Yellow elephants were trampled on, and chucked out of the trademark register – Find out why….

by Geetha Kandiah

Trademark ownership must be done in a bona fide manner. Otherwise, the registered trademark can be expunged from the register. In the case of Lim Teck Lee (Malaysia) Sdn Bhd v Longcane Industries Sdn Bhd, the Plaintiff, Lim Teck Lee (Malaysia) Sdn Bhd applied, amongst others, to expunge two trademark registrations in the name of the Defendant, Longcane Industries Sdn Bhd (“Defendant’s registrations”). The registrations in contention, both of which were for a device mark “Yellow Elephant”, were in Class 21 (for rubber gloves for domestic and household use, etc) and Class 9 (for rubber gloves for industrial purposes for protection against injury and accident, etc), and were registered in 2006 and 2009 respectively.

Defendant’s Trademark Registrations in Classes 9 and 21

The Plaintiff claimed that it had begun using a “Yellow Elephant” trademark “The Plaintiff’s trademark”) in the early 1990s for rubber gloves, in particular, black industrial rubber gloves. The Plaintiff stated that it had made preparations to register the Plaintiff’s trademark, but was required to put the plan on hold when the General Manager of the Plaintiff’s Penang branch passed away. In addition, the Plaintiff also stated that it had commissioned various contract manufacturers, including the Defendant and a company called Rivertech Entrepreneurs (“Rivertech”), to supply and produce goods under the Plaintiff’s trademark. However, the Plaintiff was unaware of the Defendant’s registrations as the Defendant did not obtain consent from the Plaintiff to register the same. The Plaintiff alleged that it had only found out about the Defendant’s registrations when it was informed of a civil suit filed by the Defendant against, among others, one of the Plaintiff’s contract manufacturer’s associate companies as well as suppliers of the Plaintiff’s goods, for infringement of the Defendant’s registrations. Subsequently, the Plaintiff’s solicitors sent a written letter of demand to the Defendant in 2016, but the Plaintiff’s demands were not addressed.

The Defendant however argued, amongst others, that it had no knowledge of the Plaintiff’s trademark, and denied that the Plaintiff was aggrieved by the Defendant’s registrations. The Defendant also asserted that as the Defendant’s registrations were registered for more than 7 years, by virtue of law, the Defendant’s registrations were valid in all respects. Further, one of the Defendant’s directors stated that he was instrumental in setting up the Defendant, and had also set up Rivertech, but denied that the Defendant and Rivertech were contract manufacturers of the Plaintiff’s goods.

Upon consideration, the High Court found that the Plaintiff was the 1^st user of the “Yellow Elephant” trademark in Malaysia, on the basis that the Plaintiff had adduced evidence showing usage of the Plaintiff’s trademark in the course of trade since 1991. In addition, the Plaintiff also provided an invoice issued in the year 2015 from the Defendant to the Plaintiff, which proved that the Plaintiff had commissioned the Defendant to manufacture the Plaintiff’s goods under the Plaintiff’s mark. Furthermore, as the Defendant was incorporated in 1995, it was clear that the Plaintiff had begun using the Plaintiff’s mark prior to the incorporation of the Defendant. The Plaintiff was therefore an aggrieved person, as the Plaintiff’s common law ownership of the Plaintiff’s marks had been adversely affected by the Defendant’s registrations. This position is even more pronounced as both the Plaintiff’s mark and the Defendant’s registrations are identical in nature, making it highly likely for members of the public to be confused or deceived into thinking that the Defendant’s goods bearing the Defendant’s registrations originate from or are associated with the Plaintiff.

The High Court also looked into whether the Defendant’s corporate veil should be lifted in order to ascertain the true factual position of the Defendant. Seeing as the Defendant was aware of the Plaintiff’s prior ownership and rights in the Plaintiff’s mark, the Court was convinced that the Defendant’s registrations had been obtained by fraud, which satisfied the first condition to lift the Defendant’s corporate veil. The second and final condition for lifting the corporate veil, i.e. that it is in the interests of justice, was also deemed to have been satisfied as the Plaintiff was able to adduce evidence showing that it had commissioned Rivertech in 2006 and 2007 to supply the Plaintiff’s goods under the Plaintiff’s mark. As such, it was essential in the interests of justice to ascertain whether the Defendant had actual knowledge of the Plaintiff’s usage of the Plaintiff’s mark prior to the application for registration of the Defendant’s registrations. The Court allowed the lifting of the Defendant’s corporate veil, and held that the two individuals who were the only shareholders and directors of the Defendant were proprietors of Rivertech prior to the application for registration of the Defendant’s registrations. As such, they were the alter egos, controllers and the directing mind and will of the Defendant. This also proved that the Defendant had defrauded the Registrar of Trademarks when it applied for registration of the Defendant’s registrations.

In view of the above, in 2017, the High Court ordered for, amongst others, the Defendant’s registrations to be expunged from the Trademark Register with costs to be paid to the Plaintiff. The Court did concede that it had a discretion to substitute the Plaintiff’s name as the proprietor of the Defendant’s registrations in the Trademark Register, but declined to exercise its discretion, as it viewed that the Registrar of Trademarks has a statutory power conferred by Parliament to accept or refuse trademarks, and the court should not usurp such powers.

Interestingly, a search done on 8 January 2018 on the Malaysian Trademark Database reveals that these marks still remain in the name of the Defendants –why, we wonder…..was the Trademark Office not informed of the High Court’s decision?

Author
Recent Posts

KASS

Communications at KASS International Sdn Bhd

KASS International is an established Intellectual Property Firm which offers a one-stop solution for IP matters in Malaysia, South East Asia, and worldwide.