Debate surrounds NATIVE TASTE lawsuit

Sari Pelita Sdn Bhd has filed a lawsuit in the Malaysian High Court in Kuala Lumpur against Balasarasvathi A/P Nagaih and Madura Store Sdn Bhd, alleging that the defendants have been passing off their tea products as the plaintiff's by copying the plaintiff's packaging get-up and design. The case is likely to involve a review of Malaysian case law on trademarks, in particular the question of ownership of goodwill when a foreign manufacturer and local distributor are involved.

Under a distribution agreement with Australian Native Foods Management (ANFM), Sari Pelita was appointed as sole distributor of tea products manufactured by ANFM and sold under the brand name NATIVE TASTE in Malaysia. However, ANFM subsequently terminated this agreement and this termination is the subject of a separate suit.

In the passing-off action, Sari Pelita claims to be the proprietor of rights in the packaging and get-up used for ANFM's tea products. It states that it created the design with the express purpose of increasing sales and that, by virtue of its substantial investment, it owns all the goodwill in the NATIVE TASTE mark and associated design of the packaging and get-up in Malaysia. Sari Pelita also alleges that Balasarasvathi and Madura Store have been distributing the same tea products under the same mark, packaging and get-up and, therefore, have been passing off their goods as Sari Pelita's.

Balasarasvathi and Madura Store assert that ANFM and its predecessor (a business known as Native Taste) own and have used the mark NATIVE TASTE in relation to tea products since 1995. They also contend that ANFM has applied for registration of the trademark in Australia and that ANFM claims all copyright and other proprietary rights in the design and get-up of the packaging used for its products.

This case will require the court to review previous case law relating to the ownership of trademarks in situations involving foreign manufacturers and local distributors. The courts have held that if a foreign manufacturer places its trademark on products exported for distribution by another party in Malaysia, it remains the owner of the mark. Therefore, a distributor, notwithstanding the acquisition of a commercial reputation in the goods, does not necessarily acquire any proprietary rights in the manufacturer's mark. If, however, the distributor has made some qualitative change to the trademark, the outcome may be different.

Suaran Singh Sidhu, Skrine, Kuala Lumpur