KUALA LUMPUR, Jan 5 — Malaysian listed company Power Root Berhad’s subsidiaries were this week abruptly ordered to pay RM23 million to an Indonesian company for alleged infringement of an Indonesian trademark of its own “Ah Huat” brand for coffee and tea beverages, without even having the chance to defend itself or even being told about the court case.
But Power Root has said it intends to fight the RM23 million case by appealing in the courts in Indonesia.
This is merely one of the rounds in Power Root’s year-long bid to regain control of its brand “Ah Huat” in Indonesia, which was allegedly registered by a company there without its permission.
Here’s a quick summary of what happened in this case, based on Power Root’s company announcement on Bursa Malaysia on January 3:
On February 22, 2013, Power Root Group officially appointed Indonesian company CV Ego Sun Star Sukses Mandiri as its official distributor for Indonesia.
But just a day before CV Ego became the official distributor in Indonesia, Indonesian man Lim Kok Kiong — a related party to CV Ego — registered the “Ah Huat” trademark in Indonesia with the Indonesian Director-General of Intellectual Property.
On April 4, 2022, Lim transferred the ownership of the “Ah Huat” trademark registration to the company CV Ego.
According to Power Root Group, it did not know of Lim’s initial trademark registration and the “Ah Huat” trademark transfer to CV Ego, adding that both events in 2013 and 2022 took place without its consent.
Power Root begins fight to take back “Ah Huat” in Indonesia
Last year, the court battles for control and benefit over the “Ah Huat” trademark began in Indonesia.
On January 13, 2023, the listed Malaysian company Power Root Berhad’s fully-owned subsidiary Power Root (M) Sdn Bhd filed a legal action at the Central Jakarta Commercial Court in Indonesia to cancel the trademark “Ah Huat” (initially registered by Lim and later transferred to CV Ego). (Power Root (M) Sdn Bhd is involved in manufacturing and distribution of beverage products).
Power Root said its court bid to cancel the “Ah Huat” trademark in Indonesia was because it was allegedly registered in “bad faith” in that country by Lim and CV Ego.
Power Root claimed that the “Ah Huat” trademark registration in Indonesia was done without obtaining Power Root (M) Sdn Bhd’s consent, and that it “was done with full awareness that the Ah Huat brand is owned internationally by the Power Root Group”.
The first RM23m compensation attempt: Power Root’s subsidiary won
In response to Power Root’s court case to cancel the “Ah Huat” trademark in Indonesia and even before it could be decided on, the Indonesian trademark holder CV Ego filed a separate court action just two weeks later (January 27, 2023) to claim RM23 million in compensation from Power Root’s fully-owned Indonesian subsidiary PT Natbio Marketing Indonesia for alleged infringement of the “Ah Huat” trademark.
But the Commercial Court in Indonesia on August 3, 2023 rejected CV Ego’s attempt to claim RM23 million compensation for alleged trademark infringement, and instead ruled in favour of Power Root’s Indonesian subsidiary PT Natbio.
Power Root listed five of the reasons why the court dismissed CV Ego’s RM23 million lawsuit, including sufficient evidence to show that Power Root Group had first filed the “Ah Huat” trademark in Malaysia on April 25, 2012 and in countries such as Taiwan, Australia, Macau, Japan and New Zealand, as compared to CV Ego’s trademark which was filed on February 21, 2013.
The other reasons were that CV Ego does not have legal standing to claim for trademark infringement and as its lawsuit is premature, due to the ongoing court case to cancel CV Ego’s “Ah Huat” trademark in Indonesia and as ownership of the “Ah Huat” trademark in Indonesia is still being contested.
CV Ego also failed to claim RM23 million from Power Root’s Indonesian subsidiary PT Natbio, as CV Ego’s RM23 million claim lacked basis and justification and was not sufficiently and clearly detailed, and as CV Ego’s lawsuit did not fulfil technical requirements as it failed to include all relevant parties who sold Ah Huat products through online platforms in the lawsuit.
CV Ego did not appeal against the Commercial Court’s dismissal of its bid to claim RM23 million compensation from PT Natbio.
The Power Root trademark cancellation bid: A temporary setback
Remember Power Root’s January 2023 effort to cancel the “bad faith” trademark registration of “Ah Huat” in Indonesia?
On October 31, 2023, the Commercial Court in Indonesia dismissed Power Root (M) Sdn Bhd’s lawsuit for the cancellation of the trademark “Ah Huat” in Indonesia, based on technical reasons as it ruled that former trademark owner Lim is no longer a relevant party to the court case as the “Ah Huat” trademark is now held under CV Ego.
Power Root (M) Sdn Bhd has filed an appeal on November 13, 2023 to the Indonesian Supreme Court, after receiving advice from its lawyers in Indonesia, K&K Advocates, that it has strong grounds to have the Commercial Court’s decision overturned.
The Power Root Group said K&K Advocates had advised that Lim — as the person who first registered the “Ah Huat” trademark in Indonesia — is relevant to be included in the court case to complete the facts and evidence gathered to strengthen the argument that the trademark registration was made in “bad faith”.
The Power Root Group said the Indonesian lawyers had also advised that Indonesian jurisprudence has shown that the courts had previously allowed court claims where previous trademark owners had been included in the claims.
The second attempt to get RM23m: Power Root’s subsidiaries not given the chance to defend
While Power Root’s effort to cancel the “bad faith” trademark registration of “Ah Huat” is still a matter being appealed in the Indonesian Supreme Court, the Malaysian listed company’s Power Root Berhad’s two fully-owned subsidiaries were told they have to pay RM23 million to CV Ego.
The two Malaysia-incorporated subsidiaries, Power Root Manufacturing Sdn Bhd and Power Root Marketing Sdn Bhd, on January 3 (Wednesday) received Indonesia’s Commercial Court’s January 2, 2024 letter. (These two companies are respectively involved in manufacture and distribution of beverage products, and distribution of beverage products.)
In that letter, the Commercial Court said CV Ego had filed a claim for trademark infringement against the two companies, and that the Commercial Court had on November 15, 2023 delivered a verdict for RM23 million to be paid to CV Ego.
But Power Root said the two Malaysia subsidiaries did not receive any written notification or court documents from the Commercial Court previously of the claim filed by CV Ego against them, adding that Indonesian law requires the Commercial Court to try at least three times to notify and summon a foreign party to attend to court matters held in Indonesia.
Power Root said this means that the two subsidiaries “did not have the opportunity to attend, and were not represented, during court proceedings” of CV Ego’s claims against them.
It’s not the end yet
Power Root Group said its Indonesian lawyers K&K Advocates has advised it that CV Ego’s RM23 million claim against Power Root’s two Malaysian subsidiaries was based on the same grounds of CV Ego’s previous failed RM23 million claim against PT Natbio (which the Commercial Court dismissed on August 3, 2023).
Power Root Group said the Indonesian lawyers also said the Commercial Court had failed to fulfil the procedural requirements of delivering court papers and asking the two Malaysian subsidiaries to appear in the court in Indonesia, saying that this resulted in the two companies being “not aware” and “not given an opportunity to present its case in defence of the claim” filed by CV Ego.
Power Root Group said its Indonesian lawyers also viewed the Commercial Court to have wrongly proceeded to deliver the November 15 verdict in the RM23 million case without any representations by the two Malaysian companies, and that its lawyers view the two companies as having strong grounds to appeal to the Indonesian Supreme Court against the RM23 million order.
Power Root Group said it will be filing an appeal against the November 2023 court order for its two subsidiaries to pay RM23 million to CV Ego.
“The Power Root Group will rigorously contest any and all claims to protect its trademarks and trade names,” it concluded in its three-page company announcement on Bursa Malaysia, also saying it will make further announcements when there are material developments on the matter.
Founded in 1999, Power Root is known to be a global beverage player, with its brands including Alicafé, Ah Huat, Extra Power Root, Frenché Roast, Oligo and Per’l Café.
Based on Power Root Berhad’s annual report for the financial year ending March 2023, the listed company recorded revenue of RM455.76 million and net profit of RM59.45 million for that financial year.
Apart from subsidiaries in Malaysia, Power Root Berhad also owns or controls beverage distribution companies abroad, such as Indonesia (specifically PT Natbio), China, United Arab Emirates and Hong Kong, based on information from its 2023 annual report.