Court reprimands wholesaler for unfairly importing energy drink

A local wholesaler has been found in contravention of unfair competition, dishonesty and engaging in a questionable act of parallel importation of an energy drink.

Justice Westmin James made the finding in a ruling delivered in the San Fernando High Court against MK Wholesalers and Distributors Ltd.

The wholesaler was sued by Koyash Enterprises Ltd, a local distributor, and Vietnamese exporter Tan Nguyet Duong Trading Company Ltd.

In granting judgment for Koyash Enterprises and the Vietnamese trading company, the judge declared that MK Wholesalers had breached the Prevention of Unfair Competition Act. He also declared that Koyash had a valid registered trademark for the energy drink Sting.

The judge ordered MK Wholesalers to pay nominal damages to Koyash of $250,000 plus interest and $250,000 for “passing off” the product, which would have led the public to believe the energy drink it sold was the same as the one Koyash sold.

To Tan Nguyet Duong Trading Company, the judge ordered MK Wholesalers to pay US$77,806.68 with interest and costs of $77,803.08 to Koyash and US$21,595 to the Vietnamese company.

Koyash was represented by attorneys Ravi Mungalsingh and Crystal Rampersad. Attorney Roger Kawalsingh and Tara Bhairosingh represented Tan Nguyet Duong Trading Company. MK Wholesalers was represented by Prakash Ramadhar, Arif Rahman, Nadia Hassan-Mohammed and Jessica Dharam.

In 2010, Koyash began importing Sting Energy drinks. It got the product from a Malaysian company which sourced it from Tan Nguyet Duong Trading Company.

MK Wholesalers had a contract with manufacturer Suntory PepsiCo for the export of the products to specific destination ports including Trinidad and Tobago.

In 2014, Koyash registered the Sting logo with the Intellectual Property Office and then discovered two years later that Sting products, with Vietnamese text printed on the cans with English labelling pasted over it, were being sold locally.

The company demanded that MK Wholesalers stop importing the drink, and filed its lawsuit in 2019.

In its defence, MK Wholesalers, which filed a counter-claim which the judge dismissed, accused Koyash of engaging in a belligerent, blistering, offensive and massive campaign against it, while denying it was in breach of competition practices. The company’s directors gave evidence that they bought beverages through a UK supplier and there had been complaints by customers of a shortage of the product.

In his ruling, James disagreed with the wholesaler’s contention on Koyash’s registration of the trademark.

“Registration of a trademark gave the exclusive right to the first claimant to use the trademark, and authorised other persons to use the trademark concerning the goods or services for which the trademark is registered.

“There is no doubt in the evidence that the defendant imported Sting Energy drinks or products containing packaging bearing the registered ‘Sting’ trademark with the intent to sell for profit, without the consent of the claimant and registered user of the trademark.

“This is made clear by the defendant’s evidence.”

On the “passing off” contention, James held, “It is clear from the elements of this test that the first claimant’s Sting product has acquired goodwill in Trinidad and Tobago and is known by its distinguishing name and mark; that the defendant has misrepresented whether intentionally or not that its goods are the goods offered by the claimant (by selling the product with the same trademark) and that the first claimant has suffered damage, as evidenced by its loss of customers and decreased sales.”

The judge held that MK Wholesalers knew there was another distributor of Sting in TT.

“The court therefore holds that on a balance of probabilities, the defendant knew of the arrangement between the second claimant and the first claimant and the defendant sought (to source the product) intending to engage in parallel importing and free riding on the second claimant’s product that they supplied to the first claimant.

“The defendant also engaged in underselling the first claimant utilising the goodwill of the product built by the first and second claimant.

“The court is of the view from all the evidence and the cross-examination that on a balance of probabilities and accordingly, I hold that the defendant in contravention of section 4(1) of PAUCA (Protection against Unfair Competition Act) engaged in an act or practice in the course of industrial or commercial activities which involves dishonesty…as against the second claimant.”

Koyash no longer holds the trademark for Sting Energy Drink, which is now distributed through Vemco in TT.

The judge also disclosed in his ruling that an attorney was prohibited from appearing in the matter as he had not been in possession of a practising certificate "for some time." He said the attorney would have been in contravention of the Legal Profession Act, had he appeared.