Nestle Products Sdn. Bhd. v Mad Labs Sdn. Bhd. (WA-22IP-31-04/2019)

MAD LABS SDN BHD

CHOW KIEN LOON (NRIC NO : 820129-14-6259) …DEFENDANTS (Consolidated and heard together with) IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR IN THE FEDERAL TERRITORY, MALAYSIA CIVIL SUIT NO. WA-22IP-85-12/2019 BETWEEN MAD LABS SDN BHD (COMPANY NO : 1044131-K) …PLAINTIFF AND NESTLE PRODUCTS SDN BHD (COMPANY NO : 45229-H) …DEFENDANT S/N G7tb4h0s5U2PqxqrP7pVg GROUNDS OF JUDGMENT A. INTRODUCTION [1] For ease of reference and consistency purposes, in this Grounds-

Nestle Products Sdn Bhd, the Plaintiff in Suit WA-22IP-31- 04/2019 (“Suit 31”) and the Defendant in Suit WA-22IP-85- 12/2019 (“Suit 85”), is referred to as “Nestle”;

(ii) Mad Labs Sdn Bhd, the 1st Defendant in Suit 31 and the Plaintiff in Suit 85, is referred to as “Mad Labs”;

(iii) Chow Kien Loon, the 2nd Defendant in Suit 31 is referred to as “CKL”; and

(iv) Mad Labs and CKL are collectively referred to as “the Defendants”. [2] In essence, the disputed matters in both Suits 31 and 85 concern the purported use of a quick-response code, abbreviated as “QR Code” generated by Mad Labs for Nestle (“Trial QR Code”) on Nestle’s instant S/N G7tb4h0s5U2PqxqrP7pVg noodle products under the “MAGGI Hot Cup” trademark and brand (“MAGGI Hot Cup Products”) and the subsequent events that had occurred pertaining to the Trial QR Code. The Trial QR Code developed by Mad Labs for Nestle was meant for a trial period of 6 months (November 2014 - May 2015). The dispute to be determined by this Court mainly concerns the alleged use by Nestle of the Trial QR Code on Nestle’s products post that trial period, May 2015 until October 2018. [3] There are three (3) appeals as follows:

3.1 In Suit 31, Nestle appealed against such part of this Court’s decision that –

Nestle has failed to establish that there was unlawful interference with Nestle’s trade and business by the Defendants.

(ii) Nestle has failed to establish that there was defamation and trade libel by the Defendants against Nestle.

(iii) Consequent to the finding in paragraph (ii) above, the dismissal of - S/N G7tb4h0s5U2PqxqrP7pVg

Nestle’s prayer for an order for the publication of a full apology by the Defendants for the publication of the offending statements as set out in the Statement of Claim, on terms as set out in Nestle’s Statement of Claim; and

Nestle’s prayer for an injunction to permanently restrain the Defendants whether by themselves or their directors, officers, agents or servants or otherwise from: i. further publishing or causing to be printed, published and/or distributed any document containing the Offending Statements or any similar words defamatory to Nestle; and ii. publishing any false statements on the Trial QR Code and/or Nestle’s products, business and/or trade.

(iv) Nestle’s prayers for general damages, aggravated damages and exemplary damages, were dismissed.

3.2 In the same Suit 31, the Defendants appeal against such part of this Court’s decision which allowed with costs Nestle’s claim against the S/N G7tb4h0s5U2PqxqrP7pVg Defendants for the tort of negligence for the failure to disable the links of the Trial QR Code.

3.3 In Suit 85, Nestle appeals against such part only of this Court’s decision which allows the Mad Labs’ claims and prayers and which decides that –

Nestle was negligent and has unjustly enriched itself in the wrongful and/or unauthorised use and/or printing of the QR Code on the packaging of Nestle’s products.

(ii) A declaration that Nestle has wrongfully and/or unlawfully utilised and/or printed Trial QR Code on Nestle’s products and/or packaging.

(iii) Mad Labs has the right to sell to Nestle the ability for Nestle to control the QR Code and is entitled to compensation for the unauthorised use of the QR Code without the permission of Mad Labs.

(iv) A permanent injunction that Nestle immediately cease and desist from utilising, printing and/or generating Trial QR Code on all its products and/or packaging. S/N G7tb4h0s5U2PqxqrP7pVg

Quantum of damages for Mad Labs’ claims for negligence and unjust enrichment in relation to and for the wrongful and/or unauthorised use and/or printing of the QR Code to be assessed. [4] This Grounds will address all three appeals. B. BACKGROUND Agreed facts [5] The agreed facts are:

At a date sometime in the third quarter of 2014, Nestle’s representative informed Mad Labs about Nestle’s plan to use a QR code for Nestle’s promotional campaign which featured and promoted instant noodle products under the “MAGGI Hot Cup” trade mark and brand.

(ii) On Nestle’s request, Mad Labs agreed to generate the Trial QR Code for the said campaign. S/N G7tb4h0s5U2PqxqrP7pVg

(iii) The Trial QR Code is as follows:

(iv) During an internal audit sometime in or around late 2018, Nestle discovered that the Trial QR Code was printed on products the MAGGI brand.

Nestle sought assistance of the Defendants sometime in October 2018 to redirect the website link of the Trial QR Code to Nestle’s dedicated website.

(vi) A meeting was held on 2/11/2018 between Nestle’s representatives and the Defendants, including Lim Chun Kiat, DW1.

(vii) On 6/12/2018 the MCMC issued a notice to the public on the Trial QR Code and the public advised to be vigilant while S/N G7tb4h0s5U2PqxqrP7pVg surfing the Mad Labs website that is linked to the Trial QR Code.

(viii) In the online magazine “Marketing Magazine”, there was an article entitled “Madlabs denies wrongdoing in Maggi QR Code fiasco”.

(ix) On 5/12/2018, The Star newspaper reported an article mentioning about the Trial QR Code on Nestle’s products that are redirecting users who scanned the said QR Code to purportedly offensive contents.

On 19/12/2018 MCMC issued a media statement.

(xi) When attempts by both parties to resolve their dispute failed in the ensuing days, it culminated into the suits filed by both parties. The Suits [6] As indicated in the earlier paragraph, the disputed matters in both Suits 31 and 85 concern the purported use of the Trial QR code generated S/N G7tb4h0s5U2PqxqrP7pVg by Mad Labs for Nestle on Nestle’s instant noodle products under the “MAGGI Hot Cup” trademark and brand “MAGGI Hot Cup Products” and the subsequent events that had occurred pertaining to the Trial QR Code. The Trial QR Code developed by Mad Labs for Nestle was meant for a trial period of 6 months (November 2014 - April 2015). The dispute to be determined by this Court mainly concerns the alleged use by Nestle of the Trial QR Code on Nestle’s products post that trial period, May 2015 until October 2018. [7] Nestle pleaded that at an internal audit in late 2018, it discovered that it had mistakenly printed the Trial QR Code on certain Maggi products, which was linked to a defunct Nestle campaign. As soon as it discovered the mistake, Nestle requested Mad Labs to redirect the website link of the Trial QR Code to Nestle’s dedicated website for Maggi products, as an interim measure. This happened for a week. Subsequently, Nestle discovered that the Trial QR Code was directing users to websites promoting gambling and some others which Nestle regarded as offensive. At the same time Nestle received negative comments from the public on its Facebook page. [8] Subsequent meetings were held between 2/11/2018 – 4/11/2018 which led to Mad Labs proposing for Nestle to purchase the Trial QR Code S/N G7tb4h0s5U2PqxqrP7pVg and its website link for USD10mil and a tentative removal of the so-called offensive pictures from the Mad Labs website linked to the said Trial QR Code. The events succeeding this include the issuance of the Advisory Notice by MCMC on the Trial QR Code. [9] Following the failure of parties to resolve their dispute on that alleged continued use of the Trial QR Code, in March 2019 Mad Labs filed Suit WA-22NCVC-121-03/2019 at the NCVC Court (“Suit 121”). In April 2019 Nestle filed Suit 31 at the IP Court. Pursuant to a Consent Order dated 9/12/2019, Suit 85 and Suit 121 were consolidated, and Mad labs re-filed its Suit 121 at the IP Court as Suit 85. [10] In Suit 85, Mad Labs is claiming against Nestle for:

breach of implied contract;

unjust enrichment; and

negligence. [11] Mad Labs prayed for the following reliefs:

compensation for the services provided to Nestle since 2014 until the date of the filing of the Suit in March 2019 based on royalty payment amounting to RM139,344,262.25 (see S/N G7tb4h0s5U2PqxqrP7pVg method of calculation of royalty by Mad Labs in paragraph 45 of SOC);

(ii) declarations that Nestle had wrongly used and printed the QR Code on the Nestle’s products and packaging;

(iii) damages; and

(iv) order and/or injunction prohibiting Nestle from continuing to use/print/generate the QR Code on any of Nestle’s products/packaging. [12] In Suit 31, Nestle claimed against Mad Labs and CKL for:

negligence;

unlawfully interference with Nestle’s trade and/or business with the intention of injuring Nestle’s goodwill and reputation; and

defamation and trade libel. [13] Nestle prayed for the following reliefs:

Declaration that Mad Labs and CKL do not own any proprietary or IP rights in the QR Code;

(ii) Defendants ordered to publish public apology for the offending statements;

(iii) Injunction against Mad Labs and CKL to further publish the offending statements against Nestle and any false statements on the QR Code;

(iv) Mad Labs and CKL to permanently disable linking the QR Code to any website including www.madlabs.com.my; and

Damages. The Witnesses [14] At the trial, six (6) witnesses appeared for Nestle and three (3) witnesses for the Defendants. Nestle’s Witnesses were: Name Position/Occupation Reference Konrad Klints Director of KPMG Services Pte Ltd (Expert Witness) PW1 Geetha a/p Balakrishna Business Executive Officer in the Food Business Unit of Nestle PW2 S/N G7tb4h0s5U2PqxqrP7pVg Name Position/Occupation Reference Khong Wei Mun IT eBusiness Lead of Nestle PW3 Mohamed Firzan Mulafer Managing Director of Publicis Malaysia PW4 Khairul Syahar bin Khalid Partner in Entropia (M) Sdn Bhd / Fomer Digital Engagement Manager of Nestle PW5 Genevieve Yeoh Swee Hoon Business Controller in the Food Business Unit of Nestle PW6 The Defendants’ witnesses were: Name Position/Occupation Reference Lim Chun Kiat Business Partner of CK DW1 Navonil Subrata Roy Founder Director of Blue Sky Thinking Sdn Bhd (Expert Witness) DW2 Chow Kien Loon Director and Shareholder of Mad Labs (Second Defendant in Suit 31) DW3 S/N G7tb4h0s5U2PqxqrP7pVg C. THE PARTIES’ CASES C.1 Nestle’s Case Tort of Negligence [15] Nestle’s claim against the Defendants for the tort of negligence, extracted from Nestle’s solicitor’s written submissions, are briefly as follows:

The Trial QR Code is a plain QR Code that has no aesthetic value in appearance. This was conceded by CKL in his evidence that the Trial QR Code is not special or unique and the Trial QR Code was generated following the required standards for QR Code generation based on source code that is publicly available. (Agreed Notes of Proceedings 4, DW3, Encl. 124, page 10 lines 27-32).

(ii) Further, by virtue of its plain feature, the mere presence of the Trial QR Code per se on the MAGGI product packaging does not attract buyers to purchase the said product. S/N G7tb4h0s5U2PqxqrP7pVg

(iii) The burden is upon the Defendants to prove that the Trial QR Code was generated by their alleged proprietary software.

(iv) Apart from the Defendants' own admission that the generation of the Trial QR Code must conform to universal standards, and that software for generating QR Codes are publicly available, the Defendants have not produced evidence in Court to show how they created the Trial QR Code and/or what software they used, notwithstanding that these are facts and evidence clearly within the Defendants’ own knowledge and possession.

The Defendants’ failure attracts section 114(g) of the Evidence Act 1950 in that the Defendants’ failure to produce such evidence raises the adverse inference that it does not have any such proprietary software.

(vi) Given that the Defendants are in full control of the Mad Labs Website and the Trial QR Code at all times, the Defendants’ wilful refusal and/or neglect to redirect the link in the Trial QR Code to the MAGGI Website or to permanently disable the link of the Trial QR Code to avoid the redirection to websites that S/N G7tb4h0s5U2PqxqrP7pVg contain damaging material had caused loss and damage to Nestle’ goodwill and reputation due to the adverse and negative publicity that was generated by the linking of the Trial QR Code to illegal websites.

(vii) Nestle’s loss and damage are further aggravated when the Defendants persistently refused and/or neglected to permanently disable the link in the Trial QR Code. This is shown through CKL’s own evidence in Court which had confirmed that even though the Defendants have the technical ability to redirect the link in the QR Code, they deliberately chose not to take any action unless Nestle gave an indemnity and a waiver of liability to them (Agreed Notes of Proceedings 4, DW3. Encl.124, page 26 lines 11 - 33, page 30 lines 1 - 13).

(viii) The fact that the Defendants sought a waiver of liability from Nestle is tantamount to an admission of wrongdoing that the Defendants had wanted Nestle to absolve them.

(ix) The Defendants were clearly imposing an unreasonable condition as the act of redirecting the Trial QR Code is within the Defendants’ control, and not Nestle’s. S/N G7tb4h0s5U2PqxqrP7pVg Unlawfull interference with Nestle’s trade and/or business with the intention of injuring Nestle’s goodwill and reputation [16] Nestle’s claim against the Defendants for this heading, extracted from Nestle’s solicitor’s written submissions, are briefly as follows:

As negligence and wrongdoing on the part of the Defendants are proven, the Defendants must be found to have unlawfully interfered with Nestle’s trade and/or business, through their acts–

to deliberately changing the website link in the Trial QR

willfully refusing and/or neglecting to redirect link of the Trial QR Code to the MAGGI Website or to permanently disable the link of the Trial QR Code; and/or

procuring, causing and/or enabling third parties to generate adverse and negative publicity on the Trial

(ii) Due to the adverse and negative publicity that was generated by the Defendants’ abovementioned unlawful acts, Nestle had not only expended substantial costs and time to address and respond to the false allegations by third parties at social media platforms and media forums, but also suffered damage to its goodwill and reputation in Malaysia. Defamation and trade libel [17] Nestle’s claim against the Defendants under this heading, extracted from Nestle’s solicitor’s written submissions, are briefly as follows:

The alleged “Offending Statements” issued by CKL are as stated in paragraph 51 of the Statement of Claim (Bundle BP, Encl.25). The impugned statements were published in an article in the online magazine “Marketing Magazine”, which was republished by CKL in his Facebook page.

(ii) The impugned statement that appeared in the Marketing Magazine was as follows: “Nestle had their hands on the code since 2014. When Mad Labs first created the code, it was for a trial test run for one of S/N G7tb4h0s5U2PqxqrP7pVg Nestle’s campaigns which would run for six months. The agreement was that if Nestle was interested, they could come back and set a discussion. However, there was no response so the project was canned. Fast forward four years, at the end of October 2018, Nestle told me that they have accidentally printed the QR Code on 170,000 tonnes of packages across 38 of their products”; “The question at hand now is not really about the technicality of the QR code. Instead, the legal liabilities that come with operating the QR code which is linked to an estimated 2.6 billion packets of noodles.”

(iii) The weblink to the said article was republished by CKL in his Facebook page on 14/12/2018, accessible at the link: https://www.facebook.com.ronchow/posts/10156564312939193

(iv) Nestle argued that the impugned statement tantamount to trade libel and defamation by way of innuendo that-

Nestle unlawfully used the Trial QR Code which belongs to Mad Labs;

Nestle is a vicious large corporation that exploits and bullies small corporations;

Nestle is unethical and dishonest and had deliberately deceived Mad Labs by utilising the Trial QR Code for many years for free without informing Mad Labs; and

Nestle had unjustly benefitted from the Trial QR Code without paying Mad Labs.

The said “Offending Statements” are misconceived and without basis as the alleged figures are not supported by any evidence.

(vi) The Defendants did not dispute that CKL had issued and republished the “Offending Statements”.

(vii) By reason of the publication of the said impugned statements, Nestle had been subjected to hatred, contempt, and ridicule from the public. [18] In view of all the torts committed when CKL was the sole director of Mad Labs, and evidence on record including from CKL’s own testimony, S/N G7tb4h0s5U2PqxqrP7pVg Nestle argued that it is amply established that CKL is the controller, alter ego and “directing mind and will” of Mad Labs at all material times. As such, the Defendants should be jointly and severally held liable for all torts committed against Nestle. Nestle’s answers to the Defendants’ claims Unjust enrichment [19] As for Mad Labs’ claim that Nestle has been unjustly enriched by virtue of Nestle’s use of the Trial QR Code after the trial period ended, Nestle argued that-

The Defendants have failed to adduce evidence that Nestle had purportedly obtained any financial gain or benefit from the mere fact of the Trial QR Code appearing on the packaging of the MAGGI Hot Cup Products.

(ii) In particular, there is not a single shred of evidence that the Defendants have rendered the purported additional services to Nestle such as providing usage reports, consumer analysis, etc. S/N G7tb4h0s5U2PqxqrP7pVg

(iii) Notwithstanding that the Trial QR Code is linked to the Mad Labs Website and thus the Defendants would have full information of scans of the Trial QR Code to benefit from the MAGGI website which was supposed to be the destination page of the Trial QR Code, none was ever adduced as evidence in Court.

(iv) Section 114(g) of the Evidence Act 1950 therefore must be invoked against the Defendants that there was no traffic and negligible use of the Trial QR Code after the end of the Campaign Period up until the discovery of the printing error by Nestle.

That this is the case is reinforced positively by Nestle’s evidence through the Google Analytics Reports in 2018 and 2021 (Exhibit P2, at Bundle K, page 41 and Exhibit P3, Bundle K, page 100) that was obtained from Nestle’s MAGGI Website which tracked the number of scans on the Trial QR Code between 2015 to 2018.

(vi) As the Trial QR Code was meant for the Campaign which had ended in mid-2015, any user who scanned after the trial period S/N G7tb4h0s5U2PqxqrP7pVg of the Trial QR Code would not have been directed to the MAGGI Campaign Website which has since became defunct. Instead that user would be led to the “Error 404” webpage. As such, there cannot be any unjust enrichment on the part of Nestle. Implied agreement between Mad Labs and Nestle [20] In answering the Defendants’ pleading that there was an implied agreement between Nestle and Mad Labs, Nestle asserted that-

The onus is on Mad Labs to prove the existence of the implied agreement between parties for the utilization of the Trial QR Code.

(ii) In fact, there is compelling evidence adduced through the testimony of PW2 and PW5 and admissions during cross-examination of DW1 and DW3 which clearly cemented the fact that no implied agreement has ever existed between the parties.

(iii) There were simply no terms and conditions that parties had come to an agreement on before or after the MAGGI Hot Cup S/N G7tb4h0s5U2PqxqrP7pVg Campaign had ended, especially on remuneration based on cost per print as claimed by the Defendants.

(iv) The cost per print calculation is implausible when the Defendants have not even set the quantity in which the Trial QR Code can be printed.

The Defendants have only asserted for the first time the existence of such implied terms when it commenced legal action against Nestle.

(vi) Mad Labs’s entire claim based on cost per print is clearly an afterthought.

(vii) The fact that Mad Labs had never imposed any commercial terms is further reinforced by the numerous other dynamic QR Codes such as the “Lagi Sihat” and “Dear Nestle” campaigns which the Defendants had provided to the Plaintiff for free.

(viii) CKL derived benefits indirectly from Nestle through his other company, Kraken Interactive, which was a registered vendor S/N G7tb4h0s5U2PqxqrP7pVg of Nestle and had provided commercial services which Nestle had duly paid.

(ix) Most vital is the fact that Mad Labs has not adduced any evidence that it charges its other clients based on cost per print basis or that this is industry practice. Negligence [21] In relation to Mad Labs’ claim that Nestle was negligent by utilising and/or printing the Trial QR Code on Nestle’s Hot Cup Products and/or packaging since May 2015 for commercial purposes other than the original purpose the Trial QR Code was for, Nestle argued the following:

The Defendants have not adduced a single shred of evidence that the Trial QR Code was continuously printed on all MAGGI Hot Cup noodles from May 2015 to 2018.

(ii) On the contrary, the evidence brought during the trial by Nestle in the form of the Google Analytics Reports in 2018 and 2021 (Exhibit P2, Bundle K, page 41 and Exhibit P3, Bundle K, page 100) show that there was simply no scan of the Trial QR Code after the end of the Campaign period until 2018 S/N G7tb4h0s5U2PqxqrP7pVg when Nestle discovered the error of printing the Trial QR Code.

(iii) Further, the error of printing of the Trial QR Code cannot legally be tantamount to negligence. First, Nestle had explained how the error was undetected as a QR Code is treated as a non-variable element on the packaging of Nestle’s products and it is virtually impossible to detect the error from a naked eye.

(iv) Secondly, Nestle took prompt remedial action when the mistaken printing was discovered during an audit by contacting the Defendants for redirection or disabling of the link of the Trial QR Code and ceasing printing and production of all packaging with the Trial QR Code.

In other words, the Defendants would never have discovered that the Trial QR Code was printed in error had Nestle not approached the Defendants for assistance.

(vi) If Nestle had bad intentions of profiting from the Trial QR Code, it did not make sense to notify and alert the Defendants for help.

(vii) In all of these, Nestle was prepared to reimburse the Defendants for their assistance and quote had been asked from the Defendants repeatedly for which they never provided.

(viii) There is further no legal basis for negligence as no loss or damages have been suffered by Mad Labs by virtue of the mistaken printing of the Trial QR Code on the packaging of the Plaintiff’s in 2018.

(ix) Based on the Google Analytics Reports in 2018 and 2021 (Exhibit P2 and Exhibit P3), for the period of 2016 up to September 2018, no referral traffic was recorded from the Trial

It therefore follows that there cannot be any loss or damage suffered by Mad Labs given that there was no use of the same.

(xi) The fact that the Defendants were not aware of the mistake until alerted by Nestle reinforces the case that the Defendants had not suffered any damage or loss.

(xii) As for alleged losses post September 2018, Mad Labs claims that it has suffered loss and damage due to the alleged hacking of the Mad Labs Website and server caused by the mistaken printing of the Trial QR Code on Nestle’s Hot Cup Products in 2018.

(xiii) To this end, Mad Labs has not adduced any evidence to show that its Mad Labs Website has been hacked other than a police report that was never investigated or followed through.

(xiv) Even if its Mad Labs Website was hacked, there is no evidence whatsoever that shows this was caused by the Trial

(xv) Nestle’s expert witness, PW1, had given incontrovertible and unchallenged evidence that the Trial QR Code could not plausibly lead to the hacking of the Mad Labs Website, especially given the very low traffic volume. S/N G7tb4h0s5U2PqxqrP7pVg

(xvi) Even if Mad Labs’ Website was hacked, it could be quickly restored, as is the industry practice.

(xvii) On the contrary, evidence by Nestle had incurred substantial costs to rectify the mistake by writing off all packaging materials containing the Trial QR Code that had not been used (WSPW2B, Encl.83, Q&A 46). The Defendants not entitled to their “cost-per-print” claim [22] It was Nestle’s argument that the Defendants claim for “cost-per-print” against Nestle for the alleged printing of the Trial QR Code on Nestle’s products between the period May 2015-2018 must be dismissed on the following grounds:

The Trial QR Code is a plain QR Code that has no aesthetic value in appearance.

(ii) As the Trial QR Code is plain and has no design or aesthetic value on its own, it attracts no copyright protection as an artistic work. S/N G7tb4h0s5U2PqxqrP7pVg

(iii) The Trial QR Code is neither a literary nor artistic work and there is no effort expended by the Defendants to generate the Trial Code.

(iv) Thus, there cannot be any independent copyright attached to the plain image of the Trial QR Code on its own or the source code for the Trial QR Code itself which is made available publicly. Without any copyright or other recognised proprietary right, there is no legal basis to the Defendants’ claim based on cost per print for the printing of the Trial QR Code on the packaging of the MAGGI Hot Cup noodles per se. C.2 Mad Labs and CKL’s case [23] The Defendants’ case against Nestle as set out in their pleadings and extracted from their solicitor’s submissions are in brief as follows:

Mad Labs maintains all rights and control over the Trial QR Code, Mad Labs’ Site and the Mad Labs Code System.

(ii) The Trial QR Code is linked to the Mad Labs’ Site by default, which would then direct Users to the Maggi or Nestle website. S/N G7tb4h0s5U2PqxqrP7pVg The redirection from the Mad Labs’ Site to the Maggi or Nestle website would be through Trial QR Code System.

(iii) The tool used to generate the Trial QR Code belongs to CKL’s companies, Mad Labs and/or Kraken Interactive, another company owned by CKL.

(iv) All redirection services, including for the Maggi Hot Cup Campaign would be operated by Mad Labs.

The Trial QR Code was generated and provided to Nestle for purposes of marketing and/or promotional activities, i.e. the Maggi Hot Cup Campaign, for engagement with customers and enticing customer, in addition to merely only providing nutritional information about a product.

(vi) There was wrongful, unauthorized and/or unlawful usage and/or printing of the Trial QR Code by Nestle on its products and/or products packaging beyond May 2015.

(vii) The Trial QR Code was meant for Nestle’s use at a trial period of 6 months only. S/N G7tb4h0s5U2PqxqrP7pVg

(viii) There is / was an implied contract between Mad Labs and Nestle, the terms of which was communicated and represented to Nestle at the outset, prior to generation of the Trial QR Code to Nestle.

(ix) The fact that Nestle continue utilizing and/or printing the Trial QR Code beyond May 2015 only indicates that Nestle had accepted the terms that were represented to it.

Nestle had therefore breached the implied contract when it failed to pay a royalty-like payment as agreed.

(xi) Nestle had wrongfully benefitted and/or unjustly enriched or profited from the unlawful, unauthorized and/or wrongful usage of the Trial QR Code past May 2015, in which Nestle ought to be liable to compensate Mad Labs for such utilization all these years.

(xi) Nestle is and/or was negligent in utilising and/or printing the Trial QR Code on its products and/or packaging since May 2015 and/or for its commercial purposes other than for what it S/N G7tb4h0s5U2PqxqrP7pVg was originally meant for, i.e. the 6-months trial period for the Maggi Hot Cup Campaign.

(xii) Mad Labs’ Site was hacked as a result of the publicity garnered on social media from Nestle’s wrongful printing of the Trial QR Code on its product packaging after May 2015, where in turn, Nestle made various allegations, complaints and/or reports against Mad Labs and/or the Mad Labs’ Site which were malicious and clearly, made in bad in faith.

(xiii) Nestle ought to be made liable to compensate Mad Labs for services rendered and/or work done throughout, commencing from 2014 to-date (even up until before these disputes were filed in Court) on quantum merit basis; and/or pursuant to Section 71 of the Contracts Act 1950.

(xiv) Mad Labs’ claim under Suit 85 for RM139,344,262.25 is fair, justified and made with proper basis, given that Nestle had utilised and/or printed the Trial QR Code on at least 38 SKUs (stock keeping units) and/or type of products under the Maggi brand, on at least approximately 170,000 tonnes of products. S/N G7tb4h0s5U2PqxqrP7pVg

(xv) Mad Labs has suffered and continues to suffer losses and damage as a result of Nestle’s unlawful, wrongful and/or unauthorised usage of the Trial QR Code after May 2015.

(xvi) Based on all the above, this Court must allow the Defendants’ claims against Nestle for-

breach of implied contract;

unjust enrichment; and

negligence. Defendants’ answers to Nestle’s claims [24] The Defendants answers to Nestle’s claims can be summarised briefly as follows:

Nestle’s allegations of negligence against Mad Labs and CKL is misconceived and without basis and Nestle cannot now seek to shift blame to Mad Labs and/or CKL for Nestle’s own actions. In any event, there is no such duty of care on the part of Mad Labs and CKL, as alleged by Nestle, whether in law or otherwise. S/N G7tb4h0s5U2PqxqrP7pVg Unlawful interference of trade

(ii) There is no valid cause of action against Mad Labs and CKL for the tort of unlawful interference of trade, as there is nothing to suggest that Mad Labs and/or CKL had the slightest bit of intention even of unlawfully interfering with Nestle’s business. Trade libel

(iii) The purported cause of action for trade libel raised against Mad Labs and CKL is unfounded and none of the facts pleaded by Nestle would enable it to succeed in a cause of action of defamation let alone for trade libel. Defamation

(iv) Nestle have failed to satisfy all three elements to establish a claim for defamation against Mad Labs and CKL. As such, Nestle has failed to disclose any valid and reasonable cause of action against Mad Labs and CKL for defamation, and as such, the purported defamation claim must fail, accordingly. S/N G7tb4h0s5U2PqxqrP7pVg Lifting of Mad Labs’ corporate veil

None of the purported causes of actions pleaded against CKL and/or Mad Labs would entitle Nestle to lift the corporate veil to hold CKL personally liable for any purported and/or wrongful acts of Mad Labs. Nestle has clearly failed to satisfy the prescribed tests under the relevant principles of the law to enable this Court to lift the corporate veil and hold CKL personally liable. In fact, nothing in Nestle’s pleadings and/or none of the facts pleaded therein would justify the lifting of the corporate veil.

(vi) In view of Nestle having failed to prove its alleged torts committed by the Defendants, and that Nestle had failed to satisfy the prescribed tests to lift Mad Labs’ corporate veil, the Defendants cannot be held jointly and severally liable for the alleged torts. D. FINDINGS [25] Relying on the evidence of the witnesses during the course of the trial and having considered the written and oral submissions of counsels of both parties, the brief facts surrounding the dispute between the parties are as follows: S/N G7tb4h0s5U2PqxqrP7pVg

It was sometime on or about last quarter of 2014, Mad Labs was informed that Nestle was considering the idea of using a QR Code for its Maggi Hot Cup products and/or campaign for a limited period.

(ii) For that purpose, Nestle’s representative, Mr Khairul Syahar bin Khalid (PW5) approached CKL to explore and use the Mad Labs’ Dynamic QR Code system for the Maggi Hot Cup Campaign.

(iii) This Court made a judicial notice that although QR Code is very widely used in Malaysia now, the usage of QR Code, particularly the Dynamic QR Code as developed by Mad Labs for Nestle in the Trial QR Code was not common or widespread during the period in issue, 2014-2015.

(iv) Despite being a world-class food manufacturing conglomerate, Nestle does not have the software, tools and/or expertise to generate its intended QR Code. S/N G7tb4h0s5U2PqxqrP7pVg

Mad Labs was one of the few, if not only, providers in the Malaysian market to have such expertise in the Dynamic QR Code at the material time.

(vi) It was discussed between the parties that the QR Code to be developed by Mad Labs for Nestle’s trial run would be a Dynamic QR Code, and not a static one. Parties agreed that a Dynamic QR Code is more practical than the static one, especially for Nestle’s promotional purposes and usage. This was confirmed by PW5’s testimony.

(vii) The mechanism of the Dynamic QR Code is briefly as follows:

All the scans of the said Trial QR Code will be sent into a system reposted within Mad Labs QR Code system;

Once the scanning is linked onto the said system, it would then check with the database for the destination URL for that period;

Once the destination URL is identified, the system then redirects the browser to the destination URL; and

All redirections will be tracked by the system and stored into the analytic database for reporting purposes.

(viii) All these features of the Dynamic QR Code were within Nestle’s knowledge.

(ix) Representatives of Nestle and Mad Labs discussed the commercial terms applicable to parties in the event Nestle agrees to continue using the Trial QR Code beyond the 6- month trial period. [26] The Defendants argued that although there was no payment sought from Nestle and/or for Nestle’s usage of the Trial QR Code during the 6- months trial period for the Maggi Hot Cup Campaign, as clearly it was a ‘trial-run’, that did not mean that Nestle could utilise and print the Trial QR Code on its products packaging indefinitely without any payment to the Defendants. [27] The Defendants argued further that these were represented, highlighted and discussed with Nestle prior to the development of the Trial S/N G7tb4h0s5U2PqxqrP7pVg [28] Nestle was fully aware that should Nestle decide to continue using the Trial QR Code beyond the 6-months trial period, parties would then formalize and enter into a formal commercial contract which would encapsulate the terms and matters mentioned above. [29] Mad Labs’ main contention was that it had communicated to Nestle’s rep, PW5, that if Nestle intended to continue to use the Trial QR Code after the trial period, it would encompass not only the use of the QR Code by Nestle but also the ancillary services to be provided by Mad Labs, as set out specifically in paragraph 5.1 (a) - (f) of Mad Labs’ SOC. [30] In October 2018 Mad Labs was contacted by Nestle’s representative requesting Mad Labs to re-direct the QR Code to Nestle’s website as the Maggi Hot Cup Campaign had ended by that time. At this time Mad Labs realised the QR Code had continued to be used on Nestle’s products and packaging. [31] Mad Labs contended that as there was continued use of the Trial QR Code by Nestle, by conduct it triggered an Implied Contract between Mad Labs and Nestle, with terms as set out in paragraph 5.1 (a)-(f) of Mad Labs’ Statement of Claim. Mad Labs further contended that as the continued use by Nestle of the QR Code between May 2015 – Oct. 2018 S/N G7tb4h0s5U2PqxqrP7pVg was without the consent and permission of Mad Labs, Nestle had breached the Implied Contract as Mad Labs had not only continued to use the QR Code in question on Nestle’s products without Mad Labs’ permission and consent, but without any payment. Mad Labs contended that it is entitled to royalty payments – calculated based on the number of Nestle products and packaging containing the QR Code – as specifically set out in paragraphs 10, 44, 45 and 47 of Mad Labs’ SOC. [32] Mad Labs pleaded that the unlawful/unauthorised usage of the Mad Labs QR Code by Nestle’s continuous usage of the QR Code after the 6- months trial period (Nov. 2014 – May 2015) comprised an act of negligence on Nestle’s part, for its failure to verify and check the appropriateness of the usage of the QR Code on its products and packaging’s throughout that period of May 2015 – Oct. 2018. Mad Labs also pleaded that that unlawful continued usage of the QR Code for the said period had wrongfully benefitted and unjustly enriched Nestle, for which Mad Labs shall be compensated based on the calculation as stated earlier. [33] On 5/12/2018 The Star had published a report that Nestle’s products containing the QR Code had been re-directed to undesirable sites. Following the newspaper report, on 6/12/2018 MCMC issued a public S/N G7tb4h0s5U2PqxqrP7pVg statement reminding the public to be cautious in accessing the website linked by the QR Code. On 12/12/2018 Mynic had suspended Mad Labs website which was alleged to breach the Common Gaming House Act

On 19/12/2018 the suspension was lifted following MCMC’s statement that the matter is a commercial issue between Nestle and Mad Labs. [34] Mad Labs pleaded that the end-result of the actions of the authorities showed that Nestle’s reports to the authorities over the issue was malicious and mala fide. This had caused Mad Labs to suffer loss and damages consequent to the risks and exposure arising from the adverse publicity created and the suspension. [35] Relying on the Federal Court decision in Kondisi Utama Sdn Bhd v Baltic Agencies Pte Ltd and another [2019] 1 MLJ 181, Mad Labs argued that there was an implied contract between parties at all material times by virtue and inference of the conduct of Nestle and its lawful representatives. S/N G7tb4h0s5U2PqxqrP7pVg Commercial terms and Implied Terms [36] This Court found that the evidence showed clearly that the commercial terms of the usage of the Trial QR Code post-trial period were discussed between the representatives of Nestle and the Defendants. This Court also found that the evidence showed that the parties agreed that Mad Labs did not only provide the Trial QR Code to Nestle but Mad Labs also the ancillary services to Nestle, all at no costs during the 6- month trial period. It was undisputed that the Defendants had willingly developed and provided the Trial QR Code and the ancillary services during the 6-month trial run (November 2014 – May 2015) to Nestle at no costs. [37] However, this Court cannot agree with the Defendants’ contention that the fact that there were discussions on “what will happen if Nestle decides to continue using the services of Mad Labs post-trial period” cannot confer on the Defendants any form of legitimate or reasonable expectation that Nestle would continue to engage Mad Labs post-trial period. Neither is it reasonable for the Defendants to assume that the provisions of services by Mad Labs to Nestle post-trial period would be agreed between parties based on the commercial terms as discussed by the representatives of both parties. There was no evidence that this was S/N G7tb4h0s5U2PqxqrP7pVg the understanding, intention and/or representations between parties, at all material times. [38] The Defendants were correct to conclude that as Nestle did not display any further interest past the trial period on the Trial QR Code and that there was lack of communication and/or response from Nestle, therefore, it was assumed that Nestle would not been pursuing any further usage, utilisation and printing of the Trial QR Code on its products packaging, after the trial period. [39] As far as Nestle was concerned, the proposed usage of the QR Code was part of Nestle’s trial, test-run and/or experiment in its promotional activities and/or marketing campaign for its products, at that point in time. This was in line with Nestle’s global marketing strategy in promoting its products, inter alia, through the usage of a QR Code on its products packaging which, in the circumstances of the present case, it was on Nestle’s Maggi products. This was confirmed by PW3 and PW5: NN : So what’s the purpose of the Mad Labs QR Code on the product packaging? KHONG (PW3) : The Mad Labs QR Code on the packaging to my knowledge or informed by the brand team is to…is for a promotional campaign at that time. And it is only printed on certain products as a trial period, as a trial exercise beyond the date. S/N G7tb4h0s5U2PqxqrP7pVg NN : Ok. Now do you agree with me that the purpose of the Mad Labs QR code for the Hot Cup campaign, even though it’s, or maybe it was for a contest, but essentially, it was for marketing and promotion of that particular product, correct? Generally? SYAHAR (PW5) : Correct, yes. [40] The usage of the QR Code was also intended to enhance the Nestle brand and the sales of the Nestle products, including the Maggi brand. As such, part of the promotional and marketing strategy would also include, amongst others, to provide product information to consumers via the QR Code, to enable consumers to make informed decisions as well as to encourage purchase of products – with just a scan of the QR Code. This was confirmed by PW2 and PW5 during cross-examination: NN : Ok. So, the reason is ultimately, to provide quick access information which would benefit Nestle as well. Correct? It gives a sort of assurance to the customer that if they want a certain information, they have a quick access with, via the QR code. Correct? GEETHA (PW2): One of the options, yes. NN : You don't know, yes? So in essence, generally, based on what you’ve answered earlier, do you agree that the Mad Labs QR code was intended to enhance the brand, whether directly or indirectly, as well as the sales of those particular products at the time, correct? It’s part of it. SYAHAR (PW5) : Yes. [41] PW5 also testified that the QR Code would encourage engagement with consumers and awareness of products offered by Nestle. PW4 S/N G7tb4h0s5U2PqxqrP7pVg testified that the QR Code would entice customers to look into a product or even to purchase a product, in addition to providing ease of access to information. PW3 also testified that the proposed usage of the QR Code was part of Nestle’s global initiative / strategy at the material time and not just within Malaysia. This have been reflected in various articles published by Nestle as well as Nestle’s Annual Reports from year 2012 to 2018. [42] The above evidence showed to this Court that the purpose, role and function of the QR Code and its implementation is crucial to Nestle, and its brand, not just within Malaysia but globally. [43] Nestle’s intention at the material time was that Mad Labs would not only provide and generate the Trial QR Code for Nestle’s usage for the Maggi Hot Cup Campaign, the related-services or ancillary thereto during the 6-month trial run, but beyond that period and for wider purposes. Nestle recognised the potential of the QR Code and the generated data and information for Nestle’s marketing, research and development, among others. This was confirmed by PW5 during cross-examination: NN : Correct. Now this kind of reports, these analytics report, if at all, these would basically assist Nestlé for their marketing research and development purposes, correct, this kind of reports? SYAHAR (PW5) : Correct. S/N G7tb4h0s5U2PqxqrP7pVg [44] After 6 months (of being provided with Trial QR Code), if Nestle wishes to continue to use the said QR Code whether for the Maggi Hot Cup Campaign or any other products and/or campaigns of Nestle’s, parties shall proceed to discuss and formalize the commercial terms, in respect of the usage of the Trial QR Code and the services that would entail there from. This was also confirmed by PW5: NN : Yes. So it would entail a formal agreement to be signed between parties before Nestlé continue to print the Mad Labs QR code beyond the trial period, correct? SYAHAR (PW5) : Correct. [45] The Defendants’ solicitor argued that the parties had discussed that in the event that the Trial QR Code is used by Nestle beyond the 6-month period, and considering the added role and/or services to be provided by Mad Labs, Mad Labs would be entitled to amongst others, a royalty-like payment from Nestle, in which the amount of payment would essentially be based on the number of products and/or products packaging containing the QR Code. This is in the event Nestle continues utilising and printing the Trial QR Code post the Maggi Hot Cup Campaign. The Defendants grounded this argument, among others, on the following testimony of PW5: NA : Ok, so meaning to say, meaning you agree with me that if Nestlé uses the Mad Labs QR code beyond the campaign, S/N G7tb4h0s5U2PqxqrP7pVg beyond the trial, obviously there must be some commercial consideration or payment to Mad Labs, correct? Logically? SYAHAR: Logically, yes. [46] Pursuant to the various discussions, representations and/or understanding reached with Nestle, on 17/11/2014 Mad Labs duly provided the Trial QR Code to Nestle. This was confirmed by PW5 during cross-examination: NN : Can’t recall ya. Ok, let me refer to you the, refer you to the document, Enclosure 47, page 1. We will share screen. And also refer to Enclosure 77, which is a clearer copy, ok, at page 1, which we have shared screen. Ok, here, this is the email dated 17.11.2014 between CKL and yourself, correct? NN : So based on this email, this was actually when Mad Labs sent over QR code for the Maggi Hot Cup campaign, correct? [47] In addition to generating and providing the Trial QR Code to Nestle, Mad Labs had also rendered certain related services, on a trial-basis and for which was also meant for a limited time. These ancillary services include the following:

Placing security measures in the Trial QR Code system, which was agreed by PW5 during cross-examination: S/N G7tb4h0s5U2PqxqrP7pVg NN : Can’t recall ya. Now Mad Labs would have to put in place certain security measures to protect the data obtained from the usage of the Mad Labs QR code, correct?

Re-directing the Trial QR Code on two separate occasions in March and April 2015, as confirmed by PW5: NN : Now for the Mad Labs QR code system, for the Mad Labs QR code, sorry, the redirection services and the website redirection services will be operated by Mad Labs itself, correct? This is for the Maggi Hot Cup campaign?

Directing, tracking and reporting traffic numbers of the QR Code usage by Users in real time, as testified by PW5: NN : Now what was the intention to have the Mad Labs QR code for the Hot Cup campaign in the first place? Where, what kind of information that will provide the consumers with when they scan the Mad Labs QR code? SYAHAR : It was not about the, it was, it was about the functionality of being able to move the URL’s or change the URL’s as we go along. [48] The evidence before this Court further showed the following facts:

Sometime on or around late October 2018, CKL was contacted by one of Nestle’s representative enquiring about the Trial QR Code.

(ii) Nestle and/or Nestle’s Representative requested that the link and/or websites in which the Trial QR Code directs to (from www.madlabs.com.my) to be directed to certain other websites of Nestle.

(iii) At that point in time in October 2018, the Maggi Hot Cup Campaign website was already defunct and/or inoperative.

(iv) Nestle’s Representative had also admitted and/or acknowledged to CKL and/or Mad Labs that the Trial QR Code had been in fact printed on the packaging of all the Nestle’s products under the Maggi brand.

It became apparent that Nestle had been in continuous usage of the Trial QR Code on their products, especially under the Maggi brand throughout those years, after the expiry of the QR Code Trial which had ended in May 2015.

(vi) Following numerous discussions between the parties, the Defendants proposed to Nestle the following:

Nestle would gain full control over the Mad Labs’ Site (i.e.www.madlabs.com.my) and Nestle would be entitled S/N G7tb4h0s5U2PqxqrP7pVg to continue utilising and printing the Trial QR Code on any of its products packaging;

Nestle would be able to place full security measures that it deems fit on Mad Labs’ Site, in view of the significant amount of exposure, risk and/or liabilities faced by Nestle, arising from the usage of the Trial QR Code and/or the Mad Labs’ Site;

It would be beneficial for Nestle (for promotional, research, marketing purposes, amongst others) in the sense that Nestle would then have full control and direct access to data and information obtained from the traffic and/or volume of Users accessing or using the Trial QR

Nestle would be free from all liabilities (whether current, potential or otherwise) moving forward from anything related to the unauthorised printing of the Trial QR Code on all the Maggi products; and

Finally, Mad Labs would not be required to provide any of such services related to the Trial QR Code, as it is no longer in the business of doing the same.

(vii) Nestle rejected the Defendants’ proposal and requested Mad Labs to do the following:

the link attached to the Trial QR Code to be redirected to Nestle’s website;

no indemnity would be provided to Mad Labs; and

no commercial consideration or compensation would be given to Mad Labs. [49] PW5 agreed in his testimony that during the trial period, Nestle had requested Mad Labs to carry out a least 2 changes to the Trial QR Code with the purpose of demonstrating the QR Code’s redirection feature. [50] Evidence before this Court including the testimony of PW5 showed that it was the understanding between parties that should Nestle decides to continue using the Trial QR Code post-trial period, parties would enter into a formal commercial contract. S/N G7tb4h0s5U2PqxqrP7pVg [51] At the end of the 6-month period in May 2015 Nestle did not approach Mad Labs over Nestle’s continued usage of the Trial QR Code. [52] Based on the above analysis, I did not find any evidence to support Mad Labs’ proposition that there exist an Implied Contract between Mad Labs and Nestle. The trial period was clearly understood by both parties as a mere trial period without any legal relationship. It follows that there was no continuing contractual relationship between Mad Labs and Nestle – implied or otherwise – between 2015 - 2018. [53] Therefore, I dismiss Mad Labs’ claim under this heading. Proprietorship of the Trial QR Code [54] It is my finding that the central, quintessential issue, that needed to be determined by this Court is whether Mad Labs could claim any proprietorship or IP rights over the QR Code. [55] The main claims in Mad Labs’s Suit and one of the main prayers sought in Nestle’s Suit would be contingent upon the answer by this Court to this question. S/N G7tb4h0s5U2PqxqrP7pVg [56] QR Code is simply pixels set that stores data for a machine (usually smartphone) to read and access the data. As opposed to static QR Code which contain fixed data where users can’t change the stored information once the QR Code is generated, a dynamic QR Code is editable where the data content and destination URL can be altered at any time. [57] Having appraised myself with the evidence before me, I conclude that the subject matter of both Suits before this Court, the Trial QR Code, is a dynamic QR Code generated by Mad Labs for a tentative use by Nestle throughout Nestle’s 6-month campaign of the Maggi Hot Cup. [58] On the purpose of the Trial QR Code, this Court concludes from the evidence of PW1, PW3, PW4 and PW5 that Nestle’s purpose of using the Trial QR Code during the trial period was mainly for promotional and customer engagement vis-a-vis the Maggi Hot Cup campaign. [59] This Court concludes that the evidence before this Court showing that Nestle requested two changes on the Trial QR Code (on 5/3/2015 and 29/4/2015) pertaining to its redirection feature, which was positively executed by Mad Labs, supports Mad Labs’ contention that Mad Labs built, created and generated the Trial QR Code in question using its own tools and expertise. S/N G7tb4h0s5U2PqxqrP7pVg [60] Mad Labs generated the unique feature of the Trial QR Code as a dynamic QR Code using a software that was built, created and owned by Mad Labs. In essence Mad Labs claimed the system used to generate the Dynamic QR Code is an in-house built propriety tool. Mad Labs argued that this was evident by the email sent by PW5 to CKL requesting Mad Labs to provide QR Code using “your (CKL’s) propriety tool”. [61] I found this email was dated 16/6/2015 – post-trial run period which ended in May 2015. I found that in that email PW5 informed CKL that PW5 wants to generate a new QR Code “as per previous corporate campaigns” (which referred to the trial period in issue using the Trial QR Code). PW5 further in that email informed CKL the URL for the new QR Code would be done later and PW5 was requested CKL’s assistance to merely provide a QR Code. This email clearly does not refer to the Trial QR Code in issue. In short, the existence of this email does not support Mad Labs’ contention that Nestle itself admitted that the Trial QR Code was developed using Mad Labs’s in-house propriety tool. [62] But that does not vitiate the fact that the Trial QR Code was generated, created and produced by Mad Labs. And this include the two subsequent changes effected onto the Trial QR Code features during the course of Mad Labs’ 6-month engagement by Nestle. S/N G7tb4h0s5U2PqxqrP7pVg [63] Does this entitled Mad Labs to its claim of proprietorship over the Trial QR Code? [64] Mad Lab’s first argument that it owns the proprietorship of the Trial QR Code and maintains the ultimate control and rights over the Trial QR Code during the entire period starting from the development of the Trial QR Code (April-November 2014) to the delivery time of the Trial QR Code (November 2014) and up to the ending of the trial run period (May 2015). [65] Throughout these period Mad Labs was the only entity that could provide Nestle with a dynamic QR Code which has the unique redirection feature that correspond with Nestle’s needs, and Mad Labs was able to accede to two requests by Mad Labs for changes to the Trial QR Code to accommodate Nestle’s needs. [66] Secondly, Mad Labs argued that the Trial QR Code it had developed for Nestle is specifically linked to a website owned and managed by Mad Labs as the sole service provider for that Trial QR Code. This was shown in the WHOIS result, a fact which was confirmed by PW1 and PW5 in their evidence. S/N G7tb4h0s5U2PqxqrP7pVg [67] It is my finding that proprietorship is a legal issue that must be proven through the fulfilment of the requisite test. The fact that the Trial QR Code was linked to a website owned and managed by Mad Labs was not even disputed by Nestle. But this fact per se does not warrant Mad Labs’ claim of ownership over the Trail QR Code. [68] I agree with the arguments of Nestle’s counsel that Mad Labs do not own any IP rights over the Trial QR Code in question. There is no necessity for this Court to dwell into the law governing IP to answer this question. Suffice for this Court to state unequivocally that it is a universally known fact that no one could claim any IP rights – whether patent, copyright or trademark – over a QR Code. [69] In fact, this Court took judicial notice that there exist an abundant literatures on the history of the invention of the QR Code by the Japanese company Denso Wave way back in the 1990s and how that inventor decided not to patent nor claim any IP rights over their invention. The company had categorically made it known that they allowed the free use and duplication of the QR Code they invented without anyone able to claim any form of IP rights and ownership over the QR code system. This Court accepts the evidence of PW1 on this same issue. S/N G7tb4h0s5U2PqxqrP7pVg [70] DW2 and DW3 also agreed in their testimonies in that the Trial QR Code is nothing unique or special. [71] Based on the above finding, this Court concluded that any claim by Mad Labs on the IP proprietorship of the Trial QR Code they created for Nestle is a non-starter. [72] But would Mad Labs be able to claim the usual proprietorship over the QR Code as if the QR Code it had generated for the exclusive use of Nestle for the specific purpose is Mad Labs’ property? [73] Having taken cognizance and judicial notice of the available literatures on the issue of QR Code proprietorship, this Court rule that a QR Code per se is not a property of which Mad Labs can claim ownership. Mad Labs therefore cannot claim proprietorship over the Trial QR Code. [74] However, there is a novel issue which this Court is ready to decide. [75] Evidence before this Court is replete that that Mad Labs developed and generated the Trial QR Code for the trial period of Nestle’s Maggi Hot Cup Campaign in November 2014 – May 2015, using tools that were only known to Mad Labs at that point in time. It was generated exclusively for S/N G7tb4h0s5U2PqxqrP7pVg Nestle and for the restrictive use as intended by Nestle at that point in time. There was evidence before this Court on the changes imported into the Trial QR Code during the trial period. These changes were carried out by Mad Labs based on Nestle’s specific instructions and needs. It could only be carried out by Mad Labs using its own tools, expertise and knowledge. [76] When Mad Labs created and generated the Trial QR Code exclusively for Nestle with certain specific features built into the Trial QR Code which would enable Nestle to modify the said QR Code in such a manner that Nestle could, inter alia, make changes to the target URL, the target contents and as such, Mad Labs attains the right to sell to Nestle that ability for Nestle to have complete control over that capability in that Trial QR code. Of course, at the trial period, the Trial QR Code does not contain a permanent target URL chosen by Nestle but an intermediary one determined by Mad Labs with unhindered and open access granted to Nestle. At that instance it was Mad Labs’ website that hosted the Trial QR Code, which will redirect the browser to the final target – the Maggi Hot Cup campaign. Post-trial period, if Nestle decides to own that Trial QR Code (and at that time it would certainly not be a “Trial” QR Code anymore), Nestle as the owner would certainly have the full ability to change the target URL at its wish, and the contents. S/N G7tb4h0s5U2PqxqrP7pVg [77] It is my finding that Mad Labs attains the right to sell to Nestle that ability for Nestle to have complete control if it can show proof that Mad Labs has- 1 – The right to control the use of the capability 2 – The right to benefit from the capability 3 – The right to sell it or give it to somebody else 4 – The right to prevent others from using it [78] Those rights are owned by Mad Labs. Mad Labs allowed those capabilities to be utilised freely without any charge by Nestle throughout the 6-month trial period. When that period ended, those rights and capability automatically returned to Mad Labs. [79] Thus, what this Court is concerned with is not merely the physical aspect of the Trial QR Code being emblazoned and appeared on Nestle’s products packaging between May 2015-Oct 2018. But whether the Trial QR Code was available for scanning? Whether during that period Nestle was able to control the information that could be access by end-users upon them scanning the Trial QR Code? [80] Even in the situation when during the material time (May 2015-Oct 2018) the Trial QR Code that appeared on Nestle’s products were not fully S/N G7tb4h0s5U2PqxqrP7pVg functioning in that an end-user that scans onto the Trial QR Code would be landing on “404 Error”, that end-user would regard that “404 Error” message was placed by Nestle, who was deemed to be in control of that information accessible by that end-user. This is due to the undeniable fact that the Trial QR Code were conspicuously placed on Nestle’s products and packaging after the trial period ended. Mad Labs who was supposed to be in control of the Trial QR Code at that time was not in control as there was no evidence before this Court that Mad Labs were aware that the Trial QR Code were placed on the packagings of Nestle’s products after the expiration of the trial period. Thus, for all intend and purpose, the Trial QR Code was under the full control of Nestle during the material period. [81] Nestle’s answer to this was exhibit P2 – the Google Analytics Report, which purportedly showed that there was no referral traffic recorded from the mid 2015 to September 2015. Google Analytics [82] Nestle uses Google Analytics, which is a web analytics service offered by Google for tracking and reporting website traffic. The mechanics of this Google Analytics is that by loading a tracking script from S/N G7tb4h0s5U2PqxqrP7pVg a destination webpage, in this case the MAGGI Website, web traffic to the MAGGI Website from the Trial QR Code can be tracked and captured as the tracking script loaded onto the MAGGI Website is activated every time a visitor visit. [83] Nestle’s expert witness, PW1, was given access to the MAGGI Website to assess the Google Analytics tools embedded and he had given evidence on the veracity of the Google Analytics Reports in his Supplemental Expert Report (Exhibit P57, Encl.109, pages 3-186). Nestle’s counsel argued that a Google Analytics report is, and its high level of accuracy to detect traffic through QR Code scans to a website, should thus be accepted by this Honorable Court as guidance and invaluable evidence on the subject matter. [84] Nestle contends that it uses Google Analytics for purposes of tracking web traffic from the Trial QR Code to the Maggi website. In the same paragraph, Nestle sets out the purported mechanics on how the traffic data is tracked and also the mechanics of the Trial QR Code (being a dynamic QR Code). [85] In exhibit P2, Nestle showed to the Court the overview of the activity recorded for the Trial QR code on the Google Analytics Reports, as below: S/N G7tb4h0s5U2PqxqrP7pVg [86] This Court agrees with the Defendants that the issues in respect of the web traffic referral from the Trial QR Code to the Maggi website and Google Analytics mechanism were not pleaded by Nestle. It was raised for the first-time during Trial, in the course of cross-examination of Mad Labs’ witness, DW2. This Court rule that the entire issue in respect of Google Analytics Report and the web traffic referral from the Trial QR Code reflected therein are an afterthought and was not considered by this Court in its determination of the disputes between the parties. S/N G7tb4h0s5U2PqxqrP7pVg [87] Having appraised the evidence of PW1 and DW2, taking into account Nestle’s counsel’s arguments on the integrity of DW2 as an expert, this Court decides to reject the conclusiveness of the data analysis generated by Google Analytics. I make this finding based on the known General Data Protection Regulations and data protection non-compliance issues affecting Google Analytics resulting from the Scherm II Ruling of the Court of Justice of the European Union (“CJEU”)1 which decided, inter alia, that the provisions of the US laws allowing US public authorities use and access of EU data do set satisfy requirements under the EU law, including restrictions based on the principle of proportionality. This had also resulted in Google Analytics being banned in certain countries including Italy, France, the Netherlands and Austria. I am aware of the completely separate issue being discussed at the CJEU but this Court rule that it cannot accept reports as evidence that had been generated by a system that is a subject of heavy judicial scrutiny in a known and mature jurisdiction. [88] Mad Labs maintained rights and ownership over that capability because it created that feature. Nestle can only continue to use the Trial QR Code with that capability with Mad Labs’s permission. Nestle does not 1 Judgment of the Grand Chamber of the Court of Justice of the European Union on 16 July 2020, ECLI:EU:C:2020:559, available online at curia.europa.eu S/N G7tb4h0s5U2PqxqrP7pVg have that permission. Nestle could have only continue to use the Trial QR Code with that capability if they were allowed by Mad Labs. [89] I conclude that as Mad Labs attained the right to sell to Nestle the ability for Nestle to control that Trial QR Code, and as Nestle had used the Trial QR Code with that capability during the material time without Mad Labs’ permission, Nestle had infringed that specific right belonging to Mad Labs and Mad Labs is entitled to compensation for such unlawful use of the Trial QR Code during the material time. [90] I rule that the unlawful use of the Trial QR Code by Nestle started on the day the trial period ended (sometime in May 2015) and ended when Nestle formally informed Mad Labs about its intention not to continue with that feature in the Trial QR Code, which was sometime in October 2018. [91] As for quantum, I do not agree with the formulation as suggested by Mad Labs as pleaded in paragraphs 10, 44, 45 and 47 of Mad Labs’s Statement of Claim in Suit 85. This is so as I had ruled that Mad Labs does not own any proprietorship over the Trial QR Code per se nor does it have any IP rights over the said Trial QR Code. S/N G7tb4h0s5U2PqxqrP7pVg [92] I decide that the quantum shall be determined at a separate assessment proceedings at a later date. Was Nestle negligent? [93] Nestle had continued to wrongfully use the Trial QR Code after the expiration of the 6-month trial period, and the wrongful use was for a long period of time of more than 3 continuing years (May 2015 – October 2018), which was discovered only at an internal audit of Nestle in late 2018. PW5 admitted this fact and that Nestle had mistakenly printed the Trial QR Code on certain Maggi products. [94] Nestle contended that the mistake does not tantamount to negligence as, amongst others, it did not lead to any loss or damage to Mab Labs. Until the Plaintiff had notified CKL of the mistake, the Defendants were totally oblivious to the fact, meaning that the mistaken print of the Trial QR Code had not caused any loss or damage to Mad Labs. Nestle further argued that the mistake is not apparent to the naked eye as it is not possible to tell whether it is a correct QR Code unless it is scanned. Nestle again relied on the Google Analytics Report in 2018 and 2021 (Exhibit P2) which showed that nobody had scanned the QR Code S/N G7tb4h0s5U2PqxqrP7pVg after the end of the Nestle’s Campaign until the internal audit exercise in 2018. [95] Nestle argued that there are two possible factual scenarios:

that the Trial QR Code was not printed until sometime in 2018 when the mistake was discovered on an audit by the Plaintiff; and/or

(ii) that notwithstanding the printing of the Trial QR Code on the packaging of the MAGGI Hot Cup noodles, nobody scanned the said Trial QR Code until 2018 when the said audit was conducted. [96] On the principles of negligence, in The Fordeco Nos 12 and 17 [2000] 1 MLJ 449 the Federal Court held, inter alia, that:- “…There are three elements that together constitute the right of action for negligence, namely, duty, breach and damage. (Bullen & Leake & Jacob’s on Precedents of Pleadings (13th Ed, 1990) at p 678). Hence, the burden is on the claimant to prove these elements.” [97] On proving a claim for negligence, in Billion Origin Sdn Bhd v Newbridge Networks Sdn Bhd & Anor (Yap Burgess Rawson S/N G7tb4h0s5U2PqxqrP7pVg International Sdn Bhd, third party) [2006] 6 MLJ 768 Justice James Foong (as he then was) held, inter alia, that: “This means that there must be some concrete evidence of the wrongdoing link to the injury suffered by the plaintiff. To prove this, the plaintiff must establish a prima facie connection between the wrongdoer and the damage caused. In this context, with regards to the first defendant, the plaintiff must prove that it was the first defendant's fault that caused or materially contributed to the damage suffered by the plaintiff. This means that one must begin by asking: whether the damage which the plaintiff suffered would have occurred 'but for' the negligence of the first defendant?'…” [98] Thus, in order for the Defendants to succeed in their claim against Nestle for negligence, the three elements, i.e. duty, breach and damage, must be fulfilled. Further, evidence must be produce to prove the link between the wrongdoing and the injury suffered. In other words, there must also be prima facie connection between the wrongdoer and the damage caused. [99] This Court agrees with the Defendants’ counsel that Nestle has / had the following duties at all material times –

to check and verify the description and/or items and/or material placed on its products and/or products packaging specifically under the Maggi brand (or even any other brand of

to ensure that Mad Labs and/or Mad Labs’ Site is / was not unnecessary exposed to adverse public perception arising from its unauthorised and/or unlawful usage and/or printing of the Trial QR Code after May 2015;

to ensure that Mad Labs’ Site is / was not susceptible to hacking by any third parties who would have gained accessed to the Mad Labs’ Site through scanning the Trial QR Code after May 2015, as a result of Nestle’s wrongful, unauthorised and/or unlawful usage of the said Trial QR Code after May 2015. [100] I concluded that Nestle was negligence in so doing, having satisfied that Nestle owed a duty of care towards Mad Labs and that Nestle had breached that duty which resulted in Mad Labs having suffered damages as a direct result of that breach of duty by Nestle. [101] I award damages in favour of Mad Labs for this tort, the quantum of which will be determined at a separate assessment proceeding. S/N G7tb4h0s5U2PqxqrP7pVg Unjust enrichment? [102] It is my finding that a QR code is free to use and can be generated using any QR code software as long as the QR solution is generated as a static QR code. There are many static QR Code generator freely available. But generating a dynamic QR code, such as the Trial QR Code, requires a more advanced type of QR code that allows users to track and edit/update such dynamic QR code, which is beneficial for business and marketing. [103] Dynamic QR codes would usually require an active subscription for a seamless QR code campaign experience that would enable the business concerned provide interactive content about their brand to consumers, and foster trust and transparency. This will include the need to track the employed QR Code scans by consumers or end-users, which is one of the key features and purpose of a dynamic QR Code. The end-result would be the ability to formulate effective marketing strategy and increase sales. These features are present in the Trial QR Code in issue. [104] It is my finding that the evidence before this Court was sufficient to enable this Court to come to a conclusion that that was the main purpose and intent of Nestle when it agreed to engage Mad Labs to generate the S/N G7tb4h0s5U2PqxqrP7pVg Trial QR Code as a dynamic QR Code for its Maggi Hot Cup campaign in November 2014 – May 2015. Nestle’s engagement of Mad Labs during that trial run period cannot be equated to Nestle putting up a new product for a 6-month trial period. Whilst the latter – putting up a new product for a 6-month trial period – is simply a test run before a commercial decision is made on that trial product, putting up a dynamic QR Code for a 6-month trial period, on the other hand, is not only a test run before a commercial decision is made whether or not the QR Code would be a permanent feature, but it was certainly a key feature to appear on Nestle’s products. [105] I take a pause here. Starting early 2023, Nestle’s Kit Kat wrapping had been changed to recyclable paper instead of plastic, as part of Nestle’s green campaign to reduce the use of plastics for its products by a third by 2025. This followed the use of recyclable paper packaging for Nestle’s other popular products, Smarties in 2021 and Quality Street in 2022. [106] Apart from utilising recyclable paper for its Kit Kat products, Nestle also decided to use QR Code on that Kit Kat’s recyclable paper packaging. I obtained this information and facts from Nestle’s official news release at nestle.com dated 11/1/2023. I took judicial notice of this development to substantiate my finding with regards to Nestle’s continued interest, S/N G7tb4h0s5U2PqxqrP7pVg emphasis and recognition of the importance of QR Code for its products and to demonstrate its overall global business strategy. [107] As this Court had decided that the continued unlawful usage of the Trial QR Code was due to Nestle’s negligence and the act of negligence continued for a long period of time, I agree with Mad Labs and CKL that there was unjust enrichment on the part of Nestle as the Trial QR Code used on Nestle’s products would have directly benefitted Nestle for the promotion and marketing of the products concerned. [108] The law on unjust enrichment is as decided in Dream Property Sdn Bhd v Atlas Housing Sdn Bhd [2015] 2 MLJ 441 where the Federal Court held: “[110] Restitution simply means that a party who has received a benefit must restore the benefit received by him. The theoretical foundation of the right to restitution remedy as it is understood today is that it is founded on the law of unjust enrichment which fall outside the domains of contract and tort. The law of contract/tort and the law of unjust enrichment are conceptually distinct. Unjust enrichment describes a cause of action. On the other hand restitution describes a remedy. Restitution as a response to wrongdoing is therefore a different topic from restitution as a response to unjust enrichment (see Goff & Jones on The Law of Unjust Enrichment para 1-04). The courts have found it necessary to make available, independent of the law of contract and civil wrongs, for the restoration of benefits on the ground of unjust enrichment.” S/N G7tb4h0s5U2PqxqrP7pVg [109] The Federal Court’s decision above clarified that unjust enrichment is a cause of action by itself, one that it separate and distinct from the law of contract or tort. The Federal Court also laid down the principle that the right to restitution arises where the key ingredients for a cause of action of unjust enrichment is fulfilled, inter alia, as follows:

The plaintiff must have been enriched;

The enrichment must be gained at the defendant’s expense;

That the retention of the benefit by the plaintiff was unjust; and

There must be no defense available to extinguish or reduce the plaintiff’s liability to make restitution. [110] I am satisfied that all the ingredients above had been successfully shown by the Defendants. Therefore, I rule that Mad Labs must be compensated for this, the quantum of which will be determined at a separate assessment proceeding. S/N G7tb4h0s5U2PqxqrP7pVg Adverse reactions by public due to Nestle’s complaints against Mad Labs [111] Having considered the circumstances and facts and the evidence before this Court that led to Nestle’s complaints to the authorities, and the consequential Media Statement issued by MCMC and the brief suspension of Mad Labs’ site, the subsequent upliftment of the suspension thereafter, and the report in The Star, I do not agree with the counsels for Mad Labs that Nestle’s actions in lodging the complain tantamount to mala fide and malicious complaints by Nestle against Mad Labs. There was no evidence of adverse public reactions against Mad Labs due to the events. [112] This Court dismiss Mad Labs’ claims under this heading. [113] I will now turn to Nestle’s claims. Negligence [114] Nestle pleaded that at an internal audit in late 2018, it discovered that it had mistakenly printed the Trial QR Code on certain Maggi S/N G7tb4h0s5U2PqxqrP7pVg products, which I had ruled as negligent on Nestle’s part towards Mad Labs. [115] But as soon as Nestle discovered the mistake, Nestle requested Mad Labs to redirect the website link of the Trial QR Code to Nestle’s dedicated website for Maggi products, as an interim measure. Mad Labs acceded to this request. But subsequently, Nestle discovered that the Trial QR Code was directing users to websites promoting gambling and some others which Nestle regarded as offensive. At the same time Nestle received negative comments from the public on its Facebook page, which Nestle pleaded were dubious complainants. The evidence before this Court clearly showed that Mad Labs refused to bring down the offensive or illegal link to the Trial QR Code. [116] Nestle was in danger at that moment and refusal by Mad Labs had emplaced Nestle in a worse off danger. Mad Labs failed to use reasonable care in dealing with the situation. Despite the impending negotiations, Mad Labs should have proceeded to do everything reasonable possible to deal with the offensive landing sites of the QR Code at that time. Mad Labs failed to employ any form of due care, diligence, knowledge, skill and caution to deal with the situation raised by Nestle. S/N G7tb4h0s5U2PqxqrP7pVg [117] This Court found that Nestle had sufficiently established its negligence claim against Mad Labs. [118] I allow Nestle’s claim against Mad Labs under this heading with damages to be determined at an assessment proceeding separately. Unlawful interference with Nestle’s trade and business [119] The Court of Appeal in the case of Ly Furniture Sdn Bhd v Lifestyle Enterprise, Inc [2015] 1 LNS 1557 sets out the elements for the tort of unlawful interference as follows: “It follows from the foregoing that to establish the tort of unlawful interference with trade it is incumbent upon the respondent to prove that:

The appellants interfered with the respondent’s trade or business;

That the interference was by unlawful means;

That the appellants intended to injure the respondent; and

The respondent was injured by the appellants.” [120] Nestle argued that its trade or business was disrupted by the unauthorised redirection of the Trial QR Code to illegal websites which was directly and/or indirectly caused by the Defendants. S/N G7tb4h0s5U2PqxqrP7pVg [121] Nestle’s main grounds to support its claim under this heading was the so-called Mad Labs’ unlawful acts comprising –

Mad Labs’ deliberate changing of the website link without Nestle’s consent;

(ii) Willful refusal to redirect the link of the QR Code to Maggi Website or permanently disable the link, despite having knowledge the QR Code was linking to gambling and pornographic websites;

(iii) Mad Labs alleged procuring of 3rd parties to generate adverse comments against Nestle;

(iv) Pressuring Nestle to purchase the QR Code and its link at USD10mil, which coincided with the problems inflicting the QR Code landing sites. [122] It is this Court’s finding that there was no evidence to support Nestle’s contention that Mad Labs procured 3rd parties to generate adverse comments against Nestle. Neither was there any evidence to prove that Mad Labs or CKL had pressured Nestle to purchase the Trial QR Code for USD10 million. The events cited in the 1st ground occurred S/N G7tb4h0s5U2PqxqrP7pVg due to the continued negotiation between parties. Nestle could have chosen to refuse to any negotiation and request Mad Labs to simply shut down any link within Mad Labs’ control to the QR Code. It did not choose to do so. Nestle cannot now turned around and claim that it is a victim of the circumstances. [123] Clearly, all these would not have happened had the Nestle’s audit team did what it did in 2018 on the very day the trial period ended. [124] As set out in Ly Furniture Sdn Bhd, for Nestle to succeed under this heading, it shall bring evidence to show that :

Mad Labs had interfered with Nestle’s trade and business;

(ii) the interference was by unlawful means and carried out with the intent to injure Nestle; and

(iii) Nestle was in fact injured by Mad Labs’ actions [125] The allegations of Mad Labs’ refusal to redirect the link to Nestle’s website was found to be true by this Court and tantamount to negligent on Mad Labs’ part but not an interference with trade and business. I do not find Nestle to have fulfilled the above elements. I therefore dismiss this claim. S/N G7tb4h0s5U2PqxqrP7pVg Defamation and Trade Libel [126] For ease of reference, CKL’s statement that Nestle alleged to be offensive and tantamount to defamation and trade libel against it is reproduced again as below:

“Nestle had their hands on the code since 2014. When Mad Labs first created the code, it was for a trial test run for one of Nestle’s campaigns which would run for six months. The agreement was that if Nestle was interested, they could come back and set a discussion. However, there was no response so the project was canned. Fast forward four years, at the end of October 2018, Nestle told me that they have accidentally printed the QR code on 170,000 tonnes of packages across 38 of their products”; and

“The question at hand now is not really about the technicality of the QR code. Instead, the legal liabilities that come with operating the QR code which is linked to an estimated 2.6 billion packets of noodles,” concluded Ron”. [127] The above statement was published on an online magazine “Marketing Magazine” and subsequently republished by CKL in his Facebook account. [128] The trite elements governing defamation are as set out in Raub Australian Gold Mining Sdn Bhd v Hue Shieh Lee [2019] CLJ 729, where the Federal Court cited with approval Justice Mohamed Dzaiddin’s decision in Ayob Saud v. TS Sambanthamurthi [1989] 1 CLJ 152; S/N G7tb4h0s5U2PqxqrP7pVg [1989] 1 MLJ 315, where it was held that the burden of proof lies on the person bringing such action - in this case Nestle - to show:

the words are defamatory;

(ii) the words refer to Nestle; and

(iii) the words were published. [129] The Federal Court in Raub Australian, referring to the Privy Council decision in Knupffer v. London Express Newspaper Limited [1944] AC 116, said that it is an essential element of the cause of action for defamation that the words complained of should be published of the person allegedly defamed. In this instance the impugned defamatory words should be published of Nestle. That the alleged defamatory statement was published is not in dispute. The 3rd element is established. [130] The Federal Court in Raub Australian also had set out that the defamatory words in question must be published of and concerning the person alleging defamation. The words must be capable of referring to that person or of identifying that person. Based on this principle, it cannot be disputed that the defamatory statement was referring to or was identifying Nestle. The 2nd element is also established. S/N G7tb4h0s5U2PqxqrP7pVg [131] In a defamation action, the most difficult element or part to prove is the 1st element - that the words complained of are defamatory. This is where the Federal Court in Raub Australian held: “[38] The test involved in determining whether or not the words complained of are defamatory is a two-stage process. Firstly, it must be considered what meaning the words would convey to an ordinary person; and secondly, it must be considered whether under the circumstances in which the words were published, a reasonable man would be likely to understand that in a defamatory way (see: Wong Yoke Kong & Ors v. Azmi M Anshar & Ors [2003] 6 CLJ 559).” [132] In Dato’ Sri Dr Mohamad Salleh Ismail & National Feedlot Corporation Sdn Bhd v Nurul Izzah Anwar & Saifuddin Nasution [2018] 1 LNS 171, the Court of Appeal held: “... the guiding principle involved must necessarily be the one as stated in the work by Gatley on Libel & Slander [supra] namely that the impugned statements must be viewed not in isolation, but rather in the context of the totality of the whole statement of which the impugned statement was but a part thereof. The quintessence of defamation is the spreading, by way of publication of falsehoods, laced as it were, with malice, for good measure. A plaintiff in a defamation suit is aggrieved because the falsity of the allegation has caused adverse implications on his reputation such that damages must flow from the defendant on successful proof by the plaintiff of the alleged defamation. The burden lies with the plaintiff to establish by evidence that there was malice that had actuated the defendant's defamatory statement.” S/N G7tb4h0s5U2PqxqrP7pVg [117] When this Court viewed the impugned statement in the context of the totality of the whole statement of which the impugned statement was, I could not find the statement was spreading, by way of its publication, of falsehoods, laced as it were, with malice, for good measure, such that the falsity of the allegation, if any, has caused adverse implications on the Defendant’s reputation such that damages must flow from the Plaintiff on successful proof by the Defendant of the alleged defamation. [133] In essence, the test involved in determining whether or not the words complained of are defamatory is a two-stage process. Firstly, it must be considered what meaning the words would convey to an ordinary person; and secondly, it must be considered whether under the circumstances in which the words were published, a reasonable man would be likely to understand that in a defamatory way (see: Wong Yoke Kong & Ors v. Azmi M Anshar & Ors [2003] 6 CLJ 559). [134] It would simply mean that the Court cannot look at any particular or any group of words or sentence in the impugned statement, but to view the impugned statement in its entirety. [135] When this Court viewed the impugned statement in the context of the totality of the whole statement of which the impugned statement was, I could not find the statement was spreading, by way of its publication, of falsehoods, laced as it were, with malice, for good measure, such that the S/N G7tb4h0s5U2PqxqrP7pVg falsity of the allegation, if any, has caused adverse implications on Nestle’s reputation. [136] Having considered the impugned statement in its entirety, I found Nestle failed to prove this 1st element. [137] Nestle’s defamation and trade libel claim against Mad Labs and CKL is dismissed. E. CONCLUSION [137] Based on the above findings, I make the following orders/declarations:

Mad Labs and CKL do not own any proprietory or IP rights in the Trial QR Code.

(ii) There was no implied contract between the parties, and as such no form of royalty payment due in favour of Mad Lab.

(iii) Mad Labs and CKL shall take all reasonable measures to permanently disable linking the Trial QR Code to any website including www.madlabs.com.my. Mad Labs and CKL was S/N G7tb4h0s5U2PqxqrP7pVg negligent in not taking reasonable measures or to use reasonable care in dealing with the situation and Nestle shall be compensated with appropriate amount of damages for such negligent.

(iv) Nestle was negligent in its continued unlawful use of the Trial QR Code after the end of the trial period and in actions to print the Trial QR Code on Nestle’s products and packaging after the end of the trial period. The negligent acts continued for a period between May 2015 – October 2018 and Nestle was unjustly enriched as a result of such negligence. Mad Labs shall be compensated with appropriate amount of damages for such negligent.

(vi) Nestle’s reports to MCMC were not malicious nor mala fide, and the consequential actions taken by MCMC and Mynic affecting Mad Labs and any form of alleged public backlash against Mad Labs, if any, are not actionable.

(vii) Mad Labs and CKL did not commit the tort of unlawful interference with trade with the intent to injure Nestle and Nestle’s business. S/N G7tb4h0s5U2PqxqrP7pVg

(viii) Mad Labs and CKL did not commit any form of defamation and trade libel against Nestle following CKL’s statement published in an online magazine and CKL’s Facebook page.

(ix) permanent injunction is issued prohibiting Nestle from continuing to use/print/generate the Trial QR Code on any of Nestle’s products/packaging.

Quantum of damages awarded to Nestle and the Defendants shall be determined at a separate assessment proceeding. Dated : 24 JANUARY 2025 -signed- (MOHD RADZI BIN HARUN) Judge High Court of Malaya S/N G7tb4h0s5U2PqxqrP7pVg PARTIES: Solicitors for the Plaintiff in Suit 31 & Defendant in Suit 85: Su Siew Ling together with Elica Wong Ying Shaang Messrs. Linda Wang Su & Boo Level 7, Menara Milenium Jalan Damanlela, Pusat Bandar Damansara 50490 Kuala Lumpur Email : info@zicoip.com Ref. : 20186733/NESTLE/SSL/WYS Solicitors for Defendants in Suit 31 & Plaintiff in Suit 85: Norazmi bin Norazman together with Jasneeta Bhullar Messrs. Thomas Philip No. 5-1 Jalan 22A/70A Wisma CKL, Desa Sri Hartamas 50480 Kuala Lumpur Email : tp@thomasphilip.com.my