3 November, 2017
IN THIS ARTICLE, MICHELLE LOI ANALYSES THE RECENT FEDERAL COURT DECISION ON THE VALUE OF MARKET SURVEYS TO PROVE NON-USE.
The value of a market survey often used by a “person aggrieved” to challenge a registered trade mark on the ground of non-use was assessed by the Federal Court in the recent case ofLiwayway Marketing Corporation v Oishi Group Public Co Ltd. The Federal Court held that compliance with the Whitford Guidelines does not automatically translate a person aggrieved case into one where the prima facie burden of proving non-use has been discharged.
It is clear from the Federal Court decision that fulfilment of the Whitford Guidelines was not enough as that only addressed the form of a market survey report (or in other words, what a market survey report ought to contain). The substantive aspect (discussed below) of the market survey report is equally important as well. It is only when both aspects are fulfilled can a person aggrieved be said to have discharged its prima facie burden of proving non-use.
A registered trade mark is presumed to be prima facie valid. Section 36 of the Trade Marks Act 1976 (“the TMA”) provides that in all legal proceedings relating to a registered trade mark, the fact that a person is registered as proprietor of the trade mark shall be prima facie evidence of the validity of the original registration of the trade mark and of all subsequent assignments and transmissions thereof.
Notwithstanding the presumption of validity under section 36 of the TMA, a person aggrieved by the entry of a trade mark in the Register (or a registered trade mark) may, subject to the provisions of the TMA, commence legal action in court for an order to rectify the trade mark entry in the Register. In the case where a trade mark has been entered in the Register but which has not been used by the registered proprietor in respect of its registered goods, the person aggrieved could consider relying on section 46(1)(b) of the TMA.
The requisites of section 46(1)(b) of the TMA were summarised in the case of USA Pro IP Limited v Montfort Services Sdn Bhd as including:
- the need for the applicant to show that it is an aggrieved person; and
- that there has been no use by the registered proprietor for a continuous period of no less than three years and one month prior to the filing date of the rectification action.
The burden of proving non-use of a registered trade mark on a prima facie basis rests on the person aggrieved, as was previously held in the High Court case of Godrej Sara Lee Ltd v Siah Teong Teck & Anor (No 2), .
In the past, a person aggrieved has been known to produce various means of showing non-use, including resorting to private investigations, and/or market surveys. However, as evident from those past cases, market surveys had been subject to various challenges. For example, as the issue of non-use pertains to non-use in Malaysia, the market survey must inevitably cover the whole of Malaysia.
The following stringent requirements which were laid out by Whitford J in the case of Imperial Group Plc v Philips Morris Ltd & Anor (commonly known as the “Whitford Guidelines”) were adopted with approval by the courts in Malaysia.
- The surveyor’s background and brief credentials must be included in the survey report;
- Instructions given to the surveyors must be clear;
- Who these respondents of the surveys were must be disclosed in the survey report;
- The full names of the respondents;
- The locations where the data had been collected; and
- The methodology of approaching these respondents should be disclosed.
Further, questions that are to be posed to the respondents of the survey must not be leading questions. Answers, both in favour and against the party seeking to rely on the market survey, must also be disclosed.
The Whitford Guidelines were also endorsed by both the High Court and the Court of Appeal inLiwayway Marketing Corporation. That endorsement, however, appeared to be on face value, without giving much regard to the substance or content of the survey report itself. Such manner of endorsement had led to the unfortunate rectification of Liwayway’s trade marks. Dissatisfied, Liwayway procured leave to appeal to the Federal Court.
Facts of the case
The appellant (“Liwayway”) was a company incorporated in the Philippines. It was the registered owner of the trade mark “Oishi” in the beverage-related goods (Class 30) and services (Class 43). Oishi Group Public Co Ltd, on the other hand, was a company incorporated in Thailand. It was also in the food and beverage business.
The respondent (“Oishi Group”) applied for the registration of its trade mark in Class 32 but was rejected by the Malaysian Intellectual Property Office by reason of Liwayway’s earlier Class 30 and Class 43 trade marks in the Register.
On 19 February 2013, Oishi Group subsequently brought a rectification action against Liwayway’s Classes 30 and 43 trade marks on the grounds that, amongst others, Liwayway has not been using its trade marks for the requisite continuous period of three years and one month prior to the filing of the rectification action. In other words, Oishi Group alleged that Liwayway has not used its trade marks in respect of its registered goods and/or services between 19 January 2010 and 19 January 2013.
In support of this allegation, Oishi Group relied on the results of a market survey conducted on 260 outlets including hypermarkets, supermarkets, mini-markets, Chinese medicinal halls, convenience stores, wet markets and wholesalers in three major locations in Malaysia between 11 August 2011 and 22 August 2011.
The decision of the High Court and the Court of Appeal
The High Court found that the market survey report tendered fulfilled the Whitford Guidelines and accepted the survey report as conclusive proof of non-use of the subject registered trade marks. The Court of Appeal affirmed this view.
The decision of the Federal Court
The market survey, as was later found by the Federal Court, was wrought with inadequacies which did not meet the substantive requirements of section 46(1)(b) of the TMA.
The issue as regards the substance of the market survey came before the Federal Court. The relevant question of law that was posed before the Federal Court was:
“ … whether the ‘continuous period of not less than three years’ of s. 46(1)(b) [of the TMA] may be truncated and computed segmentally such that non-use of the registered mark is proved by showing non-use for only a part of the duration of the three years up to one month before the filing of the rectification action.”
The question was prompted based on the acceptance by both the High Court and the Court of Appeal of the relevant survey report in question despite only covering a fraction of the requisite period of purported non-use, that is, between 11 August 2011 and 22 August 2011.
The Federal Court agreed with Liwayway and found that the market survey report did not cover the requisite period from 19 January 2010 to 19 January 2013. From the market survey report, it was clear that the survey had only covered a period of 10 days. The instruction was received on 11 August 2011 and concluded on 22 August 2011. On the basis that the survey report did not address the remainder relevant period after the conclusion of the survey on 22 August 2011 but before 19 January 2013, the Federal Court found the survey inconclusive.
Further, contrary to the High Court and Court of Appeal’s findings, the survey report did not meet the threshold requirements under the Whitford Guidelines. Put another way, Oishi Group was found not to have discharged the burden of proving a prima facie case of non-use of Liwayway’s registered trade marks in respect of its registered goods and/or services.
On this same point, the Federal Court further agreed that Liwayway is not required to adduce evidence proving use of its registered trade marks during that period of time. Accordingly, Liwayway’s appeal was allowed with costs.
The Federal Court reaffirms the difficult task and hurdle that a person aggrieved needs to overcome should it wish to rely on a market survey and its report to prove non-use. In many respects, this is seen as striking a balance between the entitlement and rights of a registered proprietor to enjoy, uninterrupted, the fruits of its trade mark registration and the rights of a person who claims to have been aggrieved by the entry of the trade mark in the Register.
The take away point for the latter would be, rather than asking what an ideal market survey ought to encompass, a person aggrieved should consider, on the facts of its own case, all possible means of proving its case for non-use before proceeding to bring the case to court.
 Section 46(1) of the TMA
  5 CLJ 133
 Imperial Group Plc v Philips Morris Ltd & Anor  RPC 293
 Section 46(1)(b) of the TMA provides:
“Subject to this section and to section 57, the Court … may, on application by a person aggrieved, order a trade mark to be removed from the Register in respect of any of the goods [or services] in respect of which it is registered on the ground that up to one month before the date of the application a continuous period of not less than three years had elapsed during which the trade mark was a registered trade mark and during which there was no use in good faith of the trade mark in relation to those goods or services by the registered proprietor or registered user of the trade mark for the time being.”
  7 CLJ 546
 “For the purpose of s. 46(1) of the TMA 1976, it is common ground that the plaintiff would have to prove and establish two (2) conditions, namely:
(i) that the plaintiff is an aggrieved person; and
(ii) that there has been non-use by the defendant for a continuous period of three years up to one month before the application to cancel the trade mark.”
  7 CLJ 24
 Ramly Ali J (now FCJ) at para  said “case law has suggested that all the applicant for rectification has to prove at the outset is prima facie case of non-use. Once this is done, the burden falls upon the registered proprietor being the 1strespondent (in the present case) to show evidence of use during the material period of time (Trina Trade Mark  RPC 131)”.
 USA Pro IP Ltd v Montfort Services Sdn Bhd & Anor  9 MLJ 258; Philip Morris Brands Sarl v Rothmans Brands Sdn Bhd & Anor  9 MLJ 98
  RPC 293
 See paragraph  of the Federal Court judgment,  5 CLJ 133, at p 142: “ … [the learned JC’s] finding may be gleaned from the following passages of the learned JC’s grounds of judgment:  Premised on the said survey report in exh. P3, I am of the considered opinion that the plaintiff has established a prima facie case of non-use. With regards to the survey report itself, I agree with the plaintiff’s submission that the said independent survey report complied with the minimum requirements set out in Imperial Group Plc. v. Philip Morris Ltd & Anor  RPC 291 … ”
For further information, please contact:
Michelle C.Y.Loi, Parner, Shearn Delamore & Co