Table of Content
1. the appeal raises questions surrounding compensatory damages in trademark infringement. (Para 1 , 2)
2. defendants appeal against compensatory damages assessment. (Para 3 , 4 , 5)

[1] This is an appeal by the defendants (defendants) against an assessment of compensatory damages conducted by the learned Deputy Registrar of the High Court (DR) pursuant to a judgment of the learned Azizah Nawawi J (after a trial).

[2] This appeal raises the following questions regarding assessment of compensatory damages:

(1) Whether the learned DR was correct in law to award compensatory damages to the second plaintiff company (2nd plaintiff) in the form of loss of royalty or loss of license fees based on the user principle (Royalty Basis);

(2) having awarded compensatory damages on the Royalty Basis, should the learned DR award further compensatory damages based on business profits that the 2nd plaintiff had lost due to the defendants unlawful acts (Lost Profits Basis)?;

(3) how should the Court assess loss or damage to the 2nd plaintiffs goodwill as a result of the defendants passing off?; and

(4) when the defendants did not comply with a mandatory order by the learned judge for the defendants to, among others, adduce documentary evidence in the assessment proceedings, whether the learned DR may draw an adverse inference against the defendants under s 114(g) of the Evidence Act 1950 (EA) and if so, what is the effect of such an adverse inference in the assessment proceedings?

B. Background

[3] The 2nd plaintiff is a German company which manufactures and sells stationery products (2nd plaintiffs Goods) bearing, among others, various forms of trade marks (STABILO Trade Marks). The STABILO Trade Marks have been registered under the 2nd plaintiffs name under the Trade Marks Act 1976 ( TMA ).

[4] The first plaintiff company (1st plaintiff), a Malaysian company, is a subsidiary of the 2nd plaintiff. The 1st plaintiff distributes and sells the 2nd plaintiffs goods in Malaysia.

[5] The 1st defendant, a registered business, is a partnership consisting of two partners, namely the 2nd and 3rd defendants. The 1st defendant is in the wholesale and retail business of stationery products. The 1st defendant previously purchased the 2nd plaintiffs goods from the 1st plaintiff for resale to retailers and the public.

[6] The 1st defendant owed a sum of money to the 1st plaintiff in respect of the 2nd plaintiffs goods supplied by the 1st plaintiff to the 1st defendant (Outstanding Sum). As the 1st defendant could not repay the Outstanding Sum, the 1st defendant returned a quantity of the purported 2nd plaintiffs goods to the 1st plaintiff by way of "Goods Return Note" dated 27 December 2013 (Returned Goods). The 1st plaintiff discovered that a part of the Returned Goods were counterfeited (Counterfeit Goods).

[7] The plaintiffs filed this suit against the defendants (This Suit) for, among others, relief regarding the Counterfeit Goods based on trade mark infringement, tort of passing off and tort of unlawful interference with trade (Three Causes of Action).

[8] After a trial, on 23 February 2016, Azizah Nawawi J allowed This Suit and ordered as follows, among others:

(1) an order that the defendants shall:

(a) disclose to the plaintiffs in an affidavit all information regarding the defendants goods which bore identical or similar

(i) marked as STABILO Trade Marks; and

(ii) get-up as get-up of the 2nd plaintiffs Goods; and

(b) hand over all records and relevant documents regarding the defendants goods which had infringed STABILO Trade Marks and/or passed off as the 2nd plaintiffs goods (Infringed Goods) (Post-Trial Discovery Order);

(2) an assessment of compensatory damages to be paid by the defendants to the 2nd plaintiff regarding the Three Causes of Action; and

(3) the defendants shall pay to the 2nd plaintiff interest at 5% per annum on the sum of assessed damages from the date of the first commission of the Three Causes of Action until full payment of sum (

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