The ruling by the Malaysian Federal Court ends all legal avenues for McDonald's to protect its name from what it said was a trademark infringement, according to the BBC.
But restaurant owner P Suppiah insists the ‘Mc' prefix is an abbreviation for Malaysian Chicken Curry.
"We feel great that this eight-year legal battle is finally over," he told reporters. "We can now go ahead with whatever we plan to do such as opening new branches."
McDonald's first sued the McCurry restaurant in 2001 and a High Court ruled in its favour in 2006, but the ruling was overturned when McCurry took the case to the Court of Appeal.
The three-member panel of the Federal Court in Kuala Lumpur ruled that there was no evidence to show McCurry was trying to appear part of the McDonald's business.
Sri Devi Nair, lawyer for McCurry, said the ruling means McDonald's does not have a monopoly on the prefix ‘Mc,' and that other restaurants could also use it as long as they distinguish their food from McDonald's.
"This is a precedent for everyone to follow," he said.
McDonald's lawyers declined to comment, except to say the company will abide by the judgment.
By Janie Stamford
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