Federal Court recognises that fashion brands often engage in product diversification

In Yong Teng Hing B/S Hong Kong Trading Co v Walton International Limited, the Federal Court has affirmed a decision of the Court of Appeal finding that the respondent’s goodwill and reputation extended beyond clothing and apparel in Class 25 of the Nice Classification, and transcended the goods in which the respondent actually traded. The respondent was in the fashion retail business, which encompasses products such as optical and sunglasses.

The respondent was an associated company of Giordano Limited. It was the registered proprietor, applicant and assignee of the GIORDANO trademark for various goods in Malaysia and many countries throughout the world.

The appellant had applied for the registration of the trademark GIORDANO with the Registry of Trademarks on July 25 1992 in respect of optical and sunglasses in Class 9. The application was accepted and published in the Government Gazette of June 8 1995. The respondent filed an opposition on the basis that:

• it was identical or similar to the respondent’s GIORDANO trademark; and
• the respondent had acquired substantial goodwill and reputation in Hong Kong and elsewhere, including Malaysia, before the applicant filed its application.

The respondent further contended that its predecessor-in-title, Giordano Limited, was the originator and/or the bona fide proprietor of the mark.

The registrar of trademarks dismissed the opposition. An appeal was made to the High Court against the registrar's decision. The respondent then appealed to the Court of Appeal against the decision of the High Court, and the appeal was allowed. The appellant then filed an appeal against the decision of the Court of Appeal.

The Federal Court held that the relevant date for deciding whether the appellant was entitled to register the GIORDANO mark in Class 9 was the appellant’s application date (July 25 1992).

The Federal Court went on to dismiss the appeal on the following grounds:

• The Federal Court took into account the extensive and substantial use by the respondent of the GIORDANO mark in Asia since 1981, long before the appellant’s application was filed. It concluded that the appellant could not have devised the mark independently. Instead, it had tried to benefit from the worldwide reputation of the respondent.
• In assessing whether there was a likelihood of confusion between the appellant’s and the respondent’s marks, the Federal Court held that the marks were identical visually and phonetically, and that the appellant’s and the respondent’s goods shared the same nature and purpose, both being fashion products. The Federal Court took regard of the commercial context within which the goods in question were bought and sold, and noted that, in recent years, it had not been uncommon for proprietors of major fashion brands to expand their product lines to embrace all facets of fashion.

The Federal Court thus found that consumers would inevitably assume that the appellant’s and the respondent’s products both shared the same origin, as the marks in question were identical. This would result in the misappropriation of the respondent’s goodwill and reputation in Malaysia and internationally. 

This case represents a victory for brand owners, as it demonstrates the willingness of the Malaysian court to keep up with trends, including product diversification. Another important lesson arising from the decision is the importance of striking a balance between the protection of a company's commercial reputation and the need to promote competition.

Janet Toh Yoong San, Shearn Delamore & Co, Kuala Lumpur