Local milk powder manufacturer wins in court

The Commercial High Colombo recently determined a case in relation to the much discussed topic of milk powder filed by Fonterra Brands Lanka Ltd., Maliban Milk Products Ltd., P.M. Mohamedali & Company as joint Plaintiffs under the Intellectual Property Act against Pelwatte Dairy Industries Ltd. (1st Defendant) and Chairman of Pelwatte Dairy Industries Don Ariyaseela De Silva Wickramanayake (2nd Defendant) alleging unfair competition. 

The Plaintiffs sought an injunction preventing the Defendants from making, or publishing any allegation, statement, advertisement, social media post, article indicating expressly or by implication that imported milk powder including New Zealand milk powder contains preservatives, chemicals, poisonous substances, pigs oil, palm oil, or non-dairy milk fat, whilst promoting the Defendants’ own milk products.

The Plaintiffs alleged that the advertisements and advertorials published by the Defendants state that the imported milk powder of the Plaintiffs is adulterated, does not have any nutritional benefits, and has no value at all. The Plaintiffs further alleged that the Facebook advertising post published by the Pelwatte Dairy Industries states that the imported milk powder contains poisonous substances. 

The disgruntled Plaintiffs were of the view that the Defendants are seeking to promote their products by dishonestly discrediting and disparaging the products and brands of the Plaintiffs, which include some of the big names in the market such as Anchor, Ratthi, Red Cow, Anlene, Maliban, and Diamond.

Counsel for the 1st Defendant Avindra Rodrigo P.C. emphasised to Court that the Plaintiffs have not produced any documentary evidence in support of the Plaintiffs’ position that their milk powder products are free of harmful substances or added fat. 

Counsel in his written submissions further stated that the Plaintiffs seek to thwart the freedom of speech and expression guaranteed to the Defendants under Article 14 (1) (a) of the Constitution, and that the Plaintiffs are acting in collusion to create a monopoly in the market and to jeopardise the business of Pelwatte Dairy Industries, which is a local company established with the vision to uplift the socio-economic status of the farmers and making the country self-sufficient in milk production. The 1st Defendant also submitted that they have not made, published any statement or advertisement that directly or indirectly discredits or refers to the Plaintiffs’ products; moreover, the 1st Defendant has only relied on previous statements made and published by Governmental and Non-Government sources, which have been already made public, to emphasise the benefits of local milk products.  

Counsel for the 1st Defendant impressed upon Court that these statements relied on by the 1st Defendant, being statements which were already widely circulated and discussed in the public domain, cannot be held to constitute unfair competition by the 1st Defendant against the Plaintiffs. 

Counsel Rodrigo pointed out that the injunctive relief prayed for by the Plaintiffs is broad in scope and prevents the Defendants from publishing any statement, advertisement, social media post or article regarding the distinctive quality of its products, as opposed to the generic class of imported dairy products, whilst highlighting the importance of comparative advertising in so far as the advertisements or statements contain true and honest information. 

Counsel for the 2nd Defendant Kushan de Alwis P.C. submitted that all the statements made by the 2nd Defendant, being an individual with a long-standing association with the farming and dairy industry in Sri Lanka, have been made with the intention of educating the general public with regard to the quality of the imported milk powder and the dairy industry in Sri Lanka. 

The Judge of the Commercial High Court Mahanil Prasantha De Silva, having heard the submissions made by the Parties and taking into consideration the documentary evidence before him, delivered the Order on 14 January 2020, dismissing the application for interim injunction made by the Plaintiffs, with cost. It was held that the Plaintiffs have failed to establish a prima facie case against the Defendants and that no equitable considerations favour the Plaintiffs to grant the interim injunction. 

Counsel Kuvera de Soyza PC with Manoj Bandara instructed by Sudath Perera Associates appeared for the Plaintiffs while Counsel Avindra Rodrigo PC with Oshani Wijewardena instructed by F.J. & G De Saram appeared for the 1st Defendant and Counsel Kushan De Alwis, PC with Prasanna de Silva instructed by A.  Keerthirathna appeared for the 2nd Defendant.