5 February 2021
While businesses and companies may be valued by the relative worth of their physical assets, what is often overlooked are the equally valuable Intellectual Property (IP) rights they own. It is a misconception that the run-of-the-mill company which merely deals in trade and does not engage in creative output or ground-breaking innovation has little to do with IP. In fact, IP can be as mundane as the very logo of the company or even the packaging or design of the company’s products. Thus, in the modern economy, it is essential that savvy business owners take cognizance of what rights they may own which extend far beyond the physical assets in their possession and how they may enforce those rights.
Registration with the Malaysian Intellectual Property Corporation (MyIPO) affords preliminary legal protection of intellectual property and is a pre-requisite for most statutory protections1 barring exceptions such as Copyright which receive automatic protection upon publication.2 However, given the prevalence of IP offences in Malaysia, most notable of all being the counterfeiting of goods,3 registration on its own cannot be said to be effective against more determined infringers.
In this case, active enforcement comes into play. Multiple avenues of enforcement exist, both criminal and civil, that businesses can rely on to protect their IP. A more direct strategy involves the employment of criminal prosecution against the infringers of trademarks or copyright. Lodging a complaint with the Ministry of Domestic Trade and Consumer Affairs’ (KPDNHEP) Enforcement Division can be utilised for the search and seizure of infringing properties such as counterfeit goods or copyrighted materials with the eventual aim of initiating criminal proceedings against the infringer.4 Part VII of the Copyright Act 1987 and Part XVI of the Trademarks Act 2019 both empower enforcement officers with a whole host of powers to arrest persons suspected of infringement and search for and seize infringing goods. Where there are reasonable grounds to suspect a party of possessing infringing copies, Section 44 of the Copyright Act 1987 provides for a warrant of search and seizure. The case of Kerajaan Malaysia & Ors v. Then See Nyuk & Anor5 affirms this position and holds that no damages can be recovered against the authorities for a lawful search and seizure under the act even if no criminal prosecution resulted from the seizure.
However, while criminal enforcement can be effective, civil litigation often provides a wider variety of remedies available to all types of IP infringement. In fact, civil remedies may be the only recourse when intellectual property involves unregistered or unregistrable rights. For example, while the owner of an unregistered trademark may not be able to utilise the full power of the Trademarks Act 2019 to enforce its claims, said owner, by virtue of Section 159 (2) of the same act, still has recourse to the Common Law tort of Passing Off. This allows owners of unregistered trademarks to bring an action against other traders who misrepresent their goods as being similar to or as being produced by the owner of the unregistered trademark owner in order to take advantage of the latter’s established goodwill and reputation.6 Furthermore, Trade Secrets, which are inherently unregistrable, may only find a remedy for infringement in the common law tort of breach of confidentiality as no direct statutory protection nor definition of Trade Secret exists.7 In any breach of confidentiality case, however, care must be taken to ensure that the Trade Secret in dispute must be specifically disclosed or in fact meets the Common Law requirements of a Trade Secret. In Dynacast (Melaka) Sdn Bhd v Vision Cast Sdn Bhd,8 the Plaintiff’s failure to specifically identify the confidential information subject to the breach lead to their case being dismissed.
Arbitration is also available in order to resolve IP disputes, and has seen effective use in internet domain name disputes. The Asian International Arbitration Centre (AIAC) was appointed by the Malaysian Network Information Centre (MYNIC) to conduct arbitration between disputing parties,9 especially when cases involve cybersquatting or otherwise the bad faith registration of a domain name to profit off an existing trademark. Arbitration may also be a more ideal alternative to civil litigation due to its more confidential nature in comparison to the public proceedings of the civil courts.10 Section 41A of the Arbitration Act 2005 specifically prohibits the disclosure of arbitral proceedings. This may be of use when a dispute involves trade secrets which businesses would prefer to keep out of the public eye or away from other competitors. However, the costs for arbitration are undoubtedly more than that of legal proceedings in court and thus may not necessarily be suitable for all cases or businesses.
Ultimately, however, the enforcement action that IP rightsholders may opt for will depend on the nature and severity of the infringement along with the remedies available to the type of enforcement action sought for. With the increasingly important role that IP plays in the global economy, businesses must remain vigilant in the protection of their own IP rights and take the appropriate enforcement action where necessary.
For further information, please contact:
Natalia Izra Dato' Nasaruddin, Partner, Azmi & Associates
1. Ong, Charmayne et al. 2020. "IP in business transactions: Malaysia overview". Thomson Reuters Practical Law. https://uk.practicallaw.thomsonreuters.com/w-018-1360?transitionType=Default&contextData=%28sc.Default%29.
2. Section 10, Copyright Act 1987
3. Kang, Siew Li & Wong, Ee Lin. 2018. "Sale of fake goods hits alarming level". The Edge Markets. https://www.theedgemarkets.com/article/sale-fake-goods-hits-alarming-level.
4. “IP Factsheet: Malaysia” South-East Asia IPR SME Helpdesk, 2016, https://www.southeastasia-iprhelpdesk.eu/sites/default/files/bean_files/malaysia_factsheet.pdf
5. [2018] 2 CLJ 704
6. Eng, Leong Lim. 2020. "Trademark procedures and strategies: Malaysia". Worldtrademarkreview.com. https://www.worldtrademarkreview.com/anti-counterfeiting/malaysia-2.
7. Juriah Abd Jalil & Halyani Hassan. 2020. "Protecting Trade Secret from Theft and Corporate Espionage: Some Legal and Administrative Measures". International Journal of Business and Society 21 (1): 207. http://www.ijbs.unimas.my/images/repository/pdf/Vol21-S1-paper15.pdf.
8. [2016] 3 MLJ 417
9. Asian International Arbitration Centre. "Domain Name Dispute Resolution (DNDR)". Asian International Arbitration Centre. https://www.aiac.world/Domain-Name-Complaints-DNDR.
10. "International Intellectual Property Commercialization Council Soft Launch." AIAC Newsletter, April, 2020. https://admin.aiac.world/uploads/ckupload/ckupload_20200416030824_94.pdf
