Leung Kai Fook Medical Co. Pte Ltd v Zainah Binti Misdin (WA-22IP-70-11/2023)

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

LEUNG KAI FOOK MEDICAL SDN. BHD. [No. Syarikat.: 654195-K] …PLAINTIF-PLAINTIF DAN ZAINAH BINTI MISDIN [No. K/P.: 881129-10-5448] [Berniaga sebagai pemilik tunggal atas nama dan gaya LEWANAY ENTERPRISE] [No. Pendaftaran: 202103092232 (IP0554055-T)] …DEFENDAN GROUNDS OF JUDGMENT ASSESSMENT OF DAMAGES (Pursuant to Order dated 2.8.2024 and Notice for Directions dated 30.8.2024) 2! A. INTRODUCTION [1] The Plaintiffs brought an action against the Defendant for trademark infringement and the tort of passing off under the Trademarks Act 2019 ("TMA 2019"). Summary judgment was entered against the Defendant in favour of the Plaintiffs. This is the Plaintiffs' Notice of Appointment for Assessment of Damages dated 7.2.2025 (Encl. 44), arising from the said Order. [2] The Plaintiffs, Leung Kai Fook Medical Co. Pte. Ltd. (the 1st Plaintiff) and Leung Kai Fook Medical Sdn. Bhd. (the 2nd Plaintiff), are the common law and registered proprietors of the well-known "Arm & Axe" and "Axe Brand" trademarks used in connection with medicated oil products. The trademarks in question ("the Arm & Axe Marks") are registered in Class 5 in Malaysia under Registration Nos. M/004859, S/008002, 89001581, 89001582, 88000334, and 88000335 and have at all material times been valid and subsisting. [3] The Defendant, Zainah binti Misdin, is the sole proprietor of Lewanay Enterprise (Registration No. 202103092232), a business operating at Plaza GM, Kuala Lumpur. The Defendant was found to have been importing, supplying, distributing, selling and/or offering for sale counterfeit goods bearing the Arm & Axe Marks ("the Counterfeit Goods") without the licence and/or authority of the Plaintiffs ("the Offending Acts"). [4] The Plaintiffs commenced this action via Writ of Summons and Statement of Claim both dated 27 November 2023. The Defendant 3! filed her Defence and Counterclaim on 11 January 2024, which was met by the Plaintiffs' Reply to Defence and Defence to Counterclaim dated 24 January 2024. [5] On 25 March 2024, the Plaintiffs filed a Notice of Application for summary judgment pursuant to Order 14 of the Rules of Court 2012. Simultaneously, the Plaintiffs filed a separate application to strike out the Defendant's Counterclaim. [6] On 2 August 2024, this Court, having heard the application on its merits, allowed the Summary Judgment Application and entered judgment in favour of the Plaintiffs. On the same date, this Court also struck out the Defendant's Counterclaim. [7] The Defendant did not file any appeal against the Order, nor did she apply for a stay of execution of the Order. Consequently, the Defendant's liability predicated on trademark infringement and the tort of passing off is now final, conclusive, and can no longer be disputed in these proceedings. [8] The Order, inter alia, directed that damages in paragraphs (6) to (10) thereof be assessed by this Court. Pursuant thereto, the Plaintiffs filed a Notice for Directions dated 30 August 2024. B. BACKGROUND FACTS [9] The material facts, which are largely undisputed, may be summarised as follows. 4! [10] The Plaintiffs are the common law and registered proprietors of the following trademarks in Malaysia which are and have at all material times been valid and subsisting: Trademarks Class Registration No. 5 M/004859 5 S/008002 Arm & Axe Logo with the words AXE Brand 5 89001581 Arm & Axe with Cap Kapak 5 89001582 Arm & Axe (Word Mark) 5 88000334 Axe Oil (Word Mark) 5 88000335 The above trademarks are collectively referred to as “Arm & Axe Marks” [11] The Axe Brand Medicated Oil is one of the leading medicated oil brands in Malaysia and internationally. The Plaintiffs have expended substantial sums on advertising and promotional activities over the 5! years to build and maintain the goodwill and reputation associated with their brand. [12] At all material times up to the filing of the Writ, the Defendant had been importing, supplying, distributing, selling and/or offering for sales the Counterfeit Goods, without the license and/or authority of the Plaintiffs (“Offending Acts”). [13] In this regard, the Defendant had infringed the Arm & Axe Marks and/or passed off its business, goods and services as and for the Plaintiffs or as being associated or connected therewith. [14] On 13 March 2023, the Plaintiffs wrote to the Enforcement Division of the Ministry of Domestic Trade and Consumer Affairs ("the Ministry") alerting the Ministry that several shops in Plaza GM, Kuala Lumpur, were involved in the sale of counterfeit products bearing the Plaintiffs' trademarks. [15] On 21 March 2023, the Ministry conducted a raid and seizure action ("the Raid") at the Defendant's business premises located at Kiosk 1A & 1B, Tingkat 1, Plaza GMKL, 12, Lorong Haji Taib 5, Chow Kit, 50350 Kuala Lumpur, and Tingkat 1, Plaza GMKL, 12, Lorong Haji Taib 5, Chow Kit, 50350 Kuala Lumpur. [16] During the Raid, the Ministry seized a total of 471 units of Counterfeit Goods from the Defendant's business premises. The seized Counterfeit Goods consisted of: 6!

Counterfeit Axe Brand Medicated Oil (56ml)

Counterfeit Axe Brand Medicated Oil (28ml)

Counterfeit Axe Brand Medicated Oil (10ml)

Counterfeit Axe Brand Medicated Oil (5ml)

Counterfeit Axe Brand Medicated Oil (3ml) 30 Total 471 ! ! [17] Following the Raid, the Plaintiffs' representatives conducted a detailed examination and verification of the seized Counterfeit Goods and confirmed that the Counterfeit Goods were not originated from, produced, or authorised by the Plaintiffs. The appearance and get-up of the Counterfeit Goods looked similar to the genuine Axe Brand Medicated Oil, and the Counterfeit Goods were used in the course of the Defendant's business as if they were the genuine products of the Plaintiffs. Both parties accepted that the Counterfeit Goods were similar in appearance to the genuine products. [18] The Defendant admitted in her Affidavit in Reply that the Counterfeit Goods were seized from her business premises on 21 March 2023. However, the Defendant raised the following points by way of mitigation or defence to quantum: 7!

The Defendant is a small business selling various general merchandise, and the Axe Brand Medicated Oil was not the primary product of her business;

At the time of the Raid, the Defendant was detained at the Kajang Women's Prison, having been arrested on 29 August 2022, remanded from 30 August to 5 September 2022, and subsequently charged under Section 302 of the Penal Code, and was incarcerated for approximately 8 months until she was released on bail on 17 April 2023;

The Defendant claimed she had no knowledge of who was buying and selling the Counterfeit Goods at her premises during the relevant period;

The Defendant believed that the Counterfeit Goods were placed at her shop on a consignment basis by one Bangladeshi national known as "Imam";

Out of 5 branches of the Defendant's business, the Counterfeit Goods were found at only 1 branch;

The Defendant was not charged under the Trademarks Act 2019; and

The Defendant contended that the Plaintiffs' loss of revenue in 2023 could not be attributed solely to the Defendant. C. THE ORDER AND SCOPE OF ASSESSMENT 8! [19] As stated earlier, by the Order dated 2 August 2024, this Court entered summary judgment against the Defendant on the issues of liability for trademark infringement and the tort of passing off. The Order directed, inter alia, that the damages in paragraphs (6) to (10) of the Order be assessed by this Court. [20] At this assessment stage, the question of the Defendant's liability is no longer in issue. The sole question before this Court is the quantum of damages to which the Plaintiffs are entitled as a consequence of the Defendant's Offending Acts. [21] The Plaintiffs claimed the following heads of damages: Head of Damage Amount Claimed (RM) 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 [22] The Defendant, on the other hand, contended that only nominal damages of RM1,000.00 are appropriate for each head of claim. D. APPLICABLE LEGAL PRINCIPLES ON ASSESSMENT OF DAMAGES [23] I begin with the foundational principles governing the assessment of damages for infringement of intellectual property rights. 9! [24] The general rule on awarding damages for infringement of intellectual property rights is well-established. The object of damages is compensatory in nature. The aim is to award such sum as will, so far as possible, place the injured party in the same position as if the wrong had not occurred. In General Tire & Rubber Co. v Firestone Tyre & Rubber Co. Ltd [1975] 1 All ER 173, Lord Wilberforce 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, 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." [25] In Wembley Gypsum Products Sdn Bhd v Mst Industrial Systems Sdn Bhd [2007] 2 MLRA 274, the Court of Appeal affirmed that damages are assessed on the basis of restitutio in integrum, namely restoring the plaintiff to the position he would have been in but for the defendant’s wrongdoing. The Court of Appeal in Wembley Gypsum held as follows: “[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 10! 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 Sdn. Bhd v. Koperasi Pasaraya Malaysia Bhd [2007] 5 AMR 36 CA).” (Underlined Emphasis Added) [26] Similarly, in Taiping Poly (M) Sdn Bhd v Wong Fook Toh (t/a Kong Wah Trading Co) & Ors [2018] Supp MLJ 312, the Federal Court reiterated that damages for infringement of intellectual property rights are tortious in nature. Where the parties are in competition, the appropriate measure will often be the plaintiff’s loss of profits. Importantly, the Court emphasised that damages are to be assessed liberally, though still grounded in evidence. The Federal Court in Taiping Poly, speaking through the judgement of Richard Malanjum CJSS (as His Lordship then was) adopted the principle laid down in General Tire & Rubber Co. and stated: "[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." [27] In AG Spalding & Bros v AW Gamage Ltd (1918) 35 RPC 101, the Court recognised that a defendant is liable for all losses that are the natural and direct consequence of the wrongful acts. This includes not 11! only direct loss of sales, but also damage to goodwill, reputation, and business connections. In AG Spalding & Bros, it was held 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 the usual course of things, from the wrongful acts…” [Underlined Emphasis Added] [28] The High Court in Sykt Faiza Sdn Bhd & Anor v Faiz Rice Sdn Bhd & Anor [2018] MLJU 1749 helpfully synthesised the applicable approach. The plaintiff bears the burden of proving causation, remoteness, and quantum of loss. The Court further recognised that there is no rigid formula for assessment, and identified three principal methods: (i) loss of profits, (ii) reasonable royalty or licence fee, and

(iii) such other evidential basis as the Court considers appropriate where precise quantification is not possible. In Sykt Faiza, the High Court helpfully summarised that the principal bases for assessing compensatory damages in intellectual property infringement cases in the following manner: [6] In assessing compensatory damages, I adopt the following approach:!

a plaintiff bears the evidential burden to prove -!

the defendant’s infringement of the plaintiff’s Intellectual Property (IP) rights has “caused” loss to the plaintiff - please see the judgment of Richard Malanjum CJ (Sabah & Sarawak) (as he then was) 12! in the Federal Court case of Taiping Poly (M) Sdn Bhd v Wong Fook Toh & Ors [2011] 3 CLJ 837, at paragraph 17. This is a question of causation of the plaintiff’s loss;!

the loss suffered by the plaintiff is not too remote and can be recovered in law. This concerns the issue of remoteness of damage suffered by the plaintiff; and!

the amount of damages to be awarded - please see the judgment of Edgar Joseph Jr J (as he then was) in the High Court case of Popular Industries Ltd v Eastern Garment Manufacturing Sdn Bhd [1989] 3 MLJ 360, at 367.! ! If a plaintiff fails to discharge the above onus, the plaintiff is not entitled to compensatory damages - please see Schwan-Stabilo Marketing Sdn Bhd & Anor v S & Y Stationery & Ors [2018] 9 CLJ 384, at paragraphs 46 and 47. In such a case, the plaintiff can only claim nominal compensatory damages - please see the judgment of Edgar Joseph Jr FCJ in the Federal Court case of Tan Sri Khoo Teck Puat & Anor v Plenitude Holdings Sdn Bhd [1994] 3 MLJ 777, at 799;!

there is no hard and fast rule to assess compensatory damages - Taiping Poly, at paragraph 19;!

in accordance with the general principle of restitutio in integrum, compensatory damages should as nearly as possible put an injured plaintiff in the same position as the plaintiff would have been in if the wrong has not been committed by the defendant - Taiping Poly, at paragraphs 8 and 19. The object of compensatory damages is to compensate a plaintiff and not to punish the defendant - General Tire & Rubber Co, at p. 177;!

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 13! financially ruined in an unjust manner - please see Motordata Research Consortium Sdn Bhd v Ahmad Shahril bin Abdullah & Ors [2017] 7 AMR 560, at sub-paragraph 75(2); and!

to assess compensatory damages for a breach of IP rights, the Court may apply any one of the following three bases -!

a computation of the loss of a plaintiff’s business profits caused by the defendant’s infringement of the plaintiff’s IP rights (Lost Profits Basis) - Taiping Poly, at paragraph 19;!

where a plaintiff has previously granted licenses to third parties for the use of the plaintiff’s IP rights, the court may assess the plaintiff’s loss of royalty or license fee due to the defendant’s infringement of the plaintiff’s IP rights (Royalty Basis) - please see Lord Wilberforce’s judgment in the House of Lords’ case of General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1975] 2 All ER 173, at 178; or!

when it is not possible to apply Lost Profits Basis and Royalty Basis, according to General Tire & Rubber Co, at p. 178-179, the Court may assess compensatory damages based on the following evidence adduced by a plaintiff -!

as regards royalty, the practice in the relevant trade or in analogous trades;!

(ii) expert opinion;!

(iii) profitability of the invention; and!

(iv) any factor on which the Court can assess compensatory damages.! [29] In Asia File Products Sdn Bhd v Brilliant Achievement Sdn Bhd & Ors [2019], the Court emphasised that causation must be established on a “but for” basis and as a matter of common sense. It further reaffirmed that compensatory damages are not punitive, and 14! that courts must guard against both overcompensation and unjust financial ruin to the defendant. In Asia File it was held as follows: [22] Regarding the issue of causation of loss or damage, I am of the following view:!

in Gerber Garment Technology, at p. 452, Staughton LJ decided that a patent owner can only claim for a loss or damage -!

which would not have occurred “but for” the patent infringement; and!

where as a matter of common sense, the patent infringement is the “cause” of the loss or damage; and!

previous cases on causation regarding patent infringement, as for all other causes of action, depend on their particular facts. Accordingly, previous judgments on causation of loss or damage arising from patent infringement, cannot constitute binding legal precedents from the view point of the stare decisis doctrine.! … [25] In assessing compensatory damages for patent infringement under s 60(1) PA, I adopt the following approach based on my understanding of the relevant cases:!

the object of compensatory damages is to compensate a patent owner and not to punish a patent infringer - please see Lord Wilberforce’s judgment in the House of Lords in General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1975] 2 All ER 173, at 177 (a patent infringement case);!

the general principle of restitutio in integrum applies, namely the amount of compensatory damages should as nearly as possible put a patent owner in the same position as the patent owner would have been in if there has not been a 15! patent infringement - General Tire & Rubber Co, at p. 177;!

the court should ensure that a patent owner is not unjustly enriched or overcompensated and at the same time the court should prevent a patent infringer from being financially ruined in an unjust manner - please see Motordata Research Consortium Sdn Bhd v Ahmad Shahril bin Abdullah & Ors [2017] 7 AMR 560, at sub-paragraph 75(2) (a case based on copyright infringement, tort of breach of confidence, tort of unlawful interference with Plaintiff’s business and tort of conspiracy by unlawful means). The appeal to the Court of Appeal against the judgment in Motordata Research Consortium has been discontinued;!

previous cases on assessment of compensatory damages should only be referred to as the court’s previous approach (not as a rule of law) in a similar factual situation - General Tire & Rubber Co, at p. 177;!

a patent owner has the evidential burden to prove that the patent owner has suffered loss and damage due to the patent infringement-please see the decision of Richard Malanjum CJ (Sabah & Sarawak) (as he then was) in the Federal Court case of Taiping Poly (M) Sdn Bhd v Wong Fook Toh & Ors [2011] 3 CLJ 837, at paragraph 17 (regarding assessment of damages for trade mark infringement and tort of passing off). If a patent owner fails to discharge the onus to prove any loss or damage arising from patent infringement, the patent owner is only entitled to nominal damages - please see Edgar Joseph Jr FCJ’s judgment in the Federal Court in Tan Sri Khoo Teck Puat & Anor v Plenitude Holdings Sdn Bhd [1994] 3 MLJ 777, at 799 (breach of contract case); and!

in General Tire & Rubber Co, at p. 177, Lord Wilberforce held that “damages should be liberally 16! assessed”. This has been explained by Males J in the English High Court case of Fiona Trust & Holding Corporation v Privalov & Ors [2017] 2 All ER 570, at paragraphs 49 and 50 (assessment of damages based on undertaking regarding a freezing order), as follows -! ! “49. There was some debate whether a “liberal assessment” of damages is appropriate. The origin of this phrase is the speech of Lord Wilberforce in a case concerned with damages for patent infringement, General Tire & Rubber Co Ltd v Firestone Tyre & Rubber Co Ltd [1975] 1 WLR 819:! ! “There are two essential principles in valuing the claim: first, that the plaintiffs have the burden of proving their loss; second, that the defendants being wrongdoers, damages should be liberally assessed but that the object is to compensate the plaintiffs and not to punish the defendants.”! !

The principle of “liberal assessment” was applied to an inquiry as to the damages caused by an interim injunction by Norris J in Les Laboratoires Servier v Apotex Inc [2008] EWHC 2347 (Ch); , [2009] FSR 3. This was endorsed by the Court of Appeal in AstroZeneca AB v KRKA dd Novo Mesto [2015] EWCA Civ 484 at [16]. The question arose in the context of a statement by Norris J, also endorsed by the Court of Appeal, that although it is for the party seeking damages to establish its loss, the court should not be over eager in its scrutiny of the evidence or too ready to subject its methodology to minute criticism, in part because the very nature of the exercise renders precision impossible. Kitchin LJ referred at [16] to the need for “a liberal but fair assessment of loss”. “! 17! [30] The Plaintiff bears the burden of proving on a balance of probabilities that the Defendant's infringement caused the loss claimed. However, it must be borne in mind that damages are to be assessed liberally and not with mathematical precision, as acknowledged in General Tire & Rubber Co. and Taiping Poly. [31] In Taiping Poly, the Federal Court further clarified that the usual head of damage is the loss of business profits arising from the diversion of customers due to the defendant’s infringement. However, the Court cautioned against speculative assumptions, noting that it cannot be presumed that all infringing sales would otherwise have been made by the plaintiff. [32] The Court also rejected any rigid approach such as simply awarding the defendant’s overall net profit, emphasising instead that damages must be tied to the plaintiff’s actual loss caused by the infringement. [33] While plaintiffs are entitled to full compensation for losses flowing from the defendant’s wrongful acts, the Court must ensure that any award remains proportionate, fair, and supported by the evidence. [34] This principle is consistent with the general law of damages, which requires proportionality and fairness. The Court must balance the need to adequately compensate the Plaintiffs against the need to ensure that the damages do not go beyond what is justifiable on the evidence. [35] As the Plaintiffs correctly submitted, the knowledge or intention of the infringer is not a material consideration in determining liability for 18! trademark infringement or passing off. The same principle applies at the stage of assessment of damages — the Defendant's subjective knowledge (or lack thereof) as to the authenticity of the Counterfeit Goods is not a valid basis for reducing or denying compensatory damages. [36] This is consistent with the established principle that trademark infringement is a strict liability tort. In Millington v Fox (1838) 3 My. & Cr. 338, it was held that innocence is not a defence to trademark infringement. While the degree of culpability may be relevant to exemplary or punitive damages, it does not affect the Plaintiff's right to compensatory damages. ! [37] In summary, the principles distilled from the foregoing authorities are as follows. First, damages for intellectual property infringement are compensatory and guided by the doctrine of restitutio in integrum. Second, the plaintiff bears the burden of proving causation, remoteness, and quantum, although damages may be assessed liberally where precise proof is difficult. Third, recoverable losses include all losses that are the natural and direct consequence of the infringement, including loss of profits and injury to goodwill. Fourth, the Court may adopt different methodologies such as loss of profits or reasonable royalty, depending on the evidence available. Fifth, damages must not be speculative, nor should they result in overcompensation or unjust punishment of the defendant. Finally, liability for trademark infringement is strict, and the defendant’s lack of knowledge or intention does not reduce compensatory damages. 19! LOSS OF BUSINESS PROFIT The Plaintiffs' Claim [38] The Plaintiffs claimed the sum of RM157,638.42 as loss of business profit. This sum was derived from a computation based on the drop in the Plaintiffs' revenue from RM47,472,661.28 in 2022 to RM37,236,400.23 in 2023, representing a revenue decline of RM10,236,261.05. The Plaintiffs have applied the methodology endorsed by the Federal Court in Taiping Poly to arrive at the net profit loss figure of RM157,638.42. [39] In illustrating the above point further, learned counsel for the Plaintiff highlighted that in the year of 2023, the revenue and the profit before tax for the Axe Brand Medicated Oil 56ml, 10ml, 5ml and 3ml are RM37,236,400.23 and RM1,147,461.45 respectively, which the breakdown is as follows: -

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

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

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

Axe Brand Medicated Oil (3ml) 6,161,381.41 189,866.57 Total 37,236,400.23 1,147,461.45 20! [40] Learned counsel for the Plaintiff 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 advanced the following calculations: 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% Loss of Business Profit in Year 2023 (Loss of Revenue x Profit Margin) RM10,236,261.05 x 3.08%=RM315,276.84 [41] Learned counsel for the Plaintiff endeavoured to highlight in his submission that the Plaintiff claimed against the Defendant in this suit and also against one TJS Worldwide Sdn Bhd (“TJS”) in the suit no. WA-22IP-71-11/2023 premised on trademark infringement and passing-off in 2023. 21! ! [42] 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 herein and TJS in the same portion (RM315,276.84÷2), that is RM157,638.42 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 TJS. [43] 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. [44] Learned counsel for the Defendant contended that:

It is unjust for the Plaintiffs to attribute their entire sales decline in 2023 to the Defendant, particularly when the Defendant's business is a small sole proprietorship dealing in general merchandise;

Only 471 units of Counterfeit Goods were seized from the Defendant's premises;

The Counterfeit Goods were found at only 1 out of 5 of the Defendant's business branches; 22! !

The Defendant was incarcerated at the time of the Raid and had no knowledge of the sale of the Counterfeit Goods;

The Counterfeit Goods were placed by a third party (one "Imam," a Bangladeshi national) on a consignment basis;

There is no evidence that the Defendant was the cause of the entire loss of the Plaintiffs' revenue in 2023; and

The Defendant proposes nominal damages of RM1,000.00 only. My Analysis [45] I have carefully considered the evidence adduced by both parties, including the Plaintiffs' financial records showing the decline in revenue from 2022 to 2023, and the Defendant's stance with respect to the limited scale of her involvement. [46] The Federal Court in Taiping Poly held that the usual principal head of damage is the loss of business profits caused by the diversion of the plaintiff's customers to the defendant as a result of the defendant's misrepresentation. Critically, at paragraph [17], the Federal Court cautioned that it cannot be presumed that the amount of goods sold by the defendant under an infringing trademark would have been sold by the plaintiff if not for the defendant's unlawful use of the trademark. Speculative and unproven damages are excluded. 23! ! [47] Further, at paragraph [24], the Federal Court was clear that the approach of taking the overall net profit of the appellant is not the applicable principle. To do so would be contrary to the acceptable principles applied in common law jurisdictions. [48] In the present case, I observe that the Plaintiffs' claim of RM157,638.42 as loss of business profit is derived from the overall decline in the Plaintiffs' revenue from 2022 to 2023. The Plaintiffs have attributed this decline, at least in part, to the Defendant's Offending Acts. However, I find that the Plaintiffs have not satisfactorily proved, on a balance of probabilities, that the entire decline in revenue of RM10,236,261.05, or even the portion attributable to the Defendant (yielding the claimed net profit loss of RM157,638.42), was caused specifically by the diversion of the Plaintiffs' customers to the Defendant. [49] Several factors weigh against a full acceptance of the Plaintiffs' computation: -

The Defendant is a small sole proprietorship dealing in general merchandise. The Axe Brand Medicated Oil was not the primary product of her business. The Counterfeit Goods were found at only 1 out of 5 of the Defendant's business branches. This indicates that the Defendant's involvement in the sale of Counterfeit Goods was limited in scope and scale.

Only 471 units of Counterfeit Goods were seized. Even if one were to assume that the Defendant had sold a similar or even greater number of units prior to the Raid, the volume of the 24! ! Defendant's sales would be a minuscule fraction of the Plaintiffs' total revenue of over RM47 million in 2022 or RM37 million in 2023.

The decline in the Plaintiffs' revenue from 2022 to 2023 could be attributable to a multitude of factors, including general market conditions, competition, post-pandemic consumer behaviour shifts, and the activities of other counterfeit sellers. The Plaintiffs' own letter to the Ministry dated 13 March 2023 identified several shops at Plaza GM (not just the Defendant's) as being involved in the sale of counterfeit products. This strongly suggests that the Plaintiffs' loss cannot be attributed solely or even primarily to the Defendant.

The Counterfeit Goods were seized on 21 March 2023. There is no evidence before this Court that the Defendant continued to sell the Counterfeit Goods after the Raid. The Plaintiffs have not pleaded that the Defendant sold Counterfeit Goods after 21 March 2023. Yet, the Plaintiffs seek compensation for the entire year of 2023. This is not proportionate to the Defendant's actual involvement.

The Plaintiffs have also commenced a separate action (WA- 22IP-71-11/2023) against another party (TJS Worldwide Sdn Bhd) arising from the same or similar Raid and the same or similar Counterfeit Goods. This raises a legitimate concern about double recovery, which the law does not permit. 25! ! [50] I am mindful of the Taiping Poly dictum that damages are to be assessed liberally. However, liberal assessment does not mean that the Court should award speculative or unproven damages. The Federal Court was clear that it cannot be presumed that the goods sold by the Defendant under the infringing trademark would have been sold by the Plaintiffs if not for the infringement. [51] That said, I accept that the Plaintiffs have suffered some loss of business profit as a consequence of the Defendant's Offending Acts. The fact that 471 units of Counterfeit Goods were found in the Defendant's possession and offered for sale is undeniable. These Counterfeit Goods were deceptively similar to the genuine Axe Brand Medicated Oil and were sold in the course of the Defendant's business, thereby diverting at least some sales that would otherwise have been made by the Plaintiffs or their authorised distributors. [52] In assessing the quantum of lost business profit, I adopt a more measured approach, guided by the following considerations: -

The number of units seized (471 units);

The range of products seized (from 3ml to 56ml bottles), with the majority being 10ml bottles (360 units);

The likely retail price of the genuine Axe Brand Medicated Oil for the relevant sizes;

The Plaintiffs' profit margin on each unit; and 26! !

A reasonable inference as to the number of units the Defendant may have sold prior to the seizure, taking into account the inventory levels found. [53] While the Plaintiffs did not specifically disclose the profit margin per unit of Axe Brand Medicated Oil (a point raised by the Defendant), the Plaintiffs have provided overall revenue and profit before tax figures from which a reasonable approximation of the profit margin can be derived. [54] Having carefully weighed the evidence, and taking a liberal but not speculative approach, I find that a reasonable assessment of the loss of business profit attributable to the Defendant's Offending Acts is the sum of RM30,000.00. This figure takes into account:-

The limited scale of the Defendant's involvement (471 units seized, 1 out of 5 branches, general merchandise shop);

A reasonable inference that the Defendant may have sold some units prior to the Raid, in addition to the 471 units found in stock;

The Plaintiffs' net profit margin as derived from the financial data provided;

The fact that multiple other sellers of counterfeit products existed in the same area, and the Plaintiffs' loss cannot be attributed solely to the Defendant; and 27! !

The need to avoid speculative or excessive damages while ensuring adequate compensation. [55] I am unable to accept the Plaintiffs' claim of RM157,638.42 as it is based on an attribution of the Plaintiffs' overall revenue decline to the Defendant, which is not supported by sufficient causal evidence. Equally, I reject the Defendant's proposal of nominal damages of RM1,000.00, which would be grossly inadequate given the undisputed fact that 471 units of Counterfeit Goods were found in the Defendant's premises and the Defendant's liability has been conclusively established. LOSS OF GOODWILL AND REPUTATION The Plaintiffs' Claim [56] The Plaintiffs claimed the sum of RM300,000.00 as loss of goodwill and reputation. The Plaintiffs contended that: -

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

The Plaintiffs have expended substantial sums as advertising and promotional expenses; 28! !

The Defendant's Offending Acts involving the Counterfeit Goods have caused significant harm to the Plaintiffs' goodwill and reputation;

The unauthorized sale of the Counterfeit Goods falsely representing the Plaintiffs' brand misleads the public and risks associating the Plaintiffs' established brand with lower quality products;

The law presumes damage to goodwill where there has been passing off, and actual damage need not be specifically proved. [57] The Defendant denies that the Plaintiffs' reputation has been affected, and contends that even if the reputation has been affected, it is not the Defendant's doing. The Defendant further contends that a nominal sum of RM1,000.00 is appropriate. My Analysis [58] It is well-settled law that in an action for passing off, the law presumes damage to the goodwill of the plaintiff's business where the goodwill has been interfered with. [59] Lord Lindley in The Commissioners of Inland Revenue v Muller & Co.’s Margarine Limited [1901] AC 217 explained “goodwill” as follows: - 29! ! “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.” [60] Nearer to home the Court of Appeal in Yong Sze Fun & Anor v Syarikat Zamani Hj Tamin Sdn Bhd & Anor [2012] 1 MLJ 585 summarized the 4 discerning features of goodwill as defined by Lord McNaghten in The Commissioners of Inland Revenue (supra) 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:

that goodwill is the benefit added to the business through 30! ! extensive trading operations which attract custom;

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

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

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.” (Underlined Emphasis added) [61] 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) [62] In Seet Chuan Seng & Anor v Tee Yih Jia Foods Manufacturing Pte Ltd [1994] 2 MLJ 770, the Supreme Court held that: - “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) 31! ! [63] In Taiping Poly (supra) where the Federal Court in awarding damages for loss of goodwill held that loss of goodwill and reputation it is trite law that it is presumed and that the sum to be awarded is a matter of discretion. [64] Learned counsel for the Plaintiffs submitted that the Plaintiffs have established their goodwill and reputation in their business predicated on the following substantial evidence: -

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;

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;

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 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); 32! !

The revenue for year 2023 in respect of the Axe Brand Medicated Oil 56ml, 10ml, 5ml and 3ml is RM37,236,400.23 [65] 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; ii. Brand of the Year given by the World Branding Forum at Kensington Palace, London on 14.11.2019; and iii. A Health Supplement/Product Brand award given by Hong Kong Medical Association in year 2019. [66] Premised on the above, learned counsel for the Plaintiff drove home the point that the fame, goodwill and reputation of the Axe Brand is indisputably well-established and recognized in Malaysia and worldwide. It is imperative that the Plaintiffs have acquired the proprietary rights on the substantial 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. 33! ! [67] It was further submitted that the Arm & Axe Marks are associated or known exclusively with the Plaintiffs. 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. In the circumstances, learned counsel for the Plaintiff submitted that the Defendant by committing the Offending Acts had affected and tarnished the Plaintiffs’ well-established goodwill and reputation. Given, it is trite that the law presumes that the plaintiff has suffered damage once the plaintiff successfully proves the passing off by the defendant, it is not necessary for the plaintiff to prove that they had suffered actual damage. [68] In computation of the quantum for loss of goodwill, learned counsel for the Plaintiff urged this Court to be vary of another material aspect of the damages caused to the Plaintiffs that is the Counterfeit Goods are not produced, manufactured and/or authorised by the Plaintiffs. In this regard, learned counsel for the Plaintiff submitted that 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. [69] Given the substandard quality of the products, 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. 34! ! ! [70] In Chelsea Man Menswear v Chelsea Girl Ltd [1987] RPC 189, the Court of Appeal held: - “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 plaintiffs’ business within those areas, in one or more of three ways, namely: -

by diverting trade from the plaintiffs to the defendants;

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

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) ! [71] Similarly, it is clear here that as a result of the Offending Acts, the Plaintiffs have suffered and will continue to suffer loss and damage, as well as injury to their goodwill and reputation, arising from the erroneous belief created by the Defendant’s misrepresentation that the Counterfeit Goods are associated with, or originate from, the same source as the Plaintiffs’ goods, unless the Offending Acts are restrained. [72] In submitting on the appropriate quantum learned counsel laid emphasis to the case of Taiping Poly (supra) which is a relatively 35! ! small and young company, the loss of goodwill awarded is RM50,000.00 back in 2011. Juxtaposing to the present case, learned counsel highlighted that the Plaintiffs herein are one of the leading brands of medicated oil that have a longstanding history of more than 90 years of heritage in Malaysia and worldwide, which enjoy an incredibly significant turnover in sales of the medicated oil and are the leaders in its market sector. [73] Learned counsel also referred to the case of Perusahaan Otomobil Kedua Sdn Bhd & Anor v Lee Lap Kee (Sole Proprietor of and Trading as Eco Auto Supply) [2024] MLJU 2797, where this Honourable Court awarded RM500,000.00 as loss of goodwill and reputation to PERODUA on the grounds that PERODUA has developed substantial goodwill in Malaysia and enjoyed a significant turnover. Similarly, learned counsel submitted that the Axe Brand has developed substantial goodwill in Asia and obtained significant revenue all the times. Therefore, the loss of goodwill and reputation claimed by the Plaintiffs in the sum of RM300,000.00 commensurates with the long history of the Axe Brand and supported by the significant revenue and marketing expenses spent to promote the business of the Plaintiffs. [74] Reference was also made to the case of Great Food Industries Sdn Bhd v Mazlan bin Mahamad Isa (t/a Perniagaan Idaman Murni) & Ors [2024] 9 MLJ 738 where the High Court awarded the loss of goodwill and reputation amounting to RM80,000.00 for a business of 7 years: - “[28] Whilst loss of business profit is directly linked to the sale of the infringing goods, loss of goodwill is 36! ! attached to the brand rather than the goods. Therefore, despite the absence of evidence demonstrating the sale of the infringing goods by D3 or his proxies, my perspective is that the plaintiff is legally entitled to loss of goodwill and exclusivity rights. In exercising my discretion, the sum of RM80,000 is awarded under this head of damage.” (emphasis added) [75] 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. [76] Further reference was made to the case of Mohammad Hafiz bin Hamidun v Kamdar Sdn Bhd [2023] 10 MLJ 391, where the High Court awarded loss of goodwill at the sum of RM200,000.00 for a Malaysian celebrity for passing off of merely 72 days. The High Court in doing so, held as follows: - “[31] Having considered all the above, and also taking into account the 72-day period (31 January 2017–12 April 2017) involved in the defendant’s commission of the tortuous act of passing off, and bearing in mind that the said period was not a festive period (Hari Raya Aidil Fitri in 2017 fell on 25–26 June 2017), I find a sum of RM200,000 as an award for the damage to the plaintiff’s goodwill as a reasonable and just amount.” (emphasis added) [77] It is also pertinent to note the judgment of Wong Kian Kheong JC (now JCA) in Schwan-STABILO Marketing Sdn Bhd & Anor v S 37! ! & Y Stationery & Ors [2018] 3 MLRH 306 where a sum of RM300,000.00 being the loss of goodwill and reputation was awarded to the 2nd Plaintiff: - “[48] As regards loss of the 2nd plaintiff ’s goodwill, I acknowledge that STABILO Trade Marks are world-renowned. As held in Taiping Poly, at para 37, the court will presume that there is damage to the 2nd plaintiff ’s goodwill due to the defendants’ passing off. Based on “ordinary business knowledge and common sense”, I assess loss of the 2nd plaintiff ’s goodwill as RM300,000.00 - please see Draper, at p 524.” (emphasis added) [78] In sum, learned counsel for the Plaintiffs urged this Court to exercise its discretion to assess and award damages in the sum of RM300,000.00 for the loss of goodwill and reputation suffered by the Plaintiffs. It was submitted that the said sum is reasonable, fair and justifiable, having regard to the loss of competitive edge and market exclusivity sustained by the Plaintiffs, a business with a legacy of almost 100 years as a direct consequence of the Offending Acts of the Defendant. [79] While I accept the Plaintiffs' submission that the quantum awarded in Taiping Poly in 2011 ought to be adjusted upward to reflect the passage of time and changes in monetary value, the leap from RM50,000.00 to RM300,000.00 — a six-fold increase — must be justified by the evidence and the circumstances of the particular case before this Court. The award in Taiping Poly itself was made in the context of a case involving an infringer who was in the 38! ! business of manufacturing and selling competing goods which is a fundamentally different factual matrix from the present case, where the Defendant is a small sole proprietor of a general merchandise kiosk at Plaza GM. [80] In assessing the quantum for loss of goodwill and reputation, I take into account the following factors: -

The Axe Brand Medicated Oil has been in existence for over 90 years, is a household name in Malaysia, and has substantial goodwill both domestically and internationally. This is not disputed by the Defendant and is accepted by this Court. The greater the goodwill, the more serious the potential harm from counterfeiting activities.

Both parties accepted that the Counterfeit Goods were deceptively similar to the genuine Axe Brand Medicated Oil. This similarity heightens the risk of consumer confusion and the potential for reputational damage. Consumers who purchase counterfeit products believing them to be genuine may experience inferior quality, and this negative experience would be attributed to the Plaintiffs' brand. The very fact that the Counterfeit Goods were almost indistinguishable from the genuine products makes the reputational risk more acute, not less.

As I have found in respect of the loss of business profit claim, the Defendant's infringement was limited in scale. Only 471 units of Counterfeit Goods were found at 1 out of 5 of the Defendant's 39! ! business branches. The Defendant is a small operator dealing in general merchandise, and the Axe Brand Medicated Oil was not the primary product of her business. The infringement, while undeniable, was modest in scope when compared to the overall market for the Plaintiffs' products.

The Defendant's premises is situated at Plaza GM, Chow Kit, Kuala Lumpur. While this is a commercial area with foot traffic, it is not a major retail chain or an online platform with national reach. The geographic and commercial reach of the Defendant's infringement is therefore limited.

It is well-settled that in passing off cases, damage to goodwill is presumed once the elements of passing off are established. The Plaintiffs need not prove actual, specific instances of reputational harm. This principle was affirmed in Erven Warnink Besloten Vennootschap v J Townend & Sons (Hull) Ltd [1979] AC 731 and has been consistently followed in Malaysian jurisprudence. However, while damage is presumed, the quantum of such damage must still be assessed with reference to the evidence and circumstances of the case. The presumption goes to the existence of damage, not to any particular quantum.

The Defendant's denial that the Plaintiffs' goodwill and reputation have been affected is, in the circumstances, a bare denial. The Defendant's liability for trademark infringement and passing off has been conclusively determined by the Order. Having been found liable for passing off, the Defendant cannot now deny that the Plaintiffs' goodwill has been interfered with. However, the 40! ! Defendant's contention that the damage to goodwill, if any, was not caused by the Defendant alone has some merit insofar as it relates to the assessment of quantum. The Plaintiffs' own letter to the Ministry dated 13 March 2023 identified several shops at Plaza GM involved in selling counterfeit products, indicating that the Defendant was not the sole source of counterfeit Axe Brand products in the market.

While damages in intellectual property cases are primarily compensatory in nature, it is also well-recognised that the quantum of damages awarded should serve as a deterrent against future infringement. The protection of registered trademarks is a matter of public policy, and the Court should not award a quantum so low as to make trademark infringement an attractive or cost-effective enterprise for infringers. As observed in AG Spalding & Bros v AW Gamage Ltd (supra), defendants are liable for all loss naturally and directly consequent upon their unlawful acts, including damage to reputation, goodwill, and trade connections. [81] The assessment of damages for loss of goodwill and reputation in trade mark infringement and passing off actions is not amenable to a blanket or formulaic application. There is no universal method of computation that can be uniformly imposed across all cases. Rather, the quantification of such loss must be approached on a case-by-case basis, with regard to the unique facts and circumstances of each dispute. 41! ! [82] Elaborating further on the above point, in Schwan-Stabilo Marketing Sdn Bhd & Anor v S&Y Stationery & Ors [2018] MLJU 319, Wong Kian Keong J (as he then was) gave a salutary reminder with respect to the use of precedents in the assessment of compensatory damages. His Lordship cautioned as follows: [16] Regarding reliance on previous cases on compensatory damages, I remind myself of the following:

(1)assessment of compensatory damages is not provided by written law. Hence, reference is made to case law. I must confess that I cannot reconcile all the cases regarding assessment of compensatory damages. Each case has its own peculiar facts and may be explained as such. In the Federal Court case of Taiping Poly (M) Sdn Bhd v Wong Fook Toh & Ors [2011] 3 CLJ 837, at paragraph 19 (regarding assessment of damages for trade mark infringement and tort of passing off), Richard Malanjum CJ (Sabah & Sarawak) held as follows- “And while it is quite easy to state the general principle the mechanics of ascertaining damages actually sustained by the plaintiff are not simple to determine. There is no hard and fast rule to follow which is foolproof and universally accepted. (See: AG. Spalding & Bros v A.W Gamage Ltd. [supra]; Juggi Lal-Kamlapat & Juggilal-Kamplapat Mills of Cawnpore v Swadeshi Company Ltd (1929) 46 RPC 74; Re Prince Manufacturing Inc and Tennisport Pty Limited v Abac Corporation Australia Pty Limited and the Liquidator Management Australia Pty Limited Trading as the Liquidator [supra]). It depends on the facts of each case. It is basically facts driven.” 42! !

(2)cases on assessment of damages should only be referred to as the court’s previous approach (not as a rule of law) in a similar factual situation. I cite Lord Wilberforce’s judgment in the House of Lords case of General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1975] 2 All ER 173, at 177, as follows - “Reported authorities, many of which were cited in argument, may be useful as illustrations of judicial reasoning, but are capable of misleading if decisions on a particular set of facts and observations in judgments leading up to such decisions are later relied on as establishing a rule of law. Nevertheless I think it useful to refer to some of the main groups of reported cases which exemplify the approaches of courts to typical situations.” [Underlined Emphasis Added] [83] The observations of Wong Kian Keong J are of considerable importance. They underscore that the assessment of compensatory damages, including damages for loss of goodwill and reputation which is inherently fact-sensitive. Prior decisions serve only as illustrations of how courts have previously approached similar factual scenarios. They are not to be treated as rigid precedents. The absence of statutory guidance on the computation of such damages makes it all the more imperative that each case be evaluated on its own merits, taking into account the specific nature and extent of the infringement, the market in which the parties operate, the degree of consumer confusion, and the actual harm suffered by the plaintiff's goodwill and reputation. 43! ! [84] On that score, no two cases are the same. I must highlight that this proposition is amply demonstrated by comparing the factual matrices of two decided cases. In!Perusahaan Otomobil Kedua Sdn Bhd & Anor v Lee Lap Kee (sole proprietor of and trading as Eco Auto Supply) [2024] MLJU 2797, the plaintiffs commenced an action against the defendant for trade mark infringement and passing off. The dispute arose from the defendant's acts of manufacturing, producing, reproducing, distributing, supplying, selling, and/or offering for sale counterfeit automotive lubricants bearing the plaintiffs' PERODUA trade marks and/or get-up, all of which were carried out without the plaintiffs' consent. [85] On or about 16 May 2019, the Enforcement Division of the Ministry of Domestic Trade and Cost of Living (previously known as the Ministry of Domestic Trade and Consumer Affairs) conducted a raid and seizure at the defendant's business premises, Eco Auto Supply. Eco Auto Supply is a sole proprietorship owned by the defendant, involved in the trading of automotive parts and lubricants. During the raid and seizure, various items were identified, seized, and removed from the defendant's business premises, including PERODUA brand cap liners, PERODUA brand empty bottles, PERODUA brand engine oil (finished products), lubricants siphoned from aluminium tanks, oil additives, base oil, gear oil, and various documents. [86] Following the raid and seizure, the defendant was charged under the Trade Descriptions Act 2011 at the Shah Alam Sessions Court for exposing for supply, or having in his possession, custody, or control for supply, automotive lubricants including PERODUA brand goods to which a false trade description was applied. The defendant 44! ! pleaded guilty to the charges and was sentenced to a fine of RM52,920. [87] Critically, it is important to note that the plaintiffs in that case were themselves involved in producing, marketing, distributing, supplying, selling, and/or offering for sale the PERODUA brand of automotive lubricants, which include engine oil, automatic transmission fluid, brake fluid, radiator coolant, and gear oil. At the material time, the defendant was also manufacturing, producing, reproducing, distributing, supplying, selling, and/or offering for sale counterfeit PERODUA automotive lubricants. As such, the plaintiffs and the defendant were direct competitors, vying for the same customer base within the same market segment. [88] It can safely be inferred that the sales of counterfeit PERODUA automotive lubricants made by the defendant would, in all probability, have been made by the plaintiffs, had it not been for the defendant's acts of infringement and passing off. The plaintiffs had suffered a loss of sales and business profits due to the diversion of customers from the plaintiffs to the defendant. In quantifying the plaintiffs' loss of business profits, the court accepted the plaintiffs' evidence on the sales of counterfeit PERODUA automotive lubricants, derived from the following items seized at the defendant's business premises during the raid and seizure: - a) The defendant's sales invoices, being invoices issued in 2016 and 2019 as well as undated invoices, which reflected 767 items sold by the defendant; and 45! ! b) The Ministry's seizure list, which showed 172 units of PERODUA empty bottles and 20 units of PERODUA finished products that were seized during the raid and seizure. [89] The point I would like to make is that the assessment of loss of goodwill and reputation in Perusahaan Otomobil Kedua was driven by a specific set of facts: the existence of a direct competitive relationship between the parties, evidence of diverted sales in the form of invoices and seized goods, and a criminal conviction that underscored the gravity of the defendant's infringing acts. [90] The factual senario in Schwan-Stabilo is different. In that case, the second plaintiff was a German company that manufactured and sold stationery products bearing, among others, various forms of trade marks registered in the second plaintiff's name under the TMA 1976. The first plaintiff, a Malaysian company and a subsidiary of the second plaintiff, distributed and sold the second plaintiff's goods in Malaysia. [91] The first defendant, a registered business operating as a partnership consisting of the second and third defendants, was in the wholesale and retail business of stationery products. Notably, the first defendant had previously purchased the second plaintiff's goods from the first plaintiff for resale to retailers and the public. In the course of that commercial relationship, the first defendant had accumulated an outstanding sum owed to the first plaintiff in respect of goods supplied. Being unable to repay the outstanding sum, the first defendant returned a quantity of purported second plaintiff's 46! ! goods to the first plaintiff by way of a "Goods Return Note" dated 27 December 2013. Upon inspection, the first plaintiff discovered that a portion of the returned goods were, in fact, counterfeit. [92] The nature of the infringement, the commercial relationship between the parties, and the manner in which the counterfeiting was discovered in Schwan-Stabilo were all different from those in Perusahaan Otomobil Kedua. In the former, the counterfeiting came to light through a return of goods within an existing supply chain relationship, rather than through a raid by the enforcement agency. The scale, method, and market impact of the infringement differed, and so too did the manner in which loss of goodwill and reputation was to be assessed. [93] The juxtaposition of these two cases points out to an important fact: What constitutes adequate evidence of damage to goodwill, how the market impact of counterfeiting is to be measured, and how reputational harm is to be quantified will inevitably vary according to the nature of the trade marks involved, the relationship between the parties, the scale and duration of the infringing conduct, the market segment in which the parties operate, and the availability of tangible evidence of loss. Courts must therefore assess each claim on its own facts, drawing upon prior authorities as useful illustrations of precedents. [94] Reverting to the present case, the factual matrix is plainly distinguishable from that of Perusahaan Otomobil Kedua and Schwan-Stabilo. Unlike the defendant in Perusahaan Otomobil Kedua, the Defendant here was not shown to be operating a business centred on the sale of the impugned goods; rather, she 47! ! was running a small business selling various forms of general merchandise, and the Axe Brand Medicated Oil was not the primary product of that business. Further, the Counterfeit Goods were found only at 1 out of the Defendant’s 5 branches. There is also no evidence in this case of criminal conviction that featured prominently in Perusahaan Otomobil Kedua. Unlike Schwan-Stabilo, this is not a case arising out of an established commercial or supply-chain relationship between the parties through which counterfeit goods were returned or traced. Looking at these facts objectively, it is clear that the present case is materially different from the authorities discussed above. [95] Having carefully weighed all the above factors, and balancing the undoubted harm to the Plaintiffs' goodwill against the limited scale of the Defendant's infringement, I am of the view that the sum of RM300,000.00 claimed by the Plaintiffs is excessive in the circumstances of this case. Equally, the sum of RM1,000.00 proposed by the Defendant is manifestly inadequate and fails to give proper recognition to the Plaintiffs' established goodwill and the presumed damage thereto arising from the Defendant's Offending Acts. [96] Taking a broad and fair view of the matter, and having regard to the Taiping Poly benchmark of RM50,000.00 in 2011 adjusted for the passage of approximately 14 years, the stature and longevity of the Axe Brand, the limited scale of the Defendant's infringement, and the need for proportionality, I assess the damages for loss of goodwill and reputation at the sum of RM100,000.00. 48! ! [97] This sum, in my judgment, adequately compensates the Plaintiffs for the interference with their goodwill caused by the Defendant's Offending Acts, while remaining proportionate to the scale and nature of the infringement committed by the Defendant. COUNTERMEASURE COSTS The Plaintiffs' Claim [98] The Plaintiffs claim the sum of RM7,305.00 as countermeasure costs. These are costs incurred by the Plaintiffs in connection with the investigation, detection, and verification of the Counterfeit Goods at the Defendant's premises, including the engagement of private investigators and the costs of the examination and verification of the seized Counterfeit Goods. [99] The Defendant contended that the countermeasure costs constitute special damages (gantirugi khas) which must be specifically pleaded in the Statement of Claim. Learned counsel for the Defendant argued that the Plaintiffs failed to plead these costs specifically in the Statement of Claim, and that these costs were incurred prior to the commencement of the proceedings. Therefore, the Defendant submitted that the Plaintiffs are not entitled to claim these costs at this stage. My Analysis 49! ! [100] Countermeasure costs are claimable in trademark infringement and passing off actions. Countermeasure costs includes 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 complained of; in other words, such damages as flow directly. (refer to case of AG Spalding & Bros v AW Gamage Ltd (1918) 35 RPC 101). [101] Countermeasure costs are costs incurred by the trademark proprietor in investigating, detecting, and verifying the infringement are a natural and direct consequence of the infringer's unlawful acts. But for the Defendant's Offending Acts, the Plaintiffs would not have needed to incur these costs. These costs are therefore, in principle, recoverable as part of the damages flowing from the infringement. [102] However, I must address the Defendant's argument that these costs constitute special damages which must be specifically pleaded. The general rule is that special damages, being pecuniary losses that are capable of substantially exact calculation, must be specifically pleaded and particularised. (refer cases of Ilkiw v Samuels [1963] 1 WLR 991 and Yew Wan Leong v Lai Kok Chye [1990] 2 MLJ 152) [103] Having reviewed the Statement of Claim, I note that the Plaintiffs have pleaded generally that they had suffered "substantial losses, 50! ! damages and injury" arising from the Defendant's Offending Acts. While a more specific pleading of the countermeasure costs would have been preferable, I am mindful that: -

The assessment proceedings are distinct from the trial on liability. The Order of the Court directed that damages be assessed, and the scope of the assessment is governed by the said Order and the evidence adduced in support thereof.

The Plaintiffs have adduced evidence of the countermeasure costs in the Plaintiffs affidavit in support, and the Defendant has had the opportunity to respond to this evidence in her Affidavit in Reply. There is no prejudice to the Defendant, as the Defendant was aware of the claim for countermeasure costs and had the opportunity to challenge the same.

The countermeasure costs are directly related to the Offending Acts and are a natural consequence thereof. They are not extraneous or unconnected to the infringement. [104] That said, I must also consider whether the quantum claimed (RM7,305.00) is reasonable and supported by the evidence. The Plaintiffs have exhibited documentary evidence in support of the countermeasure costs in the Plaintiffs affidavit in support. I have reviewed the same and find that the costs claimed relate to: -

The engagement of investigators to identify and verify the sale of the Counterfeit Goods at the Defendant's premises; 51! !

The examination and verification of the seized Counterfeit Goods following the Raid; and

Associated costs incurred in connection with the foregoing. [105] The Defendant has not challenged the quantum of the countermeasure costs with any specificity, other than to argue that they are not claimable in principle. Having considered the evidence, I find that the sum of RM7,305.00 is reasonable and proportionate to the investigative and verification work undertaken by the Plaintiffs in connection with the Defendant's infringement. [106] However, I note the Defendant's contention that these costs were incurred before the commencement of proceedings. While this is true, it does not render them irrecoverable. Costs of investigation and detection of infringement are routinely awarded as damages in intellectual property cases, as they are a direct consequence of the infringer's wrongful conduct. They are analogous to costs of mitigation, which are recoverable even if incurred before litigation is commenced. [107] In the premises, I allow the Plaintiffs' claim for countermeasure costs and assess the same at RM7,305.00. GENERAL DAMAGES The Plaintiffs' Claim 52! ! [108] The Plaintiffs claim the sum of RM50,000.00 as general damages. Learned counsel for the Plaintiffs submitted that general damages claimed are at large in cases of trademark infringement and passing off, and that this sum represents a fair and reasonable award to compensate the Plaintiffs for the overall injury, inconvenience, and disruption caused by the Defendant's Offending Acts. [109] The Defendant contended that the claim for general damages is duplicative and overlaps with the claims for loss of business profit and loss of goodwill and reputation. The Defendant argued that allowing a separate award for general damages would amount to double recovery, which is impermissible. My Analysis [110] The Defendant's objection on the ground of overlap and double recovery raises a legitimate concern. [111] In trademark infringement and passing off cases, the heads of damages typically include: -

Loss of business profit (being the economic loss suffered by the plaintiff due to the diversion of customers);

Loss of goodwill and reputation (being the damage to the plaintiff's intangible business assets); and 53! !

General damages (being damages at large to compensate for the overall injury caused by the infringement, including matters that are not readily quantifiable under the specific heads above). [112] The question is whether, having awarded damages under heads (a) and (b) above, a separate award under head (c) would amount to compensating the Plaintiffs twice for the same loss. [113] I am mindful of the principle that damages must not be duplicative. The aim of compensatory damages is restitutio in integrum — to put the injured party in the position they would have been in had the wrong not occurred. The Court must not award damages that, in aggregate, exceed the totality of the loss suffered. [114] In the present case, I have already awarded: -

RM30,000.00 for loss of business profit (covering the economic loss due to the diversion of customers); and

RM100,000.00 for loss of goodwill and reputation (covering the presumed and actual damage to the Plaintiffs' intangible business assets). [115] The Plaintiffs' claim for RM50,000.00 as general damages is worded in broad terms, without identifying of losses that are distinct from those already compensated under the above two heads. The Plaintiffs have not satisfactorily particularised what additional losses the general damages are intended to compensate, over and above 54! ! those already addressed by the awards for loss of business profit and loss of goodwill and reputation. [116] I note the Plaintiffs' submission that general damages are "at large" in passing off and trademark infringement cases. While this is correct as a general proposition, it does not follow that a separate, additional award of general damages is always warranted where specific heads of damage have already been assessed and awarded. The concept of damages "at large" typically means that the Court has a broad discretion in assessing the quantum, not that a separate and additional award is automatically justified. [117] In my judgment, the losses suffered by the Plaintiffs as a consequence of the Defendant's Offending Acts have been adequately compensated through the awards for loss of business profit and loss of goodwill and reputation. The general damages claimed by the Plaintiffs are, in substance, duplicative of the losses already compensated. [118] However, I recognise that there may be certain incidental losses and inconveniences suffered by the Plaintiffs that do not fall neatly within the specific heads of loss of business profit and loss of goodwill, such as: -

The general disruption and inconvenience to the Plaintiffs' business operations caused by the need to deal with the infringement; 55! !

The diversion of management time and resources to address the infringement, over and above the specific countermeasure costs; and

The inherent difficulty in quantifying the full extent of harm caused by the circulation of counterfeit goods in the market. [119] In recognition of these incidental but real losses, and exercising the Court's discretion to assess damages liberally as endorsed in Taiping Poly, I am of the view that a modest award of general damages is justified to ensure that the Plaintiffs are adequately compensated. However, the sum of RM50,000.00 claimed is excessive when viewed alongside the other awards made. [120] Accordingly, I assess general damages at the sum of RM25,000.00. This sum is intended to compensate the Plaintiffs for the residual, non-quantifiable losses and inconveniences arising from the Defendant's Offending Acts that are not already covered by the specific awards for loss of business profit, loss of goodwill and reputation, and countermeasure costs. SUMMARY OF AWARD [121] In summary, having carefully considered all the evidence, submissions, and authorities cited by both parties, I assess the damages payable by the Defendant to the Plaintiffs as follows: - 56! !

Loss of Business Profit 157,638.42 30,000.00

Loss of Goodwill and Reputation 300,000.00 100,000.00

Countermeasure Costs 7,305.00 7,305.00

General Damages 50,000.00 25,000.00 TOTAL 514,943.42 162,305.00 [122] The total quantum of damages assessed is RM162,305.00. [123] Pursuant to section 11 of the Civil Law Act 1956 and the established practice of this Court, I award interest on the sum of RM162,305.00 at the rate of 5% per annum from the date of the judgement until the date of full realisation. [124] Costs to the Plaintiffs in the sum of RM 10,000.00. Dated this day of 31st March 2026. -sgd-EDWIN PARAMJOTHY MICHAEL MUNIANDY JUDICIAL COMMISSIONER COMMERCIAL DIVISION (NCC 7) HIGH COURT OF MALAYA KUALA LUMPUR 57! ! 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)