Ever wondered what kind of damages you could claim if someone infringes on your trademark? Well, the Malaysian High Court recently gave us an eye-opening example.
Perodua Awarded With a Whopping RM500,000.00 for Goodwill And Reputation Loss
Just last week, The Edge Malaysia reported that the High Court in Kuala Lumpur ordered a trademark infringer to pay a whopping RM500,000 to Perodua! Why? For damaging their goodwill and reputation. Let’s dive into the details!
In 2019, the enforcement division of the Malaysian Ministry of Domestic Trade and Cost of Living raided the defendant’s premises. What did they find? A treasure trove of counterfeit Perodua-branded goods—empty bottles, engine oil, lubricants—you name it! The defendant was charged under the Trade Descriptions Act 2011 (TDA), which resulted in a fine of RM52,920. But that was just the start.
On top of the criminal case, Perodua Otomobil Kedua Sdn Bhd and Perodua Sales Sdn Bhd (“Perodua”) filed a civil lawsuit for trademark infringement and passing off. The result? Both parties reached a consent judgment. The defendant agreed to stop infringing on Perodua’s trademarks, and as part of the deal, published a full apology in three newspapers.
But that’s not all. The Court found that Perodua suffered a loss of profit amounting to RM16,777.91, and at the same time, awarded a sum of RM500,000.00 to Perodua for goodwill and reputation loss, which the learned Judge surmised that it was a fair and reasonable amount. In addition, Perodua was also awarded RM15,000.00 in costs.
We find that this case sets a very good example in deterring infringement of trademark.
When all was said and done, the infringer was slapped with
RM52,920.00 of fine
RM500,000.00 of damages
RM15,000.00 in legal costs
Criminal and Civil Action: A Double Whammy
If you thought facing one lawsuit was bad, think again. In Malaysia, trademark infringement can lead to both criminal and civil actions. That’s what happened to the defendant in this case.
As we can see from the above, the defendant was first charged, sentenced and fined under TDA. If the court had wanted to, they could have been sentenced to jail time too!
Then came the civil suit, which resulted in the RM500,000 damages award and a legal injunction preventing further infringement.
What are the criminal liabilities if you infringe someone’s trademark in Malaysia?
If you’re caught counterfeiting a registered trademark, the penalties can be severe. Section 99(1) of the Malaysian Trademarks Act 2019 (“TMA”) provides that:-
(1) Any person who counterfeits a registered trademark by-
(a) Making a sign identical with or similar to a registered trademark with the intent to deceive; or
(b) Falsifying a genuine registered trademark, whether by alteration, addition, effacement, partial removal or otherwise,
without the consent of the registered proprietor of the trademark commits an offence and shall, on conviction, be liable to a fine not exceeding one million ringgit or to imprisonment for a term not exceeding five years or to both.
The above is only the provisions under the TMA, which covers registered trademark.
However, In the Perodua case, the defendant was charged under the Trade Descriptions Act (TDA). While it was not reported exactly which provision he was charged, Section 8(2) of the TDA does provide that:-
Section 8(2) of TDA - Any person who –
(a) Applies a false trade description to any goods as if the goods were subject to any rights relating to registered trade mark;
(b) Supplies or offers to supply any goods to which a false trade description is applied as if the goods were subject to any rights relating to registered trade mark; or
(c) Exposes for supply or has in his possession, custody or control for supply any goods to which a false trade description is applied,
Commits an offence and shall, on conviction, be liable –
(A) If that person is a body corporate, to a fine not exceeding fifteen thousand ringgit for each goods bearing the false trade description, and for a second or subsequence offence, to a fine not exceeding thirty thousand ringgit for each goods bearing the false trade description; or
(B) If that person is not a body corporate, to a fine not exceeding ten thousand ringgit for each goods bearing the false trade description or to imprisonment for a term not exceeding three years or to both, and for a second or subsequence offence, to a fine not exceeding twenty thousand ringgit for each goods bearing the false trade description, or to imprisonment for a term not exceeding five years or to both
As you can see, infringing someone’s trademark in Malaysia comes with serious consequences. Not only can you be fined, but you could also face jail time—sometimes even both!
What About Civil Liability for Trademark Infringement in Malaysia?
In civil cases, it’s quite common for the plaintiff to sue the defendant for both trademark infringement and passing off at the same time. But what’s the difference between the two? Let’s break it down and explore the key distinctions.
What is Trademark Infringement?
Simply put, if you have a registered trademark and someone uses it without your permission, that's trademark infringement. However, the law goes deeper than that, outlining specific scenarios and conditions under which infringement occurs. Let’s take a closer look at the legal provisions.
Section 54 of the TMA provides for Acts Amounting to Infringement of Registered Trademark as follows:-
(1) A person infringes a registered trademark if he uses a sign which is identical with the trademark in relation to goods or services which are identical with those for which it is registered, in the course of trade, without the consent of the registered proprietor.
(2) A person infringes a registered trademark if, without the consent of the proprietor of the trademark, he uses in the course of trade a sign ------
(a) That is identical with the trademark and is used in relation to goods or services similar to those for which the trademark is registered; or
(b) That is similar to the trademark and is used in relation to goods or services identical with or similar to those for which the trademark is registered,
resulting in the likelihood of confusion on the part of the public.
While the wording in Section 54(1) and 54(2) may seem similar, they each target different types of trademark infringement.
Section 54(1) addresses clear-cut cases—where both the trademark and the goods or services are identical. This is the most straightforward type of infringement, and there’s little room for debate.
Section 54(2), however, tackles more nuanced situations. Here, the infringing sign or goods might be similar, but not identical to the registered trademark.
In these cases, the plaintiff must go a step further and prove that the similarity leads to confusion among the public. This extra element of confusion is crucial for establishing infringement under this provision.
Importantly, a trademark owner can only use Section 54 if their trademark is registered.
But if your trademark isn’t registered, don’t worry—it’s not the end of the road! You can still rely on the common law principle of passing off to protect your brand. Let’s dive into how that works.
What is Passing Off?
Passing off is a powerful common law right that allows you to protect your brand, even if you don’t have a registered trademark. It helps prevent others from misrepresenting their goods or services as yours, especially when they’re using your trademark to deceive customers.
However, to successfully bring a passing off claim, there are specific criteria that need to be met. It's not as straightforward as trademark infringement, but it’s a valuable tool when your trademark isn't registered. Let’s take a look at the key elements required to establish a passing off case.
What Are the Elements to Establish Passing Off?
To succeed in a passing off claim, the plaintiff must prove three critical elements:
Goodwill or Reputation
The plaintiff must demonstrate that their trademark or brand has an established goodwill or reputation attached to their goods or services. Essentially, the brand should be recognized by the public as representing the plaintiff’s business.
Misrepresentation
The plaintiff must show that the infringer misrepresented their goods or services as being associated with the plaintiff’s brand. This misrepresentation can lead consumers to mistakenly believe they are purchasing the plaintiff's products, causing confusion.
Loss or Damage
Finally, the plaintiff must prove that they suffered a loss as a result of the infringer’s misrepresentation. This could be in the form of financial loss or damage to the plaintiff’s brand reputation.
Source: Skyworld Holdings Sdn Bhd & Anors v Skyworld Development Sdn Bhd & Anor (Civil Appeal No. 02(f)-50-09/2020(w)
In the Perodua case, while the details weren’t fully reported, it’s reasonable to infer that Perodua successfully established their passing off claim. The court awarded them RM500,000 for goodwill and reputational loss, indicating that Perodua was able to prove their brand’s goodwill and the damage caused by the infringer’s misrepresentation. This significant award shows the weight the court places on protecting a brand’s reputation, even in cases of passing off.
Of course, not every passing off case will result in damages as high as RM500,000. The amount awarded depends largely on the value of the trademark and the extent of the harm caused to the brand's reputation. Each case is unique, and the court will assess the specific circumstances, including the goodwill associated with the brand and the impact of the misrepresentation, before deciding on the appropriate compensation.
What Are the Differences Between Trademark Infringement and Passing Off?
You might be wondering: “If I can rely on passing off, do I really need to register my trademark?” The answer is YES!
Here’s why:
Trademark infringement is easier to prove in court. All you need is your registration certificate to show ownership.
With passing off, you’ll have to prove your goodwill, reputation, and more, making it a longer and more complicated process.
If someone registers your trademark before you, it could be a nightmare to claim ownership!
Conclusion: Don’t Take the Risk!
The Perodua case shows us the dangers of trademark infringement. The defendant faced almost every legal consequence imaginable—except jail time!
The lesson? Create your own brand, protect it, and avoid the costly mistakes of infringing someone else’s trademark.
Someone infringes your trademark, take action now!
Looking to register and protect your brand like Perodua? Don't leave your intellectual property at risk—contact us today to safeguard your brand’s identity and reputation!
Written by,
Registered Trademark, Patent and Design Agent
LL.B (HONS), CLP
Advocate & Solicitor (Non-Practising)
Disclaimer: The above are meant for general information purposes and do not constitute legal advice. Please do not hesitate to contact us if we could be of assistance!
© 2024 by IP Gennesis Sdn Bhd.
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