Reflex Media, Inc. v Endeavor Standard Sdn. Bhd. (WA-22IP-2-02/2023)

Reflex Media, Inc.

Clover8 Investments Pte. Ltd. … Plaintiffs

Endeavor Standard Sdn. Bhd. (Company No.: 201501006364 (1131696M))

Chan Eu Boon (NRIC No.: 870901-35-5343) … Defendants GROUNDS OF JUDGMENT A. Introduction [1] With the ubiquitous nature of the internet and rapid technological developments, cross-border online commercial activities and transactions have become the norm. The question before this court is therefore highly relevant to today’s way of doing business – namely, whether a party’s presence in a foreign jurisdiction can be established where the party S/N qqJItkZkCeqz0bs7a8ZQ ! operates a domain address or website which leads to commercial dealings between the party and residents of that foreign jurisdiction. [2] This question arose in the plaintiffs’ application filed under order 14A and/or order 33 rule 2 of the Rules of Court 2012 (“ROC”), for questions to be determined by the court without a full trial (“Order 14A Application”). The parties agreed on the questions, which are set out in a consent order in enclosure 112 (“Consent Order”). [3] The court answered the question in the affirmative, and found that the defendants, who entered into commercial transactions with residents of the United States of America (“U.S.”) through their websites, had sufficiently established their presence in the U.S., and that the U.S. court had jurisdiction over the defendants. Following this finding, the court enforced the judgment obtained in the U.S. court against the defendants for infringement of the plaintiffs’ trademarks. B. Background Facts [4] The 1st plaintiff is a corporation incorporated in Nevada, U.S. It operates several online dating websites, including www.SeekingArrangement.com (“Seeking Arrangement Website”). [5] The 2nd plaintiff is a corporation incorporated in Singapore. It is the registered owner of the following trademarks registered in the U.S. which are used by the 1st plaintiff in conjunction with the operation of several websites, including the Seeking Arrangement Website: S/N qqJItkZkCeqz0bs7a8ZQ ! a. “MUTUALLY BENEFICIAL RELATIONSHIPS”, with U.S. trademark registration no. 3,736,566; and b. “RELATIONSHIP ON YOUR TERMS”, with U.S. trademark registration no. 4,851,998 (collectively, the “Plaintiffs’ Trademarks”). [6] The 1st defendant is a company incorporated in Malaysia. It owns and operates the domain addresses and websites found at www.TheSugarBook.com (“Sugar Book Website”) and www.Sugarficial.com (collectively, the “Defendants’ Websites”). The Defendants’ Websites are online dating platforms for people to meet, connect and build relationships, similar to the Seeking Arrangement Website. [7] The 2nd defendant is a director of the 1st defendant. [8] On 23 March 2018, the plaintiffs filed a suit against the defendants (“U.S. Suit”) at the U.S. District Court for the Central District of California (“U.S. Court”) for trademark infringement, false advertising and unfair competition in respect of, amongst others, the defendants’ use of the Plaintiffs’ Trademarks on the Sugar Book Website (“Plaintiffs’ Complaint”). [9] The Plaintiffs’ Complaint was served on the defendants in Malaysia pursuant to an order dated 4 December 2018 granted by the U.S. Court. The defendants did not defend themselves in the U.S. Suit, and on 30 August 2019, the U.S. Court entered a default judgment against S/N qqJItkZkCeqz0bs7a8ZQ ! the defendants (“U.S. Judgment”) and ordered them to, amongst others, pay the following sums to the plaintiffs: a. Statutory damages in the sum of USD4,000,000; b. Attorneys’ fees in the sum of USD83,600; and c. Costs in the sum of USD3,122. [10] The U.S. Judgment was served on the defendants in Malaysia. The defendants have not satisfied the U.S. Judgment. C. Proceedings In Malaysia [11] There are two processes to enforce a foreign judgment in Malaysia. The first is by way of the Reciprocal Enforcement of Judgments Act 1958 (“REJA”), which only applies where a foreign judgment is obtained from one of the jurisdictions listed in the First Schedule of the REJA. In such a case, an application can be made to the High Court to register the foreign judgment. [12] If the foreign judgment is not obtained from one of the reciprocating countries in the REJA, then the party seeking to enforce the judgment is required to file an action in common law in Malaysia upon the judgment (see See Hua Daily News Bhd v Tan Thien Chin [1986] 2 MLJ 107 and Pembinaan SPK Sdn Bhd v Conaire Engineering Sdn Bhd-LLC [2023] 2 MLJ 324). S/N qqJItkZkCeqz0bs7a8ZQ ! [13] As the U.S. Judgment was issued by a court in the U.S., and the U.S. is not one of the jurisdictions listed in the First Schedule of the REJA, the plaintiffs commenced this action to enforce the U.S. Judgment against the defendants in Malaysia. [14] In the course of proceedings, the plaintiffs filed the Order 14A Application, for this suit to be disposed of by way of a determination by the court of the proposed questions set out in the Schedule of the application. [15] The Order 14A Application is filed under order 14A and/or order 33 rule 2 of the ROC. Order 14A allows the court to determine any question of law arising in any cause or matter without a full trial of the matter. Under order 33 rule 2, the court may order any question or issue arising in a cause or matter to be tried before, at or after the trial of the cause or matter. [16] The parties consented to this suit being disposed of under order 14A and/or order 33 rule 2 of the ROC, and entered into an amended consent order in enclosure 112 (“Consent Order”). Under the Consent Order, the parties consented to the questions in the Schedule of the Consent Order being determined without a full trial (“Questions”). D. The Questions [17] The Questions, as agreed between the parties and set out in the Schedule of the Consent Order, are as follows: S/N qqJItkZkCeqz0bs7a8ZQ ! a. In determining whether a foreign court has jurisdiction over a defendant against whom a judgment issued by the said foreign court is sought to be enforced in Malaysia, whether the Malaysian conflict of law rules or the laws of the said foreign country are to be applied (“Question 1”). b. In the event the Malaysian conflict of law rules are to be applied in determining the issue of jurisdiction of the foreign court, is the requirement of the defendant’s presence in the foreign jurisdiction satisfied by virtue of the defendant’s commercial and/or transactional relationship with the residents of the said foreign country through the defendant’s operation of its domain addresses and/or websites which are accessible by the residents of the said foreign country (“Question 2”). c. Whether the U.S. Judgment is enforceable in Malaysia having regard to the nature of the statutory damages awarded by the U.S. Court (“Question 3”). E. Question 1: Do The Malaysian Conflict Of Law Rules Apply In The Determination Of The Jurisdiction Of A Foreign Court? [18] The answer to Question 1 has been agreed by the parties. The parties agree that the Malaysian conflict of law rules apply in the determination of whether a foreign court has jurisdiction over a defendant, against whom a judgment issued by the said foreign court is sought to be enforced in Malaysia. S/N qqJItkZkCeqz0bs7a8ZQ ! [19] Although this question has been answered by the parties, I will nonetheless briefly consider the question and examine the parties’ reasoning which had led them to conclude that the Malaysian conflict of law rules apply. [20] The U.S. Judgment was issued by a court in the U.S., and as the U.S. is not one of the jurisdictions listed in the First Schedule of the REJA, the plaintiffs filed this action to enforce the U.S. Judgment against the defendants in Malaysia. The Federal Court in Pembinaan SPK explained the process of enforcement of a foreign judgment that does not fall within the REJA regime: “[12] While REJA serves to facilitate direct execution of foreign judgments, it is only in respect of those reciprocating countries listed in the First Schedule to the Act. The right to sue in common law upon a judgment obtained in another jurisdiction nevertheless, remains. Of course, a claimant can always opt to sue upon the underlying cause, be it in tort, contract or for any other complaint without relying on the foreign judgment. [13] At common law, a foreign judgment is treated as an implied obligation to pay a debt, that debt being the sum awarded by the foreign court. Sans REJA, that foreign judgment cannot be enforced as a judgment. That foreign judgment only creates a debt between the same parties. It provides a cause of action on which the debtor can be sued on our shores. It is the judgment that is obtained from our courts and not the foreign judgment that is enforceable as a judgment in this country.” S/N qqJItkZkCeqz0bs7a8ZQ ! (emphasis added) [21] In an action to enforce a foreign judgment, the High Court held in PT Sandipala Arthaputra v Muehlbauer Technologies Sdn Bhd [2021] MLJU 1063 that the common law rules apply: “[9] Foreign judgments obtained in countries other than the countries listed in the First Schedule, have to be enforced through the common law rule. The foreign judgment provides the cause of action itself. In order for the foreign judgment to have the force of law locally, the judgment creditor is required to obtain a local judgment recognizing the foreign judgment in Malaysia. Armed with the local judgment recognising the foreign judgment, the judgment creditor could now enforce the local judgment just like any judgement creditor enforcing a judgment in Malaysia. It is said that “the foreign judgment, if it satisfies the requirement of the common law, is understood to create an obligation, a tie of law, by which the parties are bound and which may be enforced” (see Adrian Briggs, The Conflict of Laws, 4th Ed, Clarendon Law Series, 2019, 131). … [36] This Court is of the considered view that the law in relation to enforcement of a foreign judgment by way of statutory enforcement is not the same with the common law rule for recognition of foreign judgments. Each has its own set of rules. The former is a statute law, and its principles are expounded by S/N qqJItkZkCeqz0bs7a8ZQ ! local cases. The latter is purely based on the English common law rule that has been applied in Malaysia.” (emphasis added) [22] After referring to the judgment of the Singapore High Court in Humpuss Sea Transport Pte Ltd (in compulsory liquidation) v PT Humpuss Intermoda Transportasi TBK [2016] SGHC 229 [2016] 5 SLR 1322, the court in PT Sandipala further held at paragraph [14] that the considerations to be taken by the court in the enforcement of a foreign judgment under the common law rules are: a. Whether the foreign judgment is a final and conclusive judgment; b. Whether the foreign court has jurisdiction which is in accord with the private international law of Malaysia; and c. Whether there is any defence to its recognition. [23] It has also been highlighted in leading textbooks that the question of whether a foreign court has jurisdiction must be determined in accordance with the private international law of the forum court recognising the judgment: a. Dicey, Morris and Collins on the Conflict of Laws (16th edition, 2022) (“Dicey”), at paragraph 14-059: S/N qqJItkZkCeqz0bs7a8ZQ ! “A fundamental requirement for the recognition or enforcement of a foreign judgment in England at common law is that the foreign court should have had jurisdiction according to the English rules of the conflict of laws …” b. RH Hickling, Wu Min Aun, Conflict of Laws in Malaysia (1995), at page 102: “... at common law, a Malaysian court will enforce a foreign judgment only if:

The foreign court had jurisdiction by Malaysian conflict of law rules, and

The judgment is final and conclusive, and if in personam, is for a definite sum of money that is a not a tax, fine or other penalty.” c. Adrian Briggs, The Conflict of Laws (3rd edition, 2013), at page 167: “A judgement will be recognized at common law if it is the final and conclusive decision of a court which, as a matter of English private international law, had "international jurisdiction", and as long as there is no sustainable defence to its recognition …” S/N qqJItkZkCeqz0bs7a8ZQ ! [24] In view of the clear authorities set out above, I accept the answer to Question 1 which was agreed by the parties, that the private international law rules of Malaysia or in other words the common law rules applied in Malaysia, are applicable in determining whether a foreign court has jurisdiction over a defendant in respect of the enforcement of a foreign judgment in Malaysia. F. Question 2: Is The Requirement Of Presence In A Foreign Jurisdiction Satisfied Where Commercial Transactions Are Carried Out Through Websites? The general position [25] Question 2 is the question which is of most serious contention between the parties. In this question, the court is required to determine whether a defendant’s presence in a foreign jurisdiction is satisfied by virtue of the defendant’s commercial and/or transactional relationship with residents of the foreign jurisdiction through domain name addresses or websites. [26] The general position at common law on the establishment of the jurisdiction of a foreign court is set out in Dicey, Rule 47, at paragraph 14R-058. This position was referred to in paragraph [21] of PT Sandipala. [27] According to Rule 47 of Dicey, the court of a foreign country has jurisdiction to give judgment capable of enforcement or recognition as against the person against whom it was given, in the following cases: S/N qqJItkZkCeqz0bs7a8ZQ ! “First Case – If the person against whom the judgment was given was, at the time the proceedings were instituted, present in the foreign country. For a natural person this requires physical presence in the territory, and for a legal person it requires a fixed place of business in the territory. Second Case – If the person against whom the judgment was given was claimant, or counterclaimed, in the proceedings in the foreign court. Third Case – If the person against whom the judgment was given, submitted to the jurisdiction of that court by voluntarily appearing in the proceedings. Fourth Case – Subject to Rule 58, if the person against whom the judgment was given, had before the commencement of the proceedings agreed, in respect of the subject matter of the proceedings, to submit to the jurisdiction of that court or of the courts of that country.” (emphasis added) [28] The First Case relates directly to Question 2. Applying the First Case to the matter before this court, the defendants, against whom the U.S. Judgment was given must have been present in the U.S. when the proceedings against them were instituted. [29] The requirement for the defendants to have presence in the US is not disputed by the parties. The issue in dispute is whether this presence S/N qqJItkZkCeqz0bs7a8ZQ ! is satisfied by virtue of the defendants’ commercial and/or transactional relationship with U.S. residents through the operation of the Defendants’ Websites, which are accessible by U.S. residents. [30] In assessing this issue, I considered the reason for the long-accepted principle that the court of a foreign country would have jurisdiction over a party present in that country – which is that the party would be able to enjoy the benefits arising out of his presence in that jurisdiction. As such, that party cannot then evade responsibilities and obligations which follow from that presence, and must be taken to be amenable to the process of the courts in that foreign jurisdiction. [31] This has been expressed by the English courts in various cases. In Schibsby v Westenholz [1870] LR 6 QB 155, it was held that: “… if the defendants had been at the time when the suit was commenced resident in the country, so as to have the benefit of its laws protecting them, or, as it is sometimes expressed, owing temporary allegiance to that country, we think that its laws would have bound them.” (emphasis added) [32] This principle was expanded in Carrick v Hancock [1895] 12 TLR 59, a case involving an action commenced in Sweden against an Englishman, in respect of business transacted in Sweden. The court held at page 60 that: S/N qqJItkZkCeqz0bs7a8ZQ ! “… the jurisdiction of a Court was based upon the principle of territorial dominion, and that all persons within any territorial dominion owe their allegiance to its sovereign power and obedience to all its laws and to the lawful jurisdiction of its Courts. In his opinion that duty of allegiance was correlative to the protection given by a state to any person within its territory. This relationship and its inherent rights depended upon the fact of the person being within its territory.” (emphasis added) [33] The cases above involve the enforcement of judgments against individuals. However, the reasoning that he who has benefitted as a result of his presence in a foreign jurisdiction must be taken to be amenable to the process of the courts in that jurisdiction, would also apply to commercial entities. The requirement relating to the presence of a commercial entity [34] In respect of a commercial entity, its presence in a foreign jurisdiction has been accepted to mean the entity carrying on business in that jurisdiction. [35] Paragraph 14-069 of Dicey states that: “Presence – legal persons. Where a corporation is concerned neither residence nor presence has, of course, any real meaning. But there is a long line of cases dealing with the question whether a foreign corporation does or does not carry on business in S/N qqJItkZkCeqz0bs7a8ZQ ! England so as to render itself amenable to the jurisdiction of the English courts at common law. The principle of these cases applies also to the question whether a corporation is present in a foreign country so as to give its courts jurisdiction over it.” (emphasis added) [36] In Okura & Co Ltd v Forsbacka Jernverks Aktiebolag [1914] 1 KB 715, the English Court of Appeal set out the requirements to be considered in determining whether a corporation is present in a jurisdiction, at page 718: “… The point to be considered is, do the facts shew that this corporation is carrying on its business in this country ? In determining that question, three matters have to be considered. First, the acts relied on as shewing that the corporation is carrying on business in this country must have continued for a sufficiently substantial period of time. That is the case here. Next, it is essential that these acts should have been done at some fixed place of business. If the acts relied on in this case amount to a carrying on of a business, there is no doubt that those acts were done at a fixed place of business. The third essential, and one which it is always more difficult to satisfy, is that the corporation must be “here” by a person who carries on business for the corporation in this country …” (emphasis added) S/N qqJItkZkCeqz0bs7a8ZQ ! [37] From Okura, the pertinent issue to be considered in determining the jurisdiction of a court is whether the corporation carries on business in that jurisdiction. As the case was decided in the early 1900s when businesses were commonly conducted in physical premises, it is of no surprise that the court concluded that carrying on business in a jurisdiction must mean having a fixed place of business in that jurisdiction. [38] The court in Littauer Glove Corporation v F. W. Millington

Ltd [1928] 44 TLR 746 considered the principles in Okura and adopted the same approach, placing emphasis on there being some business in the foreign country, rather than a fixed place of business. The court held: “… He (his Lordship) did not rely on the expression “fixed place”, but on what was the fair meaning of “residence”. The inference which he drew from the cases cited was that there must be some carrying on of business at a definite and, to some reasonable extent, permanent place …” (emphasis added) [39] In a relatively more recent decision which is relied on by the defendants, Adams v Cape Industries plc [1991] 1 All ER 929, the English Court of Appeal considered whether an English corporation trading in the U.S. through its subsidiary and independent marketing representative could be considered to have presence in the U.S. After considering a long line of authorities, the court formulated the following general principles relating to the presence of a corporate defendant: S/N qqJItkZkCeqz0bs7a8ZQ ! “(1) The English court will be likely to treat a trading corporation incorporated under the law of one country (an overseas corporation) as present within the jurisdiction of the courts of another country only if either (i) it has established and maintained at its own expense (whether as owner or lessee) a fixed place of business of its own in the other country and for more than a minimal period of time has carried on its own business at or from such premises by its servants or agents (a 'branch office' case), or (ii) a representative of the overseas corporation has for more than a minimal period of time been carrying on the overseas corporation's business in the other country at or from some fixed place of business.

In either of these two cases presence can only be established if it can fairly be said that the overseas corporation's business (whether or not together with the representative's own business) has been transacted at or from the fixed place of business. In the first case, this condition is likely to present few problems. In the second, the question whether the representative has been carrying on the overseas corporation's business or has been doing no more than carry on his own business will necessitate an investigation of the functions which he has been performing and all aspects of the relationship between him and the overseas corporation.

In particular, but without prejudice to the generality of the foregoing, the following questions are likely to be relevant on such investigation: (a) whether or not the fixed place of business from S/N qqJItkZkCeqz0bs7a8ZQ ! which the representative operates was originally acquired for the purpose of enabling him to act on behalf of the overseas corporation; (b) whether the overseas corporation has directly reimbursed him for (i) the cost of his accommodation at the fixed place of business, and (ii) the cost of his staff; (c) what other contributions (if any) the overseas corporation makes to the financing of the business carried on by the representative; (d) whether the representative is remunerated by reference to transactions (eg by commission) or by fixed regular payments or in some other way; (e) what degree of control the overseas corporation exercises over the running of the business conducted by the representative; (f) whether the representative reserves (i) part of his accommodation, or (ii) part of his staff for conducting business related to the overseas corporation; (g) whether the representative displays the overseas corporation's name at his premises or on his stationery, and if so, whether he does so in such a way as to indicate that he is a representative of the overseas corporation;

what business (if any) the representative transacts as principal exclusively on his own behalf; (i) whether the representative makes contracts with customers or other third parties in the name of the overseas corporation, or otherwise in such manner as to bind it; (j) if so, whether the representative requires specific authority in advance before binding the overseas corporation to contractual obligations. This list of questions is not exhaustive, and the answer to none of them is necessarily conclusive … Every case of this character is likely to involve 'a nice examination of all the facts, and S/N qqJItkZkCeqz0bs7a8ZQ ! inferences must be drawn from a number of facts adjusted together and contrasted': La Bourgogne [1899] P 1 at 18 per Collins LJ.” (emphasis added) [40] From Adams, for a corporation to be present in a foreign jurisdiction, the corporation must carry on business within that jurisdiction, and “carrying on business” means that the corporation has established and maintained a fixed place of business for more than a minimal period of time. Even if the corporation does not have a fixed place of business within the foreign jurisdiction, it may still be regarded as being present in that jurisdiction if its agent or representative is carrying on the corporation’s business within that jurisdiction for more than a minimal period of time. The new way of doing business [41] The cases referred to above placed emphasis on there being a fixed place of business in the foreign jurisdiction, before presence can be established. This is expected, given that businesses at that time were carried out in physical premises. In the present day, technological advancements have resulted in many businesses having online presence, or even functioning entirely through electronic mediums. Many businesses now operate across borders, without having any physical presence in jurisdictions where they are conducting business or entering into commercial transactions. S/N qqJItkZkCeqz0bs7a8ZQ ! [42] This new way of doing business has been recognised by courts in other common law jurisdictions, with the courts in Australia and Hong Kong approaching the concept of “carrying on business” without placing emphasis on there having to be a fixed place of business or physical presence in a jurisdiction. [43] In Facebook Inc v Australian Information Commissioner [2022] FCAFC 9, the Federal Court of Australia asked the following question: “[74] Is it possible to conduct business in Australia without having any physical presence within the jurisdiction? The primary judge concluded that ‘the means by which entities carry on business are constantly evolving’. He then observed that many of the cases in which the concept of carrying on business was discussed were ‘decided long before the technological advances which underpin many forms of commerce’. I agree with his Honour. The concept of carrying on business must, of necessity, take its shape from the business being conducted …” (emphasis added) [44] The scope of what constituted “carrying on business” was examined in two earlier cases decided by the Australian courts, namely Re Gebo Investments (Labuan) Ltd v Signatory Investments Pty Ltd [2005] NSWSC 544 and Valve Corp v Australian Competition and Consumer Commission [2017] FCAFC 224 – both of which were referred to in Facebook. S/N qqJItkZkCeqz0bs7a8ZQ ! [45] In Re Gebo Investments, the Supreme Court of New South Wales held that: “[31] … Case law makes it clear that the territorial concept of carrying on business involves acts within the relevant territory that amount to or are ancillary to transactions that make up or support the business …” (emphasis added) [46] The court went on to hold, at paragraph [33], that the carrying on of business must involve some physical activity in Australia through human instrumentalities, being the activity that itself forms part of the course of conducting business. [47] In Valve Corp, the Federal Court of Australia referred to the passage in paragraph [31] of Gebo Investments with approval, but disagreed with the emphasis placed by the Supreme Court of New South Wales on the requirement for “human instrumentalities”. The court held that: “[149] Although Gebo Investments concerned different statutory provisions, we consider the discussion of principles regarding carrying on business generally to be of assistance for present purposes. We do not, however, see the reference to “human instrumentalities” in the last sentence of [33] as laying down an inflexible rule or condition as to the circumstances in which an overseas company may be taken to be carrying on business in Australia. We would instead place emphasis on the S/N qqJItkZkCeqz0bs7a8ZQ ! statement at [31] of Gebo Investments that the case law makes clear that the territorial concept of carrying on business involves acts within the relevant territory that amount to, or are ancillary to, transactions that make up or support the business.” (emphasis added) [48] The Federal Court went on to find at paragraph [150] that Valve Corporation, a company based in Washington, U.S. was indeed carrying on business in Australia, in view of amongst others, the number of customers it had in Australia (2.2 million) and the significant and ongoing revenue it earned as a result. The court held that: “[151] These facts and matters establish that Valve had a business presence in Australia. Not only did Valve engage in transactions with a large number of Australian consumers, it owned servers in Australia upon which Steam content was “deposited” when requested by its Australian customers. There was a series or a repetition of acts in Australia that formed part of the conduct of Valve’s business.” (emphasis added) [49] A similar approach was taken in Hong Kong, in Nagravision SA v Zhuhai Gotech Intelligent Technology Co Ld [2018] HKCU 2307. In this case, the plaintiff commenced an action to enforce a judgment entered by the U.S. District Court of the Southern District of Texas against the defendants for copyright infringement. The defendants were involved S/N qqJItkZkCeqz0bs7a8ZQ ! in the production, supply and distribution of set-top boxes, which are used to view television or video services, whether free-to-air (i.e. without payment) or through paid subscriptions for services. The business was carried out through a network of servers. The court found as follows: “[77] I also have regard to the very nature of the “G-Share’ business of the defendants that gives rise to the claims of the plaintiff. It is not comparable to an old style 'bricks and mortar' business nor does it require anything in the nature of 'boots on the ground' to operate. It is also very different from the business of Mr Ainsworth that simply involved making use of the world-wide nature of the internet in order to advertise his product for sale to anyone worldwide. And finally it is also very different from the business of the company which is the subject of the decision in Campbell v Gebo Investments (Labuan) Limited which sought to solicit customers (who might have been anywhere in the world, though the court there was only concerned with Australia) to purchase (making payment by credit card over the internet) imaginary shares on a simulated stock market (which was later described as nothing more than a pyramid scheme i.e. fraud). [78] The alleged illicit business of the defendants, while in part internet based, does not operate by making use of a single server or small number of servers that might be located anywhere in the world but consists of a substantial and sophisticated network of computer infrastructure both software and hardware that seemingly was deliberately positioned in the United States and was operated both locally by contractors in the United S/N qqJItkZkCeqz0bs7a8ZQ ! States acting on instructions as well as remotely. And in so far as the business was operated ‘remotely’, the evidence so far available as to from where in fact such remote control was exercised is also far from clear. It certainly does not appear to follow that it was only ever from within the PRC or was never in fact from within the United States itself.” (emphasis added) [50] The court then went on to hold that the plaintiff has made out a good arguable case of the defendants’ presence in the U.S., as there was substantial evidence of a local and/or physical connection or activities that form part of the course of conducting business in the U.S. Referring to Adams, the court held that: “[80] … each case requires careful investigation and consideration of the particular facts including the nature of activities undertaken and the relationship between any entities or persons within the jurisdiction and those overseas against whom judgment is sought to be enforced …” [51] From the authorities cited, the position at common law is that the presence of a corporate entity in a jurisdiction is satisfied if the entity carries on business in that jurisdiction for a fixed minimum period in a fixed or physical place of business. Though a useful starting point to determine presence, I am of the view that the approach in Dicey and the cases that followed should not be taken as laying down an inflexible rule or condition as to the circumstances in which a party can be said to have presence in S/N qqJItkZkCeqz0bs7a8ZQ ! a foreign jurisdiction, particularly in the imposition of the requirement of a party’s “physical presence” or “fixed place of business”. [52] Such an approach no longer reflects the practical realities of how trade and commerce are carried out in today’s era of rapid technological development and globalisation. In this regard, it is important that common law continues to evolve to address the legal challenges brought about by the advancements of the internet and digital technologies. [53] This sentiment was expressed by Australia’s highest court in Dow Jones & Company Inc v Gutnick [2002] 194 ALR 433. The case involves the publication of an article on WSJ.com, an online subscription-based news site, which the respondent who lived in Victoria, Australia, claimed to have defamed him. In agreeing with the lower courts that the jurisdiction of the Supreme Court of Victoria was regularly invoked in the commencement of the action in Australia, the High Court of Australia placed emphasis on the importance of common law adapting to the legal challenges brought about by the advancement of the internet. The court held: “[90] The appellant accepted that it was requesting this court to take a large step in re-expressing the principles of the common law. However, it argued that the court should seek a bold solution because of the revolutionary character of the technology that had produced the need to do so. Because the common law adapts even to radically different environments, this court was asked to be no less bold than the technologists who had invented and developed the Internet. We were reminded of Judge Learned Hand's observation: S/N qqJItkZkCeqz0bs7a8ZQ ! The respect all men feel in some measure for customary law lies deep in their nature; we accept the verdict of the past until the need for change cries out loudly enough to force upon us a choice between the comforts of further inertia and the irksomeness of action. … [92] The idea that this court should solve the present problem by reference to judicial remarks in England in a case, decided more than 150 years ago, involving the conduct of the manservant of a duke, despatched to procure a back issue of a newspaper of minuscule circulation, is not immediately appealing to me. The genius of the common law derives from its capacity to adapt the principles of past decisions, by analogical reasoning, to the resolution of entirely new and unforeseen problems. When the new problem is as novel, complex and global as that presented by the Internet in this appeal, a greater sense of legal imagination may be required than is ordinarily called for. Yet the question remains whether it can be provided, conformably with established law and with the limited functions of a court under the Australian constitution to develop and re-express the law. … [112] I accept that a number of arguments support this proposition. Involved in responding to it are important questions S/N qqJItkZkCeqz0bs7a8ZQ ! of legal principle and policy. The proposition cannot be answered by an enquiry limited to expressions of past law. When a radically new situation is presented to the law it is sometimes necessary to think outside the square. In the present case, this involves a reflection upon the features of the Internet that are said to require a new and distinctive legal approach …” (emphasis added) [54] The High Court of Australia went on to highlight the urgent need to develop new rules to address legal problems posed by the internet: “[119] The urgency of a new rule: To wait for legislatures or multilateral international agreement to provide solutions to the legal problems presented by the Internet would abandon those problems to “agonizingly slow” processes of lawmaking. Accordingly, courts throughout the world are urged to address the immediate need to piece together gradually a coherent transnational law appropriate to the “digital millennium”. The alternative, in practice, could be an institutional failure to provide effective laws in harmony, as the Internet itself is, with contemporary civil society — national and international. The new laws would need to respect the entitlement of each legal regime not to enforce foreign legal rules contrary to binding local law or important elements of local public policy. But within such constraints, the common law would adapt itself to the central features of the Internet, namely its global, ubiquitous and reactive characteristics. In the face of such S/N qqJItkZkCeqz0bs7a8ZQ ! characteristics, simply to apply old rules, created on the assumptions of geographical boundaries, would encourage an inappropriate and usually ineffective grab for extra-territorial jurisdiction.” (emphasis added) [55] What is presented before this court is a legal issue that arises from the advancements of the internet and digital technologies, which have resulted in businesses being able to operate globally and across borders without having a fixed place of business or physical presence in the foreign jurisdictions in which they are operating. Since the internet boom in the 1990s, digital technology has developed and will continue to develop at a rapid pace. The law has been playing catch-up with technology, and as such, it is more important than ever that common law evolves to address the challenges brought about by these rapid changes. [56] This does not however mean that the approach in Dicey and earlier common law cases are completely disregarded. The starting point under common law is that an entity must be carrying on business in a foreign jurisdiction for its presence to be established in that jurisdiction. This starting point does not change. It is only the scope of what entails the carrying on of business in a foreign jurisdiction that must change, to adapt to the new commercial realities of today’s digital and globalised world. [57] It is on this basis that I find that it is not necessary for a corporate entity to have a fixed place of business in a foreign country before jurisdiction can be founded. The presence of a corporate entity in a foreign jurisdiction can be established if that corporate entity, though not S/N qqJItkZkCeqz0bs7a8ZQ ! physically present in the foreign jurisdiction, nonetheless actively carries on commercial activities and/or enters into transactions with residents of that jurisdiction, which make up or support the corporate entity’s business. This same principle also applies to individuals who carry on business in a foreign jurisdiction, as the nature of e-commerce allows individuals to carry on business across borders in the same manner as corporate entities. [58] The defendants relied on Lucasfilm Ltd v Ainsworth [2009] EWCA Civ 1328, to support their argument that commercial activities through a website would not be sufficient to establish presence in a foreign jurisdiction. The case involves an English defendant advertising helmets through a website, and thereafter selling the items to customers in the U.S. The claimants had obtained a judgment for copyright infringement against the defendant and sought to enforce the U.S. judgment in the United Kingdom. The English Court of Appeal found that the activities carried out by the defendant were insufficient to amount to the defendant’s presence in the U.S. [59] I find Lucasfilm to be distinguishable from the present case, as that case merely involved the defendant advertising and thereafter selling items that originated in the United Kingdom to the U.S. It is therefore unsurprising that the Court of Appeal found at paragraph [194] that for the purpose of establishing the jurisdiction of the U.S. court and enforcing the U.S. judgment, the internet or a website is not fundamentally different from other business enablers, such as salesmen, post, telephone and telex. The internet was only seen as a delivery mechanism for the defendant’s business. S/N qqJItkZkCeqz0bs7a8ZQ ! [60] Ultimately, the extent to which the commercial activities of a party not present in a particular jurisdiction would qualify as the carrying on of the party’s business in the jurisdiction is a question of fact. Several factors will need to be taken into account to answer this question, including the nature of the business, the activities and transactions carried out, and the relationships the party has established with residents of that jurisdiction. [61] In the present case, the defendants actively offered online dating services in the U.S. through an online platform, under which U.S. residents can make connections with one another and enter into contracts with the defendants when using their services in the U.S. Additionally, the Defendants’ Websites are the primary methods upon which the defendants offered their services and conducted their business in the U.S. Accordingly, the factual matrix in the present case is entirely distinguishable from Lucasfilm. The test of real and substantial connection [62] To further refine the principle that a party need not have a physical place of business to establish its presence in a foreign jurisdiction, I considered the test developed by the Supreme Court of Canada – that of “a real and substantial connection” between the cause of action and the foreign court. [63] This test was set out in Beals v Saldanha [2003] 3 SCR 416, a case involving the enforcement of a judgment obtained in Florida relating to the sale of land in Florida against defendants, who are residents of Ontario, Canada. The Supreme Court held that: S/N qqJItkZkCeqz0bs7a8ZQ ! “22 Modern ideas of order and fairness require that a court must have reasonable grounds for assuming jurisdiction where the participants to the litigation are connected to multiple jurisdictions. … 32 The "real and substantial connection" test requires that a significant connection exist between the cause of action and the foreign court. Furthermore, a defendant can reasonably be brought within the embrace of a foreign jurisdiction's law where he or she has participated in something of significance or was actively involved in that foreign jurisdiction. A fleeting or relatively unimportant connection will not be enough to give a foreign court jurisdiction. The connection to the foreign jurisdiction must be a substantial one. 33 In the present case, the appellants purchased land in Florida, an act that represents a significant engagement with the foreign jurisdiction's legal order. Where a party takes such positive and important steps that bring him or her within the proper jurisdiction of a foreign court, the fear of unfairness related to the duty to defend oneself is lessened. If a Canadian enters into a contract to buy land in another country, it is not unreasonable to expect the individual to enter a defence when sued in that jurisdiction with respect to the transaction.” (emphasis added) S/N qqJItkZkCeqz0bs7a8ZQ ! [64] The test of real and substantial connection is not an alien concept in Malaysia, as it is set out in section 23(1) of the Courts of Judicature Act 1964 (“CJA”). Section 23(1) requires certain considerations to be taken into account in determining the jurisdiction of the High Court. The section provides: “(1) Subject to the limitations contained in Article 128 of the Constitution the High Court shall have jurisdiction to try all civil proceedings where –

the cause of action arose;

the defendant or one of several defendants resides or has his place of business;

the facts on which the proceedings are based exist or are alleged to have occurred; or

any land the ownership of which is disputed is situated, within the local jurisdiction of the Court and notwithstanding anything contained in this section in any case where all parties consent in writing within the local jurisdiction of the other High Court.” (emphasis added) S/N qqJItkZkCeqz0bs7a8ZQ ! [65] Considerations (a) and (c) under section 23(1) of the CJA are in line with the real and substantial connection test in Beals. Based on these considerations, the jurisdiction of a High Court to try civil proceedings is established in circumstances where the cause of action and the facts of the case occurred within the jurisdiction of the High Court. This is consistent with the principle that the cause of action and the facts of the case have a real and substantial connection with the High Court hearing the case. Public policy [66] I have taken also into consideration the defendants’ argument that the recognition of the defendants’ presence in a foreign jurisdiction as a result of commercial activities carried out using the Defendants’ Websites is a violation of public policy. [67] The defendants referred to Jan De Nul (M) Sdn Bhd v Vincent Tan Chee Yioun [2019] 2 MLJ 413, where the Federal Court held that the public policy ground to set aside an arbitration award can be invoked where there appears to be a violation of the most basic notions of morality and justice, and in an instance where to uphold the award would shock the conscience, or would be clearly injurious to the public good or wholly offensive to the ordinary reasonable and fully informed member of the public. [68] I cannot (and do not) disagree with this proposition. However, I am unable to comprehend from the defendants’ argument how the recognition of the defendants’ presence in the U.S. by the use of the Defendants’ Websites to carry out commercial transactions would be a S/N qqJItkZkCeqz0bs7a8ZQ ! violation of the basic notions of morality and justice, or would be clearly injurious to the public good or wholly offensive to the ordinary reasonable and fully informed member of the public (in accordance with the test in Jana De Nul). [69] Ultimately, the U.S. Judgment relates to the infringement of the Plaintiffs’ Trademarks. Malaysia has laws in place to protect intellectual property, including trademarks. With this in mind, I am of the view that the court’s recognition of the defendants’ presence in the U.S. which ultimately results in the enforcement of the U.S. Judgment, which relates to trademark infringement, is not a violation of public policy in Malaysia. [70] Further, the issues raised by the defendants do not qualify as arguments on violations of public policy. Instead, they appear to be concerns raised that the principle of recognising presence where commercial transactions are carried out through websites has far-reaching consequences. I find these concerns to be unwarranted. Applying the principle, the jurisdiction of a foreign court will be recognised where a website operator has actively carried on business in that jurisdiction, by carrying out commercial activities and/or entering into transactions with residents of that jurisdiction. The mere fact that a website is accessible in a foreign jurisdiction without any other evidence of commercial activities, is insufficient to establish a foreign court’s jurisdiction over the operator. Conclusion [71] The court accepts the common law position that a foreign court’s jurisdiction over a corporate entity is established when the entity is present S/N qqJItkZkCeqz0bs7a8ZQ ! in that jurisdiction by carrying on business there. However, the requirement that the carrying on of business must entail physical presence or a fixed place of business is no longer in line with the commercial realities of doing business in the inter-connected and globalised world we are in today. As such, the court finds that the presence of a corporate entity or an individual in a foreign jurisdiction can be established if that corporate entity or individual, though not physically present in the foreign jurisdiction, nonetheless carries on commercial activities and/or enters into transactions with residents of that jurisdiction, which make up or support the corporate entity’s business. [72] Further, for a foreign court to have jurisdiction, there must be a real and substantial connection between the cause of action being pursued and the foreign court hearing the case. A party can only reasonably be brought before a foreign court if he has participated in a significant activity within the foreign jurisdiction, so as to confer the jurisdiction of the foreign court over that party. [73] In the present case, the defendants are in the business of offering online dating and/or matchmaking services through the Defendants’ Websites. Although the defendants were not physically present in the U.S., they carried on commercial activities and entered into transactions with U.S. residents which support their business. In this regard, the defendants have, amongst other activities, launched the Sugar Book Website in the U.S., advertised U.S. based users in the Sugar Book Website and prominently displayed U.S. based users on the homepage of the Sugar Book Website, posted blogs and online articles that demonstrate their active presence in the U.S., collected credit card payments from users in the U.S. currency, and hosted servers in the U.S. S/N qqJItkZkCeqz0bs7a8ZQ ! The defendants have also claimed that the U.S. is one of the countries where the 1st defendant has the most users. [74] In view of the defendants’ activities as described, the court finds that the defendants carried on business in the U.S. and have established their presence in the U.S. [75] The court further finds that the plaintiffs’ cause of action against the defendants for infringement of the Plaintiffs’ Trademarks has a real and substantial connection with the U.S. Court. As the Plaintiffs’ Trademarks are registered in the U.S. and as trademark rights are territorial, the most appropriate forum to decide and enforce the plaintiffs’ exclusive rights in the Plaintiffs’ Trademarks in respect of the defendants’ use of the same, would be the U.S. Court. [76] Based on the above findings, the court answers Question 2 in the affirmative, namely that the requirement of a defendant’s presence in the foreign jurisdiction is satisfied by virtue of the defendant’s commercial and/or transactional relationship with the residents of the said foreign country through the defendant’s operation of its domain addresses and/or websites which are accessible by the residents of the said foreign country. [77] To find otherwise is in my view an affront to common sense, and would display complete ignorance of the technological breakthroughs these past few decades that have changed the way business is now carried out. S/N qqJItkZkCeqz0bs7a8ZQ ! G. Question 3: Is The U.S. Judgment Enforceable In Malaysia Having Regard To The Nature Of The Statutory Damages Awarded? [78] Question 3 on the enforceability of the U.S. Judgment relates only to the fact that statutory damages were awarded against the defendants. The defendants argued that the U.S. Court acted ultra vires of its powers in awarding the damages, and that the damages are penal in nature and should not be enforced by this court. [79] For the three reasons explained below, I am unable to agree with the defendants’ argument. [80] First, the defendants have not provided any evidence that the U.S. Court had acted beyond its power in granting the damages. [81] The U.S. Judgment and the consequent order for payment of damages were granted under the U.S. Code § 1117(c) (section 35 of the Lanham Act) (“U.S. Law”), which provides as follows: “(c) Statutory damages for use of counterfeit marks In a case involving the use of a counterfeit mark (as defined in section 1116(d) of this title) in connection with the sale, offering for sale, or distribution of goods or services, the plaintiff may elect, at any time before final judgment is rendered by the trial court, to recover, instead of actual damages and profits under subsection

(a), an award of statutory damages for any such use in connection with the sale, offering for sale, or distribution of goods or services in the amount of – S/N qqJItkZkCeqz0bs7a8ZQ !

not less than $1,000 or more than $200,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just; or

if the court finds that the use of the counterfeit mark was willful, not more than $2,000,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just.” [82] It is not in dispute that the statutory damages awarded by the U.S. Court are within the range of possible damages under the U.S. Law. Therefore, the defendants’ argument that the U.S. Court was acting ultra vires when it granted the damages under the U.S. Law cannot be sustained. [83] Second, I find the defendants’ argument that the U.S. Judgment cannot be enforced due to: a. The penal nature of the statutory damages; and b. The damages being in contravention of public policy in Malaysia, to also be unsustainable. [84] In support of their argument, the defendants referred to Halsbury's Laws of Malaysia, Conflict of Laws, Volume 3(2) (2015 reissue), where it is stated at paragraph 90.031 that: S/N qqJItkZkCeqz0bs7a8ZQ ! “The Malaysian court will not enforce a foreign penal law, either directly or indirectly. A penal law is one which imposes punishment for some breach of duty to the state, as opposed to a remedial law directed to securing compensation for a private person who has suffered damage as a result of a breach of duty owed to him. The question whether a foreign law is penal is determined by the Malaysian court and is not affected by the view taken by the courts of the foreign country …” (emphasis added) [85] However, the statutory damages are awarded under the U.S. Law in connection with the plaintiffs’ civil claim against the defendants. They are not founded upon public law. As such, the statutory damages cannot be said to be penal in nature. [86] This was explained in S.A. Consortium General Textiles v Sun and Sand Agencies Ltd [1978] 1 QB 279, where the English Court of Appeal examined the issue of the enforceability of a foreign judgment on the basis of a penalty. The court held as follows at page 299G: “… It was said that the 10,000 francs were claimed as punitive or exemplary damages which amount to a penalty and would have been outlawed in England by Rookes v Barnard [1964] AC 1129 and Broome v Cassell & Co Ltd [1972] AC 1027: and therefore it should not be enforced as part of a foreign judgment. I cannot accept this view. The word “penalty” in the statute means, I think, a sum payable to the state by way of S/N qqJItkZkCeqz0bs7a8ZQ ! punishment and not a sum payable to a private individual, even though it is payable by way of exemplary damages.” (emphasis added) [87] In this case, the statutory damages awarded by the U.S. Court are payable by the defendants to the plaintiffs, as between private litigants, and not to the state. Therefore, the damages awarded cannot be regarded as having a penal element which renders the U.S. Judgment unenforceable in Malaysia. [88] The decision in S.A. Consortium was referred to in Benefit Strategies Group Inc v Prider [2005] SASC 194 where it was decided that although the damages were described as punitive damages, there was no public element in the remedy being sought that would restrict the court from enforcing the foreign judgement. The Supreme Court of South Australia held that: “[68] The judgment sought to be enforced in this case, although described as “punitive damages”, was a judgment in respect of a private right for his alleged “brazen and fraudulent conduct”. There was no public element in the remedy being sought. In my view, it did not fall within the type of judgment which this Court would refuse to enforce on public policy grounds relating to the non-enforcement of foreign penal or revenue laws.” (emphasis added) S/N qqJItkZkCeqz0bs7a8ZQ ! [89] The rationale behind the refusal to enforce a penal law or damages which are penal in nature (in the sense that they are related to public or criminal law) was explained in Huntington v Attril [1892] UKPC

The court held that the rule is founded upon the principle that breaches of public law are local, and are only punishable in the country they are committed. A proceeding would only fall within the scope of this rule if it is in the nature of a suit in favour of the state whose law has been infringed. [90] In the present case, the U.S. Judgment is founded on a cause of action based on private law, and between private litigants As such, the enforcement of the U.S. Judgment cannot be refused on the basis that the statutory damages are penal in nature, as the judgment is not entered in respect of a breach of public law. [91] Further, I am unable to accept the defendants’ argument that the statutory damages awarded are against public policy. The statutory damages are awarded for infringement of intellectual property rights. The damages awarded are pre-established damages specifically provided for under Article 45 of the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (“TRIPS Agreement”). Article 45 provides that: “Article 45

The judicial authorities shall have the authority to order the infringer to pay the right holder damages adequate to compensate for the injury the right holder has suffered because of an infringement of that person’s intellectual S/N qqJItkZkCeqz0bs7a8ZQ ! property right by an infringer who knowingly, or with reasonable grounds to know, engaged in infringing activity.

The judicial authorities shall also have the authority to order the infringer to pay the right holder expenses, which may include appropriate attorney’s fees. In appropriate cases, Members may authorize the judicial authorities to order recovery of profits and/or payment of pre-established damages even where the infringer did not knowingly, or with reasonable grounds to know, engage in infringing activity.” (emphasis added) [92] As Malaysia is a signatory of the TRIPS Agreement, the enforcement of a type of remedy provided for under the TRIPS Agreement cannot be said to be against Malaysian public policy. In addition, section 37(1)(d) of the Copyright Act 1987 also provides for the grant of statutory damages as a relief for copyright infringement, while section 56(3)(d) and

(7)(c) of the Trademarks Act 2019 provides for the grant of additional damages. Thus, the Malaysian legislative framework for intellectual property also allows damages over and above compensatory damages to be awarded. In this regard, the recognition of the U.S. Judgment cannot be said to undermine the Malaysian intellectual property legislative framework for intellectual property, as argued by the defendants. [93] My third and final reason for rejecting the defendants’ contention that the U.S. Judgment should not be enforced having regard to the statutory damages awarded, is due to the defendants’ failure to defend themselves in the U.S. Court. As they did not raise any issue in the U.S. S/N qqJItkZkCeqz0bs7a8ZQ ! Court, I am of the view that the defendants cannot now challenge the probity of the statutory damages awarded in accordance with the U.S. Law, before this court. [94] Based on the considerations and findings above, the court answers Question 3 in the affirmative, namely that the U.S. Judgment is enforceable in Malaysia, having regard to the nature of the statutory damages awarded. H. Decision [95] In conclusion, the Questions are answered by the court in the following manner: a. Question 1: The Malaysian conflict of law rules apply in determining whether a foreign court has jurisdiction over a defendant against whom a judgment issued by the said foreign court is sought to be enforced in Malaysia. b. Question 2: The requirement of a defendant’s presence in a foreign jurisdiction is satisfied by virtue of the defendant’s commercial and/or transactional relationship with the residents of the said foreign country through the defendant’s operation of its domain addresses and/or websites which are accessible by the residents of the said foreign country. S/N qqJItkZkCeqz0bs7a8ZQ c. Question 3: The U.S. Judgment is enforceable in Malaysia having regard to the nature of the statutory damages awarded by the U.S. Court. [96] Following the court’s answers to the Questions, and pursuant to paragraph (2)(b) of the Consent Order, the court allowed the plaintiffs’ claim with costs, and enforced the U.S. Judgment against the defendants. Dated 24 March 2025 ADLIN ABDUL MAJID Judge High Court of Malaya Kuala Lumpur Counsel: Plaintiffs : Teo Bong Kwang (together with Eugene Ee Fu Xiang and Jessica Chong Jun-Xin) of Messrs. Wong Jin Nee & Teo Defendants : Timothy Siaw (together with Hon Yee Neng and Ivan Lai Jiashen) of Messrs. Shearn Delamore & Co. S/N qqJItkZkCeqz0bs7a8ZQ