INTRODUCTION

In today’s interconnected world, the internet has dramatically altered the landscape of global commerce. Businesses can now operate seamlessly across borders, offering services and products to consumers in multiple countries without ever setting foot there. As a result, the question of whether trademarks used on foreign websites can be legally recognized and protected in local jurisdictions, such as Malaysia, has become increasingly relevant. In Malaysia, while trademark rights are territorial, the Courts have established that even unregistered marks which have established goodwill and reputation through use in the course of trade in Malaysia can create enforceable rights. But with the internet’s ability to cross physical borders, the burning question now is: can the use of a trademark on a foreign website accessible from Malaysia qualify as “use” of the trademark in Malaysia?

TRADEMARK RIGHTS ARE TERRITORIAL IN MALAYSIA

In the landmark case of Lim Yew Sing v. Hummel International Sports & Leisure A/S [1996] 4 CLJ 784, the Court of Appeal upheld the principle that trademark rights in Malaysia are territorial and recognised the principle of first user as the common law proprietor. In this case, a Malaysian trader was allowed to be the registered proprietor of a foreign trademark on the basis that the foreign trademark had not been used at all in Malaysia at the time of the registration. The Court of Appeal said that:

“Trade Mark law is very territorial in many aspects. So it will be useful to keep in the forefront of our minds that however distasteful it may be for a trader in one country to appropriate the mark of a foreign trader who is using that mark in a foreign country, there is nothing unlawful under the Trade Marks Act for a Malaysian trader to become the registered proprietor of a foreign mark used for similar foreign goods provided that the foreign mark has not been used at all in Malaysia.”

In other words, a foreign trademark must be used in Malaysia; otherwise, it may be legally used and owned (or appropriated as the case may be) by whomever first uses the trademark within the country. The first user becomes the common law proprietor. It is however worth noting that Lim Yew Sing (supra) did not consider the question of whether the foreign trademark is a well-known mark as it was decided before the law relating to well-known marks came into effect on 1 August 2001 in Malaysia. It is however still good law as far as the principle of first user is concerned and had been later applied by the Federal Court in Mesuma Sports Sdn Bhd v Majlis Sukan Negara Malaysia (Pendaftar Cap Dagangan Malaysia, interested party) [2015] 6 MLJ 465, which reiterated that “he who first uses a trademark owns the said trademark under common law and that such common law ownership would in turn entitle him to file for trademark application as a bona fide applicant”.

Notwithstanding this, the cases leave open the question of whether the internet use of a trademark for services provided exclusively outside Malaysia could constitute trademark use within the country.

INTERNET USE OF TRADEMARKS IN MALAYSIA

Over the years, the Malaysian courts seem only to be confronted with internet use cases which are focused on the sale of goods over a foreign website accessible in Malaysia where the goods can be received here rather than the provision of services exclusively outside Malaysia where the services may be purchased here over the internet. For instance, in Abercrombie & Fitch Co & Anor v. Fashion Factory Outlet KL Sdn Bhd & Ors [2008] 7 CLJ 413, the plaintiffs filed an application for summary judgment on the grounds of trademark infringement, seeking, among others, a permanent injunction to restrain the defendants from infringing the plaintiffs’ registered trademarks. The plaintiffs were corporations incorporated in the United States of America, with the second plaintiff being the registered proprietor of the “ABERCROMBIE & FITCH” and “ABERCROMBIE” trademarks in Malaysia. In resisting the summary judgment application, the defendants contended that the plaintiffs had not used their registered trademarks in Malaysia.

The High Court observed that the plaintiffs operated and maintained three e-commerce websites, selling their products to various countries worldwide, including Malaysia and said that the sale of goods bearing a trademark over the internet or via a website constituted use of the trademark in Malaysia, provided that the goods are made available in Malaysia. Additionally, the High Court noted that if the website is intended to seek worldwide trade with a view towards commercial gain, its activities fall squarely within the category of “doing business over the internet” and may constitute “use” for the purposes of trademark proceedings:

“[73] Sale of goods bearing a trade mark over the internet or via a website has been recognised as a use of the trade mark.

[74] On appeal in 1-800 Flowers Inc. v. Phonenames Ltd. [2002] FSR 12 CA, Buxton LJ has provided obiter these guidelines on whether use of a mark on the internet might be sufficient to constitute use of the mark in the United Kingdom for the purpose of trade mark law. Placing a mark on the internet from a non-United Kingdom location would not suffice. An active move, like direct encouragement to purchase the product or advertisement, would be necessary in order to establish the necessary use. …

In Hyundai Motor Company v. Sun Yuen Rubber Manufacturing Co Sdn Bhd [2017] 1 LNS 731, the plaintiff applied to remove the defendant’s registered trademark, namely “GENESIS” on the ground of non-use. The High Court referred to Abercrombie & Fitch Co & Anor (supra) and ruled that the defendant’s website did not refer to the registered trademark and there was no evidence on the defendant’s website that the registered mark has been used in relation to the defendant’s goods so as to indicate a connection in the course of trade between the defendant’s goods and the defendant. For this reason, the defendant’s registered trademark was expunged from the trademark register.

In Essity Hygiene and Health Ab v. Praba’s Vcare Health Clinic Privited Limited [2019] CLJU 1124, the plaintiff, who intended to use a trademark similar to the defendant’s registered trademark in its business expansion to Malaysia, applied to remove the defendant’s trademark on the grounds of non-use. The defendant, based in India, produced evidence of printouts of its websites to demonstrate use of its registered trademark in Malaysia. Unfortunately, the High Court held that these websites did not constitute use of a trademark for the following reasons:

1. the defendant’s websites do not establish if the products that carry the mark were made available to the Malaysian public; and
2. there was no indication at all that the defendant’s websites were targeted at the Malaysian market nor were there any commercial transactions emanating from it.

The defendant failed to establish use of its trademark as the registered proprietor in Malaysia and its registered trademark was expunged from the trademark register.

It can be distilled from the above that the mere use of a mark on foreign websites is not sufficient to demonstrate trademark use in Malaysia. For internet use to constitute trademark use in Malaysia, there must be an active move, such as direct encouragement to purchase the products or targeted advertisements to establish the necessary use. Additionally, there must be evidence of use of the mark in relation to the goods or services for commercial exploitation which indicates a connection between the mark and the goods or services.

OVERSEAS SERVICES SOLD OVER THE INTERNET

With the internet diminishing borders, more and more services provided outside Malaysia are now available for purchase in Malaysia. A significant gap exists in the law governing internet use of trademarks for services provided exclusively outside Malaysia but accessible for purchase in Malaysia over the internet. This leaves much uncertainty as to whether foreign trademark proprietors may claim rights over their trademarks in Malaysia based on such internet use. This becomes critical where attempts are made to revoke their registered trademarks in Malaysia. Apart from this, there is also uncertainty as to whether the online use of the trademarks for such services may infringe local trademarks simply by virtue of the websites being accessible within Malaysia.

UK AND EU COURTS ON INTERNET USE FOR OVERSEAS SERVICES

To help bridge the gap, we draw from the experience of the courts of the United Kingdom and the European Union on dealings with internet use of trademarks where the provision of services is exclusively overseas.

In Standard International Management LLC v EUIPO T‑768/20 (General Court) [2022], the applicant provides hotel and ancillary services in the United States of America, while advertising and holding promotional campaigns aimed at customers located in the EU for those services. The applicant filed a notice of appeal against the decision of EUIPO which revoked its registered trademark on the grounds of non-use in the EU. However, the appeal was dismissed by the Board of Appeal, prompting the applicant to seek annulment of the Board of Appeal’s decision before the General Court. The crux of the case before the General Court is whether the use of the applicant’s trademarks on websites accessible to EU customers, for services based in the US, could constitute use in the EU.

The General Court held that the Board of Appeal erred in not distinguishing between the place of provision of the services (the applicant’s hotel services were provided in the USA) and the place of use of the mark (the applicant’s advertising efforts and offers for sale in the EU). The General Court emphasized that only the latter is relevant to the examination of genuine use of an EU trademark, and held that genuine use of a trademark is established when the mark is used in accordance with its essential function, which is to guarantee the identity of the origin of the goods and services for which it has been registered. The General Court concluded that the applicant’s advertisements and offers for sale in the EU are relevant to demonstrate genuine use of the mark for the services in the EU, ruling that the Board of Appeal’s decision was unlawful. This decision highlights that services may be purchased over the internet constitute trademark use within a jurisdiction if advertisements for those services are targeted at consumers in that region.

In Starbucks (HK) Limited and another v British Sky Broadcasting Group PLC and others [2015] UKSC 31, the appellants/claimants (“PCCM”) provided a closed-circuit IPTV service known as “NOW TV” in Hong Kong and were considering expanding their services into the UK. In mid-July 2012, the respondents/defendants (“SKY”) launched a new IPTV service with the name “NOW TV” as an over-the-top service in the UK. This caught PCCM’s attention, leading them to take action against SKY with a passing off claim.

People in the UK could not receive PCCM’s closed-circuit service. However, a number of Chinese speakers residing in the UK in 2012 were aware of PCCM’s NOW TV service through exposure to it when residing in or visiting Hong Kong, via PCCM’s NOW TV “channel” on YouTube, PCCM’s NOW TV websites, and the showing of PCCM’s programmes on international flights.

The UK Supreme Court dismissed PCCM’s passing off claim against SKY and held that, in order to succeed in a passing off action, the claimant must demonstrate goodwill in the sense of a customer base within the jurisdiction, as opposed to individuals who happen to be customers elsewhere. The UKSC further explained that PCCM’s business is based in Hong Kong, and it has no customers, and therefore no goodwill in the UK. The people in the UK who had access to PCCM’s NOW TV programmes via the websites or on various international airlines, are not PCCM’s customers in the UK because there is no payment involved (either directly by the people concerned or indirectly through third party advertising), and the availability of PCCM’s NOW TV service on PCCM’s NOW TV “channel” on YouTube, PCCM’s NOW TV websites, and the showing of PCCM’s programmes on international flights simply was intended to promote PCCM’s Hong Kong business.

Based on this decision, we can conclude that, goodwill is territorial in nature and the use which creates goodwill is where the entity has customers in the jurisdiction. In the absence of physical premises providing services within a jurisdiction, the use of a mark over the internet on a foreign website may be sufficient to prove goodwill in that jurisdiction, provided that there is evidence that customers in that jurisdiction can obtain the right to receive the services abroad, whether through booking or purchasing of such services. In Starbucks (supra), people in the UK did not have this right of access.

In Lifestyle Equities CV and another v Amazon UK Services Ltd and others [2024] UKSC 8, the respondents (“Lifestyle”) owned several UK and EU trade marks relating to the “BEVERLY HILLS POLO CLUB” brand (“UK/EU Marks”), while an unrelated entity in the United States of America owned similar trade marks for identical goods (“USA-branded goods”). The appellants (“Amazon”) marketed and sold the USA-branded goods on its USA-based website (“USA website”), which Lifestyle claimed targeted consumers in the UK/EU, thereby infringing its UK/EU Marks.

Amazon appealed to the Supreme Court after the Court of Appeal reversed the High Court’s decision and concluded that advertisements and offers for sale of the USA-branded goods on Amazon’s USA website were indeed targeted at consumers in the UK and EU.

The UK Supreme Court dismissed Amazon’s appeal and held that the mere fact that a foreign website is accessible from the relevant territory, here the UK, is not a sufficient basis for concluding that it targeted consumers in the UK. To determine whether the marketing of goods on a foreign website is targeted at consumers within the UK, the question is whether the average consumer, being someone who is reasonably well informed and reasonably observant, would consider the foreign website to be directed at him or her and in that way constitutes use of the mark in relation to goods in the course of trade in the UK. Factors deemed relevant by the UKSC for consideration are:

1. the message that is deliberately targeted at the local country is shown on most of the webpages wherever a consumer with the local country’s IP address visits the website;
2. the pop-up box explicitly tells the consumer they are being shown goods that are available for delivery to their local country; and
3. the order reviewing webpage contains numerous pointers consumers in the local country (e.g., local address, with local delivery times and prices and the ability to pay in local currency).

In light of the above, use of a trademark over the internet can constitute use within a relevant jurisdiction if it can be shown that the advertisement on the foreign website is specifically targeted at consumers in that jurisdiction, and the goods or services can be purchased within the jurisdiction through such a website. This principle has been demonstrated in various cases from the UK and EU, where the Courts have required evidence of targeting and commercial availability to establish trademark use in that jurisdiction.

THE END OF “USE IN A TRADEMARK SENSE”?

Notwithstanding the factors enumerated in the cases above, in a recent case in Malaysia Airlines Sdn Bhd & Anor v AirAsia Com Travel Sdn Bhd [2023] MLJU 1414, the High Court introduced an interpretation of what constitutes “use” of a trademark on digital platforms accessible via the internet for the purposes of trademark infringement which significantly broadened the scope of monopoly of trademark proprietors.

In Malaysia Airlines Sdn Bhd & Anor (supra), the High Court found the defendant, who was the operator of the “AirAsia SuperApp”, liable for trademark infringement for displaying marks which are identical to the 2nd plaintiff’s registered trademarks on its app for purposes of selling flight services provided by the plaintiffs. The High Court observed that the defendant in doing so had acted in the capacity of a travel agent. The High Court held that for there to be trademark infringement under the Trademarks Act 2019, “use” of an offending trademark need not be “use as a trademark”, i.e. the defendant need not use the 2nd plaintiff’s registered trademarks to indicate the defendant’s goods or services. Therefore, even though the defendant was merely using the 2nd plaintiff’s registered trademarks to indicate the plaintiffs’ services and not that of its own (thus there is no “trademark use” by the defendant of the 2nd plaintiff’s registered trademarks), the defendant was found to have infringed the 2nd plaintiff’s registered trademarks. This enlargement of the scope of a registered trademark proprietor’s rights does not seem to sit with authorities in the United Kingdom and Singapore where Malaysian courts draw much from, which have preserved the legal requirement for plaintiffs to show that the trademark was being used in the trademark sense. Malaysia Airlines Sdn Bhd & Anor (supra) is currently pending appeal in the Court of Appeal.

The consequence of this appears to be that online marketplace operators can no longer as a defence, assert that they are merely facilitating the advertising of goods bearing the registered trademarks by third-party sellers, and not itself advertising the goods. Based on Malaysia Airlines Sdn Bhd & Anor (supra), the purpose of the use of the offending trademark is no longer relevant. As long as there is unauthorised use of the trademark, there is infringement.

This ruling has significantly altered the criteria of what may constitute “use” of a trademark. The Court’s interpretation in Malaysia Airlines Sdn Bhd & Anor (supra) suggests that merely having a trademark accessible on the internet may be sufficient to prove infringement, regardless of whether it is specifically used as a trademark or targeted at consumers in that jurisdiction or whether the goods or services associated with the mark can be purchased within the jurisdiction through the website in question. This decision challenges the long-established position under Malaysian trademark laws and potentially changes the landscape for future cases involving trademark use on the internet in Malaysia.

By Tay & Partners, Malaysia, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact malaysia@transatlanticlaw.com

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