Nestle Malaysia's unit sued for RM139m over alleged unlawful use of QR code

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KUALA LUMPUR (March 14): A wholly-owned unit of Nestle (Malaysia) Bhd has been sued for RM139.34 million by Mad Labs Sdn Bhd over the allegedly unauthorised and/or unlawful use of the latter's QR code on Nestle’s products and packaging.

Nestle Products Sdn Bhd (NPSB) had been served the writ of summons and statement of claim on March 6, 2019, Nestle Malaysia said in a stock exchange filing today.

Among others, Mad Labs is seeking a declaration that NPSB has wrongfully and or unlawfully used or printed its QR Code on its products and/or packaging, and a declaration that NPSB is liable for the losses and damages it suffered.

Mad Labs is also seeking an order and/or injunction for Nestle to remove the said QR code from all its products and packaging, as well as to cease and desist from using and printing the code. Besides the RM139.34 million, Mad Labs is also seeking general, exemplary and/or aggravated damages in the suit.

“The position taken by the company and NPSB is that Mad Labs’ claim is not justifiable. NPSB will be contesting the claim,” Nestle Malaysia said. The group added that their solicitors, Messrs Zaid Ibrahim & Co, is of the preliminary view that the claim is without merit and that NPSB has strong grounds to defend against it.

“Given the above, the company is of the view that the claim is not expected to have a financial and operational impact to the company. NPSB is not a major subsidiary of the company,” Nestle Malaysia said. The lawsuit has been fixed for case management at the High Court Kuala Lumpur on March 20, 2019.

Last December, it was reported that Nestle Malaysia had lodged a police report on what it said was an “unlawful attack by a third party”, which redirected users who scan the QR code on some of its Maggi products to offensive content online.

The company also said its attempts to contact the party involved was unsuccessful. It subsequently reported the matter to the Malaysian Communications and Multimedia Commission (MCMC).

MCMC then temporarily suspended an internet domain named madlabs.com.my, saying the suspension was taken to protect users who surf the site, as it was found to direct users to sites that violate the provisions of the country's laws. It later removed the suspension after being informed the site was being repaired to address the problem of routing users to unnecessary sites.

"This issue is separate to any commercial issues between Nestle and Mad Labs, which are not included in the scope of MCMC's actions and controls," the regulator had said in a statement.

Shares in Nestle closed down 50 sen at RM148 today, giving the group a RM34.71 billion market capitalisation.