A case note by Elyse Diong Tze Mei.
The recent case of Bellini Resources (M) Sdn Bhd v Mohamad Zaini bin Md Taha1 sets out the criteria for the preservation of the status quo pending trial where the ownership of a trade mark is in dispute.
The company plaintiff (the Company) registered the “CAP LESONG” mark in respect of:
“ … cooking oils, edible oils and fats, meat, fish, poultry and game, meat extracts, preserved, frozen, dried and cooked fruits and vegetables, jellies, jams, compotes, egg, milk and milk products.”
in Class 29 in Malaysia on 16 January 2015 (“Disputed Mark”).
Prior to his dismissal as a director of the Company, the defendant (“MZMT”) recorded an assignment of the Disputed Mark from the Company to himself. There was no board resolution to approve the disposal of the Disputed Mark to MZMT.
The Company filed a suit against MZMT on the grounds that it did not consent or authorise the assignment of the Disputed Mark to MZMT and that MZMT had breached his fiduciary duty and trust (“Plaintiff’s Suit”).
The Company made an ex-parte application for the following interim orders against MZMT under Order 29 Rule 1 of the Rules of Court 2012 (“Ex-Parte Application”) pending the full disposal of the Plaintiff’s Suit:
- An injunction prohibiting MZMT from using or trading under the Disputed Mark;
- An injunction prohibiting MZMT from transferring, assigning or disposing of the Disputed Mark to any third party;
- An injunction prohibiting MZMT from stopping the Company from using the Disputed Mark; and
- A declaration that the Company can continue use and trade under the Disputed Mark.
THE LAW ON EX-PARTE INJUNCTION
Order 29 Rule 1 of the Rules of Court 2012 (“ROC”) allows for an application for the grant of an interim injunction to be made before or after trial of a cause or matter. An injunction is a judicial order restraining or compelling a person to stop or to do certain acts.
The High Court applied the principles laid down by the Court of Appeal in Keet Gerald Francis Noel John v Mohd Noor bin Abdullah2 for an interim injunction application:
- Whether the totality of the facts presented before him disclosed bona fide serious issues to be tried;
- If there are bone fide serious issues to try, where the justice of the case lies considering all relevant matters including the practical realities of the case; and
- The judge must have in the forefront of his mind that the grant of an injunction is discretionary, intending to produce a just result for the period between the date of the application and the trial proper as well as to maintain the status quo.
An application for an interim injunction can be made inter-partes or ex-parte. An ex-parte interim injunction can only be made in circumstances of extreme urgency3 where an inter-partes application is not viable. The applicant is also under the obligation to make full and frank disclosure of all relevant material facts, including facts which are not in the applicant’s favour4. Unless revoked or set-aside earlier, an ex-parte interim injunction is valid only for 21 days from the date it was granted and an inter-partes hearing must be fixed within 14 days from the date of order5.
The High Court allowed the Company’s ex-parte application on the grounds that there were bona fide serious issues to be tried, the balance of convenience lies in favour of the Company and there was a need to preserve the status quo of the matter.
The High Court found that the following were serious issues to be tried:
- Whether the Disputed Mark is a non-cash asset that belongs to the Company;
- Whether MZMT had wrongly obtained the Disputed Mark without authorisation or consent of the Company; and
- Whether there is a breach of MZMT’s fiduciary duty under section 213 of the Companies Act 2016.
BALANCE OF CONVENIENCE
The High Court in considering where the balance of convenience lies took into account that the Company’s business is inextricably linked to the use of the Disputed Mark and that it is highly probable that MZMT or his representatives may attempt to cancel or dispose of the Disputed Mark to a bona fide third party.
The judge took note of the fact that MZMT after having been dismissed as a Director had, without the knowledge of the Company, written to JAKIM on the Company’s letterhead to cancel the use of the Disputed Mark on the Company’s products. The judge was of the view that the damage to Company’s business will be disproportionately higher than the damage that MZMT may suffer as a result of the interim injunction.
Further, the Company had undertaken and was in a financial position to pay the damage suffered by MZMT as a result of the interim orders should the Company not succeed in its claims at trial.
The High Court in this case recognised the importance of maintaining and preserving the status quo of the Disputed Mark by preventing MZMT from transferring or disposing the ownership of the Disputed Mark to a third party pending the disposal of the case at trial.
FULL AND FRANK DISCLOSURE
The High Court was further satisfied that the Company had complied with the requirements under Order 29 Rule 1 of the ROC for full and frank disclosure.
An interim injunction is an important and useful tool for trademark owners to effectively stop the continuation of an alleged infringement as well as to prevent unauthorised disposal, transfer or assignment of ownership of a trademark. Taking legal action may diminish or avoid irrevocable impact and damage caused by the alleged infringer.
For further information regarding intellectual property law matters, please contact our Intellectual Property Practice Group.