WELL ESTABLISHED FIRST-USE TRIUMPHS OVER REGISTERED OWNER OF TRADEMARK

In the case of Wei Her Pte Ltd v Ooi Teik Seng (also known as 'Nelson Ooi') & Anor, the High Court delved into laws surrounding common law proprietor trademark rights, trademark infringement and passing off.

Brief facts

The Plaintiff, a Singaporean company, was appointed as the exclusive distributor of TORETOMAN hair tonics in Malaysia by a Japanese company, Safety Co Ltd and they had been distributing the same in Malaysia and Singapore for over 30 years. The Plaintiff subsequently registered the trademark "TORETOMAN" in Malaysia in Class 3 for non-medical cosmetics.

The Plaintiff later resigned as Safety Co Ltd’s distributor.

Disputes arose when a Malaysian citizen, the 1st Defendant, acquired a company that distributed the Plaintiff's products. Subsequently, the 1st Defendant was appointed by Safety Co Ltd as its distributor to distribute the TORETOMAN hair tonics in Malaysia after the Plaintiff resigned as the distributor. The Plaintiff contends that the Defendants infringed their trademark rights by distributing the TORETOMAN hair tonics without their permission and consent, causing damage to their goodwill.

On the other hand, the Defendants claimed the Plaintiff is merely a distributor, and is not the rightful bona fide proprietor of the trademark. Therefore, the Defendants argued that that the Plaintiff's trademark registration of the TORETOMAN trademark was fraudulently obtained and filed a counter-claim to invalidate the same.

High Court Decision

While the registration of the TORETOMAN trademark in the name of the Plaintiff served as prima facie evidence of ownership as per Section 52(a) Trade Marks Act 2019 (“TMA 2019”), this could be rebutted under certain conditions, which the Defendant successfully did.

Particularly, the Court agreed with the Defendants that Safety Co Ltd was the first user of the TORETOMAN trademark in Malaysia. Therefore, Safety Co Ltd was the rightful bona fide and common law proprietor of the TORETOMAN trademark, supported by various agreements and evidence provided. This ruling was made despite the fact that the Plaintiff was the registered owner of the TORETOMAN trademarks. In fact, the Plaintiff's actions in registering the TORETOMAN trademark while acknowledging that Safety Co Ltd is the owner of the TORETOMAN trademark in the agreement with Safety Co Ltd were deemed fraudulent.

Consequently, the Defendants' counter-claim to invalidate the trademark registration of TORETOMAN was upheld.

These findings, coupled with the Plaintiff’s failure to prove the elements constituting trademark infringement under S54 of the TMA 2019, resulted in the dismissal of the Plaintiff's claim for trademark infringement against the Defendants. Similarly, the Plaintiff’s claim of passing off was dismissed based on the same grounds.

Comments

This decision emphasizes the importance of meticulously drafted clauses that delineate the ownership of intellectual property (IP) rights in a distribution agreement or a similar agreement. These clauses can prove invaluable in resolving disputes over trademark ownership.

This case also highlights the principle that the first user of a trademark retains common law proprietorship rights, even if registration is subsequently obtained by another party. Nevertheless, it remains advisable to register your IP rights, as this provides a more effective means of proving ownership and helps prevent unnecessary protracted litigation.

It serves as a reminder for businesses to conduct thorough due diligence and seek legal advice before registering any IP rights. Doing so can help avoid wasted resources and time, as well as prevent potential invalidation of your IP rights even after its registration.