One-click buying, fast and easy access, overnight delivery, purchasing all your needs without leaving the comfort of your home – do these all sound familiar? Post-pandemic, we have all become accustomed, and some instances, even addicted, to the seamlessness of online retail. With globalization and digital interconnectedness at its peak, the threat of counterfeit goods poses significant challenges to economies and societies alike.
 
As counterfeiters exploit advancements in technology to produce highly sophisticated replicas of everything from luxury goods to essential pharmaceuticals, the battle against illicit trade certainly cannot be fought alone. To safeguard consumers and support legitimate businesses, Malaysia has implemented a series of comprehensive anti-counterfeiting measures.
 
This article serves as an update on the current relevant laws and measures in place to combat counterfeits.
 
Enforcement Raids
 
Aggrieved trademark owners can lodge complaints to the enforcement division of the Ministry of Domestic Trade and Cost of Living (“Ministry”). The enforcement officers of the Ministry are empowered to investigate and initiate enforcement action against acts of trademark infringement under sections 110 to 112 of the Trademarks Act 2019 (“TMA 2019”). To do this, the brand owner must lodge an official complaint to the Ministry to commence an investigation. The official complaint will need to include sufficient evidence such as full details of the brand owner’s IP rights, details of the infringing act(s), surveillance report and the relevant authorisations by the brand owner to the authorised representative. As at the date of this article, the Ministry requires foreign brand owners to furnish a Power of Attorney to the authorised representatives.
 
If satisfied with the documents submitted and the information provided, the Ministry will exercise its search and seizure powers by conducting an enforcement raid. This is where they will seize the infringing goods from the premises of the infringer. The Ministry would often require the brand owner or the authorised representative to be present during the enforcement raid. This is because following the raid, the brand owner or the authorised representative would be required to furnish a statement and to submit a verification report to the Ministry containing among others, verification that the seized goods are indeed counterfeit goods.
 
As at the date of this article, there is no criminal enforcement available for patent and industrial design infringements. However, we understand that there may be amendments to include criminal enforcement under the Industrial Designs Act 1996 for industrial design infringements.
 
Registrar’s Verification
 
In circumstances where an infringing trademark is similar but not identical to the registered trademark, trademark owners are now required to apply to the Registrar of Trademarks (“TM Registrar”) for a Registrar’s verification under sections 112(3) and 112(4) of the TMA 2019 before an enforcement raid can be conducted. The TM Registrar’s verification appears to replace the Trade Description Order under the Trade Descriptions Act 2011, where the latter was to be obtained from the High Court before an enforcement raid can be conducted.
 
Basket of Brands
 
The Basket of Brands (“BOB”) initiative is a unique initiative launched in 2011 that presents an avenue for brand owners to proactively protect their trademarks and combat counterfeiting effectively. The BOB functions as a platform to allow brand owners to enlist their brands by completing and submitting a designated form to the Ministry.
 
Once a brand is included in the BOB, the Ministry will keep a vigilant eye out for any goods that bear resemblance to the registered brands within the BOB, taking a proactive approach to combat IP violations without having to lodge any official complaint. In return, the Ministry requires prompt action from the brand owner in the form of verifications of the seized goods.
 
Cease & Desist Letter
 
A cease and desist letter serves as an initial recourse for brand owners to assert their rights. It is a form of formal communication to the infringer, demanding an immediate cessation of their infringing activities. Typically, such a letter would require the infringer to sign a written undertaking, promising to immediately cease the infringing acts, deliver up any infringing materials and usually, to provide some form of compensation to the brand owner. On some occasions, brand owners would use the various demands as bargaining tools to negotiate a favourable settlement with infringers, depending on the type of infringer and extent of infringement.
 
The advantage of such letter lies in its potential for a prompt solution. Where an infringer is cooperative, the brand owner can achieve the objective of ceasing the infringing activities with minimal expenditure of time and money, making it a cost-effective approach.
 
While a cease and desist letter is a common recourse, it is not a mandatory first course of action. In fact, under specific circumstances, a letter of demand may not be advisable, particularly when the element of surprise is needed. This is so when there are reasonable grounds to suspect that the infringer may destroy evidence upon receiving such a letter or where the brand owner intends to apply for an Anton Piller order or try to conduct an enforcement raid with the Ministry.
 
In Malaysia, brand owners should be aware that the TMA 2019 contains provisions for an aggrieved party to seek remedies for groundless threats of infringement. Caution should thus be exercised when issuing letters of demands to infringers.
 
Civil Litigation
 
This is the preferred course of action when the identity of the infringer is known. Remedies available in a civil suit include among others, seeking an order for an interim or permanent injunction, an order for delivery up or destruction of the counterfeit goods, summary judgment and/or damages or account of profits. It is crucial to note that time is of the essence when seeking an interlocutory order, i.e. for an Anton Piller order, Mareva injunction or interlocutory injunction. Therefore, if interim relief is warranted, the brand owner should commence legal proceedings promptly to secure such relief.
 
In a civil action for trademark infringement, the suit needs to be filed in the High Court. The Malaysian Government launched the National Intellectual Property Policy in April 2007 and in July 2007, the specialised IP Court was established.
 
Border Measures
 
Border measures, as outlined in Part XIII of the TMA 2019 and section 31 of the Customs Act 1967, play a crucial role in restricting the importation of counterfeit trademark goods.
 
A brand owner must first file an official objection to the importation of counterfeit goods with the TM Registrar at the Intellectual Property Corporation of Malaysia (“MyIPO”). The official objection should include specific details of the shipment, such as information about the importer, the registration number of the vehicle/ship, and the anticipated arrival location of the goods. If approved, the TM Registrar will require the brand owner to provide a deposit as security and will notify the Royal Malaysian Customs Department (“Customs”) to take necessary actions to prohibit the importation of goods identified in the notice, including conducting the necessary raids, seizures, and detention of the identified goods.
 
Once seized, Customs will then notify the TM Registrar, importer, and the brand owner, providing details of the infringing goods and their locations. The notice will specify that the infringing goods will be released to the importer unless a court action for infringement is instituted within a specific period from the date of the notice.
 
While these border measures are in place, the stringent requirements can be onerous for brand owners. From our experience, Customs often conduct random checks on the goods at the border, and if they encounter suspected counterfeit goods, they may seek assistance from the Ministry – this is where the BOB list proves useful in such cases. Customs may also contact MyIPO for details of the brand owner and the local trademark agent on record.
 
Complaints to Regulatory Authorities
 
If the goods fall within specifically regulated categories, such as pharmaceuticals, cosmetics, medical devices, or food, an alternative or concurrent option would be to lodge a complaint with the respective regulatory authorities overseeing those industries.
 
For instance, the National Pharmaceutical Regulatory Agency and the Ministry of Health play pivotal roles in regulating and ensuring compliance within the pharmaceuticals and food industries. The brand owner can trigger additional administrative actions that focus on potential breaches of industry-specific regulations by bringing these infringement issues to the regulatory authorities’ attention.
 
Online Monitoring and Take Down
 
In addressing the sale of counterfeit goods on online electronic commerce platforms, brand owners may find it beneficial to implement an online monitoring and detection system. This involves taking advantage of AI technology and search tools, using targeted keywords to conduct searches on selected e-commerce platforms, identifying any listings or targets offering suspected counterfeit goods. Once identified, the brand owner can then consider lodging a takedown notice or complaint to the relevant e-commerce platform.
 
Conclusion
 
While there is no one-size-fits all anti-counterfeiting strategy, safeguarding intellectual property rights and combatting counterfeiting demand a multifaceted approach. One approach would be to have collaboration with other stakeholders – including legislative bodies, law enforcement, online intermediaries, logistics organisations, payment providers and search engines.
 
In terms of authentication technology, as increasingly sophisticated counterfeiting threats emerge, brand owners will have to consider whether advanced technology such as DNA coding or smart contracts are more appropriate forms of authentication compared to the traditional technologies such as holograms and watermarks.
 
From the Malaysian perspective, brand owners have several tools at their disposal and should take advantage of the various proactive measures like enlisting on the BOB initiative and engaging in active online monitoring to initiating enforcement actions.
 
Article written by Alyshea Low (Partner) of the Intellectual Property Practice of Skrine.