Eugene Ee delves into a recent decision by the High Court which addresses some issues relating to revocation actions under the new Trademarks Act 2019.

It is trite under trademark law that a registered trademark has to be continuously used for a period of 3 years. Otherwise, it is vulnerable to a revocation action and can be removed from the Register of Trademarks on the ground of non-use.

Since the Trademarks Act 2019 (“Act”) came into force on 27 December 2019, which repealed and replaced the Trade Marks Act 1976 (“TMA 1976”), there has been a dearth of case law on the application of the law under the new Act – until recently, where there has been a string of decisions delivered by the High Court. One of the more illuminating decisions by the High Court was delivered in Oatly AB v Pahang Pharmacy Sdn Bhd (Originating Summons No.: WA-24IP-10-05/2022).

Background

Briefly, the plaintiff applied to revoke the defendant’s 3 registrations for the trademark “OATLEY” on the ground of non-use pursuant to section 46(1) of the Act which provides that a person aggrieved by the registration of the trademark may apply to the court for the revocation of the trademark on either of the following grounds:

1. the trademark has not been used in good faith in Malaysia within 3 years from the date of issuance of the notification of registration and there are no proper reasons for non-use (“1st limb”); or
2. the use of the goods or services under the 1st limb for which the trademark is registered has been suspended for an uninterrupted period of 3 years and there are no proper reasons for non-use (“2nd limb”).

Are the 3-year periods the same?

At the hearing of the action, the plaintiff had decided to pursue its action under the 2nd limb only given the defendant was able to adduce evidence of use of its trademarks within 3 years from the notification of registration, namely the period prescribed under the 1st limb.

It was argued by the defendant that the 3-year period under both limbs refer to the same time period as the 2nd limb makes reference to the use “under the 1st limb”. In support of its interpretation of section 46(1), the defendant argued that there was no overlap between the two limbs as the 1st limb is concerned with the use (or lack of it) in “good faith” whereas the 2nd limb does not make any reference to the requirement of “good faith”.

The High Court rejected the defendant’s contention as it is inconsistent with the spirit behind section 46 which is to ensure that registered trademarks are actively and continuously used to maintain their validity. Assuming the defendant’s interpretation is accepted, it would mean that a registered proprietor would only have to use its registered trademark during the first 3 years after its registration and subsequently allow it to fall into disuse for as long as it wanted without ever being under threat of losing the registration. The court found it inconceivable that a registered proprietor could claim a permanent and indefinite monopoly over the trademark by merely using it for just 3 years immediately after its registration.

The 3 stages of inquiry

According to the High Court, an application under section 46 involves a 3-stage inquiry process.

1. The plaintiff must establish that it is a person aggrieved by the defendant’s registration, commonly referred to as the threshold or locus standi requirement. To satisfy this requirement, the plaintiff must prove that it either (a) has a genuine and present intention to use its trademark which is identical with or similar to the registered trademark; or (b) that its legal interest, right or legitimate expectation in its trademark is substantially affected by the presence of the registered trademark.

   In this regard, the High Court found the plaintiff had shown that it was aggrieved by the registrations of the defendant’s trademark in classes 5 and 29 only (excluding the registration in class 16) as they were hindering the plaintiff’s application to register its marks in those classes.

2. The plaintiff must prove that the use of the trademark has been suspended for an uninterrupted period of 3 years. This is commonly established via an investigation report or a market survey report prepared by a private investigator in compliance with the guidelines set out in Imperial Group Pls v Philip Morris Ltd [1984] RPC 293 (commonly referred to as the Whitford Guidelines).
3. Assuming there is prima facie evidence of non-use, the onus then shifts to the defendant to prove that its registered trademark has been used or that there were proper reasons for non-use during the material period.

Should the market survey be conducted continuously throughout the 3-year period?

The defendant challenged the conclusiveness of the findings contained in the investigation report and market survey report on various fronts. One interesting argument raised by the defendant was that the market survey was not conducted throughout the entire 3-year period of the alleged non-use and thus inconclusive to establish non-use. The defendant placed reliance on the Federal Court’s decision in Liwayway Marketing Corp v Oishi Group Public Co Ltd [2017] 4 MLJ 141 (“Liwayway”) which purportedly laid down the requirement that market surveys must cover the entire period of the alleged non-use.

The High Court rejected the defendant’s contention and opined that it would be illogical and unreasonable to require the survey to be conducted over 3 years. The court went on to hold that the defendant’s reliance on Liwayway was misplaced and clarified that the alleged period of non-use in that case was from 19 January 2010 to 19 January 2013. However, the survey was only conducted for the period between 11 August 2011 to 22 August 2011. Accordingly, the result of the survey could not have established non-use of the trademark for the remaining period alleged by the plaintiff beyond 22 August 2011.

On the evidence before it, the High Court found there was prima facie non-use of the defendant’s trademarks for classes 5 and 29 given, among others, that the interviewees who had been in service at the company or outlet for 3 years or more confirmed that they had never heard of the defendant’s goods bearing the “OATLEY” trademarks throughout their employment.

What constitutes “no proper reasons for non-use”?

The phrase did not exist in the predecessor TMA 1976 but was only introduced in the Act. Given there is no local precedent on the interpretation of the phrase, the High Court referred to precedents from the United Kingdom and Singapore as their corresponding trademark legislation employed the same phrase. From the foreign precedents, it can be deduced that the phrase would cover situations, among others, where:

• there were abnormal situations in the industry or market, or temporary but serious disruption affecting the registered proprietor’s business;
• there was normal delay occasioned by some unavoidable regulatory requirement; and
• the obstacles to use the trademark must have arisen independently of the will of the registered proprietor (which exclude ordinary commercial delays such as the production of a new product bearing the trademark in question).

Needless to say, the issue of whether there was indeed proper reasons for non-use would have to be decided based on the factual matrix of each case. In the case before the court, it was held that the defendant had failed to establish any proper reasons for non-use. Further, the defendant’s reliance on its business proposal to prove there was use of the registered trademarks was misconceived as the proposal is merely an internal document indicative of the defendant’s plans for the future and not the current state of its business.

Commentary

The decision of the High Court is to be welcomed as it provides useful guidance for trademark law practitioners as well as brand owners regarding the approach that will be adopted by the courts when dealing with an application for revocation pursuant to section 46 of the Act and the practical issues that may arise in connection with such actions.

Eugene is a Senior Associate at Wong Jin Nee & Teo. His practice principally focuses on contentious IP and commercial matters. Outside the courtroom, he assists clients in the enforcement of their IP rights and also advises on regulatory compliance, consumer laws and data protection matters.