Malaysia: Trademarks roundup 2022

Azlina Khalid of Henry Goh summarises the trademark developments since the Malaysian Trademarks Act 2019 came into force.

The second anniversary of the Malaysian Trademarks Act 2019, on December 27 2021, came and went without much fanfare. By the time the new year of 2022 had announced itself, the general perception was that the relevant stakeholders and the national regulatory agency, MyIPO, had grown accustomed to the new legislation that repealed the archaic 1976 act.

After many months of battling the COVID pandemic, the fourth year of the 2019 act’s enforcement impacted the Malaysian trademark landscape in more ways than one. This article will discuss those developments.

Growth in trade marks

The final number of trademark filings for 2021 in Malaysia was 50,500, of which almost 60% were accounted for by foreign applicants. This was a change to the balance that existed before the pandemic, when the number of local applicants was almost equal to the number of foreign applicants.

At the time of writing, the statistics available through MyIPO had only been updated to the end of August 2022, with a total of 31,540 applications having been filed. Again, the number of foreign applicants was significantly higher, at 19,899 (an increase of 3% on 2021), than the number of local applicants, which stood at 11,641.

Assuming a constant amount of 3,942 marks being filed monthly, an extrapolation of the available numbers suggests that about 47,310 trademark applications were filed in 2022. If this were indeed the case, then there would have been a 6% drop in the number of trademark filings handled by MyIPO from 2021.

One reason may be that local businesses in Malaysia are still reeling from the economic impact of the pandemic and have put their intellectual property strategies on hold to concentrate on riding out their business challenges.

Out of the total trademark applications that were filed in 2022, the exact number of applications of Madrid System origins cannot be ascertained. MyIPO remains reticent to share its international application statistics, which would provide a clearer picture of the country’s filing trends.

As for trademarks that were accepted for registration in the same year, it is heartening to note that proportionally more marks were accepted and registered by MyIPO. As a comparison, 34,304 trademark applications were registered in 2021. Up to the end of August 2022, 24,043 marks had been registered. Extrapolating once again based on the available numbers, it can be suggested that the number of trademarks which were allowed registration by the end of the year could have reached 36,000, which would be almost a 5% increase in registered marks.

The administration of trademarks

2022 as a whole may best be remembered by how often, and for how long, the majority of the Malaysian workforce had to work from home or on a hybrid basis. This was primarily due to the highly contagious Omicron variant of COVID that was pervasive that year.

MyIPO continued to serve practitioners and the public by making available its IP Online filing system and accepting manual filing in its day-to-day transactions. Perhaps the most keenly felt challenge in the Malaysian intellectual property space in 2022 was the shortage of MyIPO officers, particularly in the trademarks section.

While the Search and Examination Unit seemed to cope well with its scope of work, churning out numerous notifications of provisional refusal, perhaps the same cannot be said for the appeals and hearing units.

As a quick recap, under the new act there was a significant change to the examination procedure, whereby the applicant no longer has the luxury of, at first, filing written representations to the Registrar arguing against the raised objections and then having the option to request a hearing if the submissions are rejected.

Since the perceived ‘second bite at the cherry’ has been nipped in the bud, and applicants are now given an ultimatum of filing written representations or requesting a hearing, more and more of them have chosen the latter option, which is to file for a hearing so that their local agent or representative is able to argue their case fully.

However, this has created a bottleneck at the Hearing Unit, which Henry Goh understands to be severely understaffed. This means that while a majority of applicants are opting for a hearing to prosecute their application fully, there has been an accumulation of cases that concern the setting of hearing dates. At the time of writing, it is understood that the Registry is unable to cope with the deluge of hearing requests and is now only fixing hearing dates for trademark disputes with hearing requests that were filed in 2020 or early 2021. Due to the staff shortage, even with hearings being fixed and heard, decisions may be issued late, as the same officers are dealing with the files.

This snowball effect of late hearing dates being scheduled in addition to late decisions being rendered does not bode well for applicants, some of which may lose interest in their applications simply because of the protracted length of time it takes for their marks to be accepted.

It is hoped that MyIPO will make serious inroads in addressing this issue so that it will not lose the confidence of local and foreign applicant stakeholders.

The trademark legislation

In so far as trademarks are concerned, there were no significant changes in legislation in 2022. However, the Malaysian government passed the new Geographical Indications Act (the GI Act 2022), which replaced the Geographical Indications Act 2000 on March 18 2022.

A geographical indication (GI) is distinct from a trademark, as a GI is essentially a protected mark for a collective group of producers or a responsible authority from an area or region that manufactures or produces a specific product. The most obvious example would be champagne from the Champagne region in France. Malaysia, with its rich and abundant natural resources, is home to a plethora of goods produced in certain regions and some have been registered as GIs. The ones that are commonly known would be Bario Rice and Sarawak peppers.

Due to the promulgation of the GI Act 2022 and to give effect to the same, the Trademarks Act 2019 was amended through the Trademarks (Amendment of First and Second Schedule) Order 2022 (the Order) and the Trademarks (Amendment Regulations) 2022 (the Regulations).

The key amendments under the Order and Regulations include:

• Prohibition of registration of a collective mark containing a GI if it includes an indication term that is identical to any goods or services in Malaysia, or where the GI is not protected or has lost its protection from its country of origin, or where the goods do not originate from there, so as to mislead the public as to the source of the collective mark;
• Prohibition of registration of a collective mark which has been applied for or has been registered under the GI Act 2022 for identical or similar goods and where the goods do not originate from the indicated GI;
• Prohibition of registration of a collective mark in respect of a wine or spirit where the collective mark is used in relation to wines or spirits not originating from the place indicated by the initial GI and even excludes GIs accompanied by terms of expression such as ‘kind’, ‘type’, and ‘style’;
• The invalidation of a registered collective mark with a GI is allowed where the mark was wrongly registered, or the mark has fallen into disuse or lost protection in its country of origin, or where the GI has become a common name for goods in Malaysia;
• An applicant for a new collective mark/certification trademark that has a GI from any country except Malaysia must furnish MyIPO with evidence that the mark has been granted a GI in its country of origin; and
• For opposition proceedings involving collective or certification marks with GIs, the notice of opposition must contain a statement that the opposition is based on the registration of a GI registered under the GI Act 2022, with a representation and full particulars of the registered GI included in the grounds of opposition.

As can be seen, these amendments to the Order and Regulations were necessary to give full effect to the new GI Act 2022 while maintaining the sanctity of collective and certification trademarks falling within the purview of the Trademarks Act 2019.

Trademark litigation

Once the majority of workers came back to working in the office, so did the judiciary and court officers. However, the trend of hearing cases online via Zoom or even a hybrid mode of online and physical hearings still seems to be the norm. Regarding the number of cases, it can be surmised that there has been a slowdown of intellectual property cases being filed in the past year.

One of the most recent cases decided in 2022 was Oatly AB v Pahang Pharmacy Sdn Bhd [2022] MLJU 3042. This case was interesting as it dealt with the revocation of a trademark under the new Section 46 of the Trademarks Act 2019.

The facts of the case were as follows:

• The defendant had three trademarks for the word ‘OATLEY’ that had been registered since 2013 under the old act in classes 5, 16 and 29 respectively;
• The plaintiff, a Swedish company, is a manufacturer of oat-based dairy products and substitutes, and sells its goods under the brand name OATLY;
• The plaintiff was successful in registering its OATLY trademark in 2016 and 2020 for classes 29, 30 and 32;
• To expand its business in Malaysia, the plaintiff then filed a further seven applications in multiple classes but the applications were issued with provisional refusals stemming from the defendant’s prior registration; and
• The plaintiff then conducted an investigation and a market survey to determine if the defendant’s registered trademarks were indeed being used in the market, and subsequently filed an originating summons to expunge the registrations from the Malaysian Trademarks Register for non-use under Section 46(1) of the Trademarks Act 2019.

At the hearing of the plaintiff’s application to expunge, counsel for the plaintiff informed the court that his client was relying on limb (b) of the aforementioned section, which states: “The Registration of a trademark may be revoked by the Court on an application by an aggrieved person on any grounds as follows: where the use of the goods or services under paragraph (a) has been suspended for an uninterrupted period of three years, and there are no proper reasons for non-use.”

The plaintiff took the position that there was a three-year period of non-use, where use had been suspended from 2019–22 after the defendant had shown that they were using the registered trademarks between 2013–16. Therefore, the calculation as to when the non-use period of three years came into question.

Based on the facts of the case and evidence produced during the hearing, the judge determined the case as follows:

• The plaintiff had successfully established a prima facie case of non-use by the defendant during the market survey that had been undertaken. There was evidence to show that the defendant had not been using its registered trademarks after registration; i.e., after 2016;
• The burden of proof once the plaintiff had established non-use then shifts to the defendant to show that it was still using its registered trademarks, or, if there had been no use, there were proper reasons for the same; and
• Evidence adduced had shown that the defendant had not used its registered trademark since 2016 and had relied on the pandemic as a proper reason for non-use in addition to submitting its business plan to use its registered marks on its registered goods between November 2021 and September 2022.

However, the above was rejected by the court as the defendant was not able to proffer any reasons for its non-use of its registered trademarks between 2016 and the onset of the pandemic.

As a result, the judge ordered the expungement of the defendant’s trademarks in classes 5 and 29 only, while leaving the remaining registration intact.

The takeaway of the case suggests that if a registered proprietor does not actively use its trademark that has been registered, then the possibility of losing it is very real. Additionally, the timeframe for calculating the three-year period of non-use, while usually taken from the date of registration (or the date of notification of registration), may change once the plaintiff is able to show non-use, and the burden of showing use then shifts to the defendant proprietor to prove that there had been use of the registered mark up to the application to revoke; failing which, it must clearly indicate good and proper reasons for the non-use.

Conclusion

2022 can be seen as a fairly challenging year in the Malaysian trademark landscape, but one ought to remain optimistic that things will improve in the next 10 months or so. Local businesses seem to be slowly getting back on their feet and there is continued interest among foreigners in protecting their trademarks in this small but significant market within the region. MyIPO should endeavour to improve itself in all its operational aspects so as to sustain such interest, which, in turn, will be good for the Malaysian economy.

Azlina Khalid
Senior legal counsel, Henry Goh

With more than 25 years of IP work experience and 18 of them spent at Henry Goh, Azlina, who is the firm’s senior legal counsel (in-house) and head of prosecution, is the go-to person for registration, prosecution and advisory in relation to trademark matters.

Her wealth of knowledge extends beyond the above, and she is also skilful in patent, industrial design and copyright legal issues. Helming a team made up of a legal counsel, trademark agents, and legal and trademark executives for day-to-day work, she also provides guidance to clients in relation to matters such as pre-litigation advice, advisory on trademark enforcement, consultation on franchise and licensing agreements, domain name registration and IP due diligence.

She is one of the firm’s main speakers and presenters at company-organised seminars for clients and the public. On the international front, Azlina has received various invitations to speak, with papers presented in India, Thailand, and Japan.