You Snooze, You Lose: Oatly AB v Pahang Pharmacy Sdn Bhd

By Kavinarasi Thavanendran

Budding business owners know that registering their trademark is an essential move in order to protect their brand. But they shouldn’t get complacent, because nothing is permanent! In the case of Oatly AB v Pahang Pharmacy Sdn Bhd (2022), the premise is simple: Use it or lose it.

Background

Oatly Group AB (the Plaintiff) is a Swedish company manufacturing oat-based alternatives to dairy products. Between 2019 and 2020, they applied to register seven of their “OATLY” trademarks in Malaysia as part of their expansion into this jurisdiction. However, the applications were denied, due to similar marks already existing under a different company, namely Pahang Pharmacy Sdn Bhd (the Defendant). The Defendant had three trademarks registered for their brand, “OATLEY.”

Nevertheless, registered trademarks are not necessarily permanent. It is important to note that trademarks that have not been in use for an uninterrupted period of three years can be revoked if there are no proper reasons for non-use. Oatly AB set off to prove just that.

The Three-Stage Inquiry Process

While their goal may be a clear point on the horizon, the journey towards it was a bit trickier. The Plaintiff faced three challenging hurdles on their path:

Stage 1: Is the Plaintiff an aggrieved person?

In order to bring the case to court, the Plaintiff must prove that they have faced sufficient harm to their legal rights. Oatly AB’s entire problem lay in three of Pahang Pharmacy’s trademarks. In this instance, they successfully managed to prove that they were an aggrieved party with respect to two out of the three marks. The last mark did not pose a threat to the Plaintiff because it was registered under a different class of goods.

Stage 2: How to prove there was a three-year period of non-use?

Above all else, they needed evidence. Cold, hard facts that proved Pahang Pharmacy’s “OATLEY” products have not been in circulation. They set about gathering this data through a two-pronged strategy:

a) Investigation Report

The investigation consisted of a series of interviews with key stakeholders. These included the Defendant’s Area Sales Manager and employees from 20 different retail outlets. The results of the investigation found that all but one interviewee had heard of OATLEY – a supervisor at a pharmacy in Sungai Buloh, who, upon checking the store’s computer system, discovered that the products were sold in the store before, but had been discontinued for up to four years.

b) Market Survey

A survey of over 300 businesses and retail stores found that none had Pahang Pharmacy’s “OATLEY” products on their shelves. Employees and local customers at these stores were also asked a series of questions to gauge their familiarity with the “OATLEY” mark. Again, only one person managed to recall the product, a pharmacist with over 12 years of working experience.

As demonstrated, the general consensus was that the majority of people had not heard of the “OATLEY” brand at all.

Although the Defendant attempted to prove that the evidence presented was not conclusive, they failed to do so convincingly, which led the Court to believe that the findings were valid. Oatly AB had successfully established a prima facie case of non-use.

Stage 3: Can the Defendant prove them wrong?

In short, no. Pahang Pharmacy’s downfall was a result of their attempt to prove the use of the trademark by adducing evidence solely from the three-year period after its initial registration in 2013.

An important point of contention, in this case, is the definition of “three-year period of non-use.” Section 46(1) of the Trademarks Act 2019 (“TMA 2019”) cites:

The registration of a trademark may be revoked by the Court on an application by an aggrieved person on any of the grounds as follows:

where within a period of three years following the date of issuance of the notification of registration, the trademark has not been put to use in good faith in Malaysia, by the registered proprietor or with his consent, in relation to the goods or services for which the trademark is registered, and there are no proper reasons for non-use;
where the use of the goods or services under paragraph (a) has been suspended for an uninterrupted period of three years, and there are no proper reasons for non-use;

The Defendant’s argument hinged on ground (a), where two main points are claimed: The first is that the mark need only be used continuously for a period of 3 years from the date of notification of registration. The second is that the period of non-use stipulated in ground (b) is, in fact, referring to the same period stated in ground (a).

The basis of this argument was promptly dismissed in court. By this logic, all trademarks will become eternally permanent after a mere 3 years of use. The underlying intention of this clause is to ensure registered marks do not fall into disuse in the first place.

The Defendant based their entire case on a false narrative. They produced hundreds of invoices dated between 2013 and 2016, and pulled up newspaper advertisements from 2014, along with photographs of their products on display and taste-sampling sessions. Unfortunately, all they managed to do was shoot themselves in the foot, because if Pahang Pharmacy had no issue producing hundreds of invoices in the three years after the trademark’s registration, surely they would be able to provide invoices for later years as well? If the photographs taken were indeed recent, surely the salespeople and customers would be wearing face masks during the pandemic?

This evidence – unearthed by the Defendant themself – led the Court to believe that the “OATLEY” trademark had not been in use since the latest invoice date, which was the 25 February 2016. This would mean 6 years of non-use, which is still contrary to Section 46(1) of the TMA 2019.

Conclusion

Pahang Pharmacy’s last-ditch attempt at salvaging their case was to show that they had a proper reason for non-use, i.e., the pandemic, which failed to convince the Court as well. Ultimately, the Court concluded non-use, and the two trademarks in dispute were revoked.

This case goes to show that one should never feel too comfortable in the false sense of security a registered trademark provides. There are non-use provisions in all countries that have trademark laws. With many businesses venturing beyond borders, business owners need to be cautious of these provisions. Filing the mark to claim rights is not sufficient. Using the mark is crucial as well.

Remember, if you snooze, you lose!

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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.