The apex court of Malaysia – the Federal Court – recently provided its grounds of judgment in Chocosuisse Union Des Fabricants Suisses De Chocolat, Kraft Food Schweiz AG and Nestlé Suisse SA v. Maestro Swiss Chocolate Sdn. Bhd. The decision centred primarily on the tort of extended passing off and the Geographical Indications Act.

The first respondent (Chocosuisse Union Des Fabricants Suisses De Chocolat) is a cooperative society for Swiss chocolate manufacturers focused on protecting the goodwill and global reputation of its members. The other respondents, Kraft and Nestlé, are Switzerland-based manufacturers and exporters of various Swiss chocolate products and are members of the first respondent. Maestro Swiss Chocolate, the appellant, manufactures and sells chocolates under various names, such as Vochelle, in Malaysia.

Proceedings were initiated by the respondents in the High Court for extended passing off and on unlawful use of a geographical indication under Section 5 of the Geographical Indications Act 2000. The principle of extended passing off provides that parties who, mutually or non-exclusively, legitimately share the goodwill and reputation of a specific trade name, may seek to enforce their rights against products which falsely adopt that same name. The respondents’ claim for extended passing off and violation of the Geographical Indications Act was based on the appellant’s use of the words “Maestro Swiss” on its products.

Chocolates made in and exported from Switzerland have acquired a reputation for their quality. The respondents therefore argued that this would mislead consumers in Malaysia into purchasing the appellant’s products on the belief that the products were manufactured in Switzerland, by a Swiss chocolatier.

While the High Court found that “Swiss Chocolate” had goodwill in Malaysia, extended passing off was not established as use of “Maestro Swiss” was deemed insufficient to mislead Malaysian consumers to believe that the appellant’s products originated from Switzerland. It also found that the “Vochelle” mark was the dominant element of the mark, not “Maestro Swiss”. It also held that there was no violation of the Geographical Indications Act as “Maestro Swiss” was not presented as a geographical indication on the appellant’s product packaging.

However, the Court of Appeal later reversed the decision of the High Court and established the claim for extended passing off. It held that, inter alia, there was a likelihood of confusion on the grounds that details of the chocolates’ Malaysian origin were only printed on the back of their packaging – noting, to support its finding, that the purchasing public is unlikely to thoroughly examine the particulars of manufacturers when consuming chocolate products. Further, it noted that the appellants had strategically placed the “Maestro Swiss” logo, which bore the red and white colours of the Swiss flag, on the front of the product packaging, emphasizing its assumed connection with Switzerland.

Despite disagreeing with the High Court on its finding that “Maestro Swiss” did not constitute a geographical indication, the Court of Appeal held that there could be no violation of the Geographical Indications Act on account that “Maestro Swiss” pre-dated the commencement date of the act, as per Section 27(2) of the act, which came into force in August 2001.

In reiterating that the test for extended passing off is the same as that for typical passing off, the Federal Court upheld the decision of the Court of Appeal. The decision was based on the evidence provided by the respondents, demonstrating that some members of the public had been misled and confused by the words “Maestro Swiss” into believing that the products had links to Switzerland.

Further, the Federal Court upheld the Court of Appeal’s decision regarding the Geographical Indications Act, reaffirming that Section 27(2) of the act only applies with respect to actions taken before it came into force.

This decision is a breakthrough in the principle of passing-off in Malaysia. It cements what is known as ‘extended’ passing-off, which prohibits traders from misselling their goods as if they were to belong to a particular product sector with goodwill and international renown, where this may be harmful to traders who benefit from the goodwill. It is particularly significant, also, that the case for extended passing-off was given by Chocosuisse Union members, as this affirms that members of a union have sufficient locus standi under the act, constituting ‘interested persons’ under Sections 2 and 11 of the act.