CEYLON TEA COMPANY ALMOND TEA COMPANY 11 TH LAWASIA INTERNATIONAL MOOT COMPETITION 2016 COLOMBO, SRI LANKA C 1027 R. held at

Transcription

1 C 1027 R 11 TH LAWASIA INTERNATIONAL MOOT COMPETITION 2016 held at COLOMBO, SRI LANKA Arbitration proceedings in accordance with KLRAC i-arbitration Rules CEYLON TEA COMPANY (Claimant) Versus ALMOND TEA COMPANY (Respondent) MEMORANDUM for THE RESPONDENT

2 -Table of Contents- TABLE OF CONTENTS TABLE OF CONTENTS... I INDEX OF AUTHORITIES... II STATEMENT OF JURISDICTION... V STATEMENT OF FACTS... VI QUESTIONS PRESENTED... IX SUMMARY OF PLEADINGS... X PLEADINGS... 1 I. THE APPLICABLE LAW THAT SHOULD BE REFERRED TO IN THIS DISPUTE SHOULD BE THAT OF MALAYSIA Conflict of Laws principles of Malaysia shall be applicable in the present dispute Arguendo: Seat of arbitration is in Sri Lanka; the applicable law will still be that of Malaysia Choice of forum is not a sole criterion to determine the applicable law Real and Close connection test... 2 II. ATC HAS NOT BREACHED THE AGREEMENT BY DISTRIBUTING SAILOR S CEYLON AFFIXED WITH THE ATC MARK IN MALAYSIA The distribution agreement between CTC and ATC is void because of the unconscionable bargaining power of ATC The goods manufactured and distributed by the Respondent were not competing goods Even if there is a breach, the breach is not a continuing breach as the noncompete clause is not enforceable III. ATC S USE OF THE WORD CEYLON IN RESPECT OF ITS TEA PRODUCTS IS NOT MISLEADING The word Ceylon does not qualify as a Geographical Indication An action for infringement of Geographical Indication is not sustainable Intellectual Property Corporation had not provided exclusive restrictions on the use of certain words... 8 MEMORANDUM for THE RESPONDENT -i-

3 -Table of Contents- IV. THE USE OF THE ATC S MARK BY ATC ON THE PACKAGING OF TEA BRANDED AS SAILORS S CEYLON DOES NOT AMOUNT TO EITHER PASSING OFF OR TRADEMARK INFRINGEMENT The use of the ATC s Mark does not constitute the tort of passing off The Claimant s mark does not possess adequate goodwill The Respondent has not made a misrepresentation that is likely to deceive the public The said misrepresentation has not caused damage The use of the ATC s Mark constitutes Trademark Infringement PRAYER FOR RELIEF MEMORANDUM for THE RESPONDENT -ii-

4 -Index of Authorities- INDEX OF AUTHORITIES Cases A. G. Spalding & Bros. v. A. W. Gamage Ltd (1915) 84 L.J. Ch Alec Lobb (Garages) Ltd and others v Total Oil Great Britain Ltd [1983] 1 W.L.R Bollinger & Ors v Costa Brave Wine Co Ltd [1960] 1 RPC Chocosuisse v Cadbury [1998] RPC Danone Biscuits Manufacturing (M) SdnBhd v Hwa Tai Industries Bhd [2010] 8 MLJ De Seguros S.A. v Enesa Engenharia S.A. [2012] EWHC Diaego North America v Intercontinental Brands (ICB) [2010] EXCA Civ Elba Group SdnBhd v Pendaftar Cap Dagangandan Paten Malaysia&Anor[1998] 4 CLJ Supp Erven Warnink Besloten Vennootschap and Another v J. Townend & Sons (Hull) Ltd. and Another [1979] AC Fage UK v Chobani UK [2013] EWHC 630 (Ch.)... 8 Gledhow Autoparts v Delaney (1965) 1 WLR 1366 (CA)... 6 Hodgkinson Corby Limited and Another v Wards Mobility Services Limited [1995] F.S IRC v Muller & Co. s Margarine [1901] AC Kickapoo (Malaysia) SdnBhd and another v The Monarch Beverage Co (Europe) Ltd [2010] 1 SLR L Oreal v Bellure[2006] EWHC 2355 Ch Lego System v Lego M. Lemelstrich [1983] F.S.R Maestro Swiss Chocolate Sdn. Bhd. & 3 Ors v Chocosuisse Union Des Fabricants Suisses De Chocolate & 2 Ors & Another Appeal FCCA No. 02(f) (W)... 8, 11, 13 Marks and Spencers v InterfloraInc [2013] EWCA Civ , 15 MEMORANDUM for THE RESPONDENT -ii-

5 -Index of Authorities- McCurry Restaurant (KL) SdnBhd v McDonalds Corporation [2009] 1 LNS Merlin Financial Consultants Ltd v Cooper [2014] EWHC 1196 (QB)... 6 Office Angels v Rainer-Thomas [1991] I.R.L.R Re United Railways of Havana, etc. Warehouses Ltd. [1960] Ch. 52, 91 (C.A.)... 3 Reddaway v. Banham [1896] A.C Rekitt & Colman v Borden (1990) 1 WLR Richard Pieris Arpico Finance Limited Vs. Arpico Finance Company Plc S.C (C.H.C) Appeal No. 41/ , 12 Scandecor Development AB v Scandecor Marketing AB [1999] FSR Schroeder Music Publishing Co Ltd v Macaulay [1974] 3 A11 E.R Sinma Medical Products (M) SdnBhd v Yomeishu Seizo Co Ltd ([2004] 4 Malayan Law Journal 358) The Leather Cloth Co v The American Cloth Co (1865) 11 H.L Cas TohtonkuSdnBhd v Superace (M) SdnBhd [1992] 1 CLJ (Rep) Statutes Malaysian Geographical Indications Act, Malaysian Trade Marks Act, Treatises Black s Law Dictionary (9th edn)... 9 Born Gary, International Commercial Arbitration (2 edn, Kluwer Law International 2014)... 2 Dicey and Morris on the Conflict of Laws (Collins ed., Sweet and Maxwell 2000)... 2 MEMORANDUM for THE RESPONDENT -iii-

6 -Index of Authorities- Lionel Bently and Brad Sherman, Intellectual Property Law (4 th edn, OUP 2014)... 12, 14, 15 Redfern and Hunter on International Arbitration (eds Blackaby and Partasides, 6th edn. 2015)... 1, 2 Won -Mog Choi, Like Products' in International Trade Law (OUP 2003)... 5 MEMORANDUM for THE RESPONDENT -iv-

7 -Statement of Jurisdiction- STATEMENT OF JURISDICTION The Parties to the Distribution Agreement have consented to submit the dispute to arbitration as per Clause 22 of the said agreement in accordance with the Kuala Lumpur Regional Centre for Arbitration i-arbitration Rules (KLRCA Rules). MEMORANDUM for THE RESPONDENT -v-

8 -Statement of Facts- STATEMENT OF FACTS The Parties Involved The Claimant, Chelsea Tea Company ( CTC ), is a company incorporated in Sri Lanka and is the manufacturer of Ceylon tea under the brand name CTC CEYLON. It was established in 1965, and has its registered address at Lot 14, Dawson Street, Colombo 00202, Sri Lanka. The Respondent, involved in the distribution concerning the subject matter is, Almond Tea Company ( ATC ), incorporated in Singapore. It was founded in 1999 with the registered address at at Suite 18-1, Katong Tower, 87 Ceylon Road, Singapore The Sri Lankan Tea Board ( SLTB ) is a fully government controlled statutory body that was established by the Parliament on 1 January It is responsible for the development of tea industry in Sri Lanka, promotion of the Ceylon tea globally and also the implementation of the regulations that are related to the industry. The Distribution Agreement The claimants and the respondents entered into a distribution agreement ( the Agreement ), which was signed by the heads of both the parties, Marvan Ranatunga, the Chairman of CTC and Philip Chan, the Managing Director of the ATC, in Malaysia, on 20 October 2008, in order to expand the tea business in Malaysia. The background to this was that during a visit to a Tea Plantation in Malaysia, Mr. Ranatunga had met Mr. Chan and was really impressed with his knowledge of Malaysian Tea industry and therefore decided to appoint ATC as the exclusive distributor of the tea CTC CEYLON in Malaysia. Initial reluctance and turning down of the offer by Mr. Chan didn t bog down Mr. Ranatunga. A fungal disease had destroyed the plantations from where the ATC sourced MEMORANDUM for THE RESPONDENT -vi-

9 -Statement of Factsits tealeaves. Mr. Ranatunga, after this, went back to negotiations with Mr. Chan and finally they agreed upon a nominal monetary consideration and entered into the distribution agreement. The Agreement had all the particulars about the distribution targets, restrictions on the distributor, termination and its consequences, warranties and liabilities, marketing and support and training and had appointed ATC as the exclusive distributor of CTC CEYLON in Malaysia. Breach of the Agreement The relevant terms of the Agreement that were found to be breached by the Respondent are mentioned in the clause 4.2 which read, During the Term and for a period of 12 months after it the Distributor must not be concerned or interested, either directly or indirectly, in the manufacture or distribution in the Territory of any goods that compete with the Products, affixed with the Trade Marks or any other arguably similar mark in the Territory. It was found by the claimants in March 2015, that the Respondents had been growing and manufacturing tea and distributing the products under the brand name SAILOR S CEYLON in Malaysia since November That was when the Agreement was still in force as it had to come to an end on October 3013 and therefore the Respondents have breached the contract. Violation of Trademark The name that the Respondents were using for their products was SAILOR S CEYLON that was allegedly similar to the name used by the Claimants for their tea i.e. Ceylon Tea. The Respondents also used the mark on the product which had a lion logo that was also similar to the Claimants logo. MEMORANDUM for THE RESPONDENT -vii-

10 -Statement of Facts- The Claimants had immediately asked the Respondents to pay damages and for the breach and in response to it, the Respondents said that they have every right to use the word Ceylon on their products. The parties decided to resort to arbitration to resolve the dispute. MEMORANDUM for THE RESPONDENT -viii-

11 -Questions Presented- QUESTIONS PRESENTED The following questions are presented before the Arbitral Tribunal for its consideration: 1. What is the applicable law in the present dispute? 2. Whether ATC s use of the word Ceylon in respect of its tea products is misleading? 3. Whether the use of the word Ceylon by the Respondent in respect of its tea products misleading? 4. Whether the use of the ATC s mark amounts to either passing off or trademark infringement or both? MEMORANDUM for THE RESPONDENT -ix-

12 -Summary of Pleadings- SUMMARY OF PLEADINGS I. THE APPLICABLE LAW THAT SHOULD BE REFERRED TO IN THIS DISPUTE SHOULD BE THAT OF MALAYSIA. The applicable law should be that of Malaysia. We submit that the seat of the arbitration is in Malaysia and consequently the substantive laws of Malaysia will govern the disputes. Further, the conflict of rules would also establish that these substantive laws of Malaysia will be the applicable law. II. ATC HAS NOT BREACHED THE AGREEMENT BY DISTRIBUTING SAILOR S CEYLON AFFIXED WITH THE ATC MARK IN MALAYSIA. ATC has not materially breached the Distribution Agreement by distributing Sailor s Ceylon in Malaysia. We also contend that the ATC s product was not a competing product. Even if there is a breach of contract, the same is not a continuing breach as the non-compete clause is not enforceable. III. ATC S USE OF THE WORD CEYLON IN RESPECT OF ITS TEA PRODUCTS IS NOT MISLEADING. The word Ceylon in itself is not capable of being protected as a Geographical Indication and is therefore is not capable of being protected. It should be noted that the Malaysian Intellectual Property Corporation clearly indicated that SLTB, the owner of the trademark, had no exclusive right over the use of the phrase, Ceylon Tea. Further, Ceylon by itself does not possess any goodwill to influence customer behavior (no evidence has been adduced to prove goodwill), implying that there is no potential to mislead. MEMORANDUM for THE RESPONDENT -x-

13 -Summary of Pleadings- According to case law, the presence of goodwill is a basic requirement to sustain an action for infringement of Geographical Indication. IV. THE USE OF THE ATC S MARK BY ATC ON THE PACKAGING OF TEA BRANDED AS SAILORS S CEYLON DOES NOT AMOUNT TO EITHER PASSING OFF OR TRADEMARK INFRINGEMENT. The test laid down for ascertaining passing off in the Rekitt & Colman v Borden 1 (popularly known as Jif Lemon case ) case is not satisfied by the use of the ATC s mark. The Respondent has not used a mark that is likely to deceive customers. The Lion logo and ATC s mark can be adequately differentiated. Further by means of disclaimers, Respondent has eliminated the possibility of deception. There is no infringement under the requisite law. 1 Rekitt & Colman v Borden (1990) 1 WLR 491. MEMORANDUM for THE RESPONDENT -xi-

14 -Pleadings- PLEADINGS I. THE APPLICABLE LAW THAT SHOULD BE REFERRED TO IN THIS DISPUTE SHOULD BE THAT OF MALAYSIA. Multiple laws govern different aspects in an international commercial arbitration. According to Redfern and Hunter, amongst the five different systems of law, which in practice may have, a bearing on an international commercial arbitration is often described as the applicable law, the governing law, the proper law of the contract, or the substantive law. This law governs the substantive issues in dispute. 2 Albeit, the Distribution Agreement (hereafter the Agreement ) contains the dispute resolution clause, the same does not specify the applicable law that would govern the merits of the dispute. 3 However, the clause specifies that the parties have agreed to use the KLRCA i-arbitration Rules and the place of the arbitration is Sri Lanka. 4 That we submit before the tribunal that the appropriate conflict of laws principles indicate the laws of Malaysia to be the applicable law. For, [1] the seat of the arbitration is in Malaysia, and [2] the real and close connection test also leads to the same conclusion Conflict of Laws principles of Malaysia shall be applicable in the present dispute. The institutional rules governing the present arbitration as indicated by the parties are the KLRCA i-arbitration Rules. Article 35 of the said Rules clearly state that if the parties fail to designate the rules of law that would be applied to the substance of the dispute, the arbitral tribunal shall apply the law which it determines to be appropriate. 5 2 Redfern and Hunter on International Arbitration (eds Blackaby and Partasides, 6th edn. 2015) Clause 22, The Agreement. 4 Clause 22, The Agreement. 5 Redfern and Hunter on International Arbitration (eds Blackaby and Partasides, 6th edn. 2015) 165. MEMORANDUM for THE RESPONDENT -1-

15 -Pleadings- It is claimed that the conflict of laws of Malaysia be applied as the seat of the arbitration is in Malaysia. Clause 22 of the Agreement does not specify Sri Lanka as the seat of the arbitration and merely uses the word place Arguendo: Seat of arbitration is in Sri Lanka; the applicable law will still be that of Malaysia Choice of forum is not a sole criterion to determine the applicable law Gary Born, a leading commentator opines that the contemporary approach to determine the applicable law is not based on the choice of forum alone. 6 He believes that choice of forum does not necessarily imply the law governing the contract to be the law of the country. Similarly, other commentators like Redfern and Hunter 7 and Dicey and Morris 8 believe that the parties for various reasons like neutrality or convenience may agree upon the seat of arbitration. Therefore, the seat shall not be construed to imply the choice of law of that jurisdiction Real and Close connection test It is submitted that if there is no express selection of the governing law, an intention with regard to the law to govern the contract could be inferred from the terms and nature of the contract and from the general circumstances of the case. 9 Further, if intention cannot be deciphered from the circumstances, the contract is to be governed by the system of law with which the transaction had its closest and most real connection. 10 In Sulamerica Cia Nacional 6 Born Gary, International Commercial Arbitration (2 edn, Kluwer Law International 2014). 7 Redfern and Hunter on International Arbitration (eds Blackaby and Partasides, 6th edn. 2015). 8 Dicey and Morris on the Conflict of Laws (Collins ed., Sweet and Maxwell 2000). 9 Dicey and Morris on the Conflict of Laws (Collins ed., Sweet and Maxwell 2000) Dicey and Morris on the Conflict of Laws (Collins ed., Sweet and Maxwell 2000) 10. MEMORANDUM for THE RESPONDENT -2-

16 -Pleadings- De Seguros S.A. v Enesa Engenharia S.A. 11, the principle of closest and the most real connection test was reiterated and relied upon as well. The principal matters that assist to investigate the closest and the most real connection are the place of contracting, the place of performance, the place of residence or business of the parties and the nature and subject matter of the contract. 12 In light of the authorities, we submit before the tribunal that the Distribution Agreement was governing the territory of Malaysia. The transaction was carried out in the Malaysian currency and the place of business was in Malaysia. Therefore, the above stated connecting factors imply that the Malaysian laws would govern the substance of the dispute. II. ATC HAS NOT BREACHED THE AGREEMENT BY DISTRIBUTING SAILOR S CEYLON AFFIXED WITH THE ATC MARK IN MALAYSIA The distribution agreement between CTC and ATC is void because of the unconscionable bargaining power of ATC. In Alec Lobb (Garages) Ltd and others v Total Oil Great Britain Ltd 13, the High Court laid down three conditions fulfillment of which would entitle a party to claim relief before a court on grounds of unconscionable bargaining: That one party was at a serious disadvantage to the other, whether through poverty or ignorance or lack of advice or otherwise, so that circumstances existed of which the unfair advantage could be taken. That the weakness of the one party had been exploited by the other in some morally culpable manner. 11 De Seguros S.A. v Enesa Engenharia S.A. [2012] EWHC Re United Railways of Havana, etc. Warehouses Ltd. [1960] Ch. 52, 91 (C.A.). 13 Alec Lobb (Garages) Ltd and others v Total Oil Great Britain Ltd [1983] 1 W.L.R. 87. MEMORANDUM for THE RESPONDENT -3-

17 -Pleadings- That the resulting transaction has been, not merely hard and improvident, but overreaching and oppressive. In this case, ATC was at a disadvantage because their entire batch of tealeaves was spoiled by the fungal disease and their business was negatively affected due to the same. They had incurred huge losses because of this devastation and hence did not have the required bargaining power in this agreement. CTC took optimum advantage of this situation and made ATC enter into a distribution agreement whose terms were significantly favourable to CTC. Clause 4.2 of the Distribution Agreement states: During the Term and for a period of 12 months after it the Distributor must not be concerned or interested, either directly or indirectly, in the manufacture or distribution in the Territory of any goods that compete with the Products, affixed with the Trade Marks or any other arguably similar mark in the Territory. As per the facts of the case, ATC had its economic base only in Malaysia and Singapore. Now, with the incorporation of this clause, after the expiry of this agreement, ATC cannot be associated with the manufacturing and distribution of tea, directly or indirectly, in Malaysia for a period of one year. This clause is grossly unfair for ATC as they have economic bases only in two countries and if they are barred to carry on business in one of them for a period of one year then this would affect their business and their annual revenues to a great extent. In Schroeder Music Publishing Co Ltd v Macaulay 14, Lord Diplock opined that any standard form of contract which is imposed upon a party, which has a weaker bargaining power, would be held void on grounds of unconscionability, irrespective of the nature of the contract. 14 Schroeder Music Publishing Co Ltd v Macaulay [1974] 3 A11 E.R MEMORANDUM for THE RESPONDENT -4-

18 -Pleadings- In this case, ATC clearly has a weaker bargaining power compared to CTC. So, the Distribution Agreement between ATC and CTC would be held void on grounds of unconscionability The goods manufactured and distributed by the Respondent were not competing goods. The tea manufactured by ATC bearing the name SAILOR S CEYLON, cannot be considered a competing good as it did not declare any of its products as Ceylon Tea and moreover did not manufacture its products in accordance with the specifications of the Sri Lankan Tea Board whereas the claimants manufacture their tea according to the set standards fixed by SLTB. 15 According to Won Mog Choi, an assessment of whether there is a direct competitive relationship between two products requires evidence that consumers consider the two products as alternative ways of satisfying a particular need or taste. 16 Therefore, we can conclude that the Respondent s product SAILOR S CEYLON is not in direct competition with the Claimant s product as the Respondent manufactured only Black Tea under the product name Earl Grey Tea and English Breakfast Tea whereas CTC manufactures only Ceylon Tea that too in accordance with the standards set by the Sri Lankan Tea Board Even if there is a breach, the breach is not a continuing breach as the non-compete clause is not enforceable. The restriction imposed in Cl. 4.2 is very broad in nature. Since ATC had a good market presence in Malaysia, CTC entered into an agreement with it. Post expiry of the contract, ATC is free to continue its own business. A restriction for 12 months is unreasonable as it 15 Refer to Question 4 & 15, Further Clarifications to the Moot Problem. 16 Won -Mog Choi, Like Products' in International Trade Law (OUP 2003) Refer to Question 11 & 15, Further Clarifications to the Moot Problem. MEMORANDUM for THE RESPONDENT -5-

19 -Pleadings- would be highly prejudicial since ATC will be completely barred from operating in Malaysia which was its original base. The restraint will not be reasonable between the parties if it provides the party in whose favour it is imposed with more protection than is justified in the circumstances. If the restraint goes further than is reasonably necessary to protect a legitimate business interest, it will be held unenforceable. 18 The extent of non-compete should be limited, to protect the legitimate interests of the business, notably aspects relating to business and trade secrets; and should be reasonable in duration, geographic scope; and scope of activity covered. In this case, ATC was only serving as an exclusive distribution channel in Malaysia and not as an agent or an employee of CTC, hence there is no such risk of trade secrets or important business secrets being exploited unduly. A restraint in an employment contract restricting the defendants from engaging in the business of an employment agency within a specified area for a period of six months was held unenforceable by the Court of Appeal. it must be shown that there is some advantage or asset in the business which can properly be regarded as the employer's property and which it would be unjust to allow the employee to appropriate for his own purpose. Although the agency did have a legitimate interest to protect, the restriction was held to be too widely drawn. 19 Gledhow Autoparts v Delaney 20, but concluded that the covenant in that case, to last three years post-termination, was essentially an anti-competition clause. III. ATC S USE OF THE WORD CEYLON IN RESPECT OF ITS TEA PRODUCTS IS NOT MISLEADING 18 Merlin Financial Consultants Ltd v Cooper [2014] EWHC 1196 (QB). 19 Office Angels v Rainer-Thomas [1991] I.R.L.R Gledhow Autoparts v Delaney (1965) 1 WLR 1366 (CA). MEMORANDUM for THE RESPONDENT -6-

20 -Pleadings- The issue in the instant case is whether the use of the word Ceylon, as used on the Defendant s packaging get up, denotes a violation of a geographical indication within the Malaysian Geographical Indications Act, 2000 (hereafter GI Act ). It is submitted that the use of the term CEYLON is not violating provisions of the GI Act and its usage is not misleading The word Ceylon does not qualify as a Geographical Indication According to Section 2 of GI Act, "geographical indication" means an indication which identifies any goods as originating in a country or territory, or a region or locality in that country or territory, where a given quality, reputation or other characteristic of the goods is essentially attributable to their geographical origin; Further, Section 5 of the GI Act states that, Section 5. Institution of proceedings for injunction and damages (1) Any interested person may institute proceedings in the Court to prevent, in respect of geographical indications- (a) the use in the course of trade of any means in the designation or presentation of any goods that indicates or suggests, in a manner which misleads the public as to the geographical origin of the goods, that the goods in question originate in a geographical area other than the true place of origin; The word Ceylon is not a geographical indicator or a certification mark. It does not inform consumers that the tea is made in a manner that confirms to the standard set by SLTB and that it possesses the qualities or characteristics for which that place is known. It is not MEMORANDUM for THE RESPONDENT -7-

21 -Pleadings- presented as a Geographical Indication, unlike indications such as Sabah tea or Sarawak pepper An action for infringement of Geographical Indication is not sustainable In Chocosuisse v Cadbury 22 case, it was stated that the claimant has to show that the geographical indication performs a function that is in addition to simply indicating the location of origin. It is required that the Geographical Indication possesses goodwill to sustain an action. Similar law was expounded the Diaego North America v Intercontinental Brands (ICB)(hereafter Vodkat ) 23 and Fage UK v Chobani (hereafter Greek Yoghurt ) 24 cases. It has not been proved by the Claimant that the word Ceylon possessed goodwill that would attract or influence customers and therefore, it has no potential to mislead Intellectual Property Corporation had not provided exclusive restrictions on the use of certain words The Intellectual Property Corporation of Malaysia had stated that SLTB has no exclusive rights over the words CEYLON TEA and SYMBOL OF QUALITY contained in the Lion Logo. 25 Considering the use of CEYLON TEA is itself not protected, it is not possible to protect the word Ceylon. Further, the packaging of the ATC s product bears distinguishing word Sailor, which would further inform consumers that the tea is not grown exclusively in Sri Lanka.The manner in which Sailor s Ceylon and ATC s mark is presented and stylized is intended to be a corporate 21 High Court decision in Maestro Swiss Chocolate Sdn. Bhd. & 3 Ors v Chocosuisse Union Des Fabricants Suisses De Chocolate & 2 Ors& Another. 22 Chocosuisse v Cadbury [1998] RPC Diaego North America v Intercontinental Brands (ICB) [2010] EXCA Civ Fage UK v Chobani UK [2013] EWHC 630 (Ch.). 25 Page 1, Moot Problem. MEMORANDUM for THE RESPONDENT -8-

22 -Pleadingslogo and no capacity does it violate the Geographical Indication. Finally, the Disclaimer 26 clearly identifies the location of origin of the product. It is a clear attempt to circumvent the instructions of the Intellectual Property Corporation. Therefore, it is submitted that the use of the word CEYLON is not misleading. IV. THE USE OF THE ATC S MARK BY ATC ON THE PACKAGING OF TEA BRANDED AS SAILORS S CEYLON DOES NOT AMOUNT TO EITHER PASSING OFF OR TRADEMARK INFRINGEMENT. ATC has been distributing tea products under the brand name SAILOR S CEYLON in Malaysia since November It is submitted that such use of the ATC s logo does not constitute the tort of passing off [4.1] and also amounts to trademark infringement [4.2] The use of the ATC s Mark does not constitute the tort of passing off. Passing off is defined by the Black s Law dictionary as, The act or an instance of falsely representing one's own product as that of another in an attempt to deceive potential buyers. 27 Further, Lord Kingsdown in The Leather Cloth Co v The American Cloth Co 28, stated the following: The fundamental rule is that one man has no right to put off his goods for sale as the goods of a rival trader, and he cannot therefore (in the language of Lord Lansdale in the case of Perry v Truefit (1843) 6 Beav. 66) be allowed to use names, marks, letters, or other indicia, by which he may induce purchasers to believe that the goods which he is selling are the manufacture of another person. Similarly, Lord Herschell in Reddaway v. Banham 29 remarked, "I am unable to see why a man should be allowed in this way more than in any other to deceive purchasers into the belief that they are getting what they are not, and thus to 26 Question 6 and 19, Further Clarifications to the Moot Problem. 27 Black s Law Dictionary (9th edn) The Leather Cloth Co v The American Cloth Co (1865) 11 H.L Cas Reddaway v. Banham [1896] A.C. 199 at page 211. MEMORANDUM for THE RESPONDENT -9-

23 -Pleadingsfilch the business of a rival." In A. G. Spalding & Bros. v. A. W. Gamage Ltd. 30 right the invasion of which is the subject of passing off actions as being the property in the business or goodwill likely to be injured by the misrepresentation was identified. In the famous case Bollinger & Ors v Costa Brave Wine Co Ltd 31 (hereafter Spanish Champagne case ), the concept of passing of in extended form was recognised. For the first time the notion of protecting collective goodwill was given credence. Subsequently, the House of Lords in the seminal Erven Warnink Besloten Vennootschap and Another v J. Townend & Sons (Hull) Ltd. and Another 32 (hereafter Advocaat case ) eruditely discussed the concept and the test applicable. Lord Diplock went on to list five characteristics which must be present in order to create a valid cause of action for passing off namely: (1) a misrepresentation; (2) made by a trader in the course of trade; (3) to prospective customers of his or ultimate consumers of goods or services supplied by him; (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence); and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quiatimet action) will probably do so. 30 A. G. Spalding & Bros. v. A. W. Gamage Ltd (1915) 84 L.J. Ch Bollinger & Ors v Costa Brave Wine Co Ltd [1960] 1 RPC. 32 Erven Warnink Besloten Vennootschap and Another v J. Townend & Sons (Hull) Ltd. and Another [1979] AC 731. MEMORANDUM for THE RESPONDENT -10-

24 -Pleadings- The Federal Court of Malaysia in Maestro Swiss Chocolate Sdn. Bhd. & 3 Ors v Chocosuisse Union Des Fabricants Suisses De Chocolate & 2 Ors& Another Appeal 33 elucidated, Indeed it should be noted that basically there is only one tort of passing off based on the recognition that misrepresenting one's own goods as the goods of someone else is not a separate genus of actionable wrong but a particular species of wrong included in a wider genus. 34 Finally the law was consolidated by Lord Oliver in the House of Lords Case of Rekitt & Colman v Borden 35 (hereafter Jif Lemon case ). The pre-requisites for an action of passing off were laid down. (The position of law has been affirmed by the Supreme Court of Sri Lanka in Richard Pieris Arpico Finance Limited Vs. Arpico Finance Company Plc 36.) To prove an action of passing of it is required to prove the following: (1) The Claimant s mark has goodwill; (2) The Respondent has made a misrepresentation that is likely to deceive the public; and (3) The said misrepresentation has caused damage. 37 It is argued that the ATC s use of the ATC s does not satisfy the conditions stipulated for an action of passing off The Claimant s mark does not possess adequate goodwill Goodwill possessed by the Lion logo has not been evidenced. In IRC v Muller & Co. s Margarine 38, considered till today the definitive case on goodwill 39, Goodwill was defined as: It is the benefit and advantage of a good name, reputation, and 33 Maestro Swiss Chocolate Sdn. Bhd. & 3 Ors v Chocosuisse Union Des Fabricants Suisses De Chocolate & 2 Ors& Another Appeal FCCA No. 02(f) (W). 34 Maestro Swiss Chocolate Sdn. Bhd. & 3 Ors v Chocosuisse Union Des Fabricants Suisses De Chocolate & 2 Ors& Another Appeal FCCA No. 02(f) (W) at Rekitt & Colman v Borden (1990) 1 WLR Richard Pieris Arpico Finance Limited Vs. Arpico Finance Company Plc S.C (C.H.C) Appeal No. 41/ The test has been applied in Sinma Medical Products (M) SdnBhd v Yomeishu Seizo Co Ltd ([2004] 4 Malayan Law Journal 358). MEMORANDUM for THE RESPONDENT -11-

25 -Pleadingsconnection of business. It is the attractive force which brings in custom. goodwill is worth nothing unless it has a power of attraction sufficient to bring customers home to the source from which it emanates. 40 It must be proven by the party prosecuting that by deceiving the public as to the source of the goods they are purchasing, it is the goodwill generated by the labels and/or bottles and/or other distinguishing features of the prosecuting party s get-up that is being misappropriated by the Appellant. 41 In order to do so, it is fundamental for the Respondent to provide in evidence proof of the goodwill they are seeking to protect. 42 In the instant case, there is no evidence to prove that the Lion Logo possessed goodwill in the market because no evidence concerning a good name, reputation, and connection of business has been found. Further, there is no causation established between the presence of the Lion Logo and customer behaviour. Therefore, the Lion logo does not possess goodwill. Without conceding the above it is argued: the Claimant cannot claim ownership of goodwill The party prosecuting the claim has to show that it has developed a reputation and understanding with the public sufficient to establish goodwill in the distinguishing mark in respect of which the protection of the law is sought. The importance in proving this goes to the root of passing off, viz. that the action is predicated on the misappropriation of goodwill developed amongst the public as a result of a signature mark, and not the misappropriation of 38 IRC v Muller & Co. s Margarine [1901] AC 217, Scandecor Development AB v Scandecor Marketing AB [1999] FSR 26, IRC v Muller & Co. s Margarine [1901] AC 217, Lionel Bently and Brad Sherman, Intellectual Property Law (4 th edn, OUP 2014) Richard PierisArpico Finance Limited Vs. Arpico Finance Company PlcS.C (C.H.C) Appeal No. 41/2014 at page 4; also refer to Hodgkinson Corby Limited and Another v Wards Mobility Services Limited [1995] F.S. 169 at paragraphs MEMORANDUM for THE RESPONDENT -12-

26 -Pleadingsthe mark itself. 43 In Scandecor Development AB v Scandecor Marketing AB 44, it was held that in cases where goodwill originates oversees but is spread in different countries, the ownership of this goodwill will depend on the facts of individual cases. The Court held that contact with customers was a major criterion while determining who owned the goodwill; what matters is who the retailers identified as carrying out activities in the local territory. In the instant case, the reputation and understanding developed with the public was a result of the understanding of the Malaysian market possessed by Philip Chan 45 and cannot be appropriated by the Claimants. Further, contact with customers and distribution was carried out by ATC. The ownership of Goodwill should rest with ATC The Respondent has not made a misrepresentation that is likely to deceive the public The Respondent has not misrepresented To prove misrepresentation under Malaysian law, a comparison test should be carried out between the Lion Logo and the ATC s logo. The comparison test was approved by the Federal Court of Malaysia in Maestro Swiss Chocolate Sdn. Bhd. & 3 Ors v Chocosuisse Union Des Fabricants Suisses De Chocolate & 2 Ors & Another Appeal 46.The principles of comparison, as elucidated by Malaysian case law 47 dictate that marks must be compared in their entireties set against circumstances of each mark's respective uses in the course of trade before any determination of likelihood of confusion or deception may be arrived at. Consideration must therefore be given to the other words, marks and devices as a whole and not merely one element in it. (It should be noted that the standard of side by side comparison 43 Richard PierisArpico Finance Limited Vs. Arpico Finance Company PlcS.C (C.H.C) Appeal No. 41/2014at page 4; also refer to L Oreal v Bellure[2006] EWHC 2355 Ch. 44 Scandecor Development AB v Scandecor Marketing AB [1999] FSR 26, Page 2, Moot Problem. 46 Maestro Swiss Chocolate Sdn. Bhd. & 3 Ors v Chocosuisse Union Des Fabricants Suisses De Chocolate & 2 Ors & Another Appeal FCCA No. 02(f) (W). 47 TohtonkuSdnBhd v Superace (M) SdnBhd [1992] 1 CLJ (Rep) 344, Elba Group SdnBhd v Pendaftar Cap Dagangandan Paten Malaysia&Anor[1998] 4 CLJ Supp 24,and McCurry Restaurant (KL) SdnBhd v McDonalds Corporation [2009] 1 LNS 309. MEMORANDUM for THE RESPONDENT -13-

27 -Pleadings- of logos to determine passing off is not followed in Malaysia; side by side comparison is followed in Sri Lanka.) Comparing the two marks, there is no common element between the Lion logo and ATC s mark: 1. The lion in both logos are different. In the Lion logo, the lion is carrying a sword which is not the case in ATC s logo. Further, the simple presence of a Lion cannot be objected to because the Lion is a very common symbol , service number of Chan while serving as a ship captain, is only present on ATC s mark. This clearly highlights the personal element of Philip Chan and further differentiates the two logos. 3. The border of the logo is incomplete in ATC s mark, which is not the case with the Lion logo. 4. Symbol of quality is a standard phrase, the presence of which cannot be objected to. There is no evidence to prove that the public was ever likely to be deceived No evidence to prove deception of consumers is provided. Generally, four types of evidence are usually considered to ascertain deception. These are evidence of actual confusion amongst consumers; trade evidence; expert evidence and survey evidence. 48 It was held in the Lego System v Lego M. Lemelstrich 49, a properly conducted opinion survey could have been used by as evidence that the public is or is likely to get confused between the goods of the Respondent or those of the Appellant due to the alleged similarities in their get-up. In the instant case, no evidence or survey has been provided by CTC to prove that customers could be deceived. 48 Lionel Bently and Brad Sherman, Intellectual Property Law (4 th edn, OUP 2014) 863; Marks and Spencers v InterfloraInc [2013] EWCA Civ 319 [10], [20]. 49 Lego System v Lego M. Lemelstrich [1983] F.S.R MEMORANDUM for THE RESPONDENT -14-

28 -Pleadings- It should further be noted, ATC had clearly provided a Disclaimer 50 on all its products. It had no intention to deceive customers or misrepresent in any capacity The said misrepresentation has not caused damage. There needs to be a linkage established by cogent evidence between the increase in sales of the ATC s product and the decrease in sales of the CTC s products in order to show with reasonable certainty that there has been a drop in the volume of sales of the Claimant s product which is attributable to the Respondent having passed off his goods as those of the Claimant. 51 In the instant case, there has been a decline in sales of CTC s product but there is no evidence provided that links the decline in sales to the introduction of ATC s product. The decline in sale could have occurred because of a number of reasons The use of the ATC s Mark constitutes Trademark Infringement. Infringement provisions under the Malaysian Trade Marks Act, 1976 (hereafter Malaysian Trade Marks Law ) are extracted below: Section 38. Infringement of a trade mark (1) A registered trade mark is infringed by a person who, not being the registered proprietor of the trade mark or registered user of the trade mark using by way of permitted use, uses a mark which is identical with it or so nearly resembling it as is likely to deceive or cause confusion in the course of trade in relation to goods or services in respect of which the trade mark is registered in such a manner as to render the use of the mark likely to be taken either 50 Question 6 and 19, Further Clarifications to the Moot Problem. 51 Lionel Bently and Brad Sherman, Intellectual Property Law (4 th edn, OUP 2014) 863; Marks and Spencers v InterfloraInc [2013] EWCA Civ 319 [10], [20]. MEMORANDUM for THE RESPONDENT -15-

29 -Pleadings- (a) as being use as a trade mark;.. In Danone Biscuits Manufacturing (M) SdnBhd v Hwa Tai Industries Bhd 52 the term likely to deceive or cause confusion in Section 38 of the Trade Marks Act 1976 was analyzed. The word likely was interpreted to mean that only probability or possibility of confusion needed to be established. There only needs to be a probability or possibility of confusion. It has been established above inn [4.1] that there was no possibility of confusion or deception. The Logos have been differentiated substantially and there is no evidence adduced, either by means of a survey or a witness, to prove that any kind of confusion to customers was caused. Further a disclaimer has been provided that seeks to eliminate any scope of confusion. The standard of likely to cause of confusion is not met. 52 Danone Biscuits Manufacturing (M) SdnBhd v Hwa Tai Industries Bhd [2010] 8 MLJ 500; Kickapoo (Malaysia) SdnBhd and another v The Monarch Beverage Co (Europe) Ltd [2010] 1 SLR MEMORANDUM for THE RESPONDENT -16-

30 -Prayer for Relief- PRAYER FOR RELIEF In the light of arguments advanced and authorities cited, the Respondent humbly submits that the Arbitral Tribunal may be pleased to adjudge and declare that: 1. Malaysian law is the applicable law in the present dispute. 2. ATC has not breached the Distribution Agreement by distributing SAILOR S CEYLON affixed with the ATC s Mark in Malaysia. 3. ATC can continue to use the word Ceylon on its tea products because the same is not misleading; 4. ATC can continue using the name SAILOR S CEYLON, the ATC s Logo, or any other name or mark containing the word CEYLON or a lion device because the same does not qualify as passing off or trademark infringement; 5. ATC is allowed to continue the sale of its products described as Ceylon tea and to recall all such products from the market. Any other order as it deems fit in the interest of equity, justice and good conscience. For This Act of Kindness, the Appellant Shall Duty Bound Forever Pray. Sd/- (Counsel for the Respondent) MEMORANDUM for THE RESPONDENT -17-