The Future of Law in Protecting Business Reputation

Future of Law in Protecting Business Reputation Will Rogers once quoted “It takes a lifetime to build a good reputation, but you can lose it in a minute” In this digital era where everyone is a publisher, the risk of reputation damage is present anywhere and anytime. Business reputation is largely what other people think of the public image of that particular organization. Of course a good reputation enhances competitive advantage and increase revenue to the company. It also allows a business to overcome a crisis in a better way and attract talented person as there is sufficient reputation. On the other side, a damaged bad reputation reduced the revenue for the company and subsequently loses the trust of stakeholder.[1] The problems faced by most businesses is that malicious posts can be circulated on social media website instantly while the process of taking legal action and trying to restore back the reputation after the event can be slow and difficult. In most cases, when negative reviews or comments are made online regarding a business, it is viewed as opinion in the eyes of the law. It will be a difficult task to prove that a person had specific bad intention while writing the review. Thus, the suggestion here is there must be a clear justification in regard to determine the specific intent of malice of the person. Additionally, the Communications Decency Act (CDA), which was taken effect since 1996 can make it even more difficult to manage negative information which is published online effectively as this act was created to protect free speech. It is also providing immunity to the websites that publish or distribute the content of others because they will not be held responsible for the information posted on their respective site.[2] Although it is defamatory, victims of online defamation will face a challenging court battle in order to restore their reputation back. In most cases, it will require more time for having those negative review to be removed from a website. Even if the negative review has been removed, people will still have negative perception towards that particular business reputation. Thus, there should be amendments made to Communications Decency Act in order to make it a more comprehensive law. Such ways is by imposing limitation although this act was created to protect free speech. Besides, this act cannot allow full immunity to websites that publish other people information and impose punishment for those who did that. Although monetary damages are typically awarded in many cases related to reputation injury, it is obvious that such awards tend to comfort the emotional harm which had been felt by plaintiff as a result of harm to her reputation in term of business. Thus, the damages given here is not comprehensive and complete as it is supposed to restore back the business reputation but not to comfort the emotional harm. Therefore, this is a difference between monetary awards and various justifications for the legal protection of a business reputation. Thus, the suggestion here is to ensure there is availability of various justifications in order to restore back the business reputation rather than a monetary award. The ways to improve this is by giving more attention to disclaimers and other forms of information correction as an appropriate remedy to restore business reputation. The issue relating to false information can be settled and also acting as a public reprimand to the defendant. This will definitely ensure people to think twice before they make any action that can jeopardise other business reputation as they will not want to risk paying monetary awards. Of course, the suggestion made here did not mean that monetary damage awards for injury towards business reputation are not appropriate. To those individual who can proved that they lost job opportunities or the company can prove there is a lost in sales as a clear result from reputation injury should be granted for those monetary awards.[3] This is because they have suffered losses in terms of monetary. My suggestion here is if there any good alternative remedy that can correct or restore the business reputation, then it should not be assumed that everyone who suffered injury to business reputation are entitled to monetary damages. It should be understandable that there are peoples who take on others ideas and embody them in a different form. This will give them a strong claim that they are the original creators of the ideas.[4] It was argued by Hegel that a principled answer to the question of when preventing the use of an idea is justified is impossible and it cannot be settled by the current legislation.[5] Thus, the suggestion here is there must be a legislation to address this problem in order to know the justification on when to prevent the use of an idea of another person. Then a right to misappropriation of valuable intangibles could be established once this problem is rectified. It is also arguable that there are strong grounds of principle for upholding the tort of passing off in its classical formulation.[6] Here, it is suggested that the principle can be expanded to a more generalised tort of misrepresentation. However, it is clearly difficult to establish an argument of principle to support its development into a more generalised tort of misrepresentation. Therefore, there is a need to appeal to Parliament to review the terms of policy or to develop more convincing argument of principle in order to make this principle to be established successfully. There is still ample avenue for developing and extending the tort of passing off in the future in Malaysia. This would serve to circumvent new kinds of unfair trade practices which may occur. The ideology of this can be found rooted in the case of Associated Newspaper PLC v Insert Media Ltd[7] where Justice Mummery remarked that: “It is important both in the evaluation of the facts and in the formulation and application of the law, never to lose sight of the legal and economic basis of the action for passing off. That tort has been developed for the protection of the property which exists not in a particular name, mark or style, but in an established business, commercial or professional reputation or goodwill.” Sometimes, the courts would choose a more liberal and flexible approach in interpreting the tort of passing off to further extend the protection to business reputations. This can be observed in the case of Lego System A/S v Lego M. Lemelstrich Ltd.[8] which confirms that passing off may be deemed to have occurred even where the plaintiff and the defendant are not selling the same goods. In this case, the plaintiff is the well-known manufacturer of “Lego” which are children’s toy building bricks who sought to prevent the defendant from using the name of “Lego” for their products of plastic gardening equipment. The court decided in the plaintiff’s favor and held that the plaintiff could lose the opportunity in the future to expand their business into the area occupied by the defendant. This principle may set off some significant implications which would inter alia prevent a trader in a totally different area of business from using a mark on the ground that the trader would interfere with the plaintiff trader should he wish to expand his business sometime in the future. However, Malaysian courts do not adopt such liberal interpretations to extend the protection to the future of traders which may be good to prevent complications regarding remoteness in the future. This can be seen in the case of McCurry Restaurant (KL) Sdn Bhd v McDonald Corporation[9] where the Court of Appeal ruled in favor of the appellant/defendant McCurry Restaurant. The plaintiff is a renowned international fast food chain whereas the defendant sold Indian and Malaysia cuisine under the name of McCurry Restaurant. The plaintiff then sought to restrain the defendant from using the prefix of “Mc”. His Lordship, Gopal Sri Ram JCA, found that the plaintiff’s and the defendant’s get-up are distinctively different. This is because McDonald’s get-up is the use of the golden arches “M” with a red background while McCurry’s get-up is the use of the wordings: Restoran McCurry, in white and grey letters with a red background accompanied with a picture of a chicken holding two thumbs up. He also found that the types of food sold by both the defendant and the plaintiff are of stark difference. This is so where the former sells Indian and Malaysian cuisines while the latter sells fast foods. As such, the court was satisfied to find that there is insufficient proof to establish passing off. It can be observed that the McCurry case would set Malaysian courts in a direction different from the Lego’s case. Thus, it is submitted here that this may be the correct direction to prevent the abuse of the law of passing off. Perhaps the consideration of the future of a trader’s business expansion may be too remote and may not be suitable to be weighed in a decision. Another area of development of the tort of passing off in the future is the application of the tort to character merchandising which is a marketing strategy by referencing directly or indirectly to an endorsement by a real or fictional character. It occurs where a trader associates his products to the name, image or distinguishing features of a popular figure to make his products more attractive or noticeable in an effort to hike up the sales of his product or services. Australian cases have suggested that a trader who has developed a reputation in a real of fictional character can restrain another from misrepresenting that their products are commercially related with that character.[10] It seems that England courts are following Australian cases’ footsteps. In the case of Mirage Studios and Ors v Counter-Feat Clothing Company Ltd[11] it was held that if the public is misled as to a feature or the quality of the goods sold, then it would suffice for a cause of action in the tort of passing off. That case has stirred up some controversy in the English judicial sphere because it implies that the elements of passing off as established in Advocaat are no longer followed. In Pacific Dunlop Ltd. v Hogan and Ors,[12] it was held that passing off may be established as long as the misrepresentation is proven regardless of whether actual deception and damage have occurred or not. It is thus, arguable that Australian courts may have gone too far in the character merchandising decisions. In a New Zealand case of Tot Toys v Mitchell,[13] Justice Fisher has expressed aversion from the Australian courts’ decisions of extending the law of passing off to character merchandising cases. As such, in Malaysian context, the law of passing off in character merchandising cases is still open for further development. It is submitted that perhaps Malaysian courts may retain the need to prove actual damage or loss in character merchandising cases and as such, fusing the Australian’s approach with the original elements required to prove passing off. This is so to protect the business reputation of traders in Malaysia. Conclusion In short, the tort of passing off has vast potential for development or extension to protect business reputations of Malaysian traders. This is especially so when new types of misrepresentations and passing off should arise which could tarnish a business’s goodwill and reputation. An example would be in cases of character merchandising as discussed. Nevertheless, the original elements to prove passing off should be retained to prevent the abuse of the law.


[1] D.B. Bromley, Reputation, Image and Impression Management 8 (1993) [2] Stanley Ingber, Defamation: A Conflict Between Reason and Decency, 65 Va. L. Rev. 785, 791–92 (1979) [3] See Laura A. Heymann, Reading the Product: Warnings, Disclaimers, and Literary Theory, 22 Yale J.L. & Human. 393, 396 (2010) [4] Waldron, “From Authors to Copiers: Individual Rights and Social Values in Intellectual Property Law” (1993) 68 Chicago-Kent at p.617 [5] Hegel, supra, n 72 at p.55. [6] Gordon, “An Inquiry into the Merits of Copyright” (1989) at p.1431. [7] 1 WLR 900, 908 [1990] [8] FSR 155 [1983] [9] [2009] 1 LNS 309 [10] Eg: Children’s Television Workshop Inc v. Woolworths (NSW) Ltd., RPC 187 [1991]; Hogan and Another v. Koala Dundee Pty. Ltd., 83 ALR, 12 IPR 508 (1988); Pacific Dunlop Ltd. v. Hogan and Others, 87 ALR 14, 14 IPR 398 (1989); Hutchence v. South Seas Bubble, 64 ALR 33 (1986). [11] FSR 145 [1991]. [12] [1989] FCA 185 and at (1989) 87 ALR 14 [13] Tot Toys Ltd. v. Mitchell, 4 NZBLC 102,797 (1992)

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