New legislation brings even greater protection for well-known marks

The newly minted Malaysian Trademarks Act 2019, which came into force on 27 December 2019, is a breath of fresh air for the protection of well-known trademarks.

Recognition for well-known marks in Malaysia was first provided for in 2001 when the recently repealed Trademarks Act 1976 was amended. Section 70(B) of the 1976 act provided that the owner of a mark protected as well known under the Paris Convention or the Agreement on Trade-Related Aspects of Intellectual Property may restrain by injunction the use in Malaysia of a trademark which, or the essential part of which, is identical to or closely resembles the well-known mark, in respect of the same goods or services, where the use is likely to deceive or cause confusion.

It further clarified that a well-known trademark is a mark which is well known in Malaysia as belonging to a person, regardless of whether that person carries on business or has any goodwill in Malaysia.

This meant that owners of well-known marks could enforce their rights regardless of whether there had been any use of the well-known mark in the country with the probability of confusion or deception occurring in respect of the same goods or services.

Section 14 of the 1976 act prohibited the registration of a mark that resembles a well-known mark already registered in Malaysia for goods or services that differ from those in respect of which registration is applied for, if the use of the mark would indicate a connection between those goods or services and the owner of the well-known mark, and the owner’s interests would likely be damaged by such use.

However, the new 2019 Trademarks Act goes a step further by expressly defining a ‘well-known trademark’ as follows:

4(1) “Well-known trademark” means any trademark that is well-known in Malaysia and that belongs to a person who –

(a) is a national of a convention country; or

(b) is domiciled, or has a real and effective industrial or commercial establishment, in a Convention Country, whether or not that person carries on business, or has any goodwill, in Malaysia.

(2) In determining whether a trademark is well-known in Malaysia, the Registrar or the Court shall have regard to the criteria as prescribed.

This definition emphasises that owners of well-known trademarks need not carry on any business or acquire the relevant goodwill for protection to be afforded to them.

Section 4(2) leaves it open as to what criteria should be considered when determining whether a trademark is well known. Regulation 5 of the Trademarks Regulations 2019 sets out the following criteria:

In determining whether a trademark is well-known in Malaysia, the Registrar or the Court shall have regard to the following criteria:

a) the extent of knowledge or recognition of the trademark in the relevant sector of the public;

(b) the duration and extent, and geographical area of any use of the trademark;

(c) the duration and extent of any promotion of the goods or services where the trademark applies and the geographical areas where the promotion is carried out;

(d) the duration and place of registration, or duration and place of application for registration, of the trademark, to the extent that they reflect use or recognition of the trademark;

(e) the record of successful enforcement of rights in the trade, in particular, the extent to which the trademark was recognised as well known by competent authorities; and

(f) the value associated with it.

Regulation 5 indicates the factors that the registrar or the court must take into account when deciding whether a mark can be categorised as well known. This is because, unlike countries such as Japan, Malaysia does not have a formal listing of well-known trademarks. Therefore, establishing a claim that a mark is well known places a higher burden of proof on owners of such marks.

As with the old act, the Trademarks Act 2019 also deals with the issue of similarities of pending applications when they are examined. Section 24(3) provides the following relative grounds for refusal of registration:

The Registrar shall refuse to register a trademark if –

(a) it is identical with or similar to a well-known trademark which is not registered in Malaysia and it is to be registered for the identical goods or services of the proprietor of the well-known trademark; or

(b) it is identical with or similar to a well-known trademark which is registered in Malaysia and is to be registered for goods or services which are not identical or not similar to those in respect of which the well-known trademark is registered and –

(i) the use of the trademark in relation to those goods or services would indicate a connection between those goods or services and the proprietor of the well-known trademark;

(ii) there exists a likelihood of confusion on the part of the public because of such use; and

(iii) the interests of the proprietor of the well-known trademark are likely to be damaged by such use.

There is therefore an expanded scope for grounds of refusal should the examining officer find that the pending mark falls foul of Section 24(3).

Perhaps the best way to appreciate how a well-known trademark is determined can be found in case law. Since the new act is only a few months old, we highlight a fairly recent case that turned on the issue of well-known trademarks.

In Y-Teq Auto Parts (M) Sdn Bhd v X1R Global Holdings, the Court of Appeal of Malaysia provided its grounds of judgment in respect of the well-known mark provision under the Trademarks Act 1976.

The marks in question were as follows:

(Mark A)

(Mark B)

Mark A was registered in Class 4 in the name of X1R Global Holdings and was used in Malaysia by its distributor. Mark B was registered in Classes 7, 9, 12 and 35 with a pending application in Class 25 in the name of Y-Teq Auto Parts (M) Sdn Bhd.

X1R initiated a legal action at the High Court applying to expunge the registered marks and the pending application, claiming that any use of Mark B in the market was likely to deceive or cause confusion to the public or would be contrary to law. X1R also relied on Section 14(1)(e) of the 1976 act, submitting that its mark was well known.

The High Court confirmed X1R’s assertion and ruled that the mark fell into the definition of a well-known trademark because, among other things:

• the public and people involved in the trade had identified the plaintiff’s mark with the defendant’s goods;
• the plaintiff’s mark had been used in more than 30 countries around the world, including Malaysia;
• the plaintiff’s mark had been registered in various countries throughout Asia; 
• the plaintiff had extensively promoted, advertised, publicised and presented goods to which its mark had been applied; and
• there was clearly value associated with the plaintiff’s mark.

This decision arose from the evidence that had been adduced by the plaintiff to show that it had been negatively affected because a third party had refused to distribute its goods due to the mistaken belief that they originated from the defendant, which was a competitor of the third party. Further, there was likelihood of confusion and deception between the use of the plaintiff’s mark and the defendant’s mark.

Because the marks were used in the same industry and closely resembled each other, the High Court held that the plaintiff had suffered dilution of its goodwill in addition to the loss of sales of its goods. This was in addition to the fact that it was also restricted from expanding the use of its marks to related goods in other classes. More importantly, the plaintiff was exposed to the risk of incurring legal liability from traders and consumers who had purchased the defendant’s inferior goods in the mistaken belief that they had acquired the plaintiff’s. Consequently, the High Court ordered the defendant’s registrations and application be expunged from the register. The defendant then lodged an appeal with the Court of Appeal, which was duly dismissed. The affirmation of the High Court decision indicated that the correct legal principles had been identified and applied to the facts of the case based on the evidence.

Y-Teq Auto Parts demonstrates that protection for well-known trademarks is strong in Malaysia. The courts are quick to enforce provisions for well-known marks and, with the widening of scope under the new Trademarks Act 2019, it would now be difficult for a non-bona fide party to blatantly copy, use and register marks that are well known in Malaysia.