The necessity for quality control in trademark licensing agreements is critical; any alleged waiver must be clear and supported by credible evidence.

[1] Playboy Enterprises International, Inc (the plaintiff) is a corporation incorporated under the laws of the State of Delaware, United States of America. The plaintiff owns and manages the 'Playboy' and 'Rabbit Head Device' trademarks (the PB Trade Marks). The plaintiff's PB Trade Marks are registered in Malaysia. The Rabbit Head Device is set out below:

[2] The plaintiff and Zillion Choice Sdn Bhd (the 1st defendant) had entered into four License Agreements as follows:

(Hereinafter referred to collectively as "the License Agreements").

[3] The License Agreements governed the relationship between the plaintiff and the 1st defendant. The territories covered by the License Agreements at the time when they were signed were as follows:

[4] Pursuant to the said License Agreements, the 1st defendant was granted a license to use the plaintiff's PB Trade Marks in connection with the 1st defendant's manufacture and sale, by itself or through wholesalers, to department and specialty stores located in countries such as Malaysia and Singapore ("the permitted territory"), of various items of women's apparel such as t-shirts, hats and shoes, and women's accessories and costume jewellery; as well as to operate a stand-alone boutique selling products bearing the plaintiff's PB Trade Marks.

[5] The principal activities of the 1st defendant are stated as "wholesaler in all kinds of garments". While that of Group Thirty-Six Sdn Bhd (the 2nd defendant) are stated as "trading in all kinds of garments and general trading". The 1st and 2nd defendants are separate entities but are closely related and have several common features such as common shareholders and directors. The 2nd defendant is not a party to the License Agreements.

[6] The plaintiff had issued and the 1st defendant had received a letter of termination (the letter) dated 14 June 2007 terminating the License Agreements. According to the plaintiff, it had terminated the 1st defendant as its licensee in Malaysia by the letter after the plaintiff had obtained evidence that the 1st defendant had sold or distributed, or caused to be sold or distributed goods bearing the PB Trade Marks in Japan, which is not an authorized territory specified in the License Agreements; and the goods sold in Japan were unapproved products bearing the PB Trade Marks. However the 1st defendant had through its previous solicitors sent a letter dated 28 June 2007 to the plaintiff disputing the contents of the letter.

[7] It is the plaintiff's case that the 1st defendant had committed infringement of the plaintiff's rights and breached its agreements with the plaintiff by selling in unlicensed territories and by selling counterfeit products. Further, the letter dated 14 June 2007 imposed, inter alia , the following obligations on the 1st defendants as stipulated in the License Agreements:

(a) that the 1st defendant was required to immediately cease and desist from all use of the Plaintiff's Properties, which included, but not limited to the removal of all Playboy-branded signage and fixtures from the Playboy Store so that it is no longer a Playboy Store;

(b) The 1st defendant was required to immediately cease sales of products bearing the PB Trade M