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On April 7 2010, the Court of Appeal of Kuala Lumpur, in delivering its judgment in Taiping Poly (M) Sdn Bhd v Wong Fook Toh & ORS CA (2010 6CLJ 51), drew a distinction between the net loss of profits and the loss of sales, as a result of an infringement and passing off of a trademark.

The appellant (Taiping Poly) in this case is the registered proprietor for trademark Haitop in Class 18 in respect of, amongst others, travel, hand, luggage and school bags and purses.

In the High Court, the Appellant’s cause of action against the Respondent was based on infringement of its registered mark and/ or passing off of the said trademark; in which the Respondent was offering to sell similar goods as the appellant under their trademark “HIGHERTOP”. The High Court Judge held the Respondent liable and damages were awarded to the Appellant for loss of sales.

The respondent appealed to the Judge in chambers. The learned Judge in an overview set aside the order for loss of sales awarded to the appellant and substituted the order with damages for loss of net profits in respect of infringement and damages for loss of goodwill with interest applicable to both, until full realisation from the date of order.

The learned Judge highlighted that loss of sales merely constituted evidence used as a means or tool to ascertain the damages and that, it cannot be equated to damage actually sustained by the injured party, particularly where there is other evidence, such as accrued profits. The cost of production, other expenditure and the sales to persons who have not been misled should also be considered. This is to avoid the injured party being over compensated.

The size of the award in respect of goodwill is essentially a matter of discretion depending upon the facts of the particular case. It is submitted that the greater the reputation, the more vulnerable it is to damage. As such, the learned Judge had taken into account the reputation of appellant and the length of time of infringement and awarded damages accordingly.

In conclusion, we note that an infringer is only liable for loss actually sustained by the injured party, being the natural and direct consequence of the unlawful acts of the infringer.