C1020-C

THE ELEVENTH

LAW ASIA INTERNATIONAL MOOT COMPETITION

10TH – 15TH AUGUST, 2016

KUALA LUMPUR REGIONAL CENTRE FOR ARBITRATION

AT COLOMBO, SRI LANKA

FOR: AGAINST:

CHELSEA TEA COMPANY, ALMOND TEA COMPANY,

LOT 14, DAWSON STREET, SUITE 18-1, KATONG TOWER,

COLOMBO 00202, SRI LANKA. 87 CEYLON ROAD, SINGAPORE

(CLAIMANT) (RESPONDENT)

MEMORANDUM ON BEHALF OF CLAIMANT

TABLE OF CONTENTS

LIST OF ABBREVIATIONS .................................................................................................. iii

INDEX OF AUTHORITIES...................................................................................................... v

STATEMENT OF FACTS ........................................................................................................ x

STATEMENT OF JURISDICTION........................................................................................ xii

ISSUES FOR CONSIDERATION ........................................................................................ xiii

SUMMARY OF ARGUMENTS ............................................................................................ xiv

ARGUMENTS ADVANCED ................................................................................................... 1

I. MALAYSIAN LAW IS THE APPLICABLE LAW TO THE DISPUTE IN THE

PRESENT CASE ................................................................................................................... 1

A. Malaysian law is the applicable law under KLCRA-I Rules. ..................................... 2

B. Malaysian law is the applicable law under law of arbitral seat ................................... 5

II. ATC HAS BREACHED THE AGREEMENT BY DISTRIBUTING SAILOR’S

CEYLON AFFIXED WITH THE ATC’S MARK IN MALAYSIA ..................................... 7

A. Breach By Distribution Of Goods That Compete With The Products Of CTC During

The Subsistence Of The Contract ....................................................................................... 7

B. Breach Of Intellectual Property Rights Of CTC By Distributing The Products In The

Territory With ATC’s Mark Bearing The Brand Name Sailor’s Ceylon And Symbol Of

Quality With The Lion Logo ............................................................................................ 10

ii

III. THE USAGE OF THE PHRASES “SYMBOL OF QUALITY” AND “CEYLON”

LEADS TO PASSING OFF ................................................................................................. 13

A. The business carried on by Ranatunga had goodwill. ............................................... 15

B. There was misrepresentation ..................................................................................... 16

C. The business has suffered damage ............................................................................ 17

D. Alternatively, ATC’s usage of the Ceylon, infringes the GI of Ceylon tea. ............. 19

IV. THERE IS AN INFRINGEMENT OF THE LION LOGO BY THE USAGE OF ATC

MARK .................................................................................................................................. 22

A. The ATC mark is similar to the Lion Logo. .............................................................. 22

B. Additionally, Lion Logo is a Well-Known mark ...................................................... 24

REQUEST FOR RELIEF ........................................................................................................ 26

iii

LIST OF ABBREVIATIONS

ATC Almond Tea Company

CISG The United Nations Convention on

Contracts for the International Sale of

Goods

CLAIMANT Ranatunga

CTC Chelsea Tea Company

ICC International Chamber of Commerce

IPR Intellectual Property Rights

KLRCA

Kuala Lumpur Regional Centre for

Arbitration

RESPONDENT Philip Chan

RM Ringgit Malaysia

SLTB Sri Lankan Tea Board

iv

TCE Traditional Cultural Expression

TK Traditional knowledge

TM Trade Mark

TMA Trade Mark Act

TRIPS Trade Related aspects of Intellectual

Property rights

UN United Nations

WIPO World Intellectual Property Organization

v

INDEX OF AUTHORITIES

CASES

Abercrombie & Fitch Co & Anor v Fashion Factory Outlet KL Sdn Bhd & Ors[2008] 4 MLJ

127 ........................................................................................................................................ 22

Badan Pengurusan Wisma 2020 v Property Base Development SdnBhd, [2012] 1 LNS 500.12

Boissevain v Weil, [1950] 1. All ER 728. .................................................................................. 2

British Broadcasting Co. v Talbot Motor Co. Ltd. [1981] F.S.R. 228. ................................... 14

Campagnie General v. Campagnie General Sdn. Bhd. [1997] FSR 610 HC (Mal.). ............. 15

Chatenay v The Brazilian Submarine Telegraph Company Limited, (1890) 1 QB 79 (CA)..... 4

Compagnie d’ Armement Martitime SA v Compagnie Tunisienne de Navigation SA (1971) A.C

572 at P.603. ........................................................................................................................... 1

Delchi CarrierSpa v. Rotorex Corp 71 F.3d 1024, 1028 (2nd Cir. 1995). ................................ 8

Erven Warnik v Townend, [1979] 2 All E.R. 927. ................................................................... 13

Fabrique Ebel Societe Anoynme v Syarikat Perniagaan Tukang Jam City Port & Ors[1988] 1

MLJ 188 ............................................................................................................................... 22

Hertz Corp. v Friend, 559 U.S. 77 (2010). ................................................................................ 5

Hoffman-La Roche v DDSA [1969] F.S.R. 410, CA. .............................................................. 17

Inland Revenue Commissioners v Muller & Co.’s Margarine Ltd[1901] A.C. 217, HL. ....... 15

Irvine v. Talksport, [2002] 2 All E.R. 424. .............................................................................. 17

Jasmine Food Corporation v Leong Wai Choon[2016] 5 CLJ 953 [HC] ............................... 22

vi

Leo Pharmaceutical Products AS v. Kotra Pharma (M) Sdn Bhd, [2009] 5 MLJ 703 .......... 22

Lloyd v Guibert, (1865) LR 1 QB 115(122). ............................................................................. 3

M.I. & M Corporation v A Mohd Ibrahim[1964] 30 MU, 392.. .............................................. 16

Nestle’s Products Ltd. v. Asia Organisation Ltd, [1965] 2 M.L.J. 195. .................................. 15

Northland Cas Co. v HBE Corp., 1311 (M.D.Fla. 2001). ......................................................... 3

Scandecor Development AB v Scandecor Marketting AB[1999] F.S.R 26. ............................ 14

Olex Focas Pty Ltd v Skodaexport Co Ltd, (1998)3 VR 380. ................................................... 5

Parker-Knoll v Knoll International Ltd., [1962] R.P.C. 265. .................................................. 16

Pinanacle Pizza Co. v Little Caesar Enters., 560 F. Supp. 2d 786 (D.S.D) 2008. ................... 3

Re United Railways of Havana and Regla Warehouses Ltd, (1960) 2 All ER 332. .................. 4

Seixo v. Provezende (1866) I Ch App. 192. ............................................................................. 17

Sinma Medical Products Sdn Bhd v Yomeishu Seizo Co Ltd [2004] 4 Malayan Law Journal

358. ....................................................................................................................................... 14

Spalding & Bros. v Gamage Ltd. (1915) 32 R.P.C. 273, 284, HL. ......................................... 13

State Aided Bank of Travancore Ltd v Dhrit Ram., AIR 1942 PC 6. ........................................ 3

Suisse AtlantiqueSocie̒te̒ d’ Armement Maritime SA v NV RotterdamscheKolenCentrale [1967]

1 AC 361. ............................................................................................................................... 7

Timothy Lawlor v Sandvik Mining and Construction Mobile Crushers and Screens Limited

[2012] EWHC 1188 (QB). ..................................................................................................... 5

Underhill Inv. Corp v FixedIncome Disc. Advisory Co., 140 (3d Cir. Del. 2009). ................... 3

Wallis,Sonand Wells v Pratt and Haynes [1910] 2 KB 1003, 1012. ......................................... 8

YK Fung Securities Sdn Bhd v. James Cape (Far East) Ltd. (CA) [1997] 4 CLJ 300. ............. 5

YK Fung Securities Sdn Bhd v. James Cape (Far East) Ltd[2012] EWHC 1188 (QB) ............ 5

STATUTES

§ 82(2) Trademarks Act, 1976. ................................................................................................ 13

vii

§10(2) Competition Act of Malaysia, 2010. ............................................................................ 12

§38(1) (a) Trade Marks Act, 1976 ........................................................................................... 22

§70B (1) Trade Marks Act 1976 .............................................................................................. 24

§74, Malaysian Contracts Act, 1950 .......................................................................................... 7

Rule 6(1) of KLRCA-I rules of 2013(revised). ......................................................................... 6

TREATISES

Alan Redfern and Martin Hunter, Law and Practice of International Commercial Arbitration,

(London; Sweet & Maxwell, 2004, 4th ed.), P. 93 ................................................................. 1

Catherine Elliott Et al., Contract Law, (Essex: Pearson Education Limited, 5th Ed, 2005). ..... 7

Dicey and Morris, The conflict of laws,( London; Stevens & Sons Limited,1967, 8th ed.), P.

693. ......................................................................................................................................... 2

Gary Born, International Commercial Arbitration, (Kluwer Law International 2014), PP. 2636-

2637. ....................................................................................................................................... 1

Greenberg, Et al., International Commercial Arbitration: An Asia-Pacific Perspective,

(Cambridge University Press 2011), P. 103. .......................................................................... 2

Kapil Wadhwa, Venkateswaran on Trade Marks and Passing- off, Vol 1, (Nagpur: Lexis Nexis

Butterworths Wadhwa Publications, 5th Ed, 2010), at P.vi. ................................................. 10

Professor Christopher Wadlow, The Law of Passing-Off Unfair Competition by

Misrepresentation, (London; Sweet & Maxwell, Thomson Reuters, Ed. 4), P. 10. ............ 13

Rajoo, Sundra/Davidson, W. S. W., Dato, “The Arbitration Act 2005: UNCITRAL Model Law

as Applied in Malaysia”, (Malaysia: Sweet & Maxwell Asia, 2007), P. 136........................ 6

Sir Jack Beatson Et al., Anson’s Law of Contract, (Oxford: Oxford University Press, 29th Ed,

2010), at P.573. ...................................................................................................................... 7

viii

JOURNALS

Dr. Ali Khaled Qtaishat, Choice of Law in International Commercial Arbitration, India Law

Journal, P.265. ........................................................................................................................ 3

Geographical Indications: An Introduction, World Intellectual Property Organization, P. 8. 19

Hasita De Alwis,Ceylon Tea – Sri Lanka’s Best Known Geographical Indication, World

Symposium on Geographical Indications, WIPO/GEO/BKK/13/INF/4 , January 15, 2014,

P.8. ........................................................................................................................................ 20

Loando, The EEC Convention on the law applicable to Contractual obligations,(1987) 24

CML Rev 159 at 204. ............................................................................................................. 4

Teo Boon Kwang, Trade Mark Law and Practice in Malaysia, P. 242 .................................. 22

Why Ceylon Tea, available at, http://www.pureceylontea.com/index.php/features/why-

ceylon-tea, accessed on 5th July, 2016. ................................................................................ 20

Yearbook Commercial Arbitration XL, ICC NO: 15667, 2015. ............................................... 3

DICTIONARIES

Black's Law Dictionary (8th ed. 2004). ..................................................................................... 6

CONVENTIONS

Article 16 TRIPs Agreement ................................................................................................... 24

Article 6bis of the Paris Convention ........................................................................................ 24

United Nations Convention on Contracts for the International Sale of Goods, Vienna, 11 April

1980, S.Treaty Document Number 98-9 (1984). ................................................................... 8

ix

WEBSITES

Malaysian Intellectual Property Association, available at

http://www.mipa.org.my/trademark.html, last accessed on 23 June, 2016. ......................... 23

Malaysian, available at http://www.wipo.int/wipolex/en/details.jsp?id=3105 , accessed on 1st

June, 2016............................................................................................................................. 24

National Intellectual Property Policy, http://www.kpdnkk.gov.my/index.php/en/fair-trade-

practices-policy/35-kpdnkk/dasar-kementerian, last visited on 1st June, 2016. .................. 12

Why Ceylon Tea, available at, http://www.pureceylontea.com/index.php/features/why-

ceylon-tea, accessed on 5th July, 2016 ................................................................................. 20

x

STATEMENT OF FACTS

I. THE PARTIES TO THE ARBITRAL PROCEEDINGS

1. The Claimant, in the present case is CTC, whose office is incorporated in Colombo, Srilanka,

established in 1965 with Marvan Ranatunga as its Chairman.

2. The Respondent, in the present case is ATC, whose office is situated in Singapore with Phillip

Chan as its Managing Director.

II. BREACH OF CONTRACT AND INTELLECTUAL PROPERTY

3. Ranatunga who is the chairman of CTC is a committed tea enthusiast and trader whose vision

is to make “CTC Ceylon” a globally renowned tea brand.

4. CTC Ceylon affixed “Lion Logo” on the packing or labels of tea grown and manufactured in

Sri Lanka; the said mark was registered in Malaysia and many other jurisdictions worldwide

with two conditions: no exclusive rights over the words “CEYLON TEA” and “SYMBOL OF

QUALITY”.

5. In 2008, Ranatunga met Phillip Chan in Malaysia, on knowing about the expertise of Chan in

the tea industry in Malaysia, Ranatunga wanted to appoint Chan as its exclusive distributor of

“CTC Ceylon” in Malaysia for which Phillip Chan didn’t agree to. After a month, Ranatunga

re-approached Chan to accept the offer.

xi

6. After negotiations between ATC and CTC, exclusive Distribution Agreement was entered into

on 20th October 2008 in Malaysia upon a consideration in Ringgit Malaysia. The Distribution

Agreement contains a clause:

“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”.

7. On 20th October 2013 as CTC setup its new headquarters in Kula Lumpur, Malaysia. In 2015,

it came to CTC’s notice that ATC has been growing and manufacturing tea in China and

distributing said tea products in Malaysia in the name of “SAILOR’S CEYLON” and a mark

that also contained a lion insignia and “Symbol of Quality” on it, since 2012 i.e. during the

subsistence of the agreement.

8. The tea produced by ATC was produced and manufactured in China. It was not manufactured

according to the standards and requirements of the SLTB.

9. CTC had wrote to ATC with regard to the damages that ATC is required to pay CTC for the

breach caused and also requested ATC to stop using ATC’s mark and not use the word

‘Ceylon’. ATC denied all the above assertions made by CTC.

III. THE ARBITRATION

10. The arbitration is to be settled according to the KLRCA i-Arbitration Rules and the place of

Arbitration is decided to take place in Colombo, Sri Lanka.

xii

STATEMENT OF JURISDICTION

1. So as to ensure an expeditious resolution of the dispute, the Parties have agreed in writing to

submit this dispute to arbitration.

2. The Parties have also agreed to resolve their dispute in accordance with the binding

arbitration agreement pursuant to Rule 1(1) Kuala Lumpur Regional Centre for Arbitration

(“KLRCA”) and the place of arbitration as Sri Lanka.

3. The Parties do not dispute the validity and enforceability of the arbitration agreement, and

any award rendered by the tribunal is acknowledged to be final and binding upon the parties as

per Rule 12(7) of KLRCA i-Arbitration Rules.

xiii

ISSUES FOR CONSIDERATION

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.

xiv

SUMMARY OF ARGUMENTS

I

When the agreement is silent about the applicable law, the institutional rules of the arbitration

or the law of arbitral seat is used to determine the applicable law. In the present case the parties

have agreed that KLRCA- i rules as the institutional rules governing the arbitration. According

to the KLRCA-i rules the tribunal is given the authority to determine the most appropriate law

to the dispute. The most accepted approach is the close connection test and the factors that are

to be considered are the place of negotiation and signing of the contract, the place of

performance of the contract, the principle place of business and the mode of currency used in

the transaction, taking into consideration of all the above factors and the law of the arbitral seat

we can come to the conclusion that Malaysian law is the most appropriate law applicable to the

dispute.

II

ATC has breached two fundamental terms of the agreement. The breach was mainly by [i]

distributing a competitive product during the subsistence of the agreement, which is in breach

of Clause 4.2 of the Distribution Agreement and [ii] by distributing their products that contains

arguably similar mark as that of CTC which is a breach of the Intellectual Property clause in

the Distribution Agreement. This has also lead to breach of trust and fiduciary duty and an

xv

economic tort. Hence a fundamental breach of the agreement has occurred which makes the

Respondent liable to pay damages to CTC.

III

The Respondent has passed off by using the phrase “symbol of quality” and the word “Ceylon”

because the Claimant has a goodwill in Malaysia, the usage of these words along with other

circumstances such as similarly priced product serving the same set of customers, etc., has

caused confusion, leading to misrepresentation and hence finally leading to damage by loss of

sales to the Claimant.

Also, the word “Ceylon” can only be used if the tea has originated in Sri Lanka because that is

when the tea gets the characteristics from the place called Kandy, in Sri Lanka because of the

traditional methods and techniques that are used at that place. Since, the Respondent’s tea has

been manufactured in China and hence, has nothing which can give it the qualities of the tea

grown in the geographic region of Kandy, in Sri Lanka.

IV

The Respondent has used the “ATC mark”, which is nearly identical to the “Lion Logo”, used

by the Claimant. The Respondent has used a lion on the logo, the color of the logo is the same,

both the logos are in a box shape and other such factors lead to the infringement of the lion

logo. Also, the “Lion Logo” is a well-known mark in Malaysia and hence the Respondent has

used the mark to cause misrepresentation and free ridership over the mark.

1

ARGUMENTS ADVANCED

I. MALAYSIAN LAW IS THE APPLICABLE LAW TO THE DISPUTE IN

THE PRESENT CASE

1. An agreement intended to create legal relations does not exist in a legal vacuum. It is

supported by a system of law which is generally known as “the substantive law”, “the

applicable law” or “the governing law” of the contract1. These terms denote that the

particular system of law that governs the interpretation and validity of the contract, the

rights and obligations of the parties, the mode of performance of the contract and

consequences of breach of contract2. When the agreement is silent on the law applicable

to the substance of the dispute, the Tribunal may determine the applicable substantive

law by applying the choice-of-law formula contained either in the institutional rules or

in the law of the arbitral seat3. The Parties in the present case have not specified the

applicable substantive law to the dispute, but have chosen the KLRCA i-Arbitration

Rules as the institutional rules governing arbitration. However, the seat of arbitration is

not specified.4 Malaysian law is the applicable law under (A) KLRCA Rules and (B)

the law of arbitral seat.

1Alan Redfern and Martin Hunter, Law and Practice of International Commercial Arbitration, (London; Sweet &

Maxwell, 2004, 4th ed.), P. 93. 2Compagnie d’ ArmementMartitime SA v CompagnieTunisienne de Navigation SA (1971) A.C 572 at P.603. 3Gary Born, International Commercial Arbitration, (Kluwer Law International 2014), PP. 2636-2637. 4¶22, Distributive Agreement.

2

A. MALAYSIAN LAW IS THE APPLICABLE LAW UNDER KLCRA-I RULES

2. When the agreement is silent about the applicable law, the institutional rules of the

arbitration or the law of arbitral seat is used determine the applicable law. In the present

case the parties have agreed that KLRCA- i rules as the institutional rules governing

the arbitration. According to the KLRCA-i rules the tribunal is given the authority to

determine the most appropriate law to the dispute. The most accepted approach is the

close connection test and the factors that are to be considered are the place of

performance of the contract, the principle place of business and the habitual residence

of the parties, taking into consideration of all the above factors and the law of the

arbitral seat we can come to the conclusion that Srilankan law is the most appropriate

law applicable to the dispute.

3. Art. 35(1) KLRCA Rules states that, in the absence of a choice of law as applicable to

the substance of the dispute, the Tribunal should apply “the law which it determines to

be appropriate”. This does not warrant a direct application of any substantive law at

whim, but rather should involve a form of analysis logically based on general conflict

of laws consideration5. One of the most widely recognised conflicts of laws principles

is to apply the substantive law of the State with which the dispute has the closest

connection6. By virtue of the application of closest connection test the Malaysian law

is the most appropriate law applicable to the dispute.

i. The Malaysian law is the most appropriate law under close connection test

4. The most satisfactory formulation which is generally used by the courts is that of proper

law7 i.e., the system of law with which the transaction has its closest connection or real

5 Greenberg, Et al., International Commercial Arbitration: An Asia-Pacific Perspective, (Cambridge University

Press 2011), P. 103. 6 Born, 2631. 7 Dicey and Morris, The conflict of laws, (London; Stevens & Sons Limited, 1967, 8thed.), P. 693.

3

connection is to be considered8, while determining the law that is more appropriate to

the dispute. The factors that the courts have considered to be relevant in determining

the applicable substantive law are the place where the contract has been negotiated,

place of signing the contract, the place of performance of the contract, the place of

business of the parties and the mode of payment9.

a) The place where the parties negotiate and sign the contract is in Malaysia

5. The basic rule of contracts that law of the place where a contract is entered into will

govern any issues arising out of the contract10. In other words, under the doctrine of lex

loci contractus, in the absence of contractual choice of law, a contract will be governed

by the law of the state “where the last act necessary to complete the contract is done”.11

The place of negotiation12 and place where the contract is signed13 are the two relevant

factors that should be looked into under lex loci contractus. The law of the place where

the contract is made is prima facie that which the parties intended or ought to have

presumed to have adopted as the footing upon which they dealt and that such law ought

therefore to prevail, in the absence of circumstances indicating different intention14.

The court in State Joint Stock Company v State Agency15 held that the place of contract

as one of the factors that determine the intention of the parties. In the present case, after

protracted negotiations16 between Ranatunga and Phillip Chan, Distribution Agreement

was entered by the parties on 20th October 200817 in Malaysia18 which makes Malaysian

law as lex loci contractus.

8Boissevain v Weil, [1950] 1. All ER 728. 9Dr. Ali Khaled Qtaishat, Choice of Law in International Commercial Arbitration, India Law Journal, P.265. 10Northland Cas Co. v HBE Corp., 1311 (M.D.Fla. 2001). 11Pinanacle Pizza Co. v Little Caesar Enters., 560 F. Supp. 2d 786 (D.S.D) 2008. 12Underhill Inv. Corp v FixedIncome Disc. Advisory Co., 140 (3d Cir. Del. 2009). 13State Aided Bank of Travancore Ltd v Dhrit Ram.,AIR 1942 PC 6. 14Lloyd v Guibert, (1865) LR 1 QB 115(122). 15Yearbook Commercial Arbitration XL, ICC NO: 15667, 2015. 16¶ 11 Proposition. 17Ibid. 18 Q. 12, Clarification.

4

b) The place of performance of the contract is Malaysia

6. In absence of contractual choice of law, Lex loci solution is to be considered while

determining the system of law with which the contract has closest connection19. The

place where the contract was to be performed is the pre-dominant factor that needs to

be looked into under lex loci solution20.

7. In the cases of distributorship agreement (where the distributor undertakes to market

the manufacturer’s goods) distributor becomes a characteristic performer since it is his

performance which is the economic purpose of the contract and his performance

becomes a primary importance21. In the cases of business, one can come to the

conclusion that the law of the country in which the contract is to be performed is the

law binding the contract. Else a very strange situation would arise, where the contract

is to be performed in a country contrary to the laws of that country. Hence, lex loci

solution becomes a predominant factor in determining the law applicable to the

contract22. In a case decided by ICC tribunal on the applicable law to the contracts State

Joint Stock Company v State Agency23 held that where the place of performance of the

obligations is the prima facie factor to be considered in determining the applicable law.

In the present case, an exclusive Distribution Agreement was entered between CTC and

ATC to distribute CTC Ceylon in Malaysia24, hence the place of performance (the place

where the goods are distributed or sold is Malaysia).25

19Re United Railways of Havana and Regla Warehouses Ltd, (1960) 2 All ER 332. 20Supra Note 14. 21Loando, The EEC Convention on the law applicable to Contractual obligations,(1987) 24 CML Rev 159 at 204. 22Chatenayv The Brazilian Submarine Telegraph Company Limited, (1890) 1 QB 79 (CA). 23 Supra Note 16. 24 Recitals at B, Distributive Agreement. 25 Ibid.

5

c) The principle place of business is Malaysia

8. The principle place of business is the place where the corporation maintains its

headquarters, provided that the headquarters is the actual centre of direction, control

and coordination, i.e., the ‘nerve centre’26. In the case of Timothy Lawlor v. Sandvik

Mining and Construction Mobile Crushers and Screens Limited27, the court

determining the applicable law to the contract accepted that the law applicable to the

contract is Spanish law and it should be used to determine the dispute as the place of

principle business was situated in Spain. In the present case, the headquarters is situated

in Kuala Lumpur, Malaysia28, which was setup to promote and distribute CTC Ceylon

tea in the region, in the line of Ranatunga's aspirations for global dominance.

d) The mode of currency used for transaction is RM

9. In the case of YK Fung Securities SdnBhd v. James Cape (Far East) Ltd.(CA)29, the

court held that the closely connected factors that needs to be taken into consideration

when there is absence of express choice of applicable law is the currency in which the

payment is made. The proper law of a contract which involves the payment to be made

in Czechoslovakia, the law with closest connection was Czech law30. The mode of

payment between the supplier and the distributor in the present case is in RM.31

B. MALAYSIAN LAW IS THE APPLICABLE LAW UNDER LAW OF ARBITRAL SEAT

10. Malaysian law is the applicable law to the merits of the dispute in the present case as

Malaysia is the seat of arbitration by default and hence Malaysian Arbitration Act, 2005

26Hertz Corp. v Friend, 559 U.S. 77 (2010). 27[2012] EWHC 1188 (QB). 28 ¶ 13, Proposition. 29 (CA) [1997] 4 CLJ 300. 30OlexFocas Pty Ltd vSkodaexport Co Ltd, (1998)3 VR 380. 31 ¶ 2.1, Distribution Agreement.

6

is applicable in the present case which gives authority to the tribunal to determine the

applicable law to the dispute by applying the conflict of law principles, in the absence

of choice of law applicable to the dispute.

i. Malaysia is the seat of arbitration by default

11. Rule 6(1) of KLRCA Rules says that in the absence of any agreement upon a specific

arbitral seat, Kuala Lumpur, Malaysia is the arbitral seat by default32. Since the Parties

have not expressly agreed on the seat of arbitration33, Malaysia is arbitral seat by

default. Accordingly, the Malaysian Arbitration Act is the law of the arbitral seat.

12. Under s. 30(4) Malaysia Arbitration Act, the Tribunal should apply “the law determined

by the conflict of laws rules” failing any agreement of the law applicable to the

substance of the dispute. Interpretation of s. 30(4) is that the Tribunal should apply the

substantive law of the jurisdiction with the closest connection to the dispute34. As

proved in the above arguments by application of close connection test to the dispute,

the applicable law is the Malaysian law.

Conclusion: Hence, the applicable law to the disputes in the present case is the Malaysian law

under the KLCRA-i rules and the law of arbitral seat.

32 Rule 6(1) of KLRCA-i rules of 2013(revised). 33 Supra Note 4. 34Rajoo, Sundra/Davidson, W. S. W., Dato, “The Arbitration Act 2005: UNCITRAL Model Law as Applied in

Malaysia”, (Malaysia: Sweet & Maxwell Asia, 2007), P. 136.

7

II. ATC HAS BREACHED THE AGREEMENT BY DISTRIBUTING

SAILOR’S CEYLON AFFIXED WITH THE ATC’S MARK IN

MALAYSIA

13. The underlying principle of a contract lies in the Latin Maxim PactaSuntServanda35(i.e.

contracts must be honored or contracts must be served). A contract is said to be

breached when one party performs defectively, differently from the agreement.36Since

Malaysian Law is the applicable law here, according to Section 74 of the Contracts

Act37, this breach entitles the claimants to incur compensation from the Respondent for

the breach caused and also obtain the enforcement of the promise by an order for an

injunction to restrain its breach.38

14. ATC had agreed to be the exclusive distributors of CTC. Clause 4.2 being the

underlying condition.39 Breaching this condition, ATC started the distribution of tea

products under the brand name Sailor’s Ceylon from November 201240, which was

during the subsistence of the agreement. Subsequently the Claimant shall prove that

ATC has breached the agreement in the following forms.

A. BREACH BY DISTRIBUTION OF GOODS THAT COMPETE WITH THE PRODUCTS OF

CTC DURING THE SUBSISTENCE OF THE CONTRACT

15. ATC has breached those clauses that form conditions in the agreement. If the parties

regarded a term as essential, it is classified as a condition. The breach by the

Distributors is a deliberate breach as they contravened the essential clauses which were

35Black's Law Dictionary (8th ed. 2004). 36 Catherine Elliott Et al., Contract Law, (Essex: Pearson Education Limited, 5th Ed, 2005). 37 §74, Malaysian Contracts Act, 1950. 38 Sir Jack Beatson Et al., Anson’s Law of Contract, (Oxford: Oxford University Press, 29th Ed, 2010), at P.573. 39 Clause 4.2, Distribution Agreement. 40¶14, Proposition.

8

explicitly agreed upon by them at the time of entering into the agreement. A deliberate

breach is one where the party in breach ‘deliberately’ intended to do, it may be possible

to say that the parties never contemplated that such a breach would be excused or

limited.41

16. It is explicit from the purpose of the Agreement that the contract itself was to enable

the Claimant to develop a strong consumer base in Malaysia.42 ATC was to help CTC

find a better market in Malaysia for their products since the former had an impressive

market knowledge about the Malaysian tea industry.43 Hence CTC wanted ATC to be

their exclusive distributor and cease their products from the market, so that ATC did

not have any sort of parallel interest and could candidly work to help CTC to acquire a

good market base in Malaysia. Paradoxically they started to distribute those products

that competed with the products of the Claimant thereby creating an inner conflict.

17. Another important covenant of the agreement was that the Distributors are not entitled

to bind the Suppliers in anyway44and must also not pledge the Supplier’s credit45. The

distribution of the products of the Respondent that had all the potential to cause

confusion in the minds of people with the products of the Claimant indirectly binds the

Suppliers. From the fact that the distributors have used confusingly similar trademark

and brand name, it cannot be denied that the act of Distributors were deliberate and

intended the same outcome. This has evidently put the credit of the Suppliers at stake.

41Suisse AtlantiqueSocie̒te̒ d’ Armement Maritime SA v. NV RotterdamscheKolenCentrale [1967] 1 AC 361. 42 ¶13, Proposition. 43 ¶8, Proposition 44 ¶2.3, Distribution Agreement. 45 ¶4.4, Distribution Agreement.

9

i. The breach amounted to a fundamental breach entitling Claimant to damages

18. The breach is fundamental when it affects the very substance of the contract46. Article

25 of CISG47 provides that a breach of contract would be a fundamental breach if it

substantially deprived the Claimant of what he is entitled to expect from the contract

and if the Respondent would have foreseen the consequence at the time of the

conclusion of the contract.48

a) ATC breached the Agreement during the subsistence of the Agreement

19. From November 2012, i.e during the subsistence of the agreement, ATC had been

growing as well as manufacturing tea in China.49 The agreement expressly lays down

the events during which termination occurs and the parties are discharged from further

contractual obligations. It is clear from the facts and circumstances that when the

Respondent started distributing their products, the agreement had not terminated as per

the clauses mentioned under the head Termination.50 Hence, the obligations of the

Respondent had not ceased yet. So as to affirm this argument it is well evident from the

factual scenario that the consequence of the termination did not follow. This shows that

the agreement was never terminated but continuing.

b) ATC breached an essential term of the Agreement i.e. Clause 4.2

20. The Respondent has completely breached clause 4.2 of the agreement as eventually,

they started distributing those tea products which contained the word ‘Ceylon’ in its

brand name and affixed the Lion logo in Malaysia. Neither was the agreement

46Wallis,Sonand Wells v. Pratt and Haynes [1910] 2 KB 1003, 1012. 47United Nations Convention on Contracts for the International Sale of Goods, Vienna, 11 April 1980, S.Treaty

Document Number 98-9 (1984). 48Delchi CarrierSpa v. Rotorex Corp 71 F.3d 1024, 1028 (2nd Cir. 1995). 49 ¶14, Proposition. 50 ¶13, Distribution Agreement.

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prematurely terminated nor was the term completed. They were directly involved in the

distribution of a competing product in the territory.

21. The essence of the contract was that, CTC aspired to acquire global dominance using

ATC’s considerable market expertise by appointing them as CTC’s exclusive

distributor. Instead of using their best endeavors in promoting the market for CTC’s

products, ATC started the distribution of their own products during the subsistence of

the contract with CTC. Hence, the breach of a fundamental term of the agreement.

B. BREACH OF INTELLECTUAL PROPERTY RIGHTS OF CTC BY DISTRIBUTING THE

PRODUCTS IN THE TERRITORY WITH ATC’S MARK BEARING THE BRAND NAME

“SAILOR’S CEYLON” AND “SYMBOL OF QUALITY” WITH THE “LION LOGO”

22. ATC has breached the intellectual property rights of CTC by undertaking parallel

distribution and secret profit making. This has led to following consequences.

i) It has led to breach of another fundamental term of the Distribution Agreement

23. The Distribution Agreement provides a separate clause for IPR of the Claimant. Clause

9.3.3 prevents the Distributors to use any kind of Trade mark that shall prejudice or

impair the distinctiveness or validity or goodwill of the Suppliers.51 Clause 9.3.7 also

widens its scope to cover trade names that has the potential to cause confusion within

the minds of the consumers. The same is reiterated in clause 4.2.52

24. Unfair competition and dishonest trading is a known evil in business and Well-known

Marks become the victim in this unhealthy trade practices, to the detriment of the

public.53 A trademark and brand name provides identity to a product. It becomes the

means through which the consumers of the product identifies and relates its quality.

51 ¶9.3.3, Distribution Agreement. 52 Ibid. 53KapilWadhwa, Venkateswaran on Trade Marks and Passing- off, Vol 1, (Nagpur: Lexis

NexisButterworthsWadhwa Publications, 5th Ed, 2010), at P.vi.

11

ATC has therefore damaged the distinctiveness of the Suppliers by undertaking the

distribution of their products which is competing and in the same territory.

25. The distributors have maleficently used the “Lion Logo”, “Sailor’s Ceylon” and a

similar brand name during the subsistence of the contract so as to create confusion in

the minds of the consumers thereby resorting to unfair means of trade. As a result many

innocent customers of CTC would be mistakenly lead to buy the products of ATC

thinking that it is the product of “CTC Ceylon”. They have used a bogus lion logo so

as to hoodwink the end- consumers who are unable to differentiate the slight difference

in the logo. ATC’s products have prejudiced and damaged the distinctiveness of the

products of CTC, therefore breaching clauses of 9.3.3 and 9.3.7.

26. Alternatively, even after the termination of the agreement, clauses 9, 10, 11 and 12

would continue to operate. This would mean that ATC shall not have any rights to use

any trademarks that would prejudice or damage the distinctiveness of the Suppliers.

This evidences the importance of the IPR Clause in the agreement. Hence the IPR

Clause forms a fundamental term of the agreement.

a) It has led to Breach of trust and fiduciary duty

27. The role delegated to the Distributors by the agreement is to safeguard and further the

interest of the Claimant. Clause 7.1 entails the Distributors to use their best endeavors

to promote the sale of the products throughout the Territory.54 The relation of the

Distributor to the Claimant is no doubt as that of a fiduciary.

28. Drawing analogy from the case of PlaneteEnfantsSdnBhd v. Goh San Hwa55 a director

of the company who was acting in conflict of interest with the company, carried out

54 ¶7.1, Distribution Agreement. 55 [2015] AMEJ 38.

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parallel importation of the products into Malaysia during the currency of the agreement

was held to be in breach of his fiduciary duties as well as in breach of constructive trust.

29. The usage of an arguably similar trademark and brand name by the Distributors were

deliberate and the distribution of their products during the subsistence of the agreement

was in no doubt to cause undue losses to the Claimant. The Distributor failed to perform

his duty as a distributor which is a complete breach of the agreement. Therefore there

has occurred a breach in the fiduciary duty as the Distributors while furthering self-

interest, acted in conflict of the interest of the Claimant which has been expressly barred

by the agreement.

b) The breach has led to an Economic tort

30. In the state of Malaysia, the Fair trade Practices Policy seeks to prohibit any kind of

unfair trade practices in the economy and promote consumer welfare. The Competition

Act 2010, was enacted so as to support fair trade practices.56 The distributors had

ulterior intentions to disregard the agreement.

31. To establish economic tort, it was held in the case of BadanPengurusanWisma 2020 v.

Property Base Development SdnBhd.57the following elements should be satisfied: [a]

interference with the plaintiff's trade or business, [b] unlawful means[c]intention to

injure the plaintiff and [d] the action should in fact injure the plaintiff.

32. The present case satisfies all the above elements. Firstly, by developing parallel interest

the distributor in order to further his self-interest while the agreement was still in

existence. Secondly, by using arguably similar trademark and brand name the

Distributors intentionally sort to create confusion within the minds of the people. This

was a tactic to regain their position in the market and double their production. They

56 National Intellectual Property Policy, http://www.kpdnkk.gov.my/index.php/en/fair-trade-practices-policy/35-

kpdnkk/dasar-kementerian, last visited on 1st June, 2016. 57[2012] 1 LNS 500.

13

manufactured and distributed that product which was capable of competing with the

products of Claimant as it was done within the same territory. Therefore the fact that

there has been interference with the business of the Claimant is undisputed.

33. The second element is satisfied as the Distributors have resorted to unfair means of

trade and competition under Section 10(2) of the Malaysian Competition Act58. They

have also infringed the IPR under Section 19 of the Malaysian Trade Mark Act, 1976.

Hence they have resorted to unlawful means.

34. Finally the fourth element is also satisfied as from the year wherein ATC had started

their distribution (Since 2012) CTC also suffered from significant market loss as a result

of the breach. The sales of CTC fell by 30% in 2013 i.e. the immediate year after which

ATC had started distributing their products. In 2014 it further dropped to 15%.59The

statistics clearly shows that the act of the Distributors have actually caused injury to the

Claimant. Thus, satisfying all the four conditions it is clearly a case of Economic tort.

CONCLUSION: Hence as a result of breach of the agreement; ATC is liable to pay damages

to CTC as there has occurred a fundamental breach of the agreement.

III. THE USAGE OF THE PHRASES “SYMBOL OF QUALITY” AND

“CEYLON” LEADS TO PASSING OFF

35. Rights in unregistered marks are protected under the Trademarks Act60, which allows

58 §10(2) Competition Act of Malaysia, 2010. 59 Q.10 Clarifications. 60§82(2) Trademarks Act, 1976.

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actions in respect of passing off. Passing off is considered with misrepresentations made

by one trader, which damage the goodwill of another trader.61Spalding& Bros. v.

Gamage Ltd.62(Advocaat Case) and later cases63 lay down five characteristics which

must be present in order to create a valid cause of action for passing off: [1] a mis-

representation [2] made by a trader in the course of trade [3] to prospective customers

or his ultimate consumers of goods or services supplied by him [4] which is calculated

to injure the business or goodwill of another trader and [5] which causes actual damage

to a business or goodwill of the trader by whom the action is brought or will probably

do so.

36. The House of Lords in Reckitt & Colman v. Borden64(Jif lemon case), restated the

essential elements of passing off as“[A], the plaintiff must establish a goodwill or

reputation attached to the goods or services which he supplies in the mind of the

purchasing public by association with the identifying ‘get-up’ under which his

particular goods or services are offered to the public, such that the get-up is recognized

by the public as distinctive specifically of the plaintiff’s goods or services. [B], he must

demonstrate a misrepresentation by the defendant to the public leading or likely to lead

the public to believe that goods or services offered by him are goods or services of the

plaintiff. [C], he must demonstrate that he suffers or, in a quia timet action, that he is

likely to suffer damage by reason of the erroneous belief engendered by the defendant’s

misrepresentation that the source of the defendant’s goods or services is the same as the

source of those offered by the plaintiff.”65 Misrepresentation, damage and goodwill are

therefore the three elements of the tort, and are sometimes referred to as its “classical

61 Professor Christopher Wadlow, The Law of Passing-Off Unfair Competition by Misrepresentation, (London;

Sweet & Maxwell, Thomson Reuters, Ed. 4), P. 10. 62 (1915) 32 R.P.C. 273, 284, HL. 63ErvenWarnik v. Townend, [1979] 2 All E.R. 927. 64 [1990] 1 All E.R. 873. 65Wadlow, 14.

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trinity”.66 These three elements are also confirmed in a Malaysian Court of Appeal case

of Sinma Medical ProductsSdnBhd v. Yomeishu Seizo Co Ltd.67A more recent

formulation of the classical trinity was laid down in Full Court of Australia, in Hansen

Beverage Co v. Bickfords Pty Ltd.68

A. THE BUSINESS CARRIED ON BY RANATUNGA HAD GOODWILL.

37. It is the injury to the goodwill rather than the precise method of inflicting that injury

that matters.69The case of Scandecor Development AB v. Scandecor Marketting AB70

concurred with the description of goodwill in Inland Revenue Commissioners v. Muller

& Co.’s Margarine Ltd.71: “It is the benefit and advantage of the good name, reputation,

and connection of a business at its first start.”72 The same principle was laid down in a

series of cases.73

38. There are a number of facts that show that the Claimant have goodwill in Malaysia.

Their business was established in 196574, and when the cause of action arose, almost

four decades had passed which is long enough to establish goodwill75. Also it is stated

that CTC had developed a strong consumer base in Malaysia76, which is indicative of

business connection in Malaysia, which results in establishment of goodwill in

Malaysia. Also, the trademark of Claimant has obtained registrations in many

jurisdictions worldwide77, which would have also helped them in creating goodwill.

66Wadlow, 10. 67 [2004] 4 Malayan Law Journal 358. 68 [2008], FCAFC 181 at [34]. 69British Broadcasting Co. v. Talbot Motor Co. Ltd. [1981] F.S.R. 228. 70 [1999] F.S.R 26. 71 [1901] A.C. 217, HL. 72Wadlow, 108. 73Campagnie General v. Campagnie General Sdn. Bhd. [1997] FSR 610 HC (Mal.). 74 ¶ 3, Proposition. 75Nestle’s Products Ltd. v. Asia Organisation Ltd, [1965] 2 M.L.J. 195. 76 ¶ 13, Proposition. 77 ¶ 4, Proposition.

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Lastly, the market share of CTC is as high as 15% in, Malaysia which makes it even

more evident that CTC has goodwill in the Malaysian market.78

B. THERE WAS MISREPRESENTATION

39. Advocaat case also identified false representation as the basis of passing off action. It

is well settled that the test for whether a representation is true or not is the objective one

of the effect it will have on mind of the relevant public. If it deceives a substantial

number in fact, then it is no defense that it is literally true, or some are not deceived or

that it was made honestly.”79Misrepresentation must be believed by those to whom it is

addressed and they must act in reliance upon it. The falsity of a representation depends

upon the way, in which, the persons to whom it is addressed would reasonably

understand it.80Misrepresentation must be such as to create a real, tangible risk of

damage to the Claimant.81

40. In the case of PT Inbisco v. Khee San, 82laid down the test of imperfect general memory

recollection. All circumstances including price, type of customers, point of sale taken

into account. D passed off. This imperfect memory collection test was confirmed in

M.I. & M Corporation v. A Mohd Ibrahim83.

41. In the present case, Respondent used the exact same expression “Symbol of Quality”,

which is there on the Claimant’s “Lion Logo”, exactly at the same place in their “ATC

Mark” where it is used in the “Lion Logo”. This can in all possibility be mistaken as a

tag line of “CTC Ceylon”, which is used on ATC products, which lead the consumers

78 Q. 24, Additional Clarifications. 79Wadlow, 301. 80Parker-Knoll v. Knoll International Ltd., [1962] R.P.C. 265. 81Wadlow, 308. 82 [1996] 1 LJ332. 83 [1964] 30 MU, 392.

17

into believing that ATC products are a sister concern of CTC, which are certified by

SLTB, and are of the same quality and flavor as that of any other CTC products.

42. The tea manufactured by ATC is made available to the common public through the

same medium as that of CTC. The tea manufactured by CTC is available at retail

outlets, coffee shops, etc. Both of the brands are available in supermarkets and grocery

stores.84 Also, they are served at cafes and restaurants, etc.,85 hence it is very natural for

the people to get deceived and think that ATC is CTC. Both the brands have same set

of customers because tea is consumed by masses and the market for both the brands

overlaps when it comes to United Kingdom and South East Asia86, which is exactly

where the dispute has arisen. Tea from both the brands is priced, at approximately the

same price.87 Also, there is “CTC Ceylon” written on the “Lion Logo” and there is a

mention of the word “Ceylon” in the name of the tea, and ATC has, used the word

Ceylon, in their tea “Sailor’s Ceylon”, which gives an impression that it is some kind

of “Ceylon tea”.

43. All these factors point out that the mark used by the Respondent is confusingly similar

and the imperfect recollection of the consumers can lead to confusion amongst them.

C. THE BUSINESS HAS SUFFERED DAMAGE

44. It is essential that the defendant’s misrepresentation should be such as to be likely to

cause substantial damage to that property. It has been confirmed in Advocaat (Supra)

and Jif lemon (Supra) cases. The Claimant is damaged by being deprived of the benefit

of the goodwill of business.88 The Claimant does not have to prove actual damage in

84 Q. 23, Additional Clarifications. 85 Ibid. 86 Q. 9, Additional Clarifications; Q.9, Clarifications. 87 Q. 17, Additional Clarifications. 88Irvine v. Talksport, [2002] 2 All E.R. 424.

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order to succeed in an action for passing off.89 Likelihood of damage is sufficient.90 It

has long been recognized that the damages could be awarded for: “depriving [the

plaintiff] of the profit he might have made by the sale of the goods which, ex hypothesi

the purchaser intended to buy.”91

45. Direct loss of sales is the major head of damage in most cases in which the parties are

in actual competition.92 The loss may be indirect, as in Hoffman-La Roche v DDSA93

where the plaintiffs lost sales to pharmacists as a result of patients being misled.

46. In the case of Yong Sze Fun v. SyktZamaniTamin94, the parties were in same trade (food

industry), likelihood of damage was presumed. In Magic boo Beauty SdnBhdv Koh

Chui Ngoh95, damages were presumed because both products were in direct competition

to each other and had similar get-up.

47. Damage is presumed because of products of Claimant and Respondent is in direct

competition with each other. The product get-up is same and there is resemblance in

both the products and hence, damage can be presumed. Both the companies ATC and

CTC sell tea hence, are rivals. Also, both of them sell tea in boxes with same set of

information imprinted on the box in fine print, the get-up is similar and is bound to

create confusion. It has been stated that CTC’s sales fell by 30% in 2013.96 The sales

suffered a further 15% drop in 2014.97 The direct loss in this case is by way of loss of

sales. Also, Claimant’s tea products are mainly marketed in Europe98 and ATC’s Sailor

89Wadlow, 260. 90Ibid. 91Seixo v. Provezende (1866) I Ch App. 192. 92Wadlow, 271. 93 [1969] F.S.R. 410, CA. 94[2012] 1 MLJ 585, Court of Appeal (Putrajaya). 95[2013] 1 LNS 37. 96 Q. 10, Clarifications. 97 Ibid. 98 Q. 9, Clarification.

19

Ceylon in Germany and United Kingdom99, which hold major share in Europe and

hence loss can be presumed by overlapping of market and CTC has lost market share

in those regions.

D. ALTERNATIVELY, ATC’S USAGE OF THE WORD CEYLON, INFRINGES THE GI OF

“CEYLON TEA”.

48. The TRIPS Agreement100, contains the following description for Geographical

Indication (“GI”):

Geographical indications are, for the purposes of this

Agreement, indications which identify a good as originating in

the territory of a Member, or a region or locality in that

territory, where a given quality, reputation or other

characteristic of the good is essentially attributable to its

geographic origin.

49. A geographical indication is a sign used on products that have a specific geographical

origin and possess qualities or a reputation that are due to that origin.101

i. Qualities of “Ceylon Tea” are derived from place of origin and production.

50. GIs value the cultural aspects and traditional methods that are intrinsic to the production

and processing of a product.102 The qualities or reputation of the product should be

essentially due to the place of origin. Since the qualities depend on the geographical

99Ibid. 100Article 22.1. 101 Geographical Indications: An Introduction, World Intellectual Property Organization, P. 8. 102 Ibid at 35.

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place of production, there is a link between the product and its original place of

production.103 Agricultural products typically have qualities that derive from their place

of production and are influenced by specific local, geographical factors such as climate

and soil.104

51. In some cases, the “place of origin” suggests to consumers that the product will have a

particular quality or characteristic that they may value.105 They function as product

differentiators on the market by enabling consumers to distinguish between products

with geographical origin-based characteristics and others without those

characteristics.106

52. Sri Lanka was formerly a British crown colony known as Ceylon, a name it kept for

nearly a quarter-century after independence. To qualify for the special, legal distinction

denoted by the words “Ceylon Tea”, and for the famous “Lion Logo” that goes with it,

the tea must not only be grown and manufactured entirely in Sri Lanka; it must also

conform to strict quality standards laid down and administered by the Sri Lankan Tea

Board.107

ii. Tea grown in Kandy has specific characteristics

53. “All 700 tea factories in Sri Lanka are now demarcated under each agro-climatic region.

Kandy is classified as a medium grown tea and is located between 2000 and 4000 ft.

from the sea level.”108 Kandy tea is intensely full bodied and has deep red color.

Regional teas have unique organoleptic characteristics & reputation of such teas

103 Supra Note 101 at P.9. 104 Supra Note 101 at P.10. 105 Supra Note 101 at P.15. 106 Ibid. 107 Why Ceylon Tea, available at, http://www.pureceylontea.com/index.php/features/why-ceylon-tea, accessed

on 5th July, 2016. 108Hasita De Alwis,Ceylon Tea – Sri Lanka’s Best Known Geographical Indication, World Symposium on

Geographical Indications, WIPO/GEO/BKK/13/INF/4 , January 15, 2014, P.8.

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essentially attribute to its GIs. This results in quality unparalleled in flavor, color, and

fragrance unique to each district.109

54. “Ceylon Tea” is a GI and SLTB is the regulatory body. Only tea confirming to standard

set by SLTB are entitled to use of the word Ceylon. ATC is not confirming to the

requirements of SLTB.110

55. The ATC tea is grown and manufactured in China and only the seeds are sourced from

Sri Lanka.111 According to the definition of Geographical Indication in TRIPS, the

quality and characteristic is attributed to the product only because it had been produced

in that region. In this case ATC tea is grown in China112 and the CTC tea is grown in

Kandy district in Sri Lanka. The geographical conditions includes the terrain, climate,

etc. which are extremely different in Sri Lanka and China and hence, the tea grown in

China would not have any characteristics that the tea grown in Sri Lanka would have.

56. Also, the TK and TCE in growing tea in China would be significantly different from

the ones in Sri Lanka. The technique of growing tea in Sri Lanka would be known by a

particular group there and not by people in general of other countries. The methods to

grow tea in a particular temperature and soil of China will be different from the ones in

Sri Lanka. The tea manufactured in China is not reflective of the cultural heritage of Sri

Lanka. The method that is used in China may not be handed over to by the previous

generations of Sri Lanka. Hence growing tea in China has deprived ATC; access to the

tea growing methods used in Sri Lanka and does not forming a part of TK or TCE.

57. Also the tea produced in China has no signs of being similar to the one produced in Sri

Lanka. The characteristics of tea grown in Kandy very different and hence by no means

109Ibid. atP.7. 110 Q. 4, Additional Clarifications. 111 Q.5, Clarifications. 112 Q. 12, Additional Clarifications.

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the tea produced by ATC has no right to use the name the Ceylon on their tea, because

the country of origin of “Ceylon Tea” is Sri Lanka, whereas the country of origin of

ATC tea is China.

Conclusion: There is passing off by the Respondent because the Claimant have goodwill in

Malaysia, there is misrepresentation in the goods sold by the Respondent and the Claimant

have suffered damage in their business by loss of sales. Also, since, the tea produced by the

Respondent is not manufactured locally in Sri Lanka they cannot use the word Ceylon on their

product.

IV. THERE IS AN INFRINGEMENT OF THE “LION LOGO” BY THE

USAGE OF “ATC MARK”

A. THE “ATC MARK” IS SIMILAR TO THE “LION LOGO”.

58. A trademark infringement action must be based on a registered mark. Section 38 of the

Trademarks Act113 provides for two types of trademark infringement: Unauthorised use

of an identical or confusingly similar mark in respect of goods or services within the

scope of the registration; and unauthorised use of an identical or confusingly similar

mark, which imports a reference to the registered proprietor or its goods.

59. In Fabrique Ebel Societe Anoynme v. Syarikat Perniagaan Tukang Jam City Port

&Ors114, in order to establish infringement of a trade mark under section 38(1) (a)115,

113 Trade Marks Act, 1976 (Malaysian). 114 [1988] 1 MLJ 188. 115 Trademarks Act, 1976 (Malaysian).

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the plaintiff has to satisfy the following five requirements: The defendants used the

mark without plaintiff’s consent, identical with the plaintiff's mark, in the course of

trade, to be used as a TM and in relation to goods in respect of which the trademark is

registered. These requirements were also applied in Abercrombie & Fitch Co & Anor

v. Fashion Factory Outlet KL SdnBhd&Ors116. These were supported by the case of

Jasmine Food Corporation v. Leong WaiChoon117 where infringement was established

by visual comparison of the products.

60. The mark used by the defendant must be identical or nearly resembling the registered

trademark as is likely to deceive or cause confusion.118. A likelihood of confusion is

sufficient to attract liability.119The person that first uses a mark in Malaysia in

conjunction with its goods or services is entitled to claim ownership over it. This has

been confirmed in Mutiara Rini SDN BHD v. The Corum View Hotel SDN BHD120.

61. In the case of M.I. & M Corporation v. A Mohd. Ibrahim121, it was held that test is not

side by side, but general imperfect memory recollection. Taking into account all

circumstances including customer type, point of sale, it was held to be infringement of

P’s registered TM.

62. In this case Ranatunga has registered his “Lion Logo” in Malaysia.122 Also, he is the

registered user of the same under SLTB. There is an infringement of trademark because

the ATC’s mark consists a lion, which is there in “Lion Logo” as well. The lion used

on ATC’s mark is confusingly similar to the mark on the “Lion Logo”. The Claimant

has not allowed ATC, to use its logo on the Respondent’s products. ATC is likely to

116[2008] 4 MLJ 127. 117 [2016] 5 CLJ 953 [HC]. 118Teo Boon Kwang, Trade Mark Law and Practice in Malaysia, P. 242. 119Leo Pharmaceutical Products AS v.KotraPharma (M) SdnBhd, [2009] 5 MLJ 703. 120[2016] 7 MLJ 771. 121 [1964] 30 MLJ 392. 122¶ 6, Proposition.

24

create confusion because the colour on its logo is same as that of CTC. ATC’s mark is

of the same shape as that of the “Lion Logo” i.e., box-shaped. Also, the fact that 1972

is used (even when its establishment year is 1999) on the Respondent’s mark brings it

closer to the establishment date of CTC, which is 1965. This creates a doubt in the

minds of the consumers that ATC is a subsidiary of CTC is incorporated after the

incorporation of CTC. All these factors point out to the fact that the mark used by the

Respondent is confusingly similar and the imperfect recollection of the consumers can

lead to confusion amongst them. Ranatunga is the first one to use that mark and hence

Chan cannot claim ownership over it. All these factors lead to confusion and mislead

the general populace of Malaysia. Hence, the Respondent has infringed the Claimant’s

“Lion Logo”.

B. ADDITIONALLY, “LION LOGO” IS A WELL-KNOWN MARK

63. A mark may be well known in Malaysia irrespective of whether the proprietor carries

on business or has any goodwill in Malaysia.123

64. The ingredients, which make a mark well known, under Regulation 13B of the Trade

Marks Regulation 1997124 is the degree of knowledge or recognition of the mark, the

duration, extent and geographical area of any promotion of the mark, use of mark,

registrations, value associated with the mark and the record of successful enforcement

of rights in the mark.

123Malaysian Intellectual Property Association, available at http://www.mipa.org.my/trademark.html, last

accessed on 23 June, 2016. 124 Malaysian, available at http://www.wipo.int/wipolex/en/details.jsp?id=3105, accessed on 1st June, 2016.

25

65. Under section 70B (1) 125, a proprietor of a trade mark that is entitled to protection under

Article 6bis of the Paris Convention or the TRIPs Agreement126 as a well-known mark,

is entitled to restrain the use of the marks used in the course of trade in Malaysia, if it

resembles essential parts or is identical to the proprietor’s mark, in respect of the same

goods and services, where the use is likely to deceive and cause confusion. Protection

by way of injunction under this section is available regardless, of whether the identical

mark is registered or not.

66. The Lion logo comes under the protection of well-known mark. Tea is being sold under

this brand ever since, 1965. He is a committed tea enthusiast and trader whose vision is

to make “CTC CEYLON” a globally renowned “Ceylon Tea” brand.127It is mentioned

that the logo bears a famous heraldic lion, which is indicative of the fact that it is well

known. Also it is registered in the various jurisdictions128 worldwide and even in

Malaysia129. Hence, the Claimant’s mark is well known which is infringed by the “ATC

mark” used by the Respondent. Since, the mark is well known; the Respondent is free

riding on the Claimant’s mark, leading to loss of sales and deception of customers.

Conclusion: The Respondent has infringed the Claimant’s trademark by using a similar mark

on their product in the course of trade and that too on the same product. Also the Respondent

is not allowed to use the same mark, on their product as, the Claimant’s mark is well-known

in Malaysia.

125 Trade Marks Act, 1976 (Malaysian) 126Article 16. 127 ¶ 2, Proposition. 128 ¶ 4, Proposition. 129 ¶ 6, Proposition.

26

REQUEST FOR RELIEF

On the basis of the foregoing arguments and prior written pleadings, The Claimant, respectfully

request the Tribunal:

TO ADJUDGE AND DECLARE that:

(a) ATC pay damages to CTC for the breach caused the damages to be determined by the profits

of ATC made by the sale of “SAILOR’S CEYLON” in Malaysia.

(b) To order that parties can only refer to the tea grown and manufactured entirely in Sri Lanka as

“Ceylon Tea”.

(c) An order directing ATC to stop using the name “SAILOR’S CEYLON”, the “ATC’S Logo”,

or any other name or mark containing the word “CEYLON” or a lion device if its tea does not

originate from Sri Lanka; and

(d) An order directing ATC to discontinue the sale of its products described as “Ceylon Tea” and

to recall all such products from the market.

Respectfully signed and submitted by counsel on 15 July 2016,

______/s/___________ ______/s/___________

Arbitrator X Arbitrator Y

______/s/___________

Arbitrator Z