McDonalds vs McCurry: Leave to Appeal to the Federal Court

On 8 September 2009, the Federal Court ruled in favourof McCurry in dismissing McDonald’s leave to appeal to the Federal Court. This upheld McCurry’s right to continue using the “Mc” prefix in operating its own fastfood restaurant which served Indian food.

In the High Court, McDonald’s had initially won in establishing a case for passing-off at the High Court against McCurry. An action for passing-off essentially involves establishing the reputation of a claimant and a misrepresentation by the defendant which has caused damage to the claimant.

On appeal to the Court of Appeal, McCurry struck back where the Court of Appeal then overturned the High Court decision. The interesting decision of Gopal Sri Ram JCA (as he then was) can be read here.

Under Malaysian law, the last avenue of appeal was then to the Federal Court. However, under the law, there is no automatic right of appeal to the Federal Court and there is a need to obtain leave (or permission) from the Federal Court by satisfying certain requirements. This has been set out conclusively by the Federal Court itself in the decision of Joceline Tan.

To obtain leave to appeal to the Federal Court, one must frame certain questions or issues of law to be determined by the Federal Court in order for the Federal Court to decide on these questions. Leave will only be granted if a question of law is one to be decided for the first time in Malaysia or there are presently conflicting decisions by the Court of Appeal on this question of law, so it will be to the public advantage for the Federal Court to decide on this conflict (as generally explained in the decision of Joceline Tan).

So, amidst the fanfare of McCurry staging an epic David vs Goliath victory over McDonald’s and how the Federal Court had upheld McCurry’s rights, I also wanted to set the Federal Court decision in its proper context and how the Federal Court could not hear McDonald’s case on its merits since the leave requirement was not satisfied.

At the Federal Court, McDonald’s was only at the leave stage in trying to obtain permission to appeal to the Federal Court. The Federal Court was not deciding the case on its merits, but had to first decide on the technical questions framed before it. As was heavily reported, the Federal Court appeared to dismiss McDonald’s claim almost on a technicality.

The Federal Court did not even decide on whether the questions posed by McDonald’s counsel were principles to be decided for the first time, or whether there were conflicting decision on these points. The Federal Court dismissed the leave application when it held that McDonald’s had not properly framed the questions for them to make any determination on them.

I have not read the grounds of judgment so I cannot determine what sort of questions were put forward. But as reported, even on the first day of hearing of the leave application, the Federal Court had already expressed some concern on the manner of drafting of the questions and McDonald’s counsel was given an opportunity to rephrase some of the questions. After the one-day adjournment, the Federal Court upheld its view that the questions were not properly framed by McDonald’s.

So it’s a shame, that not only was McDonald’s not entitled to appeal to the Federal Court yet, since McDonald’s was only at the leave stage, the Federal Court could not decide on the merits of the questions for leave itself, since the questions were not properly framed for determination.

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Confused About Japanese and Chinese Wine

In Sinma Medical Products Sdn Bhd v Yomeishu Seizo Co Ltd & Ors [2004] 4 MLJ 358, the Court of Appeal of Malaysia affirmed the decision of the High Court that Sinma was guilty of passing off and infringement of the Yomeishu’s registered trade mark of 3 kanji characters in respect of a herbal medicinal wine.

Kanji characters are Japanese writing based on Chinese characters. The Japanese phonetic sound of the 3 kanji characters is “Yo Mei Shu” and the wine was promoted among the Chinese community using the phonetic pronunciation of the characters in the major Chinese dialects used in Malaysia, including its Mandarin pronunciation: “Yang Ming Jiu”. Sinma imported medicinal wine from China and its get-up had a combination of the same 3 kanji characters with the prefix of 2 kanji characters that made up the word “Chinese.” Hence, Sinma’s wine could be referred to as “Chinese Yang Ming Jiu” (in Mandarin) or “Chinese Yomeishu” (in Japanese).

An interesting aspect of the case, which was brought to the fore at first instance in the High Court, was the difficulty Yomeishu had in proving that there was ‘passing off’ of Sinma’s wine as Yomeishu’s. Passing off can be simply described as somebody representing their goods (or services) as the goods (or services) of somebody else.

…Yomeishu sought to demonstrate the phonetic confusion between the two wines…

The 3 essential elements to proving passing off is: ‘reputation‘ – the goods must enjoy a reputation among the public, ‘misrepresentation‘ – the public must be confused between your goods and the other person’s goods, and finally ‘damage‘ – this confusion has resulted in you experiencing damage.

The hurdle that Yomeishu had to overcome was that the get-up of the respective products was markedly different, and therefore, there was difficulty in proving visual confusion.

The ingenius manner of overcoming this obstacle was that Yomeishu therefore sought to demonstrate the phonetic confusion between Yomeishu’s wine and Sinma’s wine.

The Yomeishu wine was sold to the Chinese community mainly through medicinal shops. The Chinese buyers would go up to the shopkeeper and ask for a small glass of Yomeishu, or request for a bottle of Yomeishu, in their various dialects.

So making use of this fact, Yomeishu carried out a radio campaign over the Chinese radio networks and it was done in the 3 main Chinese dialects: Mandarin, Cantonese and Hokkien. Yomeishu’s wine was referred to the listeners using the phonetic sound for the product in each of the said 3 dialects.

The listeners were told that the first 100 listeners who brought in an empty bottle or box of the medicinal wine, “Yang Ming Jiu”, “Yong Meng Chow” or “Yeoh Miah Chiew” i.e using the phonetic pronunciation of the kanji characters in Mandarin, Cantonese and Hokkien respectively, could exchange it for a free bottle of the product.

The results: 121 listeners, all Chinese, responded to the promotion. 110 with empty boxes or bottles of Yomeishu’s wine and 10 with Sinma’s wine. One person brought in an empty bottle of Yomeishu’s wine and one of Sinma’s wine.

In one swoop, this radio campaign established two facts. First, that a substantial and significant majority of Malaysian Chinese consumers related to the product of Yomeishu with the sound of the combination of the 3 characters in the Chinese dialect. This clinched the first element of ‘reputation’. Second, it also clearly showed confusion among a significant percentage of the consumers, therefore proving ‘misrepresentation’. The High Court judge held that there was passing off, and this was affirmed by the Court of Appeal.

This Yomeishu case confirms that a trade mark can enjoy protection even when pronounced in different languages or dialects. A mark consisting of merely kanji, Chinese or even jawi characters can enjoy trade mark protection if the public has come to associate that phonetic pronounciation with the product or service that the mark is registered in respect of.