Focus Malaysia | May 3-9, 2014

by Joseph Wong

Property developers must now be wary of using names synonymous with others.

KEN Holdings Bhd’s success in its legal suit against Sri Seltra Sdn Bhd regarding the usage of its “Ken” trademark will have far-reaching effects for other property developers.

Preventing Sri Seltra Sdn Bhd from using “Ken” in related or associated companies means property developers must be wary of using names synonymous with other companies.

Preventing Sri Seltra Sdn Bhd from using “Ken” in related or associated companies means property developers must be wary of using names synonymous with other companies.

The lawsuit, which recognised the Ken Group as the common-law proprietor of the brand name “Ken”, lasted three years and was fought in three stages – in the High Court, Court of Appeal and Federal Court

“The Court has recognised that Ken Holdings has built a sufficient level of goodwill towards the ‘Ken’ brand for it to be associated with the property developer, that people and recurring buyers of Ken Holdings’ properties are able to [identify] the brand with the company,” says Wong and Partners attorney Chew Kherk Ying.

Since developers are using generic names, there may yet be no issue, he says.

“This case is a landmark one because the court has upheld Ken Holdings’ stance to protect its brand and it will set a precedence for other property developers, whereby they can emulate and build their own goodwill for their brand so other developers cannot make use of their name or brand,” she says.

The court’s decision resounds beyond property development.

While prominent companies have been using their own brands – Sunway Bhd and SP Setia Bhd, for example – new or smaller players can have a tendency to ride on the brands of the bigger companies.

An industry observer notes some developers ride on generic names instead of actual brands.

The current most noticeable case is between SP Setia and Eco World Development Sdn Bhd, whose rivalry has seen some duplication of generic brand names, he says.

“There is some public confusion between these two companies. One is an established property developer while the other is fast gaining prominence,” he says.

Developer wins in three stages

SP Setia President and CEO Tan Sri Liew Kee Sin resigned his posts effective April 30 and his links to Eco World through his son Tian Xiong, a director there, has fuelled speculation Liew will join him in the rival company.

Eco World has had several former high-ranking SP Setia executives joining it.

SP Setia has KL Eco City, Eco Gardens, EcoHill, Eco Glades and Eco Cascadia, which bear part of Eco World’s brand name.

In addition, SP Setia has Setia Sky Residences, Setia Sky 88 and Setia Business Park; while Eco World has EcoSky and Eco Business Park.

Whether this is a future case remains to be seen, says the industry observer.

“The trademarking of names generally depends on what was registered and how exhaustive and wide the effect of the registered brand,” says a lawyer.

Ken Holdings took legal action against Sri Seltra to prevent it from using the “Ken” name in 2011, after hearing news the company had been mistaken for developing properties undertaken by companies bearing the “Ken” name.

Sri Seltra’s related and associated companies are Kenco Sdn Bhd, Kenco Properties Sdn Bhd, Kenco Construction Sdn Bhd, Kenco Development Sdn Bhd, Ken Concrete Sdn Bhd, Ken City Development Sdn Bhd, Ken City Bidor Sdn Bhd, Ken City Ipoh Sdn Bhd and Ken City Penang Sdn Bhd.

“We heard from our previous buyers who were keen to buy property by these companies and had mistaken them for us,” Ken Holdings group managing director Sam Tan tells FocusM.

“We then realised the Ken Group was faced with an issue of others passing off as theirs its established and reputable ‘Ken’ trademark,” he says.

The trial began in May 2012. On Dec 28 that year, the court declared the Ken Group is the common-law proprietor of the mark “Ken” in the property development and construction industry, and the defendants were restrained by an injunction from passing off the mark as theirs.

In addition to the declaration, the High Court awarded Ken Holdings damages and costs amounting to RM266,693.98.

But the legal battle did not end there. The defendants appealed but Court of Appeal judges unanimously dismissed the appeal on Aug 28 last year.

On Feb 13, the matter proceeded to the Federal Court with the defendants seeking leave to appeal but the apex court unanimously dismissed its application.

“This means the decision of the High Court in favour of the Ken Group against the defendants is maintained,” says Tan.

“The Ken Group attaches great importance to the … ownership of its trademark ‘Ken’ and has spent a substantial amount of time, effort and money to safeguard the trademark, for which we have over the past three decades established goodwill and a reputation,” he says.

Rebranding option for Sri Seltra

Sri Seltra Sdn Bhd’s related and associate companies will be rebranded to change the names of all the companies registered with the name “Ken”, following the Federal Court’s decision to uphold  Ken Holdings Bhd as the common-law proprietor of the brand name.

The companies bearing the Ken names will continue to operate, although they will cease using “Ken” as a mark until their new brand is launched.

“Our properties are being marketed under the ‘City Motors’ brand name,” says Sri Seltra general manager Terence Chia.

“We are in the process of carrying out the rebranding process but no decision has yet been made [about a new name],” he says.

He declined to reveal potential new names for the companies.

“As you may know, our ‘Ken’-named companies have been in the group for quite a long time; so we would like to take a proper and meticulous steps in coming up with another brand identity,” he says.

The alternative is to cease the operations of “Ken” –named companies and park their properties and operations under related or associated companies; but this move is impractical, says Chia, and may have a negative impact on the group.

Sri Seltra has no other options at the moment, says Chia.

An industry observer says it is unfortunate for the other companies to bear the “Ken” name as there is always the possibility that the buyers will confuse Ken Holdings with Ken City or Kenco.

“I don’t believe there was an intention on the part of Sri Seltra’s related or associate companies to take advantage of this. For buyers who are aware of Ken Holdings, it would be logical for them to ask if the developers are related,” he says.

“And to the credit of the companies bearing the Ken name, they have not named any properties using the ‘Ken’ brand,” he says.

This was confirmed by Chia. He says no property developed by the companies has been named “Ken”.

Timeline of suit

October 2011
Legal action taken against Sri Seltra.

January 2012
Interlocutory injunction to restrain Sri Seltra from further using the “Ken” trademark.

May 2012
Trial begins.

December 2012
High Court rules in favour of Ken Holdings and awards it damages and costs of RM266,693.98. Defendants appeal to the Court of Appeal.

August 2013
Court of Appeal unanimously dismisses appeal. The matter proceeds to the Federal Court.

February 2014
Federal Court unanimously dismisses defendants’ application for leave to appeal.