Anti Countrftng Measures

 ANTI-COUNTERFEITING MEASURES IN MALAYSIA

Richgopinath Salvam explains the tools to fight counterfeiters

INTRODUCTION

It is unfortunate that counterfeits are still rampant in Malaysia despite strict laws and active enforcement actions by government agencies and brand owners. Brand owners have been combating counterfeiters in this unceasing war, only to be challenged with new methods adopted by the latter.

To make matters worse, brand owners must now consider allocating resources to combat counterfeiters on the online platforms. This is especially so when some online merchants advertise their counterfeit goods as genuine, misrepresenting to prospective purchasers that the goods are parallel imports.

Due to this recent trend of counterfeits being available online, it is no surprise that brand owners are anxiously waiting for the decision of the US courts in the suit initiated by a group of luxury goods manufacturers against Alibaba Group Holdings Ltd. A recent development in the case saw Judge P. Kevin Castel of the Southern District of New York dismiss parts of the lawsuit on the ground that the claimants have “failed to allege the existence of a conspiracy” between Alibaba and its merchants (“U.S. Judge Dismisses Parts of Lawsuit Against Alibaba”, Wall Street Journal, 5 August 2015). The other parts of the lawsuit remain unaffected and a judgment on those parts is highly anticipated by most brand owners.

Anti-counterfeiting measures may differ from jurisdiction to jurisdiction. This article highlights the various anti-counterfeiting measures available in Malaysia and when a particular measure may be preferred. These measures may be resorted to contemporaneously or one after another.

 

GROUNDWORK

Once an alleged infringer is identified, the brand owner is advised to obtain and preserve the evidence of infringing acts by conducting trap purchases, or appointing a private investigator to conduct an investigation on the modus operandi of the alleged infringer. The brand owner should also conduct a company or business search to obtain details of the alleged infringer such as the company or business registration number, as well as its registered and business addresses. These steps would enable the brand owner to initiate civil proceedings without undue delay if such proceedings are required. 

CEASE & DESIST LETTER

A cease and desist letter is a form of letter of demand, where the brand owner requires the alleged infringer to immediately stop its infringing activities and to abstain from further acts of infringement.  

This method is preferred where the alleged infringers are retailers, online platform operators or distributors of the trademark proprietor, as this could be the most cost effective method of enforcement. The rationale for adopting this measure against this class of alleged infringers is due to the high likelihood that they will comply with the demand.

CIVIL LITIGATION

Civil litigation is the preferred course of action when:

(1)     the alleged infringer does not respond to a cease and desist letter;

(2)     there is a likelihood that if notice is given, the alleged infringer is likely to destroy evidence of infringement and there is therefore a need to obtain an Anton Piller Order to prevent such destruction;

(3)     damages suffered by the brand owner will be irreparable and there is therefore a need to obtain an interlocutory injunction;

(4)     there is a danger that the alleged infringer will dissipate its assets beyond the jurisdiction of the courts and a Mareva Injunction is required to prevent it from doing so;

(5)     the infringing mark is not identical to the brand owner’s registered trademark; or

(6)     a Court decision would deter future acts of infringement by a similar class of infringers, e.g. existing or former distributors of the brand owner.

It is important to note that delay in seeking an interlocutory order, such as an Anton Piller Order, a Mareva Injunction or an interlocutory injunction, may be fatal. Hence, if the brand owner encounters a situation where such interim relief is required, it should commence legal proceedings and seek such relief as soon as possible.  

ENFORCEMENT RAID

An enforcement raid in essence is an administrative action taken by a public authority entrusted with powers to enforce intellectual property rights where the penalty is usually criminal in nature. In Malaysia, the relevant public authority is the Enforcement Division of the Ministry of Domestic Trade Cooperatives and Consumerism (MDTCC). Such action is usually initiated upon the request of the brand owner through a formal complaint lodged with the Enforcement Division.

It is the preferred method when:

(1)     the counterfeit goods are identical or nearly identical to the brand owner’s marks;

(2)     the alleged infringers are street vendors without permanent addresses or where entities owning the said premises cannot be ascertained and where civil litigation may not be suitable;

(3)     putting an immediate stop to the infringing acts is a priority; or

(4)     compensation for damages is not a priority.

The Enforcement Division would usually require proof of a trap purchase or private investigator’s report to be lodged with the complaint before it carries out a raid.  

The Enforcement Division will usually agree to conduct an enforcement raid only if the counterfeits bear marks which are identical or very similar to the brand owner’s marks. Otherwise, they may require the brand owner to obtain a trade description order, i.e. an order of the court declaring that the infringing mark is a false trade description in its application to such goods under the Trade Descriptions Act 2011, before proceeding with a raid.

The brand owner’s representative is required to attend the raid to conduct a preliminary on-site verification as to whether the goods are counterfeits. The brand owner will then be required to furnish a written verification report to the Enforcement Division within two weeks from the date of the raid which sets out details of the differences between the genuine goods and the counterfeits.

The Enforcement Division will then conduct its investigation and forward its investigation report to the Deputy Public Prosecutor for a decision as to whether the alleged infringers should be charged in Court or be required to compound the offence by paying a fine.

A brand owner should note that it will not have any control over the administrative action and the subsequent criminal prosecution. However, this does not preclude the brand owner from pursuing a civil action against the alleged infringers.

BORDER MEASURES

The Trade Marks Act 1976 contains Border Measures provisions which enable a registered trademark owner to apply to the Registrar of Trade Marks for a restriction on importation of counterfeit trademark goods. This measure is helpful only if the information as to the exact shipment of the counterfeits into Malaysia is available. In seeking recourse to border measures, a trademark owner must be willing to initiate trademark infringement proceedings in court against the importer.

An application to restrict the importation of counterfeit goods must be made to the Registrar and be supported by an affidavit containing specific information such as the name of the vessel carrying the infringing products and the exact location and time when the vessel would be arriving in Malaysia. The information must be supported by relevant documents which relate to the goods.

The Registrar must, within a reasonable time, inform the applicant whether the application has been approved. The time required by the Registrar depends on the complexity of the matter. Once approval is given, the Registrar will require the applicant to deposit with the Registrar a security, the amount of which is at the Registrar’s discretion and will only be determined upon his receipt of the application.

The approval will remain in force for 60 days from the day the approval is given. During this period, the importation of any counterfeit goods into Malaysia will be prohibited. The Registrar has the onus to immediately take necessary measures to notify the authorised officer, i.e. a qualified officer under the Customs Act or a person duly appointed under the Trade Marks Act 1976 to undertake border measures, to enable him to seize any counterfeits.

Once the counterfeits are seized, the authorised officer must give the Registrar, the applicant and the importer a written notice specifying the goods seized and their whereabouts. The notice will also specify a deadline for the applicant to initiate a trademark infringement action. If the applicant does not do so within the specified time, the seized goods will be returned to the importer who may then apply to court to obtain compensation from the applicant.

There is also a provision under Section 70O of the Trade Marks Act 1976 for ex-officio action, i.e. an enforcement action undertaken by the Customs on its own accord, without any prompting by the brand owner. However, this provision does not impose an obligation on the Customs to carry out such action.

CONCLUSION

With the above arsenal at the disposal of brand owners, one can only hope that the counterfeiters’ defence can be breached and that prospective counterfeiters will be deterred from engaging in this illegal means of profiteering.  

Writer’s e-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it


SUBJECT MATTER: INTELLECTUAL PROPERTY

WRITER’S NAME: RICHGOPINATH SALVAM

WRITER’S PROFILE:

Gopi is a Senior Associate in the Intellectual Property Division of SKRINE. His practice areas include litigation and advisory work on trade marks and copyright.

 

 
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