The New Normal for Malaysian Patent Law

Amendments to the Malaysian Patents Act & Regulations came into force on 18 March 2022 without much fanfare (at least the 2019 updates to the Trademarks Act & Regulations received some coverage from our local newspapers). Some of these changes harmonise certain aspects of Malaysian patent law with that of other countries, while some other changes eliminate ambiguities that have existed due to lack of clear wording in the Act & Regulations.

Much-needed clarity

Changes to the Act & Regulations have removed ambiguities concerning certain subjects, such as sequence listings, microorganism samples and who are persons considered resident in Malaysia.

Sequence Listings

For quite a while now, drafters and filers of application which disclosed a sequence listing were unsure as to where to position the sequence listing, whether as part of the description before the claims, as figure sheets or as a separate document. One thing was certain, failure to number the sheets of the sequence listing always attracted an office action instructing the applicant to remedy this. The updated Act & Regulations now clearly state that sequence listings are to be submitted as a separate part of the description in electronic form and will follow the standard as described by the Patent Cooperation Treaty.

Budapest Treaty

Another issue prior to the update was that applicants who wanted to patent inventions related to microorganisms or microbiological processes had to complete a statutory declaration (SD) permitting access to samples of the microorganisms so that the applications could be examined substantively, which would have guaranteed an Office Action on this matter if the unwitting patent agent did not submit the SD at the time of filing the application. Now that the laws have been updated and Malaysia has acceded to the Budapest Treaty, an applicant need only deposit a sample at a Depositary Authority (not Suppository Authority) and make reference to the deposit in the application without having to complete the statutory declaration.

Persons Resident in Malaysia and Permission to file abroad

The older wording of the Act states that a person residing in Malaysia is not permitted to file a patent application overseas unless certain conditions are met. The question was then, ‘Who is a person residing in Malaysia?’ Are Malaysian SMEs ‘persons’ residing in Malaysia? Is a foreign consultant working in Malaysia under a short-term contract a person residing in Malaysia? What about an AI housed in a computer which is physically located in Cyberjaya? Is that even an inventor?

Persons residing in Malaysia are now clearly defined as the following:

1. a Malaysian citizen residing in Malaysia;

2. a non-Malaysian citizen validly residing in Malaysia; or

3. any local bodies established or registered in Malaysia.

With that settled, we now come to the issue of requesting clearance to file an application overseas first. Before, a request may have been accompanied with a copy of the patent specification to be filed overseas first. Now, the amended Regulations clearly indicate that applications should be submitted together with a description of the invention and the appropriate fee.

Major change

One major change to the Act & Regulations is the ability to make third-party observations and patent oppositions.

Third-party Observation and Patent Opposition

Prior to the amendments, there were no means available to oppose a patent prior to it being granted and patents could only be invalidated in Court after they were granted. Now, any application may be challenged at the time it is first published after 18 months following the filing/priority date or at the time the patent is granted.

For those unfamiliar with these procedures, a third-party observation is where a third party submits prior art references against an application which has been published prior to it being examined substantively. If an Examiner finds that these references are relevant, they will be cited against the application.

A patent opposition on the other hand, is done after the announcement that a patent is granted, and the grounds for opposing a patent will be similar to those for invalidating a patent i.e. the claims are not novel, inventive, industrially applicable; the disclosure or drawings lack sufficiency; the patent is not granted to the rightful person; or the patent was obtained on deceptive grounds.

In conjunction with the new third-party opposition and patent opposition options, applications which have passed the 18th month period and patents which are granted will now be published in the Official Journal for Patents as opposed to the older practice where only patents which are granted are published in the Journal.

Restoration of priority right

For quite a while now, any applications that claimed the priority of an earlier application but were not timely filed within 12 months from the date of the priority application lost their priority claim and this right could not be restored. Now, the Act & Regulations allow for the restoration of priority right if a request for the restoration of the priority right is made in a timely manner.

However, the Registrar must be satisfied that the failure to meet the deadline was unintentional or due to circumstances beyond the applicant’s control, e.g. the docketing software was locked by a ransomware because someone got seduced by some sweet-tongued ‘Nigerian prince’ and so the deadline was missed.

Deferment of Substantive Examination

Applicants now do not have the option of deferring the filing of the request for substantive examination, and must do so within 18 months from the filing date.

However, if the applicant has a corresponding application elsewhere in Australia, Japan, South Korea, the US, UK or at the European Patent Office and wishes to rely on a patent granted in any of these countries/patent office to request a modified substantive examination (MSE), the option of deferring the filing of the request for a modified substantive examination is still available.

This means that if you are not relying on a MSE to have your patent granted, you need to decide within 18 months from the date you filed your application whether you want to go all-in and have your application examined substantively.

Other changes

Some other changes which have come into effect have to do with time limits for certain actions, such as responding to examination reports, converting an application for a patent to an application for a certificate of utility innovation/utility model or responding to a hearing notice.

• Applicants now have 3 months to convert a patent application to an application for a certificate of utility innovation or vice versa following the first SE/MSE report instead of 6 months.

• Applications which have been granted, refused, withdrawn or deemed withdrawn or abandoned can no longer be divided.

• Applicants now have 3 months to respond to a SE/MSE Adverse Report instead of 2 months, which is somewhat of a U-turn from the previous amendment which shortened the duration from 3 months to 2 months.

• Lump sum payment of annuities can be made for 2 years or more but not more than 5 years.

• A lapsed patent must now be reinstated within 1 year instead of two years.

• A notice of express trust can now be entered into the register.

• Patents can now be the subject of a security interest.

• Patent owners who make post-grant amendments may be required to submit a request for re-examination of the amendments.

• More time is given to respond to hearing notice.

• Requests for extension of time can now be filed within 6 months after the deadline.

These changes appear to be positive, largely in favour of applicants and patent owners and aimed towards improving the efficiency of the patent office. In some way, it shows that MyIPO has been engaging their stakeholders and listening to them.

Want to submit a third-party observation but not sure if a dusty book in a public library can be considered as prior art? Why not give us a holler? After all, we’re here to help.

ARE BRANDED FUNERAL GOODS COUNTERFEITS?

At first glance, Chan seems an unassuming man. Most days, you’ll find him sitting in his workshop, toiling away in his sweat-stained singlet and olive-green shorts. In fact, Chan is a maker of luxury goods, and his small poorly lit workshop is filled to the brim with the must-haves of the day. The latest Apple products, designer bags and shoes, flatscreen TVs, European sportscars, and hanging from the ceiling, the workshop’s crowning glory - a Boeing 787 Dreamliner. They are all fakes of course, and perhaps in more ways than one. And don't even bother asking Chan about after sale services.

Yes, the LV bags, the Gucci heels, and the Bugattis you've been sending to granny are fakes, not just because they're made of paper and bamboo, but they could also be considered as counterfeit goods. In 2011, A New York Chinatown shopkeeper was arrested for selling “counterfeit” Burberry, Gucci, and LV “bags” meant for funeral offerings. In 2016, GUCCI sent warning letters to several Hong Kong funeral goods shops for using selling GUCCI branded “bags”, before it was forced to apologise for not being sufficiently sensitive to the local cultures.

So what’s the legal position in Malaysia in relation to these branded funeral goods? Under the Malaysian Trademarks Act 2019, these products may be considered (i) infringing goods, and/or (ii) counterfeit goods. While all counterfeit goods are infringing goods, not all infringing goods are counterfeit goods. The difference is crucial as the making and selling of counterfeit goods is a criminal offence which can come with a hefty fine (up to RM 1million) and can also land one in prison for up to 5 years.

Infringing Goods

Under the Section 54 of the Malaysian Trademarks Act 2019, there are 2 ways in which you can infringe a registered trademark.

Firstly, a person is said to have infringed a registered trademark if “he uses a sign which is identical with the trademark in relation to goods or services which are identical with those for which it is registered, in the course of trade, without the consent of the registered proprietor.”

Secondly, a person is said to also have infringed a registered trademark if, “without the consent of the proprietor of the trademark, he uses in the course of trade a sign— (a) that is identical with the trademark and is used in relation to goods or services similar to those for which the trademark is registered; or (b) that is similar to the trademark and is used in relation to goods or services identical with or similar to those for which the trademark is registered, resulting in the likelihood of confusion on the part of the public”.

Here’s a quick example of how that works. If GUCCI has registered its “GG” logo as a trademark in Malaysia for handbags, I would have infringed GUCCI’s trademark if:-

(i) I made or sold handbags bearing an identical “GG” logo;

(ii) I made or sold similar products (e.g. paper bags) bearing an identical “GG” logo, and consumers mistakenly think my products are made/licensed by GUCCI; or

(iii) I made or sold handbags bearing a similar logo (e.g. “GC”), and consumers mistakenly think my products are made/licensed by GUCCI.

In Chan’s case, his products would be considered infringing goods, if the trademarks that appear on them are registered for paper products (fairly likely) or if the consumers somehow mistake his products as those that are made/licensed by the trademark owners (not as likely).

Counterfeit Goods

Under Section 6 of the Malaysian Trademarks Act 2019, a product is considered “counterfeit goods” if it is branded with a registered trademark without the consent of the trademark owner and the product is falsely represented as a genuine product of the trademark owner.

Basically, counterfeit goods are infringing goods that are made with the intent to trick the public into thinking that they are the genuine article. A simple example would be me selling you a near or exact replica of a Burberry bag.

Chan’s products are unlikely going to be considered counterfeit goods as there is a general understanding that his products are fakes, in the sense that they are not meant to be used (at least not by the living) and that they are not the genuine article. Unless of course these brands plan to add funeral goods to their offering. But for now, Chan isn’t overly worried, with the Qingming festival around the corner, all his goods will go up in flames, and it will be up to the lawyers down there (I heard there are many) to sort it out.

IS NFT COPYRIGHT?

Several days before the Full MCO came into effect in several states, artist Mark Winkelmann’s digital artwork made history for fetching $69 million at an art auction. It’s not uncommon for art pieces to command such eye-watering prices but what was notable about this auction was that the artwork that went under the hammer was a piece of NFT art which was paid in cryptocurrency. Closer to home, we have artists like Red Hong Yi and Katun who have also sold their NFT art for more than a tidy sum.

What are NFTs, and how are they related to digital artwork?

For starters, NFT stands for Non-Fungible Tokens. NFTs are non-fungible because they are unique and irreplaceable. For example, the Mona Lisa is non-fungible because there’s only one of it, and since Leo bit the dust 5 centuries ago, we can hardly expect him to paint another one. Conversely, money, like the Malaysian Cabinet, is fungible because it is not unique and easily replaceable, e.g.- the wrinkled 1 Ringgit bill in your back pocket is, for all intents and purposes, identical and replaceable with any 1 Ringgit bill currently in circulation.

NFTs are based on the blockchain technology, which is the same technology that makes cryptocurrency secure. Like cryptocurrency tokens or cryptocoins, each NFT is unique whereby no two NFTs are identical, and at any point of time, everyone knows who owns which NFT and which NFT has been transferred from one person to another. Because of this unique nature of NFTs, some very smart people have begun to use them as digital certificates to represent ownership of assets.

Now, in relations to digital artwork, while no one will question your ownership of the brick with the word ‘SUPREME’ on it proudly displayed in your man cave, folks may not really believe that you own the Nyan Cat GIF just because you have a copy of it in your hard drive. The reason for that is that all digital artworks are easily reproduced and downloaded.

NFTs solve this problem by allowing a digital art to be linked to a particular NFT so that a verifiable (and arguably unforgeable) digital ledger is created where each transfer of ownership and/or each license is recorded for posterity. In other word, NFT serves as a digitised provenance.

Since NFTs can do all these things, are they then a substitute for copyright?

Actually, no.

What makes a piece of art valuable? There’s the quality of the work, the material used, the fact that it was made by so and so…but if you really think about it, the main factor dictating the number of zeros on a price tag is scarcity! And for digital art, scarcity is a real problem as there is practically no limit to the number of copies of the digital art which can be sold. Once your digital artwork is downloaded by someone else, how do you stop the downloader from selling more copies of your artwork? This is where copyright comes in.

Copyright are rights that belong to creators and owners (who may be one and the same) of a creative work, such as literary works, musical works, artistic works, films, sound recordings, and broadcasts. In Malaysia and many other countries, copyright is an automatic right which comes into existence upon creation of the work. And as the copyright owner, you have the exclusive right to control the reproduction and distribution of your work. You are given the rights to create as many or as few copies of your work as you would want, which basically give you the rights to create scarcity!

It may surprise you, but most NFTs are sold without the corresponding copyright to the work, even if you’ve paid $69 million! Instead, most buyers of NSTs are given a license to use or display the digital artwork while the creator retains that right to make more copies if they so wish. Some NFTs even come with the condition where the creator earns royalties for subsequent resales of the NFT. And all this licenses and agreements are made possible because of copyright.

Not everyone’s sold on the NFT hype though. Detractors point out that NFTs have no true value since you can just save a copy of an NFT artwork without buying the NFT or that the NFT bubble is one that’s about to burst.

Time will tell if NFTs are here to stay or just a fad that will die out in a couple of years' time. Given their diverse application, not just for digital artworks but for other digital objects like tweets, memes, videos and music. In spite of this, it’s undeniable that they’re a useful tool which helps artists to get their work out there, while helping them to monetise their creation and granting them a better leverage to assert their copyright. It's safe to say that NFTs are a useful and valuable complement to copyrights.

So, should you jump onto the NFT bandwagon? That’s for you to decide. But if you have copyright-related questions that need answering, why not give us a holler? After all, we’re here to help.