MALAYSIA IP CASE UPDATE : IS THE FIRST USER OF A TRADE MARK THE ULTIMATE USER ?

Huan Schen Sdn Bhd v SRAM, LLC [2016] – A Case Summary

Huan Schen Sdn Bhd (“Plaintiff”) filed an originating summons (“OS”) under s 45(1)(a) of the Trade Marks Act 1976 (“TMA”) to expunge 5 trade marks (“Defendant’s TMs”) registered in the Register of Trade Marks (“Register”) under the name of SRAM LLC (“Defendant”). Previously, the Plaintiff had obtained the Registrar’s decision to dismiss the Defendant’s application to oppose the registration of the Plaintiff’s trade mark because the Defendant had failed to establish the use of its trade marks in Malaysia before the date of Plaintiff’s application to register its trade mark. Upon successful registration of the Plaintiff’s trade mark, the Plaintiff alleged that the Defendant’s TMs were entries wrongfully made and remaining in the Register and therefore, applied to expunge and remove the Defendant’s TM from the Register. The Court considered the following issues:

Can the Plaintiff file this OS?

The Court held that the Plaintiff ‘s failure to oppose the Defendant’s TM under s 28(1) TMA and reg. 37(a) TMR and temporary cessation of the use of its trade mark do not estop or bar the Plaintiff from filing the OS. Registration of a trade mark is not a defence to an expungement application under s 45(1)(a) of TMA when the trade mark had been wrongfully entered in the Register. Furthermore, the Registrar’s decision is not final and conclusive, hence it cannot attract the application of the estoppel principle against the Plaintiff and the Plaintiff cannot rely on the Registrar’s dismissal of the Defendant’s opposition to support this OS.

Who is the first user and common law proprietor of “SRAM” mark?

It was held that the Plaintiff had adduced copies of sales invoices and an invoice dated 2nd January 2002, which bore the Plaintiff’s trade mark proved that it was the first user of the “SRAM” mark in the course of trade in Malaysia on 2nd January 2002. The Plaintiff’s subsequent conduct to register its trade mark on 26th December 2003 was relevant to support the fact that the Plaintiff had indeed used its trade mark in the course of trade in Malaysia since 2nd January 2002. The fact that the Plaintiff did not author, create or design the mark, does not affect the Plaintiff’s right as the first user of the mark. The most crucial point was the Defendant had failed to prove first use of the mark on or before 2nd January 2002 in Malaysia, despite the Defendant’s TMs had been registered and used extensively in countries outside Malaysia. The Plaintiff was, therefore, the first user of the “SRAM” mark.

Whether the Plaintiff had successfully challenged the Defendant’s TMs’ conclusive registration under s 37 TMA? If so, does the Court has a discretion not to expunge Defendant’s 1st to 4th Trade Marks under s 45(1)(a) TMA?

The Court held that the Plaintiff had failed to prove the original registration of the Defendant’s 1st to 4th trade marks was obtained by fraud under s 37(a) TMA because the Defendant was the creator of the “SRAM” mark, the Defendant had used upon and in relation to the Defendant’s goods in the course of trade outside Malaysia before or at the time of registration of its trade mark, and the Defendant’s act of opposing the Plaintiff’s application to register the mark. However, the Plaintiff had succeeded to prove under s 37(b) and (c) TMA that the use of Defendant’s 1st to 4th trade marks were likely to deceive or confuse the public because the Defendant’s 1st to 4th trade marks were not distinctive. Hence, the Court held that it had no discretion but rather it was compelled to order for the removal of the Defendant’s 1st to 4th trade marks from the Register in accordance with s. 45(1)(a) TMA based on the grounds for the expungement of a registered trade mark as the Plaintiff had successfully proven under s 37(b) and (c) TMA.

The Court ordered the Registrar to expunge and remove the Defendant’s 1st to 4th trade marks from the Register.

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