Trademark Squatter

Who is a trademark squatter? A trade mark squatter is a person who registers someone else’s mark with the bad intention to profit from such registration. This is similar to domain name squatting or cybersquatting.

In most cases, they are individuals with no intention to carry out any genuine business activities. After registering the mark, they will attempt to sell the registered trademark to the bona fide proprietor of the trademark at an inflated price. If the bona fide proprietor refuses to pay, they will then threaten to sue him for trademark infringement. In the end, the bona fide proprietor might lose his own brand / trademark and not being able to use it anymore. This phenomenon has been happening in many countries including Malaysia.

So what can you do when you find out that your mark / brand has already been registered by someone else? The only way is to take the matter to court which will involve substantial cost. The High Court in the case of Syarikat Zamani Hj Tamin Sdn Bhd & Anor v Yong Sze Fun & Anor [2012 1 MLJ 585] decided that the first user of a mark in Malaysia would prevail over a subsequent user or otherwise it would result in an anomaly in the law in the sense that the first and original user of a mark is defeated by a subsequent user. In this case, the plaintiffs and/or their predecessors in title were the first in time to use the “TAMIN” trade mark in Malaysia. The use of “TAMIN” by the plaintiffs and/or the predecessors in title commenced in 1951 whereas the defendants commenced use of the “TAMIN” trademark at the very earliest in the 1990s. This use is well after the introduction of the “TAMIN” trademark by the plaintiffs. The High Court’s decision was upheld on appeal.

Pursuant to Section 25 of the Trade Marks Act 1976, any person claiming to be the proprietor of a trademark may make an application to the Registrar for the registration of that mark. In practice, the Registrar only requires a simple Statutory Declaration affirming that the applicant is the bona fide proprietor of the mark. This simply allows any person to file an application to register a trademark including a trademark squatter. When a trademark squatter succeeds in registering the same, the bona fide proprietor (especially for small and medium enterprises) may be put in a dilemma to decide whether to pay a ‘ransom’ in order to acquire its own trademark or fight it out in court or relinquish the use of the trademark.

To contest a registered trademark, an aggrieved person may apply to the court pursuant to Section 46 of the Act to remove a trademark from the Register on the ground that the trademark was registered without a genuine intention to use it and there has in fact been no such use or there has been no bona fide use of the mark for at least three years prior to one month before the application. Alternatively, if the aggrieved person is able to prove that any trademark entry in the Register was made without sufficient cause or wrongfully remaining in the Register (i.e. he is a subsequent user) or in error, he may apply to the court to have the registration expunged pursuant to Section 45(1)(a) of the Act.

The Federal Court in Mesuma Sports Sdn Bhd v Majlis Sukan Negara Malaysia, Pendaftar Cap Dagangan Malaysia (Interested Party) [2015] 9 CLJ 125 explained the meaning of an aggrieved person as follows:

An aggrieved person is a person who has used his mark as a trademark or who has a genuine and present intention to use his mark as a trade mark in the course of a trade which is the same as or similar to the registered trademark that the person wants to be removed from the register. The person must be someone who has some element of legal interest, right or legitimate expectation in its own mark which is being substantially affected by the presence of the registered mark. The interest or right must be legal or lawful.

In conclusion, businesses are advised to obtain trademark registrations as soon as possible to avoid the difficulties mentioned above and end up losing more money.