In today’s blog post we are discussing IP protection in Malaysia’s ICT industry, which has recently been offering many promising business opportunities for the European SMEs. You’ll learn more about patent and design protection and how to ensure that your brand is safe from counterfeiting.
Malaysia has a booming ICT industry with the ICT sector being forecasted to contribute about 20% to the country’s GDP by 2020. The ICT sector is being further supported by Malaysian government that has taken special interest in developing the Internet of Things (IoT) and cloud computing. The government namely hopes that adoption of cloud computing and building on the National Broadband Initiative, would accelerate Malaysia’s development into an advanced economy.
As the government is investing heavily into ICT- related projects like developing smart city infrastructure or strengthening cybersecurity, the ICT sector will offer many promising business opportunities for the European SMEs whose top-notch technology and know-how are highly sought after through encouragement of foreign investments in the ICT sector.
European ICT companies should, however, pay attention to protecting their IP rights when planning their business strategy for Malaysia’s market, because IP infringements are still relatively common in the country. Well-managed IP is often a key factor for business success and neglecting to register IP rights in Malaysia could easily end SMEs’ business endeavor in the country. Thus, a robust IPR strategy is needed, when entering Malaysia’s market.
Apply for patents to protect your inventions
ICT companies, wishing to market new inventions in Malaysia, should consider applying for patent registrations. With such registration patent owners acquire, for a fixed period, the exclusive right to prevent others from using, commercializing or importing the patented inventions. It should also be kept in mid that patent rights are territorial, meaning that patents granted in Europe are not protected or recognized in Malaysia.
For an invention to be patentable in Malaysia, the invention must meet all three requirements: (1) novelty; (2) having an inventive step; and (3) industrial applicability. In Malaysia, there is also a utility invention option. Utility innovations require less substantial examination because the degree of innovation required is less. In other words, utility innovations can be registered as type of simpler patent or for any incremental improvement of a known product or process says Valentina Salmoiraghi, IB Business Advisor.
Utility Inventions are generally easier to obtain, and they can be granted faster than standard invention patents, this could suit well for SMEs engaged in the fast-developing ICT sector. Standard patent protection lasts for 20 years from the date of filing, while the duration of a utility innovation certificate is initially 10 years from the date of filing, but this term is extendable for another 2 consecutive 5-year terms by filing a formal request for extension, thus making a total of cumulative 20 years of enforcement. EU SMEs should thus consider utility inventions as a viable means of protection for their inventions.
For EU SMEs interested in protecting their inventions in multiple countries, it is important noting that Malaysia is a member of the Paris Convention and the Patent Cooperation Treaty (PCT), which means that applicants for standard invention patents and utility inventions are entitled to a ‘right of priority’ (i.e. the same filing date the original application made in the home country can be used in Malaysia), if the same filing is made in Malaysia within 12 months from the first filing in any other country that is also party to the Paris Convention. In using the PCT Route, the same filing must be made in Malaysia within 30 months from the first filed application.
Industrial designs protect the appearance of your product
Industrial designs are used to protect the aesthetic aspects of products, but not their functionalities. Registered designs are increasingly used in the ICT industry to protect the appearance of products, like smart phones, tablets, and media players. Industrial design registrations in Malaysia are given an initial protection period of 5 years from the date of filing and are extendable for a further 4 consecutive terms of 5 years each. The maximum protection period is 25 years.
Registered Industrial Designs also need to meet the novelty requirement, which means that they cannot be disclosed to the public in Malaysia or elsewhere before filing for registration. Both individuals or corporate entities can register industrial designs and it is not a requirement that a designer must be a Malaysian citizen or a Malaysian corporation, however, when the applicant’s ordinary residence or principal place of business is outside the country, it shall appoint a local qualified agent within the Register of Industrial Designs Agents of Malaysia.
European SMEs should be aware that layout designs of integrated circuits are also protected in Malaysia. Layout design of integrated circuits are protected under the Layout-Design of Integrated Circuits Act (2000) if the design meets the following criteria:
- It is original, i.e. the result of its creator’s own intellectual effort and not commonplace among creators and manufacturers of integrated circuit;
- It has been fixed in a material form or incorporated into an integrated circuit at the time of its creation;
- The right holder of the layout-design is a qualified person.
Copyright protects the expression of SMEs’ ideas
Since the ICT sector features cumulative innovations with short product cycles, SMEs may wish to also take advantage of other IP rights, such as copyrights. One of the main values of copyright protection is that protection arises automatically as soon as the work is created. It must, however, be brought in mind that copyright protection extends only to expressions and representation of ideas, and not to ideas per se.
In Malaysia, copyright protected items can include works of literature, music, drama, visual and graphic arts, including (but not limited to) books, movies, songs, computer software, websites and photographic works. Copyright protection in Malaysia is automatic and it is valid for the life of the author plus an additional period of 50 years after author’s death.
Although, copyright protection arises automatically, formal recordation of copyright at the Intellectual Property Corporation of Malaysia is recommended for EU SMEs, as it is useful as evidence of ownership in enforcement proceedings. In some cases, Malaysian authorities may not start legal proceedings without the copyright recordation certificate in cases where ownership is at dispute.
The typical official fees for a voluntary copyright notification in Malaysia start from RM 155 (approximately EUR 35), excluding fees of legal service providers. It is also important to note that notification of copyright can only be made by a citizen or a permanent resident of Malaysia, regardless of whether the notification is done by the author/owner or a representative. European SMEs can thus voluntarily register their copyright in Malaysia with the help of a Malaysian representative.
Keep your trade secrets
The importance of trade secret protection cannot be overemphasized in high-tech companies. By protecting trade secrets, most businesses can take advantage of the lead time, meaning the ability to commercialize the innovation well ahead of competitors, so that substantial revenue can be captured before copycats are introduced in the market. This is especially helpful for companies with products that are expected to have a short run in the market like ICT products.
Trade secrets are recognised in Malaysia and qualify for IP protection there if they meet these three criteria:
- the information must be confidential and not generally known to the public;
- the recipient of the information must be made aware of their obligation to keep the information confidential (e.g. if a confidentiality agreement was signed);
- the information was used in an unauthorised way to the detriment of trade secret owner or his/her business.
It is advisable for European SMEs to incorporate confidentiality terms in employment contracts to protect confidential information or trade secrets. The term ‘confidential information’ in contracts should also be defined in sufficiently broad terms, even including information created by the employees during their employment. Furthermore, for dealings with external parties, it is always advisable to require them to sign a non-disclosure agreement (‘NDA’) before any confidential information has been shared.
Don’t forget to protect your brand
Considering that ICT products tend to have shorter product life cycles, and at the same time, improvements are added at a consistent pace, SMEs will benefit from consistent branding. Branding supports product reputation and creates awareness among consumers. Since there is a strong interaction and interoperability among ICT products in the market, having a consistent source identifier would be useful to drive business value. Along with the branding strategy, it is essential to undertake the protection of such brands through trade mark registration.
SMEs are strongly advised to register their trade mark in Malaysia to protect their brand because IP rights are territorial and European or Community trade marks are not automatically protected in Malaysia. Since Malaysia is party to the Paris Convention, EU SMEs can make a ‘priority claim’ for registration for trade marks as well, provided that the applicant will within 6 months apply to claim priority.
Malaysia adopts the ‘first-to-file’ system, meaning that the first person to register a trade mark owns that mark. It is particularly important for SMEs to register their trade marks in Malaysia in advance and as soon as possible, because bad faith registrations are still a serious concern in the country. ‘Bad faith registration’ means that a third party would register in Malaysia an identical or very similar mark usually belonging to others in different countries, thereby preventing the legitimate owner from registering it in the country and obtaining protection. These unscrupulous companies or individuals normally try to then resell the trade mark to its owner at an inflated price.
Trade marks are registered at the Trade Mark Division of the Intellectual Property Corporation of Malaysia (MYIPO), filings fees are approximately EUR 233 (administrative fees excluding agent fees), a small amount to pay compared to the costs incurred in case of an infringement or ‘bad faith’ registration, concludes Valentina Salmoiraghi, IP Business Advisor.
South-East Asia IPR SME Helpdesk
The South-East Asia IPR SME Helpdesk supports small and medium sized enterprises (SMEs) from European Union (EU) member states to protect and enforce their Intellectual Property Rights (IPR) in or relating to South-East Asian countries, through the provision of free information and services. The Helpdesk provides jargon-free, first-line, confidential advice on intellectual property and related issues, along with training events, materials and online resources. Individual SMEs and SME intermediaries can submit their IPR queries via email (email@example.com) and gain access to a panel of experts, in order to receive free and confidential first-line advice within 3 working days.
The South-East Asia IPR SME Helpdesk is co-funded by the European Union.
To learn more about the South-East Asia IPR SME Helpdesk and any aspect of intellectual property rights in South-East Asia, please visit our online portal at http://www.ipr-hub.eu/.
 What’s really in store for Malaysia’s IT industry in 2017?, available at: https://computerworld.com.my/resource/industries/whats-really-in-store-for-malaysias-it-industry-in-2017/
 Malaysia – Information & Communications Technology, available at: https://www.export.gov/article?id=Malaysia-Information-Communications-Technology