In Thye Huat Chan Sdn Bhd v Thye Shen Trading Sdn Bhd ( 6 MLJ 69, July 4 2008, reported in November), a Malaysian court has set aside a trade description order obtained by Thye Huat Chan Sdn Bhd.
The Trade Description Act 1972 allows the registered proprietor or common law owner of a trademark to apply for a declaration that an infringing sign or get-up represents a false trade description as applied to such goods as may be specified in the order. Such an order is admissible in evidence in any proceedings under the act in which it may be relevant as conclusive proof of a false trade description and could thus form the basis of any action or prosecution under the act.
In the present case, Thye Huat was the registered proprietor of two trademarks consisting of the letters A, B and C for, among other things, tapioca starch and rice flour. Thye Huat successfully obtained a trade description order that the ABC marks as represented in three photos were, for the purposes of the act, a false trade description as applied to flour. Subsequently, Thye Huat made a complaint to the controller of trade descriptions that the first and second respondents had committed an offence under the act by applying a false trade description to goods supplied by them. Goods bearing the ABC marks were then seized from the premises of the first and second respondents.
The respondents challenged the validity of the trade description order before the courts. The challenge was based on both substantive and procedural grounds.
The respondents first questioned Thye Huat’s rights in the ABC marks, arguing that Thye Huat was not the registered proprietor or common law owner of the marks. The respondents contended that they (and/or their predecessors) had been using the ABC marks for tapioca starch before Thye Huat started using and/or applied for the registration of its trademarks. However, based on the evidence before it, the court found that the respondents had failed to prove this assertion.
The respondents also relied on the following technical grounds:
- the order that was acted upon was not that ordered by the judge and was thus null and void;
- the order was bad in law because it did not describe the allegedly infringing marks, but only provided photos of them in annex; and
- Thye Huat had failed to make full and frank disclosure when applying for the order.
With regard to the first ground, the court found that the trade description order sought by Thye Huat was in respect of the ABC marks, but that the order that was acted upon (and would be used to prosecute the respondents) was worded in respect of the get-up of the goods. As trademarks and get-ups are two different things, the trade description order which was relied upon was without basis. The court thus concluded that the order was null and void and ought to be set aside.
With regard to the second ground, the court pointed out that a trade description order must identify the infringing mark with precision. The court confirmed an earlier Court of Appeal decision in which it was held that:
- a trade description order will be void if it does not identify the infringing mark by means of a verbal description; and
- merely annexing a representation of the infringing mark would not satisfy the provisions of the act.
As the trade description order in the present case merely referred to images in annex, the court held that it was bad in law and ought to be set aside.
With regard to the third ground, the court found that Thye Huat had failed to disclose:
- that the respondents had been importing and selling tapioca starch bearing the trademark ABC;
- the particulars of the respondents that were known to it.
The court took the view that the respondents were not street market traders of counterfeit goods with no fixed addresses, but regular traders with fixed addresses which would undoubtedly have wished to oppose Thye Huat's application for a trade description order. The court believed that if the particulars of the respondents had been disclosed, it would have ordered that the application for the trade description order be served on them.
The ruling appears to:
- limit the instances in which a trade description order application can be made ex parte; and
- allow alleged infringers to take steps to avoid seizure and prosecution.
This reduces the effect of obtaining a trade description order as an instrument to facilitate a ‘surprise’ raid and obtain the seizure of allegedly infringing goods. The court justified its decision by holding that before such a "drastic instrument" as a trade description order is granted, the defendant should be given the opportunity to oppose it. However, the court went on to state that ex parte applications can still be made in cases involving the use of registered trademarks on counterfeit goods sold by street traders.
Therefore, applicants for a trade description order should ensure that all procedural and technical requirements have been complied with. As the present case demonstrates, the courts view a trade description order as a severe and harsh tool that provides conclusive proof of a false trade description. Therefore, the courts will not hesitate to set aside a trade description order where the applicant has failed to comply with the procedural and technical requirements set forth by the act.
Joshinae Wong, Skrine, Kuala Lumpur