MA HOA TRADING CO. LTD v Pendakwa Raya (J-09-321-12/2024)

This is a decision on an appeal brought by the Appellant, Ma Hoa Trading Co. Ltd ('Appellant') against the decision of the High Court which allowed the appeal by Kementerian Perdagangan Dalam Negeri dan Hal Ehwal Pengguna ('Respondent') to forfeit 21 containers of LUFFMAN cigarettes ('Cigarettes') at the Container Yard in the Port of Tanjung Pelepas, Johor for an alleged offence under section 5(1)(c) of the Trade Description Act 2011 ('TDA') read together with section 6 (1)(g) of the same Act ('Appeal').

This Appeal concerns the provisions of the TDA on two main issues. Firstly, pertaining to section 5(1)(c) of the TDA on whether the Appellant was a person who exposes for supply the Cigarettes or has in possession, custody or control of the Cigarettes for supply and secondly, on whether the Cigarettes being goods in transit and transshipment en route to a third-party consignee in the Philippines can be subject to seizure and forfeiture enforcement under section 47 of the TDA.

After considering all arguments, this Court unanimously allowed the Appeal on two main grounds: (i) there is no evidence that the Appellant was exposing the Cigarettes for supply or having possession, custody or control such Cigarettes for supply in Malaysia; and (ii) that the Cigarettes are bona fide goods in transit and transshipment to consignees in a third-party country and therefore not subject to seizure and forfeiture enforcement under the TDA.

This Grounds of Judgment sets out the reasons for this Court's decision.

On 19.5.2020, the Respondent initially seized 10 containers containing cigarettes marked with LUFFMAN brand from the Container Yard ('CY') in the Free Zone of Port of Tanjung Pelepas, Johor ('PTP'). Then on 28.5.2020, another 11 containers containing the same brand of cigarettes were seized at the same location. The seizures were done pursuant to the Trademarks Act 2019 ('TMA') following action taken by owner of the LUFFMAN trade mark, Leadon Tobacco International Pte Ltd from Singapore via their representative Shearn Delamore & Co in Malaysia ('Leadon').

The shipping documents (Bills of Lading, Commercial Invoice and Customs Transshipment Manifest (K6)) disclosed by the shipping agent showed that the consignor/shipper for all the 21 containers was the Appellant, a company from Vietnam. All the containers were loaded at Ho Chi Minh City as the port of loading. The consignee was an entity known as Mardia Store from the Philippines. The next port of discharge of the Cigarettes was to be Port of Songkhla, Thailand.

The facts show that there was no ZB1 Form nor Customs Import Form (K1) filed with PTP which indicate that that the Cigarettes were in transit and transshipment, not intended to be imported into Malaysia for sale. Thus, the containers were not moved out of the CY into warehouses in the Free Zone for purpose of importation into the country.

The Respondent applied to the Sessions Court under section 47 of the TDA to forfeit the Cigarettes for an offence under section 5(1)(c) read together with section 6(1)(g) of the same Act, notwithstanding that the seizure was initially made by the Respondent for an offence under the TMA. Section 5(1)(c) of the TDA makes it an offence for any person who exposes for supply or has in his possession, custody or control for supply any goods to which a false trade description is applied. Section 6(1)(g) provides that a trade description is an indication, whether direct or indirect and by any means given, of any of the following matters with respect to any goods or parts of goods any physical or technological characteristics not included in the preceding paragraphs.

It was the Respondent's claim that the Appellant had in their possession, custody or control at the Free Zone PTP LUFFMAN Cigarettes which were imprinted with bar codes and the words "Made Under Authority of Leadon Tobacco Intl. USA" which were not licensed by Leadon to the Appellants.

At the end of the section 47 TDA proceedings, the Sessions Court ordered the release of the Cigarettes to the Appellant on the grounds that the Respondent failed to prove that the Appellant had committed an offence under section 5(1)(c) of the TDA although it was found that there was false description under section 6(1)(g) for reasons: (i) the Cigarettes were not proved to be intended to be exposed for supply into Malaysia since there were no Customs documents showing importation of the Cigarettes and there was no known buyers in Malaysia; and (ii) the Appellant was not in possession, custody or control of the Cigarettes since they were not present at PTP and the Cigarettes were in transit meant to be shipped to another country.

Dissatisfied, the Respondent appealed to the High Court. The High Court reversed the decision of the Sessions Court and was satisfied that the Appellant had committed an offence under section 5(1)(c) of the TDA on grounds, inter alia that: (i) since the Appellant had ownership of the Cigarettes, it is deemed that they also had possession, custody and control of the same; (ii) the Appellant was the owner of the goods by definition under section 2 of the TDA not only as a party described as the consignor in the shipping documents but also by extension, having the power control and disposition over the goods; and (iii) notwithstanding that the Cigarettes were in the Free Zone and in transit, the Respondent had the necessary powers and jurisdiction to seize the goods.

In finding that the Respondent has the power to seize the Cigarettes even though they are goods in transit, the Learned Judicial Commissioner held that the Respondent had the necessary jurisdiction and power over all categories of storage areas in Malaysian ports including free zone areas. There is no expressed provision in the TDA that excludes the jurisdiction of the Respondent over goods in transit. In addition, the Appellant ought to have first made an application to the Registrar pursuant to section 82(1) of the TMA for determination whether an offence was in fact committed and for the release of the goods. Since the Appellant failed to do so, they cannot belatedly argue that the Respondent had no jurisdiction to seize the goods on the grounds that the goods were in transit.

The Appellant raised a number of issues in this Appeal. They include: (i) that the High Court erred when it found that the Respondent had proven the offence under section 5(1)(c) of the TDA; (ii) that the High Court erred when it found that the Appellant was in possession, custody or control of the Cigarettes; (iii) that the High Court failed to appreciate the fact that the initial seizure of the Cigarettes was premised on an offence under the TMA but later the section 47 TDA proceedings before the Sessions Court was based on an offence under section 5(1)(c) of the TDA; (iv) that the High Court committed an error when it found that the Respondent had proven the breach of section 6(1)(g) of the TDA, in that the cigarette packets contained bar code information belonging to Leadon; and (v) that the High Court failed to appreciate that under section 82(8) of the TMA, goods in transit cannot be subject to a seizure and notwithstanding the same provision is not found in the TDA, the Court should similarly find that goods in transit cannot be subject to seizure.

After hearing the Appellant, this Court found that the Appellant's Appeal is grounded on 2 main issues; (i) whether the Appellant was a party who had exposed the Cigarettes for supply or had possession, custody and control over the Cigarettes for supply; and (ii) whether the Cigarettes in this case, being goods in transit, can be subject of a seizure action under section 47 of the TDA.

Learned Counsel for the Appellant contends that section 5(1)(c) of the TDA expressly and specifically refers to the offender as being a person who exposes the goods to supply or has in his possession, custody or control for supply of any goods. The key emphasis is on the act of exposing or having possession, custody or control to supply. Thus, it is the Respondent's burden to prove that whilst the Cigarettes remained in transit, the Appellant had intended or acted to supply the Cigarettes into the country. The Appellant argues there is no evidence showing that intention or act. Section 5(1)(c) provides: "5. Prohibition of false trade description

Any person who-

applies a false trade description to any goods;

supplies or offers to supply any goods to which a false trade description is applied; or

exposes for supply or has in his possession, custody or control for supply any goods to which a false trade description is applied, commits an offence and shall..."

The word "supply" is defined under section 2 of the TDA as: "supply" means -

in relation to goods, the supply, including resupply, by way of sale, exchange, lease, hire or hire-purchase of the goods;

The fact that: (i) the Sessions Court found no evidence of any buyer for the goods, (ii) the shipping documents prove that the goods were in transit en route to Songkhla, Thailand in favour of consignees in the Philippines; and (iii) the goods remained in the CY or Container Yard and not moved to warehouses in the Free Zone in preparation to importation into the country, show that the Appellant did not expose the Cigarettes for supply in Malaysia nor did they have possession of the same for that purpose.

It was argued that the words "supply" used in section 5(1)(c) of the TDA must be read to mean for supply in Malaysia only and cannot be read to include any other country outside Malaysia. To construe as such would give the Respondent the power to seize goods absent of express provision.

Additionally, it was the Appellant's contention that taking into consideration section 82(8) of the TMA which excludes goods in transit from a seizure action, the same exclusion should also apply to goods in transit under the TDA. To disallow a seizure under the TMA but to allow the same to be done under the TDA would lead to inconsistencies in the enforcement of law for alleged infringement of intellectual property. Section 82(8) of the TMA states: "82. Restriction on importation of infringing goods

Where an authorized officer has been notified by the Registrar under subsection (7), the authorized officer shall take the necessary action to prohibit any person from importing the infringing goods identified in the notice, not being goods in transit, and shall seize and detain the identified goods."

On the issue of possession, custody and control, Learned Counsel argues that the High Court had erred in equating ownership and possession when the two are separate legal concepts. Although the Appellant was named as consignor and made a claim on the Cigarettes, does not mean that at the material time the Cigarettes were in the possession, custody and control of the Appellant. The facts show that all 21 containers were placed in the custody of PTP as the port of transit and therefore only PTP had in situ control of the containers.

In addition, it was argued that since the goods are in transshipment, only the shipping agents had control over the containers. In essence, the Appellants did not have the power to dispose or deal with the cigarettes whilst they are in custody of PTP, control of the shipping agents and in transshipment. Reference was made to the decisions in PP v Chieng Ung Kai [1993] 1 MLJ 21; Toh Ah Loh & Mak Thim v Rex [1949] 1 MLJ 54; [1948] 1 LNS 72 and Chan Pean Leon v PP [1956] 1 MLJ 237; [1956] 1 LNS 17.

The Respondent argued, inter alia that: (i) both the Sessions and High Court were correct in finding that there was an infringement of section 6(1)(g) of the TDA when the individual cigarettes packing contained description bar codes and the words "Made Under Authority of Leadon Tobacco Intl. USA" and were not licensed by Leadon to the Appellants; (ii) the fact that the Appellant sought for the release of the Cigarettes via letters dated 31.5.2020, 6.6.2020, 23.6.2020 and 21.7.2020 showed that the Appellant had held themselves out as owners of the Cigarettes and therefore they had possession and/or control over them; (iii) the Appellant fell within the definition of "owner" under section 2 of the TDA being a party who holds himself out to be the owner or being in possession, beneficially interested in or having control or power of disposition of the Cigarettes; (iv) the consignee for all the 21 containers Mardia Store of the Philippines had never asserted any ownership over the Cigarettes; and (v) notwithstanding the status of the CY as Free Zone as defined under the Free Zone Act 1999, such designated areas remain part of Malaysia and therefore any infringement of the TDA remains actionable notwithstanding that the Cigarettes were in transit.

Reference was made to the decisions in Chan Pean Leon v PP [1956] 1 MLJ 237;[1956] 1 LNS 17; Lee Wai Ping v PP [2022] 1 LNS 337; [2022] MLJU 267; Malaysia Airports (Sepang) Sdn Bhd & Anor v Federal Express Brokerage Sdn Bhd & Ors; Peguam Negara Malaysia (Intervener) [2013] 8 CLJ 597; [2013] 6 MLJ 774; Philip Morris Products Inc v Glenbid (M) Sdn Bhd & Anor [2001] MLJU 262; Philip Morris Products SA v Ong Kien Hoe & Ors [2009] 4 MLJ 727; [2010] 2 CLJ 106 and Philip Morris Brands Sarl v Goodness for Import and Export & Ors [2017] 10 CLJ 337; [2018] 7 MLJ 350. DELIBERATIONS AND FINDINGS Whether the Appellant was a party who exposed the Cigarettes to supply

Section 5(1)(c) states quite clearly that the prohibition relates to an act exposing the goods for supply or to having possession, custody and control for supply such goods. The word "supply" is defined under section 2 of the TDA as the supply, including resupply, by way of sale, exchange, lease, hire or hire-purchase of the goods. The term "expose for supply" is not defined. Employing the common dictionary meaning of "expose" in that context, it would mean to make known something or to offer something for sale or use (see https://www.merriam-webster.com/dictionary/expose).

Reading both provisions together, it is quite clear that the act of exposing to supply connotes a commercial activity that is intended to inform the user, consumer or public about the goods with the intent to sell, exchange, lease, hire or hire-purchase them whilst the act of having possession, custody or control for supply means the goods in possession, custody or control are intended to be dealt with in any of those manners.

Now, as far as foreign goods are concerned, such goods must first be imported into the country to be sold for there cannot be an act of supplying and selling in the country unless the goods are firstly imported. The TDA does not define the term "import". However a definition for that term is found in the TMA. The TMA defines "import" as to bring or cause to be brought into Malaysia by whatever means. In this Court's view, the meaning of bringing or causing to be brought into Malaysia must mean bringing or causing to be brought the goods for purposes of supply in the country. To construe the word to include all goods irrespective whether they are brought into the market or merely for purposes of transit and transshipment would be casting the net too wide and we do not find the provisions of the TDA contemplate such a construction.

The facts presently show that the Cigarettes were in the CY PTP and waiting to be transshipped to Songkhla, Thailand and the shipping documents support that fact. There is no evidence that the containers were moved to warehouses for importation into the country and there is also no evidence that any of the Cigarettes are purchased by consignees in Malaysia. There is also no evidence that the Appellant had removed any part of the Cigarettes from the containers for purposes of repacking and sale in the country. The goods remained outside the economic border and have not entered Malaysia's market. We do not agree with the Respondent that the term "supply" must be construed so widely to include possibility of supply of the Cigarettes anywhere in the world outside Malaysia. That would be an overreach of the TDA beyond the jurisdiction of Malaysia.

Based on those considerations, we do not find that the Respondent has shown that the Appellant is a person who exposes for supply or has in his possession, custody or control for supply any goods to which a false trade description is applied. For those reasons, we are inclined to agree with the Sessions Court and find that the High Court erred in finding otherwise.

There was a failure by the Learned Judicial Commissioner to consider that the provision of section 5(1)(c) speaks not about possession simpliciter but possession for supply. The act of exposing to supply or possession, custody and control to supply are the key elements under that provision. Thus, it was erroneous for the Learned Judicial Commissioner to deem possession, custody and control merely on the basis that the Appellant was the consignor of the Cigarettes and sought for their release without determining whether there was evidence to show the intent or act to supply in the country. Whether the Cigarettes being goods in transit can be seized and forfeited

The Appellant sought for this Court to apply the spirit of section 82(8) of the TMA to a seizure under the TDA on the grounds that the Cigarettes being goods in transit are excluded from any seizure enforcement by the Respondent.

Now, section 82 falls under Part XIII of the TMA on Border Measures. The provisions on Border Measures reflect Malaysia's obligations as a member of the World Trade Organization to implement measures under the Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS") which requires signatory nations to strengthen the authority given to their respective custom administration. Section 82 gives trademark owners the right to object to and to prevent counterfeit trademark goods from entering the country by making an application to the Registrar of Trademarks. However, by the express provision of section 82(8), such border measures do not apply to goods which are in transit (see Intellectual Property Law in Malaysia, Tay Pek San, Second Edition, pages 257-258). Therefore, goods in transit are excluded from being liable to be seized under the provisions for border control (see Law of Trade Marks and Passing Off in Malaysia, Teo Bong Kwang at page 631).

Section 82(8) provides: "82. Restriction on importation of infringing goods

Where an authorized officer has been notified by the Registrar under subsection (7), the authorized officer shall take the necessary action to prohibit any person from importing the infringing goods identified in the notice, not being goods in transit, and shall seize and detain the identified goods."

What are "goods in transit"? The TDA does not offer any definition. The TMA does. Under section 81 of the TMA, the term is defined as being goods imported, whether or not landed or transshipped within Malaysia, which are to be carried to another country either by the same or another conveyance. The term "import" as defined under the same provision means to bring or cause to be brought into Malaysia by whatever means. Thus, goods in transit are goods that are not intended to be imported into the country for the purpose of use or sale in the country. They are merely brought within the borders of Malaysia only to remain transiently for purposes of transshipment to another country. In that perspective, the term "import" merely describes the act of bringing the goods within the borders of the country and not as an economic activity of bringing goods to be used or consumed in the country.

This brings us to the decision in Philip Morris Brands Sarl v Goodness for Import and Export & Ors [supra]. The Respondent relies on this case as authority to argue against the contention that goods in transit cannot be subject to seizure under the TDA. It must be stated that that case concerns an infringement of section 38(1)(a) of the repealed Trademarks Act 1976. Section 38(1)(a) relates to the offence of using a mark which is identical with it or so nearly resembling it as is likely to deceive or cause confusion in the course of trade in relation to goods or services in respect of which the trade mark is registered in such a manner as to render the use of the mark likely to be taken either as being use as a trade mark.

In that case, 12 containers of MALIMBO cigarettes that were in transit and to be transshipped to Egypt were seized by the Malaysian Customs Department. In rejecting the arguments for the defendant that the goods were in transit and therefore did not infringe the plaintiff's trademark rights, the High Court held the view that: (i) the definition of "goods in transit" and "import" in section 70 (equivalent to section 81 of the current TMA) are confined only to the provisions on Border Measures and cannot be imported into the reading of sections 35(1) and 38(1); (ii) the fact that the goods were in transit did not oust the applicability of section 38(1); (iii) because there was false customs declarations on the type of goods which was stated as "Omani marble" when they were actually MALIMBO cigarettes the goods were deemed as unaccustomed goods under section 2(1) and 45(1) of the Customs Act and cannot be regarded as goods bona fide in transit; and (iv) notwithstanding the goods are in the free zone, they are physically in the country and therefore subject to the laws of the country.

After carefully considering the decision in Philip Morris Brands Sarl [supra], we find that the decision there ought to be confined to the consideration of the claims there, that is under the TMA. Section 54(3) of the TMA provides the various instances where an infringement of use of sign can occur and they include the act of import and export. In Burberry Ltd v Megastar Shipping Pte Ltd [2019] 1 SLR 536, the Singapore Court of Appeal held the view that goods in transit are within the meaning of "import" and therefore not excluded from the reach of the Trade Marks Act. In the Court's view, for as long as the infringement takes place in Singapore, it does not matter that the goods are in transit and intended for a foreign market. The Court was of the view that the word "use" as found in section 27 of the Trade Marks Act (which is equivalent to Malaysia's section 54) do not contemplate that the infringing goods must be intended to be for sale in Singapore. The infringement can occur in more ways other than just by way of import: [40] We agree with the Judge that the context and structure of the TMA are consistent with import covering goods brought into Singapore only for the purpose of transit. First, the plain meaning of s 27 and its context in the TMA support the view that goods can be considered to be imported even if they are not intended for the Singapore market. This is because the acts considered as use for the purposes of trade mark infringement do not explicitly contemplate that the goods must be intended for sale here or to be placed on the Singapore market. Putting the goods on the Singapore market is only one of the possible infringing uses (see s 27(4)(b)). Applying the infringing sign on the goods or the packaging does not require that the goods be intended for the Singapore market (see s 27(4)(a)). The author of Law of Trade Marks and Passing off in Singapore ([8] supra) states that as long as any of the infringing uses in s 27(4) of the TMA takes place in Singapore, it does not matter whether the goods are eventually intended for a foreign market (at para 11.090). On this basis, even if goods in transit are not intended for the Singapore market, as long as they were brought into Singapore, they would be considered to be imported under s 27(4)(c). For example, in Beautimatic International Ltd v Mitchell International Pharmaceuticals Ltd and Alexir Packaging Limited [1999] ETMR 912, the application of the sign on goods in the UK was held to be infringement even though the goods were intended to be shipped overseas. In Waterford Wedgwood plc v David Nagli Ltd [1998] FSR 92, the transshipment of counterfeit Waterford crystals was held to be trade mark infringement by way of importing and reexporting. It was no answer that the goods were only temporarily in England while in transit (at 104)."

Coming back to the TDA and section 5(1)(c), it is our view that the considerations expressed by in Philip Morris Brands Sarl and Burberry Ltd cannot apply to the present Appeal. Section 5 of the TDA is entirely dissimilar to section 54 of the TMA. Whilst there is parallel similarity between sections 5(1)(a) and (c) of the TDA to section 54(3)(a) and (b) of the TMA on the application of the infringing description or sign and the expose for supply or sale of the infringing description or sign, section 5 does not provide for instances of import as provided under section 54(3)(f): "54. Acts amounting to infringement of registered trademark

A person infringes a registered trademark if he uses a sign which is identical with the trademark in relation to goods or services which are identical with those for which it is registered, in the course of trade, without the consent of the registered proprietor.

A person infringes a registered trademark if, without the consent of the proprietor of the trademark, he uses in the course of trade a sign-

that is identical with the trademark and is used in relation to goods or services similar to those for which the trademark is registered; or

that is similar to the trademark and is used in relation to goods or services identical with or similar to those for which the trademark is registered, resulting in the likelihood of confusion on the part of the public.

For the purposes of this section, a person uses a sign if he-

applies it to goods or their packaging;

offers or exposes goods for sale under the sign;

puts goods on the market under the sign;

stocks goods under the sign for the purpose of offering or exposing them for sale or of putting them on the market;

offers or supplies services under the sign;

imports or exports goods under the sign; ..."

Consistent with our earlier view that goods in transit are not intended to enter the Malaysian market, we would hold that goods in transit as far as the TDA in concerned, are goods that are not imported for the purpose of supply into Malaysia. We refer to the decision of the Federal Court in Goodness For Import and Export v Philip Morris Brands Sarl [2016] 5 MLJ 171; [2016] 7 CLJ 303, where the Court expressed the view that goods in transit under the Customs Act are not imported goods unless they become unaccustomed: [52] In the present case, the MALIMBO cigarettes were brought into Malaysia by sea. But then, goods in transit shall not be deemed to be imported unless the goods become unaccustomed goods. How do goods become unaccustomed goods under the Customs Act 1967? Under s 2 of the CA, 'unaccustomed goods' means goods in respect of which a breach of the provision of this Act or of any subsidiary legislation made thereunder has been committed. In the present case, the first defendant had paid a compound offered by the RMC for an offence of making false custom declaration under s 133(1)(a) of the CA, in respect of the MALIMBO cigarettes. If that is accepted as a breach of the provisions of the Customs Act 1967, then applying the definition of 'unaccustomed goods' under s 2 of the CA, the MALIMBO cigarettes had become unaccustomed goods, and consequently therefore, they were no longer goods bona fide in transit, but were imported goods. Further and/or in the alternative, the goods may be deemed to be unaccustomed goods under s 45 of the CA which provides: If goods, other than bona fide ship's stores, are found by a proper officer of customs in any vessel in territorial waters and such goods are not correctly accounted for in the manifest or other documents which ought to be aboard such vessel, then such goods shall be deemed to be unaccustomed goods and shall be liable to seizure. [53] In the present case, if it is proven that the false custom declaration involved the goods not having been correctly accounted for in the ship's manifest or other documents which ought to be aboard the vessel, then the goods shall be deemed to be unaccustomed goods, in which case under s 2 of the Act, the goods were imported goods. In other words, if either of the positions as aforesaid are established, then the MALIMBO cigarettes were not in transit, but were imported goods, in which case it would support the plaintiff's case of infringement of its trademark..."

Guided by that decision, we hold that unless the Cigarettes being goods in transit have become unaccustomed, then they cannot be regarded as goods imported into the country. The facts in the present Appeal do not show that any action has been taken under the Customs Act. The only action taken was by the Respondent under the TMA initially and then under sections 5 and 47 of the TDA.

To add, we take the position that the views expressed in some decisions of the European Court of Justice such as Montex Holdings Ltd v Diesel SpA [2006] ECR 1-10881, [2006] All ER (D) 105 (Nov) and Class International BV v Colgate-Palmolive Co [2005] ECR 1-8735, ETMR 12 (ECJ) and the English Court of Appeal decision in Nokia Corporation v Her Majesty's Commissioner of Revenue & Customs [2009] EWHC 1903 (Ch), [2009] All ER (D) 341, where it was held that the infringement of trademark requires goods to be introduced or placed in the market and that goods in transit must satisfy that requirement are to be preferred (see discussion in Law of Trade Marks and Passing Off in Malaysia, Teo Bong Kwang at page 632). Kitchin J in Nokia Corporation expressed the following: [49] I derive the following principles from all these cases. First, infringement of registered trade mark requires goods to be placed on the market and that goods in transit and subject to suspensive customs procedures do not, without more, satisfy this requirement. This principle has been applied in domestic law by the Court of Appeal in Eli Lilly v 8PM Chemists Ltd [2008] EWCA Civ 24, [2008] FSR 12, 100 BMLR 53; and it was recognized more recently by this court in L'Oreal SA v eBay International AG [2009] EWHC 1094. [50] Second, the position is different if the goods in the transit procedure are subject to the act of a third party which necessarily entails their being put on the market ("the Montex exception"). But the burden of establishing this rests on the trade mark proprietor. [51] Third, a mere risk that the goods may be diverted is not sufficient to justify a conclusion that the goods have been or will be put on the market

We would therefore prefer to hold the view that goods in transit are excluded from seizure and forfeiture under the TDA on the basic consideration that goods in transit are not goods brought into the country and as far as section 5(1)(c) is concerned, the Cigarettes in this Appeal were not at any time exposed or held in possession for supply into the country. Thus, we would described them as bona fide goods in transit [see the Federal Court in Goodness For Import and Export v Philip Morris Brands Sarl [supra] above].

We would mean bona fide goods in transit as goods that strictly remain in storage pending transshipment and not subject to any activity of repackaging, re-exporting or rebranding in the Free Zone as what happened in Philip Morris Products SA v Ong Kien Hoe [supra]. In that case, the Court found that the second defendant opened the containers, unstuffed the cigarettes by taking them out and storing the cigarettes in a warehouse at West Port, repacked them into outgoing containers and transshipped them in paper bags. All these acts evidenced the defendant's use of the trademarks. For those reasons, the Court held the argument raised by the defendant that the goods were in the Free Zone and therefore outside the purview of the TMA holds no merit.

We would therefore confine the decisions in Philip Morris Brands Sarl, Burberry Ltd and a recent decision of the High Court in Mohammad Faisol Ahmad Tajuddin & Anor v Malik Streams Corporation Sdn Bhd [2024] CLJU 831, [2024] MLJU 950 which followed the decision in Philip Morris Brands Sarl to hold that it is no defense to state that the infringing goods in question are goods in transit on the basis that the words "in the course of trade" in section 54 of the TMA ought to be interpreted widely, to their facts and the law under consideration that is the TMA.

Further, to hold that view would be consistent with the obligations of Malaysia under Article 51 of TRIPS. The TRIPS Agreement is a World Trade Organization ('WTO') accord setting minimum IP standards (patents, copyrights, trademarks, etc.) for member nations, including Malaysia. As a member of the WTO, Malaysia achieved full compliance of the TRIPS in 2015. Under the foot note to Article 51, it is stated as understood by members that there shall be no obligation to apply border control procedures (as exemplified by section 82 of the TMA) to imports of goods put on the market in another country by or with the consent of the right holder, or to goods in transit (see Article 51, Section 4: Special Requirements Related To Border Measures, TRIPS). We do not see why that obligation cannot be extended to the TDA.

Whilst we agree with the Courts in Philip Morris Brands Sarl, Philip Morris Products SA and Philip Morris Products Inc all referred to by the Respondent that the enforcement of Malaysian law cannot be ousted merely because goods in transit are placed in Free Zones, we would state that the applications of those laws such as the Customs Act 1967, Free Zone Act 1990, TDA and TMA must be subject to certain limitations equally placed by law. Section 82(8) of the TMA would be one of those instances. We would not hesitate to agree that if the Cigarettes here were not bona fide goods in transit then the Appellants would have been caught by section 5(1) of the TDA. As much as it is undesirable for importers to use Malaysia as a transit point to carry out businesses in infringement of third-party intellectual property rights, each case must be decided based on its facts and application of the law.

The High Court thus fell into error when it failed to consider the issue of goods in transit in greater depth. It was not sufficient for the Learned Judicial Commissioner to be satisfied in making the finding that there was false description within section 6(1)(g) of the TDA without fully appreciating that: (i) the Appellants did not expose for supply or have possession, custody and control of the Cigarettes for supply in Malaysia; and (ii) that the goods being bona fide goods in transit cannot be subject to seizure and forfeiture enforcement by the Respondent.

To add, we find that it was wrong for the Learned Judicial Commissioner to have placed the Appellant with the burden to apply to the Registrar under section 82 of the TMA to determine if indeed there was an infringement before relying on section 82(8). Firstly, the application by the Respondent for forfeiture was made under a provision of the TDA on an offence under section 5(1)(c) of the TDA. Secondly, an application under section 82 is made by the registered proprietor of a mark as a measure of border control to stop infringing goods from entering the country. Finally, the Appellant was not relying on section 82(8) of the TMA as the substantive provision to oppose the forfeiture application but rather by way of reference on a provision of law that excludes goods in transit and for the Court to consider if the same treatment ought to be given to goods in transit on an offence under the TDA.

In conclusion and guided by the guidelines in Mohd Yusri Mangsor & Anor v PP and Another Appeal [2014] 7 CLJ 897, [2014] 4 MLJ 875 on the powers of an appellate court, we find that there are reasons for this Court to interfere with the findings and decision of the High Court. There was insufficient judicial appreciation of the facts and the law.

The Appeal is thereby allowed and the decision of the High Court to seize and forfeit the Cigarettes contained in all the 21 containers is thereby set aside. The decision of the Sessions Court is therefore affirmed. Dated this 19th January 2026 DATUK MOHD RADZI BIN'ABDUL HAMID JUDGE COURT OF APPEAL PUTRAJAYA For the Appellant: P S Segaran and S Kandasamy Messrs P S Segaran & Co For the Respondent: Atiqah Binti Abdul Karim@Husaini Deputy Public Prosecutor Attorney General's Chambers