Malaysia - Intellectual Property Update.
Legal News & Analysis - Asia Pacific - Malaysia - Intellectual Property
31 July, 2018
There is more to Goodwill than meets the eye
Singham Sulaiman Sdn Bhd v Appraisal Property Management Sdn Bhd and another appeal  MLJU 286
Suits Nos. WA-2219-5-02 of 2016 and WA-221P-31-06 of 2016
In the first case, the plaintiff, Singham Sulaiman Sdn Bhd ("SSSB") brought an action against the defendants, Appraisal Property Management Sdn Bhd ("APM") and JLL Property Services (M) Sdn Bhd ("JLLP"), on the tort of passing off their real estate services as SSSB's business by using, amongst others, the "Jones Lang LaSalle" mark. SSSB is the registered owner of the “Jones Lang Wootton" composite mark ("Jones Lang Wootton Registered Trade Mark").
JLLP counterclaimed based on the tort of passing off, namely that SSSB has passed off its real estate services as being associated with the services offered by Jones Lang LaSalle group of Companies ("JLL Group").
In the second case, Jones Lang Wootton Ltd ("JLWL") applied to remove the Jones Lang Wootton Registered Trade Mark from the Register.
These two suits have been consolidated.
Jones Lang Wootton started its real estate business in London ("London Firm") and expanded its real estate business worldwide including Malaysia by operating as partnerships from within the countries. The Jersey Partners and the Australian Partners of Jones, Lang, Wootton bought over the business, name and goodwill of one Mr Wicks who had carried on business as Chartered Surveyors, Valuers and Property Manager in Kuala Lumpur.
Under the sale and purchase agreement, the Jersey and Australian Partners would carry on a real estate business under the name and style Jones, Lang, Wootton incorporating Wicks and Partners ("Malaysian Firm"). A Partnership Agreement was entered into in respect of the Malaysian firm ("Partnership Agreement"). The Partnership Agreement had provided that the name and style of Jones, Lang, Wootton is the property of the London Firm and that carrying on of this name and style by the Malaysian Firm is by licence of the London Firm.
SSSB purchased interests of the Australian and Malaysian Partners in the Malaysian Firm. It was provided in the Sale and Purchase Agreement ("SPA") that the SPA does not confer on SSSB any title, right or interest in the Jones Lang Wootton name which shall remain the property of the London Proprietors.
SSSB was given an exclusive sub-licence to use the Jones Lang Wootton name and JLW mark. In the sub-licence, SSSB had expressly acknowledged that the Jones Lang Wootton name is the property of the then proprietary partners of the London Firm ("London Proprietors").
SSSB had entered into a deed of covenant that it will not at any time during the licence register or attempt to register in Malaysia the Jones Lang Wootton name or any name or style materially or substantially the same, or any name incorporating any one or more of the words "Jones", "Lang" or "Wootton".
SSSB subsequently entered into a sub-licence which states, amongst others, that JLW Pacific Ltd ("JLWP") and its "assigns or successors shall endeavor" to ensure that a new sub-licence is granted to enable SSSB to continue using the Jones Lang Wootton name "on terms no less favourable" to SSSB if the licence signed on 19 May 1982 ("1982 Licence") between the London Proprietors and the Australian Partners, whose names were listed in Part 2 of the First Schedule to the 1982 Licence, is terminated.
In 1999, LaSalle Partners (a firm which originated from the United States) acquired Jones Lang Wootton partnerships except in Malaysia and the merged entity is known as Jones Lang LaSalle ("JLL Group"). By a series of assignments, the London Proprietors assigned all Intellectual Property Rights, including its goodwill, that is, the Jones Lang Wootton name and JLW mark to JLWL.
SSSB subsequently applied to register the Jones Lang Wootton Registered Trade Mark which was allowed by the Registrar. The trade marks used by SSSB include the sub-licensed marks and Jones Lang Wooton Registered Trade Mark ("JLW marks").
The JLL Group undertook a rebranding exercise and is now known only as JLL.
In deciding whether a tort of passing off has been committed or not, one of the factors that the judge had to consider was whether SSSB has goodwill in its business regarding JLW marks.
The Court held that the plaintiff has to prove ownership of goodwill attached to the business with regard to that mark but need not prove that the plaintiff owns the mark. It follows from this that ownership of the JLW marks does not confer the right to sue for the tort of passing off.
The Court elaborated that goodwill is divisible whereby:
a. One party may own goodwill attached to the business regarding a mark in a particular country; and
b. Goodwill in respect of the same business concerning the same mark in another country may be owned by another party.
In deciding that SSSB had generated goodwill attached to its business, the Court considered the following:
1. Section 23 Valuers and Appraisers Act 1981 ("VAA"): As a result of the introduction of section 23 of the then VAA, the Malaysian Firm cannot lawfully offer services in Malaysia as registered valuers/appraisers. Therefore, the Malaysian Firm could not have any goodwill attached to the business of registered valuers/ appraisers with regard to the marks.
2. SSSB was specifically incorporated to provide services in Malaysia as registered valuers/appraisers based on JLW Marks. SSSB had bought all the interest in the Malaysian Firm and carried on the business of registered valuers/appraisers in Malaysia. Accordingly, it has generated goodwill attached to its business regarding JLW marks.
It was the contention of the defendants that any goodwill generated by the use of a mark by a licensee shall accrue to the licensor. However, the Court distinguished the cases that were relied on by the defendants.
Ultimately the Court concluded that when the Valuers and Appraisers (Amendment) Act 1984 came into force, only SSSB can lawfully provide services in Malaysia as registered estate agents with the use of JLW Marks.
Further, when SSSB carried on its real estate business in Malaysia by the use of JLW Marks, it created goodwill which is attached to such a business. Therefore, SSSB is the owner of goodwill in its real estate business regarding the use of JLW Marks.
As the London Proprietors, JLWP and JLWL, are prohibited by section 23 of the then Valuers, Appraisers and Estate Agents Act 1981 from providing real estate services based on JLW Marks in Malaysia, they cannot claim any goodwill in any real estate business with respect to JLW Marks.
For further information, please contact:
Ameet Kaur Purba, Partner, Shearn Delamore & Co