Malaysia Federal Court allows appeal by celebrity on goodwill and passing off

29 July 2021

Mohammad Hafiz bin Hamidun v Kamdar Sdn Bhd [2021] 1 LNS 590

The plaintiff in Mohammad Hafiz bin Hamidun v Kamdar Sdn Bhd was a popular “Nasyid” singer and composer. He was also in the business of selling Baju Melayu and Kurtas bearing the name, “Hafiz Hamidun”, through his company, Mikraj Concept Sdn Bhd (“MCSB”). MCSB was later renamed Haje Sdn Bhd (“HSB”). The defendant was a fabric retailer who applied the plaintiff’s name on the labels of certain products that it offered for sale. The plaintiff received messages from fans and followers on social media, enquiring if the defendant’s products originated from the plaintiff. The plaintiff then initiated an action against the defendant for the tort of passing off.

The High Court held that firstly, the plaintiff’s name was inextricably linked to the plaintiff and he had personally established goodwill in it. Secondly, even if the goodwill in the plaintiff’s name resided with HSB and not the plaintiff, the corporate veil ought to be lifted in the interests of justice to reveal the plaintiff as the alter ego and effective owner of HSB.

The Court of Appeal reversed the High Court’s decision and held that the plaintiff did not have the locus standi to maintain his claim against the defendant as the goodwill was actually established by HSB.

The Federal Court set aside the Court of Appeal’s judgment, restoring the High Court’s decision and laid down principles on what goodwill is and with whom it resides:

• There is a distinction between goodwill and reputation. Something which is reputable and popular may not necessarily have goodwill. It is in this sense that Lord Macnaghten’s dicta in Inland Revenue Commissioners v Muller & Co's Margarine Ltd [1901] AC 217, that goodwill is “the attractive force which brings in custom”, sheds some light. Goodwill is proprietary whereas reputation is not.
•  Goodwill, by its definition and in business, may not necessarily be attached so strictly to any particular person or group of persons. Goodwill resides in a trade or goods or services, or in the name, description or any other insignia, mark or distinguishing feature relevant to those goods or services.
• Celebrities engaging corporations to advance businesses which draw on their goodwill does not itself make the goodwill of those celebrities in those business any less their own.
• Any misappropriation and deceptive use of a celebrity’s name or stature for commercial gain, such as by causing the public into believing that the celebrity had endorsed it, is in line with the purpose for which the tort of passing off was developed to counter and remedy the misrepresentation and the deceit caused.