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Case Review: Low Chi Yong v Low Chi Hong & Anor

CASE REVIEW:
Low Chi Yong (trading as Reynox Fertichem Industries) v Low Chi Hong & Anor [2018] 1 CLJ 287

This trade mark dispute arose from two biological brothers, Low Chi Yong and Low Chi Hong. This case is first filed at High Court and went to appeal at Court of Appeal and later, Federal Court. The Appellant has filed a claim against the Respondents for trade mark infringement. The Appellant is the sole registered proprietor of “REYNOX” trade mark. The trade mark is used in liquid fertilizer business. The 2nd Respondent is incorporated to take over the business in which both Appellant and 1st Respondent had equal shares in it. The Appellant and the Respondent initially formed a partnership to use the trade mark. After some time, the Appellant withdrew his consent to the Respondents to use his trade mark in their business when he left 2nd Respondent. In the Respondents counter claim, they claimed that the registration of the said trade mark by the Appellant was obtained by fraud.

HIGH COURT DECISION

The Appellant’s claim was allowed. The court held that there is no fraud in the registration and the Appellant is the sole registered proprietor of the trade mark and have exclusive right over the trade mark as accordance to Section 35 of the Trade Marks Act 1976(“The Act”). The counterclaim by the Respondents was dismissed.

COURT OF APPEAL DECISION

The Respondents appealed to the Court of Appeal and the court allowed the appeal partly and sustained the dismissal of the counterclaim. The court held that the act of the Appellant in terminating the use of the trade mark by the Respondents without reasonable notice is unjust, inequitable and oppressive. The use of the trade mark by the Respondents is with the consent and approval of the Appellant.

APPEAL TO FEDERAL COURT

Dissatisfied with the decision, the Appellant appealed to the Federal Court. Whether by giving his consent to the use of the registered trade mark to a company or a firm he still a shareholder/director of the company or a partner of the partnership firm, can he be considered as having abandoned his exclusive right to the trade mark in perpetuity even if he does not derive any benefit therefrom(and has withdrawn from the company) and also be said guilty of estoppel, acquiescence or laches.

FEDERAL COURT DECISION

The appeal is allowed. The decision of Court of Appeal is set aside and the High Court decision is reinstated. The Appellant has the exclusivity over the trade mark as the trade mark is registered under his name only. The consent to use trade mark was given when the Appellant was still a shareholder/ director of the company but withdrew the consent after he left 2nd Respondent. There is trade mark infringement as consent was never given to the Respondents after he left and the defences of abandonment, estoppel, acquiescence and laches were not proved.

COMMENTARY

Registered trade mark is transferable to any other person via assignment or registration as a registered user. This is provided in section 47 and section 48 of Trade Marks Act 1976(“The Act”) respectively. Nevertheless, in the case where no assignment or registration of registered user has been made to the Registrar, section 40(dd) of the Act stated that express or implied consent is also sufficed as long as the person who uses the trade mark can prove it should the registered proprietor of the trade mark enforce its rights through legal actions. This consent will negate the trade mark infringement’s claim brought by the registered proprietor.

In the present case, the Respondents failed to prove that there is consent to use the trade mark after the Appellant, the sole registered proprietor of the trade mark, resigned from the 2nd Respondent. It is undeniable that there was consent when he was a director and shareholder of the 2nd Respondent. Nonetheless, it was shown that the consent was withdrawn by the Plaintiff through notices refraining the Defendants from using the said trade mark with immediate effect.

The Respondents also argued that due to the assignment granted by the Appellant, there is consent continues. However, section 47 of the Act provided that the registration of the assignment cannot be evidenced through document or instrument is admissible to the court unless an entry has been made by the Registrar in the Register. Since there is no evidence that the assignment being registered, it is confirmed that no assignment granted to the Respondents by the Appellants.

At the Court of Appeal, the learned judges highly relied on the principle of equity and held that protection under section 35 of the Act where the registered proprietor has an exclusive right over the trade mark is not sustainable as the trade mark used by the Respondents is with consent and approval of the Appellant. In addition, the name REYNOX appears in the firms’ name as well as in the 2nd Respondent that too with the approval and consent of the Appellant. The conduct of the Appellant in terminating the use of the trade mark by the Respondents without reasonable notice is unjust, inequitable and oppressive and the Appellant’s reliefs ought not to be entertained by the court.

In the present case, the learned judges nonetheless uphold the exclusive right of the registered proprietor over the trade mark, where in this case is the appellant, as stated in Section 35 followed by Section 36 of the Act. The court affirmed that the registered proprietor has the right to withdraw his consent from any other person from using the trade mark. The defence of the abandonment, acquiescence, estoppel and laches raised by the Respondents are also failed as the Respondents failed to first establish consent on the part of the Appellant. The court held that Respondents are the unauthorized user of the trade mark and therefore, there is indeed a trade mark infringement against the Appellant’s trade mark. This case highlights the importance of records of any verbal agreements between the parties in the matter of ownership over a trade mark.

Therefore, it is important for the parties to draw up a proper assignment/license agreement that specify among others, their rights, the termination clause and the time limit of the use of the trade mark. In the case of Yong Teng Hing V. Walton International Ltd [2012] 7 CLJ 310 , the Respondents are the rightful proprietor of the GIORDANO trade mark as the Appellant has assigned the trade mark to the Respondents in 1991. The Appellant’s application to register the GIORDANO trade mark in other class is refused since it would confuse the public as if the Appellant is associated with the Respondents. Even with a proper license agreement to use trade mark, disputes still arise, what more if without. However, in this situation, the dispute would be majorly on the law of contract.

To invoke section 40(dd) of the Act, his consent, on the other hand, can be shown through agreement like in the case of Colliers International Property Consultants Inc V. Colliers International Property Consultants Sdn Bhd [2015] 1 LNS 252 which initially, the Defendant is permitted to use the Plaintiff’s trade mark as mentioned in the Affiliation Agreement between the Plaintiff and the Defendants. In the case of UBE Engineering Sdn Bhd V. Ube Industry Sdn Bhd & Anor [2001] 1 CLJ 300, the court refuse to grant interlocutory injunctions to the Plaintiff since there was a possibility of consent given to use Plaintiff’s trade mark through an oral agreement.

The Defendants in the present case also claimed that there is fraud on the part of the Appellant in obtaining the trade mark’s registration as mentioned in Section 37 of the Act. However, there is not even a single evidence to establish the claim and to rebut the exclusive right to the use of the trade mark by the registered proprietor under Section 35. Hence, it is a bare allegation and the registration of the trade mark is valid.

This is different in the case of Doretti Resources Sdn Bhd V. Fitters Marketing Sdn Bhd & Ors And Another Case [2017] 1 LNS 738   where the Defendants proved that the Plaintif is not the first user of PYRO trade mark and at the material time has the actual knowledge that the 1st Defendant is the 1st user and common law user of PYRO trademark and registered the trade mark by defrauding the Registrar. In the present case, the Respondents knew that the Appellant is the one who started the liquid fertilizer business and 1st user of the trade mark. The claim that the registration of the trade mark should be in joint name between the Appellant and the 1st Respondent could not be proven by the Respondents at the High Court.

The defence of abandonment also cannot be proved since in the present case, the Appellant asserted his rights by sending notices to Respondents to terminate the use of the trade mark with immediate effect. The court has referred to the Narayanan in “Law of Trade Marks and Passing Off “in paragraph 24.74 where it stated that non-use of trade mark alone is not enough. Other factors must be involved such as liquidation of the company or declared intention not to use the trade mark. In the case of Kong Kin Loong & Anor V. Kong Sou Keet & Ors [2018] 1 LNS 1203, even if the company stop using the trade mark, the cessation does not mean the trade mark is abandoned in the business.

In conclusion, it is emphasized that there should be proper records to show consent to use the trade mark and the defences raised by the Respondents should be pleaded in details. This case shows that, without evidences to prove otherwise, the court will enforce the exclusive right of the registered proprietor. This case also important as it highlights the exclusivity of the trade mark to the proprietor once it is registered by upholding the right of the registered proprietor to withdraw consent despite the losses and damage that will cause to the user of the trade mark in their business.

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