Disclaimer: This article is not a legal advice. Please consult with a law firm specializing in intellectual property if you need legal assistance.
Custom design bags are a great way to express your lifestyle, preferences, or ideals, while having the practicality of having a bag.
A Malaysian fashion designer converted used food plastic packaging into unique-looking handbags, which has caught the attention of locals recently.
The handbags were made as part of a project to encourage people to reuse and upcycle plastic waste. In her Instagram page, she has featured 3 different bags, using the plastic packaging of local biscuit brand Hup Seng, as well as local bread brands Gardenia and Massimo.
Together with the photos, she described how relatable and intimate these food brands have become in many Malaysian households in several posts, garnering the attention and likes of many followers.
As of this article, the designer has announced an end to the project and is no longer available for orders.
While the project has noble intentions and looks promising, an expert has warned that there could be legal problems ahead.
We reached out to Robert Chua of Tee IP, who was more than happy to explain to us in further details.
In what ways did the infringement happen?
In consideration of the situation, there seems to be two possibilities of infringement, being both trademark infringement and copyright infringement.
Firstly, to determine whether there has been an infringement of trademark, the mark has to be registered. The owner of an unregistered trademark does not have rights to sue others that have infringed their trademark. Under Section 54 of the Trademarks Act 2019, a person can infringe a registered trademark if they use the trademark, or a similar mark in relation to identical/similar goods or services to those of said mark, without consent. This use must result in the likelihood of confusion to the public.
A registered proprietor of a trade mark has the exclusive right to the use of the trademark in relation to the goods or services for which it is registered. However, this exclusive right does not extend to goods or services beyond those for which the trademark is registered in.
In this situation, it is arguable whether said designer has infringed the “Hup Seng Cracker” and “Gardenia Bread” trademark. Even though she has created bags to be sold and affixed identical marks to those bags, it is arguable as to whether this constitutes an infringement considering that bags and bread are two different and unrelated class of goods. Further, it is likely that the public would not mistake or be confused as to the origin of the crackers or bread being that Hup Seng Cracker and Gardenia Bread are household goods and brands.
In terms of copyright infringement, the owner of the copyright in a work has the exclusive right to control the doing of a number of acts in relation to the copyright work pursuant to Copyright Act 1987. Under the Act, copyright arises automatically upon the creation of a work without need for any form of registration. Section 26A of the Act provides for the possibility of a notification of the existence of copyright in a work, which allows the same to act as evidence should indication of ownership should there be a dispute.
Section 13(1) provides for acts of infringement in relation to literary, musical or artistic works, films, sound recordings or derivative works. These acts are the reproduction in any material form; communication to the public; performance, showing or playing to the public; distribution of copies to the public by sale or other transfer of ownership; and the commercial rental to the public.
As shown in Hexagon Tower Sdn Bhd v Polydamic Holdings Sdn Bhd & Ors  4 AMR 384, it was held that there should be a sufficient objective similarity between the alleged infringing work and the copyright work and a causal connection between them. Additionally, it must also be established that the unauthorised and/or infringing act was done in relation to a substantial part of the work, if not the whole work.
Application of the aforesaid to the scenario, it is very likely that she has infringed several copyrights. This being that a substantial part of the proprietors’ copyright, such as the packaging of their goods and logo, is used to create bags to be sold. Without the consent of the proprietors, the designer has directly infringed the copyright of the proprietors by committing an act of infringement (reproduction in any material form and distribution of copies to the public by sale). Further, direct infringement is based on strict liability, it does not matter whether or not she is aware of this infringing act.
What happens if the brand owners decide to take action, what kind of penalty would she get?
Section 37 Copyright Act 1987 stipulates the remedies for a copyright infringement, being an order for injunction, damages, an account of profits and statutory damages.
A brand owner that sues for copyright infringement may apply for an interlocutory injunction, which means an order to refrain the alleged infringer to do a particular act or refrain from doing a particular act. This is granted at the discretion of the court. The brand owners may also apply for an Anton Piller Order, being a form of mandatory injunction that requires the alleged infringer to permit entry to their premises to allow the brand owners to secure evidence, as evidenced in Anton Piller KG v Manufacturing Processes Ltd  Ch 55.
She is also likely to be ordered to pay monetary damages to the brand owners for use of their copyright without permission. That is, monetary compensation to put the brand owners in the position that they would have been in if the infringement had not occurred. Alternatively, should losses not be able to be ascertained, the brand owners may seek statutory damages pursuant to Section 37(1)(d) Copyright Act 1987, which provides that statutory damages of not more than RM25,000 may be granted for each infringing work but not more than RM500,000 in total.
The Court, in their discretion, grant an account of profits, meaning that Wan may be required to handover any profit made by her that is attributed to the copyright infringement.
Section 56 Trademarks Act provides remedies for trademark infringement, being an order for injunction, damages, an account of profits and additional damages should the Court decide appropriate.
Further and/or in the alternative, it is also not uncommon for the proprietor of a mark to alternatively, bring an action under the common law tort of passing off, i.e. that the reputation/goodwill of the proprietor was used by Wan in her business which caused actual damage to the business or goodwill of the trademark proprietor (Yong Sze Fun & Anor v Syarikat Zamani Hj Tamin Sdn Bhd & Anor  1 AMR 389). However, it is arguable as to whether an action of passing off would succeed in this case as it can be said that the proprietors of the marks have suffered no dilution of goodwill in terms of business as they were and are not in the fashion business; Wan has not misrepresented the trade origin of the marks nor would consumers be deceived or confused as to whether the brands themselves have started to sell fashion items.
The fine for falsely applying a registered trademark to goods pursuant to Section 100 Trademarks Act 2019 is (not exceeding) RM10,000 for each good(s) bearing the falsely applied mark or imprisonment for not than three years, or both. For the offense of the same for falsely applying to services, it is a fine not exceeding RM70,000 or to imprisonment of not more than three years, or both.
What could she do if she wishes to carry on with the products? Can she approach the trademark owners for permission to do so?
Pursuant Section 55 Trademarks Act 2019, a person does not infringe a registered trademark if it is used in good faith; have used an identical/similar mark to the registered mark before the date of the registered trademark’s registration; non-commercial use; news commentary; or with consent of the trademark proprietor.
In this scenario, it does not seem like she qualifies for any of the aforementioned defences.
Section 13(2)(a) Copyright Act 1987 stipulates that doing any of the acts restricted by copyright, if done by way of fair dealing such as for the purposes of research, private study, criticism, review or reporting of news or current events, does not constitute copyright infringement.
It does not seem that she would fall under any of the aforementioned defences.
Therefore, it is advisable for her to approach the brand owners for permission to use their trademarks and copyrights. Alternatively, she may consider to license the same from the brand owners, and negotiate to pay a fee in exchange for consent to use the trademarks and copyrights.
Special thanks to TeeIP Sdn. Bhd. and their team for their detailed research! To find out how they can help you navigate through your IP journey, visit www.teeip.com.