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The Honda case – Injunctive Relief in Industrial Design and Three Dimensional Copyright in Malaysia

The High Court in Malaysia has delivered an important decision on the various issues pertaining to copyright and industrial design with special reference to an application for an interlocutory injunction.

In Honda Giken Kogyo Kabushiki Kaisha v Allied Pacific Motor (M) Sdn Bhd & Anor [2005] 3 MLJ 30, the famous Japanese marque for bikes and cars applied for an interlocutory injunction against a local manufacturer of a motorcycles in respect of two models manufactured by them. The first model was known as the COMEL MANJA JMP 125, to which Honda claimed had infringed its industrial design in respect of various designs filed embodying its HONDA WAVE 125 model motorcycle. The next was a claim against the defendants’ for manufacturing the COMEL MANJA JMP-100 (GS-5) motorcycle, for copyright infringement, on the grounds that the manufacture of the same was infringing the copyright of the design drawings embodying the plaintiff’s HONDA EX-5 DREAM motorcycle.

The key findings of the court on the law was that novelty for industrial designs in Malaysia is local, and thereby the publication or use of the design outside the country prior to registration will not render the design invalid.

Industrial Design

The claim brought by Honda was based on several industrial design registrations in Malaysia in respect of a motor scooter, the rear combination lamp, leg shields and handle cover equipped with lights of a motor scooter. These designs pertained to parts of a motorcycle and the vehicle proper embodied in the said HONDA WAVE 125 motorcycle.

On the issue of the validity of the design, the court held firstly that once a design has been gazetted, the court will presume that the administrative work gearing towards the registration was duly performed by the Registrar in a regular manner and that all the necessary documentation was filed and that it complied with the legal requirements of the law pertaining to registration. Thereby the registration was valid. This presumption of regularity is not restricted to the question of scrutinizing whether the right forms have been correctly filled or the right fees have been paid, but also extends to the application of the mind when construing whether the design concerned is within the scope of the provisions of the law. Therefore unless there is any evidence to displace it, the court will accept that the registration was regularly carried out. This has the impact of making all industrial designs valid unless proven otherwise notwithstanding there being no substantive examination in Malaysia in respect of industrial designs.

As to challenging the issue of validity, the defendants however claimed that the industrial designs concerned were not new as Honda had launched the said WAVE 125 motorcycle earlier in Thailand and so their registration of the industrial design in Malaysia was flawed. The court held that as the defendants had thrown in the challenge, the burden is on them to establish invalidity following the English decision of AMP Incorporated v Utilux Proprietary Ltd [1972] RPC 103.

On the issue of whether the design was new or not, the court rejected the argument that earlier use in Thailand would defeat novelty in Malaysia. This was as the relevant provision of the Industrial Designs Act states that the design is not considered new if it was disclosed to the public anywhere in Malaysia, or was the subject matter of another application with an earlier priority date. The provision therefore suggests that anything outside the scope of those two variables may be taken to be new and so the ingredient of novelty is obviously territorial. Thereby any search requirement in respect of novelty for industrial designs would need to be limited to within Malaysia only.

The court then went on to compare the infringing design with Honda’s designs by looking at the designs, sketches and pictures as well as comparing the physical product. The court held on a balance of probabilities the defendants’ COMEL MANJA JMP 125 was an obvious imitation of the Honda’s WAVE 125 and so there was a serious issue to be tried.

Copyright Infringement

The court here considered Honda’s claim that its copyright in the two dimensional drawings and its three dimensional form, embodied in the form of a motorcycle branded under the model of HONDA EX-5 DREAM motorcycle was copied by the defendants in their production of their COMEL MANJA JMP-100 (GS-5) motorcycle. The court then followed the earlier Malaysian decision of Peko Wallsend Operations Ltd v Linatex Process Rubber Bhd & Anor [1993] 1 MLJ 225 that a three dimensional reproduction of a two dimensional drawing was copyright infringement.

On the issue of authorship the court found that the works were initially vested on the author, one Mr. Ichiro Koizumi, but as it was made in the course of his employment with Honda R & D Co Ltd, the copyright was deemed transferred to the plaintiff.

The court found that the copyright items were created in Japan but were first published in Thailand, but due to the application of the Berne Convention in Malaysia with retroactive effect since 1st October 1990 although the work was first published in Thailand it would be entitled to copyright protection in Malaysia.

The court proceeded to go through the documents supporting Honda’s copyright, which consisted of a document that confirmed that the said Mr. Ichiro Koizumi who conceptualized and designed the HONDA EX-5 DREAM was employed by Honda R & D Co Ltd and the assignment from Honda R & D Co Ltd to Honda Motor Co Ltd. The court then went on to compare the defendants’ COMEL MANJA JMP–100(GS-5) motorcycle with the Honda’s EX-5 DREAM motorcycle and found that there was substantial reproduction of the design drawings in direct contravention of the plaintiff’s rights.

There was therefore a serious issue to be tried and the court went on to consider whether an interim injunction ought to be granted which the court held was to be underlined by the elements of justice.

Interim Injunction

Injunction on the industrial design

With respect to the infringement of the registered design in respect of the Honda’s WAVE 125, the court decided that despite the finding of facts and the troubling similarities with the industrial design there were several factors that militated against the granting of an interim injunction.

The main factor was that although Honda had their design registered on 7th December 2000, they never launched their HONDA WAVE 125 motorcycle in Malaysia, in fact even when the application for interim injunction was filed on 17 May 2004, it was still yet to be launched. This is to be contrasted to the defendants’ position where they were well ahead and had created a niche market for themselves by the production of the COMEL MANJA 125 motorcycle. Therefore if the interim injunction is granted there will be serious ramifications and financial and social consequences. This was because there were factories running, workers being employed as well as contracts with various third parties being entered into. This is to be contrasted with Honda’s position where it still had yet to launch its HONDA WAVE 125 and so would suffer only minimal losses.

A further ground for not granting the injunction was that the Court found that there was another registered design owned by a sister company of the defendants on which the defendants claimed that their design was based on. In view of the fact that a design that is registered is considered to be prima facie valid, the fact that there was another design that could be in issue threw into some doubt the infringement by the defendants of the plaintiff’s industrial design. This thereby affected the certainty of the plaintiff being successful in the main case.

Injunction on the copyright infringement

As to the injunction against the defendants’ COMEL MANJA for copyright infringement, the court found that the HONDA EX-5 was available in Malaysia for many years and was Honda’s best selling motorcycle. The court held that the fact it was Honda’s best selling motorcycle despite the defendants’ product being available in the market militated against granting the injunction. This was because it appeared that the defendants’ product posed no threat to it. Again the court felt the defendants’ business will be destroyed beyond repair by the injunction and since the defendants were not impoverished companies, damages will be an adequate remedy.

Conclusion

It appears that the court has taken a view that once a party has substantial operations it will be reluctant to grant an interlocutory injunction against it and leave the matter to be decided at trial. This is as the interim injunction may cause serious economic dislocation and the court may be reluctant to do this without liability being properly established at a full trial.

Therefore although a party may have a strong case, the ultimate assessment of the balance of convenience is important and thereby it is imperative that parties enforce their intellectual property rights in a timely fashion and not let the defendant get into an entrenched position.

Critique

The decision however may be difficult to sustain especially as regards the reluctance of the judge to grant the injunction in respect of the copyright infringement, where he felt the balance of convenience was against granting the injunction as the sales of the HONDA EX-5 was unaffected. This would usually have no impact, as if there is a clear finding of infringement the court should have granted the injunction, especially as Honda would be in a position to make good any undertaking of damages. Therefore based on the usual principles the relief should have been granted.

As to the infringement of the industrial design it was a tough decision, which could have gone either way, as Honda had not sold their WAVE 125 model as yet. Furthermore there was the issue of another industrial design being the design that was being infringed. However it is not a decision that is so apparent, that another court would have certainly come to the same finding.

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