15 May 2020
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Introduction
Malaysia is not immune to global financial and economic crises. Over the last 20 years, Malaysia has experienced its fair share of financial crises but never with so much uncertainty.
After close to two months of lockdown under the Movement Control Order (MCO) to curb the spread of COVID-19, Malaysia slowly re-opens its economy with a new norm.
Despite the gloomy economy and slowdown in business, online trade, in particular, the sale of goods via the Internet continues to soar. Unemployment and other financial challenges attribute to the temptation to make quick bucks by riding on popular brands during this global economic downturn. Micro-businesses fighting to stay buoyant are hence susceptible to ‘venture’ into sales by counterfeiting goods which are commonly perceived as quasi-crimes or rather an economic survival.
In what is now called the new norm, great emphasis is being given to personal and general hygiene. Demand for sanitisers, surgical masks, personal care products, detergents, health supplements and medications will certainly increase. This is likely to create the opportunity for counterfeiters to capitalise on the situation. Activities such as rebottling of sanitisers with popular brand names in high demand can easily be executed, likewise for other personal care products, surgical masks, detergents, and the like.
As cost saving measures kick-in, consumers opt for cheaper alternatives. Products such as automotive spare parts, alcoholic beverages, lubricants, and beauty and skin care products become targets of counterfeiters.
Brand owners must, accordingly, be vigilant and continue to stress on the importance of intellectual property (IP) to avoid not only economic losses but also brand integrity.
Enforcement of Trademark Infringement in Malaysia
Criminal actions against counterfeiting activities in Malaysia have been enforced through the Trade Descriptions Act 1972, and more recently, under the Trade Descriptions Act 2011 (“TDA”). As the custodian of the TDA, the Enforcement Division of the Ministry of Domestic Trade and Consumer Affairs (“MDTCA”) is clothed with protection and enforcement against counterfeiting activities. The TDA also had a provision to act against non-identical trademark infringement for lookalike products by way of a Trade Description Order issued by the High Court under Section 9.
Aggrieved trademark owners can lodge complaints at the Enforcement Division with the required evidence and documents for necessary actions to be taken.
Enforcement Under the New Trademarks Act 2019
Last year, the government decided to overhaul the Trade Marks Act 1976, largely to align with Malaysia’s accession to the Madrid Protocol, and passed the new Trademarks Act 2019 that came into force in December 2019.
Ripple effects followed with the amendments to the Trade Description Act 2011 where enforcements of trademark infringement saw a shift and are now governed by the new Trademarks Act 2019. Among the key changes are:
Enforcement officers of the MDTCA who are gazetted as Assistant Controllers of Trade Descriptions under the TDA are now empowered to investigate and enforce against acts of trademark infringement under Part XVI Sections 110 and 111 of the Trademarks Act 2019.
In circumstances of an enforcement against an infringing trademark that is confusingly similar but not identical with the registered trademark, trademark owners are now required to apply to the Registrar of Trade Marks for a Verification Order which may be used by the MDTCA to act against any infringer(s) and as prima facie evidence in court. The Verification Order seems to be a replacement of the Trade Description Order under the TDA where the latter was to be applied from the High Court and played the same function as prima facie evidence in court when prosecuting the infringer(s). This is in line with Sub-sections 112(3) and (4) of the Trademarks Act 2019.
Specific provisions for offences such as counterfeiting a trademark (Section 99), importation of goods with falsely applied trademark (Section 102), and what can constitute as falsely applying a registered trademark (Section 100).
This is a major shift in the protection of trademarks in Malaysia where previously, Malaysia was among the fewest countries if not the only one where enforcement of trademark infringement was under a separate legislation other than the Trademarks Act.
Procedures for Enforcement Action
Along with the changes, procedures for lodging complaints have been updated by the MDTCA. The Enforcement Division now requires that trademark owners conduct surveillance and gather actual information or evidence prior to lodging a complaint.
Trademark owners
must also provide necessary documents, samples of the original and the infringing or counterfeit products or photographs, and surveillance reports. Among the documents that must be submitted are:
- Letter of complaint;
- Authorisation from trademark owners;
- Copies of trademark registration;
- Surveillance reports;
- Verification Order from the Registrar of Trademark (where applicable); and
- Photographs/samples of original and infringing products.
Whilst the Enforcement Division carries out its own intelligence prior to any raid action, the onus is largely on trademark owners to provide such information.
Conclusion
It’s not all doom and gloom – this current business climate may be a good opportunity for multinational and domestic companies to adjust their IP strategy and planning, reap more economic benefits from their existing IP portfolios, and get ahead of industry trends and reposition businesses for the better.
For further information, please contact:
Brian law, partner, Law Partnership
