Strategic Advertisers’ Dream or Brand Owners’ Nightmare? Grace Teoh elaborates.
The summer (or winter for those south of the Equator) of 2016 has seen the launch of two of the biggest ‘games’ of the year: the 2016 Summer Olympics in Rio and the augmented reality game developed by Niantic Inc., Pokémon Go. Both games have generated fevered passion in fans everywhere, and accordingly, both have provided unparalleled marketing opportunities for business proprietors due to the size of the marketable audience. However, both games have vastly different methods of profiting from these opportunities.
The International Olympics Committee (IOC) and its licenced business proprietors have cashed in on these opportunities through conventional licensing activities. Conversely, Niantic and business proprietors have a symbiotic relationship; the game requires its players to visit ‘Pokéstops’ or ‘Gyms’, which are based on real-world locations. It has been reported that premises that are marked as, or are nearby, ‘Pokéstops’ or ‘Gyms’ have seen improved sales, and the more convenient it is for players to play the game, the more players the game would have, and accordingly, the more likely it is for Niantic to profit from the in-game purchases.
Consequently, Niantic would likely benefit, whereas the IOC would suffer an enormous loss, in profits from ‘ambush marketing’ activities. Ambush marketing, or strategic advertising, broadly refers to businesses that utilise marketing techniques to form unauthorised associations with a particular brand, without having to pay any licensing fees. These techniques may be legal or otherwise, depending on the law of each jurisdiction.
In Pokémon Go, examples of such techniques include occasions where the business, which is not associated with Niantic in any way, advertises that if a player provides proof of playing the game within the business premises, the player will receive goods or services at a discounted rate.
As for the Olympic Games, it was reported that certain electronics, sports apparel, and swimwear apparel companies, which had not obtained licences from the IOC, had utilised loopholes to provide products to athletes, in anticipation that the latter would be inadvertent walking advertisements during the Olympic Games.
While there may be benefits to such marketing techniques in certain situations, such as generating healthy competition and providing a symbiotic relationship for all parties involved, these techniques are more likely to interfere and hinder commercial relationships instead. Licensees would be displeased that others are benefitting from the brand without having to pay the licence fees, and rightly so.
Malaysian jurisprudence has been slow to address this, likely due to the lack of pressing necessity as Malaysia has yet to host a major international event in recent times. Consequently, the causes of action available to brand owners are limited and may not necessarily impede obstinate strategic marketers.
If a brand owner has a registered trademark in Malaysia, there may be a cause of action for trademark infringement where the business proprietor utilises the trademark in the course of trade. Generally, the crux of an action for trademark infringement is the obstacle in proving that the antagonist had used the trademark “in the course of trade”.
However, the Federal Court had recently delivered a decision in support of brand protection in its interpretation of “in the course of trade” in Mesuma Sports Sdn Bhd v Majlis Sukan Negara Malaysia (Pendaftar Cap Dagangan Malaysia, interested party)
 6 MLJ 465. While the respondent was a non-trading entity, it was held that the respondent had still used the trademark “in the course of trade”, as “trade” included activities other than provision of goods and services, e.g. licensing and merchandising activities, or according to the Concise Oxford Dictionary
, business conducted for profit.
In light of the Federal Court’s decision in Mesuma Sports
, sub-sections 38(1)(b) and (c) of the Trade Marks Act 1976 could be interpreted such that trademark infringement includes circumstances where the use of a trademark in relation to advertisements results in the impression that the business proprietor has the right to use the trademark vis-à-vis the proprietor’s goods or services, even if the proprietor’s goods or services are not the same as the brand owner’s, and even if the brand owner is not considered an end trader.
Hypothetically, a blogger who uses variations of a registered “Pokémon Go” trademark to attract more advertisers to his site could be liable to the brand owner for infringement of trademark even though the trademark is not used to indicate the source of goods or services, but to attract attention as the activities of the blogger are ultimately conducted to increase his profits.
WELL-KNOWN MARKS AND DEFENSIVE REGISTRATION
Section 70B of the Trade Marks Act 1976 provides for the protection of ‘well known’ trademarks under the Paris Convention or TRIPS Agreement, or the essential part of such marks, which have not been registered in Malaysia. However, the protection is limited to unauthorised use in relation to the same goods or services in respect of which the well-known trademark is used, such that it causes confusion or deception.
A brand owner may consider obtaining extended protection for its trademarks by applying for ‘defensive registrations’ under section 57 of the Trade Marks Act for goods and services which the brand owner does not intend to trade in, to minimise the risks of opportunistic unauthorised uses in non-related goods and services in a parasitic attempt to ride on the awareness of the brand. Once the brand owner obtains defensive registrations, it may then have a cause of action against the opportunists for trademark infringement.
However, the threshold for a successful defensive registration is extremely high, and rightly so, given that defensive registrations are immune to expungement applications on the grounds of non-use. To obtain defensive registrations, the brand owner would have to prove that (i) the trademark consists of an invented word or words; and (ii) the trademark fulfils the criteria in regulation 13B of the Trade Marks Regulations 1997 as a ‘well-known’ trademark.
Where brand owners do not have a registered trademark, they may have a claim under the tort of passing off. The difficulty here usually lies in the brand owner’s ability to prove that the Malaysian public has been deceived or confused by the strategic marketer.
In cases where the wily marketer has made oblique references to well-known brands, e.g. where the business proprietor utilises a sufficiently small but recognisable part of the brand such that the public wryly acknowledges that the proprietor is merely riding the brand’s coat-tails, the brand owner may be at a loss to protect its rights. Malaysian jurisprudence has refused to embrace trademark dilution, a concept which enables brand owners to prevent others from utilising their marks in such a way as to blur, tarnish, or otherwise reduce the uniqueness and value of the marks, without the brand owner having to prove that the public was deceived or confused.
In McCurry Restaurant (KL) Sdn Bhd v McDonalds Corporation
 3 MLJ 774, the Malaysian Court of Appeal had implicitly declined to consider trademark dilution when it firmly reiterated that proof of misrepresentation is an essential element of the tort of passing off.
The brand owner may be able to institute proceedings for copyright infringement, provided that the owner is able to prove that (i) the work is a copyrightable work pursuant to the Malaysian Copyright Act 1987; (ii) the business proprietor had copied a substantial part of the work; and (iii) the proprietor does not have a defence, such as fair dealing, incidental inclusion, or parody, under section 13(2) of the Copyright Act.
Copyright is presumed to be the ‘catch-all’ protection for brand owners, as the threshold for a particular work to be eligible for copyright is relatively low. The challenges in infringement suits generally lie in proving the infringement, not copyrightability, of the work and refuting the defendants’ claims to an absolute defence under section 13(2) of the Copyright Act.
One issue a brand owner may face is in proving that there was substantial qualitative reproduction of the work. In a hypothetical example, Pokémon Go players may be familiar with the audio aspect of the game, e.g. the background music or the audio clip played when the player is in the proximity of a Pokéstop or a ‘wild’ Pokémon. In this example, a business proprietor may have used two seconds of the background music in a radio advertisement. Niantic would have to prove that (i) the advertisement replicated a substantial part of the copyrighted work, in terms of quality rather than quantity; and (ii) the business proprietor does not have a defence as mentioned above.
Conventional advertisements are governed by the Malaysian Advertising Code of Practice, which is enforced by the Malaysia Advertising Standards Advisory. The Advisory is an independent body empowered to withhold advertising space from recalcitrant business proprietors, largely due to the collective agreement of its members which are industry associations.
Broadcast media, online services, and other telecommunications and electronic media are subject to the Malaysian Communications and Multimedia Content Code, which is enforced by the Communication and Multimedia Content Forum of Malaysia under the purview of the Malaysia Communication and Multimedia Commission. The Forum is authorised to issue a reprimand, impose a fine, and direct the removal of the offending advertisement.
Both Codes stipulate that advertisements should not take unfair advantage of the goodwill attached to the mark, name, brand, advertising campaign, symbol, etc. of another proprietor, and that advertisement should not be so similar that it misleads or causes confusion.
However, it should be noted that the sanctions imposed by both the Advisory and the Forum would not compensate the brand owner for the damage caused by the offender; in fact, the sanctions currently available to these authorities are akin to a slap on the wrist for the offender and are unlikely to deter future recurrence.
UNLAWFUL INTERFERENCE WITH TRADE
An action for unlawful interference with trade is a supplemental cause of action as opposed to a primary one. This may be a particularly difficult cause of action as there are two intangible elements: (i) there must be proof that the business proprietor had deliberately interfered with the owner’s interests; and (ii) it was done by unlawful means. The latter condition consequently requires the brand owner to have a cause of action for infringement of an intellectual property right, a tort, or breach of a contractual right, or otherwise prove that the business proprietor’s actions constitute a criminal act, before the cause of action can even exist.
Where the brand owner successfully proves this cause of action, the owner may be awarded damages. However, it may not be a necessary conclusion that the Malaysian courts would automatically award punitive damages.
In stark contrast to the quick reactions of many enterprising business proprietors, from travel agencies to property developers and hamburger joints, cashing in on the Pokémon Go craze, Malaysian jurisprudence has been slow in considering extended brand protection to “catch ‘em all”, whether in the enactment of new laws or extending currently available common law principles. This inertia may consequently affect the decision by brand owners to expand into the Malaysian market.