By Chew Kherk Ying and Sonia Ong of Wong & Partners
On February 17 2012, the Malaysian High Court held in favour of the plaintiffs in Burukan Bin Mohamed & 2 Ors v Sirajudin Bin y Mohamed Mydin & 3 Ors concerning the use of a mark in a family restaurant business and the parties' agreement to part ways.
The first plaintiff (BBM) and the first defendant (SBMM) are brothers who wished to continue to separately run an Indian restaurant business inherited from their father popularly known as Kayu Nasi Kandar in Malaysia. To this end, the brothers entered into an agreement under which BBM retained control of two outlets and SBMM retained control of the remaining ten outlets. The parties also agreed that they would be allowed to continue using the trade name Restoran Kayu Nasi Kandar for their continuing business.
The dispute commenced when the plaintiffs claimed passing off against the second defendant who used a sign that was confusingly similar to the plaintiffs'. Although both parties were by virtue of the agreement permitted to use the same trade name, the colours, font and figurative elements comprising the second defendant's sign closely resembled the plaintiffs' sign, and evidence of public confusion was presented. The defendants, however, counterclaimed for trade mark infringement relying on their trade mark registration for the figurative element of the sign contended by the plaintiffs as giving rise to passing off.
Before deciding on the parties' respective claims, the Court on its own motion determined two questions, namely whether the term "continuing business" in the agreement meant that use of the trade name Restoran Kayu Nasi Kandar by BBM was confined to the two outlets existing at the time of execution of the agreement or extended to future outlets he operated, and whether the second plaintiff being the business owned by BBM and his wife which was not party to the agreement prevented the second plaintiff from using the said trade name. The Court answered the first question in the negative and held that the parties would have intended that each of them be allowed to use the trade name not only for their outlets existing at the time the agreement was executed, but also future outlets. The second question was also answered in the negative although this appears to be a drafting error as the Court based its finding on the fact that BBM retained control over the operation of the second plaintiff's outlets, suggesting that the Court agreed that the second plaintiff came within BBM's continuing business and should therefore be allowed to use the trade name.
The Court upheld the plaintiffs' claim of passing off on the grounds that the overall look and feel of the second defendant's sign too closely resembled the plaintiffs', but dismissed the defendant's counterclaim of infringement on the grounds that the plaintiffs' sign was visually and phonetically distinguishable from the defendants' trade mark registration, which demonstrates the stricter test applied in cases of infringement as opposed to passing off.