A trademark is a unique sign, symbol, word, phrase, or design that distinguishes the goods or services of one entity from another, serving as a cornerstone of brand identity. Beyond being a legal tool, trademarks play a vital role in protecting businesses and consumers alike. For brands, they safeguard intellectual property, ensure market differentiation, and build intangible asset value. For consumers, trademarks signify quality, authenticity, and trust, making it easier to identify and rely on preferred products or services. In a globalized and increasingly digital marketplace, trademarks are more critical than ever in maintaining brand integrity and building consumer confidence.
In this article, we will dive into some of the contemporary challenges businesses face today when it comes to trademark registration in Malaysia and what these issues mean for protecting intellectual property in a fast-changing world.
Bad-Faith Filings
Bad-faith trademark filings refer to applications made with the intent to block legitimate businesses from securing their trademarks or to take unfair advantage of an existing brand’s reputation. In Malaysia, this issue has become more prevalent in recent years as the country experiences rapid economic growth and increased participation in global markets. Bad-faith applicants often file trademarks with no intention of using them but rather to sell or lease the rights to the legitimate trademark holder or to prevent competitors from using a similar mark. This practice can be especially damaging in sectors like e-commerce, where companies may act maliciously to register trademarks that resemble well-known brands in order to profit from the brand’s goodwill.
The consequences of bad-faith filings can be severe for businesses. First, it creates unnecessary costs for legitimate companies, who must either engage in lengthy and expensive legal battles to challenge the bad-faith application or navigate complex opposition procedures1. In addition, bad-faith filings can damage a company’s reputation if the trademark is granted and another business is forced to alter its branding or marketing efforts. Businesses also face the risk of losing market share, especially if bad-faith trademarks are used to create confusion among consumers, diluting the value of their brand.
Challenges in Registering Non-Traditional Trademarks
Non-traditional trademarks, such as sounds, colors, and shapes, are increasingly recognized under modern trademark laws, including the Trademarks Act 20192. While these trademarks offer businesses new opportunities to create distinctive brand identities, they also present unique challenges in the registration process. Unlike traditional word or logo trademarks, non-traditional marks often face stricter evaluation to prove their distinctiveness and ability to function as a trademark.
One major challenge is demonstrating distinctiveness, a key requirement for trademark registration. For example, a sound trademark, must be uniquely associated with a particular brand in the minds of consumers.
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| (e.g. “Netflix” introduction sound) | (e.g. “20th Century Fox” introduction sound) |
Similarly, color trademarks are often rejected if the color is considered functional (e.g., red for fire extinguishers) or widely used in the industry, making it difficult to claim exclusivity. For shape trademarks, challenges similar to those seen in the KitKat four-finger shape trademark case3 could arise in Malaysian courts. To secure registration of a shape trademark,
- Proof of Distinctiveness: The applicant must demonstrate that the shape uniquely identifies the goods or services in the minds of Malaysian consumers. Extensive marketing, consumer surveys, and sales data could be used as evidence.
- Functionality Prohibition: Shapes essential to the product’s function or that provide a technical advantage (e.g., ergonomic designs or packaging that aids in usability) are unlikely to qualify for protection.
Another challenge is the lack of consumer recognition for non-traditional marks. Unlike logos or brand names, it may take time for consumers to associate a sound, color, or shape with a specific brand. This makes it harder for businesses to prove that the mark has acquired distinctiveness through extensive use in the market.
While the recognition of non-traditional trademarks under the Trademarks Act 2019 is a progressive step, the challenges in registration highlight the need for clearer guidelines, greater awareness among examiners, and improved strategies by businesses to substantiate their claims. Without addressing these issues, many businesses may struggle to fully benefit from this expanded scope of trademark protection.
Enforcement and Procedural Challenges
Trademark enforcement in Malaysia faces significant hurdles, particularly when it comes to opposing infringing trademarks. One of the primary challenges is procedural delays, which can hinder businesses from protecting their intellectual property in a timely manner. The trademark opposition process often involves multiple stages, including filing notices4, submitting evidence5 and written submissions6, all of which can take several months or even years to conclude. These delays are exacerbated by the growing volume of trademark applications and limited resources at the MyIPO, creating a backlog that slows down the resolution of disputes.
This issue is further complicated by the gap between legal provisions and practical enforcement. While the Trademarks Act 2019 provides a robust framework for addressing trademark infringement, including mechanisms for opposition and cancellation, implementing these provisions effectively remains a challenge. For instance, businesses may find it difficult to gather sufficient evidence to prove infringement or bad faith, especially in cases involving counterfeit goods or cross-border disputes. The gap in enforcement also extends to the penalties for infringement. Although legal remedies, such as injunctions and damages, are available, they may not always act as a strong deterrent against repeat offenders, particularly in industries where counterfeiting or brand imitation is widespread.
Digital and E-Commerce Infringements
With Malaysia’s growing digital platforms and e-commerce market, issues involving domain names, fake websites, and counterfeit goods have introduced new challenges in trademark protection, as businesses navigate an environment where brand misuse is easier and more pervasive. These challenges threaten not only large corporations but also small and medium enterprises (SMEs) that rely on brand recognition to compete in the digital space.
One major issue is cybersquatting, where bad-faith individuals/entities register domain names that are identical or confusingly similar to establish trademarks. These domains are often used to divert web traffic, engage in phishing scams, or demand payment from legitimate trademark owners for their return. Similarly, fake websites impersonating well-known brands have escalated, deceiving consumers into purchasing counterfeit or substandard products. This not only causes financial losses to businesses but also damages their reputation if customers associate the fake products with the legitimate brand. Additionally, the rise of counterfeit goods on e-commerce platforms presents another significant challenge. Online sellers often exploit the anonymity of these platforms to sell fake products using registered trademarks. Many marketplaces lack effective systems to detect and remove infringing listings quickly, forcing businesses to monitor and report violations on their own, which leads to delays in protecting their brands.
Conclusion
In conclusion, addressing the contemporary challenges in trademark registration and protection is crucial for safeguarding businesses and fostering a robust economy in Malaysia. Issues such as bad-faith filings, enforcement gaps, and digital infringements not only threaten brand integrity but also hinder innovation and consumer trust. A proactive approach by businesses through diligent trademark monitoring, timely registration, and leveraging the legal framework is essential to mitigate these risks. By staying vigilant and committed to protecting their intellectual property, businesses can safeguard their market position and help strengthen the economy.
For further information, please contact:
Amera Mohd Yusof, Partner, Azmi & Associates
general@azmilaw.com
- Section 34 and 35 of Trademarks Act 2019.
- Section 2 of Trademarks Act 2019.
- Société des Produits Nestlé S.A. v. Cadbury UK Limited [2012] EWHC 2637 (Ch), [2016] EWHC 50 (Ch), [2017] EWCA Civ 358— In this high-profile case, Nestlé sought to register the shape of its four-finger chocolate bar as a trademark in multiple jurisdictions, including the UK, EU, and others. Courts required Nestlé to prove that the shape alone, without branding or packaging, allowed consumers to identify it as a KitKat product. This was particularly difficult in regions where other similar-shaped products existed. Additionally, the shape was challenged as being essential to the function of breaking the chocolate bar into segments, which disqualified it from trademark protection under trademark laws that prohibit functional shapes from being registered.
- Section 35 of Trademarks Act 2019.
- Section 35(6) of Trademarks Act 2019, Regulations 25, 26, 27 and 28 of Trademarks Regulations 2019.
- Section 35(8) of Trademarks Act 2019.
