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Diesel S.P.A. v. Bontton Sdn Bhd: The own name doctrine and the court’s power to make declarations of non-infringement

In Diesel S.P.A. v. Bontton Sdn Bhd [2020] MLJU 715, the Malaysian Court of Appeal was faced with, inter alia, the novel issues of, firstly, whether the court has discretionary powers under Malaysian law and/or an inherent jurisdiction to grant a negative declaration in respect of infringement, and, secondly, whether it should grant recognition of a trademark in reliance on the own name doctrine. The own name doctrine is a legal doctrine in trademark law which states that a person had the right to the use of his own name as a trademark in good faith.

The plaintiff and appellant, Diesel S.P.A., is an Italian lifestyle company that has had the name “DIESEL” as its house mark and central theme since 1978. The appellant had intended to commence sales and distribution in Malaysia of its products using its “DIESEL” marks in Class 25 for clothing and footwear.

At this time, the defendant and respondent, Bontton Sdn Bhd, also had goods in Class 25 bearing the word “Diesel” and was in the business of retailing and distribution of ready-made casual wear and related accessories. Both parties’ positions were that they had expended substantial sums of money on advertising, promoting and marketing the goods bearing their respective trademarks and that they were the common law owners of their respective trademarks.

Prior to the proceedings, both parties had sued each other’s distributors for infringement by selling products bearing their respective trademarks. Although the respondent succeeded in obtaining an interim injunction in the suit, neither party took the proceedings any further. Following this, the appellant filed an originating summons for declaration orders seeking, inter alia, a declaration that the bona fide use by the appellant of its “DIESEL” marks does not infringe the respondent’s registered trademarks, on the grounds that such use would constitute use by the appellant of its own name.

The appellant’s case was that it is entitled to the declaratory orders on the grounds that it has simply been using its own name in good faith. The “DIESEL” mark had been adopted since the time the appellant had been incorporated with the trading name of “Diesel”, and the appellant had acquired goodwill and a reputation over 38 years. Further, the appellant’s position was that the own name doctrine was enshrined in Section 40(1)(a) of the Malaysian Trade Marks Act 1976 and that the appellant is entitled to rely on Section 40(1)(a) even in the absence of a trademark infringement action. Section 40(1)(a) of Trade Marks Act 1976 reads as follows:

“Notwithstanding anything contained in this Act, the following acts do not constitute an infringement of a trade mark –

  1. The use in good faith by a person of his own name or the name of his place of business or the name of the place of business of any of his predecessors in business;”

The respondent’s position was that the appellant had incorrectly and improperly framed his originating summons as the appellant was not seeking a rectification of a registered trademark or alleging any trademark infringement.

The High Court refused to exercise its discretionary powers under Section 41 of the act to grant the declaratory orders on the grounds that Section 40(1)(a) was intended as a statutory defence to trademark infringement and not to confer a right on the party relying on it. The High Court also held that the court had no jurisdiction or power to make such declaratory reliefs. Appellant subsequently appealed to the Court of Appeal.

The Court of Appeal first went into an examination of the issue of the court’s jurisdiction and powers and held that the absence of an express provision for a declaratory relief did not amount to a lack of power or jurisdiction on the part of the court to grant such relief.

In respect of Section 40(1)(a), the Court of Appeal held that it was expressed in “perfectly general terms”, with its clear intent being to declare, pronounce or provide for certain acts as not constituting infringement of trademarks. The court rejected narrow construction of the scope of Section 40(1)(a) or Section 40 itself as only being applicable as a defence to trademark infringement as incorrect and as going against the clear and express terms of the provisions. The Court of Appeal also granted the appellant the declaratory order sought, based on the ample documentary evidence that the appellant had provided for the creation and evolution of its “Diesel” name.

The Court of Appeal’s decision is significant for two reasons: Firstly, it establishes that the court may exercise its inherent jurisdiction to grant declaratory reliefs even if the particular declaratory relief has not been expressly provided for. Secondly and more importantly for the law of trademarks in Malaysia, it establishes that the court may make a declaration of non-infringement without the need for initiating infringement proceedings. The Court of Appeal’s decision will be a welcome relief to traders, who have been using their own name in good faith and honesty, and wish to market, retail and distribute their goods in Malaysia under that name, without the fear of threat of an action for trademark infringement.

By: Denise Mirandah and S. Siddharth Sriram

This article was first published in Asia IP. For more info, please visit https://www.asiaiplaw.com/section/ip-analysts.