6 Jul
2020

High Court cans counterfeit beer importer’s weak defence

Henry Goh & Co

Malaysian court’s recent ruling in favour of a brewer follows established case law on registration but notes sound public health reasons for cracking down on fake alcoholic beverages.

In Heineken Asia Pacific Pte Ltd v Super La Via Sdn Bhd, the plaintiff was a Heineken group company incorporated in Singapore that produces, packages, distributes, markets and sells more than 50 beers, non-alcoholic beers and other branded beverages, including Tiger and Anchor, in the region. Most importantly, the plaintiff is the registered owner in Malaysia of various BINTANG (meaning ‘star’ in Malay) trademarks in Class 32 for beers.

The defendant was a Malaysian company involved in retail mini-markets, warehousing and storage facilities, as well as general trading.

In June 2018 the plaintiff filed an action against the defendant for trademark infringement for importing, exporting, distributing and selling beer bearing marks identical to or closely resembling one or more of the BINTANG marks. The products were printed with the description ‘Strong Filtered Beer’ and ‘Alc. 16%’, and were not manufactured by or under the licence of the plaintiff. Test purchases made by the plaintiff at the end 2017 showed infringing canned beers were offered for sale in at least seven retail outlets in the cities of Kuala Lumpur and Petaling Jaya.

Injunctive orders had already been granted earlier against the defendant pending the conclusion and disposal of the action. Subsequently, the plaintiff also filed an application for summary judgment.

The High Court found that the original beer bearing the BINTANG marks manufactured by or under the licence of the plaintiff contained only 4.7% alcohol by volume or lower. This was well known and acknowledged by the defendant. The canned counterfeit Bintang beers, however, were printed with one of the BINTANG marks and described as ‘Strong Filtered Beer’ and ‘Alc. 16%’. The defendant’s shipping documents, invoices and packing
lists for the counterfeit beer all clearly contained the descriptions ‘Bintang Beer’, ‘Bintang 16%’ or ‘Bintang Beer 16%’. Therefore – and unless otherwise satisfactorily explained by the defendant – the inevitable conclusion was that the defendant had used the BINTANG marks without the plaintiff’s authorisation when importing the counterfeit products.

In applying the principles set out in cases such as Fabrique Ebel Societe Anonyme v Perniagaan Tukang Jam City Port and Leo Pharmaceutical Products Ltd AS v Kotra Pharma (M) Sdn Bhd, the court was satisfied that the plaintiff’s marks had been duly registered with the Intellectual Property Corporation of Malaysia, in Class 32. Under Section 35(1) of the Trademarks Act 1976, the plaintiff had exclusive rights to use the marks in relation to goods of that class. The defendant did not deny that it was neither the registered owner nor the registered user of the BINTANG marks. In addition, the plaintiff’s marks had been registered in excess of seven years, and under Section 37, this was prima facie evidence of validity, which the defendant at no stage challenged.

The plaintiff had neither licensed nor authorised the defendant to use the BINTANG marks at any material time, and had proved that the defendant used the marks in respect of counterfeit beer, which was not cogently explained otherwise by the defendant. It was therefore clear that the defendant used the offending mark, which was identical to or closely resembled the plaintiff’s registered BINTANG marks. This was evident from the shipping documents and the comparison between the offending mark on the cans bought in test purchases and the genuine BINTANG marks.

In its rebuttal, the defendant primarily called on the plaintiff to prove its allegations and maintained that the imported beer was original. The defendant also claimed that it was not the owner of the counterfeit beer but only an intermediary and that the imported beer was not meant for the Malaysian market. The five containers of beer arrived in Malaysia as a transshipment only, it argued. As such, the defendant denied liability, claiming that it had merely leased its import licence for the import of the first three containers for another party, Marten Luxury Sdn Bhd.

The judge was not persuaded by the defendant’s bare denial that it was not the owner of the counterfeit beer. Further, the defendant’s secondary act of abetment was not statutorily excusable and sufficed to connect it with the use of the counterfeit Bintang beer even if others had been the ultimate owners. The defendant’s non-ownership was not ipso facto a statutory defence under Section 40 (acts not constituting infringement).

The court held that the defendant’s affidavit was basically one of bare and bald denials, whereas the plaintiff’s case had been substantiated by cogent documentary evidence.

As to whether the defendant used the mark in the course of trade, the court applied a liberal interpretation of Sections 3(2) and 38 of the act, as in Philip Morris Brands Sarl v Goodness For Import & Export, where the High Court held that transshipment of cigarettes in Malaysia constituted use of a mark in the course of trade. In the case at hand, the court also noted recent local news reports of counterfeit alcoholic drinks with high methanol content causing the deaths of more than 45 consumers. The judge opined that a liberal interpretation is right and sensible in view of rampant piracy and the import of counterfeit goods. This is particularly the case for counterfeit alcoholic beverages, which can be detrimental to consumers’ health, if not fatal.

It was also plain in the circumstances that the defendant used the plaintiff’s marks in relation to beer, in respect of which the BINTANG marks were registered in Class 32. The court found it inescapable that the offending mark had been purposefully crafted to mimic the BINTANG marks so as to mislead consumers that the counterfeit beer was produced by the plaintiff.

The High Court allowed the application and entered summary judgment in favour of the plaintiff for, among other things:

  • permanent injunction to restrain the defendant (and related entities) from:
    • infringing the plaintiff’s registered trademarks, especially the BINTANG marks, in the course of trade;
    • claiming release, taking possession or accepting delivery of beer bearing marks identical to or closely resembling any of the BINTANG marks and printed with the description ‘Strong Filtered Beer’ and ‘Alc. 16%’ that were not manufactured by or under the licence of the plaintiff; or
    • enabling others to do any of the aforesaid acts;
  • an order that the defendant disclose full details, documents, invoices, contracts, records and inventory of the counterfeit beer within seven days of the judgment;
  • an order for delivery up of the counterfeit beer to the plaintiff’s solicitors; and
  • an inquiry as to damages, or at the plaintiff’s option, an account of profits and costs.

Ultimately, the court held that there was neither a triable issue raised by the defendant nor any other reason to hold a trial. In other words, there was no defence to be tried.

Lim Eng Leong

Trademark manager

[email protected]

Lim Eng Leong acts as a registered trademark agent, legal counsel and trademark manager at Henry Goh. His expertise includes devising and implementing trademark protection strategies, as well as managing trademark portfolios across various industries. Mr Lim is adept in trademark prosecution and opposition proceedings. Together with an external solicitor, he has coordinated successful enforcement and defence strategies for clients’ IP rights at all levels of the Malaysian court system, including negotiations for settlement and co-existence of rights.