manufacturer may now fully protect his interest in his mark without fear of expungement of the said mark as well as from being sued for an infringement action.