The Intellectual Property Corporation of Malaysia (MyIPO) has recently announced that the Malaysian Patents Act 1983 will be amended to bring the Act into substantive conformity with international practices. Our attorneys attended a brief discussion with MyIPO and representatives from various local organizations in relation to the amendments, which will be presented at the House of Representatives (“Dewan Rakyat”) in December 2010. The amendments are expected to come into force by end of year 2011.
Expedited Examination
One highly anticipated amendment is the proposal of a new provision for expedited examination due to reasons acceptable to the Registrar of Patent. Although the reasons were not listed out specifically during the discussion, we were informed that each expedited examination will be treated on a case by case basis by the Registrar who will determine whether the expedition is necessary. The introduction of this new provision would allow an efficient and speedy application process, and is especially of interest to businesses seeking early commercialization of their intellectual property assets. It also strengthens strategic platforms of businesses heading into initial public offerings (IPO). Additionally, this new provision enables expedited examination to assist in infringement litigation and licensing matters.
Monetization and Securitization
A new provision under Section 36 provides for the recognition of patent rights as collateral by financial institutions. This will effectively allow patent owners to mortgage their patents or use them to secure loans. The problem here lies with evaluation of the patent rights. The fact is that intellectual property (IP) rights evaluation is a very complex exercise and Malaysian banks have not or have rarely considered IP as collateral. With the introduction of this new provision, it is hoped that inventors can rely on their IP rights in securing funds in order to commercialize their inventions locally and abroad.
Infringement Issues
New provisions pertaining to infringement matters were also proposed, namely Effect of Innocent Infringement and Groundless Threat. Under Section 58, Acts of Infringement will include a new provision on contributory infringement, which covers infringement by supplying component parts of a patented product or process.
According to the new provision of Innocent Infringement, the burden of proof lies with the patent owner to proof that the infringement was deliberate, failing which the would be infringer would not have to pay any damages. In relation to this matter, we would advise patent owners to have patent markings on their products, packaging, etc. to ensure transparency and to prevent “innocent” (and sometimes, unscrupulous) infringers from taking advantage or manipulating the benevolent purpose of this protection.
Meanwhile, the rationale behind the new provision of Groundless Threat is to prevent the patent owner from issuing baseless threats to non-infringers, which might result in a loss to their business. Introducing this new provision will prevent patent owners from misusing demand letters as a threat to other competitors in an unjustified manner. This new provision will also encourage the patent owners to ensure the strength of their patents as a counter-measure towards potential infringers.
Observation by 3rd Party on Patentability
Among other notable new provisions include Observations by 3rd Party on Patentability (not to be confused with opposition type proceedings being practiced in European Patent Office). It is an impossible feat for a Patent Examiner to uncover all relevant prior art during the patent application process. No matter how thorough or conscientious an examination carried out, there is always the possibility that a prior art or other public disclosure that may anticipate the patent application remains undiscovered. Currently, this Observation procedure is an unofficial procedure whereby 3rd parties can submit the prior art documents to the Patent Office but since it is unofficial, the Examiner may or may not consider the prior art. With the introduction of this new provision, any 3rd party will have a means to bring to the attention of the examiner, during the substantive examination process, any relevant prior art which may affect the outcome of the patent application and the Examiner will be required to consider them prior to allowing an application. As a result of this amendment, patents granted by the Government will be considerably stronger.
Section 23A: Who can qualify as Residents?
The definition of Residents under Section 23A has always been a bone of contention. An amendment in this provision was proposed so the subject of who qualifies as a resident in Malaysia can be clear and unambiguous. Many parties present during the discussion suggested for “the Applicant of the patent” to be considered the “resident”, as opposed to the inventor.
Under the current Act, a person who is a Malaysian resident is required to file a patent application for the invention in Malaysia first prior to filing in other countries, unless a written consent is received from the Patent Office. The Act does not specify a position when the inventors reside in other countries or if it is a Malaysian residing overseas.
A new provision on composition of offences was also proposed under this section, which will have the existing imposed penalty not exceeding RM15,000 or imprisonment of 2 years or both – reduced to a penalty of RM10,000 or imprisonment of 2 years or both.
Rights of Government
Under Section 84, there is a proposed amendment that allows the government to exploit a pharmaceutical product without the consent of the patent owner by manufacture, import and export, or by compulsory licensing. Currently, pharmaceutical products produced under a compulsory license cater only to the Malaysian market. This new provision is purported to be a solution to the unmet demand of vital medicines to persons in need of them, in accordance with the DOHA Declaration. There was a concern raised that, while manufacturing the medicine for Malaysians in need is agreeable, the added provisions for importing and exporting raises the question of whether the medicinal needs of the people are being seconded to profits. Furthermore, rights of government to appropriate patent rights without consent may cause concern to foreign entities intending to seek patent protection in Malaysia. It was concluded that the import and export provision will be strictly regulated and only used for providing necessary medicines to impoverished nations that cannot themselves produce those medicines. An afterthought comment was then given on this: providing medicine to people in need is an altruistic and humanitarian effort and should be applauded. Furthermore, doing so will give our local pharmaceutical manufacturers knowledge and experience that may otherwise have gone to their counterparts in other medicine producing countries.
Protection in Biotechnology
Companies with innovations in the field of biotechnology would benefit from the positive outcome of the proposed amendments. Long standing controversial issues concerning Protection of Traditional Knowledge (TK) & Genetic Resources (GR), and also Protection of Modified Microorganism & Other Modified Biological Materials would be addressed. Related documents in clarification of the protection will be recognized as an essential part of the substantive requirement under Section 30. Malaysia is now preparing to become a signatory to the Budapest Treaty.
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