Patent Litigation 2020

Last Updated February 10, 2020

Malaysia

Law and Practice

Authors



Lee Hishammuddin Allen & Gledhill is a full-service law firm housing various practice groups including dispute resolution, arbitration, financial services, Islamic finance, corporate and commercial, employment and industrial relations, insolvency, insurance, IP and TMT, real property, regulatory and compliance and tax. LHAG has more than 125 lawyers with offices in Kuala Lumpur, Penang and Johor Bahru. Clients include top-ranked local conglomerates and multinational companies spanning industries such as IT, e-commerce, telecommunications, biotechnology, healthcare, entertainment and FMCG (fast-moving consumer goods). Its seasoned team of trade mark, industrial design and patent agents, litigators and commercial lawyers work closely with in-house counsel to protect intellectual property, innovation and creativity. The team has experience in a wide range of jurisdictions and commercial sectors, and assists clients to identify and anticipate potential issues or trends in outsourcing. The breadth of its practice includes handling disputes involving IT and communications services, business process outsourcing, finance and accounting and facilities management. The authors would like to thank Fatin Akmal Bin Hassim, for their contribution to this chapter.

In Malaysia, the intellectual property rights that provide for the protection of inventions are those provided by patent law and the law governing utility innovations (UI).

The rights in patents and UIs are governed by the Patents Act 1983 (the PA), while case law supports and explains in greater detail the relevant statutory provisions.

Patent

An aspirant patentee can obtain protection in two ways: (i) by way of an application to the Patent Registration Office of the Intellectual Property Co-operation of Malaysia (IPCM) for a national patent under Part VI of the PA; or (ii) via an application for international filing under the Patents Cooperation Treaty in Part XIVA of the PA.

National Patent

For an inventor to own a patent for an invention, they must be the first person to file a patent application. The inventor must apply to the Patent Registration Office of IPCM (Regulation 5(2) of the Patents Regulations 1986 (the PR)). Applications undergo a full examination to see if the application complies with all the requirements including those regarding novelty, inventive step and industrial applicability.

The procedure for registration is as follows:

  • filing an application for the grant of a patent;
  • preliminary examination of the application;
  • public inspection of the application;
  • search and substantive or modified substantive examination of the application; and
  • grant of the patent.

Patent Cooperation Treaty (PCT)

The PCT system allows an applicant to make an international application within Malaysia and to then designate the countries (which are signatories to the PCT) in which he or she wishes to seek patent protection. This enables patent protection to be sought simultaneously across the designated countries. As the application is given an international filing date, the application has the same effect as an application for a national filing under the PA.

An international search is done by an International Searching Authority (ISA) to find any written material or prior art to establish whether the invention in the application is new. The ISA will also issue a written opinion on the patentability of the invention.

The applicant may opt for an international preliminary examination, undertaken by an International Preliminary Examining Authority (IPEA). A specific "demand" is submitted to the IPEA, which will examine the application and send the applicant an international preliminary examination report setting out an opinion as to whether the invention in the application is suitable for patent protection. If the applicant chooses to continue, the International Bureau of the World Intellectual Property Organization (WIPO) will publish the international application.

Approximately 18 months after the application or priority date (if the applicant claims priority), the application is published in the PCT Gazette by WIPO (published weekly).

Up to this stage, the application is going through its "international phase".

For an international application to proceed in the countries designated in the application, the application must enter the national phase. The application is examined separately in each country. In Malaysia, the applicant must submit documents required under the PA, and the application will be treated as a national filing and subjected to the requirements of the PA.

Utility Innovation

A UI is any innovation which creates a new product or process, or any new improvement of a known product or process, which is capable of industrial application, and includes an invention (Section 17, PA). Certain requirements that would apply to patents are excluded for utility innovations, pursuant to Section 17A(2), PA. Therefore, a UI is only required to be new to Malaysia and be industrially applicable. It is not necessary for the UI to have worldwide novelty. The prior art for the purpose of a UI is concerned with disclosure to the public in Malaysia, and so disclosure outside of Malaysia is disregarded. An inventive step is not a requirement.

The UI registration system is governed by the Register for Certificates for Utility Innovations (Section 32, PA). The criteria to register a UI are set at a lower threshold compared to those required to register a patent. The application for a certificate for a UI should contain one claim only.

A patent and a certificate for a UI may be challenged in court pursuant to Section 56 of the PA.

The grant procedure usually takes about three years.

Anyone who is not based in Malaysia or is not a Malaysian resident must apply by way of a patent agent: Section 86(5), PA.

The average costs to grant in Malaysia are approximately MYR2050, excluding tax.

The duration of a patent is 20 years from the filing date of the application, where the filing date is taken as the date the patent application is received: Section 35(1), PA ; Section 28(1), PA.

The certificate for a UI lasts ten years from the filing date of the application. Before the ten years expire, the owner of a certificate for a UI may apply for an extension for two consecutive terms of five years each (Section 35(2) PA), making the total duration of protection potentially 20 years from the filing date. Upon application for an extension, the owner must prove that the UI is in commercial or industrial use in Malaysia or explain its non-use: Section 35(3), PA.

It should be noted that if the patent application was filed, or the patent was granted, before 1 August 2001, the duration of that patent is 15 years after the date of its grant or 20 years calculated from the filing date, whichever expires later: Section 35(1B) and (1C), PA.

When Can the Owner Exercise its Rights?

The patentee obtains exclusive rights on the date the certificate of the grant of patent is issued. Any infringement proceedings can be brought only from this date.

A certificate for a UI is deemed to be granted and takes effect on the date the certificate for the UI is issued. Any infringement proceedings can be brought only from this date.

After an application is made available for public inspection, an applicant may issue a cease and desist letter to warn a person who has commercially or industrially worked the invention which is the subject matter of the application: Section 34(5), PA.

An applicant may make a demand for compensation:

  • from the time the infringer is given the warning; or
  • in the absence of a warning, after the patent application in respect of the invention has been made available for public inspection: Section 34(6) PA, 1983.

Rights of an Owner of Patent or Certificate for a UI

Section 36(1) of the PA establishes the rights of a patent owner, namely:

  • the right to exploit the patented invention;
  • the right to assign or transmit the patent; and
  • the right to conclude licence contracts.

Exploitation of a patented invention is defined as:

  • making, importing, offering for sale, selling or using the product when the patent has been granted in respect of a product;
  • stocking the product for the purpose of offering for sale, selling or using when the patent has been granted in respect of a product; and
  • simply using the process or using the process in respect of a product obtained directly by means of the process when the patent has been granted in respect of a process.

The owner of a patent shall have the exclusive right to exploit the patented invention (SKB Shutters Manufacturing Sdn Bhd v Seng Kong Shutter Industries Sdn Bhd [2015] 9 CLJ 405, Federal Court). Exploitation refers to commercial exploitation (Pentamaster Instrumentation Sdn Bhd v QAV Technologies Sdn Bhd [2017] 5 CLJ 736). The rights under the patent shall extend only to acts done for industrial or commercial purposes and not acts done only for scientific research: Section 37(1), PA.

No other person has the right to do any of the above acts without the patentee’s consent: Section 36(2), PA.

Section 36(1) of the PA is equally applicable for the owner of certificate for a UI.

Infringement Proceedings

The owner of a patent or certificate for a UI shall have the right to institute court proceedings against any person:

  • who has infringed or is infringing the patent or certificate for a UI: Section 59(1), PA; or
  • who has performed acts which make it likely that an infringement will occur (ie, "imminent infringement"): Section 59(2), PA.

Annual Fees

The exclusive rights granted to the owner of patent or certificate for a UI is subject to payment of annual fees. The patent or certificate for a UI shall lapse in the event of non-payment of the annual fees: Section 35(2) and (3), PA. 

As noted above, the duration of patent is 20 years and a certificate for a UI is 10 years.

A patent term or certificate for a UI cannot be extended once it has lapsed, after which it is no longer in effect.

For avoidance of doubt, a patent or certificate for a UI may also lapse on the ground of non-payment of the annual fees: Section 35(2) and (3), PA.

Where a patentee or owner of a certificate for a UI intends, at the expiration of the second year from the date of grant, to keep the same in force he or she shall, twelve months before the date of expiration of the second and each succeeding year during the term of the patent or certificate for a UI, pay the prescribed annual fee: Section 35(2), PA.

A grace period of six months is allowed upon payment of the surcharge as prescribed.

No act done from that date by any third party in relation to the invention can amount to an infringement unless the patent is reinstated (Section 35A(6) PA).

A lapsed patent can be reinstated pursuant to Section 35A of the PA. Within two years from the date on which a notice of the lapsing of a patent is published in the Gazette, the owner of the patent or any other person who is entitled to the patent may apply to have the patent reinstated. Reinstatement of a lapsed patent is subject to two conditions under this section: (i) all annual fees due and surcharge for reinstatement have been paid; and (ii) the Registrar must be satisfied that the non-payment of annual fees was due to accident, mistake or other unforeseeable circumstances.

If these criteria are satisfied, the Registrar will publish a notice of reinstatement of a lapsed patent in the Gazette. The reinstatement of a lapsed patent shall not prejudice the rights acquired by third parties after it is notified in the Gazette that the patent has lapsed and before it is notified in the Gazette that the patent has been reinstated.

Third parties do not have the right to participate during grant proceedings. To challenge a patent, third parties must initiate invalidation proceedings before the High Court.

The applicant is given three months to submit correction submissions where the application form is not complete or where there is statutory non-compliance during preliminary examination, otherwise the application is considered invalid. Where the request for substantive or modified substantive examination is not received, the application will be withdrawn. Where there is statutory non-compliance during substantive examination, the applicant is given two months to submit correction submissions/arguments, which will then go back for substantive examination, otherwise the application is refused. The applicant can appeal to the High Court, and subsequently to the Court of Appeal and the Federal Court as a final resort.

An annual renewal fee must be paid after the grant to ensure the patent or certificate for a UI remains alive: Section 35(2), PA. There is a six-month grace period for the renewal fee to be paid after the date on which it is due: proviso to Section 35(2), PA. The surcharge for a late payment of renewal fee is 100% of the fee for the year in which the annual fee is due. After the expiry of this grace period, the patent or certificate for a UI lapses and a notice that the patent or certificate for a UI has lapsed or that the annual fee has not been paid is published in the Gazette: Section 35(3), PA.

The owner of a patent or a certificate for UI may initiate action against the infringer pursuant to section 59(1) of the PA.

Where a person performs any act under Section 36(3) of the PA in relation to a patented invention without the patentee’s consent, this amounts to an infringement, in particular, direct patent infringement (Section 58 PA, 1983).

It is possible to initiate an action for an "imminent infringement", pursuant to Section 59(2) of the PA, where the owner of the patent shall have the same right against any person who has performed acts which make it likely that an infringement will occur.

An infringement of a patent will only take effect if the infringing act takes place in Malaysia (Section 58, PA).

A third party may challenge the validity of a patent or certificate for a UI. Pursuant to Section 56(2), PA, the court shall invalidate the patent if it is proved that:

  • what is claimed as an invention in the patent:
    1. is not an invention within the meaning of the PA;
    2. is excluded from protection because it is a non-patentable invention under Section 13;
    3. would be against public order or morality; or
    4. is not patentable because it does not comply with the requirements of Sections 11, 14, 15 and 16 (not a patentable invention, not novel, does not have an inventive step and does not have industrial application);
  • the description or the claim do not comply with the requirements of an application pursuant to Section 23;
  • that any drawings which are necessary for the understanding of the claimed invention have not been furnished;
  • the right to the patent does not belong to the person to whom it was granted (unless it was assigned to them: Section 56(2A), PA;
  • incomplete or incorrect information has been deliberately provided by the person to whom the patent was granted or by his or her agent (in regard to a request for substantive examination); or
  • the description or the claim does not comply with the requirements of the PA, or there is any non-compliance with the PR (Ranbaxy (Malaysia) Sdn Bhd v E.I DU Pont Nemours & Co. [2012] 9 CLJ 79 ).

Any invalidated patent, claim or part of a claim shall be regarded as null and void (Section 57(1), PA). When the decision of the court becomes final, the Registrar of Patents shall be notified and record the declaration in the Register and publish it in the Gazette (Section 57(2), PA).

To institute court proceedings for invalidation, the party must be an "aggrieved person": Section 56(1), PA. In Heveafoam Asia Sdn Bhd v PF (Teknologi) Sdn Bhd [2001] 2 MLJ 660, the court observed how the term "aggrieved person" was interpreted in other infringement cases, such as industrial design infringement in the case Besalon International Limited & Ors v South Strong Industries Sdn Bhd [1997] 2 AMR 1333. Here, "aggrieved person" was defined as someone who was prejudiced by the wrongful entry.

In Iradar Sdn Bhd v Nutech Company Limited [2016] 1 LNS 1392, Wong Kian Kheong JC (as his Lordship then was) in considering the issue of locus standi requirements and the term "aggrieved person" in Section 56(1) of the PA held that:

  • A party alleging that it is aggrieved by a patent has the legal burden to prove the same; as such, the party has to satisfy the court that it is an "aggrieved person" in the sense of Section 56(1) of the PA.
  • If the plaintiff is unable to discharge the legal onus, the action should be struck out on this ground alone without a need to decide the merits of the action.
  • The term "aggrieved person" refers to a person who has a genuine, real or actual grievance due to a registered patent – a person may have a genuine, real or actual grievance if his or her right, interest, business, trading or operations is adversely affected or prejudiced by a patent.
  • A person may therefore be aggrieved if:
    1. he or she is an owner of a patent which is adversely affected or prejudiced by a registered patent;
    2. he or she is a holder of a certificate for UI which is adversely affected or prejudiced by a registered patent; or
    3. his or her business, trading or operations may constitute an infringement of a registered patent.
  • The above examples are not absolute; if a person does not have any grievance due to a registered patent:
    1. he or she can lawfully continue his or her business, trading or operations without any restriction from the owner of the patent; and
    2. there is no lawful basis for him or her to apply to court to invalidate the patent.
  • The term "aggrieved person" does not include a person who has no grievance and is a "mere busybody".

The High Court has jurisdiction to hear patent matters.

An appeal may be made to the Court of Appeal.

Parties may appeal to the Federal Court; however, leave to appeal must first be obtained. An appeal shall lie from the Court of Appeal to the Federal Court if the following criteria are met:

  • the judgment or order of the Court of Appeal is in respect of any matter decided by the High Court in the exercise of its original jurisdiction; and
  • the case involves a question of general principle decided for the first time.

Alternatively, if the case involves questions of importance upon which a decision of the Federal Court would be to the public advantage it may also be appealed.

All disputes regarding patents or certificate for a UI are dealt with by the High Court, and subsequently the Court of Appeal and Federal Court on appeal.

Parties may issue a letter of demand or a cease and desist letter for the infringer to cease their act of infringement.

However, it is not a prerequisite to issue a formal demand letter or warning letter or to engage in any mediation prior to filing a lawsuit.

Section 34 of the PA accords provisional rights to the applicant for a patent, before its grant. After an application that is made available for public inspection, the applicant may, in writing, warn a person who has commercially or industrially worked the invention which is the subject matter of the application that a patent application for the invention has been filed. An applicant may demand that such a person pay as compensation in respect of the invention:

  • from the time the person is given the warning; or
  • in the absence of a warning, after the patent application has been made available for public inspection.

The amount of compensation will be equivalent to what the prospective patentee would have normally received for the working of the invention to the time of the grant of the patent. However, the right to demand compensation shall be exercised only after the grant of the patent.

Subject to the following, parties may sue or carry on proceedings in court through solicitors or in person: Order 5 rule 6(1) of the Rules of Court 2012 (RC).

A body corporate or company may not begin or carry on any proceedings otherwise than by a solicitor: Order 5 rule 6(2), RC.

A person lacking capacity (a minor or someone suffering from mental illness) may not bring, make a claim in, defend, make a counterclaim in or appear in any proceedings except by his or her litigation representative: Order 76 rule 2, RC.

A person under a disability (ie, a minor or a person who has been declared to be mentally disordered under the Mental Health Act 2001)  may not bring, make a claim in, defend, make a counterclaim in or appear in any proceedings except by his or her litigation representative: Order 76 rule 2, RC.

Interlocutory injunctions are available where the plaintiff successfully establishes that:

  • there is a bona fide serious issue to be tried;
  • the balance of convenience tilts in favour of the grant of the interlocutory injunction – ie, the plaintiff would suffer greater injustice if relief were withheld; and
  • damages would not be an adequate remedy in the event that the plaintiff succeeded at trial: Keet Gerald Francis Noel John v Mohd Noor bin Abdullah & Ors [1995] 1 MLJ 193.

The Court may also consider factors such as:

  • where the justice of the case lies;
  • the practical realities of the case;
  • (the plaintiff's ability to meet his or her undertaking in damages should the suit fail, the court may require the plaintiff to secure his or her undertaking by, for example, providing a bank guarantee (cases may also arise where the injustice to the plaintiff is so manifest that the judge may dispense with the usual undertaking as to damages: Cheng Hang Guan v Perumahan Farlim (Penang) Sdn. Bhd. [1988] 1 CLJ 435 (Rep); [1988] 3 MLJ 90);
  • whether there is any delay in the making of the application; or
  • public interest.

The plaintiff may also seek other forms of relief such as Anton Piller Orders, or ex parte interlocutory injunctions prior to service of the papers on the infringer.

In the event the court grants an ex parte interim injunction order, that order shall automatically lapse 21 days from the date it on which was granted unless earlier revoked or set aside: Order 29 rule 1 (2B), RC.

An ex parte interim injunction must be served within seven days of the date of the order and the court, when granting the order, must fix a date to hear the application inter partes within 14 days from the date of the order: Order 29 rule 1 (2C), RC.

For the purpose of applying for an ex parte injunction order, the court will demand strict compliance with the provision under Order 29 rule 1 (2A), RC: Motor Sports International Ltd & Ors v Delcont (M) Sdn Bhd [1996] 2 MLJ 605.

The affidavit in support of an application made ex parte must contain a clear and concise statement of:

  • the facts giving rise to the claim;
  • the facts giving rise to the application for the interim injunction;
  • the facts relied on to justify the application ex parte, including details of any notice given to the other party or the reason for not giving notice;
  • any answer by the other party (or which he or she is likely to assert) to the claim or application;
  • any facts which may lead the court not to grant the application ex parte or at all;
  • any similar application made to another judge, and the order made on that application; and
  • the precise relief sought: Order 29 rule 1 (2A), RC.

Further, it is important that the plaintiff in an ex parte injunction application provides full and frank disclosure, failing which the ex parte injunction order may be set aside: Pentamaster Instrumentation, supra.

A potential opponent can declare non-infringement of a patent pursuant to Section 62 of the PA. Any interested person shall have the right to request, by instituting proceedings, that the court declare that the performance of a specific act does not constitute an infringement. If it can be proved that the act in question does not constitute an infringement, the court shall grant the declaration of non-infringement: Section 62(2), PA. However, if the act in question is already the subject of infringement proceedings, the defendant in the infringement proceedings may not institute proceedings for a declaration of non-infringement: Section 62(4), PA.

Pursuant to Section 59(3) of the PA, a party may not institute an infringement action after five years from the act of infringement of the patent, and two years from the act of infringement of the certificate for a UI.

Notably, in an action for infringement of a UI, the expiry of the two-year limitation period may not be raised as a defence unless it is specifically pleaded at an early stage of proceedings; the limitation period does not constitute an absolute defence: Tan Yock Kuan & Anor v Cew Sin Plastics Pipe Sdn Bhd [2019] 1 LNS 681.

Discovery

The discovery process is available and is provided by Order 24 of the RC.

Discovery applications are typically made after the close of pleadings but before the start of trial. There are three stages, namely: (i) disclosure of a list of documents; (ii) copies of documents are inspected and taken; and (iii) production of the documents.

In an order for discovery, a party may be required to disclose documents which support or adversely affect his or her own or another party’s case.

The list of prospective documents to be disclosed must be succinct but allow each document to be identified. Where a document is privileged, it must be described as such, along with justification. The list is to be accompanied by an affidavit to verify its contents. The documents in a list shall be deemed inspected when the list has been filed and served on all the parties to the action.

In certain circumstances, a pre-action order for discovery against a person may be given if there are sufficient grounds for doing so. The application must detail facts pertaining to the intended proceedings and whether the person against whom the order is sought is likely to be party to subsequent proceedings in court: Order 24 rule 7A, RC. Such a pre-action discovery is not to be confused with a Norwich Pharmacal Order. The former pertains to obtaining relevant information to support a claim against a potential defendant who is already identified; while the latter pertains to obtaining relevant information to identify a potential defendant. 

Anton Piller Order

To be awarded an Anton Piller Order the plaintiff must prove an extremely strong prima facie case that the patent has been infringed and the damage – potential or actual – must be very serious.

The plaintiff must provide clear evidence that the defendant has incriminating documents in his or her possession, and that there is a real possibility that they may be destroyed.

A lawsuit is initiated by filing a Writ and Statement of Claim, or Originating Summons, whichever is appropriate, in which the defendant is informed of the plaintiff’s claim, the material facts on which they are based, and the relief claimed. The remedy or relief being sought must be specifically prayed for. The plaintiff does not plead law or evidence in the statement of claim.

In brief:

  • the particulars of the plaintiff(s) and defendant(s) shall be stated in the Statement of Claim: Order18 rule 6(4), RC;
  • every pleading shall contain a brief summary of the material facts, but not the evidence by which those facts are to be proved: Order 18 rule 7 (1), RC;
  • the effect of any document or the purport of any conversation referred to in the pleading shall, if material, be briefly stated – the precise words of the document or conversation shall not be stated, unless they are material: Order 18 rule 7 (2), RC;
  • a party shall, in any pleading subsequent to a statement of claim, specifically plead any matter – such as performance, release, any relevant statute of limitation, fraud or any fact showing illegality:
    1. which he or she alleges makes any claim or defence of the opposite party not maintainable;
    2. which, if not specifically pleaded, might take the opposite party by surprise; or
    3. which raises issues of fact not arising out of the preceding pleading: Order 18 rule 8, RC;
  • a party may plead any matter which has arisen at any time, whether before or since the issue of the writ: Order 18 rule 9, RC;
  • a party shall not make an allegation of fact or raise any new ground or claim inconsistent with a previous pleading of his or hers: Order 18 rule 10, RC;
  • a party may, by his or her pleading, raise any point of law: Order 18 rule 11, RC;
  • every pleading shall contain the necessary particulars of any claim, defence or other matter pleaded including:
    1. particulars of any misrepresentation, fraud, breach of trust, wilful default or undue influence on which the party pleading relies; and
    2. where a party alleges any condition of the mind of any person – whether any disorder or disability of mind or any malice, fraudulent intention or other condition of mind except knowledge – particulars of the facts on which the party relies: Order 18 rule 12(1), RC;
  • no party shall quantify any claim or counterclaim for general damages: Order 18 rule 12(1A), RC; and
  • a statement of claim shall specify the relief or remedy which the plaintiff claims; but costs need not be specifically claimed: Order 18 rule 15(1), RC.

Amendment of Pleadings

Amendments can be made at any stage of proceedings; however, they should be made as early as possible to avoid injustice to the other party. Amendment may be made without leave of court before the pleadings are deemed to be closed: Order 20 rule 3(1), RC. After the close of pleadings, amendments may be made with leave of court provided that:

  • the application for amendment is bona fide;
  • there is no prejudice caused to the other side which cannot be compensated by costs; and
  • the amendments would not, in effect, turn the suit from one character into a suit of another inconsistent character: Yamaha Motor Co Ltd v Yamaha (M) Sdn Bhd & Ors [1983] 1 MLJ 213, Federal Court.

In Hong Leong Finance Bhd v Low Thiam Hoe [2015] 8 CLJ 1, the Federal Court held that: 

  • when dealing with an application to amend the pleadings, which introduces a new element to the claim or defence, on the eve of the trial, the principles in Yamaha Motor are not the sole considerations;
  • the principles in Yamaha Motor apply to cases where the application to amend the pleadings is made at an early stage of the proceedings;
  • there must be a cogent and reasonable explanation in the applicant's affidavit as to why the application was filed late;
  • the application to amend the pleadings may not be a tactical manoeuvre;
  • the proposed amendment must disclose full particulars in order for the court to ascertain if there is a real prospect of success in proving the same; and
  • lateness in the application to amend the pleadings cannot necessarily be compensated by payment of costs.

In Malaysia, three requirements must be satisfied to make a representative action, as per the case Duke of Bedford v Ellis [1901] AC 1:

  • the plaintiff and those represented by him or her must be members of a class and have a common interest;
  • they must have a common grievance; and
  • the nature of relief sought must be beneficial to all.

A representative action for patent proceedings is possible provided that the above requirements are met.

After action is initiated by a patent owner, the other party may apply to strike out the claim on the grounds that it:

  • discloses no reasonable cause of action;
  • is scandalous, frivolous or vexatious;
  • may prejudice, embarrass or delay the fair trial of the action; or
  • is otherwise an abuse of the process of the Court: Order 18 rule 19, RC.

Courts may also strike out a claim when the motive for initiating that claim is some purpose other than obtaining the genuine redress which the process offers: Malaysia Building Society Bhd v Tan Sri General Ungku Nazaruddin Ungku Mohamed [1998] 2 CLJ 340, Court of Appeal.

The principles upon which the court acts in exercising its power under any of the four limbs of Order 18 rule 19, RC are well-settled. It is only in plain and obvious cases that recourse should be had to the summary process, and this summary procedure can only be adopted when it can be clearly seen that a claim is "obviously unsustainable". It cannot be exercised by a minute examination of the documents and facts of the case. So long as the pleadings disclose some course of action or raise some question fit to be decided by the judge, the mere fact that the case is weak and not likely to succeed at the trial is not ground for the pleadings to be struck out: Bandar Builder Sdn Bhd v United Malayan Banking Corporation Bhd [1993] 4 CLJ 7, Supreme Court.

The necessary parties to an action for infringement are the owner of the patent and the alleged infringer.

Pursuant to Section 61(2) of the PA, a beneficiary (eg, a licensee or beneficiary of a compulsory licence) may request the owner of the patent to institute court proceedings for infringement.

The beneficiary may institute the proceedings in his or her own name, after notifying the owner of the patent of his or her intention to do so, if he or she proves that the owner of the patent received the request but refused or failed to institute proceedings within three months from its receipt (Section 61(3), PA). The court shall, at the request of the licensee, grant an appropriate injunction to prevent infringement or to prohibit its continuation if immediate action is necessary to avoid substantial damage: Section 61(4), PA. However, if the registered owner has already initiated an action for such infringement, the licensee may not then bring another additional action against the infringer: Tan Yock Kuan, supra.

A third party who is neither the patentee nor the licensee, and who has no grievance due to a patent, is a "mere busybody” and may not bring an action for infringement.

Direct infringement is the exploitation of a patented invention under Subsection 36(3) of the PA 1983 in Malaysia by a person other than the owner of the patent and without the agreement of the owner: Section 58, PA. This is the case whether or not the infringer is aware that he or she is infringing a patent.

The owner of the patent shall have the same right against any person who has performed acts which make it likely that an infringement will occur, and this is known as imminent infringement: Section 59(2), PA.

The PA does not provide for indirect infringement. With that being said, it is submitted that Section 59(2) of the PA (which provides for imminent infringement) may be wide enough to encompass some situations of indirect or contributory infringement.

For instance, a person who supplies an essential element of the invention knowing that it will be used by the recipient to commit an act of direct infringement has contributed to the infringement and is arguably also liable for imminent infringement. However, the mere supplying, or offering to supply, an essential element of the invention without more will not suffice.

Thus, a contributory infringer may be liable for imminent infringement under Section 59(2) of the PA if he or she played an important role in providing the means for direct infringement, such as the supply of an essential element of an invention, with the knowledge that it will be used to infringe a patent. 

Remedies

Pursuant to Section 60(1) of the PA, if the owner of the patent proves that an infringement has been or is being committed, or is imminent, the court shall award damages and grant an injunction: Section 60(2), PA.

The scope of protection for a patent is determined by its claims. Claims are to be construed as part of the whole specification and not viewed independently. A claim is, however, also to be construed by its ordinary meaning, rather than expanded by extracting the body of the specification to construe the meaning of the claims: Sanofi-Aventis (M) Sdn Bhd & Anor v Fresenius Kabi (M) Sdn Bhd & Anor [2011] 1 LNS 1670.

The Malaysian courts have adopted the “pith-and-marrow” construction, which assesses infringement by virtue of whether all the essential integers have been taken by the alleged infringer, and purposive construction, which places more importance on the intention behind the wording of a claim than on its literal meaning. However, if the wordings are clear, the court cannot go beyond what is already on the face of the claim: B Braun Melsungen AG & Anor v Terumo Kabushiki Kaisha & Anor [2011] 1 LNS 947.

Infringement is the performance of any act referred to in Section 36(3) of the PA in Malaysia by a person other than the owner of the patent, without the owner’s agreement, in relation to a product or process falling within the scope or protection of the patent: Section 58, PA; SKB Shutters, supra.

In assessing inventiveness, it must be determined "whether the patent has disclosed something sufficiently inventive to deserve the grant of a monopoly": SKB Shutters, supra; Spind Malaysia Sdn Bhd v Justrade Marketing Sdn Bhd [2018] 4 CLJ 705, Federal Court.

In construing patent claims, Malaysian courts have adopted the doctrine of purposive construction developed in Catnic v Hill & Smith [1982] R.P.C 6: for example in Cadware Sdn Bhd v Ronic Corporation [2014] 9 CLJ 1, Court of Appeal; Nuctech Company Limited v Pan Asiatic Technologies Sdn Bhd [2016] 1 LNS 398; Winthrop Pharmaceuticals (Malaysia) Sdn v Astrazeneca UK Limited [2015] 1 LNS 9, Umi Kalthum J (as her Ladyship then was). 

The Malaysian Court of Appeal – in Cadware, supra – adopted the formula set out in Improver v Remington [1990] FSR 181, where Hoffmann J reformulated the Catnic question into the following three-stage test dubbed the "Improver questions":

“…The language should be given a 'purposive' and not necessarily a literal construction. If the issue was whether a feature embodied in an alleged infringement which fell outside the primary, literal or contextual meaning of a descriptive word or phrase in the claim ('a variant') was nevertheless within its language as properly interpreted, the court should ask itself the following three questions:

  • Does the variant have a material effect on the way the invention works? If yes, there is no infringement. If no;
  • Would the immaterial variant have been obvious at the date of publication of the patent to a reader skilled in the art? If no, there is no infringement. If yes;
  • Would the reader skilled in the art nevertheless have understood from the language of the claim that the patentee intended that strict compliance with the primary meaning was an essential requirement of the invention? If yes, there is no infringement. If no, infringement will be established.”

The English case of Actavis UK Ltd & Ors v Eli Lilly and Co, and other appeals [2018] 1 All ER 171, aimed to further reformulate the Improver questions. The new approach requires a two-stage test.

The first stage involves normal interpretation. The second stage looks at whether an alleged infringement which does not fall within the scope of the claims under the first stage still infringes as an “equivalent”. The questions to be asked are:

  • Notwithstanding that it is not within the literal meaning of the relevant claim(s) of the patent, does the variant achieve substantially the same result in substantially the same way as the invention (ie, the inventive concept revealed by the patent?)
  • Would it be obvious to the person skilled in the art, reading the patent at the priority date, but knowing that the variant achieves substantially the same result as the invention, that it does so in substantially the same way as the invention?
  • Would such a reader of the patent have concluded that the patentee nonetheless intended that strict compliance with the literal meaning of the relevant claim(s) of the patent was an essential requirement of the invention?

This test was recently applied in Kingtime International Ltd & Anor v Petrofac E&C Sdn Bhd [2018] MLJU 1840.

In a further landmark case, the Federal Court in Merck Sharp & Dohme Corp & Anor v Hovid Berhad [2019] MLJU 936 overruled the earlier decision of SKB Shutters, supra, insofar as a dependent claim is no longer invalid merely on the finding that the claim that it is dependent upon is held to be invalid. Instead, the court is required to assess each claim individually.

The following are the major defences against infringement:

  • Monopoly rights of a patentee are confined to activities which are carried out for industrial or commercial purposes only.
  • Patent owners cannot control acts which are carried out in order to make, use, offer to sell or sell a patented invention solely for uses reasonably related to the development and submission of information to the relevant authority which regulates the manufacture, use or sale of drugs.
  • A patentee, or any third party who has his or her consent, who has placed patented products into circulation for the first time in the marketplace cannot thereafter utilise his or her exclusive rights as a patentee to control subsequent dealings with the products.
  • Where the infringing act has been committed with the conditional or unconditional consent of the patent owner or his or her licensee.
  • The rights of a patentee do not extend to the use of the patented invention on any foreign vessel, aircraft, spacecraft or land vehicle temporarily in Malaysia.
  • No infringement proceedings can be taken where the patent has lapsed and has not been reinstated.
  • Where the act is done pursuant to a compulsory licence.
  • Where the exploitation is committed by the Malaysian government or any person authorised by the Malaysian government.
  • Where a person has used the patented product or process in good faith.
  • A purchaser of a patented article has an implied licence to repair it as long as the repair does not amount to the making of a new article.

Primary Evidence

The court may consider two types of evidence, primary and secondary. Primary evidence is the opinion of expert witnesses. The assistance of expert evidence is "almost invariably" required to reach findings of fact on obviousness. However, while expert opinion is admissible on the ultimate question of fact, the court is not bound to follow it.

The function of the expert is “to educate the Court … they come as teachers, as makers of the mantle for the court to don”: SKB Shutters, supra; Spind Malaysia, supra.

In Spind Malaysia, supra, Md Raus Sharif CJ in delivering the judgment of the Federal Court held:

“[86]…[I]t is clear that the bolded statement above meant that the court may construe patent claims without the assistance of an expert who approximates the hypothetical person skilled in the art, all his attributes and dispositions included. Although the observation in SKB Shutters was made in the context of the construction of claims, the principles elucidated are of a general nature and are equally applicable in determining whether there is an inventive step.”

Pursuant to Order 40 rule 1 of the RC, the court may appoint experts to inquire and report upon any question of fact or opinion not involving questions of law or of construction. An expert means any person who has such knowledge or experience that his or her opinion would be admissible in evidence in relation to a certain question: Order 40 rule 1(5), RC. Where a court expert is appointed, any party may call one expert witness to give evidence on the question reported on by the Court expert: Order 40 rule 6, RC.

Secondary Evidence

Secondary evidence includes contemporary events and the commercial success of the alleged invention. Commercial success is an indication that the patented invention meets a long-felt need in the industry. However, commercial success is not conclusive of the non-obviousness of the invention. The inventor who is relying on this factor must convince the tribunal that the commercial success of the invention is credited to the invention itself, and not because of other factors such as clever advertising gimmicks: Spind Malaysia, supra, Federal Court.

The court will construe a patent claim and may use experts to assist it in areas in which the court lacks knowledge.

There are no provisions on revocation or cancellation of a patent in Malaysia. However, a party may commence invalidation proceedings against a patentee to invalidate a patent. See 2.2 Third-Party Remedies to Remove Effects of Intellectual Property.

The defendant in an infringement proceeding may request the invalidation of the patent (Section 60(3), PA). However, the court will usually deal with infringement issues before dealing with an invalidation claim. A party may also raise issues of invalidation when declaring non-infringement (Section 62(5), PA).

See 4.1 Reasons and Remedies for Revocation/Cancellation.

See 4.1 Reasons and Remedies for Revocation/Cancellation.

See 4.1 Reasons and Remedies for Revocation/Cancellation.

In general, the procedures and rules relating to evidence for civil actions apply to intellectual property rights actions.

One important point which may be worth emphasising is the limitation period. For patent infringement, the proceedings may not be instituted after five years from the act of infringement: Section 59(3), PA. For infringement of a certificate for a UI, the proceedings may not be instituted after two years from the act of infringement.

In Malaysia, the jury system was abolished in 1995.

There is a specialised Intellectual Property High Court in the High Court of Malaya at Kuala Lumpur which hears intellectual property disputes, which is presided upon by a single Judge.

Parties do not exert any influence over who is the decision-maker in an Intellectual Property dispute.

A defendant can make an offer to settle the matter at any time, after the commencement of action and before the court disposes of the matter: Order 22B, RC.

In recent times, the court has been more inclined to direct parties to attempt mediation. In this respect, parties would be required to submit an Agreement to Mediate, the Mediation Form and a summary of their respective cases to the mediation centre or directly to the mediator.

In the Kuala Lumpur Court Complex, there is a mediation centre which is tasked with processing mediation requests and appoints mediators to the cases. The mediator is typically another High Court Judge, not presiding over the matter.

A party may apply for a stay of proceedings, in which the party must show special circumstances to be granted a stay.

Remedies for the patentee include special damages, general damages, injunctions, account of profits, costs (partial), exemplary damages, statutory damages, declaration and orders for delivery up (if applicable).

A prevailing defendant may be awarded costs. There are no fixed costs, they depend on the type and manner of enforcement. Costs are generally awarded to the winning party, but this is at the discretion of the court.

A defendant in any action may apply for security of costs. This would be at the discretion of the court.

If the owner of a patent proves that an infringement has been committed or is being committed, the court shall award damages and grant an injunction to prevent further infringement and any other legal remedy (Section 60(1), PA). If the owner of the patent proves imminent infringement the court shall grant an injunction to prevent infringement and any other legal remedy (Section 60(2), PA). The defendant in any proceeding may request in the same proceeding the invalidation of a patent as a form of remedy (Section 60(3), PA).

Stay of Execution

The infringer may apply for a stay of execution, in which the infringer must establish special circumstances, or that the appeal would be rendered nugatory in the event a stay of execution is not granted.

Erinford Injunction

An Erinford injunction is an interim injunction sought to preserve the status quo pending the determination of an appeal so that the appeal will not be rendered nugatory. In the case of Philip Morris Brands Sarl v Goodness for Import and Export & Ors (No 2) [2013] 9 MLJ 484, the court held as follows:

“[11] I agree with the submission of learned counsel for the plaintiff that there is an imminent danger that the first defendant will at any time between now and the appeal remove the MALIMBO cigarettes from Malaysia. It is a fact that the first defendant did intend to do so at the second last hearing date of the plaintiff's application, that is, on 28 March 2013, and I had on that occasion granted an interim stay order against the first defendant. I agree that should this court not grant the stay order, it would render the plaintiff's appeal to the Court of Appeal nugatory and worse, academic. This is because the substratum of the appeal would be destroyed and the subject matter of the said writ and statement of claim would no longer be in the jurisdiction of Malaysia and of this court. I, therefore, find that the plaintiff has successfully shown that there exists a special circumstance which merits this court to grant the stay.

[12] With the same token, I agree that on the balance of convenience the status quo of this matter be maintained lest the appeal be rendered nugatory and or academic.

[13] Given the plaintiff's position, where it has established a good business reputation in the industry, the alleged infringing act and/or illegal conduct of the first defendant may cause irreparable damage to the plaintiff's credit, goodwill and business reputation which may not be adequately compensated by damages, I find on this score too it favours the plaintiff. On the other hand, should the decision of the Court of Appeal be in favour the first defendant monetary compensation should be an adequate remedy for it and the plaintiff is in the position to compensate the first defendant...”

The appellate procedure for patent proceedings is the same as all appellate civil disputes.

Appeals to the Court of Appeal involve a re-hearing of the case which involves a review of both facts and law.

Appeals to the Federal Court are limited to a review of the law involved in the case.

The costs that typically arise before filing a lawsuit includes a "getting-up fee", in which whether the advocate and solicitor have acted reasonably and properly in getting up their client’s case in preparation for the trial is taken into account. In this case, work done before action is initiated may be considered.

Costs may be dealt with at any stage of proceedings or after the conclusion of proceedings; any costs ordered shall be paid at the conclusion of proceedings unless the court otherwise orders: Order 59 rule 7, RC.

In assessing the costs payable in relation to any item, the court shall have regard to all relevant circumstances, particularly:

  • the complexity of the cause or matter, and the difficulty or novelty of the questions involved;
  • the skill, specialised knowledge and responsibility required of, and the time and labour expended by, the solicitor or counsel;
  • the number and importance of the documents prepared or perused;
  • the place and circumstances in which the business involved is transacted;
  • the importance of the cause or matter to the client;
  • where money or property is involved, its amount or value; and
  • any other fees and allowances payable in respect of other items in the same cause or matter, where work done in relation to those items has reduced the work which would otherwise have been necessary: Order 59 rule 16, RC.

At the conclusion of the proceedings, the court will hear submissions from the parties as to the quantum of costs to be awarded and shall order such costs as it deems fit. The court shall direct that the submissions of the parties on costs are to be tendered as part of the substantive submission of the case or separately and there shall be annexed to the submission of costs a bill for such costs which shall be in Form 117, and shall include particulars of the following:

  • work done including the value of getting up; and
  • all disbursements reasonably incurred: Order 59 rule 7(2), RC.

The court in exercising its discretion as to costs shall, to such extent as may be appropriate, take into account:

  • any offer of contribution or offer of settlement under Order 22B;
  • the conduct of all parties, including conduct before and during proceedings;
  • the conduct of parties in relation to any attempt at resolving the matter by mediation or any other means of dispute resolution; and
  • in particular, the extent to which parties have followed any relevant pre-action protocol or practice direction issued by the Registrar: Order 59 rule 8, RC.

In addition, where a party has failed to establish any claim or issue which he or she has raised in proceedings, thereby unnecessarily or unreasonably protracting or adding to the costs or complexity of proceedings, the court may order that the costs of that party shall not be allowed in whole or in part, or that any costs occasioned by that claim or issue to any other party shall be paid by him or her to that other party, regardless of the outcome of the cause or matter: Order 59 rule 10, RC.

The fees for more than one counsel for one party or set of defendants shall not be allowed unless the Court so certifies: Order 59 rule 14, RC. Such fees may be allowed notwithstanding that both counsels are members of the same firm of solicitors: Order 59 rule 14(2), RC.

The court may. in appropriate cases. award costs on an indemnity basis. All costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred. Any doubts which the court may have as to the reasonableness of costs shall be resolved in favour of the receiving party: Order 59 rule 16(4), RC.

It is generally the losing party that must pay costs to the winning party, however, costs are awarded at the court's discretion.

Alternative dispute resolution is available to resolve patent cases, including negotiation, mediation and arbitration (subject to a valid arbitration agreement between the disputing parties).

A patentee can transfer his or her rights, title and interest in a patent or patent application to an assignee. This may also occur upon the patentee’s death, at which point the rights, title and interest in the patent are transferred to the patentee’s personal representative.

Not all rights in a patent can be assigned. For example, the right to make the patented invention cannot be assigned.

The assignment is valid even if it is not registered. However, an assignment will have no effect against third parties unless it is recorded in the Register: Section 39(4), PA. Any subsequent transaction in regard to a patent application or a recorded patent obtains priority over any previous non-recorded transactions. Therefore, a recordal of assignment is a mechanism to eliminate potential fraudulent dealings involving patents.

It is not explicitly required for an assignment to be in writing. However, for the purposes of a recordal of assignment, the assignment must be in writing.

Pursuant to Regulation 34, PR:

  • an application to record an assignment is to be made to the Registrar in Form 6 together with the payment of the prescribed fee;
  • the application is to be signed by or on behalf of the parties to the transfer; and
  • the application is to be accompanied by documents including the assignment in writing signed by both parties, proving to the satisfaction of the Registrar the change of ownership

The Registrar will record the assignment in the Register and the change in ownership will be published in the Gazette.

Voluntary Licences

A licence contract is one whereby the licensor grants to the licensee a licence to do any or all of the acts amounting to an exploitation of the patented invention. A licence contract can include certain rights under the patent or all the rights of a patent.

A licence contract must be in writing signed by or on behalf of the contracting parties (Section 41(2), PA). A licence contract can only be concluded by all joint owners (Section 40, PA).

A licensor may grant an exclusive or non-exclusive licence (Section 44, PA). The difference between the two is that the former gives the licensee the right to exploit the patented invention but this right is not afforded to anyone else including the patentee (Section 44(2), PA), whereas in the latter, the licensor may grant a further licence to a third person regarding the same patent other than to the licensee (Section 44(1), PA), and the licensor has the right to exploit the patented invention.

Involuntary Licences (Compulsory Licences)

This enables third parties to exploit the patent. A compulsory licence is defined as the authorisation to perform in Malaysia, without the agreement of the owner of the patent, any or all of the acts amounting to an exploitation of the patented invention.

Compulsory licences can only be applied for after the expiration of three years from the grant of a patent or four years from the filing date of the patent application, whichever is the later: Section 49(1), PA. The applicant must show one or more of the following:

  • that there is no production of the patented product or application of the patented process in Malaysia without any legitimate reason; and/or
  • that there is no product produced in Malaysia under the patent for sale in any domestic market, or there are some, but they are sold at unreasonably high prices or do not need the public demand without any legitimate reason.

A compulsory licence shall not be applied for unless the person making the application has made efforts to obtain authorisation from the owner of the patent on reasonable commercial terms and conditions but such efforts have not been successful: Section 49(2), PA.

The applicant must set forth the amount of royalty, the conditions of the exploitation of the patent and the restrictions of the rights of the licensor or licensee, and a request for the said licence: Section 50(1), PA.

Under Section 49A of the PA, compulsory licences may be granted based on the interdependence of patents, to avoid infringement of the earlier of the two patents. The applicant (an owner of a later patent or a licensee of a licence contract under the later patent) must establish:

  • that the invention claimed in the later patent cannot be worked in Malaysia without infringing a patent granted on the basis of an application benefiting from an earlier patent; and
  • that the invention claimed in the later patent constitutes, in IPCM’s opinion, an important technical advance of considerable economic significance in relation to the invention claimed in the earlier patent.

Voluntary Licence

The recordal of licence is not necessary, but the patentee may apply to the Registrar for an entry to be made in the Register to the effect that any person may obtain a licence: Section 42(1), PA. This will allow any person interested in becoming a licensee to apply through the Registrar for a licence (Section 42(2), PA). The Registrar shall then record a licence. An application under Section 42(1) of the PA shall be made on Form 7 together with the payment of the prescribed fee: Regulation 35, PR.

The request to record particulars of a licence contract shall be made to the Registrar on Form 9 together with the payment of the prescribed fee: Regulation 36, PR.

Where a licence contract has expired, terminated or been invalidated, parties must request that the Registrar have this fact recorded in the Register: Section 47, PA. The request shall be made to the Registrar in Form 10 together with the payment of the prescribed fee: Regulation 37, PR.

Involuntary Licence

A compulsory licence allows third parties other than the patentee to exploit the patent in several situations. There are three types of compulsory licence:

  • compulsory licences which are granted due to the action or inaction of a patent owner that is against public interest;
  • compulsory licences which are granted on the basis of the interdependence of patents; and
  • compulsory use of the patent by the government.

An application for a compulsory licence shall be made to the Registrar in Form 11 together with the payment of the prescribed fee: Regulation 38, PR. The Registrar shall, within three months from the date of the application, examine whether the requirements under Section 50(1) of the PA and Regulation 38 of the PR are satisfied, and if so, the Registrar will send a copy of the application to the licensor and licensee and invite the parties to make any observations: Regulation 39(1), PR. The Registrar shall notify the applicant, the licensor or the licensee of the date the application shall be considered by IPCM not later than three months before the date set for the Board to consider the application: Regulation 39(2), PR.

The Registrar shall notify in writing any party required to appear before the Board to give a statement or to hand any documents not later than one month before the date set for the appearance: Regulation 40(1), PR. Within one month from the date the Board makes its decision, the Registrar shall notify the applicant, the licensor or the licensee of the decision and shall record the decision in the Register: Regulation 40(2), PR.

Lee Hishammuddin Allen & Gledhill

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+603 6201 0122

yth@lh-ag.com www.lh-ag.com
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Law and Practice

Authors



Lee Hishammuddin Allen & Gledhill is a full-service law firm housing various practice groups including dispute resolution, arbitration, financial services, Islamic finance, corporate and commercial, employment and industrial relations, insolvency, insurance, IP and TMT, real property, regulatory and compliance and tax. LHAG has more than 125 lawyers with offices in Kuala Lumpur, Penang and Johor Bahru. Clients include top-ranked local conglomerates and multinational companies spanning industries such as IT, e-commerce, telecommunications, biotechnology, healthcare, entertainment and FMCG (fast-moving consumer goods). Its seasoned team of trade mark, industrial design and patent agents, litigators and commercial lawyers work closely with in-house counsel to protect intellectual property, innovation and creativity. The team has experience in a wide range of jurisdictions and commercial sectors, and assists clients to identify and anticipate potential issues or trends in outsourcing. The breadth of its practice includes handling disputes involving IT and communications services, business process outsourcing, finance and accounting and facilities management. The authors would like to thank Fatin Akmal Bin Hassim, for their contribution to this chapter.

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