1. ) PERUSAHAAN OTOMOBIL KEDUA SDN. BHD. 2. ) PERODUA SALES SDN. BHD. LEE LAP KEE PENCELAH Kementerian Perdagangan Dalam Negeri dan Hal Ehwal Pengguna

WA-22IP-10-01/2020 Kand. 144 04/11/2024 09:41:35 IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR IN THE FEDERAL TERRITORY OF KUALA LUMPUR (COMMERCIAL DIVISION) CIVIL SUIT NO. WA-22IP-10-01/2020 BETWEEN 1. PERUSAHAAN OTOMOBIL KEDUA SDN. BHD. [Company Reg. No.: 54795-V] 2. PERODUA SALES SDN. BHD. [Company Reg. No.: 66332-U] AND LEE LAP KEE [NRIC No.: 600220-10-7037] (sole proprietor of and trading as Eco Auto Supply, Business Reg. No.: 002550012-W) JUDGMENT A. Introduction [1] The plaintiffs filed an application for assessment of damages 1 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [2] After considering documentary evidence before the court and the court awarded the following damages to the plaintiffs: a. RM16,777.91 for loss of business profits; and b. RM500,000 for loss of goodwill and reputation. B. Background Facts The Raid and Seizure [3] On or about 16 May 2019, the Enforcement Division of the Ministry of Domestic Trade and Costs of Living (previously known as the Ministry conducted at the d [4] Eco Auto Supply is a sole proprietorship owned by the defendant, and is involved in the trading of automotive parts and lubricants. [5] During the Raid and Seizure, various items were identified, seized PERODUA brand of cap liners, PERODUA brand of empty bottles, PERODUA brand of engine oil (finished products), lubricants siphoned from aluminium tanks, oil additives, base oil, gear oil and various documents. 2 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [6] Following the Raid and Seizure, the defendant was charged under the Trade Descriptions Act 2011 at the Shah Alam Sessions Court for exposing for supply or having in his possession, custody or control for supply automotive lubricants which include the PERODUA brand of goods to which a false trade description is applied. The defendant pleaded guilty to the charges and was sentenced to a fine of RM52,920. The Consent Judgment [7] The plaintiffs commenced this action against the defendant for trade mark infringement and manufacturing, producing, reproducing, distributing, supplying, selling and/or offering for sale counterfeit automotive lubricants bearing the PERODUA trade marks and/or get- up - , which were carried out without the plaintiffs consent. [8] On 1 September 2022, the plaintiffs and the defendant entered into . The terms of the Consent Judgment are inter alia as follows: a. That the PERODUA Trade Marks and their variations thereof are well-known trade marks which are to be conferred protection under Article 6bis of the Paris Convention and Article 16 of the Agreement on Trade- Agreement ; 3 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal b. That the defendant whether acting by himself, his partners, servants or agents, or any of them or otherwise howsoever be restrained by an injunction from doing any of the following acts: i. infringing or attempting to infringe the PERODUA Trade Marks and/or the PERODUA Get-Up by importing, manufacturing, producing, reproducing, distributing, supplying, selling, offering for sale or otherwise howsoever automotive lubricants which are not permitted and/or authorised by the plaintiffs including but not limited to engine oil, automatic transmission fluid, brake fluid, radiator coolant and gear oil bearing the PERODUA Trade Marks or any mark that is confusingly and/or deceptively similar to the PERODUA Trade Marks, and/or the PERODUA Get-Up; ii. passing off or attempting to pass off or causing, enabling or assisting others to pass off automotive lubricants which are not permitted and/or authorised by the plaintiffs including but not limited to engine oil, automatic transmission fluid, brake fluid, radiator coolant and gear oil as and for the p associated, affiliated and/or related with the plaintiffs either by importing, manufacturing, 4 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal producing, reproducing, distributing, supplying, selling, offering for sale or otherwise howsoever such goods; iii. using in the course of trade and without the 1st respect of automotive lubricants which are not permitted and/or authorised by the plaintiffs including but not limited to engine oil, automatic transmission fluid, brake fluid, radiator coolant and gear oil, where the use is likely to deceive or cause confusion, pursuant to section 70B(1) of the Trade Marks Act 1976 (now repealed) and/or section 76(2) of the Trade Marks Act 2019; iv. importing, manufacturing, producing, reproducing, distributing, supplying, selling, offering for sale or otherwise howsoever automotive lubricants which are not permitted and/or authorised by the plaintiffs including but not limited to engine oil, automatic transmission fluid, brake fluid, radiator coolant and gear oil bearing the PERODUA Trade Marks or any mark confusingly and/or deceptively similar to the PERODUA Trade Marks, and/or the PERODUA Get-Up, which acts are calculated to deceive and would lead the innocent purchasing public into a 5 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal false supposition and belief that such goods are equally symbolic of the p s; and v. assisting, aiding and/or abetting any other party or parties in doing any of the acts referred to in paragraphs (b)(i) to (iv) above. c. That the defendant publishes a full apology at the acts of infringement and passing off of the PERODUA Trade Marks and the PERODUA Get-Up, according to the terms, content and format satisfactory and acceptable to the plaintiffs, in three daily newspapers of the p specified by the plaintiffs, and the said apology is to be published no later than 14 days upon the defendant being served with a copy of the Consent Judgment; d. That an inquiry as to damages in respect of the d carried out by the plaintiffs or at the p account of profits of which payment is to be made by the defendant to the plaintiffs of all sums due upon taking such enquiry or account together with interest thereon; and e. Interest. 6 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [9] From the Consent Judgment, the plaintiffs may either carry out (a) and/or passing off; or (b) an account of profits. The plaintiffs confirmed that they have opted for an inquiry as to damages for the of infringement and/or passing off. C. [10] Before proceeding with the assessment of damages, the court denial of liability, and his argument that he did not manufacture, produce, reproduce, distribute, supply, sell and/or offer for sale the counterfeit PERODUA automotive lubricants identified, seized and removed during the Raid and Seizure. He claimed the empty bottles seized by the Ministry s were bottles used for recycling purposes. [11] The Consent Judgment, which was agreed to by the parties and is thus binding on them, contains the following orders: a. an injunction order to restrain the defendant from infringing or attempting to infringe the PERODUA Trade Marks and the PERODUA Get-Up; b. an order for the defendant to publish an apology for the PERODUA Trade Marks and the PERODUA Get-Up; and 7 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal c. an order for an inquiry as to damages in respect of the ing off, or for an account of profits. [12] By these terms, the defendant had essentially admitted to infringing and passing off the PERODUA Trade Marks and the PERODUA Get-Up. If the defendant had not committed any infringement, he would not have entered into the Consent Judgment or agreed to the injunction, the apology or the order on damages. [13] Further, the events that transpired which led to the Consent Judgment being entered into show that the defendant was aware of and understood the terms of the Consent Judgment. It is not in dispute that: a. The defendant was physically present with his solicitors before Nadzarin Wok Nordin J on 1 September 2022, when the Consent Judgment was recorded; b. A certified interpreter from Institut Terjemahan & Buku Malaysia was present during the proceedings to explain the terms of the Consent Judgment in Mandarin to the defendant, and the defendant confirmed that he understood the terms; and c. During the proceedings, the defendant did not express or assert his innocence, but instead agreed to be bound by the terms of the Consent Judgment. 8 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [14] Thus, in view of the admission by way of the Consent Judgment, which the defendant had confirmed his understanding and agreed to be bound by, it is therefore not open for the defendant to now deny being liable for the acts of infringement or passing off. In Marl Jaya (M) Sdn Bhd v Kerajaan Malaysia [2017] CLJU 1183, the High Court held that: [14] It is too late in the day for the Defendants to raise the issue of the non-service of the Notice of Intention to claim for Loss and Expense. By agreeing to a consent judgment on liability to be entered, the Defendant has also with it agreed that there is no further dispute on liability but only on quantum. The Defendants may not admit liability as recorded in the clarification of the consent judgment but that does not mean that liability is still an issue. In fact it has become a non-issue and the only issue is the quantum. [15] The Defendants by entering into and consent to a judgment being entered and agreeing to proceed with assessment of damages would mean that they cannot now resile from that position. Indeed the Defendants are estopped from raising the issue of liability in that since the said Notice under Clause 44 of the Contract is not issued, then the Defendants are not liable. [16] If they had wanted to do that, then they should not have agreed to a consent judgment being recorded and then the parties would have the opportunity to lead evidence as to 9 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal (emphasis added) [15] Similarly, in the present case, the parties had agreed to and recorded the Consent Judgment, under which the defendant had admitted to committing the acts of infringement and passing off. The question of the with the recording of the Consent Judgment, and cannot be reopened during proceedings on assessment of damages. D. Assessment of Damages Damages claimed by the plaintiffs [16] Having found that the defendant cannot deny his liability for the acts of infringement and passing off, I moved on to assess damages arising from the infringement and passing off. [17] The plaintiffs claimed two heads of damages: a. The loss of business profits caused by the diversion of the and b. The loss of goodwill and reputation resulting from the nfringement and passing off. 10 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [18] The principle to be applied in assessing damages is to restore the plaintiff by monetary compensation to the position which he would have been in had the wrongful act not been committed. This principle is set out in General Tire and Rubber Co v Firestone Tyre and Rubber Co Ltd [1975] 2 All ER 173, where the House of Lords held at page 117 that: exemplary damages can be given) the object of damages is to compensate for loss or injury. The general rule at any rate in relation to 'economic' torts is that the measure of damages is to be, so far as possible, that sum of money which will put the injured party in the same position as he would have been in if he had not sustained the wrong (Livingstone v Rawyards Coal Co ((1880) 5 App Cas 25 at 39) per Lord Blackburn). In the case of infringement of a patent, an alternative remedy at the option of the plaintiff exists by way of an account of profits made by the infringer: see the Patents Act 1949, s 60. The respondents did not elect to claim an account of profits; their claim was only for damages. There are two essential principles in valuing that claim: first, that the plaintiffs have the burden of proving their loss: second, that, the defendants being wrongdoers, damages should be liberally assessed but that the object is to compensate the plaintiffs and not punish the defendants (Pneumatic Tyre Co Ltd v Puncture Proof Pneumatic Tyre Co Ltd ((1899) 16 RPC 209 at 215 (emphasis added) 11 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal Loss of business profits [19] of business profits. I am guided by Taiping Poly (M) Sdn Bhd v Wong Fook Toh [2011] 3 CLJ 837, where the Federal Court, in assessing damages for trade mark infringement, held that the assessment should be based on the loss of profits, and not the loss of sales. At paragraph 16 of its judgment, the court quoted McGregor on Damages, 16th edition, where it is stated that: The principal head of damage is the loss of business profits caused by the diversion of the plaintiff's customers to the defendant (emphasis added) [20] Thus, an assessment of damages based on lost business profits would apply to a case where a plaintiff is in the business of manufacturing and selling goods that [21] In the present case, the plaintiffs are involved in producing, marketing, distributing, supplying, selling and/or offering for sale the PERODUA brand of automotive lubricants, which include engine oil, automatic transmission fluid, brake fluid, radiator coolant and gear oil. At the material time, the defendant was also manufacturing, producing, reproducing, distributing, supplying, selling and/or offering for sale counterfeit PERODUA automotive lubricants. As such, the plaintiffs and 12 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal the defendant are direct competitors, vying for the same customer base within the same market segment. [22] It therefore follows that the sales of the counterfeit PERODUA automotive lubricants made by the defendant would have been made by the p passing off in selling counterfeit PERODUA automotive lubricants. The plaintiffs have therefore suffered loss of sales and business profits due to the diversion of customers from the plaintiffs to the defendant. [23] I also considered the defendant s argument that in quantifying the plaintiffs loss of business profits, customers who were not misled when purchasing from the defendant must be excluded. In Draper v Trist [1939] 3 All ER 513, the English Court of Appeal held that: The practical question which presents itself in a matter of this kind and it is convenient to consider it from a practical point of view, at any rate for the moment is this. The defendant in a passing-off action has in the normal case, the simple case, sold a quantity of deceptive goods. He may have sold those goods direct to the public, the ultimate purchaser, or he may have sold them to a middleman who is himself going to sell them to members of the public or perhaps to some other trader, who, in his turn, deals directly with the public. The defendant, therefore, has put upon the market, and sent in to the market, a quantity of goods which, on the face of them, and ex hypothesi, are saying something about themselves which is calculated to mislead. That is the very gist of the conception of passing off. It 13 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal is manifest that, if the plaintiff, before he could recover damages, had to show that, in the case of each sale, the purchaser was deceived because it is on the assumption that purchasers are deceived that the plaintiff's damages are based then his task, save in very exceptional circumstances, would be a quite impossible one. On the other hand, it is equally true to say that to impose upon a defendant the task of showing that the purchasers were not deceived would be an equally impossible one. It is, in my opinion, misleading to consider too much the question of onus of proof in a case of this kind. The real problem is, when all the facts are considered and all the considerations on either side are given fair weight, the proper sum at which to estimate the plaintiff's damage. That a jury would be entitled, if it were shown that goods were sold under a deceptive appearance or description, to award something more than nominal damages is, in my opinion, the law (emphasis added) [24] From the above passage, the court clarified that to require the plaintiff to prove or a defendant to disprove that the defendant s purchasers were deceived or not deceived by the purchase of the infringing product is an impossible task, except in very exceptional circumstances. Thus, it is unnecessary to exclude customers who purchased the defendant s products but who were not misled by the purchase, from the calculation of the plaintiffs loss of business profits. Such an exercise would be impractical, if not impossible to perform. 14 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [25] In quantifying the plaintiffs fits, the court accepted the evidence of the plaintiffs on the sales of the counterfeit PERODUA automotive lubricants, derived from the following items seized a. The , which are invoices issued in 2016 and 2019, and undated invoices . They reflect 767 items sold by the defendant. b. The Ministry s seizure list , which shows 172 units of PERODUA empty bottles and 20 units of PERODUA finished products that were seized during the Raid and Seizure. [26] The court notes that the existence, authenticity and content of the Invoices and the Seizure List were not challenged by the defendant, and thus, the court relied on these documents in quantifying the plaintiffs loss of business profits. [27] From the items listed in the Invoices and the Seizure List, the court derived the loss of business profits by calculating the quantities of the items sold, multiplied by the profit margins of the plaintiffs for each of the items sold. For the Invoices that are undated and the items in the Seizure List, the court applied the profit margins in 2019. In his submissions, learned counsel for the defendant argued that items in the Invoices that are undated should not be included in the calculation of loss of profits. However, this contention was not raised in the defendant s affidavit, and 15 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal there is no valid explanation given by the defendant as to why these Invoices should not be included. Thus, the court rejected this argument. [28] The calculations setting out the plaintiffs loss of business profits are as follows: a. The plaintiffs loss of business profits based on the Invoices showing the Item Quantity Sold Profit Loss of Margin Business - 96 RM21.20 RM2,035.20 synthetic engine oil (3 litre) Perodua 0W- 64 RM18.62 1,191.68 fully synthetic engine oil (4 litre) b. The plaintiffs loss of business profits based on the Invoices showing the 9: Item Quantity Sold Profit Loss of Margin Business 16 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal Perodua 0W- 126 RM21.61 RM2,722.86 fully synthetic engine oil (3 litre) - 151 RM19.47 RM2,939.97 synthetic engine oil (4 litre) - 126 RM14.54 1,832.04 synthetic engine oil (3 litre) - 60 RM18.88 RM1,132.80 synthetic engine oil (4 litre) - 20 RM15.09 RM301.80 transmission fluid (1 litre) 20 RM7.05 RM141 automatic transmission fluid (1 litre) 17 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal c. the Invoices that are undated: Item Quantity Sold Profit Loss of Margin Business 0W- 64 RM19.47 RM1,246.08 synthetic engine oil (4 litre) - 20 RM15.09 RM301.80 transmission fluid (1 litre) 20 RM7.05 RM141 automatic transmission fluid (1 litre) d. The plaintiffs loss of business profits based on items in the Seizure List: Item Quantity Sold Profit Loss of Margin Business - 192 RM14.54 RM2,791.68 18 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal synthetic engine oil (3 litre) [29] From the above, the plaintiffs loss of business profits totals RM16,777.91. [30] The court finds this amount to be a natural and direct consequential infringement and passing off, in view of the fact that the plaintiffs and the defendant are direct competitors, with customers in the same market segment. This amount will restore the plaintiffs to the same position they would have been in had the defendant not committed the act of infringement and passing off. [31] It is to be noted that the defendant did not challenge the basis of the plaintiffs would be overcompensated by the loss of business profits claimed. The main contention raised by the defendant is that he is not liable to the plaintiffs. I have addressed and rejected this contention in Part C above. Loss of goodwill and reputation [32] The loss of goodwill in an action for passing off is recognised in Draper v Trist (supra). The English Court of Appeal held at page 524 of the judgment, that: 19 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal to use ordinary business knowledge and common sense, and to consider that one cannot have deceptive trading of a considerable volume without inflicting, at any rate, some measure of damage on the goodwill. How long that will last, what its extent will be, is a thing which no evidence, except in the most exceptional case, could satisfactorily define, and the matter is reduced, as many of these matters are reduced, to the formation of a rough estimate in a way in which a jury (emphasis added) [33] Thus, there is no mathematical approach in assessing lost goodwill and reputation. The loss of goodwill and reputation is assessed by using ordinary business knowledge and common sense. [34] In this regard, the court considered that: a. The plaintiffs have developed substantial goodwill and reputation in Malaysia in relation to the PERODUA automotive lubricants; b. The plaintiffs have expended substantial sums on advertising and promoting the PERODUA automotive lubricants throughout the years; 20 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal c. From 2016 to 2022, the sales figures of the PERODUA automotive lubricants in Malaysia were in the region of RM100,000,000 to RM240,000,000; d. Immense value is tied to the p PERODUA Trade Marks, in view of the plaintiffs position e. Several prominent and esteemed accolades have been awarded to the plaintiffs for the PERODUA brand; f. The defendant had acknowledged in the Consent Judgment that the PERODUA Trade Marks and variations thereof are well-known trade marks that are entitled to protection under Article 6bis of the Paris Convention and Article 16 of the TRIPS Agreement. [35] The court also considered damages awarded for the loss of goodwill and reputation in the following cases: a. In Taiping Poly (supra), RM50,000 was awarded to the registered owner of the HAITOP trade mark, involved in the business of travel and school bags; b. In Schwan-Stabilo Marketing Sdn Bhd v S & Y Stationery [2018] 9 CLJ 384, RM300,000 was awarded to the owner of the Stabilo trade marks, involved the stationery business; 21 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal c. In PJ Uniform Sdn Bhd v St John Ambulans Malaysia [2019] 1 AMR 32, RM220,000 was awarded to the owner involved in humanitarian work; and d. In Syarikat Faiza Sdn Bhd v Faiz Rice Sdn Bhd [2019] 1 AMR 180, RM100,000 was granted to the owner of the Faiza and related trade marks, involved in the rice business. [36] Having considered the status of the plaintiffs and the PERODUA brand, and the approaches taken by the courts in awarding damages for loss of goodwill and reputation. [37] The main issue raised by the defendant in opposing the award of damages for the plaintiffs loss of goodwill and reputation is that this claim was not pleaded by the plaintiffs. The court finds this argument to be misconceived, as the claim for loss of goodwill and reputation has been specifically pleaded. In paragraph 38 of the statement of claim, after particularising the defendant s acts of passing off, the plaintiffs pleaded: As a result of the aforesaid acts of infringement and passing off, the Plaintiffs had suffered and continues to suffer loss and damage as well as injury to their goodwill and reputation if such acts are not restrained. 22 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [38] Thus, the court finds the defendant s argument to be devoid of merit, and must necessarily be rejected. E. Decision [39] With the considerations and findings above, the court awarded the following damages to the plaintiffs: a. RM16,777.91 for loss of business profits; and b. RM500,000 for loss of goodwill and reputation. [40] The court awarded costs of RM15,000 to the plaintiffs in respect of the application for assessment of damages, and RM1,000 for costs thrown away arising from the adjournment of the hearing on 1 November 2024, due to the non- Dated 4 October 2024 ADLIN ABDUL MAJID Judge High Court of Malaya Kuala Lumpur 23 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal Counsel: Plaintiffs : Lee Lin Li (together with Lim Jing Xian) of Messrs. Tay & Partners Defendant : Pramjit Singh (together with Navinjit Singh Golen) of Messrs. Harjit Sandhu, Wan & Associates 24 S/N O0SCPUpbOEOSW37U9q5jXQ **Note : Serial number will be used to verify the originality of this document via eFILING portal