Common Law Rights and Passing Off in Malaysia: Why “First-to-File” Is Not Absolute (Section 24(4))

Malaysia operates a “first-to-use” trade mark system, not a pure “first-to-file” system. This distinction, rooted in the country’s common law heritage, means that an unregistered brand owner who has established goodwill in Malaysia can block a later trade mark application during examination, oppose it during publication, or even invalidate an existing registration. The legal basis for this protection is embedded directly in the Trademarks Act 2019 through Section 24(4), which requires the Registrar to refuse registration if the mark’s use in Malaysia would be prevented by the law of passing off or any other earlier right.

The Legal Framework: Section 24(4) and the Preservation of Common Law Rights

Section 24(4) of the TMA 2019 provides that the Registrar shall refuse to register a trade mark if its use in Malaysia is prevented by virtue of:

• Any rule of law protecting an unregistered trade mark or other sign used in the course of trade — most significantly, the tort of passing off.
• Any earlier right existing beyond the provisions of the TMA 2019, including rights under the Copyright Act 1987 or the Industrial Designs Act 1996.

Importantly, Section 159(2) of the TMA 2019 expressly preserves the right of action for passing off, stating that nothing in the Act shall be deemed to affect the right of action for passing off or the remedies in respect of such an action. This means common law trade mark rights coexist with the statutory registration system and can be asserted both defensively (blocking or opposing applications) and offensively (invalidating registrations or obtaining injunctions).

The “First-to-Use” Principle

Malaysia’s Federal Court confirmed in Mesuma Sports Sdn Bhd v Majlis Sukan Negara Malaysia [2015] 6 MLJ 465 that the first user of a trade mark is the common law proprietor of that mark. This means that a party who has used a mark in commerce in Malaysia — even without ever registering it — can establish ownership rights that are enforceable against later registrants.

The practical implication is significant: a registered mark does not automatically override an earlier unregistered right. If the unregistered user can prove goodwill established through prior use, the registration may be vulnerable to challenge.

The Three Elements of Passing Off

To succeed in a passing off action, the plaintiff must establish three elements, following the classic formulation from Reckitt & Colman Products Ltd v Borden Inc [1990] 1 ALL ER 873, as applied by Malaysian courts:

1. Goodwill

Goodwill is the attractive force that brings customers to the plaintiff’s business. It is identified by the trade mark, trade name, get-up, or other distinctive features associated with the business. The plaintiff must demonstrate that goodwill exists in Malaysia — international reputation alone, without Malaysian commercial activity, is generally insufficient (though the well-known marks provisions under Section 76 may provide an alternative basis for protection in certain cases).

Evidence of goodwill typically includes: sales figures in Malaysia, advertising and promotional expenditure directed at Malaysian consumers, duration of use, distribution networks, customer base, and market share. The question is whether the mark has acquired a sufficient reputation in the Malaysian market that consumers associate it with the plaintiff’s goods or services.

2. Misrepresentation

The defendant must have made a misrepresentation — whether intentional or unintentional — leading or likely to lead the public to believe that the defendant’s goods or services are those of the plaintiff, or are connected with or endorsed by the plaintiff. This is typically established by showing that the defendant’s mark is identical or confusingly similar to the plaintiff’s mark, and that consumers are likely to be deceived.

3. Damage

The plaintiff must show that the misrepresentation has resulted in, or is likely to result in, damage to the plaintiff’s goodwill. This may include loss of sales, loss of licensing revenue, dilution of the mark’s distinctive character, or damage to reputation. Where the goods are in direct competition, damage is often inferred from the diversion of trade.

How Passing Off Rights Block or Invalidate Registrations

Passing off rights can be asserted at multiple stages of the trade mark lifecycle:

• During examination: The Registrar may refuse registration under Section 24(4) if aware that the applicant’s mark would be actionable in passing off. In practice, this arises when the unregistered owner makes the Registrar aware of their prior rights, typically through a letter of protest or during opposition proceedings.
• During opposition: Under Section 34 of the TMA 2019, any person may oppose a trade mark application within two months of its publication in the Intellectual Property Official Journal. An unregistered mark owner can oppose on the ground that the application offends Section 24, including Section 24(4) (passing off).
• Post-registration invalidation: Under Section 47 of the TMA 2019, the High Court may declare a registration invalid on the ground that there is an earlier right under Section 24(4). An “aggrieved person” — which includes a prior user with established goodwill — may apply for invalidation.
• Standalone passing off action: The unregistered owner can bring a civil action for passing off in the High Court, seeking injunctive relief and damages, regardless of the defendant’s registration status.

The Burden of Proof

The burden of proof in a passing off action is higher than in an infringement action based on a registration. A registered mark benefits from a presumption of validity and ownership (Sections 36 and 37 of the TMA 2019). By contrast, an unregistered mark owner must affirmatively prove every element of passing off — goodwill, misrepresentation, and damage — through evidence.

This is why registration is always recommended, even for marks already used in commerce. The statutory presumption significantly reduces the evidentiary burden in enforcement proceedings.

Well-Known Marks: An Additional Layer of Protection

Under Section 76 of the TMA 2019, a well-known mark is entitled to protection in Malaysia regardless of whether it is registered or subject to a pending application, and regardless of whether the proprietor carries on business or has goodwill in Malaysia. This goes beyond passing off, which typically requires Malaysian goodwill. The well-known marks provision is particularly valuable for international brand owners who may not have established physical commercial presence in Malaysia.

Strategic Recommendations

• Always register: While passing off provides a safety net, it requires proving goodwill, misrepresentation, and damage — a more burdensome path than enforcing a registered mark. Register early and comprehensively.
• Document use from day one: If you are using a mark in Malaysia without registration, maintain detailed records of all sales, advertising, distribution, customer interactions, and market presence. This evidence is your primary weapon in any passing off action.
• Monitor the Register: Even if you do not register your mark, monitor the Intellectual Property Official Journal for applications that conflict with your brand. The two-month opposition window is your most cost-effective opportunity to block a conflicting application.
• Act promptly against squatters: If a third party has registered your mark, consider both invalidation under Section 47 (based on Section 24(4)) and a standalone passing off action. Delay weakens your position and allows the registrant to build their own rights.
• Consider the well-known marks route: If you are an international brand owner with recognition in Malaysia but limited local commercial activity, the well-known marks provisions under Section 76 may provide broader protection than passing off alone.

Common Mistakes

• Assuming registration is everything: Malaysia’s first-to-use system means an unregistered prior user with goodwill can challenge and potentially invalidate a later registration. Due diligence on prior use is essential before filing.
• Relying on international reputation without Malaysian evidence: Passing off requires goodwill in Malaysia. Global brand recognition is context, but the evidence must demonstrate Malaysian commercial presence.
• Ignoring the opposition window: The two-month opposition period after publication is the cheapest and fastest way to block a conflicting application. Missing it forces resort to post-registration court proceedings.
• Waiting too long to act: Delay in challenging a conflicting registration can weaken the passing off case, as the registrant builds their own market presence and consumer associations.
• Confusing passing off with infringement: Passing off protects goodwill and does not require a registration. Infringement under the TMA 2019 requires a registered mark. The two remedies have different elements, burdens, and procedures.

Key Takeaway

Malaysia’s trade mark system is not purely first-to-file. Section 24(4) of the TMA 2019 and the preserved common law tort of passing off give unregistered brand owners with established Malaysian goodwill powerful tools to block applications, oppose registrations, and invalidate marks obtained by later filers. The Federal Court’s recognition of the first-to-use principle means that genuine commercial use in Malaysia creates enforceable rights, even without registration. However, the burden of proof for passing off is significantly higher than for registered mark enforcement, making registration the recommended path for all serious brand owners. For those who find themselves competing against a later registrant, passing off and invalidation proceedings under Section 47 provide effective remedies — provided the evidence of prior use and Malaysian goodwill is strong.