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Going global

Dave A Wyatt and Azlina Aisyah Khalid
Malaysia

Dave A Wyatt and Azlina Aisyah Khalid of Henry Goh & Co look in to strong indications that Malaysia will accede early to the Madrid Protocol, and also give an overview of recent IP developments in the country

The Madrid System for the International Registration of Marks was established under the Madrid Agreement in 1891. Administered by the International Bureau of WIPO in Geneva, Switzerland, the system offers a simple, cost effective alternative to obtaining trade mark registrations in other countries via what are known as direct national filings.

In recent decades, as the world's technologies have advanced in leaps and bounds, the intellectual property system has never faced a greater challenge in preserving exclusive rights to owners for their intellectual creations. Insofar as trade mark rights are concerned, brand and trade mark owners have always been confronted and perplexed by the numerous trade mark practices that vary from country to country. Trade mark rights have always been territorial in nature but with the fast paced globalisation of the world, it was obvious that the process of trade mark registration ought to be made easier for trade mark owners wherever they may be.

Enter the Madrid Protocol. The Protocol was introduced almost 100 years after the Madrid Agreement and with it, came new features which removed the difficulties that were inherent in the Madrid Agreement. The Protocol has been in force since April 1 1996.

Coming back to Malaysia, in 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 on October 17 and 18 2011, there were strong indications that the Government would accede by 2013, ahead of its 2015 obligation under the ASEAN Economic Community.

Nevertheless, there is a lot of work required before that can be achieved. For one, changes to the Trade Marks Act 1976 must be made and these must be passed by Parliament with its accompanying regulations. To this end, the Malaysian Government already has drafted amendments to the Trade Marks Act, which include provisions for acceding to the Madrid Protocol.

Secondly, MyIPO must make significant improvements in terms of upgrading its infrastructure particularly its ICT capabilities so as to cope with the incoming international filings. Human resources ought to receive proper training and backlogs should ideally be cleared. Continuous public consultation, both with the industry's practitioners as well as the public would also be most welcomed, in part to educate the latter and for the former, to allay their concerns.

For the first nine months of 2011, the filing statistics show that MyIPO has received more than 20,000 trade mark applications. More of interest is the fact that for the past few years, there is a trend showing that the total number of applications filed by Malaysian individuals and companies seem to equal the total number of applications filed by foreigners. This is a healthy indicator that more and more local businesses and small medium enterprises are becoming aware of the importance of securing intellectual property 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 their trade mark protection across 80 member countries. This in turn will facilitate growth and trade for Malaysian businesses. In addition, there is a huge potential to develop their export markets.

Having said that, it must be remembered that the comparative ease of filing under the Madrid Protocol does not necessarily mean applications will automatically translate into registrations. After designating countries of choice, a Malaysian applicant must choose whether or not they wish to continue with the application in each designated country and once they do, the application reverts to a home application, subject to each country's rules and practice. This means that prior to utilising the Madrid Protocol registration system a Malaysian business must obtain proper and comprehensive advice with regards to their global IP protection policies in order to ensure successful registration, whilst enjoying the reduced costs afforded by the Madrid Protocol. Ideally, this should be in line with its business activities.

To summarise, change may not be a bad thing yet from the authors' point of view the road ahead leading to a successful accession and implementation of the Madrid Protocol will, in all probability, be an exciting and challenging one for those concerned.

PCT effects

Apart 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 PCT in 2006. What changes has this brought for foreign and local IP owners?

Not surprisingly 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 over 80% of new applications originate from PCT filings. Overall filing statistics for the period 2008-2010 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 6,464 applications.

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

For Malaysian IP owners looking to global markets, the PCT has been a welcome addition to their toolbox of strategies for obtaining patent protection overseas. Exports are particularly important for Malaysia. The 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 the local applicants with MyIPO as receiving office has increased year-by-year since joining the PCT system. In 2011, the total figure is expected to be around 300 applications.

The first port-of-call for many Malaysian companies filing patents overseas remains 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.

Growth in patenting activity by Malaysian IP owners is also reflected in a notable shift in the proportion of domestic applications they file as compared with foreign applicants. The number of patent applications filed by local applicants has increased year-by-year since 1997. In 2011, it accounts for about 18% of all applications. This compares with an historical average (1986-2011) of 9%. Local IP owners also account for about 14% of the Malaysian patents granted in 2011. The historical figure is 4%.

Obviously, there is a long way to go before we reach parity of local and foreign applicants for patents, as has already been achieved for trade marks. 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 nano-technology.

Patents in action

Patenting activity in Malaysia no longer stops at MyIPO. Patent enforcement is done by way of civil action in the High Court. In 2007, Malaysia started to introduce IP Courts, with a plan for an IP High Court in each of the six states having the most IP disputes. The introduction of such 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.

Quite a number of 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) v EI du Pont de Nemours, 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 v OKA Concrete Industries 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 could not be constructed by piecing together 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) patent for a safety intravenous catheter. The patent survived a counterclaim for invalidity. However, the patent claims were held not infringed as three essential features of the claims were determined by the judge to be missing in the defendant's (Terumo) 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 that has these qualities and appears honest, impartial and objective to the judge will not in itself win a case. However, it will assist the court in assuming the mantle of the person skilled in the relevant art, and thereby reaching a fair decision based on the facts.

Legislative updates

February 2011 saw the introduction of significant procedural changes in patent and trade mark procurement with amendments to the regulations. In particular, there is now a formal process for expediting the examination of both patents and trade marks, for example in the case of potential or outgoing infringement.

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), court orders that are a powerful weapon 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) trade marks.

Meanwhile, the proposed amendments to the Copyright, Designs, Patents and Trade Marks Acts that we reported on in the last issue of the Handbook are still waiting to be read in Parliament. This process is planned to start in March 2012.

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