Leung Kai Fook Medical Co. Pte Ltd v Tjs Worldwide Sdn. Bhd. (WA-22IP-71-11/2023)

LEUNG KAI FOOK MEDICAL CO. PTE LTD [Company No.: 197803359R]

LEUNG KAI FOOK MEDICAL SDN BHD [Company No.: 654195-K]! ! ! ! !!!!!!!!!!!… PLAINTIFFS AND TJS WORLDWIDE SDN BHD [Company No.: 201201033288 (1017776-P)]! ! !!!!!!!!!… DEFENDANT ! ! GROUNDS OF JUDGMENT (Assessment of Damages) A. INTRODUCTION [1] These are my grounds of judgment in respect of the Plaintiffs' assessment of damages, consequent upon the entry of Summary Judgment against the Defendant on 2.8.2024 ("the Order").

(a) Loss of Business Profit;

(b) Loss of Goodwill and Reputation;

(c) Countermeasure Costs; and

(d) General Damages. [23] The total quantum of damages sought by the Plaintiffs is RM514,943.42, broken down as follows: Head of Damage Amount Loss of Business Profit 157,638.42 Loss of Goodwill and Reputation 300,000.00 Countermeasure Costs 7,305.00 General Damages 50,000.00 Total 514,943.42 [24] The Defendant contends that the total damages should not exceed nominal damages of approximately RM1,000.00 for each head of loss, and that the Plaintiffs' claims are excessive, remote, speculative, and unproven. [25] It is important to emphasize at the outset that the question of the Defendant's liability is no longer open for consideration. The summary judgment is final and binding. The Defendant's attempts to relitigate issues of liability including arguments that it did not know the goods were counterfeit, that it is merely a small business, that it did not manufacture the Counterfeit Goods, and that it is itself a victim are wholly inappropriate at this stage and will not be 9! ! entertained insofar as they seek to re-open the question of liability. However, to the extent that these factual circumstances are relevant to the quantum of damages, they may be considered. C. APPLICABLE LEGAL PRINCIPLES ON ASSESSMENT OF DAMAGES A. The General Principle: Restitutio In Integrum [26] The general and well-established rule in assessing damages for the infringement of intellectual property rights is that the object of an award of damages is compensatory in nature. The aim is to put the injured party, so far as money can do so, in the same position as he would have been in had the wrong not been committed. This is the principle of restitutio in integrum. [27] This principle was clearly explained by the House of Lords in General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1975] 1 All ER 173. The case establishes that, in intellectual property claims as in other torts, damages are not punitive but compensatory. The measure of damages is therefore the sum necessary, so far as possible, to restore the injured party to the position he would have occupied had the infringement not occurred. In that regard, the House of Lords stated: “As in the case of any other tort (leaving aside cases where exemplary damages can be given) the object of damages is to compensate for loss or injury. The general rule at any rate in relation to ‘economic’ torts is that the measure of damages is to be, so far as possible, 10! ! that sum of money which will put the injured party in the same position as he would have been in if he had not sustained the wrong (Livingstone v Rawyards Coal Co ((1880) 5 App Cas 25) per Lord Blackburn).” [Underlined Emphasis Added] [28] The same principle was adopted by the Court of Appeal in Wembley Gypsum Products Sdn Bhd v Mst Industrial Systems Sdn Bhd [2007] 2 MLRA 274. The significance of that decision lies in its affirmation that the general law of damages in tort applies equally to intellectual property disputes. The Court of Appeal emphasised that the assessment of damages is directed towards compensation for both pecuniary and non-pecuniary loss and is guided by the principle of restitutio in integrum. The Court held: “[46] In our judgment, it is useful to set out the general object of awarding damages, contained in Clerk & Lindsell on Torts, 16th edn, at p. 254 para 5-04: The general object of an award of damages is to compensate the plaintiff for the losses, pecuniary and non-pecuniary, sustained as a result of the defendant's tort. More specifically, the assessment process is said to aim at restitutio in integrum. The general principle is, in the off-quoted words of Lord Blackburn, that the court should award 'that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation.' The principle admits of application to losses which are capable of reasonable precise calculation in money terms. (see also UDA Holdings 11! ! Sdn. Bhd v. Koperasi Pasaraya Malaysia Bhd [2007] 5 AMR 36 CA).” (emphasis added) [29] The Federal Court in Taiping Poly (M) Sdn Bhd v Wong Fook Toh & Ors [2018] Supp MLJ 312 further reaffirmed this principle in the specific context of intellectual property infringement. The importance of Taiping Poly is that it recognises two related propositions. First, damages for infringement of intellectual property rights are tortious in nature and are aimed at restoring the claimant to the position he would have been in had the infringement not occurred. Second, where the parties are commercial competitors, the appropriate measure of damages may be lost profits. The Federal Court also stressed that such damages should be assessed liberally. Richard Malanjum CJSS (as His Lordship then was) stated the following: “[19] Damages for the infringement of intellectual property rights are tortious in nature. Their objective is to restore the claimant to the position he would have been in had the defendant not infringed. Thus, where the claimant is in the business of manufacturing goods, so that they are in competition with the defendant, then the measure of damages will be lost profits. However, it should be noted that damages is to be assessed liberally." [30] The principle that a defendant is liable for all loss that is the natural and direct consequence of the wrongful act was also articulated in AG Spalding & Bros v AW Gamage Ltd (1918) 35 RPC 101. This case is important because it makes clear that recoverable loss in 12! ! intellectual property cases is not confined to immediate trading loss alone, but may also include injury to reputation, goodwill, and business connections, provided such loss flows directly and in the ordinary course from the wrongful conduct. It was held at p. 67 that: “Defendants are liable for all loss actually sustained by the Plaintiff which is the natural and direct consequence of the unlawful acts of the Defendants; this will include any loss of trade actually suffered by the Plaintiff, either directly from the acts complained of, or properly attributable to injury to the Plaintiff’s reputation, business, goodwill, and trade and business connections caused by the acts of complained of; in other words, such damages as flow directly, and in the usual course of things, from the wrongful acts…” (Underlined emphasis added) [31] When we speak of burden of proof. the burden of proving the damages lies on the Plaintiffs. The Plaintiffs must demonstrate:

(a) That the Defendant's infringement has caused loss to the Plaintiffs (causation);

(b) That the loss suffered is not too remote and is recoverable in law (remoteness); and

(c) The quantum of damages to be awarded. 13! ! See: Taiping Poly (supra) at paragraph 17; Sykt Faiza Sdn Bhd & Anor v Faiz Rice Sdn Bhd & Anor and Another Appeal [2018] MLJU 1749 at paragraph 6. [32] The High Court in Sykt Faiza Sdn Bhd (supra) is particularly instructive on the recognised methods by which compensatory damages may be assessed in intellectual property cases. The value of that case lies in its clear summary of the three established bases of assessment. First, damages may be assessed on the basis of loss of business profits suffered by the plaintiff as a result of the defendant’s infringement. Second, where the plaintiff has an established licensing practice, damages may be assessed on the basis of lost royalties or licence fees. Third, where neither of those methods can sensibly be applied, the Court may assess damages more broadly on the basis of all relevant evidence, including trade practice, expert evidence, profitability, and other surrounding circumstances. [33] It is well-established that damages for infringement of intellectual property rights are to be assessed liberally. The Federal Court in Taiping Poly (supra) expressly stated: "However, it should be noted that damages is to be assessed liberally." [34] This principle is particularly apposite where the loss occasioned by the infringement is not capable of exact mathematical calculation. In intellectual property cases, the harm suffered frequently extends beyond direct financial loss and may include injury to goodwill, loss 14! ! of reputation, dilution of brand value, and erosion of market position. In such circumstances, the Court must adopt a realistic and commercially sensible approach in assessing compensation. [35] At the same time, the Court must ensure that the assessment of damages remains fair and proportionate. The objective of damages is compensation, not overcompensation. Accordingly, the Court must guard against unjust enrichment of the Plaintiffs while at the same time ensuring that the Defendant is not unjustly financially ruined. This principle was stated in Motordata Research Consortium Sdn Bhd v Ahmad Shahril bin Abdullah & Ors [2017] 7 AMR 560 at sub-paragraph 75(2), and was reiterated in Sykt Faiza Sdn Bhd (supra), in the following terms: "The Court must ensure that a plaintiff is not unjustly enriched (overcompensated) and at the same time the court should prevent the defendant from being financially ruined in an unjust manner." D. LOSS OF BUSINESS PROFIT [36] The loss of business profits is essentially pecuniary damages which is caused by the diversion of the Plaintiffs’ business and/or customers, existing or potential, to the Defendant. Generally, it is a consequential loss. [37] Reverting to the present case, at all material times, the Defendant had never denied procuring the Counterfeit Goods. The Defendant only stipulated that they did not have the knowledge about the genuineness of the Counterfeit Goods. Nevertheless, knowledge is 15! ! not a relevant element to determine the liability of the Defendant premised on trademark infringement and passing-off (which is now final) or to determine the amount of damages to be awarded to the Plaintiffs. [38] The Plaintiffs claimed the sum of RM157,638.42 as loss of business profit. The Plaintiffs' basis for this claim is derived from the methodology adopted by the Federal Court in Taiping Poly (supra), which recognises loss of business profits caused by the diversion of the plaintiff's customers to the defendant as a result of the defendant's misrepresentation as the principal head of damage. ! [39] The Federal Court in Taiping Poly laid down the applicable principle for the calculation of loss of business profits in trademark infringement and passing off actions. The significance of that decision lies in its rejection of a simplistic approach based merely on “loss of sales” or “net profit”. Instead, the Court made clear that the proper inquiry is directed at the loss of business profits caused by the diversion of the plaintiff’s customers to the defendant as a result of the defendant’s wrongful conduct. In other words, the focus is not on intangible accounting figures, but on the profit which the plaintiff would, in the ordinary course of business, have earned but for the defendant’s infringement and misrepresentation. The Federal Court further recognised that, in quantifying such loss, a practical and commercially sensible method may be employed. In that case, the plaintiff’s loss of business profits for each relevant year was assessed by applying the plaintiff’s profit margin percentage to the proven loss of sales. The profit margin percentage was derived by dividing the “profit before taxation” by 16! ! the turnover for the relevant year. The Federal Court held that such an approach was reasonable and consistent with the accepted common law method of assessing damages in infringement and passing off cases. The Court stated: “(1) The principle to be applied when assessing damages payable to the successful plaintiff in a trademark infringement and passing-off action was neither ‘loss of sales’ or loss of ‘nett profit’ but ‘loss of business profits ‘caused by the diversion of the plaintiff ’s customers to the defendant as a result of the defendant’s misrepresentation’. That was the acceptable principle applied in common law jurisdictions. In the instant case, the loss of business profit for each relevant year was assessed by multiplying the profit margin percentage with the loss of sales figure. The profit margin percentage was obtained by dividing the ‘profit before taxation’ figure by the turnover for a particular year. In the instant case, the resultant sum of RM32,726.70 as loss of business profits for the years 1995–1997 was a reasonable assessment of the appellant’s loss as a result of the respondents’ infringement of its brand for the three years in question (see paras 24, 33–36 & 42).” (emphasis added) [40] The Plaintiffs led evidence in the instant case to show that their revenue declined from RM47,472,661.28 in 2022 to RM37,236,400.23 in 2023 — a decline of RM10,236,261.05. The Plaintiffs submitted that the Offending Acts, which took place in 2023, contributed to this decline by diverting customers from the Plaintiffs' genuine products to the Counterfeit Goods. From this overall decline, the Plaintiffs derived a loss of business profit figure 17! ! of RM157,638.42 using the methodology that calculates net profit margin against diverted sales. [41] The breakdown of revenue stipulated above is as follows: No. Counterfeit Goods Revenue Profit Before Tax (RM)

(a) Axe Brand Medicated Oil (56ml) 18,614,961.26 573,630.92

(b) Axe Brand Medicated Oil (10ml) 8,086,624.13 249,194.05

(c) Axe Brand Medicated Oil (5ml) 4,373,433.43 134,769.91

(d) Axe Brand Medicated Oil (3ml) 6,161,381.41 189,866.57 Total 37,236,400.23 1,147,461.45 [42] Learned counsel for the Plaintiffs submitted that the revenue for Axe Brand Medicated Oil 56ml, 10ml, 5ml and 3ml in 2023 (RM37,236,400.23) had significantly dropped as compared to the year of 2022 (RM47,472,661.28). As such, the loss of business profit suffered by the Plaintiffs in 2023 is RM315,276.84. Learned counsel for the Plaintiffs proffered a calculation in the following manner: Axe Brand Medicated Oil 56ml, 10ml, 5ml dan 3ml Loss of Revenue (Total Revenue in Year 2023 – Total Revenue in Year 2022) RM37,236,400.23 – RM47,472,661.28 = RM10,236,261.05 Profit Margin for Year 2023 (Profit Before Tax in Year 2023/Total Revenue in Year 2023 x 100%) RM1,147,461.45/RM37,236,400.23 x 100% = 3.08% 18! ! Loss of Business Profit in Year 2023 (Loss of Revenue x Profit Margin) RM10,236,261.05 x 3.08% = RM315,276.84 [43] Learned counsel highlighted that the Plaintiffs only claimed against the Defendant in this suit and also against one Zainah Binti Misdin (“Zainah”) in the suit no. WA-22IP-70-11/2023 premised on trademark infringement and passing-off in 2023. As such, learned counsel submitted that for the purpose of mitigation, the loss of business profit of RM315,276.84 suffered by the Plaintiffs ought to be borne and divided by the Defendant and Zainah in the same portion (RM315,276.84÷2), that is RM157,638.42. This is in light of such loss of business profit was a direct consequence from the Offending Acts by the Defendant and also from the infringement activities by Zainah. [44] Based on this formula, learned counsel submitted that the sum of RM157,638.42 being the loss of business profit suffered by the Plaintiffs would fairly put the Plaintiffs in the position that they would have been, which is, they would have made this amount of profit, had it not been for the Offending Acts. [45] The Defendant raised numerous objections to the claim for loss of business profit, which I shall address in turn.

(i) The Plaintiffs failed to plead the loss of revenue in the Statement of Claim 19! ! [46] The Defendant submitted that the Plaintiffs failed to plead that they suffered loss of revenue amounting to RM10,236,261.05 in 2023. The Plaintiffs responded by stating that it is sufficient for the pleadings to state that the Plaintiffs suffered substantial losses, damages, and injury arising from the Offending Acts, and that the detailed quantum of losses is a matter for the assessment proceedings. [47] I agree with the Plaintiffs on this point. The crux of the Statement of Claim was to establish the Defendant's liability for trademark infringement and passing off. It is well-settled that in cases where liability is determined by summary judgment with damages to be assessed, the precise quantification of damages need not be pleaded with precision in the original pleadings. The assessment proceedings exist precisely for the purpose of quantifying the damages. The Plaintiffs have adduced evidence and proved the quantum of losses in the assessment proceedings through their affidavit in support and other supporting documentations. I find no procedural deficiency in this regard.

(a) The fact that 330 units of Counterfeit Goods of various sizes were found at the Defendant's premises;

(b) The retail value of the Counterfeit Goods and their potential to divert customers from purchasing the Plaintiffs' genuine products;

(c) The Defendant's location at Plaza GM, which is known to cater to walk-in customers and tourists, thereby creating a real opportunity for the Counterfeit Goods to be sold and to divert custom;

(d) The Plaintiffs' overall revenue decline in 2023, while not entirely attributable to the Defendant, nonetheless being consistent with the presence of counterfeit products in the market;

(e) The principle that damages are to be assessed liberally; and 22! !

(f) The countervailing principle that the Court must not allow speculative or unproven damages, and must ensure that the Defendant is not unjustly burdened with losses not attributable to its actions. I find that the sum of RM157,638.42 claimed by the Plaintiffs as loss of business profit is excessive and is not supported by sufficient evidence of a direct causal link between the Defendant's specific conduct and the entirety of the claimed loss. The Plaintiffs have not adequately demonstrated that the 330 units at the Defendant's premises caused or contributed to the loss of profit in the specific sum claimed. [54] At the same time, the Defendant's proposal of nominal damages of RM1,000.00 is wholly inadequate and fails to reflect the reality that infringement did occur, Counterfeit Goods were present at the Defendant's premises, and the potential for diversion of sales and confusion existed. [55] Exercising my discretion and guided by the principle of liberal assessment, I assess the loss of business profit at RM30,000.00. This figure takes into account:

(a) The volume of 330 units of Counterfeit Goods across four product sizes;

(b) The estimated retail value of such goods and the profit margin the Plaintiffs would have earned on equivalent genuine sales; 23! !

(c) The realistic scale of diversion of customers attributable to this particular Defendant, given its small operation; and

(d) The principle that the Plaintiffs must be compensated but not unjustly enriched, and the Defendant must not be financially ruined in an unjust manner. E. LOSS OF GOODWILL AND REPUTATION [56] The idea of "goodwill" as a form of property has long been understood in common law to be an intangible but highly valuable asset, one that is closely bound up with the running of a trade, business, or calling. The key principles that shape our understanding of goodwill were set out with authority by the House of Lords in The Commissioners of Inland Revenue v Muller & Co.'s Margarine Limited [1901] AC 217. In that case, the House of Lords had to grapple with the question of what goodwill really means when treated as a form of property. Two particularly influential explanations came from the speeches of Lord Lindley and Lord Macnaghten, and their words have since been embraced and relied upon in many common law countries, Malaysia included. [57] Lord Lindley made clear that goodwill, when looked at as property, carries no meaning on its own — it only makes sense when connected to a trade, business, or calling. In his view, it takes in everything that adds value to a business, whether that be its location, its name, its reputation, its relationships with existing customers, the introduction of new customers to old ones, or even agreements not to compete. The important point Lord Lindley 24! ! stressed was that goodwill, in this broad sense, cannot be separated from the business it enhances. It lives where the business is carried on. And if a business operates in more than one place or country, each location may well have its own separate goodwill. His Lordship put it this way: “Goodwill regarded as property has no meaning except in connection with some trade, business or calling. In that connection I understand the word to include whatever adds value to a business by reason of situation, name and reputation, connection, introduction to old customers, and agreed absence from competition, or any of these things, and there may be others which do not occur to me. In this wide sense, goodwill is inseparable from the business to which its adds value, and, in my opinion, exists where the business is carried on. Such business may be carried on in one place or country or in several, and if in several there may be several businesses, each having a goodwill of its own.” (emphasis added) [58] Lord Macnaghten, speaking in the same case, gave what is probably the most well-known judicial description of goodwill. He described it as something easy to talk about but hard to pin down in precise terms. To him, goodwill was the benefit and advantage that flows from a business's good name, reputation, and connections. What stands out in his description is the idea that goodwill is the "attractive force which brings in custom" — that special quality which makes an established business different from a brand-new one just starting out. He also pointed out that the goodwill of any business 25! ! must come from a particular centre or source, tying it firmly to the place or channel through which the business reaches and draws in its customers. [59] These principles did not remain confined to English law. The Malaysian Court of Appeal took them up and applied them in Yong Sze Fun & Anor v Syarikat Zamani Hj Tamin Sdn Bhd & Anor [2012] 1 MLJ 585. In that decision, the Court of Appeal broke down Lord Macnaghten's definition into four clear features of goodwill, giving lawyers and courts a practical and workable framework for identifying and evaluating goodwill in real-world business disputes. Those four features can be summarised as follows: “[114] In the Commissioners of Inland Revenue v Muller & Co.’s Margarine Limited at pp. 223-224, Lord McNaghten defined “goodwill” in this way: What is goodwill? It is a thing very easy to describe, very difficult to define. It is a benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old established business from a new business at its first start. The goodwill of a business must emanate from a particular centre or source. [115] Four discerning features of goodwill may be listed:

(a) that goodwill is the benefit added to the business through extensive trading operations which attract custom; 26! !

(b) that trademark or get up is the badge and indicia that signifies, indicates and identifies the goodwill and the business;

(c) that goodwill is created through and by means of trading activities; and

(d) that the more extensive the trading activities are, which must necessarily include sales and promotion, the more value that would be attached to the goodwill.” (emphasis added) [60] Reading these authorities together, what becomes clear is that goodwill is not some vague or abstract notion. It is a real commercial asset, grounded in the actual day-to-day running of a business. It is earned through sustained trading, made visible through the marks and reputation associated with a business, and its value grows with the scale and reach of the trading activities behind it. [61] Applying this to the present case, learned counsel for the Plaintiffs submitted that the Plaintiffs have established their goodwill and reputation in their business predicated on the following substantial evidence:

(a) The Plaintiffs produce and manufacture one of the leading brands of medicated oil in Asia known as the Axe Brand Medicated Oil or Minyak Cap Kapak which is a recognized heritage brand in Singapore and Malaysia with 5 GMP certified factories that possess all boasting state-of-the-art technology; 27! !

(b) The Arm & Axe Marks are and have been at all material times valid and subsisting in Malaysia. The Plaintiffs have used the Arm & Axe Marks in Malaysia and worldwide in the business of medicated oil for more than 90 years and are still using it substantially and extensively;

(c) The Arm & Axe Marks were exclusively created and are extensively promoted by the Plaintiffs for the Plaintiffs’ usage only over the years. The Plaintiffs have expended a substantial amount of monies on advertising and promoting their business, goods and services by reference to the Arm & Axe Marks. The annual advertising and promotional expenditures for the goods bearing the Arm & Axe Marks in Malaysia from 2019 to 2023 are as follows: Year Annual Expenditure on Advertising and Marketing 2019 1,798,361.60 2020 1,310,192.71 2021 350,305.69 2022 394,933.16 2023 498,890.62 Total 4,352,683.78 The average annual expenditure on the advertising and marketing expended by the Plaintiffs was RM870,536.76 from 2019 to 2023 (RM4,352,683.78÷5); 28! !

(d) The revenue for year 2023 in respect of the Axe Brand Medicated Oil 56ml, 10ml, 5ml and 3ml is RM37,236,400.23;

(e) Further, the Plaintiffs have established a well-known and valuable brand, i.e. the Axe Brand in Malaysia and worldwide through the Arm & Axe Marks. The Axe Brand has been and is still recognized as one of the most trusted brands, namely:

(i) An award for a famous brand with a heritage of more than 50 years given by the IPOS TM (Intellectual Property Office of Singapore Trade Mark) dated 5.8.2015;

(f) The fame, goodwill and reputation of the Axe Brand is indisputably well-established and recognized in Malaysia and worldwide. This can be proven from the interviews of the Plaintiffs’ directors by various newspapers or magazines, amongst others, such as South China Morning Post, The CEO Magazine, The Business Times and The Sunday Times. [62] I have no reason to disagree with the Plaintiffs to the extent that the Plaintiffs have acquired the proprietary rights on the substantial 29! ! goodwill and reputation in respect of the Arm & Axe Marks in Malaysia and worldwide predicated on the usage, sales and promotional efforts made by the Plaintiffs. It is thus indisputable that the Arm & Axe Marks are associated or known exclusively with the Plaintiffs. [63] It is clear to me that in view of the amount of effort, time and monetary investments expended by the Plaintiffs, the Plaintiffs have received significant goodwill and positive recognition in the quality of their goods. The usage of the Plaintiffs’ goods in the medical and other related industries is also recognized and guaranteed. [64] In this regard, the Plaintiffs submitted that their claim in the sum of RM300,000.00 for loss of goodwill and reputation is predicated on the following:

(a) The Plaintiffs are one of the leading brands of medicated oil with a longstanding history of more than 90 years in Malaysia and worldwide;

(b) The Plaintiffs have expended substantial sums on advertising and promotional expenses;

(c) The goodwill associated with the Plaintiffs' business is well established;

(d) The Defendant's Offending Acts involving the Counterfeit Goods under the Arm & Axe brand caused significant harm to the Plaintiffs' goodwill and reputation; 30! !

(e) The unauthorized sale of counterfeit goods falsely representing the Plaintiffs' brand misleads the public and risks associating the Plaintiffs' established brand with lower quality, damaging the brand image cultivated over years; and

(f) The larger the reputation and goodwill associated with a brand, the greater the potential damage from infringements. [65] The starting point of my discussion is that it is well-settled that in cases of passing off, damage to goodwill is presumed once the interference with the plaintiff's business through the passing off of goods is established. The Plaintiffs are not required to prove actual damage to goodwill; the law presumes such damage. [66] In Draper v Trist and Tristbestos Brake Linings Ltd [1939] 3 All ER 513, Goddard LJ was of the view that: ‘the law assumes, or presumes, that, if the goodwill of a man’s business has been interfered with by the passing-off of goods, damage results therefrom. He need not wait to show that damage has resulted. He can bring his action as soon as he can prove the passing-off, because it is one of the classes of cases in which the law presumes that the plaintiff has suffered damage’. (emphasis added) [67] In Seet Chuan Seng & Anor v Tee Yih Jia Foods Manufacturing Pte Ltd [1994] 2 MLJ 770, the Supreme Court held that: 31! ! “In an action for passing off, damage is an essential element of the tort and it is necessary for the plaintiff to establish that he had suffered damage. However, if the goods in question, as in this case, are in direct competition with one another, the court will readily infer the likelihood of damage to the plaintiff’s goodwill through the loss of sales and loss of the exclusive use of his name.” (emphasis added) [68] In AG Spalding & Bros v AW Gamage Ltd (supra), it was held that defendants are liable for loss properly attributable to injury to the plaintiff's reputation, business, goodwill, and trade connections. [69] Having highlighted above, I had the opportunity to consider some of the leading authorities on the quantification for the loss of goodwill and reputation. In Taiping Poly (supra), the court awarded RM50,000.00 for loss of goodwill. That award was made in 2011. [70] The Plaintiffs also referred to the case of Leung Kai Fook Medical Co. Pte Ltd & Anor v Arunagiri Nathan a/l G Rengasamy & Anor (Suit No. WA-22IP-19-04/2021), where the High Court awarded RM200,000.00 for loss of goodwill and reputation. [71] In Perusahaan Otomobil Kedua Sdn Bhd & Anor v Lee Lap Kee (Sole Proprietor of and Trading as Eco Auto Supply) [2024] MLJU 2797, this Honourable Court awarded RM500,000.00 as loss of goodwill and reputation to PERODUA on the grounds that 32! ! PERODUA has developed substantial goodwill in Malaysia and enjoyed a significant turnover. [72] The High Court in Great Food Industries Sdn Bhd v Mazlan bin Mahamad Isa (t/a Perniagaan Idaman Murni) & Ors [2024] 9 MLJ 738 awarded the loss of goodwill and reputation amounting to RM80,000.00 for a business of 7 years. [73] In Tan Mei Li & Ors v Golden Regal Restaurant Sdn Bhd [2014] 1 MLRH 242, the sum of RM 100,000.00 was awarded for loss of goodwill of a 10-year-old business for an infringement lasting for a period of slightly over one year. [74] In Mohammad Hafiz bin Hamidun v Kamdar Sdn Bhd [2023] 10 MLJ 391, the High Court awarded loss of goodwill at the sum of RM200,000.00 for a Malaysian celebrity for passing off. [75] It is also pertinent to note the judgment of Wong Kian Kheong JC (now JCA) in Schwan-STABILO Marketing Sdn Bhd & Anor v S & Y Stationery & Ors [2018] 3 MLRH 306 a sum of RM300,000.00 being the loss of goodwill and reputation was awarded to the 2nd Plaintiff. [76] The Defendant denies that the Plaintiffs' goodwill and reputation were affected because, according to the Defendant, it had not yet sold any of the Counterfeit Goods before the Raid. The Defendant contends that if there was any damage to goodwill, it was not caused by the Defendant. 33! ! [77] In assessing the appropriate quantum for loss of goodwill and reputation I accept the Plaintiffs' submission that goodwill is inherently tied to the integrity and exclusivity of brand representation. The Axe Brand Medicated Oil is a heritage brand with over 90 years of history. Substantial investment has been made in building and protecting that goodwill. The harm caused by the presence of counterfeit goods in the market, even at a single small retail outlet should not be trivialised. [78] Another material aspect of the damages caused to the Plaintiffs is that the Counterfeit Goods are not produced, manufactured and/or authorised by the Plaintiffs. Therefore, the Counterfeit Goods do not meet and/or conform with the specification, quality and standard as prescribed by the Plaintiffs for the goods and services bearing the Arm & Axe Marks. [79] As such, the members of the trade and public, the customers and/or prospective customers of both the Plaintiffs and the Defendant will attribute such lack of quality and standard to the Plaintiffs. It will thereby cause further serious and irreparable harm and damage to the Plaintiffs’ well-established goodwill and reputation. [80] In Chelsea Man Menswear v Chelsea Girl Ltd [1987] RPC 189, the Court of Appeal held as follows: “In my judgment, it clearly shows that the use by the defendants of this name or mark even outside such areas would be likely to cause substantial confusion between the plaintiffs’ and defendants’ respective businesses, and thus to cause damage to the 34! ! plaintiffs’ business within those areas, in one or more of three ways, namely: -

(a) by diverting trade from the plaintiffs to the defendants;

(b) by injuring the trade reputation of the plaintiffs whose men’s clothing is admittedly superior in quality to that of the defendants; and

(c) by the injury which is inherently likely to be suffered by any business when on frequent occasions it is confused by customers or potential customer with a business owned by another proprietor or is wrongly regarded as being connected with that business.” (emphasis added) [81] I take into consideration that as a result of the Offending Acts, the Plaintiffs had suffered and will continue to suffer loss and damages as well as injury to their goodwill and reputation by reason of the erroneous belief engendered by the Defendant’s misrepresentation that the Counterfeit Goods are associated with or originated from the same source as the Plaintiffs’, [82] However, I must also consider the proportionality of the award. The Defendant operates a small retail outlet on the third floor of Plaza GM. The quantity of Counterfeit Goods was 330 units. There is no evidence that the Defendant was engaged in a large-scale or systematic counterfeiting operation. The Defendant's premises is one outlet, and the potential reach of the damage to the Plaintiffs' goodwill must be assessed realistically. 35! ! [83] The Plaintiffs seek RM300,000.00 under this head. While I acknowledge the significance of the Plaintiffs' brand and the principle that damage to goodwill is presumed, I find that the sum of RM300,000.00 is disproportionate when considered against the scale of the Defendant's infringing activity. In Taiping Poly (supra), RM50,000.00 was awarded for a smaller company. The Plaintiffs' brand is undoubtedly larger and more established, which justifies a higher award, but the scale of the infringement in the present case is relatively modest. [84] Taking into account the longstanding and well-established goodwill of the Plaintiffs' brand, the principle that damage to goodwill is presumed in passing off cases, the scale of the Defendant's operations, and the quantity of Counterfeit Goods involved, I assess the loss of goodwill and reputation at RM 200,000.00. The sum of RM200,000.00 is reasonable, fair and justifiable on the basis that the loss of competitive edge and loss of market exclusivity suffered by the Plaintiffs being a business with almost 100 years of history resulting from the Offending Acts of the Defendant. F. COUNTERMEASURE COSTS [85] The Plaintiffs claim the sum of RM7,305.00 as countermeasure costs. These costs represent the expenses incurred by the Plaintiffs in investigating, detecting, and taking action against the Defendant's infringing activities, including costs associated with the trap purchases, engagement of personnel, and related expenditures. 36! ! [86] The Defendant argued that countermeasure costs constitute special damages which must be specifically pleaded in the Statement of Claim, and that since these costs relate to expenses incurred before the commencement of proceedings, they cannot be claimed in the assessment. [87] Countermeasure costs incurred by a trademark proprietor in detecting and investigating infringement are a recognised head of damages in intellectual property cases. Such costs are a natural and direct consequence of the Defendant's infringing acts. Had the Defendant not engaged in the Offending Acts, the Plaintiffs would not have incurred these expenses. [88] However, the Defendant raises the procedural point that such costs, being in the nature of special damages, ought to have been specifically pleaded. The general rule is that special damages being losses that are not the natural and probable consequence of the wrong and which depend on the particular circumstances of the case must be specifically pleaded. [89] There is some force in the Defendant's submission that, as a general principle, special damages must be specifically pleaded to give the opposing party fair notice. [90] Nevertheless, I am mindful that the assessment of damages in the present case arises from an Order that directed damages to be assessed. The scope of the assessment encompasses all damages flowing from the Defendant's Offending Acts. Countermeasure costs are a direct and foreseeable consequence of the Defendant's acts 37! ! of trademark infringement and passing off. Had the Defendant not engaged in the Offending Acts, the Plaintiffs would not have been compelled to incur these investigative and enforcement expenses. [91] In intellectual property cases, it is well-recognised that trademark proprietors are frequently compelled to incur significant costs in monitoring the market, conducting trap purchases, engaging investigators, and coordinating with enforcement authorities in order to detect and suppress infringing activities. These are not unusual or extravagant expenses but rather reasonable and necessary costs that any diligent trademark proprietor would incur in protecting its intellectual property rights. [92] The Plaintiffs have provided evidence of the following countermeasure costs:

(a) Costs associated with investigation activities and trap purchases conducted prior to the Raid;

(b) Costs of engaging the Plaintiffs' representatives to examine and verify the Counterfeit Goods seized during the Raid; and

(c) Related administrative and coordination expenses. [93] Having considered the evidence adduced, I find that the countermeasure costs are a natural and direct consequence of the Defendant's Offending Acts and are recoverable as damages. The sum of RM7,305.00 is modest, reasonable, and proportionate. 38! ! [94] In the circumstances, and exercising my discretion liberally in favour of the Plaintiffs as the injured party, I allow the claim for countermeasure costs and assess the same at RM 7,305.00 as claimed. G. GENERAL DAMAGES [95] The Plaintiffs claim the sum of RM 50,000.00 as general damages arising from the Defendant's trademark infringement and tort of passing off. The Plaintiffs submitted that general damages are recoverable at large for the inconvenience, disruption, and general harm caused by the Defendant's Offending Acts, which go beyond the specific heads of loss already claimed. [96] The Defendant raises two principal objections to this head of claim:

(a) First, the Defendant contended that the general damages claim is duplicative and overlapping (bertindih dan bertindan) with the claims for loss of business profit and loss of goodwill and reputation. The Defendant argued that to allow a separate award for general damages would amount to double recovery for the same loss.

(b) Second, the Defendant submitted that the quantum of RM50,000.00 is excessive and unwarranted in the circumstances. [97] The Defendant's objection regarding overlap requires careful consideration. In the assessment of damages for intellectual 39! ! property infringement, the Court must be vigilant to ensure that there is no double recovery — that is, the Plaintiffs must not be compensated twice for the same loss under different labels. [98] The Plaintiffs have already claimed and I have assessed damages under three specific heads: loss of business profit, loss of goodwill and reputation, and countermeasure costs. The question is whether a separate award of general damages is justified, or whether such an award would amount to an impermissible duplication of the losses already compensated under the other heads. [99] In AG Spalding & Bros v AW Gamage Ltd (supra), the court held that defendants are liable for "all loss actually sustained by the Plaintiff which is the natural and direct consequence of the unlawful acts." This formulation is broad enough to encompass general damages that are not specifically quantifiable but which nonetheless flow naturally from the wrong. [100] General damages in the context of trademark infringement and passing off may include, but are not limited to:

(a) The general inconvenience and disruption to the Plaintiffs' business operations caused by the necessity to investigate, monitor, and take action against the Defendant's infringing activities;

(b) The erosion of the exclusivity of the Plaintiffs' trademark rights;

(c) The dilution of the distinctive character of the Arm & Axe Marks; 40! !

(d) The anxiety and concern caused to the Plaintiffs as brand proprietors by the knowledge that counterfeit goods bearing their marks are being offered for sale in the market;

(e) The potential for residual or continuing harm to the Plaintiffs' market position even after the cessation of the infringing activities; and

(f) The general loss of consumer confidence in the Plaintiffs' products. [101] I accept that there is some degree of conceptual overlap between the claim for general damages and the claims for loss of business profit and loss of goodwill and reputation. Loss of business profit addresses the quantifiable financial loss from diverted sales. Loss of goodwill and reputation addresses the harm to the Plaintiffs' brand equity and standing. General damages, if awarded, should only compensate for harm that is not already covered by these two heads. [102] However, I am of the view that the Defendant's Offending Acts did cause harm to the Plaintiffs that is not entirely captured by the awards for loss of business profit and loss of goodwill and reputation. The disruption to the Plaintiffs' business operations, the erosion of trademark exclusivity, and the general inconvenience caused by the need to enforce their intellectual property rights are legitimate heads of loss that may be compensated through an award of general damages. 41! ! [103] That said, I must be careful not to allow double recovery. The awards for loss of business profit and loss of goodwill and reputation have already compensated the Plaintiffs for the core financial and reputational harm. The general damages award should therefore be modest and should reflect only the residual harm not already covered. [104] The Plaintiffs seek RM 50,000.00 under this head. Having regard to the need to avoid double recovery, the relatively modest scale of the Defendant's infringing activities, and the harm that is not already compensated under the other heads, I assess general damages at RM 25,000.00. H. SUMMARY OF FINDINGS AND AWARD ! [105] Having considered all the evidence, submissions, and authorities placed before me by both parties, I summarise my findings and the award of damages as follows: Loss of Business Profit [106] The Plaintiffs claimed RM157,638.42. The Defendant proposed nominal damages of RM1,000.00. Having considered the evidence, the principles in Taiping Poly (supra) and Sykt Faiza Sdn Bhd (supra), and the specific circumstances of this case, iincluding the volume of Counterfeit Goods (330 units), the Defendant's scale of operations, the need for a causal link between the Defendant's 42! ! specific conduct and the Plaintiffs' losses, and the principle that damages are to be assessed liberally but not speculatively — I assess the loss of business profit at RM30,000.00. Loss of Goodwill and Reputation [107] The Plaintiffs claimed RM300,000.00. The Defendant proposed nominal damages of RM1,000.00. Having considered the longstanding and well-established goodwill of the Plaintiffs' brand (over 90 years of heritage), the principle that damage to goodwill is presumed in passing off cases, the scale of the Defendant's infringing activities, the awards in comparable cases including Taiping Poly (supra) (RM50,000.00 for a smaller company in 2011) and Leung Kai Fook Medical Co. Pte Ltd & Anor v Arunagiri Nathan a/l G Rengasamy & Anor (RM200,000.00), and the proportionality of the award to the Defendant's conduct, I assess the loss of goodwill and reputation at RM200,000.00. Countermeasure Costs [108] The Plaintiffs claimed RM7,305.00. Having considered the evidence of the costs incurred, I allow the claim in full and assess countermeasure costs at RM7,305.00. General Damages [109] The Plaintiffs claimed RM 50,000.00. The Defendant objected on the grounds of duplication with the other heads of damage. Having considered the need to avoid double recovery, the residual harm not 43! ! already compensated under the other heads, and the scale of the Defendant's infringing activities, I assess general damages at RM25,000.00. I. TOTAL AWARD [110] The total damages awarded to the Plaintiffs are as follows: Head of Damage Amount Claimed Amount Awarded Loss of Business Profit 157,638.42 30,000.00 Loss of Goodwill and Reputation 300,000.00 200,000.00 Countermeasure Costs 7,305.00 7,305.00 General Damages 50,000.00 25,000.00 Total 514,943.42 262,305.00 ! [111] For all the reasons stated above, I assess the total damages payable by the Defendant to the Plaintiffs at RM262,305.00, together with interest at the rate of 5% per annum from the date of the judgment until the date of full realisation. 44! ! [112] I ordered costs of RM 10,000.00. Dated this day of 15th April 2026. -Sgd-EDWIN PARAMJOTHY MICHAEL MUNIANDY JUDICIAL COMMISSIONER COMMERCIAL DIVISION (NCC 7) HIGH COURT OF MALAYA KUALA LUMPUR Counsel: For the Plaintiff : Lum Kok Kiong and Chai Zhi Yong (Messrs. Lum Kok Kiong & Co) For the Defendant : Mohamed Ibrahim and Nor Aziah (Messrs. Ibrahim & Fuaadah) !