The assessment of damages for industrial design infringement must be based on actual loss or profits, with speculative claims being inadmissible; aggravated and exemplary damages may be awarded for deliberate infringement.

JUDGMENT

Yusrin Faidz Yusoff JC:

Introduction

[1] This judgment concerns the assessment of damages in encl 64, following the Court 's decision in favor of the plaintiff in an industrial design infringement claim. At its core, the case raises a fundamental question: to what extent should a party that has invested time and effort in creating a unique design be compensated when another unjustly benefits from its work?

Background Facts

[2] The plaintiff, Naili Holdings Sdn Bhd., is a company engaged in the art and business of designing garments, particularly batik-style clothing. Recognizing the value of its creation, it took steps to secure legal protection for its design, duly registering it under Industrial Design No MY20-00070-011 on 31 January 2020. The design was not merely ornamental; it was the product of careful thought, intricate craftsmanship, and a desire to bring something novel to the marketplace. The plaintiff proceeded to commercialize this design under the name "Coral Orchid", launching its sales in February 2020.

[3] Some months later, in September 2020, the defendant, Sabella Holding Sdn Bhd., a well-established garment manufacturer, introduced three clothing products, eerily similar to the plaintiff's registered design. These garments, labeled as Cherry Floral, Navy Floral, and Yellow Floral, found their way into the marketplace, bearing the same artistic elements for which the plaintiff had sought protection. The defendant did not stop at mere production; it actively advertised, marketed, and sold these garments across multiple platforms, including online stores and social media.

[4] The plaintiff, upon discovering this, turned to the courts for redress. A full trial ensued, and on 10 October 2023, Justice Dato' Mohd Radzi Harun ruled in favor of the plaintiff (See: Naili Holdings Sdn Bhd v. Sabella Holdings Sdn Bhd (HC)). In essence, my predecessor held that the defendant had infringed the plaintiff's registered industrial design, thereby violating its exclusive rights. As a result, a permanent injunction was granted, forbidding the defendant from further use of the design.

[5] The plaintiff subsequently filed for assessment of damages in accordance with a notice issued under O 37 r 1 of the Rules of 2012 ('the Rules'), wherein they sought the sum of RM1,908,000.00 which includes general damages as well as aggravated and exemplary damages. This is based on paragraph (iv) of my predecessor's Judgment which reads as follows:

"iv. Satu siasatan ke atas gantirugi atau di atas pilihan Plaintif, satu akaun keuntungan yang dibuat oleh Defendan akibat pelanggaran Pendaftaran Reka Bentuk Perindustrian Malaysia No MY20-00070-0101 dan bayaran mana-mana jumlah yang mungkin didapati hasil siasatan tersebut kepada Plaintif;"

[6] Following an assessment of damages, I granted the total sum of RM209,293.65 along with assessment costs of RM8,000.00, in favor of the plaintiff. My decision encompasses the following:

(a) General damages in the sum of RM59,293.65;

(b) Aggravated damages in the sum of RM50,000.00; and

(c) Exemplary damages in the sum of RM100,000.00.

[7] In addition to the foregoing, the plaintiff proposed, and the defendant agreed, to the sum of RM20,000.00 as costs for the full trial of the main claim. Accordingly, this amount is recorded as such, in addition to the RM20,000.00 previously awarded by my predecessor for the dismissal of the defendant's counterclaim.

[8] Essentially, the defendant, vide their Notice of Appeal dated 25 November 2024, is appealing against my decision granting the aforesaid sum of RM209,293.65.

Issues

[9] The Court is faced with three principal issues:

(a) Did the plaintiff prove actual loss of profit?

(b) How should compensation be calculated?

(c) Should aggravated and exemplary damages be awarded?

Counsels' Contentions

Plaintiff's Contentions

[10] Learned counsel for the plaintiff, Haris Bin Md Nor, contends that substantial damages should be awarded to compensate for its financial loss, reputational h