Malaysia – High Court Brokers Bunfight

We know that the most important purpose of a trade mark is to allow a customer to distinguish this product, with minimal private and social costs, from similar goods made by other manufacturers.

But what happens when the original manufacturer has entered into agreements giving consent to another manufacturer to make those same goods on certain conditions, decides to retract that consent due to certain conditions not being met by claiming infringement of its trade mark? This was the scenario that the High Court of Malaysia had to determine in Papparoti(M) Sdn Bhd v Roti Roti International Sdn Bhd 2 Ors (2009)

Papparoti, the owner of the trade mark Papparoti the Father of all Buns, was incorporated in 2004 to manufacture and sell butter filled buns baked with a crispy, coffee-flavored topping (commonly known as the Mexican bun). In 2006 the first defendant Roti-roti International and second defendant Papparich Group were incorporated and were in the same business as Papparoti.

Sometime in 2006 the directors of Papparoti, Roti and Papparich entered into an oral agreement to incorporate a joint venture company in Hong Kong for the purpose of marking and promoting the Papparoti brand to countries outside Malaysia. Papparoti International was incorporated, and via an investor in Korea, created a new company Papparoti Korea.

It was agreed that Papparoti Korea would sell these Mexican buns under the brand Papparoti, on condition that Papparoti Korea would source the supply of dough and toppings for the buns exclusively from Papparoti International. Paparoti supplied these products to Papparoti International.

Sometime in 2008 the directors of Papparoti, Roti-roti and Papprich fell out, which resulted in Papparoti not supplying Papparoti International with the products. Papparoti International responded by supplying to Papparoti Korea the products sourced from the third defendant, Niche Lifestyle Group.

Papparoti then obtained against the defendant an ex parte order to restrain the passing off of Papparoti bakeries products not of the Papparoti’s manufacture or distribution, and an Anton Pillar order to permit search and seizure of documents or products which bear the trade mark belonging to Papparoti.

The High Court of Malaysia saw through Papparoti’s attempt to circumvent its lack of contractual obligations with Papparoti Korea by using trade mark law to restrict the defendant’s trade with Papparoti Korea. The key points listed by the judicial commissioner were that:

  • Papparoti did not own the trade mark at the material time – legal status was granted after the event on August 12 2008;
  • Even if Papparoti did own the trademark at the material time, the product supplied by Niche to Papparoti Korea was flour and not bread – a registration in respect of bread does not give rise to a right in respect of flour;
  • Papparoti’s trade mark rights are territorial – they do not extend to other countries, particularly in this case where Papparoti Korea had already registered and owned a similar mark
  • There was no passing off as Papparoti had failed to show any goodwill of their business product in Korea, and that there was no misrepresentation to the customer (as the customer in this case was Papparoti Korea, who were supplied the products by the defendants).

The commissioner was scathing in his judgment of Papparoti, and found that there was no infringement of Papparoti’s trade mark and that the Anton Pillar order was used by Papparoti in an oppressive manner to conduct a fishing expedition against the defendants and was thus an abuse of court process. He refused injunctive relief and said that Papparoti failed to establish a prima facie case against the defendants.