Filling the Gap in Trade Marks: The Trademarks Bill 2019
31 July 2019
Gooi Yang Shuh and Lam Rui Rong provide a précis of what’s in store for brand owners.
The Trademarks Bill 2019 (“2019 Bill”) was passed by the House of Representatives and the Senate of the Malaysian Parliament on 2 and 23 July 2019 respectively. The 2019 Bill now awaits royal assent from the Yang di-Pertuan Agong. Thereafter, it will come into operation on a date to be appointed by the Minister of Domestic Trade and Consumer Affairs by notification in the Federal Gazette.
The 2019 Bill is a total revamp and overhaul of the current Trade Marks Act 1976 (“1976 Act”) and seeks to fill the gaps in the trade marks regime in Malaysia, both figuratively and literally (note that it will soon be ‘trademarks
’ as opposed to ‘trade marks
’). Below are some of the main takeaways on the 2019 Bill.
DEFINITION OF “TRADEMARK”
To come within the definition of ‘trademark’ under the 2019 Bill, a sign must be capable of:
- “distinguishing goods or services of one undertaking from those of other undertakings”; and
- “being represented graphically”.
Most notably, trademark protection will extend to cover non-traditional trademarks, such as colours, sounds, scents, and holograms. The new definition of ‘trademark’ recognises that such signs are capable of being trademarks and accordingly, may be registered trademarks provided they are capable of graphical representation. In view of the advancements in non-traditional marketing methods, this will be a welcomed development for businesses seeking to rely on non-traditional marks as part of their corporate branding.
The 2019 Bill also provides that a registered trademark shall be a personal or moveable property and may be the subject of a security interest in the same way as other personal or moveable property. The concept of a “registrable transaction” is introduced, and the particulars of a registrable transaction may be entered in the Register of Trademarks upon approval by the Registrar of Trademarks (“Registrar”) of an application by a person claiming to be entitled to an interest in or under a registered trademark by virtue of the registrable transaction or any other person claiming to be affected by the transaction. The 2019 Bill itself does not identify what are “registrable transactions”; section 2 provides that “registrable transactions” are transactions determined by the Registrar in guidelines or practice directions issued pursuant to section 160.
Malaysia will be taking its first step in acceding to the Protocol relating to the Madrid Agreement concerning the International Registration of Marks, adopted on 27 June 1989 (“Madrid Protocol”). The Madrid Protocol is an international system that allows the simultaneous registration of trademarks in several jurisdictions with the filing of one application in a single office.
Malaysia’s accession to the Madrid Protocol will eliminate the need for an applicant filing an application with the Malaysian office to file separate applications in each member country in which it seeks to protect its trademark. The exact manner in which the Madrid Protocol will be implemented in Malaysia will be set out in subsequent subsidiary legislation.
Multi-class applications (i.e. one trademark application claiming goods and services of several classes under a single trademark application) will be implemented. This may have some impact on costs and may simplify the application, maintenance, and renewal processes, as there would only be one application or registration number and one renewal date.
Collective marks (i.e. a trademark owned by an association that is used by its members to identify and distinguish the goods and services of the members of that organisation from others) will be afforded trademark protection. An example of a collective mark is the “CA” mark used by accountants to identify their membership in the Institute of Chartered Accountants.
The 2019 Bill provides that subsequently acquired distinctiveness may be a defence against revocation for non-use actions. This means that a trademark which, at the time of registration, was devoid of distinctive character or consists exclusively of signs or indications which are descriptive of the goods or services or which are generic, will not be expunged if it is shown to have acquired distinctiveness after registration.
Under the 1976 Act, acts amounting to infringement are strictly limited to use of an infringing mark in relation to the goods or services in respect of which the plaintiff’s trademark is registered. Under the 2019 Bill, however, the unauthorised use of a sign even in relation to similar goods or services would amount to trademark infringement.
Further, the approach to determining the likelihood of confusion established in past Malaysian case law, that the Registrar or the courts may take into account all factors relevant in the circumstances, is expressly codified in the 2019 Bill.
The 2019 Bill also provides a number of new defences to trademark infringement, including a provision that the use of a trademark to indicate the intended purpose of the goods bearing the sign, including accessories or spare parts or service, will not constitute infringement of a registered trademark, provided that such use is in accordance with honest practices in industrial or commercial matters.
Remedies for infringement
The 2019 Bill explicitly provides that in addition to damages, a plaintiff may be awarded an account of profits attributable to the infringement that has not been taken into account in computing damages. Under the 1976 Act, damages and account of profits are mutually exclusive in all circumstances.
Further, additional damages (akin to exemplary and aggravated damages) will only be an available remedy where the infringement involves use of a counterfeit trademark as opposed to being awarded in relation to use of any infringing trademark.
Groundless Threats of Infringement
An aggrieved person who receives groundless threats of trademark infringement may institute proceedings to seek reliefs such as a declaration that the threats are unjustifiable, an injunction against continuance of the threats, and damages for any loss sustained by the threats. This is an entirely new concept in Malaysian trademark jurisprudence that may have an impact on the method of enforcement of the trademark rights by registered proprietors.
The scope of protection under the 2019 Bill for well-known marks which are not registered in Malaysia will be expanded to cover the use of an infringing mark in relation to similar goods or services, and use which would indicate a connection with, and is likely to damage the interests of, the proprietor of the well-known mark.
The ‘registered user’ concept under the 1976 Act will be removed and is now subsumed under the licensing provisions set out in Part X of the 2019 Bill. This amendment reflects the commercial reality and recognition that trademark licensing arrangements are increasingly common and complex. The 2019 Bill provides a welcomed framework for the rights and remedies of licensees.
The 2019 Bill differentiates between an “exclusive licensee” and a “licensee”. An exclusive licensee refers to a licensee who is authorised to use the registered trademark to the exclusion of all other persons including the person granting the licence. The definition of a “licensee” has been expanded to include sub-licensees. The rights and remedies of a licensee under the 2019 Bill will differ depending on whether the licensee is an exclusive or a non-exclusive licensee.
Licence agreements may provide exclusive licensees extensive rights and remedies as if the licence has been an assignment, e.g. the exclusive licensee shall be entitled to bring infringement proceedings in his own name against any person other than the registered proprietor.
NEW CRIMINAL OFFENCES
The criminalisation of the use of a false trade description in relation to trade mark is presently provided for in the Trade Descriptions Act 2011 (“TDA”). However, once the 2019 Bill comes into force, various new criminal offences will be introduced under the 2019 Bill and the Sessions Court will have jurisdiction to try such offences.
The Trade Descriptions (Amendment) Bill 2019, which has also been passed by both Houses of the Malaysian Parliament, will amend the TDA to remove all references to ‘trade mark’. All trademark-related offences, such as counterfeiting a trademark, falsely applying a registered trademark to goods or services, importing or selling goods with falsely applied trademarks, falsely representing trademark as protected international registration designating Malaysia, and false entries to the Trademarks Office or in the Register of Trademarks, will be consolidated under the 2019 Bill.
TRANSITIONING FROM THE 1976 ACT TO THE 2019 BILL
The 2019 Bill has a whole host of transitional provisions, providing for the potential effects on pending matters such as applications, registered trade marks, rectification applications, rights and remedies of licensees, infringement actions, and revocation actions. To highlight a few:
- Trade marks registered under the 1976 Act before the commencement of the 2019 Bill (“existing registered marks”) shall continue to be registered trademarks under the 2019 Bill;
- Pending applications for registration of a trade mark under the 1976 Act shall be reviewed according to the provisions of the 1976 Act, and if registered, shall be treated as an existing registered mark;
- Applicants with pending applications which have not been examined under the 1976 Act, may apply to have those applications determined according to the provisions of the 2019 Bill;
- The provisions of the 1976 Act continue to apply to any infringing act committed before the commencement of the 2019 Bill; and
- Pending applications under section 46 of the 1976 Act for non-use of trade mark will continue to be dealt with according to the provisions of the 1976 Act.
The 2019 Bill paves the way for a new era of trademark protection in Malaysia to streamline Malaysia’s trademark regime with current commercial realities and the international trademark protection landscape. That said, as with all development efforts, there will always be concerns that in attempting to plug the current gaps under the 1976 Act, new lacunae may inadvertently arise. To date, no proposed subsidiary legislation or guidelines have been sighted to provide clarification as to how the 2019 Bill will be implemented.
In subsequent issues of Legal Insights, we will be taking a deeper dive into some of the topics highlighted above, including interpretation, potential implications, and some possible lacunae.