Malaysia – Trade Description Order for trade mark infringement

In Malaysia a trade mark owner can enforce his rights in a number of ways. A effective means of enforcement against an infringer of a trade mark or a person liable for passing off, would be to obtain a Trade Description Order (TDO). This is provided by virtue of section 16 of the Trade Description Act 1972 (the Act). A TDO declares a particular trade mark or get up a false trade description, and the officers of the Ministry can then seize goods affixed with the marks or get up declared as such and prosecute the manufacturers and/or the sellers.

The two key points that will to be considered amongst others is the applicant for the TDO must have exclusive use of the trade mark and the infringing trade mark must be identified with sufficient precision.

The case in hand is the decision Thye Huat Chan v Thye Shen Trading Sdn Bhd & Anor [2008] 6 MLJ 99.

Before dealing with the decision a brief summary of the case would be in order. The TDO was sought by Applicant Thye Huat Chan the registered proprietor of two trademarks (‘the ABC trademarks’). The TDO was applied for pursuant to section 16(1) (a) of the Act whereby the Applicant claimed that their two registrations Nos. 87/01110 for rice, sago flours and 93/07762 for tapioca starch, rice flour and other goods, were being infringed.

The TDO was granted on 13 November 1997 in that use of the trade marks were held by the Court to be false trade descriptions. The draft order of court was drawn up by Applicant’s lawyers and submitted to the High Court Registry for approval. However the draft order was by the said Registry to become a TDO relating to the get up of the infringing products. The order was approved and accepted and therefore ended up not being the order that was granted by the learned Judge. Upon obtaining the TDO, the Applicant then made a complaint to the Controller of Trade Descriptions (‘Controller’) that the two Respondents had committed an offence under section 3 of the Act by ‘applying a false trade description to goods supplied by them’. Subsequently the Controller’s officers seized from the premises of the two Respondents’ bags of tapioca starch bearing a similar mark to that of the Applicant. On 25 May 1999 the two respondents were granted leave to intervene in this application, which was commenced ex parte by the Applicant.

The contention by the Respondents was that the Applicant did not have exclusive right to use the ABC trademark, as they were not the originator or the common law proprietor of the ABC trademark. Further to that the Respondents also raised procedural grounds in order for the TDO to be set aside.

At this point it will be noted that the TDO serves as an aid in the enforcement of the Act, which is enforced by the Controller. Section 3 of the Act states that it is an offence for any person, in the course of trade or business, to apply for a false trade description to any goods or to supply or offer to supply any goods to which a false trade description is applied. It should be taken into account that the Controller would be reluctant to act on section 3 in the absence of a TDO which is not only evidentiary in nature but also in a way creates an offence because the TDO is a conclusive proof of the offence. To put in the words of the trial judge “a TDO is a formidable instrument”.

We will look at the procedural arguments raised by the Respondent. Their contention is that the TDO was invalid as the TDO that extracted from the Court (for the get up) was not the TDO as issued by the court (for trade mark). This of course is a salient point since a get up and trademark are not the same. Get up as explained by Christopher Wallow in The Law of Passing Off (1990) “is normally used in passing off to mean the whole visible external appearance of the goods in the form in which they are likely to be seen by the public before the purchase”. Therefore, a get up is not the same as trademarks although a trademark may appear in the get up.

Although THC suggested that the TDO be amended, the Court declined to do so as it held that as the TDO resulted in criminal penalties, an amendment would ultimately go against the rule against retrospectively in criminal liability; this is because the guilt of the Respondents on July 1, 1988 when the action was taken against them would depend on the TDO.

The other procedural argument raised by the respondents is that the TDO did not identify the infringing trademark with sufficient precision. The decision of the Court of Appeal in Tiga Gajah Cho Heng Sdn Bhd v Majuperak Tepung Beras Sdn Bhd [2001] 3 MLJ 508 stands as precedent.

There the TDO identified the infringing trademark in two ways that is ‘the elephant device as depicted in the schedule’. (Which in essence the respondent trademark was a full drawing of an elephant) or ‘any other device which is colourably and/or confusingly similar thereto…’

It was held that the TDO did not identify the infringing trademark with sufficient precision since by merely affixing the infringed trademark to the order without proper and detailed description does not satisfy section 16 of the Act.

In the current case, the applicant merely annexing a representation of the infringed trademark without a verbal description and therefore is does not meet the requirement of the said section 16.

Another more important side of the argument raised by the respondents was that the applicant did not make a full and frank disclosure when applying for the TDO. This is because the applicant knew of the identity of the respondent at that point in time. Since prior to it the applicant issued a cease and desist letters on them for importing and selling tapioca bearing the ABC trademark.

In the event the Respondent were disclosed then the TDO should have been served on them with a view of a inter partes hearing. This would have avoided the seizure of the Respondents’ goods and the inevitable prosecution. The purpose of the TDO would then be pointless from the point of view of use since there will be no complain made to the Controller. However the TDO then would act as a preventive measure against further infringement and also effectively remove an undesired competition. The TDO was set aside for non-disclosure.

On the substantive argument, it was the contention of both the respondent that the Applicant is not the originator or the common law proprietor of the ABC trademark.

The first Respondent submitted that they have used the ABC trademark openly since 1986, which is before 4th October 1993 (date of the second trademark). The first Respondent was able to show proof of it by submitting documents dated 1990, in effect showing that the Applicant was not the originator or common law proprietor of the ABC trademark.

However in overcoming that contention, the Applicant claimed that they have been supplying goods bearing the ABC trademark before the year 1986 claimed by TST.

The second Respondent was also unsuccessful in their argument on the merits, as they contented that they have used the ABC trademark since 1980 but were not able to show proof.

Therefore the TDO was not set aside on the basis of the substantive grounds but on the procedural grounds as discussed above.

The court set aside the TDO with costs, to which the Applicant objected to based on section 32 of the Act, which provides that no costs need to be paid if the seizure of the respondents’ goods were made with reasonable cause. To this the learned Judge held that section 32 of the Act was there to protect enforcement officers, and their employer (the government) from a claim of damages under this Act in relation to seizure of goods.

Therefore, the Applicant here had to pay costs, since the said section does not protect applicant’s of TDO’s.

In conclusion it can be seen that for a mark owner to proceed by way of a TDO, the procedural requirements of the Act must be satisfied in as much as the substantive merits of the case. Although some would argue that the substantive merit should overcome the procedural requirement, the fact that the TDO has criminal sanctions made the Court require strict compliance with the procedural requirements.