Significant cases of IP protection
Michael C M Soo, Ng Kim Poh and Lee Lin Li
Shook Lin & Bok
The Malaysian courts have seen a gradual increase in the number of lawsuits brought by IP owners in the past two years, with at least 10 reported decisions by the High Court and two reported decisions by the Court of Appeal. This chapter reviews some of the more significant cases. The year 2004 also saw the passing of a bill for the protection of new plant varieties - the Protection of New Plant Varieties Act 2004, published on July 1 2004 - although this is not yet in force.
In Industria De Diseno Textil SA v Edition Concept Sdn Bhd ( 2 CLJ 357) the defendant applied to amend the Trademarks Register to expunge the plaintiff’s ZARA mark on the grounds that:
• the ZARA mark was wrongly entered in the register as its use was likely to deceive or cause confusion to the public because the ZARA mark is well known in Malaysia as a result of the defendant’s alleged use of it since September 1999; and
• there had been no use of the ZARA mark during its registration by the plaintiff for a continuous period of three years up to one month before the application for rectification was filed.
In dismissing the first ground, the High Court held that the correct date in determining whether the mark was well known in Malaysia was the date of application for registration of the ZARA mark by the plaintiff (ie, August 3 1998). The defendant failed to adduce any evidence that the ZARA mark was well known in Malaysia on this date.
In dismissing the second ground, the High Court held that the correct date when calculating whether there had been non-use of the ZARA mark during its registration for a continuous period of three years was the date the mark was actually entered upon the register (ie, February 5 2002) and not the date of application for registration. Therefore, the three-year period should run from February 5 2002 and not August 3 1998. The High Court found that the plaintiff had started using the ZARA mark 10 months before the rectification proceedings were filed by the defendant; hence the defendant failed to satisfy the requirement of non-use for a continuous period of three years.
The High Court recognised the importance of trademark searches to avoid unnecessary litigation and their significance in commercial and business decisions. The High Court remarked that the defendant should have carried out a trademark search at the Registry of Trademarks before it commenced business operations using the ZARA mark, as it could have avoided these legal proceedings.
Industrial designs and copyright
In Honda Giken Kogyo Kabushiki Kaisha v Allied Pacific Motor ( 3 MLJ 30) Honda applied for an interlocutory injunction against the defendant based on the alleged infringement of:
• five industrial design registrations owned by Honda for the Honda Wave 125 motorcycle by the defendant’s Comel Manja JMP 125 motorcycle; and
• Honda’s copyright in two and three-dimensional drawings of the Honda EX5 Dream motorcycle by the defendant’s Comel Manja JMP 100 motorcycle.
The designs were registered on December 7 2000. The drawings were created by Honda in Japan and first published in Thailand.
In dismissing the defendant’s contention that the designs were not new as vehicles of a similar design had been sold in Thailand prior to the plaintiff’s application to register the designs in Malaysia, the High Court ruled that the novelty requirement in the Industrial Designs Act 1996 is territorial. Therefore, prior disclosure of designs outside Malaysia is irrelevant. The court also applied the statutory presumption under Section 114(e) of the Evidence Act 1950 that official acts have been correctly carried out. Therefore, the court held that the designs were valid, ruling that there were many similarities between the Honda Wave 125 and the defendant’s JMP 125.
In dealing with the copyright claim, the court applied the Copyright (Application to Other Countries) Regulations 1990 and held that the drawings first published in Thailand were entitled to copyright protection in Malaysia (subject to eligibility under the Copyright Act 1987). The court stated that the drawings were protected by copyright as artistic works in Malaysia and were similar to the eventual product of the JMP 100 motorcycle.
Although the court concluded that there were serious questions to be tried, it stated that the balance of convenience tilted in favour of refusal of the grant of an interlocutory injunction. The court found that the grant of an injunction pending final disposal of the suit would have a negative and perhaps irreversible impact on the defendant, as an injunction would affect third parties and the government.
Interestingly, in considering the copyright claim, Section 7(6) of the Copyright Act 1987 was neither raised nor dealt with by the court. Section 7(6) protects designs that are capable of being registered under the Industrial Designs Act 1996 but are not registered. However, copyright for such designs ceases as soon as any article to which the design has been applied is reproduced more than 50 times by an industrial process.
Based on decisions of the Privy Council and the Australian courts, which are regarded as persuasive in Malaysia, ‘capable of registration’ has been interpreted to mean that the design falls within the definition of an ‘industrial design’ under the relevant industrial design laws, and that it does not need to be new. However, there are no reported Malaysian cases dealing with this phrase. An ‘industrial design’ covers features of shape, configuration, pattern or ornament applied to an article by any industrial process, being features that, in the finished article, appeal to and are judged by the eye.
Designs that are not capable of registration under the Industrial Designs Act 1996 but that are artistic works within the meaning of the Copyright Act 1987 enjoy copyright protection for 25 years from the time the design is exploited by the copyright owner or licensee by making articles by an industrial process as copies of the artistic work and marketing such articles in Malaysia or elsewhere.
The two and three-dimensional drawings of the Honda EX5 Dream motorcycle were protected by copyright as artistic works that are not capable of registration, although technically such drawings were capable of registration under the Industrial Designs Act 1996. If the latter applied, copyright in such drawings would cease as soon as the motorcycle (the Honda EX5) to which the design is applied had been reproduced more than 50 times.
In Rock Records (M) Sdn Bhd v Audio One Entertainment Sdn Bhd ( 1 CLJ 200) the plaintiff applied for summary judgment for copyright infringement by the defendant under the Copyright Act 1987. Rock Records claimed that Audio One Entertainment had infringed its copyright in sound recordings by Malaysian artists by incorporating them into karaoke video CDs without permission.
The court held that a licence granted by a copyright owner to reproduce sound recordings in laser disc format does not extend to the right of reproduction of the sound recordings in karaoke video CD format. Therefore, the reproduction of sound recordings in karaoke video CDs by Audio One Entertainment was copyright infringement and the plaintiff was granted summary judgment.
This case is significant as it serves to remind IP owners of the importance of ensuring that the scope of the licence is clearly defined. The basic elements of a licence - the authorised acts and geographical and temporal range within which the licensee can perform these acts - must be clearly provided for in the licence. It is also important to recognise or deny expressly the right to give a licensee the right to assign its rights, grant sub-licences or subcontract the manufacture of the products under licence, even though grant of an exclusive or sole licence does not in itself give rise to such rights.
The court’s decision in Rock Records is consistent with government efforts to enforce the Copyright Act 1987 effectively and stamp out piracy. The government has stepped up its efforts to stem the tide of piracy, with the Ministry of Domestic Trade and Consumer Affairs taking a proactive role against pirates in the consumer market. Over the last 12 years ministry initiatives have resulted in the seizure of a total of M$198 million worth of counterfeit goods. A total of 21,981 cases were tackled between 1992 and 2004.
In a recent development, recording industry representatives including the Recording Industry Association of Malaysia (RIM), anti-piracy watchdog the Business Software Alliance and the Motion Picture Association urged the government to set up a special unit to surf the Internet for local websites distributing illegal copies of movies, music and software. This development follows continuous efforts carried out to eradicate piracy in the market. Warning letters sent by RIM to local websites containing illegal copies of music files in the last year have seen positive results as these websites were shut down within 24 hours. Over 100 warning letters have also been sent in the last year to pirates who offer truetone ringtones for mobile phones without paying royalties. These efforts seem to have had some effect in reducing pirate activities.
The government effort to arrest the spread of piracy may further be seen in the recent amendment to the Copyright Act 1987. The Copyright (Amendment) Act 2003, in force since October 1 2003, provides for stiffer penalties to punish and deter copyright infringers.
Apart from the increase in penalties and terms of imprisonment, the amendment also addresses the lack of arrest powers in the enforcement division of the Ministry of Domestic Trade and Consumer Affairs. Under the amended act, the enforcement officers are given powers of arrest without warrant. The new powers of arrest represent a significant and effective step in the piracy battle and, since the revised act came into force, there has been an increase in the number of DVD and VCD traders arrested for possessing illegal copies of films on optical discs.
Before the enactment of the Industrial Designs Act 1996, all industrial designs registered under the UK Registered Designs Act 1949 were recognised and enforceable in Malaysia under the predecessor statutes to the Industrial Designs Act 1996. Under the UK act registered designs are valid for 25 years. The Industrial Designs Act 1996 provides for the registration of industrial designs, and that industrial designs must be registered in Malaysia to be recognised in Malaysia following the entry into force of the Industrial Designs Act 1996. Designs registered in the United Kingdom prior to the commencement of the Industrial Designs Act 1996 continue to be given recognition in Malaysia.
Under the Industrial Designs Act 1996, designs registered under the act will be valid for an initial term of five years, with an extension for two further five-year terms permitted.
The Industrial Designs Registration Office recently issued a circular stating that, on the advice of the Attorney General’s Chamber, designs registered under the UK act would not be allowed to be extended beyond three five-year terms.
This is contrary to the announcement made by the then-secretary general and director general of the Intellectual Property Corporation of Malaysia in a dialogue with practitioners held on March 27 2004. On March 3 2005 the Intellectual Property Corporation of Malaysia changed its name to the Malaysian Intellectual Property Office.
The advice of the Attorney General’s Chamber is inconsistent with the following provisions of the Industrial Designs Act 1996:
• The validity period of designs registered under the UK act should be governed by the UK act, under which registered designs are valid for 25 years. Section 49(2)(c) of the Industrial Designs Act 1996 stipulates that any design registration protected under the repealed predecessor statutes to the Industrial Designs Act 1996 (ie, the UK Designs (Protection) Act 1949, the UK Designs (Protection) Ordinance of Sabah and the UK Designs (Protection) Ordinance of Sarawak) would continue to be in force and have the same effect as if it had been effected under the Industrial Designs Act 1996.
• Section 50(2) of the Industrial Designs Act 1996 stipulates that a certificate of registration granted under the UK act would have “the maximum period of validity accorded under the repealed laws”. The words ‘period of validity’ should be contrasted with the words ‘period of registration’ used in Sections 25(1) and 25(2) of the Industrial Designs Act 1996.
• Owners of designs registered under the UK act prior to the entry into force of the Industrial Designs Act 1996 have a vested right to extend their respective registration to a maximum period of 25 years. It is trite law that a vested right would not be taken away by Parliament unless it is expressly stated in the statute or by necessary implication.
A party aggrieved by a decision of the Industrial Designs Registration Office can appeal to the High Court pursuant to Section 46(1) of the Industrial Designs Act 1996.
It is hoped that the Attorney General’s Chamber will clarify its position on this issue in light of the interpretation of the statute. The recent circular has caused uncertainty and anxiety among practitioners and owners of UK-registered designs since the Industrial Designs Act 1996 came into effect on September 1 1999.
The Intellectual Property Corporation of Malaysia, the governing corporation of the Registry of Trademarks, the Patents Office, the Industrial Designs Registration Office and the Registration of Geographical Indications and Names Office, has changed its name to the Malaysian Intellectual Property Office. The change was officiated by the Malaysian prime minister at the National Intellectual Property Day held on March 3 2005.
Other procedural changes include the practice recently introduced by the Registry of Trademarks requiring trademark agents to notify the office of any inaccurate details in applications by returning a trademark validation form and to provide, on a disk or by email attachment, a lengthy description of goods or services. These changes help to verify and ensure the accuracy of the office’s records. Other changes include requiring applicants to execute supplemental deeds of assignment to rectify errors or omissions in deeds of assignment which have been filed with the office for the purpose of recording assignment.