Passing off

Though few would quibble at the outcome of Glaxo Plc v Glaxo-Wellcome Ltd. [1996] FSR 388 or Direct Line Group Ltd. v Direct Line Estate Agency Ltd. [1997] FSR 388, the judicial reasoning for those decisions was a bit thin. A case that reviews the authorities and analyses the principles is Compagnie Generale des Eaux v Compagnie Generale des Eaux Sdn. Bhd. In view of the obvious parallels, this authority could be useful in domain name as well as company name grabbing cases.

Facts

The defendant was incorporated in Malaysia on the 14th September 1991. The plaintiff, a large French utility founded in 1853, had begun to do business in Malaysia through a local associate. By a letter from its solicitors, the defendant offered those acting for the plaintiff "favourable terms as to the future use of [their] client company's name by [the plaintiff]." The plaintiff brought proceedings for passing-off in the Malaysian High Court seeking an injunction to restrain the defendant from using in any way or carrying on business in Malaysia under its name of incorporation and other consequential orders.

Decision

The defendant led no evidence at trial but argued that there was no case to answer on the ground that the plaintiff had no goodwill in the jurisdiction. Kamalanathan J rejected that argument robustly. Relying on authorities from around the world (SA des Anciens Etablissements Panhard et Lavassor v Panhard Levassor Motor Co. Ltd. (1901) 18 RPC 405, C & A Modes v C & A (Waterford) Ltd. [1978] FSR 126, Esanda Ltd. v Esanda Finance Ltd. [1984] 2 NZLR 748, Jian Tools for Sale Inc. v Roderick Manhattan Group Ltd. [1995] FSR 294 and Dun & Bradstreet (Singapore) Pte. Ltd. v Dun & Bradstreet (Malaysia) Sdn. Bhd. [1994] 1 MLJ 32), the judge said at page 621:

"An analysis of the authorities shows that a plaintiff would have goodwill which is entitled to protection in a passing off action if he can show that it has carried on business under a particular name and which is known to the public or a section of it. According to Henchy J in the C & A case (pra), the plaintiff's business activities can be `by direct selling within the state or otherwise.' Though the learned judge in the C & A case was speaking in relation to sale of goods, I hold that the same principle is applicable in relation to the providing of services and information, which the plaintiff was engaged in. I further hold that whether or not there is goodwill is a question of fact to be determined in the context of the industry or trade in question."

There was evidence before the judge that the plaintiff had received revenues of more than half a million Malaysian dollars and that it had paid substantial taxes to the Malaysian authorities in the 5 years immediately before the defendant's incorporation. Not surprisingly, Kamalanathan J found that the plaintiff had provided far more than the modicum of evidence necessary to demonstrate goodwill and reputation. Distinguishing Anheuser Busch Inc. v Budejovicky Budvar NP [1984] FSR 413 on which the defendant relied, His Lordship observed at 625:

"The most important fact about the Budweiser case is that both the plaintiff and the defendant had been using the trade mark `Budweiser' for their respective beers since 1875 and 1895 respectively. In fact they had in 1911 and in 1939 entered into two agreements for the right to use the trademark in different jurisdictions. The agreements unfortunately did not specify who was entitled to use the trademark in the United Kingdom and thus the dispute arose. Those facts are totally different from the instant case where I find that the defendant appropriated the name for itself with a view to collecting "a licence fee" from the plaintiff if the plaintiff should desire to use the name in Malaysia."

The judge concluded that the defendant had acted in bad faith and that there would be confusion among members of the public and damage to the plaintiff were it to be left with its name.