Malaysia introduces totally revamped Trademarks Bill

On 9 April 2019 the Malaysian Parliament tabled a new, totally revamped Trademarks Bill 2019 for its first reading. The proposed bill could bring about significant changes to the existing regime for trademark protection and enforcement in Malaysia. It will replace the Trade Marks Act 1976 and, among other things, seeks to put in place the necessary and long-overdue legislative framework for Malaysia’s accession to the Madrid Protocol. On top of this, the bill will introduce new provisions with regard to:

  •  the protection of non-traditional marks;
  • an express provision for the securitisation of registered mark;
  • enhanced statutory protection for registered marks; and
  • improved enforcement mechanisms against counterfeit goods.

1. Accession to the Madrid Protocol

The bill contains express provisions to pave the way for Malaysia’s imminent accession to the Madrid Protocol. In this regard, it seeks to empower the Minister of Domestic Trade and Consumer Affairs to prescribe the relevant regulations that will enable Malaysia to full its international obligations under the protocol. The regulations would govern matters relating to the applications for the international registration of marks and the protection accorded to such registrations, among other things.

2. New definition of ‘trademark’ and recognition of non-traditional marks

A famous colour and position trade mark

One of the significant changes proposed by the bill is the new definition of ‘trademark’, removing the definition promulgated by the UK Trademarks Act 1938. The term ‘trade mark’ is now spelled as ‘trademark’ and its definition has been updated to be in line with the modern definition of the word as found in the UK Trademarks Act 1994. A ‘trademark’ is defined as “any sign capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of other undertakings (Section 3(1)). And ‘sign’ is widely defined to include the following new items:

  • shape of goods or their packaging;
  • colour;
  • sound;
  • scent;
  • hologram;
  • positioning; and
  • sequence of motion.
An example of a sound trade mark registered in Russia

This brings about a significant yet welcome change in trademark practice, as the bill expressly recognises and accordingly grants protection to non-traditional trademarks in keeping with new developments. Owners of such non-traditional marks will soon be able to register them under the new legislation.

3. Trademarks as personal or moveable property and the securitisation thereof

With the objective of further developing a knowledge-based economy and to facilitate the creation of a viable ecosystem for IP trading, the Malaysian Parliament will introduce a new Part IX, which recognises trademark rights as a subject for securitisation. Pursuant to the provisions in this new part, a registered mark will be treated as personal or moveable property and “may be subject of a security interest in the same way as other personal and movable property” (Section 62). Charges may be placed on registered marks, in the same manner as personal or moveable property (Section 64(5)). As a result, the owner of a registered mark will be able to tap into its value and pledge it as a form of security or collateral in any financing arrangement. This would create an added incentive for owners to register their marks, aside from the usual rights accrued from the trademark’s registration.

4. Strengthened statutory relief and remedies for trademark infringement

The bill has also codified the remedies that are ordinarily awarded to successful claimants in an infringement action. These include damages, account of profits, injunctions (including interim injunctions) and mandatory orders. The bill empowers the courts to grant damages to the claimant, as well as to compel the defendant to provide an account of the profits made in cases of flagrant counterfeiting. This is not currently the case, as successful claimants are still required to elect which of the two heads of damages they wish to claim based on common law principles. The courts will also be empowered to grant mandatory orders against defendants, including handing down an order to erase the defendant’s offending sign and the delivery or disposal of the infringing goods, material or articles. With regard to civil actions against counterfeiters, the courts will be given the discretion to grant additional damages to the claimant depending on the flagrancy of the infringement, the benefit gained by the counterfeiter, the need to punish such counterfeiters and other relevant considerations. The bill will also provide relief to any person who is subjected to groundless threats of infringement proceedings. In the circumstances, a claimant may claim for a declaration that the threats are unjustified, an injunction to prevent the threat from continuing and damages for the loss suffered.

5. Enhanced legal enforcement of trademark rights

The logo of the Ministry of Domestic Trade and Consumer Affairs

Under the existing enforcement regime, criminal charges in respect of the false application of trademarks to goods and services is governed by the Trade Descriptions Act 2011, in particular Section 8. However, it appears that the legislature intends to include and consolidate all the relevant provisions for criminal sanctions against counterfeiting activities involving registered trademarks within the ambit of the bill. A new Part XV titled “Offence” will be introduced, which will consist of extensive provisions relating to trademark counterfeiting offences and the false application of a registered mark to goods or services. With the concurrent introduction of the proposed bill and the Trade Descriptions (Amendment) Bill 2019, it appears that the Malaysian legislature intends to transfer the provisions relating to enforcement of a registered trademark found in the Trade Descriptions Act to the bill. This is evident by the removal of Section 8 (offence relating to application of false trade description involving a registered mark) and placing it under the purview of the bill. This appears to be a logical move given that the subject of protection of Section 8 concerns a registered mark. For the first time, the bill will criminalise the act of counterfeiting a registered mark and falsely applying a registered mark to goods or services. It also criminalises acts of making an article specifically designed or adapted for making copies of a registered mark or a sign likely to be mistaken for it. Any person who imports, sells or exposes for sale or has in their possession, custody or control for the purpose of trade or manufacture any goods to which a registered trademark is falsely applied is guilty of an offence. Hefty penalties for the offences under Part XV are prescribed. Following the above proposed changes, Part XVI, titled “Investigation and Enforcement”, has adopted a substantial part of the provisions in the Trade Descriptions Act with regard to the powers of the enforcement authority. Similar to the powers under the act, enforcement officers will be armed with the powers to investigate, arrest suspects and search and seize goods suspected of being the subject of an offence.

6. Attempts to modernise and streamline registration procedures

As a measure to modernise trademark registration procedures, the bill will introduce the publication of the Intellectual Property Journal (presumably in lieu of the possibly more time-consuming Government Gazette ), electronic ling and issuance of documents via electronic means and issuance of guidance and practice directions. It also seeks to clarify some of the administrative powers of the registrar of trademarks. Besides that, as a bulk of the work of the registrar or assistant registrar is to determine whether the use of a trademark is likely to cause confusion, the bill introduces a new Section 9, which provides that in determining whether the use of a trademark is likely to cause confusion, the registrar may take into account all relevant factors,
including whether the use is likely to be associated with a registered or earlier mark. It is believed that the original intention of this section is to codify guidelines for determining the issue of confusion between two marks. However, as the current wording stands, it appears too brief and general and risks imposing upon the registrar an additional requirement of expanding the scope of such inquiry to include the issue of confusion by association. It is highly doubtful whether the proposed and rather briefly worded Section 9 will provide much assistance to the registrar. The statutory mandate to take into account confusion by association may instead prove to be an additional burden on it.

Conclusion

The bill contains substantial changes to the existing law and practice relating to trademarks in Malaysia. It is a welcomed development as it will bring Malaysian trademark law in line with international standards

Teo Bong Kwang, Wong Jin Nee & Teo
Eugene Ee,  Wong Jin Nee & Teo

June 2019 

Postscript: The Trademark Bill 2019 went through its second reading at the lower house of the Malaysian Parliament with some minor changes on 2 July 2019. The upper house (Senate) approved it on 23 July 2019.  It is expected that the new bill may come into force in early part of 2020.

This article first appeared on WTR Daily, part of World Trademark Review on 18 June 2019. For further information, please go to www.worldtrademarkreview.com. The images found in this post were inserted by the authors.

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