Malaysia: Border Measures In Malaysia

Last Updated: 4 December 2006
Article by Cindy Goh Joo Seong

Introduction

Combating counterfeit goods has been one of the most talked about issues in the Intellectual Property (‘IP’) industry for the past few years. This issue is very relevant in present times when many countries are moving towards globalisation and international trade. The Agreement on Trade Related Aspects of Intellectual Property Rights (‘TRIPS Agreement’), one of the most influential IP international treaties in the world also provides for rules on civil and administrative procedures and remedies to combat infringing and counterfeiting activities.

The TRIPS Agreement further lays down that all parties should have measures taken at the border for the suspension of counterfeit and pirated goods by the customs authorities, also known as "Border Measures". Border Measures are to prevent the counterfeit and pirated goods from being released into the domestic market, thus causing more damage and losses for IP rights holders. Criminal procedures and penalties sufficient to act as a deterrent should also be imposed.

As a result, IP legislations in member countries have been amended to adopt the provisions of the TRIPS Agreement. In 2000, an amendment was made to the Malaysian Trade Marks Act 1972 ("the Act") vide the Trade Marks (Amendment) Act 2000. The provisions found under Part XIVA of the Act provide for the intervention by the customs authorities in the enforcement of the trade mark rights by its owners. They came into force on 1 August 2001 and denote the introduction of Border Measures in Malaysia.

Pursuant to these provisions, customs authorities are empowered to prohibit any person from importing counterfeit trade mark goods into Malaysia (under the new Section 70C to 70P of the Act). This allows the customs authorities to seize goods suspected to bear infringing trade marks at the point of entry into Malaysia and provides for the conditions and procedures to be met.

Firstly, it must be noted that only the proprietor of a registered trade mark can invoke these provisions. Secondly, the goods involved must be "counterfeit trade mark goods". Under section 70C of the Act, "counterfeit trade mark goods" has been defined to mean any goods including packaging bearing marks which are identical, so nearly resembling or marks which cannot be distinguished in its essential aspects from the registered trade mark; and which infringes the right of the proprietor of the trade mark.

The procedures laid down in the Act are as follows:-

Application

The trade mark owner or his agent may submit an application to the Registrar of Trade Marks stating that:

a. he is the proprietor of a registered trade mark;

b. the counterfeit trade mark goods are expected to be imported at a specified time and place; and

c. such importation is objected to.

Such an application must be supported by evidence identifying the goods to be seized.

Approval Of Application & Security Deposit

Upon receipt of the application, the Registrar shall determine the application and inform the applicant whether the application is approved. The approval is valid for 60 days from date of approval.

The trade mark owner shall then deposit with the Registrar an amount of money as security sufficient to reimburse the Government for any liability or expense likely to be incurred as a result of the seizure. It is also to prevent abuse and to protect the importer or to pay such compensation as may be ordered by the Court (if any).

Notification Of The Customs Authorities

The Registrar shall notify the customs authorities immediately after approving the application.

Seizure & Notice Of Seizure

After the seizure, the customs authorities will issue a notice of seizure to the Registrar, importer and applicant stating that the goods have been seized and their whereabouts. A specified period known as the "retention period" will also be stated for the applicant to institute an infringement action. This notice is crucial because the goods will be released unless an infringement action is brought within a time stipulated in the notice. This notice period can be extended via application to the Registrar and not to the customs authorities.

Inspection Of Goods

The importer and trade mark owners may be allowed to inspect and/ or remove the seized goods provided the requisite undertakings are given. These undertakings are not unreasonable. In summary, the party seeking to inspect the seized goods must return the sample and take reasonable care in preventing damage to it. The Registrar is not liable for any damage to the seized goods during the inspection or when removed.

Forfeiture Of Goods

The importer may, by written notice to the Registrar consent to the forfeiture of the seized goods. The Government will then dispose of such goods. Such a notice must be given before any infringement action is instituted. This provision may be used by the importer to their advantage at the expense of trade mark owners. Where the goods seized are perishables (e.g. cigarettes), the importer would quickly consent to the forfeiture prior to the commencement of an infringement action and the Government will then dispose of the seized goods upon receiving such a notice. In essence, this amounts to destruction of evidence before legal suit can be instituted against the importer and/or the manufacturer of the seized goods.

Release Of Goods

Upon expiration of the retention period or extended period, the Registrar shall release the seized goods to the importer if the applicant has not:

a. instituted an infringement action; or

b. given notice that such action has been instituted.

Compensation must be paid to the importer if an action is not taken within the period or no notice was given.

If an infringement action has commenced but the trade mark owner has not obtained an interlocutory injunction from the court to prevent the release of such goods within 30 days from the date of commencement , the Registrar shall also release the goods back to the importer.

Ineffectiveness Of Border Measures In Malaysia

At present, Border Measures are rarely used in Malaysia. The author is of the view that the present provisions in the Act are rather ineffective and onerous for trade mark owners. Some observations are as follows:

  • The provisions only provide for civil remedy. There is no criminal sanction provided.
  • No fixed time period is stipulated for the Registrar to inform the applicant of the approval of the application. If the decision is given or received after the specified time of importation of the goods, this will defeat the entire purpose of the application.
  • Trade mark owners must deposit sufficient security to the Registrar. This poses an onerous duty on trade mark owners because the Registrar has complete discretion as to the amount of security to be deposited. Further, there is another provision in the Act which provides that any expenses incurred by the Registrar which exceeds the amount of security given shall be treated as a debt to the Government.
  • The strict time period of 30 days imposed to obtain the interlocutory injunction will cause difficulty for trade mark owners. Due to the nature of litigation in Malaysia, there are occasions where it would be difficult to obtain an injunction within the time limit. Trade mark owners will face serious consequences if the injunction is lifted or lapsed. The Court may also order them to pay compensation if the infringement action is dismissed.
  • Proper co-ordination must exist between the Registrar and the customs authorities to ensure that the seizure of goods can be carried out smoothly and immediately.

Due to the current ineffectiveness of the Border Measures, the author would suggest an alternative method to combat counterfeit goods in Malaysia. The trade mark owner’s solicitors would first make a complaint to the Enforcement Unit under the Ministry of Domestic Trade and Consumer Affairs on behalf of their client. The Enforcement Unit will then liaise with the customs authorities which will provide assistance for the seizure of the goods at the point of entry together with the Enforcement Unit officers. The solicitors will also be present to supervise the seizure of goods. Past experiences have proven that this method has been very successful. More control can also be imposed since the entire exercise is coordinated by solicitors acting on behalf of the trade mark owners. It is for this reason that it is essential for solicitors to maintain a close working relationship with the Enforcement Unit.

Proposals have been made by members of the Malaysian Bar to amend the provisions of the Act to resolve the above issues, in the hope of encouraging more trade mark owners to use Border Measures in Malaysia. With the sufficient IP protection in place, Malaysia can truly benefit from this and concentrate on enhancing its trade globally.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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