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Lam Soon fails to remove NATURELL mark on grounds of non-use - International Law Office

International Law Office

Intellectual Property - Malaysia

Lam Soon fails to remove NATURELL mark on grounds of non-use

July 12 2010

In Lam Soon Edible Oils Sdn Bhd v Hup Seng Perusahaan Makanan (M) Sdn Bhd (KLHC Suit No D5 (IP)-25-7-2009) the applicant had filed rectification proceedings to expunge the respondent's Trademark Registration Number 97012526 for NATURELL in Class 30 on the grounds of non-use for three years up until one month before the proceedings were instituted. This decision is important as it is the first time that a high court has dealt with several issues relating to non-use.

The applicant alleged that it was aggrieved because the NATURELL mark was blocking its own Trademark Application Number 07009502 for NATUREL in Class 30. The respondent argued that the applicant was not a 'person aggrieved' under Section 46(1) of the Trademarks Act 1976, as there was no likelihood of any practical damage being caused to the applicant if the NATURELL mark was to remain on the register, since the applicant had not been using the NATUREL mark for any goods in Class 30. The respondent referred to a recent decision of the Federal Court (the highest appellate court in Malaysia) in McLaren International Limited v Lim Yat Meen ([2009] 4 CLJ 749).

The high court agreed with the decision in McLaren that the mere filing of an application does not confer on the applicant the necessary standing to file rectification proceedings. However, the court went on to distinguish between the facts of McLaren and those of the present case. The court held that the applicant had registered the NATUREL mark in Class 29 and the applicant had made substantial use of this mark for goods under Class 29, which had resulted in goodwill attaching to the mark for goods under Class 29. With the intention of marketing different products under its NATUREL mark, the applicant had embarked on registering its mark in Class 30, which the court had accepted as a preparatory step towards using the NATUREL mark in relation to goods under Class 30. Hence, the high court took the view that the applicant was an aggrieved person.

The respondent also relied on the high court's decision in Industria de Diseno Textil SA v Edition Concept Sdn Bhd ([2005] 3 MLJ 347) and argued that for the purposes of rectification, the three-year period should run from the date of actual registration, not from the date of application (September 4 1997). As stated on the respondent's certificate of registration for its NATURELL mark, the certificate was issued by the registrar of trademarks on September 18 2007; therefore, the application for rectification was fundamentally defective, since the non-use period under Section 46(1)(b) of the act commenced only upon issuance of the certificate of registration. The respondent argued that the cause of action for rectification proceedings based on the three-year period of non-use would begin at the earliest only on September 18 2010 or September 19 2010. However, the court did not accept the respondent's argument and held that since the present action was commenced on April 16 2009, the relevant non-use period was from March 16 2006 until March 16 2009.

The applicant relied on two reports, compiled by market research company AC Nielsen Malaysia and Nielsen Company Malaysia respectively, to show that there had been no use of the NATURELL mark for a continuous period of three years up until one month before commencement of this action. The respondent objected to these reports on the grounds that the applicant had failed to show that the survey evidence had complied with the minimum criteria governing admissibility of such evidence and referred to the Court of Appeal decision in Lim Yew Sing v Hummel International Sports & Leisure A/S ([1996] 3 MLJ 7), which held that survey evidence had to meet certain minimum criteria as laid down in Imperial Group PLC v Philip Morris Limited ([1984] RPC 293).

The court agreed with the respondent that although the survey evidence in Lim Yew Sing related to establishing confusion in the market, the minimum criteria should be applicable to survey evidence that purportedly shows non-use of a mark under Section 46(1)(b) of the act. The court held that the two reports clearly did not meet the minimum criteria set out in Imperial Group, and that they fell short of establishing a prima facie case of non-use of the respondent's NATURELL mark. The court reasoned as follows:

  • The period of non-use between February and March 16 2009 was not covered by the first report. The letter from AC Nielsen Malaysia dated March 20 2009 stated that there was no use of the NATURELL mark in the "Biscuit category" between February/March 2006 and December 2008/January 2009. These dates showed that the report allegedly compiled by AC Nielsen Malaysia was not reflective of the factual position or state of affairs at the time of commencement of this proceeding. In Lim Yew Sing the court held: "Generally, let it be said that if a survey is to be of any use, it must fairly reflect the factual position at the time the application to expunge is made."
  • The second report was also fundamentally flawed as it did not cover the whole of Malaysia. The report was not statistically significant as it did not represent a cross-section of the public in Malaysia, focusing rather on peninsular Malaysia only.
  • There was no evidence that the data compiled by Nielsen Company Malaysia and/or AC Nielsen Malaysia had been accepted as an authoritative source of information or data by the court in Malaysia.
  • There was no attempt by the applicant to introduce the background and brief credentials of Nielsen Company Malaysia and AC Nielsen Malaysia.
  • There was no evidence of how the report was derived or from where the data was collected.
  • There was no evidence of the number, names and locations of supermarkets, hypermarkets, retail outlets, convenience stores and provision stores from which the data was collected.
  • There was no evidence that the alleged data was collated from outlets which constitute a cross-section of the relevant trade in Malaysia.
  • The data appeared to be coded for computer input; however, the coding instructions were not disclosed.

As such, the court held that the applicant had failed to establish a prima facie case of non-use in good faith of the NATURELL mark in Malaysia. The court agreed with the respondent that the onus was on the applicant to establish a prima facie case of non-use of the NATUREL mark before the evidential burden would shift to the respondent to adduce evidence of such use. In such circumstances the application should be dismissed without requiring the respondent to adduce evidence of use.

In any event, the court also held that the respondent had adduced sufficient evidence of use of the NATURELL mark in good faith during the relevant three-year period, insofar as the respondent had undertaken active and substantial steps to use the NATURELL mark before March 16 2009. The court took into account the fact that the respondent had been conducting research and development when concluding that the respondent had not abandoned the NATURELL mark. The court also held that the fact that the respondent's biscuit had been awarded the Monde Selection Gold Medal and had obtained halal certification constituted evidence of use.

For further information on this topic please contact Michael Soo or Olivia Khor at Shook Lin & Bok Kuala Lumpur by telephone (+60 3 2031 1788), fax (+60 3 2031 1775) or email (michaelsoo@shooklin.com.my or oliviakhor@shooklin.com.my).

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