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Protection of Well Known Trade Marks

Author/s: Andy Leck, Celeste Ang

Whilst the Malaysian Trade Marks Act 1976 provides for the special status of well known marks, the concept of dilution that is the fundamental basis for the protection of well known marks is not recognised under legislation or by the courts.

Dilution applies specifically to well known marks and does not always require a likelihood of confusion. Rather, dilution is caused where the distinctive character of a well known mark is diminished, thereby weakening the strength and exclusivity of mental association created by consumers between the brand of the well-known proprietor and its products.

Two recent decisions of the High Court and the Court of Appeal illustrate the difficulties of enforcing rights in well known trade marks in Malaysia in the absence of the recognition of dilution.

1. Consitex SA v. TCL Marketing Sdn Bhd [2008] 8 CLJ 444

Brief facts

A claim for trade mark infringement and passing off was brought by the reputed Italian fashion enterprise, Ermenegildo Zegna. Consitex is a member of the Ermenegildo Zegna group, an international enterprise specialising in the design, manufacture and marketing of menswear. Consitex’s goods have been sold in Malaysia since 1989. TCL Marketing is a Malaysian private limited company incorporated in 1996 and is in the business of manufacturing and marketing garments.

The issue was the alleged infringing use of the trade mark “Emmer Zecna” by TCL Marketing for menswear. Consitex had registered its trade marks “Ermenegildo Zegna” and “Zegna” in Malaysia for clothing, shoes, boots and slippers. Consitex contended that use of the “Emmer Zecna” mark by TCL Marketing amounted to trade mark infringement as the said mark was confusingly similar to Consitex’s “Ermenegildo Zegna” trade mark, resulting in confusion and deception to the public. Consitex also claimed passing off of its goods and business through the use of a confusingly similar trade mark and trade name by TCL Marketing.

High Court’s Decision

Consitex’s claim was dismissed as there was no finding of confusion or deception to the public caused by the use of TCL Marketing’s “Emmer Zecna” mark in Malaysia. Whilst the Court agreed that the statutory requirements for trade mark infringement had been established, the marks were held to be distinguishable.

Some of the factors considered by the Court are as follows:

(a) Aurally and visually, the two marks differed greatly with Consitex’s mark being longer and having an emphasis on the suffix “gildo” in the first word.
(b) Consitex and TCL Marketing operated in different markets. Consitex catered to the more affluent consumers who purchased designer brands, whilst TCL Marketing catered to middle-class consumers who shopped at departmental stores and supermarkets.
(c) The disparity in price between the goods was also a “strong determining factor”. The marked price difference would deter consumers from mistaking the brand for another.
(d) There were no known instances of confusion in the market arising from the coexistence of both marks to-date.

Consitex did not succeed on the claim of passing off either as the Court held that the “Ermenegildo Zegna” trade mark was only well known amongst “upper bracket income” consumers and not the general public. Moreover, Consitex failed to show that it had suffered damage to its reputation following the coexistence of both marks in Malaysia since 1997.

Commentary

“Emmer Zecna” appears to be an abbreviation of “Ermenegildo Zegna” at first glance and thus consumers are likely to assume the goods of TCL Marketing to be a “second tier brand” of Consitex retailing at a lower price to suit the needs of middle-class consumers. This argument was rejected by the Court as baseless and mere speculation. Nonetheless, this is recognized as a growing trend amongst designers worldwide as they seek to market their goods across all sectors of society and not just the affluent.

In any case, even though Consitex’s goods are primarily targeted for highend consumers, the general public would be aware of the “Ermenegildo Zegna” mark through extensive media exposure, ease of access to the Internet, overseas travel and spillover advertising of the brand worldwide.

In view of dilution not being recognised in Malaysia, the High Court’s decision is correct in principle under a sole assessment of the likelihood of confusion without regard to the fame or well known status of the mark. Nonetheless, it is arguable that the close visual and phonetic resemblance of the marks and use over identical goods should have weighed more heavily in favour of the plaintiff.

2. McCurry Restaurant (KL) Sdn Bhd v. McDonald’s Corporation (Court of Appeal - April 2009)

Brief facts

The plaintiff, McDonald’s, brought a suit in the High Court against McCurry Restaurant for passing off of its well-known prefix “Mc” in connection with food products and services.

McDonald’s, the well-known fast food giant with over 30,000 outlets around the world and having opened its first restaurant in Malaysia in 1982, claimed that it had created the prefix “Mc” as a source/trade identifier for its goods and services through consistent and extensive use of the same at all levels of the business.

Based on the foregoing, McDonald’s asserted that the use of the same prefix by McCurry Restaurant, as well as the combination of red and white on its signage, would inevitably misrepresent, deceive and confuse the public into the false belief that McCurry Restaurant was somehow associated with McDonald’s. Following the extensive publicity undertaken worldwide by McDonald’s for the “Mc” prefix, it claimed that McCurry Restaurant had knowingly intended to appropriate its goodwill, reputation and commercial advantage through a false trade association.

In its defense, McCurry Restaurant denied McDonald’s monopoly over the prefix “Mc” and asserted that the similarities between the marks were to be considered as a whole (i.e. “McCurry” and “McDonald’s”), which did not create confusion. Moreover, McCurry Restaurant was engaged in a completely different range of food and drinks distinct from fast food, serving mainly typical Malaysian or Indian cuisine. In any case, the “McCurry” trade mark was created based on the abbreviation of “Malaysian Chicken Curry” and thus it was never the intention of McCurry Restaurant to misrepresent or ride on McDonald’s goodwill and reputation.

High Court’s Decision (September 2006)

The High Court agreed that McDonald’s had acquired immense goodwill and reputation from its extensive and consistent use of the prefix “Mc” and the colours red and white, which had become well known worldwide. Accordingly, when “Mc” is used in conjunction with a food item, the first impression is an association with McDonald’s. On this basis, the High Court held that McCurry Restaurant’s use of the same prefix amounted to a misrepresentation and if allowed to continue, would result in the loss of exclusivity of McDonald’s prefix “Mc”.

In addition, the High Court also held that there was an extended form of passing off, which results from the erosion to the distinctiveness of a brand name which occurs by reason of its degeneration into common use as a generic term that is not dependent on the likelihood of confusion. As such, the use of the prefix “Mc” by McCurry Restaurant would certainly erode the exclusivity of McDonald’s over the same.

Court of Appeal’s Decision (April 2009)

In reversing the High Court’s decision, the Court of Appeal held that there was no evidence to show that McCurry Restaurant was passing off McDonald’s business as its own. The judge had erred in holding that McDonald’s had a monopoly in the use of the prefix “Mc” and based on the totality of the evidence, reasonable persons would not associate the business of McCurry Restaurant with McDonald’s.

The following factors were considered in favor of McCurry Restaurant:

• McDonald’s trade mark as a whole consisted not only of the prefix “Mc” but also the distinctive golden arched ‘M’. In contrast, McCurry Restaurant’s signboard carried the words ‘Restoran McCurry’ in white and grey lettering against a red background with a picture of a chicken giving a thumbs up and the words ‘Malaysian Chicken Curry’.

• McCurry Restaurant’s representation of its business was of a style, getup and cuisine distinctly different from McDonald’s as none of its food items carried the prefix “Mc”, unlike the items sold by McDonald’s.

• The type of customers who patronised each restaurant was different: adults and senior citizens for McCurry Restaurant and children for McDonald’s.

Following the Court of Appeal’s assessment of the above, it held that there was no passing off by McCurry Restaurant in its use of the prefix “Mc”.

Commentary

The Court of Appeal’s decision is in tandem with that of the High Court in the case of the “Emmer Zecna” trade mark above, wherein a proprietor cannot claim passing off by reason of its monopoly, fame and well known status of a particular mark. Rather, based on the traditional assessment of passing off, one must look at all of the surrounding circumstances and consider if there is a likelihood of confusion.

In view that McCurry Restaurant had used the prefix “Mc” on its signage together with the words ‘Malaysian Chicken Curry’ and engaged in a different food business, a reasonable person would be unlikely to assume a commercial association with McDonald’s, although use thereof may somehow remind consumers of McDonald’s. Essentially, there is no confusion as to source but it may result in negative association and/or an erosion of the exclusivity of the distinctiveness of the prefix “Mc” in connection with McDonald’s.

It is to be noted that the High Court had applied the concept of dilution in favour of McDonald’s under the heading of an extended passing off, which was rightly put forward by McCurry Restaurant as non-existent in Malaysia.

The Malaysian Trade Marks Act 1976 is currently being reviewed for amendments and it thus remains to be seen if the cases above would spur a consideration for the inclusion of an anti-dilution right to extend the scope of protection for well known trade marks in Malaysia.

This article is one of several that appear in Asia Pacific Intellectual Property Client Updates, June 2009.

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Protection of Well Known Trade Marks

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