Jost Cranes Gmbh & Co. Kg V Jost Cranes Sdn Bhd (Company No: 497277-T)

  

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IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR (COMMERCIAL DIVISION)

 

ORIGINATING MOTION NO: D25 (IP) 11-2009

 

In the matter of JOST CRANES Sdn Bhd with an address at 3rd Floor Wisma Peter’s, No.1, Jalan Petaling Utama 11, Petaling Utama, Batu 7, Jalan Klang Lama, Petaling Jaya, 46000 Selangor

 

AND

 

In the matter of sections 14(a); 14(b); 25; and 45 of the Trade Marks Act 1976

 

AND

 

In the matter of trade mark application numbered 08009754 for JOST & Device, the said trade mark which consists of the word JOST and two lines forming arrowheads for “cranes, cable cranes, mobile and non-mobile cranes, slewing cranes, lattice tower cranes, adjustable derricks, trolley travelling cranes, all included in Class 7” in the name of JOST CRANES GmbH & Co. KG

 

AND

 

In the matter of trade mark application numbered 03009029 for “JOST & DEVICE”, the said trade mark which consists of the word JOST and two lines forming arrowheads for “cranes (including tower cranes, luffing cranes and topless cranes), material hoists (including multilift material hoists), lifting and hoisting apparatus, together with parts and accessories thereof; all included in Class 7” in the name of JOST CRANES Sdn Bhd

 

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AND

 

In the matter of use by JOST CRANES GmbH & Co. KG of the trademark represented in its application numbered 08009754 in the dealing of trade in Malaysia before the priority date of JOST CRANES Sdn Bhd trademark numbered 03009029.

 

AND

 

In the matter of Order 87 Rule 2 Rules of the High Court 1980

 

BETWEEN

 

JOST CRANES GmbH & Co. KG

 

APPLICANT

 

AND

 

JOST CRANES SDN BHD (Company No: 497277-T)

 

RESPONDENTS

 

JUDGMENT

 

This is an application by JOST CRANES GmbH & Co. KG (the Applicant) for an order that the trademark “JOST & DEVICE Mark” under trademark no. 03009020 (the JOST Mark) currently registered

 

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under the name of JOST CRANES SDN BHD (the Respondent) be expunged and removed from the Register of Trade Marks, Malaysia. The JOST Mark is made of the word JOST and two bands forming arrowhead devices. For ease of reference, I reproduce below the said JOST Mark:

 

The JOST Mark was filed by the Respondent on 22.7.2003 (i.e. the priority filing date) for goods in Class 7 including cranes, material hoists, lifting and hoisting apparatus, together with parts and accessories thereof. The mark was subsequently registered and will expire on 22.7.2013.

 

The Applicant’s present trademark expungement application is based on section 45(1) (a) of the Trade Marks Act 1976 (the Act).

 

The Applicant’s case

 

Very briefly, the Applicant contends that the JOST Mark was wrongfully entered upon the register because the Respondent is not the proprietor as it claimed to be pursuant to Section 25(1) of the Act, which provides that only person rightfully claiming to be the proprietor

 

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of a trade mark used or proposed to be used by him may make an application to have the said trade mark registered.

 

The Applicant contends that it is the first user of the JOST Mark in respect of construction cranes in Class 7. For this very reason, the Respondent could not have claimed to be the proprietor that entitled them to file for any form of trademark application for the JOST Mark. The Applicant further contends that because the Respondent is not the proprietor of the mark, its mark cannot be protected by any court of law and ought to be expunged by the Court, following Section 45 of the Act.

 

The Respondent’s case

 

The Respondent’s case can be summarised as follows. The proprietorship of the JOST mark never resided in the Applicant. On 21.6.2000, the Respondent entered into an agreement with one Franc Jost (the 1st Agreement) and on 28.11.2001, another agreement was entered between Franc and the Respondent (the 2nd Agreement).

 

Franc Jost as the inventor of the JOST cranes, which bore the JOST Mark, had sold all rights in respect of the cranes to the Respondent, including the rights to the mark. The Applicant is not a person

 

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aggrieved provided under Sections 45 and 46 of the Act to take out the Application and therefore, the Application has no locus standi to bring the present action.

 

According to the Respondent, a reading of the 1st and 2nd Agreements will also suggest that the Respondent is not a mere licensee, but has in fact purchased all rights to the cranes, including the right to use the mark which bore on the cranes.

 

The Respondent contends that it is the first in time user in Malaysia of the JOST Mark. Hence, all use of the mark in Malaysia must be imputed on the Respondent alone as the rightful proprietor of the mark.

 

According to the Respondent, the Applicant has not sufficiently used the JOST Mark in the course of trade in Malaysia and there is no likelihood of confusion or deceipt caused.

 

The Respondent has extensively promoted the JOST Mark in Malaysia in order to signify that cranes bearing the JOST Mark originate from the Respondent. The Respondent contends that the Registrar of Trade Marks had correctly exercised his discretion in allowing the registration of the JOST Mark.

 

Findings of the court.

 

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Section 45(1) (a) of the Act, which this application is premised upon, requires the Applicant to be a person aggrieved by the registration of the JOST Mark. Hence, the first question to pose would be: whether the Applicant is a person aggrieved and has the locus standi under Section 45(1) (a) of the Act to initiate the present action.

 

First of all, I will quote the relevant provision that is relevant to the current discussion. Section 45(1) (a) of the Act, in particular, provides that the Court may order the expunction of a registered trade mark if such an application was made by any person aggrieved by the noninsertion in or omission from the Register of any entry or by any entry made in the Register without sufficient cause or by any entry wrongfully remaining in the Register, or by any error or defect in any entry in the Register, make such order for making, expunging or varying such entry as it thinks fit.

 

Since the decision of the Federal Court case in McLaren International Ltd. v. Lim Yat Meen [2009] 4 CLJ 749, persons aggrieved’ is given a more stringent approach as set out in Re Arnold Palmer [1997] 4 MLJ 360. In Re Arnold, it is held that:

 

“If an applicant for rectification has no trading interests to begin with, it cannot suffer any damage at all by the existence of a conflicting

 

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trade mark on the register. It therefore cannot be right, in principle, that the mere filing of its application can confer the necessary locus standi on the applicant for the purposes of rectification proceedings.” What I gather from this case is that if the Applicant can show a trading interest in relation to or connected with the JOST Mark such as having prior use of the mark in the course of trade of the relevant goods in question, then grievance is shown.

 

Weighing all the facts and evidence, in my judgment, the Applicant had a commercial interest in the JOST Mark even before the Respondent submitted an application for the registration of the mark. The Applicant has also been using the said mark in the course of trade on cranes, cable cranes, mobile and non-mobile cranes, slewing cranes, lattice tower cranes, adjustable derricks, trolley travelling cranes, all included in Class 7. The Applicant had and continues to have first user rights to the said trademark. I will go into detail about this point at a later stage of this judgment. At this point, suffice to say that the Applicant does have the locus standi to issue these proceedings, being a ‘person aggrieved’ under Section 45(1)

 

(a) of the Act by the entry of the JOST Mark in the Trademark Register.

 

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I move on to consider the question whether the Applicant is the first user or proprietor of the JOST Mark in respect of construction cranes in Malaysia prior to the Respondent’s filing date on 22.7. 2003. Case laws have shown that courts are prepared to infer first prior user of a particular trademark in respect of goods applied for from small amounts of use and testing.

 

In the Australian case of Moorgate Tobacco Co. Ltd v. Philip Morris Ltd (1984) 156 CLR 414, it is held that there is no need to establish local reputation by the foreign owner. A prior transaction would be viewed in a favorable manner if it could be considered to fall within the definition of use as a trademark.

 

In Thunderbird Products Corporation v. Thunderbird Marine Products Pty Ltd [1974] 131 CLR 592 , it is held that the existence of correspondence, the sending of brochures and the forwarding of a loosely assembled boat for mould-making by the originator of the product, an American corporation, to the Australian company constituted use of the mark by the American corporation. This is despite the fact that the prototype is not meant for actual sale, but is to be used by the licensee to make boats from the mould which would be subsequently sold.

 

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The concept of use of a trademark must also be assessed from various aspects and circumstances including the nature of the goods involved. To this extent and in this limited given context, a helpful reference to the definition of genuine use of a trademark may be referred to.

 

In Daimler AG v. Sany Group Co. Ltd [2009] All ER 37, the

 

following principles may be derived with regards of the meaning of genuine use:

 

(a) Genuine use is a qualitative and not a quantitative criterion;

 

(b) The use has to be consistent with the essential function of the trademark, which is to guarantee the identity of the origin of the goods or services to the customer or end users.

 

(c) The use has to be on the market by the proprietor or an authorized third party and not just internal use by the undertaking concerned.

 

(d) The use has to be to maintain or create a share in the market for the goods or services protected by the mark.

 

(e) The court has to take into consideration all the facts and circumstances relevant to establishing whether the commercial exploitation of the mark has been real, and in particular,

 

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whether such use would be viewed as warranted in the trade

 

sector concerned to maintain or create a share in the market for the relevant goods or services protected by the mark; and finally,

 

(f) The nature of the goods in issue such as the characteristics of the market concerned and the scale and frequency of the use of the mark have to be taken into account.

 

It is important to bear in mind that in the present action, the goods in question are construction cranes and unlike usual types of goods that can be boxed, stored and transported, construction cranes are of a different species of goods altogether. The parts of these construction cranes must be transported and assembled separately.

 

It cannot be disputed that the Applicant is the manufacturer of construction cranes using the JOST Mark, which derives from its very company name. Construction cranes bearing the JOST Mark have been widely advertised, published and promoted extensively. This can be seen in the Applicant’s 1st Supporting Affidavit and Exhibits FJT-11.

 

In this case, there was never a direct, legally binding relationship between the Applicant and the Respondent directly though both dealt

 

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in a commercial and business way with another party, i.e. Franc Jost sometime between June 2000 (i.e. prior to the filing of the mark on 22.7.2003) till the termination of the 2nd Agreement sometime in July 2005. In my view, the 1st Agreement relates to the grant of rights by Franc Jost of certain distributorship rights of the Luffer and Topless cranes designed by him. Nevertheless, the Applicant with the Applicant’s very own JOST Mark, manufactured these cranes. Whilst Franc Jost has the property rights to the design of these cranes, it is the Applicant who has the rights to the JOST Mark as the manufacturer of and who affixed the JOST Mark onto these cranes and use the same in the course of trade.

 

The question of who can be registered as the owner of a trade mark -proprietor as first user or importer was dealt with in the case of Hai-O Enterprise Bhd v. Nguang Chan @ Nguang Chan Liquor Trader (a firm, intervening) [1993] 1 BLJ 53. Mahadev Shankar J (as he then was) stated the following:

 

“Generally speaking it is the manufacturer of goods who is entitled to be registered as the owner of any mark he attaches to identify his goods, not the person who imports these goods into this country. In

 

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certain circumstances however the importer can acquire those rights as against the manufacturer where there is a contest between them. ” “We start with the definition of a Trade Mark in s. 3 of the Trade Marks Act 1976 [TMA 1976] where the material words are:

 

‘trade mark’ means … a mark used or proposed to be used in relation to goods … so as to indicate a connection in the course of trade between the goods and a person having the right . as proprietor . to use the mark…

 

“It is important at all times to keep in the forefront of our minds that there is a clear distinction between the intellectual property in a trade mark, and the title to the goods upon which that mark is applied. So generally, a manufacturer continues to own the mark even though he has sold the goods. The object of the exercise is to indicate “origin”. In its most elementary form the owner of the trademark would be trader whose connection is indicated by the use of the mark. That trader would be the owner of the mark at common law. Speaking generally in this case, it is common ground that the said mark was originally conceived in China for indicating the Chinese connection with the goods. If the Chinese used or proposed to use this mark on their goods in Malaysia then the said mark comes with the definition.

 

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So viewed the proper meaning to be assigned to the term ‘proprietor’ means the Chinese because they were the ones who intended that their mark should be used in Malaysia when they agreed to allow Hai-O to import their goods under the Sole Agency agreement and did in fact so use the mark from the day the goods reached Malaysian soil. ” In my view, the 1st Agreement relates only to the designs of the specified Luffer and Topless tower cranes. It makes no mention of the JOST Mark. To my mind, the 1st Agreement was thus neither an agreement relating to sales of the JOST Mark nor is it sales of the business of Franc. It is concerned with the designs of the two models of cranes i.e. Luffer and Topless. It is thus not an agreement on the sales of JOST Mark, as contended by the Respondent. In fact, learned counsel for the Respondent fairly conceded that there is no exact clause in it, which deals specifically with this. Indeed, nowhere in the contents of the 1st Agreement is there any mention made to JOST Mark.

 

As it turned out, the 1st Agreement paved the way for the role and direct involvement played by the Applicant vis-à-vis the manufacture of construction of the Luffer and Topless models of cranes of Franc Jost’s designs as provided for in the 1st Agreement. In fact, the

 

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Applicant was the actual manufacturer and supplier of these construction cranes during the subsistence of the First Agreement. The manufacture of the construction cranes was in respect of both the specified models of Luffer (M) and Topless (M) cranes only. Pursuant to the 1st Agreement, the range of the designs to be sold (or, licensed) to the Respondent was tower cranes from 190 meters until 310 meters tone (see clause 3(a) of FTJ-3 and schedule 1 of the 1st Agreement). On these manufactured construction cranes by the Applicant, the Applicant has used the JOST Mark. Indeed, the JOST Mark was used as the identifier and source of its construction cranes, as is prominently and conspicuously represented on its cranes (see: Exhibit FJT-11)

 

The Respondent has not produced any evidence to the effect that it has manufactured the construction cranes of the agreed Luffer and Topless designs (with Franc Jost) in Malaysia or elsewhere.

 

On the other hand, the Applicant has produced the following letters as can be seen in exhibit FTJ-4 of the Applicant’s first supporting affidavit as proof of manufacture:

 

(a) two letters written by the Applicant to Respondent on tower crane related matters on 2.11.2000;

 

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(b) correspondence from the Applicant to the Respondent on 1.11.2001 in relation to the supply of Jost tower crane model JT300.16 to Shenyang Peter’s Machinery Co. Ltd;

 

(c) correspondence dated 21. 9. 2002 from Respondent to the Applicant;

 

(d) correspondence from Applicant to the Respondent dated 18.11.2002;

 

(e) correspondence from Applicant to the Respondent on 7.3.2003;

 

(f) correspondence from Applicant to the Respondent on 17.3.2003 in relation to the delivery of mechanical and electrical parts for cranes JT300.16;

 

(g) correspondence/invoices issued by Jost GmbH on various dates on the supply and sourcing of its cranes and related parts to Shenyang Peter’s Machinery Co. Ltd through the Respondent;

 

(h) correspondence issued by the Respondent to the Applicant on 6.11.2000 and the Respondent’s remittance schedule to the Applicant;

 

(i) unrelated correspondence dated 10.7.2002 from Jost GmbH to the Respondent; and

 

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(j) Unrelated correspondence dated 1.10. 2002 from Jost GmbH to the Respondent.

 

There are two important points to be said about these letters.

 

For one, these letters were made prior to the filing date of the JOST Mark on 22.7.2003. This would mean that any information in particular found therein would have been made known to the Respondent during this relevant material time. As can be clearly seen, the JOST Mark, which appears on top of these letters, was first used by the Applicant in relation to the cranes it manufactured in the course of trade prior to the filing date of the mark.

 

For another, as it is evident from these letters, the Respondent was the importer of construction cranes of the Applicant’s manufacture bearing the JOST Mark before the priority filing date of 22.7. 2003.

 

In this way, I agree with the submission of learned counsel for the Applicant that the Respondent has acted as the conduit through which the Applicant’s construction cranes bearing the JOST Mark were supplied and distributed in the world during the subsistence of the First Agreement. This has proven the usage of JOST Mark by the Applicant, which preceded way before the priority filing date of 22.7. 2003. In my view, the locations with which such usage was made

 

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extended to include that of Malaysia. All transactions relating to the importation, onward consignment, sales and all other such activities meant to facilitate such sales and consignment of the Applicant’s JOST branded cranes of the Luffer and Topless model took place in Malaysia.

 

It is true that the Respondent had incurred various expenses in its efforts to promote and sell the construction cranes bearing the JOST Mark. Having regard to the factual matrix of the present case, in my view, such promotional efforts to sell the construction cranes bearing JOST Mark were construction cranes of the Applicant’s manufacture (and not of the Respondent’s); and further that promotional efforts to sell goods bearing a certain trade mark can be taken or deemed to be use of the said mark.

 

It is not disputed that such promotional efforts and activities vis-à-vis construction cranes bearing JOST Mark was made through one Foo Jong Teng, the Applicant’s former employee.

 

Based on the affidavit evidence, I am unable to accept the contention that the Respondent was the one, which manufactured the construction cranes bearing JOST Mark before the Applicant. The letters found in Exhibit FJT-4 as I have mentioned a moment ago

 

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provide very strong evidence from which one can directly infer that the manufacture of the cranes bearing JOST Mark came from the Applicant. As stated earlier, these letters moreover related to events before the priority filing date of the Respondent’s mark.

 

Hence, it untenable for the Respondent to claim that it was the first user of the JOST Mark on construction cranes in Malaysia. In my view, it is not shown to this court by the Respondent that the JOST Mark originated from the Respondent. Contrary to this, based on the evidence, the first user of the JOST Mark in respect of construction cranes in Class 7 was the Applicant.

 

In my view, having regard to the facts and circumstances of the present case, the Respondent in actual fact was aware at all material times that it was not legally entitled to the JOST Mark. Knowledge on the part of the Respondent is imputed since at least it started corresponding with the Applicant in November 2000 as shown in Exhibit FJT-4. Due to prior use of the mark by the Applicant, the Respondent cannot claim entitlement to the mark. In my view, the Respondent had unlawfully applied to register the JOST Mark. Therefore, for all these very reasons, this court order the expunction and removal of the Malaysian Trade Mark Registration No. 97012526

 

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for the trademark “JOST & DEVICE Mark” from the Register of Trade Marks pursuant to Section 45(1) of the Act as the entry was made without sufficient causes. Hence, I allow the Applicant’s application with costs.

 

(Dato’ Azahar bin Mohamed) Judge High Court Kuala Lumpur.

 

7 April 2010.

 

Counsel for the Applicant: S F Wong (with him Ms Michelle Loi) Solicitors for the Applicant: Messrs Shearn Delamore Counsel for the Respondent: S.M. Lim and Vinesh M. Varghese Solicitors for the Defendants: Messrs Raja, Darryl & Loh

 

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