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Interlocutory Injunctions in Trade Mark Cases – Is the American Cynamid test still applicable in Malaysia

It is well established in law that an interlocutory injunction is ancillary to a cause of action and therefore it is only a party who has a cause of action who can apply for an interlocutory injunction (Siskina v Distos Compania Naviera SA [1979] AC 210). The primary objective of an interlocutory injunction is to protect the Plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial.

The essential principles governing the grant or refusal of an interlocutory injunction were authoritatively expounded by the House of Lords in American Cyanamid Co. v Ethicon Ltd [1975] AC 396 . This case related to American Cyanamid’s patent for the use of a absorbable surgical sutures of filaments made of a particular kind of chain polymer known as “polyhydroxyacetic ester”.

In this case, Lord Diplock states that the governing principles in determining whether to grant an interim injunction are whether

(1) there is a serious issue to be tried,

(2) where the balance of convenience lies, and

(3) if the interlocutory injunction is not granted, whether it will cause irreparable injury to the applicant.

In defining the “balance of convenience”, the House of Lords held that the objective of the injunction was to protect the plaintiff against injury resulting from the violation of his legal rights for which he could not be adequately compensated in damages recoverable from the defendant if he were successful at trial. Alternatively, the plaintiff’s need for protection had to be against the defendant’s need to be adequately compensated by the plaintiff’s cross-undertaking in damages if the defendant were prevented from exercising his legal rights and the matters were resolved in the defendant’s favour at trial.

Since the time the American Cyanamid principles were propounded, a debate has developed as to the applicability of the American Cyanamid principles especially in so far as the grant of interlocutory injunctions in intellectual property cases are concerned. For instance, in the case of Athletes Foot Marketing Associates Inc v Cobra Sports Ltd [1980] RPC 343, which concerns issues of trade restrictions, the learned judge, Walton J stated that he was not prepared to follow the American Cyanamid principles as he was of the opinion that it was not possible to apply the general principles of American Cyanamid in matters involving trade restrictions as once the injunction is granted, the party affected would have invested time, money and effort in a totally different direction in order to change their trading name and that “it would be idle to say that they could change back- possible years after there has been a trial and appeals from the decision therein.” Therefore, in cases involving issues such as trade restrictions, it is pertinent that one should also look at various issues such as commercial feasibility before an injunction is granted.

However, in Home Box Office Inc v Channel 5 Home Box Office Ltd [1982]FSR 449, the learned Judge Peter Gibson J referred to the case of NWL Ltd v Woods [1979] 1 WLR 1294 which laid down the principle that it was appropriate to consider the degree of likelihood of a permanent injury being granted, where the grant or refusal of an interlocutory injunction would dispose of the action finally, there being nothing left on which it would be in the interest of the unsuccessful party to proceed to trial. The learned Judge stated that the Athletes Foot’s principles were not applicable in the present case as there were relevant facts in dispute and the grant of refusal of the injunction will not mean the end of this trial. The learned Judge went on to state that the principles of American Cyanamid are still applicable as they were “principles of general application”.

In the case of Series 5 Software v Phillip Clarke [1996 ] 1 AER 853, the learned Judge Laddie J sought to reassert the importance of considering the relative strengths of the parties’ claims. He was of the view that in exercising its discretion in granting interlocutory relief, the courts should consider whether (i) the grant of an interlocutory injunction is a matter of discretion and therefore depends on all the facts of the case; (ii) when exercising this discretion, the rule is that there is no fixed rules; (iii) the court should rarely attempt to resolve disputed issues of fact or law; (iv) the major factors to be borne in mind are (a) how far are damages an adequate remedy, if indeed the other party can afford to pay them; (b) the balance of convenience; (c) the maintenance of the status quo pending the full trial and (d) any clear view that the court may reach as to the relative strength of the parties’ cases. This decision may seem to signify that the fundamental rule of law in the Cyanamid case in exercising it’s discretion as to whether interlocutory relief should be granted, the balance of convenience between the parties was the most important issue be considered once the prima facie case is made out is no longer the case anymore. The Series 5 Software approach was further reasserted by the learned Judge Laddie J. in the subsequent cases of British Sugar Plc v James Robertson & Sons Ltd and also in Barclays v RBS Advanta [1996] RPC 307.

In Malaysia, the applicability of the case of Athletes Foot and also the American Cyanamid principles were discussed in the case of S Yuvarajan & Anor v Anthony Martin [1994] 3 MLJ 112, a case where the Plaintiffs applied for an interim injunction to restrain the defendant (“Chop Sipot Mas”) from infringing the plaintiff’s trade mark (“Chop Sipoth”) and passing off his sarongs as the plaintiffs’ sarongs until the date of trial.

In this case, Plaintiffs submitted that traders of the “kain pulikat” sarong comprises of small traders and the sarongs were sold in crowded bazaars, where the sarongs were stacked together in plastic wrappers with labels stuck on them and in such circumstances, the likelihood of confusion in relation to the two trade marks and get-ups used was very great.

The Defendant’s however argued that their labels contains dissimilar features compared with the plaintiff’s label and further argued that the current mark used by the Plaintiff was not an original trade mark registered by them. The Defendant relied on the case of Athletes Foot and submitted that the principles of American Cyanamid is not applicable to cases involving restraint of trade and the merits of the case must be taken into account.

Referring to the case of Home Box Office Inc v Channel 5 Home Box Office Ltd [1982]FSR 449, the learned Judge was of the view that there were serious issues to be tried. Thereafter, he was left to consider whether damages are an adequate remedy for the partied and to assess the balance of convenience. At this juncture, the Judge was of the view that these two questions were intertwined. He stated that if the Defendant’s were to continue selling sarongs using a mark substantially similar to the Plaintiff’s trade mark at a price lower than the plaintiff’s sarong, the circumstances are such that the defendant can be expected to penetrate the market and to successfully ride on the plaintiff’s goodwill to the substantial detriment of the Plaintiff’s business, the extent of which injury would not be easily quantified in damages if the plaintiff’s were to succeed at the trial. Further, the disadvantage to the Plaintiffs if the injunction is not granted in the sense of substantial and unqualified injury to its established goodwill far outweighs the disadvantage to the defendant if the injunction is granted in the sense that the injury to him would just be one of delay in proceeding with his yet to be established business. Therefore, the learned Judge was inclined to agree with the distinction made in the case of Home Box Office Inc v Channel 5 Home Box Office Ltd [1982]FSR 449 and applying the American Cyanamid principles, the learned Judge granted the injunction accordingly.

The decision of the English apex court of the American Cyanamid was applied in the Court of Appeal decision of Keet Gerald Francis Noel John v Mohd Noor Bin Abdullah & Ors [1995] 1 MLJ 193. Here, the Plaintiffs applied for an injunction to prevent the Defendant from entering a parcel of a timber concession known as Block 549 or from giving any effect to any agreement, apart from the agreement with the Plaintiff to sell him the timber logs harvested from the said parcel. In this case, the Court of Appeal stated that a judge hearing an application for an interlocutory injunction should consider whether the totality of the facts presented before him discloses a bona fide serious issues to be tried. Here, the judge is refrained from making any determination on the merits of the claim or any defence to it. The judge must weigh the harm that the injunction would produce by its grant against the harm that would result from its refusal. If after weighing all matters, he comes to the conclusion that the Plaintiff would suffer greater injustice if relief is withheld, then he would be entitled to grant the injunction especially if he is satisfied that the Plaintiff is in a financial position to meet his undertaking in damages.

Although the decision of Laddie J in Series 5 Software may be regarded as being ‘surprising or even heretical”, the learned Robert Walker J. in the case of Barnsley Brewery Company Ltd. V RBNB, the learned judge stated that although the decision of Laddie J in Series 5 Software be regarded as being ‘surprising or even heretical”, however, the learned Judge was of the view that the case is a valuable reminder of the background and context of the American Cyanamid and its basic message. The message in the American Cyanamid case is that applications for interlocutory injunctions cannot be ‘mini trials’ of disputed issues. Rather, the court would have to reduce the risk of granting a decision which will ultimately produce an unjust result.