ZARA Case brings welcome non-use clarification

Malaysia

In Industria De Diseno Textil SA v Edition Concept Sdn Bhd (Case [2005] 2 CLJ 357, January 25 2005), a court in Malaysia has dismissed a local company's action to cancel a ZARA registration owned by a Spanish fashion house.

Industria De Diseno Textil SA (IDT) applied to register the mark ZARA in respect of retail services in Malaysia on August 3 1998. The mark was registered on February 5 2002 but IDT only started using the ZARA mark in respect of retail services in January 2003.

Local company Edition Concept Sdn Bhd started using a ZARA mark in respect of clothing in 1999. Based on this prior use, Edition applied to remove IDT's ZARA mark from the Trademark Register on the grounds that IDT's mark had been wrongfully entered on to the register. Edition claimed that the mark was confusingly and deceptively similar to its own mark, which, it stated, is well-known in Malaysia in respect of the same type of services as those covered by IDT's mark. It also maintained that IDT had not used its mark for a continuous period of three years plus one month from the date of registration as it had not used the mark within three years of the application date.

The court first noted that the correct date at which to examine whether IDT's ZARA mark was likely to cause confusion and/or deception pursuant to Section 14(1)(a) of the Trademarks Act 1976 was the date the application for registration was first filed. As Edition had only started using the ZARA mark in 1999, confusion and deception as at August 3 1998 (the application date) was a non-issue. Similarly, the court held that the correct date at which to analyze whether Edition's ZARA mark was well known in Malaysia was also the date that IDT's application for registration was first filed. As Edition had not adduced any evidence to show that its mark was well known as at August 3 1998, its claim on this issue could not succeed.

Although Edition was the first user of the ZARA mark in Malaysia, the court held that it was not entitled to expunge IDT's registered mark as it should have inspected the register before using the ZARA mark in 1999. The court emphasized that the power of the court to remove a registered trademark from the register is entirely discretionary and even if a party proves the grounds for such rectification, the court should exercise its discretion judiciously. The court held that in the present case, it was against the interest of the public as well as IDT to remove the ZARA mark from the register.

On the issue of non-use, the court held that the required period of three years non-use runs from the date of actual registration (here, February 5 2002) and not the date of application of the mark. As IDT started to use the mark in 2003, Edition failed on this ground as well.

This decision is to be welcomed by foreign trademark owners in Malaysia. Not only has it given due recognition to the rights of a foreign trademark owner vis-à-vis a local trader who has made prior use of an identical trademark, it has also ended the uncertainty of when the three-year period of non-use starts to run.

Teo Bong Kwang and Liew Shie Ying, Wong Jin Nee & Teo, Kuala Lumpur

Unlock unlimited access to all WTR content