28 February, 2019
This Federal Court decision from last year affirms the decision of the High Court and Court of Appeal that a Trade Description Order (“TDO”) premised on trade mark infringement may be applied for and granted on an ex parte basis. At all material times prior to this case, it has been a long-standing practice that a TDO may be obtained on an ex parte basis, without any notice to the defendant. The legality of this practice, however, was first challenged and tested through this case.
Facts of the case
The respondent, Tan Kim Hock Tong Seng Food Industry Sdn Bhd, (“TKHTS Food Industry”) manufactured, processed, distributed and sold their products bearing their registered trade mark, including their famous “dodol” products.
In 2001, the first appellant, Tan Kim Hock Product Centre Sdn Bhd (“TKH Product Centre”), was incorporated with TKHTS Food Industry’s founder (“TKH”) and the second appellant (“SSE”) as directors and shareholders in order to sell and market the “dodol” products manufactured by TKHTS Food Industry.
Subsequently, TKH sold his interest in TKH Product Centre to SSE and her family, but TKHTS Food Industry continued to sell the “dodol” products.
In November 2013, TKHTS Food Industry stopped distributing its “dodol” products to TKH Product Centre. However, sometime later, TKHTS Food Industry found that TKH Product Centre was selling “dodol” products bearing similar marks to its trade marks but were not TKHTS Food Industry’s “dodol” products.
TKHTS Food Industry then applied for a TDO under section 9 of the Trade Descriptions Act 2011 (“Act”) for a declaration that the trade mark consisting of the shape of a “T”, a red and white coconut tree and the stylised letter “S” on TKH Product Centre’s “dodol” products as sold by TKH Product Centre, was confusingly similar to TKHTS Food Industry’s trade mark, and that this trade mark is a false trade description.
The TDO was granted and the High Court further held that TKH Product Centre’s “dodol” products bearing infringing marks were considered imitation or counterfeit products. Thereafter, a raid was carried out by the Ministry of Domestic Trade, Cooperatives and Consumerism at TKH Product Centre’s premises.
TKH Product Centre and SSE filed an application for leave to intervene and to set aside the TDO, the latter of which was resisted by TKHTS Food Industry. The High Court refused to set aside the TDO.
Thereafter TKH Product Centre and SSE’s appeal to the Court of Appeal was also dismissed by the Court of Appeal on similar grounds.
Questions of law at the Federal Court
The Federal Court was asked to answer, among others, the following questions:
- whether a TDO could be applied for on an ex parte basis under section 9 of the Act, given the criminal consequences imposed by the order (“the first question”); and
- whether section 9 of the Act empowers the High Court to determine and declare goods as imitation goods whether on an ex parte basis or at all (“the second question”).
- Decision
In dismissing the appeal, the Federal Court answered the first question in the affirmative, essentially holding that it was permissible in law to apply for a TDO on an ex parte basis and the High Court was empowered to grant a TDO on an ex parte basis.
The rationale behind this position is that a TDO was meant to protect not only the rightful trade mark owners but also the consumers at large from the problem of imitation goods, and swift action with some elements of surprise was therefore an “essential ingredient” of a TDO application.
By applying the purposive approach of interpretation to section 9 of the Act, the Court held that it was appropriate for the Court to supplement the provision with the words “ex parte” so as to achieve the very purpose for the enactment of the provision.
Likewise, the second question was also answered in the affirmative, in that the Federal Court held that the High Court was empowered to declare that goods bearing a false trade description, which was in turn declared as an infringing mark under section 9 of the Act, as “imitation or counterfeit goods”.
The Federal Court, however, did acknowledge that not all TDOs are to be applied for on ex parte basis. A Court hearing an ex parte application for a TDO would, under the relevant circumstances, be entitled to direct that the cause papers be served on the defendant who has been identified as the alleged infringer. The same Court is also empowered to set aside the TDO granted on an ex parte basis, as the Court would still retain the power to review the TDO after its grant.
For further information, please contact:
Yap Khai Jiani, Shearn Delamore & Co
yapkhaijian@shearndelamore.com
