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2019

7 Things ALL Businesses MUST know about Malaysia’s New Trademarks Act

As the new Trademarks Bill 2019 has been passed in our Parliament and will soon come into force, here is a quick read for all business owners on 7 things they MUST know:

  1. Going global made easy

Local businesses can now protect their trademarks internationally, in a more cost-effective manner. Trademarks are territorial in nature and this means that if trademark protection is sought in 5 countries, individual applications need to be executed in those 5 countries.

For decades, there has always has been a centralised filing system, called the Madrid Protocol (“Protocol relating to the Madrid Agreement concerning the International Registration of Marks”), which makes it cost effective and easier for business owners to protect their marks globally.

The Madrid Protocol is essentially an international registration system which provides for the registration and administration of trademarks in up to 104 contracting parties through a single procedure, with a single administration, in a single language. The International Bureau at WIPO manages the International Applications that are filed through the Madrid Protocol. Malaysia was not a member of the Madrid Protocol and as such, a company based in Malaysia was not able to file an international application, utilizing the Madrid Protocol.

However, with the new Trademark Act, Malaysia accedes into the Madrid Protocol, and local companies can now file an International Application at the International Bureau. From there, we can designate the countries they are interested in.

Foreign trademark owners can designate Malaysia through their International Applications too, making it easier for them to have their trademark asset protected in Malaysia.

  1. Businesses should revisit their USP

That is what Intellectual Property protection is about – it protects the Unique Selling Point (USP) of each business, be it the special technology, design or trademark.

Trademarks used to be the visual representation that indicates the source of origin of the product or service one comes across. Historically, consumers view words, logos and taglines to indicate the source of origin of a product or service. Starbucks® for coffee, ADIDAS® for shoes, ZUMBA® for aerobic dancing, for petrol stations, for cold fizzy cola beverage and so on.

However, as businesses started creating USPs which involved the other senses of the consumer – sense of smell, sense of hearing and sense of touch – non-traditional trademarks started to be created. Think of the following and which company comes to mind?

The colour purple for chocolates

The triangular shape of a chocolate bar

The sound of a lion roaring for a movie production company

The ringtone of a mobile phone

The shape of a bottle for a fizzy drink

With these new trademarks introduced, many countries then amended their trademark laws to ensure these new genre of trademarks could be protected. Thankfully, our new Act allows for these types of trademarks too.

So local businesses, it is time to revisit your USP in your business. Scent, sound, shape, colour, holograms. positioning and motion marks that are distinctive to your business can be protected – on the condition that these non-traditional marks can be graphically depicted.

  1. Multi class trademark applications now made possible – saving cost!

Trademark registrations cannot be done for everything under the sun. One must identify what specific goods or services they are providing under their trademark. There are 34 classes of goods and 11 classes of services under the classification system most countries use (including Malaysia) and this means that if the business provides a few types of services and goods, there may be more than one class for which their mark should be registered under.

Take for instance, the food and beverage industry. If the restaurant owner has his brand ABC applied on his restaurant, and sells spices, sauces and other food products with the brand ABC and also franchises his outlets, he would then protect his brand ABC under the following classes:

Class 43 – for the services of providing food and beverage; cafe services; catering services; and take away services.

Class 30 – for food products such as spices and sauces.

Class 35 – for retailing the food products; franchising; retailing through franchise operations.

With the new Trademarks Act introduced, business owners can now register their one mark in a few classes through one single trademark application, thus resulting in cost savings for the entrepreneur.

  1. Trademarks can be used as financial instruments

Under the new Trademarks Act, a registered trademark can be used as a collateral to obtain financing from financial institutions. Although financial institutions may not yet be ready to finance a business based on a newly coined trademark, trademarks that have been around for years and those that have reputation and goodwill may be able to benefit from this treatment of trademarks as a bankable or moveable property.

  1. Scope of protection is wider

The new Trademarks Act widens the scope of protection awarded to trademark owners. Previously trademark infringement could be initiated when an identical trademark is used on identical goods or services. Moving forward, trademark owners can initiate action against those who use the identical trademark on goods and services that are related as well. Examples of related goods and services are shown below:

Class 25 (for clothes, headwear and footwear), Class 14 (for accessories such as jewellery and watches) and Class 18 (for handbags and travelling bags) are related.

As shown in the above example of Class 30 (for food products), Class 43 (for restaurants) and Class 35 (for selling of the food products and franchising) are related.

  1. Those receiving Groundless Threats will have remedies

Previously, when a business owner and parties in his supply chain receive a Letter of Demand (or a Cease and Desist letter) with allegations that do not hold water, there was no avenue to prevent such wrong actions through the Trademark Act.

However, provisions in the new Act allow for those who receive groundless threats to seek remedies from Court. One can apply for a declaration that the threats are unjustifiable, an injunction against the continuance of the threats and claim damages in respect of any loss arising from the threats.

The availability of these provisions also highlight that parties who are alleging trademark infringement should carefully ascertain the validity of their allegation, conduct thorough investigation prior to sending any Cease and Desist Letters and obviously, seek advice from Intellectual Property experts.

  1. False representation as a Registered Trademark will get you FINED!

Lastly, any person who falsely represents their trademark as a registered trademark, with the knowledge it is false, may be liable to a fine of up to RM 10,000 under the new Act.

There you have it – the 7 key changes the new Trademarks Act brings forth and which businesses should be aware of.

It is important to note that the new Act is not yet in force and that we are now awaiting the Trademark Regulations which will have more fleshed out guidelines on how the provisions of the Act will be applied. Further to the above, there are many other changes that come with the new Act that were not in the previous Act. However, we have gleaned the provisions that would have the most impact on businesses to share with you. Should you be keen to review the entire new Trademark Bill, do let us know and we can email it to you!

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