25 February 2020

The new Trademarks Act 2019 (“TMA 2019”) came into force on 27 December 2019. Various changes marked its debut to the trademark landscape in Malaysia. Among others, it expanded the scope of trademark infringement, narrowed the utility of priority dates to searches and sought to regulate the competing rights between different statutory IP rights such as the distant cousins, copyright and industrial designs. The struggle for supremacy between the rights made its mark in the Japanese grain case of Hakubaku Co. Ltd. v Asiamega Food Manufacturers Sdn. Bhd. [2018] MLJU 1820. Here the conflict between trademark rights arising from registration or common law established on prior use was pitted against copyright ownership of the same marks. To read our commentary on the Hakubaku case, please see:

InsiderTAPS (22 July 2019)

The elusive provision giving priority to an existing prior right other than the common law right of passing off is housed in the new relative grounds of refusal of registration in section 24(4). Section 24(4) was introduced as one of the relative grounds for refusing registration of a trademark where its use in Malaysia is prevented by virtue of any rule of law protecting an unregistered trademark or other sign used in the course of trade including under the law of passing off or by virtue of an earlier right such as a right under the law of copyright or industrial designs. This provision seeks to clarify other IP rights that have priority relative to a trademark right being asserted by an applicant for registration. Essentially, it seeks to prohibit the registration of a trademark and serves as a ground for invalidation, if its use is prevented in any of the two circumstances, one by virtue of any rule of law protecting an unregistered trademark or other sign used in the course of trade including under the law of passing off, and the other by virtue of an earlier right other than earlier trademarks such as the law of copyright or industrial designs. Section 24(4) of the TMA 2019 explicitly recognizes the existence of other types of IP rights apart from unregistered trademark rights under common law that may prevent a trademark from being registered.

In Hakubaku, the court found that the plaintiff was the first user or common law owner of the “HAKUBAKU & device” mark by virtue of its actual use before the defendant’s mark was registered. The plaintiff also successfully established copyright ownership in three “HAKUBAKU & device” variation marks. Examined in the context of section 24(4), the defendant’s mark would remain invalid under the new Act on the ground of an earlier right under section 24(4) that the plaintiff is the first user and common law owner of the mark and copyright owner under the Copyright Act 1987. No dissonance is apparent here.

It would seem however that the TMA 2019 has not reconciled the ambiguity ensuing from the court’s finding that the defendant’s mark may not be expunged on the ground that the defendant committed the tort of passing off and copyright infringement in the face of a presumption that the defendant is first user or common law owner as the defendant’s use of the trademark was based on its right in registration. That the first part of the finding flies in the face of long-standing case law, the new Act salves the effect by expressly recognizing that the rights of a first user acquired under common law prevails over trademark registration rights. However, whether such common law rights would also prevail over a competing copyright claim remains to be seen. One resolution may be to engage the honest concurrent user mechanism to acknowledge that the rights stand on equal footing so long as no bad faith or illegality exists. Until then, the squaring continues.

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Lee Lin Li
Partner
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linli.lee@taypartners.com.my

Chong Kah Yee
Associate
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kahyee.chong@taypartners.com.my