11 TH LAW ASIA INTERNATIONAL MOOT COURT, 2016 KUALA LAMPUR ARBITRATION REGIONAL CENTRE MEMORANDUM FOR RESPONDENT

Transcription

1 11 TH LAW ASIA INTERNATIONAL MOOT COURT, 2016 KUALA LAMPUR ARBITRATION REGIONAL CENTRE MEMORANDUM FOR RESPONDENT ON BEHALF OF ALMOND TEA COMPANY AGAINST CHELSEA TEA COMPANY RESPONDENT CLAIMANT

2 CONTENTS LIST OF ABBREVIATIONS...iii INDEX OF AUTHORITIES... iv QUESTIONS PRESENTED... viii STATEMENT OF FACTS... ix SUMMARY OF PLEADINGS... xi WRITTEN SUBMISSIONS... 1 I. THE ARBITRATION AGREEMENT CANNOT BE INVOKED DUE TO ABSENCE OF DISPUTE... 1 A. The arbitration agreement cannot be invoked, in accordance with Article 7(1) of the UNCITRAL Model Law and Section 9(1) of the Malaysian Arbitration Act, II. THE MALAYSIAN LAW IS THE LAW APPLICABLE LAW TO THE SUBSTANCE OF THIS DISPUTE... 3 A. The Conflict of Laws rules of Sri Lanka is applicable in the present matter... 3 B. Malaysian law has the closest and most real connection to the law governing the underlying agreement... 4 III. ATC HAS NOT BREACHED THE AGREEMENT BY DISTRIBUTING SAILOR S CEYLON AFFIXED WITH ATC S MARK IN MALAYSIA... 6 A. The terms under the agreement were not breached by ATC... 6 IV. ATC S USE OF THE WORD CEYLON IN RESPECT OF ITS TEA PRODUCTS IS NOT MISLEADING... 8 A. ATC S USE OF CEYLON IS WELL WITHIN ITS LEGAL RIGHTS WITHOUT CURTAILING ON INFRINGEMENT... 8 B. ATC S SALE OF SAILOR S CEYLON DOES NOT CONSTITUTE AN ACT OF UNFAIR COMPETITION UNDER ARTICLE 10bis OF THE PARIS CONVENTION FOR PROTECTION OF INDUSTRIAL PROPERTY C. ATC S USE OF SAILOR S CEYLON DOES NOT VIOLATE SECTION 5(C) OF THE GEOGRAPHICAL INDICATIONS ACT, V. THE RESPONDENT'S USE OF ATC'S LION LOGO AND 'SAILOR'S CEYLON' DOES NOT AMOUNT TO INFRINGEMENT AND/OR PASSING OFF A. CTC is the registered user of the Lion Logo and registered users can initiate infringement proceedings as under Section 51 of the Trade Marks Act, B ATC's Logo and unregistered Trademark do not affect the 'origin' function of the Claimant's trademark C. ATC's use of the Trade mark in respect of their Tea products does not amount to passing off as CTC's Ceylon Tea i

3 PRAYER FOR RELIEF ii

4 LIST OF ABBREVIATIONS Paragraph Arb. Art. ATC Co. CTC edn. i.e. Ibid ICC KLRCA Ltd. No. pg. Sec. SLTB TRIPs UNCITRAL Arbitration Article Almond Tea Company Company Chelsea Tea Company Edition That is Ibidem International Chamber of Commerce Kuala Lumpur Regional Centre for Arbitration Limited Number Page Section Sri Lankan Tea Board Agreement on Trade Related Aspects of Intellectual Property Rights United Nations Commission on International Trade Law v. Versus iii

5 CASES INDEX OF AUTHORITIES 1. Arsenal Football Club Pty Ltd v. Reed [2003] RPC(9) Beale v. Kyte, (1907) 1 Ch Bihar State Mineral Development Corporation v. Encon Builders (I) Pvt. Ltd., (2003) 7 SCC Boissevain v. Weil, (1959) 1 KB Bonython v. Commonwealth of Australia, (1951) AC Burberrys v Cording (1909) 26 R.P.C. 693 at Cadbury Schweppes Pty Ltd v The Pub Squash Co [1981] 1 W.L.R First National Reinsurance Co. Ltd. v. Greenfield, (1921) 2 KB Fletcher Construction NZ & South Pacific Ltd. v. Kiwi Co-Operative Dairies Ltd., CP 7/98 (N.Z. High Court, 1998) 10. Guangdong Agriculture Co. Ltd. v. Conagra International (Far East) Ltd., (1993) 1 HKLR Hendriks v Montagu (1881) 17 Ch.D Hoffman-La Roche v Centrafarm, Case C-102/77 [1978] ECR I-1139, [7] 13. Holterhoff v Freiseleben C-2/00 [2002] ECJ 14. Idameneo (No. 789) Ltd. v. Symbion Pharmacy Services Pty. Ltd., (2011) FCAFC Imperial v Phillip Morris [1984] R.P.C Klissers Farmhouse Bakeries v Harvest Bakeries [1989] R.P.C KP Permanent Make-Up, Inc. v. Lasting Impression I 543 U.S. 111, 125 S. Ct. 542 (2004) 18. Lazard Bros & Co. Ltd. v. Fairfield Properties Co. (Mayfair) Ltd., (1977) 121 SJ Lever v Bedingfield (1898) 15 R.P.C. 453 iv

6 20. Lindsay Petroleum v. Hurd, (1874) LR 5 PC 21. Lindsay Petroleum v. Hurd, (1874) LR 5 PC 22. Marcus Publishing Plc v Hutton-Wild Communications Ltd [1990] R.P.C. 576 C.A. 23. Massam v Thorley (1880) 14 Ch.D Mayer Newman and Co. Ltd. v. Al Ferro Commodities Corpn. SA, The John C. Helmsing, (1990) 2 Llodys Rep 290 (CA) 25. Middle East Ltd. v. Arab Republic of Egypt, 22 ILM (1983) 26. Mills v. Haywood, (1877) 6 Ch D Neutrogena [1996] R.P.C Re: Sweden Freezer Mfg. Co case, 159 U.S.P.Q. 246 (T.T.A.B. 1968) 29. Reckitt & Colman SA (pty) Ltd v S C Johnson & Son SA (pty) Ltd.1993 (2) SA 307 (A) 30. Reuter v. Mulhens (1953) 70 R.P.C. 235 at Sayers v. International Drilling Co. N.V., (1971) 1 WLR Shepherd Homes Ltd. v. Sandham, (1971) Ch Smith's Potato Crisps v Paige's Potato Crisps (1928) 45 R.P.C Star Industrial v. Yap Kwee Kor [1976] F.S.R Tai Hing Cotton Mill Ltd. v. Glencore Gain Rotterdam BV, (1996) 1 HKC The European v The Economist [1996] F.S.R Y.K. Fung Securities Sdn Bhd v. James Cape (Far East) Ltd., 3 (1997) 2 MLJ 621 AWARDS 1. Arbitration Court of the Chamber of Commerce and Industry of Budapest, Award No. Vb ICC Court of Arbitration, Case No. 5460, XIII Y.B. Comm. Arb. 104 (1988) 3. ICC Court of Arbitration, Case No. 6149, XX Y.B. Comm. Arb. 41 (1995) v

7 4. ICC Court of Arbitration, Case No (1995) 5. ICC Court of Arbitration, Case of 29 December 1998 XXIVa Y.B. Comm. Arb. 13 (1999) 6. Joong and Shipping Co. v. Choi Chong-sick, XX Y.B. Comm. Arb. 284 STATUTES 1. Geographical Indications Act, 2000 (Malaysian) 2. The Geographical Indications of Goods (Registration and Protection), 1999 (India) 3. The Malaysian Arbitration Act, The Malaysian Contracts Act, 1950 CONVENTIONS 1. Lisbon Agreement, The Paris Convention on Protection of Industrial Property, TRIPs Agreement, 1994 BOOKS 1. ALAN REDFERN & MARTIN HUNTER, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION (6th edn., Oxford University Press, 2015) 2. GARY B. BORN, INTERNATIONAL COMMERCIAL ARBITRATION, VOLUME II (2nd edn., Kluwer Law International, 2014) 3. J. BEATSON, A. BURROWS, & J. CARTWRIGHT, ANSON S LAW OF CONTRACT, (29th edn., Oxford University Press, 2010) 4. J.W. CARTER, CARTER S BREACH OF CONTRACT (LexisNexis Butterworths, 2011) 5. DAVID KITCHIN & DAVID LLEWELYN, KERLY S LAW OF TRADE MARKS AND TRADE NAMES (14th edn., Sweet and Maxwell, 2005) vi

8 ARTICLES 1. DEV S. GANGJEE, RESEARCH HANDBOOK ON INTELLECTUAL PROPERTY AND GEOGRAPHICAL INDICATIONS 2. REKHA S.CHAVAN, LEGAL PROTECTION OF GEOGRAPHICAL INDICATIONS: NATIONAL AND INTERNATIONAL PERSPECTIVE 3. INTELLECTUAL PROPERTY READING MATERIAL, WIPO PUBLICATIONS MISCELLANEOUS 1. Belden Premaraj, Arbitration: The Preferred Alternative, available at %20The%20Preferred%20Alternative.pdf 2. Belden Premaraj, The Choices of Law- Better Safe Than Sorry: The Malaysian Arbitration Perspective, available at %20Better%20Safe%20Than%20Sorry.pdf 3. Obaid S. Busit, The Determination of Applicable Law in International Commercial Arbitration, available at vii

9 QUESTIONS PRESENTED I. WHAT IS THE APPLICABLE LAW THAT SHOULD BE REFERRED TO IN THIS DISPUTE II. WHETHER OR NOT ATC HAS BREACHED THE AGREEMENT BY DISTRIBUTING SAILOR S CEYLON AFFIXED WITH THE ATC S MARK IN MALAYSIA III. WHETHER OR NOT ATC S USE OF THE WORD CEYLON IN RESPECT OF ITS TEA PRODUCTS IS MISLEADING IV. WHETHER OR NOT ATC S USE OF THE ATC S MARK AMOUNTS TO TRADEMARK INFRINGEMENT AND/OR PASSING OFF viii

10 STATEMENT OF FACTS 1. The Sri Lankan Tea Board (SLTB) is a government-owned statutory institution established in 1976, and is the apex regulatory and administrative body of the Sri Lankan tea industry. 2. The Chelsea Tea Company (CTC) is a company incorporated in Sri Lanka, established in CTC is a manufacturer of Ceylon Tea, under the brand name CTC CEYLON. The Chairman of the Board of Directors of CTC is Marvan Ranatunga. 3. CTC CEYLON tea bears the famous heraldic lion insignia, which is affixed onto labels or packaging of tea grown and manufactured entirely in Sri Lanka by approved traders who conform to the quality standards set by the SLTB. SLTB has obtained trademark registrations for the Lion Logo in many jurisdictions worldwide. 4. SLTB is also the proprietor of the Lion Logo in Malaysia. However, as per conditions imposed by the Intellectual Property Corporation of Malaysia, SLTB has no exclusive rights over the words CEYLON TEA and SYMBOL OF QUALITY contained in their logo. 5. Almond Tea Company (ATC) is a company incorporated in Singapore. The managing director of ATC is Philip Chan, a former ship captain, who has ventured into the tea manufacturing and distribution business in Singapore and Malaysia. 6. In 2008, on a visit to Malaysia, Ranatunga met Chan. Ranatunga wanted to appoint ATC as the exclusive distributor of CTC CEYLON in Malaysia. However, Chan was not keen to accept this offer, as Ranatunga wanted ATC to cease the sale of all other tea products in Malaysia. 7. Subsequently, one month later, a fungal disease destroyed the tea plantations of ATC. Ranatunga took this opportunity to contact Chan again. After negotiations, CTC and ATC agreed upon a monetary consideration, and entered into a distribution agreement on 20th October, CTC CEYLON developed a strong consumer base in Malaysia, and the total profits from the sale of CTC CEYLON in Malaysia increased from year to year, exceeding ix

11 the targets set by CTC. However, the Agreement was not renewed upon its expiry on 20th October, 2013, as CTC had set up its own Southeast Asian headquarters in Kuala Lumpur. 9. In March, 2015, it came to CTC s attention, that ATC had been growing and manufacturing tea in China, and distributing such tea products under the brand name SAILOR S CEYLON in Malaysia, since November CTC immediately wrote to ATC, asking for damages for the breach of the Agreement. CTC also demanded that ATC should stop using the ATC s Mark on the package of their tea, and not use the word Ceylon to describe their tea. 11. ATC denied any breach of the Agreement, and were of the view that they have the right to use the word Ceylon on their tea products, as well as ATC s Marks on their tea packages. 12. As the parties could not come to an agreement, they decided to settle the matter by arbitration. 13. Further, the parties have agreed that the arbitration will be limited to the following issues: (a) What is the law that should be referred to in this dispute; (b) Whether or not ATC has breached the Agreement by distributing SAILOR S CEYLON affixed with the ATC s Mark in Malaysia; (c) Whether or not ATC s use of the word CEYLON in respect of its tea products is misleading; and (d) Whether or not ATC s use of the ATC s Mark amounts to trademark infringement and/or passing off. x

12 SUMMARY OF PLEADINGS I. THE ARBITRATION AGREEMENT CANNOT BE INVOKED DUE TO ABSENCE OF DISPUTE The arbitration agreement between CTC and ATC is to arbitrate any disputes arising out of the underlying agreement. The presence of a dispute is therefore essential in order to invoke the arbitration clause. In the present matter, it is submitted that there has been no breach of the contract, nor has there be an infringement of trademark. Thus, due to the absence of a dispute, the arbitration agreement cannot be invoked. II. THE MALAYSIAN LAW IS THE LAW APPLICABLE TO THE SUBSTANCE OF THIS DISPUTE As per the KLRCA Rules, failure of parties to specify a seat of arbitration determines the seat of arbitration as Malaysia. According to the Malaysian Arbitration Act, failing any agreement in international arbitrations, the arbitral tribunal shall apply the conflict of law rules to the material facts of the dispute to determine the applicable law. In the present matter, the tribunal should apply conflict of law rules of Malaysia. It is an established practice in Malaysia that on applying the conflict of laws rules, the applicable law is the law that has the closest and most real connection to the dispute. In the present dispute, the Laws of Malaysia bear the closest and most real connection. III. ATC HAS NOT BREACHED THE AGREEMENT BY DISTRIBUTING SAILOR S CEYLON AFFIXED WITH ATC S MARK IN MALAYSIA A breach of a contract occurs if there is a failure to perform a contractual obligation. In the present matter, ATC had not breached any of the terms of the Agreement. The ATC s mark is not deceptively similar to CTC s mark, and is not likely to cause confusion among the consumers. It is therefore submitted that there has been no breach of the Agreement. xi

13 IV. ATC S USE OF THE WORD CEYLON IN RESPECT OF ITS TEA PRODUCTS IS NOT MISLEADING. ATC s use of the word CEYLON in respect of its tea products is not misleading, as CTC CEYLON do not have the exclusive rights over the word CEYLON TEA, as prescribed by the Intellectual Corporation of Malaysia. Further, the Additionally, the use of CEYLON does not violate Article 10bis of the Paris Convention for Protection of Industrial Disputes, which deals with unfair competition involving protection for Geographical Indications. It has been argued that the term CEYLON is a descriptive term for the kind of tea product instead of its true origin. Lastly, ATC s use does not infringe the statutory protection of Geographical Indications, the Geographical Indications Act, It does not constitute an act of misleading under Section 5 of the Act. Doctrine of descriptive first use, and Minimal subjective test clearly establishes that the word was not misleading in its use. V. ATC S USE OF ATC S MARK AND SAILOR S CEYLON IN RESPECT OF ITS TEA PRODUCTS DOES NOT AMOUNT TO INFRINGEMENT AND/OR PASSING OFF. With respect to procedure, CTC is the registered user of the Lion logo and registered users cannot initiate proceedings for infringement without proper notice to the registered proprietor, in the present matter, SLTB. Further, ATC s Logo do not affect the claimant s trademark in respect of the mark s origin function. Moreover, CTC s use of their trademark does not amount to passing off as the Claimant s product. xii

14 WRITTEN SUBMISSIONS I. THE ARBITRATION AGREEMENT CANNOT BE INVOKED DUE TO ABSENCE OF DISPUTE 1. It is humbly submitted that the arbitration agreement cannot be invoked due to the absence of a dispute, in accordance with [A] Article 7(1) of the UNCITRAL Model Law and Section 9(1) of the Malaysian Arbitration Act, A. The arbitration agreement cannot be invoked, in accordance with Article 7(1) of the UNCITRAL Model Law and Section 9(1) of the Malaysian Arbitration Act, Article 7(1) of the UNCITRAL Model Law states that an arbitration agreement is an agreement by the parties to submit arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. Further, Section 9(1) of the Malaysian Arbitration Act reiterates the same. 3. It is humbly submitted that arbitration agreements are generally limited to agreements to arbitrate disputes or differences. 1 Article 7(1) of the UNCITRAL Model Law, and Section 9(1) of the Malaysian Arbitration Act, 2005 apply to agreements to arbitrate disputes. 4. One of the essential elements of a valid arbitration agreement is the existence of a present or a future dispute in connection with some contemplated affair. 2 This position has further been confirmed by an Indian Court, in the case of Mallikarjun v. Gulbarga University It is humbly submitted that the existence of a dispute is an essential condition for the jurisdiction of an arbitrator. 4 A reference to an arbitration agreement may be made only if a dispute exists, which is agreed by the parties to be submitted to arbitration. The question as to whether or not a dispute exists is of significant relevance because if a dispute does not exist, the reference is not valid. 5 Further, an arbitrable dispute 1 GARY B. BORN, INTERNATIONAL COMMERCIAL ARBITRATION, VOLUME II (2nd edn., Kluwer Law International, 2014) pg Bihar State Mineral Development Corporation v. Encon Builders (I) Pvt. Ltd., (2003) 7 SCC (2004) 1 SCC INDU MALHOTRA, O.P. MALHOTRA S THE LAW AND PRACTICE OF ARBITRATION AND CONCILIATION (Thomson Reuters, 3rd edn. 2014) pg Ibid, at pg

15 involves a genuinely disputable issue and not merely the assertion of a claim or bare denial of the liability Courts in various jurisdictions have held that national arbitration legislation was inapplicable because there was no real dispute between the parties. 7 Further, in Joong and Shipping Co. v. Choi Chong-sick, 8 it was held that if there is anything in dispute between parties who have agreed on arbitration, then it is only right and proper that they should be held to their contractual bargain to have the disputes resolved by arbitration...on the other hand, in fact, if there is no dispute between the parties, there is nothing to go to arbitration. This view was reiterated in Guangdong Agriculture Co. Ltd. v. Conagra International (Far East) Ltd In the present matter, ATC had been growing and manufacturing tea in China, and distributing it in Malaysia under the brand name Sailor s Ceylon. 10 It is humbly submitted that ATC had not breached the Agreement, and that there was no trademark infringement or passing off. 8. Hence, it is humbly submitted that due the absence of dispute between the parties, and due to absence of cause of action, the arbitral panel lacks jurisdiction, and the arbitration agreement cannot be invoked. 6 Mayer Newman and Co. Ltd. v. Al Ferro Commodities Corpn. SA, The John C. Helmsing, (1990) 2 Llodys Rep 290 (CA) 7 Fletcher Construction NZ & South Pacific Ltd. v. Kiwi Co-Operative Dairies Ltd., CP 7/98 (N.Z. High Court, 1998); Tai Hing Cotton Mill Ltd. v. Glencore Gain Rotterdam BV, (1996) 1 HKC XX Y.B. Comm. Arb (1993) 1 HKLR of the compromis 2

16 II. THE MALAYSIAN LAW IS THE LAW APPLICABLE LAW TO THE SUBSTANCE OF THIS DISPUTE 9. It is humbly submitted that the Malaysian Law is the applicable law to the substance of this dispute because [A] the tribunal should apply conflict of law rules of Sri Lanka, and [B] Malaysian Law has the closest and most real connection to this dispute. A. The Conflict of Laws rules of Sri Lanka is applicable in the present matter 10. As per the Laws of Sri Lanka, failing any agreement in international arbitrations, the arbitral tribunal shall apply the conflict of law rules to the material facts of the dispute to determine the applicable law Further, by selecting the KLRCA Rules, the parties have agreed that in absence of an agreement determining the choice of law, the Tribunal should determine the appropriate law applicable to the substance of the dispute by way of conflict of law rules The historic view in many civil and common law states was that international arbitral tribunals were mandatorily required to apply the arbitral seat s choice of law rules. 13 Consistent with this view, a number of arbitral awards have held that the local conflict of laws rules of the arbitral seat are applicable and, in some cases, mandatorily applicable In the words of one award, on any question of choice of law [the arbitrator] must therefore apply the relevant rules of private international law of [the seat of arbitration]. 15 A variation of this rule adopted in some arbitral awards was that, although not mandatorily applicable, the conflict of laws rules of the arbitral seat nonetheless should be applied, either because they were impliedly chosen by the parties 16 or because they were otherwise appropriate It is humbly submitted that the conflict rules of the seat is certain and efficacious, and it will avoid the complexity and ambiguity for arbitrators deciding between various existing conflicts rules. Therefore, the conflict of law rules of Sri Lanka is applicable 11 The Sri Lankan Arbitration Act, 1995, Sec. 24(2) 12 KLRCA UNCITRAL Rules, Art GARY B. BORN, INTERNATIONAL COMMERCIAL ARBITRATION, VOLUME II (2nd edn., Kluwer Law International, 2014), pg Award in ICC Case No. 8385, in J.J. Arnaldez, Y. Derains & D. Hascher, Collection of ICC Arbitral Awards (2003); Interim Award in ICC Case No. 6149, XX Y.B. Comm. Arb. 41 (1995); Final Award in Hamburg Friendly Arbitration Case of 29 December 1998 XXIVa Y.B. Comm. Arb. 13 (1999) 15 Final Award in ICC Case No. 5460, XIII Y.B. Comm. Arb. 104, 106 (1988) 16 Final Award in ICC Case No. 9771, XXIX Y.B. Comm. Arb. 46, 18 (2004) 17 Award in ICC Case No. 4237, X Y.B. Comm. Arb. 52, 54 (1985) 3

17 to determine the applicable law governing the substance of this dispute. B. Malaysian law has the closest and most real connection to the law governing the underlying agreement 25. It is an established practice that on applying the conflict of law rules, the applicable law is that law which has the closest and most real connection to the dispute. 18 Further, the determination of the law with the closest and most real connection involves consideration of several connecting factors It is humbly submitted that where there is no explicit expression of the governing law or proper law in a contract, the proper law of the contract shall be that with which the transaction has its closest and most real connection. It has been held by Denning LJ that the proper law of the contract depends not so much on the place where it is made, not even on the intention of the parties or on the place where it is to be performed, but on the place with which it has the most substantial connection. 20 The proper law of the contract has been defined as the system of law by reference to which the contract was made, or that with which the transaction has its closest and most real connection. 21 In the absence of an express choice, an arbitrator may resort to a variety of connecting factors: the place of execution of the contract, 22 the place of performance, 23 etc. 27. In an award, 24 it was observed that the contract was concluded in Pakistan. The place of performance was also Pakistan. Further, payment of the purchase price was also effected in Pakistan. In consequence, the connecting principles generally recognised in private international law, such as lex loci contractus, lex loci executionis, and lex loci solutionis, pointed unanimously to the fact that Pakistani law should be applied to the contract. As, a result, it was held that the dispute should be decided according to the substantive law valid in Pakistan. 28. One of the most significant factors in determining the closest connection to a particular legal system is the place of performance of the contract. Where the contract is to be performed is indicative of the law that ought to govern it. Lord Simonds 18 Bonython v. Commonwealth of Australia, (1951) AC 201, 219 (Privy Council on appeal from Australia); Y.K. Fung Securities Sdn Bhd v. James Cape (Far East) Ltd., 3 (1997) 2 MLJ Ibid 20 Boissevain v. Weil, (1959) 1 KB pg. 482 at Bonython v. Commonwealth of Australia, (1951) AC Middle East Ltd. v. Arab Republic of Egypt, 22 ILM (1983), pg. 752 at pg Ibid 24 Award 1961 No. Vb 1024, cited by Mora in Questions of International Law (Hungarian Branch of the International Law Association) 1964,

18 referred to it as being sometimes a decisive factor Lord Denning indicated a series of factors that point towards one law as the proper law of the contract; namely, inter alia, the place of making it, the currency agreed upon, the place of administration, and the language used It is humbly submitted that in the present dispute, the legal system that has the closest and most real connection to the dispute, is Malaysian law. The factors discussed in various cases, that determine closest connection, all unanimously point to the fact that Malaysian Law should be applied, and be the governing law of the contract. 31. It has been held that several connecting factors are involved, in determining the closest connection. 27 It is pertinent to mention that the Distribution Agreement 28 between CTC and ATC was signed in Malaysia. Further, the Agreement was for the distribution of tea in Malaysia, and the contract was performed in Malaysia. Therefore, the principles generally recognised in private international law, such as lex loci contractus, lex loci solutionis, and lex loci executionis, point to the fact that Malaysian Law has the closest connection with the present dispute. Moreover, as per the Agreement, the currency agreed upon for payment is Ringgit Malaysia. 32. It is humbly submitted that the aforementioned factors together make it clear that the test for closest connection is satisfied, and it is Malaysian Law that has the closest and most real connection to the present dispute. Therefore, the proper law or the law governing the contract, i.e. the law applicable to the substance of the dispute is Malaysian Law. 25 Bonython v. Commonwealth of Australia, (1951) AC 201, at pg Sayers v. International Drilling Co. N.V., (1971) 1 WLR Supra note Appendix A of the compromis 5

19 III. ATC HAS NOT BREACHED THE AGREEMENT BY DISTRIBUTING SAILOR S CEYLON AFFIXED WITH ATC S MARK IN MALAYSIA 25. As per the laws of Malaysia, When a contract has been broken, the party who suffers by the breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from the breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it It is humbly submitted that CTC is not entitled to any remedy because [A] the terms under the agreement were not breached by ATC, and [B] the doctrine of laches applies in the present matter. A. The terms under the agreement were not breached by ATC 27. A breach of contract occurs if there is a failure to perform a contractual obligation. Furthermore, a party s obligation to perform is only discharged if the performance rendered matched the requirements of the contract. If such requirements are not fulfilled, there is a failure to perform. The breach may consist in the non-performance of the relevant obligation, or its performance in a manner or at a time which fails to comply with the requirements of the contract It is submitted that ATC had not failed to perform any of the contractual obligations, and had not breached any terms of the agreement. In the case of Idameneo (No. 789) Ltd. v. Symbion Pharmacy Services Pty. Ltd., 31 the distribution of the goods of the plaintiff was given to a third party. The agreement contained a term prohibiting the third party from using any trademark similar to or capable of being confused with the plaintiff s mark. The plaintiff brought a suit for breach of the agreement on the defendant for using similar marks. However, the court held that the defendant s marks were not deceptively similar to the plaintiff s mark, or likely to cause confusion, and dismissed the suit for breach of the agreement. 29. Clause 4.2 of the Agreement states that, 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 29 The Malaysian Contracts Act, 1950, Sec. 74(1) 30 J. BEATSON, A. BURROWS, & J. CARTWRIGHT, ANSON S LAW OF CONTRACT, (29th edn., Oxford University Press, 2010), pg (2011) FCAFC 164 6

20 compete with the Products, affixed with the Trade Marks or any other arguably similar mark in the Territory. 30. In the present matter, ATC was not concerned in the manufacture or distribution of goods affixed with CTC s trademark. Further, ATC had not used any other arguably similar mark likely to cause confusion to the consumers. 31. Clause of the Agreement states that the Distributor must not use in the Territory any trade marks or trade names so resembling the Trade Marks, any trade marks or trade names of the Supplier as to be likely to cause confusion or deception. 32. In the present matter, ATC distributed SAILOR S CEYLON under ATC s mark, in Malaysia. However, it is pertinent to mention that ATC s mark was not deceptively similar to CTC s mark. Further, ATC s mark was not capable of causing confusion to the customers of the tea products. 33. It is therefore submitted that ATC did not breach the Agreement by distributing SAILOR S CEYLON affixed with the ATC s mark. 7

21 IV. ATC S USE OF THE WORD CEYLON IN RESPECT OF ITS TEA PRODUCTS IS NOT MISLEADING 34. ATC s use of the word CEYLON with respect to its tea products is not misleading because of the following reasons, (A) ATC s use of Ceylon is well within its legal rights without curtailing on infringement, (B) ATC s use of Ceylon is not in violation of article 10bis of the Paris Convention for the Protection of Industrial Property, 1883 and finally (C) ATC s use of Ceylon is in compliance with section 5 of the Geographical Indications Act, A. ATC S USE OF CEYLON IS WELL WITHIN ITS LEGAL RIGHTS WITHOUT CURTAILING ON INFRINGEMENT 35. ATC s use of CEYLON is not misleading for the absence of exclusive rights to such use with Chelsea Tea Company (CTC). SLTB, being the registered trademark proprietor of the Lion Logo in Malaysia and other jurisdictions worldwide has been imposed with a condition by the Intellectual Property Corporation of Malaysia, which gives it no exclusive right over the words CEYLON TEA and SYMBOL OF QUALITY contained in the Lion Logo. Further, ATC s logo uses merely the word Ceylon instead of Ceylon Tea, not directly indicating or referring to the Tea on the packaging. Further, CTC CEYLON is not registered as a trademark in Malaysia 32, which provides the Claimants with no exclusive rights over the usage of the term CEYLON. Moreover, there is no statistical evidence of an actual event of confusion with the consumers, as no Market Surveys have been conducted by CTC Ceylon. 36. As regards the public concerned, the assessment will depend on the kind of product and the public to which that product is addressed. In the present case, the product being a cheese for consumption primarily by the final consumer (but also by commercial purchasers, such as restaurants, food factories, etc.), the general public is relevant. Therefore, it is with regard to the general public that the designation or indication in question must have lost its original geographical meaning Clarification to moot problem, Question 15, Pg.3 33 Recital 23 of the Commission Regulation (EC) No 1829/2002 (n 69). 8

22 37. The Court in KP Permanent Make-Up, Inc. v. Lasting Impression I 34, Inc. reaffirmed the importance of allowing competitors access to descriptive terms: The common law s tolerance of a certain degree of confusion on the part of consumers followed from the very fact that in cases like this one an originally descriptive term was selected to be used as a mark, not to mention the undesirability of allowing anyone to obtain a complete monopoly on use of a descriptive term simply by grabbing it first. 38. Moreover, in Reckitt & Colman SA (pty) Ltd v S C Johnson & Son SA (pty) Ltd 35 [South Africa] Reliance was also placed on the respondent s expressed intention to compete head-on with Brasso and its conscious choice of the Brasso type tins. It was submitted that the respondent had entered the market with the deliberate intention of passing off its product as Brasso and that a court, under those circumstances, should not be astute to find that the respondent had not achieved its object. The respondent s intention in this case was to compete and an intention to compete must not be confused with an intention to deceive. The choice of the Brasso-type containers, in the light of the belief of the respondent that these containers had become generic and that the public had come to expect metal polish to be sold in containers of that general shape, was not fraudulent. 39. Further, ATC s sale of tea products under the brand name SAILOR S CEYLON and the use of CEYLON as such is not misleading as it does not refer to the tea product CEYLON TEA that is grown and manufactured entirely in Sri Lanka, but a different tea product that is grown and manufactured in China. Philip Chan s intention to continue selling other tea products in Malaysia can be established 36 while acting as the exclusive distributor for CTC Ceylon. The agreement states that ATC cannot be concerned with sale of specifically Ceylon Tea product with an arguably similar mark, and not if it is in essence a separate tea product However, Ceylon Tea as a type of tea does not does not attribute its quality or reputation to the place of origin. The SLTB merely prescribes a certain quality for the Ceylon Tea affixed with the Lion logo, which have been set by themselves. This does not suggest that Ceylon Tea as a particular kind of tea cannot be grown elsewhere with varying qualities. Thus, it is humbly submitted that ATC s use of the word CEYLON in respect of its tea products is not misleading U.S. 111, 125 S. Ct. 542 (2004) (2) SA 307 (A) 36 Moot compromis, Para 8 37 Clause 1.1.2, Pg. 1 of Appendix A 9

23 B. ATC S SALE OF SAILOR S CEYLON DOES NOT CONSTITUTE AN ACT OF UNFAIR COMPETITION UNDER ARTICLE 10bis OF THE PARIS CONVENTION FOR PROTECTION OF INDUSTRIAL PROPERTY 41. Article 10bis(3)(III) states Indications or allegations the use of which in the course of trade is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quantity, of the goods. 42. It is submitted that ATC s use of the word Ceylon does not mislead the public as to the nature, manufacturing process, characteristics, suitability for their purpose or quantity of the goods. The use of CEYLON is used to describe the good, as the word has multiple meanings within known literature, most importantly the significance of Sri Lanka s historical name. 43. The doctrine of descriptive fair use rests on the policy judgment that even if one merchant has gained trademark protection for a term, other merchants should still be able to use that term not as a trademark but to describe a good or service that has the nature or qualities to which the term refers. Descriptive fair use has long been recognized at common law as a limit on injunctive relief against the use of geographic terms, and is explicitly acknowledged in federal law at Sections 33(a)98 and 33(b)(4)99 of the Lanham Act. 44. McCarthy 38 pointed out that while being not determinative, dictionary definitions are relevant and sometimes persuasive in determining public usage. This is based on the assumption that dictionary definitions usually reflect the public s perception of a word s meaning and its contemporary usage. 39 Ceylon is widely known as the colonial name for the province known as Sri Lanka. 45. Further to answer the question of whether an act comprises of an unfair competition, it is said that "[d]ishonest or fraudulent rivalry in trade and commerce, [especially] the practice of endeavoring to substitute one's own goods or products in the market for those of another by means of imitating or counterfeiting... distinctive characteristic[s] of the article A geographical indication the reputation of which is not yet established on the market, may not be protectable against misleading use by competitors through an action for unfair competition. Moreover, the availability of protection against acts of unfair competition does not prevent geographical indications from becoming generic terms. 38 Research Handbook on Intellectual Property and Geographical Indications by Dev S. Gangjee, Pg McCarthy (n 68) Pg. 12:13 40 AIPLA Q.J., Volume 31:29, Pg

24 Geographical indications which become generic terms in a particular country lose their distinctive character and are no longer protectable in that country. 41 Thus, the use of CEYLON is not misleading to the general public under the definition provided under Article 10bis(3)(III), and does not constitute an act of unfair competition. 47. Additionally, CTC Ceylon entered Malaysian markets through the distribution agreement on October, 2008, although ATC started selling Sailor s Ceylon in In order to be protectable, a given geographical indication must have acquired a certain reputation or goodwill. 43 Goodwill is generally defined as the value of attraction to customers which the name and reputation possesses. 44 It is local in character and divisible. 45 It is submitted that because of a relatively shared market with respect to the timelines of entry for both ATC s and CTC s products, it is highly unlikely that CTC Ceylon had established a goodwill in the Malaysian market before ATC started sale of its products. Due to the absence of an established goodwill, ATC s products cannot be said to have acted detrimentally to the Claimant s goodwill. 41 Intellectual Property Reading Material, WIPO Publications, Geneva Oct.1, 1995, p Clarification to moot problem, Question 6, Pg Legal protection of geographical indications: national and international perspective by Rekha S.Chavan, Pg Reuter v. Mulhens (1953) 70 R.P.C. 235 at Star Industrial v. Yap Kwee Kor [1976] F.S.R

25 C. ATC S USE OF SAILOR S CEYLON DOES NOT VIOLATE SECTION 5(C) OF THE GEOGRAPHICAL INDICATIONS ACT, Section 5(c) states that, any interested person may institute proceedings in the Court to prevent, in respect of geographical indications, any use in the course of trade of a geographical indication which, although literally true as to the country, territory, region or locality in which the goods originate, falsely represents to the public that the goods originate in another country, territory, region or locality. This is synonymous to Art. 22 of the TRIPS agreement. 49. Under Article 22, geographical indications are prohibited where the consumer may be misled. Arguably, in order for the consumer to make an informed choice and not be misled or deceived by labeling, the product's true origin need only be clearly indicated on the product's label. 46 If a product label uses a geographical term in its name that is not the true origin of the product, while clearly and simultaneously informing the consumer of the product's true origin elsewhere on the label, so-informed consumers can reject the product as not "authentic." 50. Further, ATC s use of Ceylon does not indicate the origin of the good, but merely describes the kind of good, as established earlier. Also, in ATC s production of its tea products, the seeds were sourced from Sri Lanka, which is clearly mentioned. This leads to the reasonable inference that there was no intent on part of ATC to mislead the public as to the true origin of the goods. 51. In re Sweden Freezer Mfg. Co, the TTAB had observed that a geographic mark should be held deceptive only when the impression created by the use of a term which has geographical significance is likely to give to the article sold thereunder an appearance of greater merit, quality or saleability not actually possessed by the product thereby inducing or misleading a particular class of consumers into purchasing this product. 47 However, in the present matter, as there is no established goodwill by the Appellants, it cannot be argued that there is any differential merit between both the competing products. 52. Reputation, on the other hand, is a subjective matter, since it requires public knowledge of the connection between good and place. To satisfy the second origin 46 Id. at note U.S.P.Q. 246 (T.T.A.B. 1968) 12

26 nexus requirement for protection under a NAFTA- or TRIPS-compliant law, one needs to show either that the purported place of origin contributes some distinctive characteristic to the type of goods in question, or that it is well known for those goods. 48 Only, it cannot be established clearly that the consumer audience in Malaysia were aware of the distinctive character of the Ceylon tea. Further, SLTB s Ceylon tea conformed to a particular standard of Ceylon Tea, approved by themselves. This does not show that Ceylon tea cannot be grown elsewhere. 53. Under a minimalist subjective test, marks using geographic terms are likely neither descriptive nor mis-descriptive in three situations. The first is when the term is not generally recognized by the public as the name of a place, because the place is too obscure CEYLON being a colonial name for Sri Lanka, runs on the first situation as the term is not generally recognized by the public. For all the above reasons, it is humbly submitted that ATC s use of the word CEYLON in respect of its tea products is not misleading. 48 Id. 13

27 V. THE RESPONDENT'S USE OF ATC'S LION LOGO AND 'SAILOR'S CEYLON' DOES NOT AMOUNT TO INFRINGEMENT AND/OR PASSING OFF 54. With respect to procedure, CTC is the registered user of the Lion logo and registered users cannot initiate proceedings for infringement without proper notice to the registered proprietor, in the present matter, SLTB. Further, ATC s Logo do not affect the claimant s trademark in respect of the mark s origin function. Moreover, CTC s use of their trademark does not amount to passing off as the Claimant s product. A. CTC is the registered user of the Lion Logo and registered users can initiate infringement proceedings as under Section 51 of the Trade Marks Act, Section 51 provides that any registered user is entitled to call upon the registered proprietor of the trade mark to take proceedings for infringement, and if the registered proprietor refuses or neglects to do so within two months after being called upon, the registered user may institute proceedings under his own name and shall make the registered proprietor a defendant. B ATC's Logo and unregistered Trademark do not affect the 'origin' function of the Claimant's trademark 56. The 'origin' function has been described as the function of 'guaranteeing' that goods or services bearing a register mark have been placed on the mark with the authority of the proprietor. 49 One of the circumstances in which the origin function may be unaffected is where a mark is used for purely descriptive purposes. 50 In Hölsterhoff v Freiesleben 51, The European Court of Justice ruled that the rights conferred by Article 5 of the Trade Marks Directive did not cover these specific circumstances, in which there was no question of the trade mark used being perceived as a sign indicative of origin On the question of the extent of a proprietor's rights to prevent use of a trademark, The European Court of Justice observed:...where the defendant reveals the origin of goods which he has produced himself...there can be no question of the trademark used 49 Hoffman-La Roche v Centrafarm, Case C-102/77 [1978] ECR I-1139, [7] 50 Arsenal v Reed [2003] RPC(9) Case C-2/00 [2002] ECR I Ibid., [17] 14

28 being perceived in trade as a sign indicative of the firm of origin In the present matter, Almond Tea Company was incorporated in 1999 in Singapore with registered address at Suite 18-1, Katong Tower, 87 Ceylon Road, Singapore and has been growing and manufacturing tea in China since January ATC's Sailor's Ceylon is marketed through most Asian countries, in Germany and in the United Kingdom. It's main market is south-east Asia. 59. CTC and ATC entered into a distribution agreement n 20 October 2008, since when CTC developed a strong consumer base, sales increased to exceed targets set by CTC and constituting approximately 35 per cent of CTC's global nett revenue Further, ATC has been marketing and distributing several products under the brand of Sailor's Ceylon including Sailor's Ceylon Earl Grey Tea and English Breakfast Tea for the period It is humbly submitted that the term Sailor's Ceylon is intended as a reference to the Managing Director, Phillip Chan's previous service as a Singaporean ship captain. Further, the use of 1972 in the Logo is symbolic of Phillip Chan's service tag as captain. 56 Also, the use of the word Ceylon is purely descriptive of the product, for which tea seeds were sourced from Sri Lanka. 62. It is further submitted that all products marketed by ATC contained the following line on their packaging: Manufactured and packed to the highest standards by Almond Tea Company in [country of origin] using the finest imported and local ingredients It is humbly submitted that ATC did not have any fraudulent intentions to deceive consumers into believing that their goods were associated with or originated from the Claimant Company. 53 Holterhoff v Freiseleben C-2/00 [2002] ECJ of the compromis 55 Question 11, 13 and 16 of the Additional Clarifications to the Moot Problem. 56 Question 18 of the Carifications to the Moot Problem. 57 Question 6 of the Additional Clarifications to the Moot Problem. 15

29 C. ATC's use of the Trade mark in respect of their Tea products does not amount to passing off as CTC's Ceylon Tea i. ATC's Trade mark is not identical or so nearly similar to CTC's trademark as to be likely to cause deception. 63. The central issue is whether a substantial or large number of relevant section of the public have been misled or are likely to be misled. 58 The deception must be more than momentary and inconsequential. 59 Per Lord Oliver in the Reckkitt Coleman case, is it, on a balance of probabilities, likely that...a substantial number of the relevant class will be misled into purchasing the defendant s product in the belief that it is the claimant's product? Mere confusion does not result in a valid claim of passing off. This is based on the reasoning that nobody is entitled to be protected against confusion as such. 61 The passing off action is based on deception or its likelihood. If the court does not believe in any probability of deception, the action must fail. 65. Only things which are put predominantly forward so as to be likely to catch the eye of a purchaser and remain in his memory need generally be considered. Thus, the printing on the back or sides of a box may usually be disregarded in considering whether the get-up of goods is likely to deceive Neutrogena [1996] R.P.C Per Jacob J, at there are always some people who are confused and even when products are well-differentiated, mistakes do occur. 59 Cadbury Schweppes Pty Ltd v The Pub Squash Co [1981] 1 W.L.R. 193 at 205B, PC. 60 [1990] R.P.C. 341 at 407. This passage indicates that below-sale confusion can really only be relevant in passing off if the confusion persists through and results in a second/subsequent sale. 61 Marcus Publishing Plc v Hutton-Wild Communications Ltd [1990] R.P.C. 576 C.A. 62 Per Kekewich J. in Lever v Bedingfield (1898) 15 R.P.C. 453 at 462; Also, per Lord Hamworth M.R. at 46 in Smith's Potato Crisps v Paige's Potato Crisps (1928) 45 R.P.C. 132: there is a distinguishing feature in the defendant's roduct which ought not to be overlooked by any observer with his wits reasonably about him. 16

30 ii. ATC's use of their trademark does not amount to misrepresentation by way of imitation of CTC's trademark. 66. To establish misrepresentation by imitation of a trademark, the claimant must establish that the badge of trade concerned has been used for goods or a business that are not his- or at least that have no right to the badge- so as to be recommended by it. 63 Furthermore, in order to establish passing off this way, it must be shown that what the defendant has taken is in itself sufficiently distinctive of the claimant Section 40(2) of the Trade Marks Act 1976 states that the use, of a trade mark in any manner, does not amount to infringement having regard to any limitations on the registration to which the registration does not extend. A trader who introduces a feature into the get-up of his goods does not thereby acquire any proprietary interest in it, so as to be able to prevent its use by competitors, until it has become so identifiable with his goods that its use by others is calculated to deceive It has been noted that if the only resemblances between the two marks are in parts which are common, so that the owner of the one has taken nothing which is peculiar to the other, then there is at all events no infringement Where a word is prima facie the name or description of an article, evidence that it is also generally associated with the name of a particular maker is by no means conclusive that it has become a distinctive work which cannot be used of the same article when made by others without risk of deception It has been observed in The European v The Economist, wherein 'European' is the most prominent feature of the platiniff's mark it is not made-up or invented word but an ordinary word in common use, capable of being used most naturally in a descriptive manner, and in the case of the defendant's newspaper used to describe its characteristics and contents Where descriptive words are included in a registered trade mark, the courts have always and rightly been exceedingly vary of granting a monopoly in their use In the present matter, the trademark registered by the SLTB was given with the 63 Hendriks v Montagu (1881) 17 Ch.D. 638; Massam v Thorley (1880) 14 Ch.D Imperial v Phillip Morris [1984] R.P.C Klissers Farmhouse Bakeries v Harvest Bakeries [1989] R.P.C. 27, Casey J rejected the claimant's claim of distinctiveness in the use on bread packaging of check or gingham patterns, whilst noting the importance of the fact that the defendant's packaging had a lbel showing clearly the maker's name and mark: at The European v The Economist [1996] F.S.R Burberrys v Cording (1909) 26 R.P.C. 693 at Ibid. 17