Ariani Textiles & Manufacturing (M) Sdn. Bhd. v Gulatis Exclusive Sdn. Bhd. (WA-22IP-21-02/2019)

(M) SDN BHD PLAINTIFF AND GULATIS EXCLUSIVE SDN BHD DEFENDANT GROUNDS OF JUDGMENT (PLAINTIFF’S APPLICATION FOR ASSESSMENT OF DAMAGES) A.

This Court had earlier allowed the Plaintiff’s claim and directed that the damages be assessed.

For the purposes of this application, I reproduce relevant parts of the Grounds of the Decision of the Mohd Radzi bin Harun J that was S/N 4toMk4Ga1k6gghxaH24POg delivered on 7-6-2023. The judgment of Justice Mohd Radzi bin Harun has since been confirmed by the Court of Appeal: - S/N 4toMk4Ga1k6gghxaH24POg

Therefore, the High Court had earlier found that the Defendant sold RM 524,000 worth of the infringing products. I am bound by the said decision, and I am not in any position to make any determination that is contrary to the reasoning of the learned Judge. According to the calculation provided by the Plaintiffs’ solicitors this would equate to the sale of 9, 179 units of the infringing products. B. Assessment of Damages - Decision of Court 4. It is trite that damages for the infringement of trademark is laid down under Section 37 of the Copyright Act 1987, which is reproduced below: - “(1) Infringements of copyrights and the prohibited acts under sections 36A and 36B shall be actionable at the suit of the owner of the copyright and, in any action for such an infringement or prohibited act, the court may grant the following types of relief: S/N 4toMk4Ga1k6gghxaH24POg

an order for injunction;

damages;

an account of profits;

statutory damages of not more than twenty-five thousand ringgit for each work, but not more than five hundred thousand ringgit in the aggregate; or

any other order as the court deems fit.

Notwithstanding subsection (1), all such relief shall be available to the plaintiff in an action under subsection 36A(3) except for statutory damages.

In making an award under paragraph (1)(b), the court may also make an order under paragraph (1)(c) for an account of any profits attributable to the infringement or prohibited act that have not been taken into account in computing the damages.

Except as provided in subsection (3), the types of relief referred to in paragraphs (1)(b), (c) and (d) are mutually exclusive. S/N 4toMk4Ga1k6gghxaH24POg

For the purpose of paragraph (1)(d), all parts of a collective work shall constitute one work.

Where in an action under this section it is established that an infringement or a prohibited act under section 36A or 36B was committed but it is also established that at the time of the infringement or commission of the prohibited act the defendant was not aware, and had no reasonable grounds for suspecting, that the act was an infringement of the copyright or prohibited under section 36A or 36B, the plaintiff shall not be entitled under this section to any damages against the defendant in respect of the infringement or commission of the prohibited act, but shall be entitled to an account of profits or statutory damages whether or not any other relief is granted under this section.

Where in an action under this section an infringement of copyright or the commission of a prohibited act under section 36A or 36B is established, the court may, in assessing damages for the infringement or commission of the prohibited act, award such additional damages as it may consider appropriate in the circumstances if it is satisfied that it is proper to do so having regard to ---- S/N 4toMk4Ga1k6gghxaH24POg

the flagrancy of the infringement or prohibited act;

any benefit shown to have accrued to the defendant by reason of the infringement or prohibited act; and

all other relevant matters.

In awarding statutory damages under paragraph (1)(d), the court shall have regard to ---

the nature and purpose of the infringing act or prohibited act, including whether the infringing act or prohibited act was of a commercial nature or otherwise;

the flagrancy of the infringement or prohibited act;

whether the defendant acted in bad faith;

any loss that the plaintiff has suffered or is likely to suffer by reason of the infringement or prohibited act;

any benefit shown to have accrued to the defendant by reason of the infringement or prohibited act;

the conduct of the parties before and during the proceedings;

the need to deter other similar infringement or prohibited act; and

all other relevant matters. S/N 4toMk4Ga1k6gghxaH24POg

An injunction shall not be issued in any proceedings under this section if it requires a completed or partly built building to be demolished or prevents the completion of a partly built building.

For the purposes of this section and section 38 ---

"action" includes a counterclaim, and reference to the plaintiff and to the defendant in an action shall be construed accordingly;

"collective work" means a work in which relevant materials, constituting separate and independent works in themselves, are assembled into a collective whole; and

"court" means the appropriate High Court in Malaysia.

For the purpose of this section, "owner of the copyright" means the first owner or an assignee of the relevant part of the copyright."

The principle to be applied in assessing damages for breach of copyright is to put the Plaintiff in the position as if the wrong was not committed. I refer to General Tire and Rubber Co v. Firestone Tyre and Rubber Co Ltd [1975] 2 All ER 173: - S/N 4toMk4Ga1k6gghxaH24POg "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 (Livingstone v. Rawyards Coal Co ([1880] 5 App Cas 25 at 39) per Lord Blackburn). In the case of infringement of a patent, an alternative remedy at the option of the plaintiff exists by way of an account of profits made by the infringer: see the Patents Act 1949, s. 60. The respondents did not elect to claim an account of profits; their claim was only for damages. There are two essential principles in valuing that 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 punish the defendants (Pneumatic Tyre Co Ltd v. Puncture Proof Pneumatic Tyre Co Ltd ([1899] 16 RPC 209 at 215))"

I further refer to the decision of the Federal Court in Taiping Poly (M) Sdn Bhd v. Wong Fook Toh (t/a Kong Wah Trading Co) & Ors S/N 4toMk4Ga1k6gghxaH24POg [2018] Supp MLJ 312 where Richard Malanjum CJ (Sabah and Sarawak) held: - “[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. (See: General Tire v. Firestone [1976] RPC 197). 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. AW 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. However, in assessing damages it is also necessary to exclude those customers of the defendant who were not misled in S/N 4toMk4Ga1k6gghxaH24POg making their purchases. Otherwise the claimant would be overcompensated. Damages may also be awarded for loss of business reputation and goodwill resulting from the infringement and passing off. [20] Nearer home the Court of Appeal in Wembley Gypsum Products Sdn Bhd v. MST Industrial Systems Sdn Bhd [2007] 6 CLJ 228 said this at pp. 243-244: “In our judgment, it is useful to set out the general object of awarding damages, contained in Clerk & Lindsell on Torts (16th Ed), at p 254 para 5-04: The general object of an award of damages is to compensate the plaintiff for the losses, pecuniary and non-pecuniary, sustained as a result of the defendant's tort. More specifically, the assessment process is said to aim at restitutio in integrum. The general principle is, in the off-quoted words of Lord Blackburn, that the court should award 'that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation.' The principle admits of application to losses which are capable of reasonable precise calculation in money terms. S/N 4toMk4Ga1k6gghxaH24POg (see also UDA Holdings Sdn Bhd v. Koperasi Pasaraya Malaysia Bhd [2007] 5 CLJ 489; [2007] 6 MLJ 530 (CA)). The question is whether the sum has been correctly awarded by the trial court and is consistent with the above general object and principle. The trial court had assessed damages in the sum of RM4,831,450 by taking into account the plaintiff's total sales and the defendant's profit margin (ie, RM14,866,000 x 32.5% = RM4,831,450) In our view, the trial court had rightly evaluated the evidence of the defendant's own witness (DW1), showing that the total sales of the defendant's GCB products using the trademarks amounted to RM14,866,000. It was the trial court's finding that the defendant had failed to dispute the fact that the plaintiff would have made a profit of at least 30% - 35% out of the loss in the sales of the GCB products using the trademarks. The trial court adopted an average of 32.5% in assessing damages. S/N 4toMk4Ga1k6gghxaH24POg We are also of the view that the trial court had occasioned no error in the assessment and award of the sum of RM4,831,450 as damages to the plaintiff. There was also found no error in the award of interest at the rate of 8% per annum from 31 January 1991 (the date of first wrongful use of the trademarks) to the date of realisation.” [21] It is obvious in the above case that the Court of Appeal went on the basis of profit margin of the defendant in computing the amount of damages that should be awarded to the plaintiff. The court did not rely on 'loss of sales' principle. [22] Incidentally, we note that in coming to its decision the Court of Appeal did not refer to the judgment of the then Supreme Court in Seet Chuan Seng & Anor v. Tee Yih Jia Foods Manufacturing Pte Ltd [1994] 3 CLJ 7; [1994] 3 BLJ 292. We think rightly so. In that case the then Supreme Court was not considering a question on assessment of damages but merely determining whether the elements of passing off were satisfied and in reference to the plaintiff's goodwill. Thus, the phrase 'loss of sales' used in the dicta of the judgment of the majority should not be given too much emphasis. It should not be considered as being the ratio decidendi of that case and thus the basis to rely on when assessing damages in a trade S/N 4toMk4Ga1k6gghxaH24POg mark infringement and passing off. The phrase was only used in relation to 'likelihood of damage to the plaintiff's goodwill through loss of sales and loss of the exclusive use of his name'. [23] Hence, with respect we are not inclined to say that in an action for infringement of a trademark and passing off the basis when assessing damages is on the actual loss of sales as advocated by the appellant and which in this case totalled to RM2,154,426.79. The High Court was therefore right in setting aside the awards based on loss of sales given by the learned Senior Assistant Registrar.”

In this case as I have referred to earlier, this Court did find that the Defendant did sell about RM 542,000.00 worth of infringing goods. This is about 9, 179 units. This is for the period between June 2017 and July 2019.

This sum will be deducted from the Defendant’s average costs of product. Based on the Plaintiff’s counsel calculation this would be to the sum of RM 488, 488.28. During the course of submissions before this Court, the Defendant’s counsel did not challenge this. As such, this Court S/N 4toMk4Ga1k6gghxaH24POg accepts that would be the profit claimable for the 9, 179 units sold by the Defendant.

Therefore, for the period up to July 2019 the profits that are claimable for the wrongs committed by the Defendant, the damages claimable against the Defendant is to the sum of RM 488, 488.28.

The Plaintiff also claims for damages beyond the said date. I find that the Court did earlier direct that the Defendant disclose the number of sales of the products beyond July 2019 and that the Defendant did not undertake this.

Therefore, this is a suitable case for statutory damages to be granted under Section 37 of the Copyright Act for damages beyond July

The Defendant did not deny that it sold the infringing products beyond the said date and as such, must be held accountable for the same. I therefore grant the maximum amount allowable under law which RM100,000.00 considering the number of works infringed multiplied by RM 25,000.00. S/N 4toMk4Ga1k6gghxaH24POg

Costs of the High Court proceedings is fixed at RM 100,000.00 considering the amount of time incurred, the complexity of the case, the seniority of counsel and importance of the subject matter to the clients.

As to the exemplary damages sought by the Plaintiff, as the same was not pleaded in the Statement of Claim, this Court is precluded from granting such damages. Furthermore, the damages awarded above sufficiently compensates the Plaintiff for the wrong committed by the Defendant. See Rookes v. Barnard [1964] AC 1129, Broome v. Cassell & Co Ltd [1971] 2 QB 354, Tradewinds Properties Sdn Bhd v. Zulhkiple bin A Bakar & Ors [2019] 1 MLJ 421 and Sambaga Valli a/p KR Ponnusamy v. Datuk Bandar Kuala Lumpur & Ors and another appeal [2018] 1 MLJ 784. Dated 15 January 2025 Dato’ Indera Mohd Arief Emran bin Arifin Judge High Court of Malaya at Kuala Lumpur NCC5 S/N 4toMk4Ga1k6gghxaH24POg Counsel: Lim Zhi Jian, Ling Siew Hui & Wong Qi Shu for the Plaintiff Rosli Dahlan Saravana Partnership Advocates & Solicitors Foong Cheng Leong, Low Li Qun & Alethia Subil for the Defendant Chai & Company Advocates & Solicitors S/N 4toMk4Ga1k6gghxaH24POg