1 February 2012Jurisdiction reportsDave Wyatt and Azlina Aisyah Khalid

Malaysian progress on provision for the Madrid Protocol

Administered by the International Bureau of the World Intellectual Property Organization (WIPO) in Geneva, Switzerland, the system offers a simple, cost-effective alternative to direct national filings when obtaining trademark registrations in other countries.

In recent decades, technology has advanced rapidly and intellectual property (IP) owners are being constantly challenged when preserving the exclusive rights of their intellectual creations. Insofar as trademark rights are concerned, brand and trademark owners have always been obstructed by the numerous and differing trademark practices that vary from country to country.

Trademark rights have always been territorial in nature but with fast-paced globalisation, trademark registration processes had to be simplified and geography removed as an issue.

Enter the Madrid Protocol. It was introduced almost 100 years aft er the Madrid Agreement and with it came new features that removed the difficulties that were inherent in the Madrid Agreement. Th e Protocol has been in force since April 1, 1996.

In Malaysia, during a national seminar on the Madrid Protocol, jointly organised by the Ministry of Domestic Trade, Co-Operatives and Consumerism, the Malaysian Intellectual Property Office (MyIPO) and WIPO in October 2011, there were strong indications that the Malaysian government will accede by 2013, ahead of its 2015 obligation under the ASEAN Economic Community.

Nevertheless, there is much work to be done before accession can happen. Changes to the Trade Marks Act 1976 must be made, and these must be passed by parliament, with accompanying regulations. To this end, the Malaysian government has already drafted amendments to the Trade Marks Act, which include provisions for acceding to the Madrid Protocol.

MyIPO must also make significant improvements to its infrastructure, particularly its information and communication technology capabilities, so that it can cope with the expected international filings. Staff should receive adequate training and application backlogs should be cleared. Continuous public consultation, with industry practitioners as well as the public, would also be a good idea because the latter requires education and the former has concerns that need to be allayed.

"It must be RemembeReD, hOWeveR, that the cOmPaRatIve ease Of fIlIng unDeR the maDRID PROtOcOl DOes nOt mean aPPlIcatIOns WIll autOmatIcally tRanslate IntO RegIstRatIOns."

For the first nine months of 2011, filing statistics show that MyIPO received more than 20,000 trademark applications. For the past few years, the total number of applications filed by Malaysian individuals and companies seems to equal the total number of applications filed by foreigners. This is a healthy indicator that more local businesses and small and medium-sized enterprises are becoming aware of the importance of securing IP protection for their business assets.

It cannot be denied that once Malaysia accedes to the Madrid Protocol, Malaysian businesses will have the opportunity to expand protection of their trademarks across 80 member countries. This will facilitate growth and trade for Malaysian businesses. There is also the potential for them to develop their export markets.

It must be remembered, however, that the comparative ease of filing under the Madrid Protocol does not mean applications will automatically translate into registrations. After designating countries of choice, a Malaysian applicant must choose whether to continue with the application in each designated country; if they do so, the application reverts to a home application, which is subject to each country’s rules and practices.

This means that before a Malaysian business can use the Madrid Protocol registration system, it must obtain comprehensive advice on its global IP protection policies to ensure successful registrations while enjoying the reduced costs afforded by the Madrid Protocol.

Patenting activity: PCT effects

Aside from looking forward to the implementation of the Madrid Protocol, it is informative to reflect on recent patenting activity in Malaysia. Five years have passed since Malaysia joined the international patent system by way of accession to the Patent Cooperation Treaty (PCT) in 2006.

Unsurprisingly for a developing country, the majority of new patent applications in Malaysia are now filed through the PCT route. An analysis of the cases handled by our office shows that more than 80 percent of new applications originated from PCT filings. Overall filing statistics for the 2008—2010 period show a healthy growth in the total number of patent applications being filed. The final figure for 2011 is expected to be similar to that for 2010, which was a total of 6464 applications.

The PCT national phase is a preferred route for foreign applicants. They normally benefit from a streamlined examination process when the International Search Report and Written Opinion are favourable. An application that meets these requirements may even proceed to grant within approximately one year of requesting examination.

For Malaysian IP owners looking at global markets, the PCT has been welcome. Exports are particularly important for Malaysia. Th e country was ranked 16th out of 139 for the value of its exports in the World Economic Forum’s Global Competitiveness Report 2010—2011. The number of PCT applications filed by local applicants, with MyIPO as the receiving office, has increased year-on-year since Malaysia joined the PCT system.

The first ports of call for many Malaysian companies filing patents overseas are neighbouring ASEAN countries, but other countries such as Argentina, Brazil, China, India, Japan, Russia and Mexico are now appearing more regularly on their IP shopping lists.

There is a notable shift in the proportion of domestic applications that are filed by Malaysian IP owners when compared to foreign applicants, which represents growth in their patenting activity. The number of patent applications filed by local applicants has increased year-on-year since 1997. In 2011, it accounted for approximately 18 percent of all applications.

This compares with an historical average (1986—2011) of 9 percent. Local IP owners also own approximately 14 percent of Malaysian patents granted in 2011. Historically, this figure was 4 percent.

"One needs an expert whose knowledge of the field of the invention can be equated as far as possible with that of the fictional ‘skilled person’."

There is a long way to go before Malaysia achieves parity of local and foreign applicants for patents, as has already been achieved for trademarks. Nevertheless, the statistics do highlight significant progress as Malaysian industry moves up the value chain. Indeed, the most prolific PCT applicant from Malaysia is MIMOS Berhad, a research and development institution that is active in areas such as wireless communications, advanced informatics and nanotechnology.

Patents in action

Patenting activity in Malaysia no longer stops at MyIPO. Patents are enforced by civil actions in the High Court. In 2007, Malaysia began to introduce IP Courts and it plans to have an IP High Court in each of the six states that have the most IP disputes. The introduction of specialised IP Courts in Malaysia, with dedicated judges, is certainly one of the most noteworthy and positive milestones on the IP scene in recent years. IP cases are now given a much higher priority and can reach trial within 18 months or so.

Several patent disputes have already been heard and decided by the Kuala Lumpur IP High Court. Among the decisions issued in 2011, the following three cases are noted:

In Ranbaxy (Malaysia) Sdn Bhd v E.I. du Pont de Nemours and Company, the plaintiff (Ranbaxy) sought to invalidate two claims of the defendant’s (Du Pont) Malaysian patent that covered potassium losartan in crystalline form, which can be used for treating hypertension and congestive heart failure. Ranbaxy also sought a declaration that it did not infringe those claims.

The plaintiff had obtained regulatory approval in Malaysia to market a pharmaceutical containing potassium losartan. The defendant counterclaimed for infringement of one of the claims in dispute. Various attacks on validity were dismissed. The plaintiff was found to have infringed the patent and an injunction was ordered.

Positive Well Marketing Sdn Bhd v OKA Concrete Industries Sdn Bhd was an infringement action relating to the plaintiff’s (Positive Well) patent for a slope protection system. The defendant’s (OKA Concrete) counterclaim for invalidation failed and infringement was found.

In relation to the invention’s novelty, it was confirmed that a lack of novelty objection cannot be constructed by combining separate items of prior art. As for inventive step, greater weight was given to the evidence of one of the plaintiff’s technical witnesses who was a geotechnical expert, as compared with the defendant’s witness who admitted in cross-examination to having limited knowledge of the field of the invention.

B. Braun Melsungen AG & Anor v Terumo Kabushiki Kaisha concerned the plaintiff’s (B. Braun’s) patent for a safety intravenous catheter. The patent survived a counterclaim for invalidity. However, the patent claims were held not to have been infringed as three essential features of the claims were determined by the judge to be missing in the defendant’s (Terumo’s) product.

From the stream of decisions that have been issued by the Kuala Lumpur IP High Court since its inception, a clear message emerges: the choice of expert witnesses has a significant bearing on the outcome of each case. One needs an expert whose knowledge of the field of the invention can be equated as far as possible with that of the fictional ‘skilled person’.

At the same time, the expert must not be overly-qualified in terms of demonstrating inventive faculties. Presenting an expert who has these qualities and appears honest, impartial and objective to the judge will not in itself win a case. It will, however, assist the court to assume the mantle of the person skilled in the relevant art, and thereby to reach a fair decision based on the facts.

Legislative updates

In February 2011 significant procedural changes in patent and trademark procurement with amendments to the regulations were introduced. In particular, there is now a formal process for expediting the examination of both patents and trademarks, eg, in cases of potential or ongoing infringements. In November 2011, an amended Trade Descriptions Act 2011 entered into force.

This new act reduced the duration and scope of Trade Description Orders (TDOs), which are court orders that are powerful weapons for enforcement actions against counterfeiters. The validity term of a TDO has been reduced from five years to one year, and a TDO can no longer be used for enforcing unregistered (common law) trademarks.

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