IP Enforcement Manual Malaysia

IP Enforcement Manual - Malaysia

The IP enforcement Manual was drafted for United Kingdom Intellectual Property Office by Rouse &Co International in cooperation with Wong Jin Nee & Teo, Malaysia This Manual seeks to provide all IP owners or other interested parties with a clear explanation of the IP enforcement procedures in Malaysia Set out in this Manual are the trademark and copyright enforcement procedures for Malaysia Users of this Manual should take local legal advice to ensure accuracy

EXECUTIVE SUMMARY

Malaysia has a reasonably well functioning legal system to deal with Intellectual Property (IP) cases. Its IP laws and enforcement are generally compliant with international treaties like the WTO’s IP rules. A recent upgrade to the trademark laws has helped. The biggest challenge is slow and convoluted procedures for IP enforcement.

Criminal cases for trademark counterfeiting and copyright piracy are brought at the Enforcement Division of the Ministry of Domestic Trade, Co-operatives, and Consumer Affairs. It conducts raids and can seize products. Private investigators and IP law firms assist IP owners with criminal cases. The biggest practical challenge is that the process is slow and time consuming, and a lot of investigation work is needed in advance (which the IP owner needs to drive). Once a raid happens then most cases proceed very slowly into the criminal courts. Almost all cases are compounded into a small fine which is often said to be an insufficient deterrent.

Civil court proceedings are more expensive, so used mainly for complex IP cases. Rarely are they used against counterfeit or pirated products cases where targets tend to be part of the grey economy. If a larger legitimate target is found an injunction and damages can be obtained, and some legal fees are recoverable.

Online IP protection is relatively straightforward. IP owners can issue notices and have infringing content removed from ecommerce platforms and internet service providers.

Malaysia has no effective Customs border protection system at present. IP owners are expected to identify shipments and file cases requesting seizures which is of course impractical. There is no IP recordal system and customs do not report their own seizures.

HOW TO USE THIS MANUAL

This Manual covers three main areas of IP enforcement as they apply to counterfeit (trademark infringing) and pirated (copyright infringing) goods. The first area is criminal actions, which usually means conducting raids to seize suspected counterfeit and pirated goods, followed by criminal prosecutions1 through the criminal courts. The second is court actions brought in the civil courts against IP infringers. In the case of counterfeit and pirated goods this usually means bringing a court case against a counterfeiter for an order to stop infringing as well as claiming damages. Because preparing a lawsuit is expensive and time consuming, civil cases are used carefully, usually only where a target has resources to pay damages. Lastly, there are in some countries, administrative options for IP infringement (including using customs to intercept IP infringing goods at borders).

Outside the legal system there is a fourth avenue, for dealing with online IP enforcement. This typically means how to remove pirated content and counterfeit goods from ecommerce platforms, or internet service providers. This is typically done with notices under the ecommerce platforms’, or internet service providers’ contractual terms of service. In some countries, laws also back this up.

There are many other areas of IP enforcement outside the areas above, from patent to designs to trade secrets which are beyond the scope of this Manual. IP protection is a complex area of law and practice. There are many technical terms and special procedures which often differ from other areas of law. This Manual uses those terms where necessary but also provide definitions.

The aim of this Manual is to provide a summary of the rules and their practical application. This is done by explaining the legal provisions themselves and how they work in practice. In addition, a practical commentary is included setting out details of how the rules work, including examples.

IP owners and those seeking to bring cases must always seek local legal advice. IP lawyers and brand protection professionals are employed in each country to advise on and assist in IP enforcement. Such professionals can be found by searching for IP in directories like the Legal 500 (https://www.legal500.com/) or Chambers (chambers.com), or through IP industry organisations like INTA (inta.org) and the UK’s Anti-Counterfeiting Group (https://www.a-cg.org/). Many countries also have a local IP association which can provide lists of IP lawyers.

IP professionals (for example in other countries) may use this Manual to learn how IP laws and practice operates in the country. Businessmen and women may use this to learn some of the basics and educate themselves on how IP enforcement works. The Manual highlights relevant IP Sections/Regulations/Acts so that IP owners and businesses have a basic understanding of the IP offences committed, possible defences and how the law considers the two types of infringement namely trademark counterfeiting and copyright piracy. This way, businesses can better prepare their enforcement strategy and approaches. This Manual can also assist when engaging an IP law firm or IP investigator in a case.

1 the institution and conducting of legal proceedings against someone in respect of a criminal charge.

OVERVIEW OF MALAYSIA’S LEGAL AND IP SYSTEM

Malaysia is a federation of 13 states and federal territories of Kuala Lumpur, Putrajaya, and Labuan. 9 of these states are headed by hereditary rulers, the Sultans, who are the constitutional heads of states, with the remaining 4 states headed by Governors who are appointed for fixed terms of office to serve as constitutional heads of state.

The legal system of Malaysia was modelled after the English legal system which adopts a Constitutional Monarchy form of government, with the King presiding ceremonially as the Head of the State. The King is elected by the Conference of Rulers for a 5-year term from the hereditary rulers of the 9 states ruled by the Sultans. The Federal Constitution of Malaysia clearly divides the law-making authority into 3 main branches, namely, the Legislative (Parliament of Malaysia), Executive (although a Monarch is the Head of State, the executive power is vested in the Prime Minister and his cabinet of Ministers) and Judiciary (structured to remain legally independent from the Legislative and Executive and is empowered to interpret laws created by the Parliament). The separation of powers also occurs both at Federal and State levels. The federal laws enacted by the federal assembly, known as the Parliament of Malaysia, apply throughout the country.

The court system in Malaysia is based substantially on the British legal system and common law principles. The superior courts consist of the Federal Court (which is the apex or supreme court), the Court of Appeal and High Courts. The subordinate courts consist of Session Courts and Magistrate Courts. All members of the judiciary are appointed by the King, acting on the advice of the Prime Minister and after consultation with the Conference of Rulers. The head of the judiciary is the Chief Justice of the Federal Court, who exercises direct supervision over all courts.

Due to the engagement efforts from various industries, particularly the software industry, the Judiciary established dedicated Intellectual Property (IP) Courts in 2007, mainly to give attention to IP cases and ensure that the judges hearing such cases would be more equipped to handle IP issues. There is currently 1 IP Court operational at the Kuala Lumpur High Court. The purpose of assigning a special IP court is to give due attention to IP cases in the criminal and civil courts and ensure that the judges hearing such cases are equipped to handle IP issues.

Apart from the court system, parties may also refer disputes to arbitration or mediation. Arbitration is one of the main forms of alternative dispute resolution in Malaysia and is relied upon by specific industries, particularly the construction industry. Unlike arbitration, mediation allows for a collaborative method or a facilitated negotiation to settle disputes between parties.

The business environment in Malaysia is generally conducive, governed by a myriad of laws and regulations including those enacted to maintain free and fair trade and competition, consumer protection and protection of IP rights and others to protect the interest of the public and stakeholders including foreign investors. While there are certain sectors such as the telecommunications and multimedia industry and distribution trade which restrict foreign equity ownership and foreign participation, the IP system in Malaysia generally treats foreigners and local owners equally.

IP System

IP is recognized by the Malaysian Government to be the driving force for spurring innovation, stimulating creativity, facilitating trade and investment, attracting more research and development into science and technology, all of which are essential components for sustainable economic growth and social development for the nation.

The IP system in Malaysia is in line with international standards, with Malaysia being a member of many international IP treaties, such as the World Intellectual Property Organisation (WIPO), the Berne Convention for the Protection of Literary and Artistic Works, the Paris Convention for the Protection of Industrial Property, Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs) signed under the auspices of the World Trade Organisation (WTO), and the Patent Cooperation Treaty (PCT) and recently, the Madrid Protocol.

After the United States of America exited from the Trans-Pacific Partnership Agreement (TPPA), the remaining nations including Malaysia signed it the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”) on 8 March 2018. The CPTPP has yet to be ratified by Malaysia. Malaysia is also a party to the Regional Comprehensive Economic Partnership (RCEP) which aims to

foster inclusive development, promote innovation, drive sustainable growth, and support job generation among the RCEP members. Both contain IP chapters which need IP law changes.

The Malaysian Intellectual Property Corporation (MyIPO) is the statutory body responsible for the administration of IP matters in Malaysia including the registration, protection, prosecution, and maintenance of IP rights. Enforcement of IP rights can be conducted through the judicial process by filing civil proceedings in courts or by lodging criminal complaints with the Enforcement Division of the Ministry of Domestic Trade and Consumer Affairs (MDTCA). The MDTCA has wide powers to conduct search and seizures of counterfeit/pirated products and prosecute offenders.

In Malaysia, IP advisers generally comprise of practising lawyers who may be advocates and solicitors or registered IP agents.

In order to practise as an advocate and solicitor (which is somewhat similar to barristers and solicitors in England except that it is a fused profession in Malaysia), he or she has to be registered with the Bar There is one Bar for Peninsular Malaysia, namely, the Bar Council of Malaysia and a separate Bar each for Sabah and Sarawak, namely Sabah Law Association and the Advocates Association of Sarawak, respectively. A member of the Peninsular Malaysia Bar is not entitled to practice in Sabah and Sarawak and vice versa. The respective Bars are given statutory powers to regulate the profession and acts as a general watchdog on professional etiquette and standards. Many IP lawyers are also registered IP agents, depending on their areas of practice. Registered IP agents may be lawyers or nonlawyers and they are registered with MyIPO pursuant to the specific IP legislation (e.g., Trademarks Act 2019, Patents Act 1986, or Industrial Designs Act 1996). Registered IP agents do not have the locus standi to issue demand or cease and desist letters or litigate IP cases in the civil courts. Only practising lawyers have such locus standi in Malaysia.

IP ENFORCEMENT MANUAL – MALAYSIA

1. THE IP ENFORCEMENT SYSTEM UNDER TRIPS2

Malaysia is a common law country. Malaysian IP laws are mainly contained in statutes and common laws3 and accordingly, Malaysia has several laws in place governing the enforcement of IP. As a WTO TRIPs member, Malaysia commits to providing enforcement measures4. These comprise:

▪ civil remedies comprising judicial procedures, evidence rules, injunctions,5 damages6, other remedies, information to right holder and rights of indemnification (compensation for harm or loss) to defendants (accused), as well as provisional measures (preliminary injunctions7 and search and seizure orders);

▪ customs seizures of infringements or border measures; and

▪ criminal remedies for willful trademark counterfeiting or copyright piracy on a commercial scale. This Manual sets out how these apply to counterfeiting (trademark infringements and counterfeiting) and piracy (copyright infringements). The designation “Controller” or “Assistant Controller” stated in the applicable Acts refers to enforcement officers of the relevant Malaysian law enforcement authorities.8 In almost all cases, the law enforcement authority that enforces IP rights would invariably be the MDTCA.

The European Commission Report on “Protection and enforcement of intellectual property rights in third countries” reports that IPR enforcement remains a matter of concern despite efforts of the Malaysian government. According to the OECD-EUIPO report Illicit Trade - Trends in Trade in Counterfeit and Pirated Goods (2019), Malaysia remains among the top provenance economies for counterfeit and pirated goods traded worldwide. IPR-infringing goods continue to be widely accessible both on physical and online markets. The Batu Ferringhi Night Market in Penang as well as the Petaling Street in Kuala Lumpur continue to be among the high number of problematic physical markets with a high presence of fake products.

It is further noted that enforcement authorities in Malaysia currently lack sufficient resources to take efficient action against IP infringements Further, with regard to Customs enforcement, burdensome requirements must be fulfilled by IP holders in order for customs authorities to take action. There is also a lack of information concerning the ultimate destruction of IP infringing goods 9

2. TRADEMARKS AND COPYRIGHT

Trademarks must be registered with the Intellectual Property Corporation of Malaysia (“MyIPO”) before their corresponding trademark proprietors or trademark owners may institute actions for trademark infringement under Section 56 of the Trademarks Act 2019 (“TMA 2019”) which came into force on 27 December 2019, repealing the Trade Marks Act 1976.

In Malaysia, the proprietor of an unregistered trademark is not left without remedy in the event that his trademark is violated by a third party. Section 159 of the TMA 2019 expressly preserves the common law rights of unregistered trademark proprietors to institute actions for passing-off. Malaysia has acceded to the Madrid Protocol10 on 27 September 2019 and the TMA 2019 provides for, among others, regulations relating to Malaysia’s accession to the Madrid Protocol.

2 The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is the most a multilateral agreement on intellectual property (IP).

3 Common law is a body of unwritten laws based on legal precedents established by the courts.

4 Part III of TRIPS - Articles 41-61

5 a judicial order that restrains a person from beginning or continuing an action threatening or invading the legal right of another person, or that compels a person to carry out a certain act. (Oxford Languages dictionary)

6 damages [plural] an amount of money that a court decides should be paid to someone by the person, company, etc., that has caused them harm or injury.

7 a temporary order given by a court of law which tells someone either to do or not do something until an official decision on the case can been made.

8 Although empowered to do so, the Royal Malaysian Customs Department and Police in recent years are hardly involved in enforcement actions relating to trademark counterfeiting.

9 https://trade.ec.europa.eu/doclib/docs/2020/january/tradoc_158561.pdf

10 The Madrid System for the International Registration of Marks is governed by the Madrid Agreement and the Madrid Protocol relating to that Agreement. The system makes it possible to protect a mark in a large number of countries by obtaining an international registration that has effect in each of the designated Contracting Parties.

Copyright protection is provided under the Copyright Act 1987 (“CA 1987”) which covers a wide range of works eligible for copyright including literary works, musical works, artistic works, films, sound recordings, broadcasts, derivative works, and published editions of works (“subject matters of copyright”). Under the CA 1987, copyright will subsist in a work if:

▪ the work is one of the subject matters of copyright;

▪ the work is original and has been reduced to material form; and

▪ the author is a qualified person or one of the other qualifying requirements are fulfilled. Although it is not mandatory to record copyright for it to subsist, the Copyright (Voluntary Notification) Regulations 2012 which came into operation on 1 June 2012 established a new framework for the voluntary notification of copyright with MyIPO under Malaysian copyright law (“Voluntary Notification”). The Voluntary Notification system provides copyright owners with proof of copyright ownership in their works, and this may facilitate enforcement procedures

Registration with MyIPO provides preliminary legal protection of IP and is a pre-requisite for statutory protection under the trademark and copyright laws. However, given the prevalence of IP offences in Malaysia, most notable of all being the counterfeiting of goods, 11 registration on its own cannot be said to be effective against infringement

3. CRIMINAL IP ENFORCEMENT

3.1 TRADEMARKS

3.1.1 Criminal acts defined in the TMA 2019 and Trade Descriptions Act 2011

Pursuant to the TMA 2019, various offences relating to counterfeiting involving registered trademarks are now provided for. These offences include the following:

▪ Counterfeiting a trademark (Section 99 of the TMA 2019) – Any person who counterfeits a registered trademark by:

- making a sign identical with or similar to a registered trademark with the intent to deceive; or

- falsifying a genuine registered trademark, whether by alteration, addition, effacement, partial removal or otherwise,

without the consent of the registered proprietor of the trademark, commits an offence under this section. In a prosecution under this provision, the burden of proving the consent of the registered proprietor of the trademark shall be upon the accused person.

Commentary: Section 99 of the TMA 2019 has broadened the scope of counterfeiting trademarks to cover the instances of “alteration, addition, effacement, partial removal” of a registered trademark. The first limb of section 99 requires the element of ‘intent to deceive’ on the part of the perpetrator to be proven, before a perpetrator could be held liable for making a sign identical with or similar to a registered trademark. This gives rise to the requirement of prosecutors (a lawyer who conducts the case against a defendant/accused in a criminal court). Also called prosecuting attorney. having to prove criminal intent on the part of the perpetrator in prosecution proceedings.

▪ Falsely applying a registered trademark to goods or services (Section 100 of the TMA 2019) – A person falsely applies a registered trademark to goods or services, when he applies the trademark or a sign likely to be mistaken for that trademark without the consent of the registered proprietor A trademark shall be deemed applied to goods or services if it is used in any advertisement or printed matters (including invoices, catalogues, business letters, price lists or other commercial documents) In this connection, a trademark shall also be deemed to be applied to goods or services if it is used in a way that is likely to lead persons to believe that it refers to, describes, or designates the goods or services.

11 https://www.theedgemarkets.com/article/sale-fake-goods-hits-alarming-level

Commentary: The deeming provision under section 100(2) of the TMA 2019 could be used to combat the act of falsely applying a trademark to goods or services in the e-commerce sphere as well. It is worded to cover instances of the use of an offending mark in the perpetrators’ business documents in and ‘any medium’ which include digital and online media

▪ Making or possessing of article for committing offence (Section 101 of the TMA 2019) –Any person who makes or has in his possession, custody or control of an article specifically designed or adapted for making copies of a registered trademark or sign that likely to be mistaken for that trademark, knowing or having reason to believe that the article has been, or could be used for committing an offence against Sections 99 and 100 of the TMA 2019 set out above, commits an offence under this section.

Commentary: This provision enables brand owners to seek recourse against parties whose primary involvement in the offending activities was the use of tools or equipment that facilitated the offending acts set out in sections 99 and 100 of the TMA 2019.

▪ Importing or selling, etc., goods with falsely applied trademark (Section 102 of the TMA 2019)

To trade or manufacture, any person who:

▪ imports into Malaysia; or

▪ sells, offers, or exposes for sale; or

▪ has in his possession, custody

any goods to which a registered trademark is falsely applied under Section 100 of the TMA 2019 commits an offence under this section. The accused person may be absolved of criminal liability if:

▪ he can prove he has taken all reasonable precautions against committing an offence under this section,

▪ had reason to suspect the genuineness of the trademark at the time of the commission of the alleged offence and

▪ provided all the information to the Assistant Controller/relevant law enforcement officer in his knowledge with respect to persons from whom he obtained the goods

To establish the offence of possession, custody, or control of goods to which a registered trademark is falsely applied for trade or manufacture, there will be a presumption that by having 3 or more of these goods, that person will be deemed to be in possession for the purpose of trade or manufacture.

Following the removal of references to registered trademarks in the Trade Descriptions Act 2011 (“TDA 2011”) [as amended by the Trade Descriptions (Amendment) Act 2019)] and with the coming into force of the TMA 2019, the provisions of the TDA 2011 will still govern and apply to any investigation, trial or proceedings commenced before the TMA 2019 came into force.

Further, complaints may still be lodged under the TDA 2011 if the complainant is able to establish that infringers, in addition to committing offences under the TMA 2019, conducted activities which amount to offences under the TDA 2011, for instance:

▪ by dealing with goods to which false trade descriptions have been applied,

▪ by making direct or indirect false indications relating to the nature or designation of such goods (e.g., false labelling relating to the nature, any physical or technological characteristics, approval by any person or place of manufacture).

3.1.2 Registrar’s Verification

Section 112 of the TMA 2019 provides that the Assistant Controller/relevant law enforcement officer may, upon a complaint by a person, conduct an investigation on any other person who has committed or is committing any offence under the TMA 2019.

If the complaint made is in relation to an offending trademark which is not identical with the complainant’s registered trademark, any registered proprietor or licensee shall obtain the Registrar of Trademark’s verification (in the prescribed form together with the payment of the prescribed fee). The Registrar’s verification shall be prima facie12 evidence in any proceedings before any court of law.

Commentary: Pursuant to Regulation 116(2) of the Trademarks Regulations 2019 (“TMR 2019”), an application for the Registrar’s verification shall be supported by a legal declaration exhibiting the evidence of use of the trademark which is not identical with the registered trademark on the goods or services. Once granted, the Registrar’s verification shall be valid for a period of one year from the date of issuance.

3.1.3 Criminal procedure for trademark offences

Enforcement actions are initiated by the registered trademark proprietor or persons authorised by the registered proprietor by lodging a written complaint with the MDTCA and submitting supporting documents including:

▪ a Letter of Authorisation (“LOA”) or a Power of Attorney (“POA”) if the complaint is lodged by the representatives;

▪ copies of the registration certificates of the relevant trademarks (or Trademark printouts containing details of the registered trademarks from MyIPO);

▪ brief preliminary details of the targets

▪ locations and images of suspected counterfeit goods compared with the genuine products.

TMA 2019 empowers the MDTCA officers to conduct investigations:

▪ where they have reasonable grounds to suspect that any offence is or will be committed; or

▪ upon complaints lodged in relation to counterfeiting activities.

The MDTCA has wide powers to:

▪ conduct raid actions,

▪ seize suspected counterfeit products,

▪ seize, and retain documents,

▪ may direct the targets to allow them to access to records and computerised data and where appropriate and if the circumstances warrant it, to arrest the targets.

The MDTCA has the option of compounding the offence (in which the offender is give the option to pay monetary fines instead of being prosecuted) or alternatively, to prosecute the offenders in court. No prosecution for or in relation to any offence under the TMA 2019 shall be instituted without the consent of the Public Prosecutor.13 The courts may issue orders for seized goods to be forfeited and disposed of

After raid actions are conducted by the MDTCA officers, the complainants or brand owners are required to prepare and submit ‘Letters of Confirmation’ enclosing verification reports containing detailed comparisons of counterfeit features of the seized goods with the corresponding genuine goods as well as cautioned statements.

Commentary: Brand owners are advised to conduct pre-raid checks on targets to confirm the availability and quantity of the suspected counterfeit goods prior to the raids and seizure actions conducted by the MDTCA. The pre-raid checks should be conducted covertly by private investigators, to prevent the risk of tipping off the targets. Further, the MDTCA may also request for brief preliminary verification reports showing general side-by-side comparisons of suspected counterfeit goods and genuine products

3.1.4 Ministry of Domestic Trade and Consumer Affairs (“MDTCA” as defined above)

The MDTCA (formerly known as Ministry of Domestic Trade, Co-Operatives, and Consumerism) promotes good trade practices, the growth of ethical domestic trade, protecting consumer interest and regulates licensing and manufacturing of optical discs. MDTCA also formulates policies, strategies and review matters pertaining to the development of the domestic trade. Some of the functions and duties of the MDTCA include enforcement of IP laws, particularly under the TMA 2019 and CA 1987

Under the TDA 2011, the MDTCA are empowered to exercise the following powers and functions conferred upon them:

▪ Investigation (Section 30 of the TDA 2011)

▪ Search and Seizure of goods and documents (Section 40 of the TDA 2011)

▪ Enter premises with/without warrant (Sections 40 and 41 of the TDA 2011)

▪ Arrest (Section 39 of the TDA 2011)

▪ Compounding of offences (Section 63 of the TDA 2011)

Under the TMA 2019, MDTCA officers are empowered to exercise the following powers and functions conferred upon them:

▪ Investigation (Sections 111 and 112 of the TMA 2019)

▪ Require the provision of information or documents (Section 113 of the TMA 2019)

▪ Arrest (Section 119 of the TMA 2019)

▪ Enter premises other than residential premises/dwellings, inspect and seize goods (Section 120 of the TMA 2019)

▪ Conduct searches without a warrant, based on urgency and necessity (Section 122 of the TMA 2019)

▪ Access recorded information or computerized data (Section 123 of the TMA 2019)

▪ Compound offences (Section 136 of the TMA 2019)

Commentary: Under Section 121 of the TMA 2019, MDTCA officers may apply for warrants and obtain the necessary authorisation from Magistrates (judges which preside in the Magistrates’ Courts) to enter residential premises or dwellings for the purposes of conducting investigations, raid actions and/or seizures of suspected counterfeit goods.

3.1.5 Criminal prosecution of Trademark offences

Upon the completion of investigations, the MDTCA officers will hand over the investigation papers and all other relevant documents submitted by the brand owners’ representatives in relation to the case to the Public Prosecutor who will decide to either impose compound fines or prosecute the targets in court

Targets that are prosecuted will be formally charged in court (usually before the Magistrates’ Courts) and directed to enter their plea14 If any target pleads not guilty and depending on the judge’s discretion upon hearing the prosecution’s case, the target may be directed to defend himself in a trial.

3.1.6 Criminal penalties for Trademark offences

The courts may order the following penalties for trademark offences:

▪ Counterfeiting a trademark

Any person who counterfeits a registered trademark (contrary to Section 99 of TMA 2019 above) shall, on conviction, be liable to a fine not exceeding RM1,000,000 or to imprisonment for a term not exceeding five years or to both.

▪ Falsely applying a registered trademark to goods or services

Any person who falsely applies a registered trademark to goods (contrary to Section 100 above) of the TMA 2019 shall, on conviction, be liable:

if the person is a body corporate with fine not exceeding RM15,000 for each of the goods bearing the falsely applied registered trademark with fine not exceeding RM30,000 each of the goods bearing the falsely applied registered trademark or

if the person is not a body corporate with a fine not exceeding RM10,000 for each of the goods bearing the falsely applied registered trademark or to imprisonment for a term not exceeding three years or to both with a fine not exceeding RM20,000 for each of the goods bearing the falsely applied registered trademark, or to imprisonment for a term not exceeding five years or to both

Any person who falsely applies a registered trademark to services (under Section 100 of the TMA 2019) shall, on conviction, be liable:

- if the person is a body corporate, to a fine not exceeding RM100,000; or

- if the person is not a body corporate, to a fine not exceeding RM70,000 or to imprisonment for a term not exceeding three years or to both

▪ Making or possessing of article for committing offence

Any person who makes or possesses an article for committing offences of counterfeiting and falsely applying a trademark, (contrary to Section 101 of the TMA 2019) shall, on conviction, be liable to a fine not exceeding RM1,000,000 or to imprisonment for a term not exceeding five years or to both.

▪ Importing or selling, etc., goods with falsely applied trademark

Any person who commits this offence (under Section 102 of the TMA 2019) shall, on conviction, be liable:

if the person is a body corporate with fine not exceeding RM15,000 for each of the goods with the falsely applied registered trademark with fine not exceeding RM30,000 for a second and subsequent offence, for each of

the goods with the falsely applied registered trademark; or or

if the person is not a body corporate, fine not exceeding RM10,000 for each of the goods with the falsely applied registered trademark or to imprisonment for a term not exceeding three years or to both with fine not exceeding RM20,000 for a second or subsequent offence, for each of the goods with the falsely applied registered trademark, or to imprisonment for a term not exceeding five years or to both

3.1.6.1 Defences

Statutory/legal defences against claims for trademark infringement are provided for under the TMA

2019 An accused person who uses a registered trademark for a non-commercial purpose, news reporting or commentary or if the use is expressly or impliedly consented to by the registered proprietor or licensee does not infringe the trademark In short, parallel importation is legal under the TMA 2019 on the basis that registered trademark proprietors are deemed to have provided express or implied consent to the use of their registered trademarks on parallel imported genuine goods

In relation to the offences of importing, selling, etc., goods with falsely applied trademarks which breach Section 102 of the TMA 2019, a defence is available to an accused person who can prove that he has taken all reasonable precautions against committing the offence and he had, at the time of the commission of the alleged offence no reason to suspect the genuineness of the trademark.

Commentary: Malaysia’s criminal raid systems works to a fair degree. There are around 1000 IP cases a year. IP owners often closely supervise and attend raids through private investigators and IP lawyers. The most common complaint is the time taken to conduct a criminal prosecution. Many IP cases are compounded, that is the defendant (accused person) pays a fine rather than going to trial and risking a higher penalty. This is often said to have limited deterrent.

3.2 COPYRIGHT

3.2.1 Criminal acts defined in the CA 1987

There are two main categories of offences under the CA 1987. The first category comprises offences related to the infringement of copyright and dealing in or possessing infringing copies while the other covers offences arising from acts which obstruct or interfere with the enforcement of the CA 1987.

3.2.2 Criminal offences under CA 1987

Section 41 of the CA 1987 provides that any person who during the subsistence of copyright in a work or performers’ right:

▪ makes for sale or hire any infringing copy (Section 41(a) of the CA 1987);

▪ sells, lets for hire or by way of trade, exposes or offers for sale or hire any infringing copy (Section 41 (b) of the CA 1987);

▪ distributes infringing copies (Section 41 (c) of the CA 1987);

▪ has in his possession, custody or control, otherwise than for his private and domestic use, any infringing copy (Section 41 (d) of the CA 1987);

▪ by way of trade, exhibits in public any infringing copy (Section 41 (e) of the CA 1987);

▪ imports into Malaysia, otherwise than for his private and domestic use, an infringing copy (Section 41 (f) of the CA 1987);

▪ makes or has in his possession any article used or intended to be used for the purposes of making infringing copies (Section 41 (g) of the CA 1987);

▪ circumvents or causes or authorizes the circumvention of any effective technological measures15 (Section 41 (h) of the CA 1987);

▪ manufactures, imports or sells any technology or device for the purpose of the circumvention of technological protection measure (Section 41 (ha) of the CA 1987);

▪ removes or alters any electronic rights management information16 without authority (Section 41 (i) of the CA 1987); or

▪ distributes, imports for distribution, or communicates to the public, without authority, works or its copies in respect of which electronic rights management information has been removed or altered without authority (Section 41 (j) of the CA 1987)

shall, unless he is able to prove that he had acted in good faith and had no reasonable grounds for supposing that copyright or performers’ right may be liable for copyright infringement.

In addition, it is also an offence (under Section 43A of the CA 1987) for any person to operate an audiovisual recording device in a screening room to record any film in whole or in part (Camcording). If found guilty, the offender will be liable to a minimum fine of RM10,000 and maximum fine of RM100,000 or to imprisonment for a term not exceeding five years or to both.

3.2.3 Criminal procedure

Enforcement actions are initiated by the copyright owner or its authorised representative lodging a written complaint with the MDTCA (or Police)17 and submitting supporting documents including:

▪ a LOA or a POA (if the complaint is lodged by the representative), a copy of the certificate of copyright voluntary notification or a Section 42 Statutory Declaration declaring ownership over the copyright (if available),

▪ brief preliminary details of the targets, locations and images of suspected infringing copies compared with the original works (if available)

The MDTCA officers have the power to conduct raid actions and seize suspected infringing copies from any premises or house Generally, the MDTCA officers would need to obtain a search warrant to enter any premises unless they have reasonable grounds to believe that obtaining the warrant would lead to a delay during which evidence is likely to be removed or destroyed. There will be no prosecution for any offence under CA 1987 except:

▪ with the consent in writing of the Public Prosecutor (pursuant to Section 53 of the CA 1987) to compound or impose a fine for offences with the consent of the Public Prosecutor (pursuant to Section 41A (1) of the CA 1987)

▪ the compounding of an offence acts as a fine for the acts of infringement, and no further proceedings will be taken against the infringer. Goods seized during raid actions and seizures may be released to the infringer (pursuant to Section 41A (2) of the CA 1987)

15Technological protection measure is defined to mean any technology, device or component that, in the normal course of its operation, effectively prevents or limits the doing of any act that results in an infringement of the copyright in a work;

16 Rights management information is defined to mean information which identifies the work, the author of the work, the owner of any right in the work, the performer or the terms and conditions of use of the work, any number or codes that represent such information, when any of these items is attached to a copy of a work or appears in connection with the communication of a work to the public.

17 Although empowered to do so, the Police in recent years is hardly involved in enforcement actions under the CA 1987.

3.2.4 Powers of MDTCA

Powers of investigation

Section 50(2) of the CA 1987 provides that in relation to any investigation in respect of any offence under the CA 1987, MDTCA officers are entitled to exercise all powers in relation to police investigations as prescribed under the Criminal Procedure Code.

Power to enter, search and seize under a warrant

The powers of the courts to grant search warrants which authorise entry into premises and MDTCA officers to seize suspected infringing copies and other forms of evidence are conferred by Section 44 of the CA 1987.

Power to enter, search and seized without a warrant

Under Section 44 of the CA 1987, the MDTCA may only conduct a search without a warrant if there are reasonable grounds to believe that by reason of delay in obtaining a search warrant, the infringing copies, contrivance, article, vehicle, book, or documents used to commit an offence under the CA 1987 are likely to be removed or destroyed.

Power to compound offences

Under Section 41A of the CA 1987, the MDTCA may compound any offence which is prescribed by subsidiary legislation under the CA 1987 as a compoundable offence with the written consent of the Public Prosecutor.

The case of Kerajaan Malaysia & Ors v. Then See Nyuk & Ors. 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 seizure18 .

3.2.5 Criminal Penalties

Any person who is guilty of any criminal offence under Section 41 of the CA 1987 stated in paragraph 3 2.2 above shall, on conviction, be liable:

▪ in the case of an offence under paragraphs (a) to (f) of subsection 41(1), to a minimum fine of RM2,000 and not more than RM20,000 for each infringing copy, or to imprisonment for a term not exceeding five years or to both and for any subsequent offence, to a minimum fine of RM4,000 and maximum fine of RM40,000 for each infringing copy or to imprisonment for a term not exceeding ten years or to both;

▪ in the case of an offence under paragraphs (g) and (ha) of Subsection 41(1), to a minimum fine of RM4,000 and not more than RM40,000 for each contrivance in respect of which the offence was committed or to imprisonment for a term not exceeding ten years or to both and for any subsequent offence to a fine of not less than RM8,000 and not more than RM80,000 for each contrivance in respect of which the offence was committed or to imprisonment for a term not exceeding twenty years or to both;

▪ in the case of an offence under paragraphs (h), (i) and (j) of Subsection 41(1), to a fine not exceeding RM250,000 or to imprisonment for a term not exceeding five years or to both and for any subsequent offence, to a fine not exceeding RM500,000 or to imprisonment for a term not exceeding ten years or to both.

Criminal cases under the CA 1987 conducted by the MDTCA will be instituted at the Sessions Court which has the jurisdiction to impose fines for offences under the CA 1987.

Commentary: Although fines provided under the law seem significant, final fines imposed by Courts are usually in the lower end of the fine that can be imposed for an offense. This considered as not being dissuasive enough even when the infringement was intentionally committed for a commercial purpose. In addition, it is difficult to find culprits of organized crime and arrested them

3.2.6 Exceptions/Defences: acts not considered as copyright infringement or offences

Section 13(2) of the CA 1987 provides the following statutory exceptions to the right of control of the copyright owner and accordingly exceptions to infringement actions:

▪ fair dealing for purposes of research, private study, criticism, review or the reporting of news or current events, provided that it is accompanied by an acknowledgement of the title of the work and its authorship, except that no acknowledgment is required in connection with the reporting of news or current events by means of a sound recording, film or broadcast (Section 13(2)(a) of the CA 1987);

▪ doing of any act of reproduction19, performance20, distribution communication of the works [under section 13(1)] by way of parody, pastiche or caricature (Section 13(2)(b) of the CA 1987);

▪ inclusion in a film or broadcast of any artistic work situated in a place where it can be viewed by the public (Section 13(2)(c) of the CA 1987);

▪ reproduction and distribution of copies of any artistic work permanently situated in a place where it can be viewed by the public (Section 13(2)(d) of the CA 1987);

▪ incidental inclusion of a work in an artistic work, sound recording, film or broadcast (Section 13(2)(e) of the CA 1987);

▪ inclusion of a work in a broadcast, performance, showing, or playing to the public, collection of literary or musical works, sound recording or film, if such inclusion is made by way of illustration for teaching purposes and is compatible with fair practice (Section 13(2)(f) of the CA 1987);

▪ any use of a work for the purpose of an examination by way of setting the questions, communicating the questions to the candidates or answering the questions, provided that a copy of a musical work shall not be made for use by an examination candidate in performing the work (Section 13(2)(ff) of the CA 1987);

▪ reproduction made in schools, universities or educational institutions of a work included in a broadcast intended for such schools, universities or educational institutions (Section 13(2)(g) of the CA 1987);

▪ making of a sound recording of a broadcast, or a literary, dramatic or musical work, sound recording or a film included in the broadcast to that extent that it consists of sounds, and if such sound recording of a broadcast is for the private and domestic use of the person by whom the sound recording is made (Section 13(2)(gg) of the CA 1987);

▪ making of a film of a broadcast, or a literary, artistic, dramatic or musical work or a film included in the broadcast to that extent that it consists of visual images, and if such making of a film of the broadcast is for the private and domestic use of the person by whom the film is made (Section 13(2)(ggg) of the CA 1987);

▪ making and issuing of copies of any work into a format to cater for the special needs of people who are visually or hearing impaired and the issuing of such copies to the public by non-profit making bodies or institutions and on such terms as the Minister may determine (Section 13(2)(gggg) of the CA 1987);

▪ reading or recitation in public or in a broadcast by one person of any reasonable extract from a published literary work if accompanied by sufficient acknowledgement (Section 13(2)(h) of the CA 1987);

▪ any use made of a work by or under the direction or control of the Government, by the National Archives or any State Archives, by the National Library, or any State library, or by such public libraries and educational, scientific or professional institutions as the Minister may by order prescribe, where such use is in the public interest and is compatible with fair practice and the provisions of any regulations, and no profit is derived therefrom, and no admission fee is

19 the right to control the act of reproduction – be it the reproduction of books by a publisher or the manufacture by a record producer of compact discs containing recorded performances of musical works – is the legal basis for many forms of exploitation of protected works.

20 The right of public performance entitles the author or other copyright owner to authorize live performances of a work, such as a play in a theatre or an orchestra performance of a symphony in a concert hall. P

charged for the performance, showing or playing, if any, to the public of the work thus, used (Section 13(2)(i) of the CA 1987);

▪ reproduction of any work by or under the direction or control of a broadcasting service where such reproduction or any copies thereof are intended exclusively for a lawful broadcasting and are destroyed before the end of the period of six calendar months immediately following the making of the reproduction or such longer period as may be agreed between the broadcasting service and the owner of the relevant part of the copyright in the work, provided that any reproduction of a work, if it is of exceptional documentary character, be preserved in the official archives of the broadcasting service, shall not be used for broadcasting or for any other purpose without the consent of the owner of the relevant part of the copyright in the work (Section 13(2)(j) of the CA 1987);

▪ performance, showing or playing of a work by a non-profit making club or institution where such performance, showing or playing is for charitable or educational purpose and is in a place where no admission fee is charged in respect of such performance, showing or playing (Section 13(2)(k) of the CA 1987);

▪ any use of a work for the purposes of any judicial proceedings, the proceedings of a royal commission, a legislative body, a statutory or Governmental inquiry, or of any report of any such proceedings, or for the purpose of the giving of professional advice by a legal practitioner (Section 13(2)(l) of the CA 1987);

▪ making of quotations from a published work if they are compatible with fair practice and their extent does not exceed that justified by the purpose, including quotations from newspaper articles and periodicals in the form of press summaries, provided that mention is made of the source and of the name of the author which appears on the work thus used (Section 13(2)(m) of the CA 1987);

▪ reproduction by the press, the broadcasting or the showing to the public of articles published in newspapers or periodicals on current topics, if such reproduction, broadcasting or showing has not been expressly reserved, provided that the source is clearly indicated (Section 13(2)(n) of the CA 1987);

▪ reproduction by the press, the broadcasting or the performance, showing or playing to the public of lectures, addresses and other works of the same nature which are delivered in public if such use is for informatory purposes and has not been expressly reserved (Section 13(2)(o) of the CA 1987);

▪ commercial rental of computer programs, where the program is not the essential object of the rental (Section 13(2)(p) of the CA 1987); and

▪ making of a transient and incidental electronic copy of a work made available on a network if the making of such copy is required for the viewing, listening or utilization of the said work (Section 13(2)(q) of the CA 1987).

In addition, a target would not be held liable for offences under the CA 1987 provided that he:

▪ proves that he had acted in good faith and had no reasonable grounds for supposing that copyright would or might be infringed by his acts; or

▪ imports an infringing copy into Malaysia for his private and domestic use. It should be noted that for the purposes of offences stated in paragraphs (a) to (f) of Subsection 41(1) above, any person who has in his possession, custody, or control three or more infringing copies of a work in the same form shall, unless the contrary is proved, be presumed to be in possession of or to import such copies otherwise than for private and domestic use.

Commentary:

Pros of criminal enforcement

- Its less time consuming, a relatively cheaper option than a civil suit in most cases

Cons of criminal enforcement

- Once a raid happens then most cases proceed slowly into the criminal courts.

- Almost all cases are compounded into a small fine which is often said to be an insufficient deterrent.

4. CIVIL IP ENFORCEMENT

Although Malaysia is federally constituted, its judicial system is a single-structured system consisting of superior and subordinate courts. As indicated above, the superior courts are the High Court of Malaya, the High Court of Sabah and Sarawak, the Court of Appeal, and the Federal Court. The subordinate courts are the Magistrate Courts and the Sessions Courts. The Federal Court is the highest judicial authority in Malaysia and is the final court of appeal. The IP Court was established in 2007 to focus mainly on IP disputes. Currently, there is a specialised IP High Court in Kuala Lumpur.

Commentary: Civil proceedings for trademark and copyright infringements are initiated at the High Courts which have the jurisdiction to grant injunctions and award an unlimited award of monetary damages. An infringement action trial will usually be heard at the High Court within nine months from the date of application. The limitation period21 for filing an infringement action is six years. Ex parte22 interim injunction applications (together with certificates of urgency) may be heard within one day to one week following the application date, while interim injunction applications may be heard within one to three months following the application date.

The High Court has jurisdiction to hear trademark matters and there is a right of appeal to the Court of Appeal. Thereafter, appeals can be filed with the Federal Court Leave to appeal to the Federal Court will be allowed if:

• The appeal is against a Court of Appeal judgment or order for any civil cause or matter decided by the High Court in the exercise of its original jurisdiction.

• The case involves a question of general principle decided for the first time.

• The case involves a question(s) of importance and a Federal Court decision would be to the public advantage.

Civil litigation is usually perceived to be costlier and more time consuming than conducting criminal raid actions against targets and would, therefore, always be reserved for and seen as more appropriate for “higher value” targets which are usually manufacturers or importers of infringing products.

4.1 Trademark and copyright civil cases

4.1.1 Trademark and well-known trademark infringement under the TMA 2019

The potential scenarios of infringement covered by the TMA 2019 under sections 54(1) and 54(2) include:

▪ A person uses an identical trademark in relation to identical goods or services in the course of trade and without the consent of the registered proprietor. In such a situation, the likelihood of confusion will be presumed.

▪ A person uses an identical trademark in relation to similar goods or services in the course of trade and without the consent of the registered proprietor.

▪ A person uses a similar trademark in relation to identical goods or services in the course of trade and without the consent of the registered proprietor.

▪ For the second and third scenarios, the registered proprietor has to establish that such use will result in the likelihood of confusion on the part of the public in order to establish an infringement of his registered trademark. 21

The TMA 2019 has also defined what would amount to uses of a sign for the purpose of infringement, which include:

▪ applying the sign to goods or their packaging;

▪ offering or exposing goods for sale or offering or supplying services under the sign;

▪ importing or exporting goods under the sign;

▪ using the sign in advertising and on printed matters such as invoices, catalogues, business papers, price lists or other commercial documents in any medium

Well-known trademarks are protected under Section 76 of the TMA 2019. A well-known trademark is entitled to protection whether or not the trademark is registered in Malaysia, or an application for the registration of trademark has been made to the Registrar; and whether or not the proprietor of the trademark carries on business or has any goodwill in Malaysia. In determining whether the mark is a well-known mark in Malaysia, the following criteria under regulation 5 of the TMR 2019 will be taken into account:

▪ the extent of knowledge or recognition of the mark in the relevant sector of the public;

▪ the duration, extent and geographical area of any use of the trademark;

▪ the duration, extent and geographical area of any promotion of the trademark, including advertising or publicity and the presentation, at fairs or exhibits, of the goods and services to which the mark applied;

▪ the duration and place of any registrations, or any application for registration, of the trademark to the extent that they reflect use or recognition of the trademark;

▪ the record of successful enforcement of rights in the trademark, in particular, the extent to which the trademark was recognized as well known by competent authorities; and

▪ the value associated with the trademark.

4.1.2 Secondary Liability for Trademark Infringement

Section 54(4) of the TMA 2019 has extended the scope of trademark infringement to cover a party such as a contract manufacturer or a printer who has applied an infringing mark on behalf of another party. In this connection, a person shall be treated as a party who uses the material which infringes the registered trademark if that person:

▪ applies a registered trademark to any material used or intended to be used for labelling or packaging goods; or

▪ uses a sign in advertising or on any document [described in section 54(3)(g)] which includes the use of the sign on invoice, catalogues, business letter, business paper, price list or other commercial document, including any such document in any medium.

A person shall only be liable under section 54(4) if when he applied the trademark, he knew or had reason to believe that the application of the trademark was not duly authorised by the registered proprietor of the trademark or a licensee.

4.1.3 Licensee’s Rights to sue for Infringement

Pursuant to section 70(1) of the TMA 2019, a licensee has the right to institute infringement proceedings in his own name provided that the licensee must first call upon the registered proprietor to take infringement proceedings and in the event the registered proprietor refuses or does not take infringement proceedings within 2 months after being called upon, the licensee may then bring the proceedings in his own name as if he were the registered proprietor.

Commentary: In the event the licensee brings the infringement proceeding in his own name, the licensee must join the registered proprietor as a plaintiff/claimant or add the registered proprietor as a defendant. In the case of an exclusive licensee having the rights and remedies of an assignee (an agreement to assign transfers all of the assignors’ IP rights to the assignee) the registered proprietor or the exclusive licensee may not proceed with the action without the permission of the Court, unless the other is either joined as a plaintiff or added as a defendant

4.1.4 Passing off

Unregistered trademarks may be protected in Malaysia under the common law principle of passing off. The right to pursue such action is expressly preserved by Section 159(2) of the TMA 2019. Although passing off is the only remedy available for proprietors of unregistered trademark, registered proprietors would likewise be entitled to commence actions for passing off if they are able to satisfy the requisite elements. In order to succeed in an action for passing-off, the following elements must be satisfied by the claimant or plaintiff:

▪ that he has sufficient reputation or goodwill in the mark, trademark, get-up or other indicia in question in this country;

▪ that the actions of the defendant are likely to and/or have actually caused misrepresentations; and

▪ that he has suffered or is likely to suffer damage or injury to his business or goodwill as a result of the defendant’s misrepresentation.

Commentary: In common law countries like Malaysia, passing off is a common law tort which can be used to enforce unregistered trade mark rights. The tort of passing off protects the goodwill of a trader from misrepresentation It prevents a party from representing its goods or services as those of another. The required elements for to establish passing off against another party are:

• The presence of goodwill

• Misrepresentation

• Damage The evidence of advertisements, brochures, publication, websites, and promotional and advertising activities related to the use of an unregistered trademark in Malaysia may be adduced in establishing goodwill23

4.1.5 Statutory Defences under the TMA 2019

The statutory defences to a trademark infringement claim, which are as set out in Section 55 of the TMA 2019, are summarised as below:

▪ Use in good faith by a person or his predecessor’s name or the name of his or predecessor’s place of business.

▪ Use in good faith by a person of a sign to indicate the kind, quality, quantity, intended purposes, value, geographical origin or other characteristics of goods or services; or the time of production of goods or the rendering of services; or uses the trademark to indicate the intended purpose of goods which includes accessories or spare parts, or service and such use is in accordance with honest practices in industrial or commercial matters.

▪ Continuous use in the course of trade from a date before the use of the registered trademark by its proprietor, predecessors or registered user; or the registration date of the trademark, whichever is earlier.

▪ Use of the registered trademark for a non-commercial purpose, for purposes of news reporting or news commentary.

4.2 Copyright infringement

Section 36(1) of the CA 1987 provides that copyright is infringed by any person who does or causes any other person to do, without the copyright owner’s authority, any of the acts restricted by copyright under the CA 1987. Such acts include:

▪ reproduction of the work in any material form,

▪ the performance of work, showing or playing to the public,

▪ the communication of the work to the public,

▪ the distribution of copies to the public by way of sale or other transfer of ownership and

▪ the commercial rental of copies of the work to the public.

Pursuant to Section 36(2) of the CA 1987, copyright is infringed by any person who, without the consent or licence of the copyright owner:

▪ imports an article into Malaysia for the purpose of selling, letting for hire,

▪ or by way of trade, offering or exposing for sale or hire, the article,

▪ distributing the article for the purpose of trade or for any other purpose to an extent that it will affect prejudicially the owner of the copyright,

▪ or by way of trade, exhibiting the article in public, where he knows or ought to reasonably know that the making of the article was carried out without the consent or licence of the owner of the copyright.

4.3 Civil remedies in trademark and copyright cases Trademarks

In Malaysia, the civil remedies available to the plaintiff in a trademark infringement action include but are not limited to the following:

▪ injunctions to prevent infringing goods from entering into the channels of commerce or restrain further infringement;

▪ full discovery24 or disclosure of details including suppliers or sources of infringing goods;

▪ delivery up of infringing goods to the plaintiff/claimant;

▪ declarations that the activities conducted by defendants amounted to infringement and the marks/signs used or applied by the defendants are infringing marks (especially if the marks in question are not identical);

▪ damages and/or account of profits25; and

▪ in an action where the infringement involves the use of a counterfeit trademark, the award of such additional damages as the High Court considers appropriate and the Court may also order the seizure or taking into custody of suspected infringing goods, materials, or articles relevant to the infringement and the supply of documentary evidence relevant to the infringement.

Relief may be sought in an action for acts of imminent infringement under section 56(2) of the TMA 2019 against any person who has performed acts which will make it likely that trademark infringement will occur.

Commentary: In a case of trademark infringement which involves the use of a counterfeit trademark, the courts shall have regard to the following when assessing the award of additional damages pursuant to section 56(8) of the TMA 2019:

▪ the extent of the infringement;

▪ benefit accrued to the defendant by reason of the infringement;

▪ the need to punish the defendant; and

▪ all other relevant matters

Plaintiffs in actions involving infringement of registered trademarks and the use of counterfeit trademarks in relation to goods/services are entitled to and may elect both damages plus account of profits attributable to the infringement that have not been taken into account in computing the damages (i.e. so that there would not be double compensation).

Copyright

Section 37 of the CA 1987 provides that copyright owners which are successful in their claims may be granted the following types of relief:

▪ an order for injunction;

▪ damages;

▪ an account of profits;

▪ statutory damages of not more than RM25,000 for each work, but not more than RM500,000 in the aggregate; or

24 whereby parties are obligated to disclose documents which are relevant to the issues and which are in their possession, custody, or power.

25 a remedy which aims to cut the profits made by the defendant by committing a wrongful act under law

▪ any other order as the court deems fit.

4.4 Civil procedures in Trademark and Copyright cases

The civil procedures could be summarised as follows:

▪ After the Writ of Summons26 and Statement of Claim27 have been served by the plaintiff, the defendant must enter his appearance within 14 days thereof (subject to extension(s) of time granted by the court)

▪ The defendant shall file his defense within 14 days from entering his appearance.

▪ The plaintiff may file a reply to the defence within 14 days from the service of the defence.

▪ Pleadings28 are deemed closed 14 days after the filing of the reply by the plaintiff.

▪ Thereafter, the court will issue directions for pre-trial case management on the conduct of proceedings up to trial.

A case is usually set down for trial within 3 to 8 months from the commencement of proceedings, depending on the availability of the free dates of the High Court. Trial is usually conducted by an examination of witnesses in open court. On completion of the trial, the High Court will usually provide directions for filing of written submissions and then fixes a date for decision.

Note: Rules of general civil procedure pursuant to the Rules of Court 2012 shall be applicable.

4.5 Interlocutory injunction

The principles on which interlocutory injunctions are granted are laid down in the landmark case of American Cyanamid Co v Ethicon Ltd [1975] AC 396 which have been adopted in Malaysia in various cases. In granting injunctions, judges would consider whether:

▪ There is a bona fide or genuine serious issue to be tried.

▪ The balance of convenience29 favours the grant of the interlocutory injunction.

▪ The award of damages at the end of the trial to a successful claimant would not offer adequate relief.

The plaintiff will usually be required to give an undertaking as to damages before the interlocutory injunction is granted which would be called upon if the injunction is granted and the plaintiff fails to sustain the action after full trial. As injunctive relief is equitable in nature (a relief that generally doesn't involve money, rather is issued in the form of an order from the court to do or refrain a part from doing an act), the application must be applied for as soon as the plaintiff becomes aware that his trademark or copyright is infringed. Any inordinate delay in the application may be fatal unless it is justified and adequately explained. Further, in an ex parte application for an interlocutory injunction, full and frank disclosure of all material facts must be made. Any failure to disclose any material fact may be fatal and result in the ex parte injunction being set aside and the plaintiff may be liable for all damages suffered.

Commentary: Both interlocutory and final injunctions may be available as remedies. Interlocutory or interim injunctions are generally granted in the interim until further order of the Court or the conclusion of a trial. An interim injunction can be mandatory (requiring a person or entity to do something) or prohibitory (requiring a person or entity not to do something). The purpose of an interim injunction is to preserve the position of a party claiming to have suffered damage by an incorrect or unlawful action, until that party’s challenge to the action can be fully heard and determined by the Court finally A final injunction is granted after a trial is concluded, on the merits30 of the case

Commentary:

Pros of Civil Enforcement:

- permanent injunction can be obtained.

- preliminary injunction can be requested.

- monetary compensation can be awarded for damages caused by the infringement. Cons of Civil Enforcement

- Procedure is usually more time consuming and costly than criminal enforcement

- Strong evidence of infringement and commercial prejudice needed (higher burden of proof of infringement)

- May be difficult to enforce the Court’s decision in case the defendant does not have assets or declares its bankruptcy.

5. E-COMMERCE IP INFRINGEMENT FOR TRADEMARK AND COPYRIGHT Trademarks

Regulation 6 of the TMR 2019 provides that in relation to the use of a sign or trademark on the internet, the Registrar or the court shall have regard to the provisions of the TMA 2019, the TMR 2019 as well as the Joint Recommendation Concerning Provisions on the Protection of Marks, and Other Industrial Property Rights in Signs, on the Internet adopted at the Thirty-Sixth Series of Meeting of the Assemblies of the Member States of the World Intellectual Property Organisation on 24 September to 3 October 2001.

Commentary: Whilst there is no specific provision on e-commerce or digital infringement under the TMA 2019, an e-commerce operator may be held liable for trademark infringement under Section 54(3)(h) of the TMA 2019 if it advertises a registered trademark on its platform without the registered trademark proprietors’ consent. In addition, e-commerce operators may also be held liable for trademark infringement under Section 54(3)(g) and (h) of the TMA 2019 if a registered trademark is used on invoices and other commercial documents as well as in advertising, which includes digital or online mediums, while allowing sellers to offer or expose infringing products bearing the registered trademarks without the registered trademark proprietors’ consent on their platforms. In Malaysia, it a criminal offence of assisting or contributory infringement if the ISPs do not take measures to manage counterfeit goods on their platforms.

A recent case seems to suggest that brand owners should utilise and exhaust all available avenues such as lodging complaints via IP complaint portals or complaint processes made available by ecommerce platform operators before taking further action such as applying for an injunction against an e-commerce operator31 .

In practice, IP owners can issue notices to ecommerce platforms requesting them to remove/take down infringements from their platforms. Many ecommerce platforms adopt rules and merchant terms prohibiting IP violation, so are able to take down such listings under contract.

Copyright

The specific provisions on the internet intermediaries' liability, as well as the notice and takedown procedures with regards to copyright infringement in Malaysia, are provided for under the CA 1987, amended in 2012. However, the provisions on the internet intermediaries’ liability, in general, are covered by the Malaysian Communications and Multimedia Act 1998 (CMA 1998) and the Communications and Multimedia Content Code (the Content Code), respectively.

The provisions on the liability of internet intermediaries for online copyright infringement, as well as the notice and takedown procedures, were first introduced in Malaysia vide the Malaysian Copyright (Amendment) Act 2012, which added new Part VIB into the CA 1987 adding new s.43B to s.43I. These

new provisions define who are the internet intermediaries to be subjected to the notice and takedown procedure and explain the type of exemptions from liabilities afforded to them once they undertake the notice and takedown procedure (Abd Ghani et al., 2017). These provisions are yet to be tested in the court of law.

Under Part VIB of the CA 1987, Internet Service Providers (ISP) or intermediaries are exempted from liabilities in 3 main areas, namely transmission, caching and storage, provided that the ISP did not initiate or direct the transmission of the electronic copy of the work, the transmission is carried out through an automatic technical process without any selection of the electronic copy of the work; the ISP does not make any modification to the content, it was merely acting as a conduit or channel and it has no knowledge of the infringing activities nor receive any financial benefit directly attributable to the infringement and responds within the time specified to remove access to the infringing copy.

Further, the Consumer Protection (Electronic Trade Transactions) Regulations 2012 (“CP(ETT)R 2012”) provides that online merchants are required to disclose information which include but are not limited to their personal and company (if applicable) details, and descriptions of their goods as specified in the Schedule to the CP(ETT)R 2012 on the online marketplace or website where their business is conducted. It is an offence for any person to disclose or provide information as specified in the Schedule that he knows or has reason to believe is false or misleading.

Commentary: Although CP(ETT)R 2012 has been in force since 1 July 2013, most merchants operating on e-commerce platforms have not complied with these provisions. Right holders are actively engaging with e-commerce platforms with the hope that they would compel their merchants to disclose essential information so that the right holders could take enforcement actions against merchants dealing with illicit goods directly.

Although a recent landmark case involving cyber fraud confirmed that the courts possess jurisdiction to grant injunctions against persons unknown32 i.e., anonymous defendants who are identifiable but whose names are unknown In practice, it would likely be challenging to enforce the injunctions against the unknown persons at a later stage. By the same token, it seems that similar injunctions may be applied for and used against infringers who conceal their identities online and on e-commerce platforms.

Liability of E-Commerce Platform Operators remains uncertain in Malaysia. There is currently no reported case law which expressly and conclusively imposes liability on e-commerce platform operators for allowing infringing or counterfeit goods or services on their platforms. There is, however, a case where the Kuala Lumpur IP High Court had granted a summary judgment in favour of a brand owner/plaintiff based on trademark infringement on an e-commerce website. The court granted various reliefs which included:

(i) a declaration that that the e-commerce operator has infringed the plaintiff’s trademark by operating the website and selling infringing products through the website;

(ii) (ii) a permanent/final injunction against the e-commerce operator;

(iii) (iii) an order for disclosure of the full particulars of certain sellers named by the plaintiff;

(iv) removal of the plaintiff’s trademark from the website; and

(v) damages33 The grounds of judgment for this case are not available as the court had only issued a court order pursuant to the summary judgment without delivering any grounds. Based on the outcome of the case, it appears the court had accepted the plaintiff’s argument that the e-commerce platform operator had advertised products bearing the plaintiff’s trademark without the plaintiff’s consent which, therefore, amounted to infringement of the trademark under the repealed Trade Marks Act 1976.

In another recent judgement A&M Beauty Wellness Sdn Bhd v Shopee Mobile Malaysia Sdn Bhd34 , the high court recently provided some clarification on the extent of liability that online marketplaces such as Shopee (in the present case) have regarding IP infringements by sellers While the postings on Shopee were not disputed, the high court refused to grant the injunction against Shopee for the following reasons:

32 Zschimmer & Schwarz GmbH & Co KG Chemische Fabirken v Persons Unknown & Anor [2021] 7 MLJ 178

33 Nexgen Biopharma Research & Innovation SARL v Celcom Planet Sdn Bhd (Suit No. WA-22IP-3-01/2018)

34 WA-22IP-67-10/2019

- The court acknowledged that Shopee cannot possibly regulate all its sellers and does not have the technical capability or resources to pre-screen every listing or apply auto blocks.

- By merely providing the platform, Shopee was neither the seller of the products nor the agent or representative of the third-party sellers.

- The court stated that there needed to be a balance between the injunction in the plaintiff's interest and the consequences for Shopee. If the injunction carried a higher risk of injustice, the court should not grant it

Pursuant to the Copyright Amendment Act 2012, an ISP can now be notified through the copyright owner’s written notification of claimed infringement to the ISP’s designated agent. If a notice which substantially complies with these requirements is received, the ISP must remove or disable access to the allegedly infringing material no later than 48 hours from receipt of the notification. The ISP must seek clarification from the copyright owner of any unclear aspects within the 48-hour deadline.

The Personal Data Protection Act 2010 came into force in November 2013. Online operators must therefore be careful when collecting the personal data of customers, as the act regulates the processing of personal data in commercial transactions.35

6. CUSTOMS IP BORDER ENFORCEMENT

6.1 Trademarks

Border measure provisions are provided under Sections 81 to 94 of the TMA 2019 (Part XIII), with specific provisions governing the detention or seizure of counterfeit goods being imported into Malaysia. Under Section 82 of the TMA 2019, the registered proprietor of a registered trademark or the licensee may submit an application to the Registrar to apply for restrictions on the importation of particular counterfeit goods. The application must include very specific details of the shipment, importer, registration number of the vehicle/aircraft/ship and place where the goods would be arriving. Upon receipt of the application, the Registrar shall consider the application and will inform the applicant within a reasonable period whether the application has been approved. The Registrar will immediately take necessary measures to notify the Royal Malaysian Customs Department to prohibit the importation of the goods identified in the notice into Malaysia and seize and detain the identified goods. An approval shall remain in force until the end of 60 days from the approval date.

Based on prima facie evidence, any authorised officer may detain or suspend the release of goods bearing, without authorisation, a trademark which is identical with a registered trademark and the goods are identical with the goods of a registered trademark which are to be imported or destined for export. “Destined for export” has been defined in the TMA 2019 to mean goods which are to be exported from Malaysia to another country through any mode of transportation. It should be noted that the provisions in Part XIII do not apply to small quantities of goods (i.e., not more than 2 goods) of a non-commercial nature contained in travellers’ personal luggage or sent in small consignments.

There is currently no customs prohibition recordal system in place in Malaysia.

Commentary: An IP holder cannot directly apply to the Royal Malaysian Customs to detain or seize goods IP holders may only apply through the Registrar of Trademark, who in turn will notify the customs authorities to seize the shipment of counterfeit goods, the right holder must provide certificates proving that they are the owner of the trademark that the expected counterfeits infringe and provide information relating to the goods and the shipment to enable the customs officers to identify the imported goods and detain them. Practically this is too high a burden to impose on IP owners so few seizures occur.

After the application, the right holder will then have to file a civil suit to obtain an order preventing the release of goods to the owner of seized goods within 30 days from the date of commencement of civil suit, failing which the goods will be returned to the owner of seized goods who may then sue for damages. It should also be noted that where the goods have been seized and the right holder fails to commence civil action within the retention period, the person that owns the seized goods may

apply to the Court for an order of compensation against the right holder. If the Court is satisfied that the person aggrieved had suffered loss or damage as a result of the seizure of the goods, the Court may order the right holder to pay compensation in such amount as the Court thinks fit. There may also be a substantial retention fee that has to be paid when seizing goods.36

The strict requirement to provide the specific date, time and location of the infringing goods which are expected to be imported means that brand owners are still required to resort to extensive and accurate investigations before resorting to border measure provisions under the TMA 2019. Rarely do they have that information and in practice given ethe high volume of imported counterfeit goods the remedy is seen as ineffective.

Malaysia may have to adopt a more typical recordal, ex officio inspection, notification, and seizure system in other to join various IP treaties (including FTA’s going forwards).

6.2 Copyright

Section 39 of the CA 1987 provides that copyright owners may apply to the Director General of MyIPO or Copyright Controller to request that the importation of infringing copies into Malaysia be prohibited during a specified period. Once the application is approved, the importation of the infringing copies will be prohibited and liable to seizure and forfeiture. Similarly, due to the onerous requirements of these provisions, they are rarely utilised by copyright owners.

In addition to the above, Section 43H of the CA 1987 allows copyright owners to submit notifications to service providers requiring them to remove or disable any access to electronic copies of infringing materials from their network. Upon receiving the notifications, the service providers shall remove or disable any access to the infringing electronic copies on their network not later than 48 hours from the time the notification was received.

The persons whose electronic copies of works which have been removed or to which access has been disabled may issue counter notifications to the service providers (after the copyright owners’ notifications) requiring the restoration of the electronic copies or access thereto.

Commentary: A service provider is defined under section 43B of the CA 1987 as any person who provides services relating to, or provides connections for, the access, transmission, or routing of data; or operates facilities for online services or network access.

Copyright owners should be aware that the CA 1987 generally limits the liabilities of service providers. Under section 43H of the CA 1987, the copyright owners are required to provide an undertaking to compensate the service providers or any other person against damages, loss or liability arising from the compliance by the service provider pursuant to the notices for the removal of any access to the infringing electronic copies. Likewise, the persons whose electronic copies of works which have been removed or to which access has been disabled are required to provide a similar undertaking to compensate the service providers or any other person against damages, loss or liability arising from the compliance by the service provider of such counter notifications to restore the electronic copies or access thereto.

7. ADMINISTRATIVE IP ENFORCEMENT

As mentioned above, the MDTCA is the main law enforcement authority which carries out the enforcement of IP rights. Complaints can be lodged with the MDTCA for cases in relation to counterfeiting or piracy. The MDTCA has the power to search and seize counterfeit and/or infringing products and prosecute offenders/counterfeiters. These actions are rather speedy, can be cost-effective and leave a lasting impact on the offenders/counterfeiters. When lodging complaints to the MDTCA, right holders need to submit documents to prove their proprietorship, brief investigation reports showing the infringing activity and letters of complaints.

Other government agencies which may be involved in the enforcement of IP rights are the Royal Malaysian Customs Department, Royal Malaysia Police and Malaysian Communications and Multimedia Commission (on certain occasions).

36 https://www.southeastasia-iprhelpdesk.eu/sites/default/files/bean_files/malaysia_factsheet.pdf

Commentary: On 8 February 2021, an IT company was charged in court under Section 41(1) (ha) of the CA 1987 for selling technology or equipment for the purpose of the circumvention of technological protection measure on copyrighted broadcast works, referred to in Section 36A(3) of the CA. The director pleaded guilty and is awaiting sentencing on 1 March 2021. On 16 February 2021, a 46-year-old woman pleaded guilty to a charge of possessing 6 TV media boxes which allowed illegal streaming of Astro’s copyrighted content via the Internet. The accused was fined RM30,000 under Section 232(2) of the Communications and Multimedia Act 1998.

8. OTHER ENFORCEMENT ISSUES

8.1 Alternative Dispute Resolution

Arbitrations in Malaysia are governed by the Arbitration Act 2005 (“AA 2005”) which is based on the UNCITRAL Model Law on International Commercial Arbitrations. AA 2005 applies to all arbitrational proceedings seated in Malaysia. Mediation is also available for parties in dispute. Mediation in Malaysia is governed by the Mediation Act 2012 (“MA 2012”). All disputes may be referred to mediation except for matters specifically excluded in the Schedule to the MA 2012 (for example, any criminal matter). It has become increasingly common for the courts to refer parties to mediation before trial commences. If parties are able to settle the dispute through mediation, the parties may enter a Consent Judgment with the courts or into a Settlement Agreement and withdraw or discontinue their claims before the courts.

Commentary: Alternative dispute resolution (arbitration and mediation) is available to resolve trademark cases. A trial judge can refer parties to mediation before another trial. However, in the event that mediation is unsuccessful, the matter will proceed to trial.

Arbitration is also available 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,37 especially for cybersquatting cases or otherwise the bad faith registration of a domain name. 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 38 However, arbitrations are expensive, and the cost incurred is undoubtedly more than that of legal proceedings in court Therefore, it may not be suitable for all cases or businesses, especially SMEs

8.2 Warning letters and settlements

IP disputes may also be resolved at the outset before commencement of civil actions by issuing cease and desist letters and through negotiations between the IP right holders and infringers. Settlement terms which infringers usually have to comply with would include but are not limited to signing of Letter of Undertaking (“LOU”) containing the agreed settlement terms, affirmation of statutory declarations stating the details of the suppliers of the counterfeit goods, delivery-up and/or destruction of counterfeit goods and payment of settlement sums. The infringers’ compliance of the demands would constitute resolution of the dispute. If the infringers breach any term in the LOU, the right holders will retain the right to commence civil suits and take further action against the infringers.

In certain situations, warning letters may be issued in lieu of cease and desist letters to serve as educational instruments and deterrence. Such letters would put the recipients on notice that the right holders are aware of the alleged infringers’ infringing acts but rather give them a chance to make amends for their wrongdoings and provide information on how their infringing acts are cheating or endangering consumers and the public. Further, such letters may also be distributed among members of the same trade or industry or they may receive “word on the street” about such warning letters which deter them from venturing into similar counterfeiting activities.

37 Asian International Arbitration Centre. “Domain Name Dispute Resolution (DNDR)”. Asian International Arbitration Centre. https://www.aiac.world/Domain-NameComplaints-DNDR

38 “International Intellectual Property Commercialization Council Soft Launch.” AIAC Newsletter, April,

Before the registered proprietor of trademarks embarks on a cease-and-desist letter program, it is important to consider the provision on groundless threats of infringement proceedings introduced by Section 61 of the TMA 2019. Under this provision, where a person threatens another with proceedings for infringement of a registered trademark other than:

▪ the application of trademark to goods or material used or intended to be used for labelling or packaging goods (i.e., manufacturer);

▪ the importation of goods to which, or to the packaging of which, the trademark has been applied (i.e., the importer); or

▪ the supply of goods under the trademark

any aggrieved person may bring proceedings for relief under this section. The relief shall include any of the following:

▪ a declaration that the threats are unjustifiable;

▪ an injunction against the continuance of the threats; or

▪ damages in respect of any loss he has sustained by the threats.

Commentary: If proceedings to obtain relief for groundless threat are instituted by the recipient of a cease-and-desist letter against the person making the threat (i.e., the registered proprietor or issuer of the letter containing allegations of trademark infringement, etc.), the latter must prove that the threats and allegations set out in the letter are justified and not baseless statements.

Accordingly, the recipient or addressee of the cease-and-desist letter may be entitled to any of the above reliefs unless the registered proprietor is able to show that the acts in respect of which the threat was issued, if committed, would constitute an infringement of the registered trademark. The mere notification that a trademark is registered or that an application for registration has been made, shall not constitute a threat of proceedings for the purpose of this provision.

8.3 Publication of Apology Notice

In certain cases, the right holders would be able to secure publication of apology notices by infringers in the local newspapers and/or their social media platforms as one of the settlement terms. For certain brands, such a public acknowledgment by the infringers of their wrongdoings would send a strong message to the market, provide an educational tool as well as creating a deterrent effect for other infringers and in such situation, it would better serve the interest of the IP right holders.

Commentary: Brand owners should request the infringers to provide written consent and indemnification prior to publishing such apology notices as it may be required by certain publishers of the newspapers.

ANNEX 1: FLOWCHART FOR CRIMINAL PROCEDURE FOR TRADEMARK AND COPYRIGHT

Complaint by trademark/copyright owner

Law Enforcement Authority –Enforcement Division of the Ministry of Domestic Trade & Consumer Affairs (MDTCA)

Sufficient evidence against target to proceed with raid action

Criminal raid action

• Seize suspected counterfeit products

• Seize and detain documents

• Access to records and computerised data

• Arrest the targets (where applicable)

MDTCA to decide whether to take action based on complaint lodged (with supporting documents)

Insufficient evidence against target to proceed with raid action

Case closed

Prosecution Accused pleads guilty

Trial and defence by the accused

Compounding the offence

Accused pleads not guilty and claims trial Mitigation Sentencing Court convicts the accused

If the accused is found not guilty, he/she will be acquitted

If the accused is found guilty, the court convicts the accused

Sentencing

ANNEX 2: FLOWCHART ON BORDER MEASURES AND CUSTOMS ENFORCEMENT

Complaint by trademark proprietor pursuant to Section 82 of the TMA 2019

Complaint by copyright owner pursuant to Section 39 of the CA 1987 and Copyright (Notice of Prohibition of Import) Regulations 1987

Submit an objection/ application for restriction on the importation of suspected infringing goods

Application to request for restriction on importation of infringing copies

Registrar of Trademarks

Application (Form TMP3) must include (without limitation) the following details:

Expected date and time of arrival

Approved and the approval shall remain in force for 60 days

Rejected

Director General of the Intellectual Property Corporation of Malaysia or Copyright Controller

Approved Rejected

Seized goods will be released if: applicant fails to take legal proceedings; or

if proceedings are commenced, there is no court order preventing the release of goods after expiry of 30 days

ANNEX 1: CONTACT DETAILS OF INTELLECTUAL PROPERTY OFFICE- MALAYSIA

Intellectual Property Corporation of Malaysia (MyIPO)

Address: Menara UOA Bangsar, Jalan Bangsar Utama 1, Bangsar, 59000 Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur

Tel.: +603-2299 8400

http://www.myipo.gov.my/en/home/

ANNEX 2: REFERENCES TO COPYRGHT AND TRADEMARK LAWS - MALAYSIA

Relevant links from WIPO Lex

Trademark Law as amended in 2019: https://wipolex.wipo.int/en/legislation/details/19564

Copyright Law: https://wipolex.wipo.int/en/legislation/details/7603

Copyright (Amendment) Law: https://wipolex.wipo.int/en/legislation/details/7538