Gloves, Musang King Durians and IP Rights

By P. Kandiah

“TOP GLOVE’S R&D arm ranks second highest among Malaysian patent applicants in 2020” ran the headline across major Malaysian newspapers in mid-February.

The other top four Malaysian patent applicants are MIMOS Bhd., Universiti Teknologi Malaysia, University of Malaya and Petroliam National Bhd. (PETRONAS). Are we beginning to see an emerging trend of industry-based R&D compared to university-based research as reflected by the number of patent applications filed in Malaysia?

In the rapidly growing knowledge-based economy around the world, what is Malaysia’s ranking in the global IP scene? It is widely acknowledged that knowledge-based economy will be the driver of the modern economy of most countries. How does Malaysia fare in the global IP regime — the bed rock of knowledge-based economy?

The Global Innovation Policy Centre of the US Chamber of Commerce published an “International IP Index” in 2020 that created a template for economies to aspire to become 21^st century knowledge-based economies through new and more effective IP regimes. Unless a country has a robust IP ecosystem in place, it will find it very difficult to attract FDI and domestic investments in manufacturing, create jobs, advance economic growth, and generate breakthrough technology solutions in emerging spheres of technology like AI, software, e-commerce platforms, life sciences vital to the country’s well-being.

The US Chamber’s International IP Index reviewed the overall IP ecosystem of a country in the following categories of the IP regime: (1) Patents, (2) Copyright, (3) Trademarks, (4) Design Rights, (5) Trade Secrets, (6) Commercialisation of IP assets, (7) Enforcement of IP rights, (8) Membership and Ratification of International Treaties and Protocols, and (9) Systemic Efficiency, amongst other parameters.

Source: www.theglobalipcenter.com

Amongst the East Asian countries, Malaysia is ranked behind Singapore, South Korea, Taiwan, and Japan. Why is Malaysia behind such countries? Let’s see some of the reasons for this position.

(A) Membership and Ratification of International Treaties related to IP Rights.

Participation in international treaties reflects an economy’s willingness to join the international IP community and embrace a high standard of IP protection. Although Malaysia is a signatory to TRIPS Agreement of the World Trade Organisation (WTO), it is yet to become a signatory or yet to ratify a number of significant IP treaties namely:

Hague Agreement concerning the International Registration of Industrial Designs
International Union for the Protection of New Varieties of Plants (UPOV)
Budapest Treatyon the International Recognition of the Deposit of Microorganisms
Convention on Cybercrime / Budapest Convention

Malaysia is a member of or has ratified some other important IP treaties / agreements namely:

Paris Convention for the Protection of Industrial Property
Patent Cooperation Treaty (PCT)
Madrid Agreement Concerning the International Registration of Marks
Berne Convention for the Protection of Literary and Artistic Works
Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks

(B) Patent and Related Rights

Whist Malaysia is ahead of Indonesia, Vietnam and Thailand in respect of Patent rights, it is regrettably behind Singapore in the International IP Index in respect of this IP right.

Malaysia has been making significant advancements in the patent field. Its membership of the PCT enables patent applicants to file international patent applications in a strategic and timely manner. Malaysia has also agreed to have patent prosecution highway collaboration (PPH) with several IP offices such as the European Patent Office (EPO), Japanese Patent Office (JPO), China National Intellectual Property Administration (CNIPA) and Korean Intellectual Property Office (KIPO).

The PPH facilitates quick substantive examination of patent applications filed in the country to reduce the time taken to examine a patent application before grant.

Despite these advances, there are some misgivings in the patent system in Malaysia. Applicants generally complain on the undue time taken to examine a patent application. Damages ordered against patent infringers by the Courts are not seen as a strong deterrent for potential patent infringers either.

Despite emphasis on research on biotechnology and life sciences, Malaysia is not a signatory to the Budapest Treaty, making it difficult and expensive for researchers in these fields of technology to seek patent protection for patentable microorganisms.

(C) Trade Secrets and Confidential Information

Whist Malaysia relies on common law rights and laws of contract to protect trade secrets, it is timely for the Legislature to enact a sui generis Act on trade secrets which, apart from providing payment of penal damages for theft of trade secrets and confidential information, can also provide legal certainty to the public at large with regards to what is a trade secret and what acts tantamount to its theft.

(D) Trademarks and Geographical Indications

Malaysia has the basic form of trademark protection in place. It still needs to consider more seriously the trade in counterfeit goods across border through e-commerce platforms and online transactions.

Local industry players need to better appreciate the relevance and importance of trademarks and Geographical Indications (GI) and take steps to protect these IP rights. A case in point would be the entire Durian Saga we keep reading in our daily news.

While our king of fruits (durian) is a big export item to China, there are no known trademarks or registered GIs either in Malaysia or in China or in any other country where fruit is exported. The fruit is sold just as a commodity which does not command a premium price. Unless the fruit has a registered GI, any other farmer from any country can sell his fruits as Musang King durians.

The term “Musang King” can be argued as eligible to be registered as GI when the fruits are cultivated in specific geographical areas of the country. The fruit bears its taste, aroma, texture and colour due to the climatic and soil conditions of the area. If so registered as a GI, no other durians can be sold as “Musang King” durians, thus enabling the orchards to command a premium price in the market.

Just like “Champagne” wine from a particular winery from a particular region in France. No other winery can refer their wines as Champagne even if their wines taste like, smell like or look like “Champagne”. The wineries take all efforts to ensure that there is no misappropriation of this GI in any country. This is why sparkling wine from Spain is referred to as “Cava” and sparkling wine from Germany is known as “Sekt”.

In fact, GIs that denote agricultural crops have become economically very important in cross border trade disputes. Currently, India and Pakistan are battling over the right to use the term “Basmati” for long grained rice. Each country is claiming the sole right to use the term Basmati for rice cultivated in a particular region of its country. Of course, Basmati rice commands a premium price compared to other varieties of rice. Similarly, India has registered the term “Darjeeling” for a tea cultivated in the Darjeeling region of the Himalayas for its tea. which gives the right to tea planters in Darjeeling to call their tea “Darjeeling” tea to the exclusion of all other tea growers. Darjeeling tea, as expected, commands a premium price in the global tea market.

Regrettably, our locally grown fruits such as pineapples, guavas, rambutans and mangosteens do not have any trademarks, which if registered and promoted well enough, can fetch premium price in the market, just like “Valencia” oranges.

(E) Enforcement of IP Rights

Enforcement of IP Rights is a challenge in many countries. In the Global IP Index, South Korea, Japan, Taiwan and Singapore are listed ahead of Malaysia in respect of enforcement of IP rights. Malaysia needs to introduce new criminal enforcement initiatives to better enforce IP rights. Brazil and South Korea strengthened their IP enforcement measures with amendments that increased the basis of which damages can be awarded in respect of patent infringement and theft of trade secrets. India strengthened its civil enforcement measures and awarded substantial damages in IP infringement cases.

As Malaysia moves into the 21^st century, it needs to have a robust IP framework that can attract more FDIs, create a local innovative society, incentivise local entrepreneurs who can compete in the international market populated with IP Rights of all kinds ranging from patents, industrial design rights, trademarks, copyright and trade secrets.

Unless Malaysia improves its IP ecosystem it may fall behind emerging regional countries like Thailand, Vietnam, Indonesia and Philippines. The International IP Index clearly points the areas of IP that needs attention. The big question is, do we have the political will to move forward by making the necessary changes in our IP ecosystem?

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Communications at KASS International Sdn Bhd

KASS International is an established Intellectual Property Firm which offers a one-stop solution for IP matters in Malaysia, South East Asia, and worldwide.