Legal Insights
 -------------------------------------
External Publications
Know your Rights

A primer on the enforcement of intellectual property rights by Sri Sarguna Raj

It is often the case that the owner of Intellectual Property ("IP") rights invests a lot of time and money in developing and registering his rights but is at a loss as to the steps to take when his rights are infringed. This article provides a brief overview of the options available to the owner of IP rights to protect those rights when they are infringed.

 

 

CIVIL REMEDIES

When an infringement of IP rights has occurred, civil actions may be initiated by the owner of the IP rights. In certain circumstances, a licensee of a copyright, registered design or patent may bring an action if he is the exclusive licensee of the right and joins the owner of the right to proceedings as co-plaintiff or defendant.

 

A plaintiff who is not a Malaysian resident may be required to provide an undertaking or provide security (in the form of a cash deposit or a local bank guarantee) as to costs in the event that the plaintiff is unsuccessful and is found liable to pay the costs of the defendant.

 

 

The First Step

Legal proceedings for infringement are often expensive and time consuming as the evidential requirements are heavy and the burden of proof rests on the IP rights owner. What most IP rights owners usually seek is to stop the infringement immediately and to try to enforce their rights out of court.

 

As a first step, a letter of demand or a "cease and desist letter" may be sent to the infringer stating the IP owner’s rights and how they have been infringed by the infringer. The infringer will be asked to sign an undertaking in favour of the IP rights owner.

 

The usual undertakings demanded would include the infringer’s agreement to cease all of the infringing activities immediately, to deliver up to the owner of IP rights all infringing items in his possession and to disclose under oath the names of all persons to whom he has supplied infringing goods and the identity of the source. The infringer may be required to pay a sum of money to the IP owner for the legal costs incurred. In return for the undertaking, the owner will agree not to commence legal proceedings against the infringer.

 

If the infringer disputes the contents of the letter of demand or the response is negative, civil and criminal remedies are usually available to the owner of the IP rights.

 

 

Pre-emptive remedies

Concurrent with the commencement of a civil suit, the plaintiff may wish to take pre-emptive measures to immediately stop the infringing action by applying for an interim injunction, a Mareva injunction or an Anton Piller order.

 

An interim (or interlocutory) injunction prevents the infringer from continuing infringing activities until the conclusion of the trial. It may be sought at any time, even before the writ has been issued and served on the defendant and is usually applied for ex parte. Such relief is granted at the discretion of the court. The party seeking it must show that there has not been a delay in making the application, that there is a serious issue to be tried, and that if the infringing activities are not prevented immediately, damages will not be adequate compensation for the plaintiff. The plaintiff must also satisfy the court that he is capable of indemnifying the defendant in terms of damages and costs if the injunction is subsequently set aside. The balance of convenience must lie in favour of the plaintiff. A failure to comply with an interim injunction order amounts to contempt of court.

 

An Anton Piller order is a civil search warrant that can be granted to prevent the defendant from disposing of or destroying evidence by allowing for search and seizure of relevant evidence. It is always made ex parte as the element of surprise is essential to its execution. Its main purpose is to preserve evidence pending trial. The plaintiff must show that he has a very strong prima facie case and that damage would be substantial if it was not granted. There must also be strong evidence to suggest that the infringer would dispose of evidence. It will generally suffice if it can be shown that the defendant has been engaged in some acts of infringement. It must be noted that the defendant’s permission must be sought to enter his premises, but his refusal will amount to contempt of court.

 

A Mareva injunction may also be sought to freeze the defendant’s bank accounts and prevent him from dealing with his assets so that they cannot be disposed off to frustrate any money judgment obtained against him. The defendant’s bank must also be notified. Non-compliance by the defendant or the bank amounts to contempt of court. The plaintiff must show that he has a good arguable case, that the defendant has assets within Malaysia, and that there is a real risk that the defendant will dispose of the assets before judgment is given. As it is usually an ex parte application, the plaintiff is required to make full and frank disclosure of all material facts and to give an undertaking as to damages should it be set aside later.

 

 

Civil action

(1) Trade Marks

Proceedings for trade mark infringement can be initiated when a person other than the registered user or proprietor uses a mark identical to, or resembling, the registered mark so that it is likely to deceive, or cause confusion, in the course of trade in relation to goods in respect of which the trade mark is registered. However, this relief cannot be sought while an application for registration is pending. A registered user of a trade mark may sue provided he has requested the registered owner to do so and the latter has not responded by taking any action within 2 months.

 

An action may also lie in the common law tort of passing off in respect of a registered or an unregistered trade mark. In a passing off action, the plaintiff must show that he has goodwill or reputation such that the mark, name or get-up is distinctive to him and recognised as being so by the public or members of the trade, that the defendant made a misrepresentation likely to deceive or confuse a substantial number of persons that the infringing mark is connected or associated with the plaintiff, and prove that he will or is likely to suffer damage as a result of the defendant's acts. However, as the burden of proof is heavier and the evidential requirements are greater, an action in passing off is usually resorted to as a fall-back measure where it is not possible to rely on a registered trade mark.

 

 

(2) Copyright

The owner of a copyright has control over reproduction, communication to the public, distribution of copies of the work to the public by sale or transfer of ownership and the commercial rental of the work in its original or derivative form. To exercise any of these exclusive rights without permission amounts to an infringement. The only exception is in regards to limited copying by libraries and the press for reporting current events which would amount to fair use. Fair use however is unlikely to include any activity that leads to profit. Unauthorised importation also amounts to infringement unless the importer can show that he did not know, or had no reasonable way of knowing, that it was carried out without a licence.

 

 

(3) Industrial Design

Civil proceedings may be brought by a proprietor of a design against anyone who manufactures or deals with products that infringe his design, that is, one which is identical to or not substantially different from his design. A proprietor can be prevented from recovering damages if the defendant can show that he was not aware, and had no reasonable means of making himself aware, of the existence of the registered design in issue. However, an injunction may still be granted against him. Publication of the design in a principal Malaysian newspaper will usually suffice to prevent a defendant from relying on a lack of awareness.

 

 

(4) Patent

Infringement of a patent occurs when a person, without the consent of the owner of the patent, makes, imports, offers for sale or sells or uses the product, or stocks such product for the purpose of selling, using or offering for sale a product or uses a process or makes, imports, offers for sale, or sells or uses a product obtained directly by means of a process. Any beneficiary or licensee may take action if the proprietor has been informed of the breach and has not taken action within 3 months. He may then institute proceedings in his own name, after notifying the registered owner. An owner may only institute proceedings after the certificate of grant of patent has been issued. As the registration process may take several years, a remedy will not be available if an infringement occurs during this period.

 

 

Outcome of civil action

Once proceedings have concluded, a final or perpetual injunction may be granted to prohibit further infringing activities. This may be awarded with an order to deliver up to the plaintiff (or to destroy) any stock of infringing goods or associated materials such as manufacturing moulds, packaging, labels and brochures.

 

Damages awarded in tort and contract law are merely compensatory in nature. Thus, the amount of damages awarded is usually the amount of net profit or notional profit made from the infringing activities. It may also be the value of lost sales or the amount the infringer would have been liable to pay if he had a valid licence to use the relevant IP right. The Copyright Act 1987, however, provides for additional damages for copyright infringement.

 

An account of profits may be ordered as an alternative to damages. This usually gives the plaintiff better recompense where the defendant has been making profits from the infringement which he would not have otherwise made.

 

A successful party may be awarded costs, which is usually based on a rough scale according to the amount and nature of the judgment obtained as well as the scale and complexity of the proceedings.

 

 

Other modes of resolution

Alternative dispute resolution, such as arbitration and mediation, is an option, particularly in cases where a contractual relationship exists between the parties. Arbitration can be beneficial as the parties can select an arbitrator who has in-depth knowledge or experience in the particular field. Judges may also refer parties to mediation at any stage of proceedings where it is thought that a compromise can be reached.

 

 

CRIMINAL OFFENCES

A defendant who has infringed an IP right may also face criminal action for his infringing activities.  The specific criminal remedies for the respective IP rights are discussed below.

 

 

(1) Copyright

Section 41 of Copyright Act 1987 renders it a criminal offence to make for sale or to hire, sell, let for hire or by way of trade, expose or offer for sale or hire, distribute, possess (otherwise than for his own use), or by way of trade, exhibit in public an infringing copy. It is also an offence to import into Malaysia, otherwise than for his own domestic use, any infringing copy. Similarly, making or having in possession any contrivance used or intended to be used for the purposes of making an infringing copy is also an offence.

 

Upon conviction, a person will be liable to a fine of up to RM20,000 per copy or to imprisonment for up to 5 years or to both for the first offence, or a fine of up to RM40,000 per copy or to imprisonment for up to 10 years or to both for any subsequent offence.

 

In addition, the Copyright (Amendment) Act 1997 introduced a criminal offence for circumventing technological measures to remove or alter any electronic rights management information without authority, as well as for distribution or importation for distribution or communication to the public, any works or copies in respect of which electronic rights management has been removed or altered. The penalties for these offences can be a fine of up to RM250,000 or to imprisonment for up to 5 years or to both for the first offence and a fine of up to RM500,000 or to imprisonment for up to 10 years or to both for any subsequent offence.

 

The Copyright Act 1987 also provides for powers of search, seizure and arrest (with and without warrant) on the Enforcement Division of the Ministry of Domestic Trade, Co-operatives and Consumerism ("MDTCC"). Any item seized is liable to forfeiture whether or not a conviction follows. Action will be taken by the Enforcement Division on its receipt of a written complaint from a copyright owner or any person authorised by the owner, supported by evidence of copyright ownership and infringement.

 

 

(2) Trade Marks

There are no express criminal remedies available under the Trade Marks Act 1976.

 

However, Part XIVA of the Trade Marks (Amendment) Act 2000 provides a new remedy for border measures. It prohibits the importation of counterfeit trade mark goods. The Malaysian Customs and Excise Department and appointed officers of the MTDCC may seize and detain imported goods that infringe a registered trade mark. A proprietor can submit an application to the Registrar objecting to the importation of goods that he suspects will infringe his trade mark.

 

 

(3) Patents

Any person falsely representing that anything disposed by him for value is a patented product or process, commits a criminal offence and, upon conviction, is liable to a fine of up to RM15,000 or to imprisonment for up to 2 years or to both. The same applies to any person who represents that a patent has been applied for in respect of any article disposed of for value and either no such application has been made or any such application has been refused or withdrawn.

 

A magistrate may, upon written information and after inquiry, issue a warrant authorizing search or seizure of certain premises.

 

 

(4) Industrial Designs

There are no specific criminal remedies available for infringement of a registered design.

 

 

TRADE DESCRIPTIONS ACT

The Trade Descriptions Act 1972 provides for criminal remedies where a false trade description has been applied to a product. This can be particularly useful as the Act specifically provides that the use of a counterfeited trade mark amounts to a false trade description. A Trade Description Order could be sought, which coupled with an official complaint to the MDTCC, can trigger criminal enforcement action. The Attorney General may choose to prosecute on the advice of the MDTCC with the penalties being a fine of up to RM100,000 or to imprisonment for up to 3 years or to both for the first offence or a fine of up to RM200,000 or to imprisonment for up to 6 years or to both for any subsequent offence.

 

 

CONCLUSION

The Malaysian Government must strive for effective enforcement measures to dispel the perception that the country is a haven for counterfeit products. If effective enforcement measures are not taken, the registration and protection of IP rights would come to naught.

 

 

SRI SARGUNA RAJ ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it )

 

Sri graduated with a Bachelor of Laws degree from King's College, London. He is an Associate with the Intellectual Property Division of SKRINE.

 

 
ACCOLADES & AWARDS

Skrine Retains Who’s Who Legal Accolade for Malaysia

On 15th May 2017, the Who’s Who Global Awards was held in London, United Kingdom and Skrine was conferred the Award:

Malaysia Law Firm of the Year 2017

Skrine previously received this Award in 2013, 2014, 2015 and 2016.

>> READ MORE

SKRINE Clinches Top Honours at ALB Malaysia Law Awards 2017

On 6th April 2017, the Asian Legal Business Malaysia Law Awards was held and SKRINE was named

Malaysia Law Firm of the Year 2017

SKRINE also bagged 5 other awards

>> READ MORE

Asialaw Profiles 2017

The Asialaw Profiles has ranked Skrine as Outstanding Firm and particularly highlighting the following practice areas:

Outstanding Firm

  • Competition & Antitrust
  • Corporate/M&A
  • Dispute Resolution
  • Energy & Natural Resources
  • Intellectual Property
  • IT, Telco & Media
  • Project & Infrastructure

>> READ MORE

PDPA NOTICE

English | Bahasa Malaysia