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CASE REVIEW: Al Baik v El Baik

CASE REVIEW Al Baik Fast Food Distribution Co S.A.E. v El Baik Food Systems Co, S.A. [2016] 9 CLJ 310

This is a case regarding a trade mark “Al Baik”. Muslims who have been to Makkah, Saudi Arabia for pilgrimage (Hajj) and Umrah might be familiar with this name. Al Baik in Saudi Arabia is a famous restaurant serving affordable fried chicken meals owned by El Baik Food Systems Co, S.A.. However, the Al Baik restaurants in Malaysia which are located at Setapak, Bukit Bintang, Shah Alam and Kuala Lumpur are running by a company from Egypt named Al Baik Fast Food Distribution Co S.A.E.

Summary of facts

*SC – Saudi Company

EC – Egyptian Company

In this case, the Respondent/Plaintiff (Saudi Company) has filed an action against the Appellant/Defendant (Egyptian Company) to expunge their trade mark from the Register under Section 45 of the Trade Marks Act 1976. This section is regarding the power of court to make, expunge or vary entry in the Register if an aggrieved person applies to the court due to the non-insertion in or omission from the Register without sufficient cause or by any entry made in the Register wrongfully remaining in the Register.  Saudi Company is the registered owner of El Baik trade mark in Saudi Arabia since 1987 and has registered the said trade mark during 1997 in Malaysia. In 2008, the Saudi Company has registered the Al Baik trade mark in Malaysia. At the material time, the Saudi Company is not trading in Malaysia at the material time.

The Egyptian Company then filed a claim at the High Court against the Respondent/ Plaintiff for removal of their trade mark under Section 46 of Trade Marks Act 1976. Section 46 confers the power of court to order a trade mark to be remove from the Register on the ground that the registered proprietor has no intention to non-use of trade mark in good faith and non-use of trademark for a continuous period of 3 years. The Egyptian Company in this case is the registered proprietor of “Al Baik” trade mark since 2005 and has been trading in Malaysia since then.

High Court decision

The court held that the Saudi Company’s application to expunge the Egyptian Company’s mark is allowed on the ground that the Egyptian Company is not the rightful owner and in contrary to Section 25 which stated that an application to register a trade mark may be made any person who claimed to be proprietor of a trade mark used by him. The Egyptian Company trademarks are confusingly similar to that of the Saudi Company and this will cause confusion to the trade and public in Malaysia. The Egyptian Company’s application to remove the Saudi Company’s mark is also allowed on the ground that the Egyptian Company is an aggrieved person, Saudi Company has registered the trade mark in bad faith, the Saudi Company did not use Al Baik mark in contrary to Section 46 and the mark was not used for the period of three years.

Both parties then appealed to the Court of Appeal against the decisions of the High Court and the matters were heard in consolidation.

Summary of Decision

  1. The appeal by the Egyptian Company is allowed. The Saudi Company has not satisfied the threshold requirement of an aggrieved person under Section 45 and therefore no confusion as the Saudi Company is not trading in Malaysia.
  2. The appeal by the Saudi Company is dismissed. The Egyptian Company has registered their trademarks not only in Malaysia, but also other countries and has operating in Malaysia using the trade mark. The Egyptian Company is indeed an aggrieved person. The Saudi Company failed to show that they had used the marks in Malaysia nor they have genuine and present intention to use the marks in Malaysia.

Commentary

Awareness to register trade mark has been rising in Malaysia. This is evidenced by the statistics from MyIPO where application to register trade mark has increasing throughout the years. This healthy trend does not only affect big brands as aforementioned but also budding local corporations and enterprises from arrays of industries. Research shows that in Malaysia, trade mark is the most important type of intellectual property.

Nonetheless, the registration of the trade mark alone does not sufficient to ensure the full protection over the trade mark. It must be accompanied with the intention to use the trade mark in the course of trade.

In the current case, Saudi Company appealed against the High Court’s decision that held the trade mark Al Baik owned by the Saudi Company to be removed from the Register under Section 46 of the Act for the non-use of the mark for the period of 3 years up to 1 month of the application to remove.

The Court of Appeal has extensively discussed the relevant sections and the application in the current case. Under Section 46 of the Act, the court may order a trade mark to be removed from the Register on the ground of non-use if the registration had been made with an intention to use or the non-use is for the period of 3 years up to one month before the application under this section is made. The applicant however must first prove to the court that he is an aggrieved person. The court has referred to P. Narayanan in his book “Trade mark and Passing Off” where he explained that the intention to use of the mark must exist at the date of the application and the intention must be genuine and bona fide.

The Egyptian Company in this case has satisfied to the court that they are the aggrieved person since the Egyptian Company was the registered owner of Al Baik trade mark bearing the similar trade mark to the Saudi Company. In referring to the case of McLaren International Ltd v. Lim Yat Meen [2009] 4 CLJ 749 FC, a person aggrieved must have used his mark as a trade mark or have a genuine and present intention to use his mark in the course of trade, which is similar to the owner of the registered trade mark which he seeks to remove from the Register. In the current case, the Egyptian Company is already using its trade mark and has attempted to remove a similar trade mark. Hence, the Egyptian Company is indeed an aggrieved person. The court also found that the Saudi Company failed to show it has used the marks in the course of trade in Malaysia though El Baik mark by Saudi Company is registered as early as 1997 while Al Baik is registered in 2008.

On the other hand, Egyptian Company has appealed against the decision of High Court in allowing the application by Saudi Company to expunge the Egyptian Company’s mark on the ground that the Egyptian Company is not the rightful owner under Section 25 of the Act and the Egyptian Company’s mark is contrary to Section 14(1)(a) to(g) [Refer reference 1] and/or section 19(1)(a) and/or (b) [Refer reference 2] of the Act for the reason that is confusingly similar to the Saudi Company’s mark and cause confusion to the trade and public in Malaysia. Among the Saudi Company’s contention is their mark is a well-known mark in Malaysia.

The court has applied the Pianotist test for the purpose of Section 14 and Section 19 of the Act. The court stated that the current case is similar to the Staywell’s case. In Staywell Hospitality Group Pty Ltd v. Starwood Hotels & Resorts Worldwide, Inc And Another [2013] SGCA 65, the Australian Company applied to register their trade mark PARK REGIS which is widely used in New Zealand and Australia in hotel business but not in Singapore. An American Company, has been used ST Regis mark in the hotel business, including Singapore. The court has considered step-to-step approach; similarity of marks, similarity of goods or services, and likelihood of confusion arising from the two similarities. The court has looked into the conceptual similarity and considered the mark as a whole. Though there are difference in term of hotel rating between the two, the court found that it did not change the fact that they offer similar goods and services. The American Company’s opposition is allowed.

In the current case, the court found that the Saudi Company is not an aggrieved person under Section 45 of the Act since they never operated their business in Malaysia. Logically, there could not be a confusion between Saudi Company goods or services and the Egyptian Company. The Egyptian Company has been trading in Malaysia for quite some time. In addition, notwithstanding the fact that they have registered their trade mark since 1987, they have failed to take any action promptly against the Appellant and therefore the doctrine of estoppel, acquiescence, laches and abandonment are applied. The court then allowed the appeal of the Egyptian Company.

This case is recommended to read as it densely filled with information, among others, the purpose and the spirit of the Act, the purpose of Section 20 (Honest concurrence use of trade mark), 25 (Registration of trade mark),35 (Rights given by Registration) ,44 (Alterations of registered trade mark) and 45 (Rectification of the Register) in paving the way of registration in the best acceptable manner, the Pianotist test in determining whether there is confusion or not between the marks and the general defence in the case of trade mark infringement.

The preliminary issues also highlighted the fact that the authority of the agent to act for a registered trade mark does not extend to court proceedings. The agent is not an aggrieved person, the registered proprietor is. The court also mentioned that application to the court under the Act must be by Originating Summons.

It also interesting to note the passing remarks where the Act has provided a win-win situation for both parties but not resorted to. The issues between the two companies may be resolved by adding a prefix in front of the mark Al Baik; Saudi ALBAIK or Egyptian ALBAIK. This may settle the issue of confusion and allowed both parties to trade with the suggested variation. In fact, such suggestion is allowed under the Act.

In conclusion, it is important to genuinely use the trade mark after registration to prevent from the trade mark being removed from the Register on the ground of the non-use. The High Court decision in expunging both marks are unjust, at least to one party, the Egyptian Company, as they have trading in Malaysia for quite some time. The Court of Appeal also took the opportunity to mention that the fact they have to expunge one trade mark is a loss of revenue to the government.

REFERENCE

1. Section 14(1)(a) to(g) of Trade Marks Act 1976:

A mark or part of mark shall not be registered as a trade mark –

(a)    If the use of which is likely to deceive or cause confusion to the contrary to law;

(b)    If it contains or comprises any scandalous or offensive matter or would otherwise not be entitled to protection by any court of law;

(c)    if it contains a matter which in the opinion of the Registrar is or might be prejudicial to the interest or security of the nation;

(d)   if it is identical with or so nearly resembles a mark which is well known in Malaysia for the same goods or services of another proprietor;

(e)     if it is well known and registered in Malaysia for goods or services not the same as to those in respect of which registration is applied for:

Provided that the use of the mark in relation to those goods or services would indicate a connection between those goods or services and the proprietor of the well known mark, and the interests of the proprietor of the well known mark are likely to be damaged by such use;

(f)      if it contains or consists of a geographical indication with respect to goods not originating in the territory indicated, if use of the indication in the mark for such goods in Malaysia is of such a nature as to mislead the public as to the true place of origin of the goods; or

(g)     if it is a mark for wines which contains or consists of a geographical indication identifying wines, or is a mark for spirits which contains or consists of a geographical indication identifying spirits, not originating in the place indicated by the geographical indication in question

2. Section 19(1)(a) and/or (b) Trade Marks Act 1976:

No trade mark shall be registered in respect of any goods or description of goods—

(a) that is identical with a trade mark belonging to a different proprietor and entered in the Register in respect of the same goods or description of goods or in respect of services that are closely related to those goods; or

(b) that so nearly resembles such a trade mark as is likely to deceive or cause confusion.

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