Terminating an agreement can be akin to a divorce, and this was seen in the recent case between Colliers International Property Consultants Inc. (“the Plaintiff”) and Colliers International Property Consultants Sdn Bhd (“the Defendant”), where the Defendant (also former licensee) kept using the Plaintiff’s logo and name even after the termination of the relevant agreements between the parties.
The case, which was heard at the High Court of Malaysia, involves two companies which have almost identical names and logos (see below). The Defendant was bound to the Plaintiff through three affiliation agreements, a license agreement and an assignment.
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The core issue here was whether the Defendant had used the “Colliers” name and logo as the agency arm and part of the Colliers group in Malaysia or whether the Defendant’s use was independent and prior to the Plaintiff.
The Defendant submitted that the Plaintiff’s marks should be expunged as it had been wrongfully registered according to Section 45 of the TMA. Pursuant to Section 37 of the Act, unless the Defendant can prove that (i) the registration was obtained by fraud, (ii) the mark is offensive based on Section 14 (prohibition on registration) or (iii) the mark is not distinctive of the goods or services of the Plaintiff at the commencement of the proceedings, then the Plaintiff’s registration is conclusive. As the Defendant was unable to prove any of those points, the judge dismissed the Defendant on this ground.
The Defendant also tried to expunge the Plaintiff’s marks under Section 46 of the TMA, because the Plaintiff could not have used its marks in good faith for three years up to one month before the filing of the Defendant’s counterclaim. The Plaintiff argued that the non-use was due to special circumstance and was within the purview of Section 46(4), further attributing the non-use to the unlawful use of the “Colliers” marks by the Defendant, as it prevented the Plaintiff from appointing a new licensee in Malaysia.
The Court opined that, to satisfy this finding, the circumstance for non-use must be abnormal and external in nature. In this case, the learned Judge held that the circumstances did indeed constitute “peculiar or abnormal circumstance which is external in nature and beyond the control of the Plaintiff”. As such, the Judge also dismissed this ground with costs.
The Court subsequently addressed the Plaintiff’s claim of passing-off, which is established if three criteria are met: (i) that the Plaintiff had sufficient reputation or goodwill in the mark, (ii) that there was misrepresentation by the Defendant to the public that services offered are the services of the Plaintiff; and (iii) that the Plaintiff suffers or had suffered or is likely to suffer damage to his business or goodwill through the misrepresentation of the Defendant.
The Court found that the agreements signed by the Plaintiff and the Defendant, and the fact that the Defendant continued to use the logo after the termination of these agreements accrued the goodwill of the Plaintiff. Furthermore, the Judge found that the Defendant misled the public via several means, including name cards that linked it to the Colliers Group, and an allusion to the Colliers group on the Defendant’s website. The Judge concluded that actual damage was not necessary and that the probability of damage was enough.
Two interesting issues raised during the trial were (i) the Defendant had no explanation for why it chose to use the “Colliers” trademark and surprisingly when the Defendant’s sole witness was asked for the reason during cross examination, the witness stated that the trademark belongs to the Defendant because there is no document to say otherwise, and (ii) the limitation period does not kick in even though the infringement has been going on since 2003 as the Defendant’s act of infringement continues every day and each act gives rise to a new cause of action.
The “divorce” between these two companies did not go that well but the Judge reached her decision – the Malaysian company was not able to use the name and logo of Colliers anymore. This case is a good reminder to those who enter into licensing arrangements with third parties. The goodwill of the licensee accrues to the licensor, and when the relationship turns sour and the licensee decides to exit, it has to create its own brand!