Fancy eating Swiss chocolate? Imagine buying chocolate thinking it is Swiss chocolate because of the look and feel of the packaging, and even a Swiss sounding name that lures you into buying it – only to find out that it is our very own locally-made chocolate! This situation is what Chocosuisse Union Des Fabricants Suisses De Chocolat (the 1st Appellant), a cooperative formed in Switzerland to represent the common interests of the Swiss chocolate industry, hopes to prevent.
Chocosuisse Union Des Fabricants Suisses De Chocolat & Ors (“The Appellants”) had brought an action against Maestro Swiss Chocolate Sdn Bhd & Ors (“the Respondents”), who manufacture and sell chocolate and chocolate-related products, particularly under brand names such as “Vochelle” and “Maestro SWISS” in Malaysia, for the tort of extended passing off and the infringement of the “Swiss Chocolate” Geographical Indication (GI).
The fundamental nature of the Appellants’ objection was against the use of the words “Maestro SWISS” by the Respondents on their products. For the claim of extended passing off, the Appellants claimed that the continued use of the said words in relation to chocolates and chocolate-related products by the Respondents would amount to misappropriating the substantive goodwill and reputation and/or commercial advantage enjoyed by the Appellants and/or other Swiss chocolate manufacturers in relation to Swiss chocolates.
On their claim for violation of the GI, the Appellants argued that the use of the words “Maestro SWISS” together with the colours white and red (the colours of the Swiss flag) on the Respondents’ products would deceive and/or confuse the public into thinking that the Respondents’ products are produced in or originated from Switzerland.
The Respondents, in objecting the claims made by the Appellants, argued that they had legitimate right to such use since they had extensively promoted and advertised the marks in relation to their products, thus acquiring distinctiveness in relation to the Respondents’ chocolates. Further, the Respondents opposed the Applicants’ claim on the issue of the GI, by the fact that they have been using the mark/words even before the Geographical Indications Act 2000 (“GI Act”) came into force and thus, such use fell outside the “grasp” of the said Act.
Earlier the High Court Judge had dismissed the Appellants’ claim mainly on the ground that the use of the words “Maestro SWISS” on the Respondents’ products had not led nor was it likely to lead ordinary members of the chocolate buying public in Malaysia to believe that such chocolates were made in or imported from Switzerland. Also, the Judge found that the words “Swiss chocolate” – the description which denotes that the chocolates are made in Switzerland and are of high quality and premium chocolates – did not appear anywhere on the Respondents’ product packaging. Rather, what did appear on the packaging was information to the effect that the products were made in Malaysia. With that, the Judge found that no reasonable person could have taken those products to be Swiss chocolates. The High Court had further stated that 1st Appellant had no locus standi to commence this suit.
The Appellants challenged the High Court’s findings in the Court of Appeal. The Court of Appeal sided with the Appellants, stating that the 1st Appellant has the requisite locus standi to initiate the action under common law as well as under the GI Act. Simply put, the members of the 1st Appellant share a common interest in protecting the “Swiss Chocolates” designation or words which indicate that the chocolates have Swiss origin or are associated with Switzerland. Therefore, the 1st Appellant is entitled to share in the goodwill of that reputation, and thus clearly has the necessary locus standi.
The Court of Appeal further agreed with the Appellants that in an action for extended passing off, the grievance was not that the use by the alleged infringer may induce members of the buying public to believe that the goods were manufactured by the complainant, but that such use had the likelihood of inducing the members of the buying public to believe that the goods bearing the impugned mark, name, description or other indication belonged to a distinctive group of goods with recognizable and distinctive qualities that had acquired a certain goodwill and reputation. Similarly, in an “extended” passing off case such as this, the damage or likelihood of damage to be proved is to the reputation and goodwill that have been acquired by goods belonging to that distinctive group.
Also, the Court of Appeal found that the learned High Court Judge had not given due consideration to the evidence adduced before the Court especially the evidence relating to the perception of the words “Maestro SWISS” on the packaging. The Court of Appeal considered the Appellants’ witness statements, which revealed that the use of the words “Maestro SWISS”, represented in red and white colours, would make them believe that the Respondents’ product was from Switzerland or had links with Switzerland. Further, the Court of Appeal opined that the learned High Court Judge also erred in not giving any consideration at all to the survey conducted by one of the Appellants’ witnesses, which revealed that some members of the public are likely to be confused into believing that the Vochelle brand of chocolates produced and marketed by the Respondents originated from Switzerland or are Swiss chocolates. The Court of Appeal is of the view that it is right to be cautious in considering and accepting surveys such as this, but being cautious does not amount to total disregard of such surveys.
Although the Respondents had argued that they clearly mention on the back of their packaging that their products are manufactured by a Malaysian company in Malaysia, the Court of Appeal inferred that the average customer would not normally examine the details of the manufacturer that are printed on the back of the product packaging. Subsequently, the Court of Appeal concluded that there was a likelihood of confusion in the minds of some members of the public that the chocolate products manufactured and marketed by the Respondents came from that distinctive group of “Swiss chocolates”.
The Court of Appeal also held that the use of the “Maestro SWISS” mark by the Respondents was not a bona fide use of the Respondents’ corporate name and/or logo since there was a conscious effort by the Respondents to create the impression of a link to Switzerland or a Swiss company even though in reality the Respondents had no Swiss origin nor any connection to Switzerland whatsoever.
In light of the above, the Appellants’ appeal in relation to the tort of extended passing off with costs was granted by the Court of Appeal, however the Appellants’ claim under the GI Act failed because the use of the geographical indication by the Respondents pre-dated the commencement of the GI Act.
Even though it may seem to be an effective marketing gimmick to associate your mark with a name of a particular place or country that is not the source of origin of your goods, it would be wise to avoid doing so as it entails a huge risk which may involve not only monetary damages but also the goodwill of the company you are striving to establish.