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Ever wonder why no one knows the contents of Coca-cola’s secret recipe and why Coca-cola has always been the top brand for so many decades? Why is Microsoft Corporation a successful software company with its well-known Microsoft operating system? Why is there a craze for iPhones from Apple before it’s even launched in the Asian region? These are the questions that SMEs should ponder on and strive to emulate. Technology leaders, for example, Microsoft, Sony, Apple, IBM and etc, have always been focusing in improving their products and developing new products to stay competitive in the market. More importantly, these companies understand and benefit from different aspects of the intellectual property (IP) system to protect their products and appropriating their knowledge in IP according to their needs in a competitive environment.
Understanding the functions of IP and applying a thorough IP strategy can have far reaching beneficial effects to SMEs in Malaysia. It is therefore important for SMEs to appreciate how different types of IP protection can assist them in getting considerable returns and to protect their business assets.
WHAT IS INTELLECTUAL PROPERTY (IP)?
IP can be products or services, creative works or technical solutions, tangible or intangible, encompassing a broad scope of legal, business and technical matters. These creations of the human mind takes a variety of forms, for example brands, software, art or music; and it exists across all industries, from pharmaceuticals to entertainment. IP is referred as the concept of enforceable rights in a court of law, covering patents, trademarks and copyright.
A new product can be protected using different mechanisms provided in the IP system. For example, the new product or new process used to produce the new product can be protected under a patent. As you wish to introduce the new product to the market, wouldn’t it be great if your product is accompanied with a brand name which is unique such that customers can recognize that said product originates from your company immediately? The brand name associated with the product can be protected under a trademark. Your product may be placed in a new package before it is distributed to your customer. Your new packaging, on the other hand, can be protected under the law of passing off. Now, you wish to protect the appearance of your new product. This is the case where protection under industrial design will be useful. The drawing in which your design lies can also be protected as an artistic work under a copyright. Additionally, you can also seek protection of information on the ingredients for your new product and the marketing strategy that you devise to promote sales of your product, via the law of confidential information. Hence, IP confers a bundle of rights to the owner. It is therefore important for SMEs to realize that their intellectual effort can be protected in various ways under the IP system.
IP is an intangible property. Just like tangible property, IP can be sold, bought, leased or rented, passed under a will or assigned to other people or legal entities. Basically, IP rights are territorial in nature. Therefore, the grant and enforcement of IP rights are governed by national laws, and also by international treaties, whereby these treaties have been given effect by the national laws.
TYPES OF INTELLECTUAL PROPERTY SYSTEMS IN MALAYSIA
Basically, intellectual property can be categorised into:
(i) industrial property that comprises patents, trademarks, and industrial designs
(ii) copyright that comprises literary, musical, artistic, photographic, audio-visual and derivative works, giving some exclusive rights to control some reproduction of authorship.
TYPES OF INTELLECTUAL PROPERTY
The four main types of intellectual property recognized in Malaysia are: Patents, Trademarks, Industrial Designs and Copyright.
1) Patents
A patent is a monopoly right (the right to make, use, sell and/or import) granted by the government to the owner of an invention for a stipulated period. This will enable the owner to prevent others from exploiting the invention during the patent term without his consent, in the country in which he has obtained patent protection. The key objectives of the Patent Registration Office are to encourage investment, invention and innovation; and to promote disclosure of technological developments.
Malaysia, like most of the countries in the world, adopts the first-to-file patent system. This means that the right to the grant of a patent for an invention lies with the first person to file a patent application for protection of his invention, regardless of the actual date of invention. It is therefore advisable to file patent application as soon as possible. Additionally, as Malaysia is a party to the Paris Convention, a patent applicant from Malaysia is able to use its first filing date as the effective filing date or priority date in another country party to the Paris Convention, provided that he files another application within 12 months from the first filing.
The patent system in Malaysia is regulated by the following acts:
- The Patents Act 1983
- The Patents (Amendment) Act 1986
- The Patents Regulations 1986
- The Patents (Amendment) Act 1993
- The Patents (Amendment) Act 1995
- The Patents Act (Revision) 2000
- The Patents (Amendment) Act 2003
For an invention to be patented, it must be:
- New – not published or in public use in any form, anywhere in the world
- Non-obvious (inventive step) – would not have occurred to specialist in a particular field to find a solution to that problem
- Applicable in industry – it can be industrially manufactured or used
Non-patentable Inventions include:
- Discoveries, scientific theories and mathematical methods
- Schemes, rules or methods for doing business
- Diagnostic and treatment methods of human or animal body by surgery or therapy
- Plant or animal varieties and their biological production processes, other than man-made living micro-organisms, micro-biological processes and the products of such micro-organism processes
The term of a patent is 20 years from the date of filing application, while utility innovation (an exclusive right on a “minor” invention which does not need to satisfy the test of inventiveness) is 10 years from date of filing (renewable 5+5 years upon proof of use). The patent or certificate must be renewed annually for it to be valid. Upon the patent or certificate’s expiration, anyone is free to use the invention.
Patents are granted for major developments in advanced technology such as in antibiotics and computer hardware, as well as common household articles such as a corkscrew, a mousetrap or a ballpoint pen.
Utility Innovations
While it seems that stringent requirements are needed to be fulfilled before a patent is granted, SMIs owners and managers shall not be disheartened as there is an alternative route for protecting their invention in Malaysia, i.e. via utility innovation. In order for a grant of a certificate of utility innovation, no requirement for inventive step is needed. Hence, utility innovations are preferred especially for products with “minor” improvements and short shelf-life. It offers a cheaper, easier and faster protection for such inventions.
Introduction of Patent Corporation Treaty
The Patent Corporation Treaty (PCT) is an international patent law treaty. Malaysia became the 131st member state of the PCT. PCT was entered into force in Malaysia on 16 August 2006. The PCT makes it possible to seek patent protection for an invention simultaneously in large number of countries by filing an international patent application. It does not, however, result in an international patent or a worldwide patent. In order to file an international patent application at the Malaysian Patent Registration Office as the Receiving Office, the applicant or one of the applicants must be a national or a resident of Malaysia. The international application can be filed either in Bahasa Malaysia or English by using the prescribed forms and by paying the prescribed fees.
2) Trademarks
Trademarks remain the field of IP that is most familiar and of greatest interest to Malaysian businesses. A trademark is a unique sign used by a business to identify itself and its products from its competitors to consumers. This sign can be any letter, word, slogan, name, signature, numeral, device, brand, heading, label, ticket, shape, colour, and aspect of packaging or a combination of these. For businesses in the service sector, the mark is sometimes called service mark.
® and ™ are common symbols associated with trademarks.® indicates that the mark is a registered trademark, hence protected under the trademark law. ™ is just a symbol used to indicate that a company / individual / partnership claims it as a trademark. It does not denote that the mark is registered nor protected under the trademark law. A trademark is usually seen on the product or its packaging.
In Malaysia, trademarks are governed by the Trade Mark Act 1976 and the Trade Mark Regulation 1997 (Amendment 200). However, it is not compulsory to register a trademark in order to obtain protection from rogue traders. Unregistered trademarks may still acquire protection under the Common Law action of “passing off”, which is protection by virtue of use and reputation. This remedy requires the owner of the mark to prove his reputation and goodwill, whereby he must convince the court, firstly, the infringing act misleads the public, and secondly, the infringing goods and services may be mistaken from this own goods and services. This is extremely difficult if said business or trademark is new or emerging.
On the contrary, a registered trademark grants the owner a statutory monopoly. Once registered, no person or enterprise other than its proprietor or authorised users may use them. Infringement action can be initiated against abusers.
Types of Trademarks That Can Be Registered- An invented word(s)
- Any distinctive sign such as logos, pictures, symbol etc
- Names of person / firm / company mentioned in a specific manner
- Applicant’s signature
- Words with no direct relation to goods or services, geographical origins
A trademark will not be registered if the representations contain the following elements:
- His Majesty the Yang Di Pertuan Agong
- Their Royal Highnesses the Sultans
- Their Excellencies the Yang Di Pertua Negeri
- National Flower and Mosque
- Royal or Imperial Arms, Crests or Insignia
- Red Crescent, Geneva Cross or other representations of the Red Crescent, Geneva Cross and other crosses in red
- Swiss Federal Cross in white or silver on a red ground or such representations in similar colour or colours
A trademark also cannot contain the following words in any language:
- Red Crescent
- Geneva Cross
- Royal
- Imperial
- Any wording that attempts to deceive the public or will cause confusion with a previously registered mark
- Any wording that is scandalous or offensive
- Any wording which will create the impression that the applicant, has or recently had Royal authorisation or patronage, regardless of whether it is true
3) Industrial Design
Industrial Design refers to the features of shapes, configuration, pattern or ornamental aspect of an article that may be reproduced by industrial means. If this aspect is missing, the creation may come under the category of the artistic work whose protection is assured by copyright laws. The differentiating aspects from other articles must be apparent, and never been disclosed anywhere prior (An article refers to any object to which the design is applied).
The features in the article that are judged by the eye do not include:
- a method or principle of construction
- features of configuration that are dictated solely by the function of the article
- features of shape that is dependent upon the appearance of another article which it forms an integral part
Currently, industrial designs in Malaysia are protected by the following legislations:
- Industrial Design Act 1996
- Industrial Design Regulations 1999
A registered industrial design is given an initial protection period of 5 years from the date of filing and is renewable for a further two consecutive terms of 5 years each. An industrial design registered in Malaysia is only protected in Malaysia. In order to have the designs protected in other countries, applications for registration will have to be filed within six months from the date of its first filing in any of the Paris Convention member countries. In the event of others using the design without the owner’s consent, he has the right to take legal action against an infringer within 5 years from the act of infringement.
It should be noted that under the Registered Design Act 1949 (United Kingdom), the registered proprietor of any design registered in the United Kingdom has the same rights and privileges as though the registration in the United Kingdom has been issued with an extension to Malaysia. However, Malaysians who require design protection in Malaysia must obtain a British registration.
4) Copyright
Copyright is the sole right given to the owner of a copyright for a specific time frame, enabling him to control the commercialisation of his work and to restrict unauthorised reproduction or exploitation of an original work such as:
- literary works
- musical works
- artistic works
- films
- sound recording
- broadcasts
- derivative works; and
- published editions
Rights of Copyright Holder
The copyright holder has exclusive rights to:
- reproduce the work in any material form (including photocopying, recording, etc).
- perform or show the work to the public
- play a recording or show a film containing the work in a non-domestic situation
- broadcast the work
- communicate the work by cable
- distribute copies of the work to the public by sale or rental
Copyright of an original work vests initially with the author (writer, composer, maker of the work, etc). However if the work is by an employee in the course of employment, unless there is a contrary agreement, the copyright lies with the employer. If there is no contrary agreement and it is an independent contractor, he/she will own the copyright even though he/she was commissioned to create the work. Copyright differs from patents and intellectual property, as it is merely a right to prevent others from reproducing and not a monopoly right to do something.
Copyright protection in Malaysia is governed by the Copyright Act 1987. The Act outlines the nature of works eligible for copyright (which includes computer software), the scope of protection, and the manner in which the protection is accorded. There is no registration of copyright. All original works which are expressed in tangible forms like writing and recording are automatically protected for a duration of 50 years, irrespective of their quality and purpose of creation. Protection does not extend to ideas, procedures, methods of operation or mathematical concepts. In cases where infringement has occurred, the respective authorities will carry out necessary investigations and prosecutions.
The use of the symbol © is a notice of an assertion of copyright. When a piece of work or material has the appropriate copyright, it will feature the following - ©, the year copies of the work were first made available and the name of the copyright owner. For example, © 2006 AAA Sdn. Bhd.
CREATIVE COMMONS
The Creative Commons initiative was started by US cyber law and experts in IP laws in 2001. Since then, more than 30 countries have adopted Creative Commons, including Britain, Canada, Australia, Japan, China, France, Germany, Spain, and Taiwan. Malaysia is the first in the South-East Asian region to do so.
Creative Commons licensing is suitable for digital works, which can easily be duplicated and modified given today’s remix culture – where someone might rip a CD track and modify it digitally on a computer. Audio and audio-visual recordings, music, digital images, video, text and interactive content can be licensed under Creative Commons. It enables IP owners to grant “some rights reserved” or even “no rights reserved” to the public. IP owners are free to stipulate exactly how someone else can use or modify their works, distribute or profit from the works or their adaptations, or even if someone is allowed to profit from their intellectual property at all. This helps promote easier sharing and building upon the creative work of another. There are no charges to licence one’s work under Creative Commons.
CONFIDENTIAL INFORMATION
A trade secret is a formula, practice, instrument or a compilation of information used in business to obtain an advantage over competitors. In some jurisdictions, for e.g. Malaysia, it is protected under the law of confidential information. Understanding the importance of trade secrets and taking measures to protect the company’s information, can serve as an alternative protection and more importantly, it can be managed internally without incurring substantial costs.
Types of Confidential Information
Information is classified as confidential information if it is not known to the public, has limited access and is a valuable asset to the company. The following is a list of information which can be considered as confidential information:
- business information (e.g. marketing strategies, sales information, customer list);
- photograph of equipment used in industry;
- technology, technical secrets, know-how, formula, recipe; or
- government secrets.
Measures to Secure Confidential Information
There are various ways to maintain information in secrecy. The following are ways that serve as a reference and is non-exhaustive:
- keeping information in a secured place with limited access or no access at all;
- having non-disclosure agreements signed between employees, business partners and third parties who have access to the information;
- understanding the fiduciary relationship; and
- introducing a non-competing clause in the employment contract – disallowing employees from working or dealing with a rival company for a limited period of time even after the employees have left the company
MANAGING IP
There are several ways for SMEs to manage their IP. They can apportion a limited budget and yet maximize the protection of IP available to them. For example, if a company cannot conduct commercialization independently due to budget constraints, it can still propose to have R&D collaboration with another company or even tertiary institutions. The cost of seeking IP protection can then be shared between two entities with common interests and better products can emerge from the combined expertise from two different companies. Additionally, where a company lacks production and sales facilities and find it difficult to commercialize independently, it can licence or transfer its IP rights to other companies. Licensing and franchising is only possible if the SME has taken steps to seek IP protection at the initial stage. Instead of incurring more costs to the company, IP can in fact generate substantial revenue for the company. It is advisable that an IP audit be conducted each year to evaluate the IP portfolio of a particular SME. Although it can be time consuming, an IP audit report is definitely a useful tool in accessing the company’s budget for succeeding years.
Intellectual Property Corporation of Malaysia
In Malaysia, the Intellectual Property Corporation of Malaysia (MyIPO), under the jurisdiction of the Ministry of Domestic Trade and Consumer Affairs, is responsible for the development and management of the IP system. Its general objective is to provide IP protection that is consistent with international practices.
If you require more information on the registration of IP, please contact:
Intellectual Property Corporation of Malaysia (Perbadanan Harta Intelek Malaysia)Tingkat 32, Menara Dayabumi
Jalan Sultan Hishamuddin,
50623 Kuala Lumpur, Malaysia
Tel: 603-2263 2100 Fax: 603-2274 1332
Website: www.myipo.gov.my
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