Personal Data Protection Act Trinity Group Sdn. Bhd. v. Trinity Corporation Berhad - A Case Note

Transcription

1 August 2013 Personal Data Protection Act Trinity Group Sdn. Bhd. v. Trinity Corporation Berhad - A Case Note Mastering the Specialised Art of Designing Surveys For Use In IP Trials 4 5 Industrial Designs (Amendment) Act Franchise (Amendment) Act Enforcement Initiatives in the News 11 The Federal Court Clarifies the Scope of Application of the Hummel s Case: A Short Analysis of Yong Teng Hing b/s Hong Kong Trading Co & Anor v Walton International Ltd [2012] 6 MLJ 609 FC Court Of Appeal Affirms the Decision of the Trial Court in Nehemiah Reinforced Soil Sdn. Bhd. v Patrick Cyril Augustin & Anor (Reported in [2012] 9 MLJ 112) 12 14

2 PERSONAL DATA PROTECTION ACT 2010 By Jin Nee WONG & Min Lee BOO The Personal Data Protection Act 2010 ( PDPA ) marks a milestone in Malaysia s efforts towards recognising the importance or value towards ownership of personal data. The PDPA received royal assent on 2 June 2010 and was published in the Gazette on 10 June It is scheduled to come into force on 16 August It was reported that Tuan Haji Abu Hassan Ismail would be appointed the Personal Data Protection Commissioner. WHO DOES IT APPLY TO? PDPA applies to a person who processes and/or has control over or authorises the processing of personal data in respect of commercial transactions. Personal data processed by individual for the purposes of personal, family or household affairs including recreational purposes are exempted. The act of processing includes collecting, recording, holding, storing or carrying out any operation of the personal data such as the organisation, adaptation, alteration, use, retrieval, consultation, disclosure, correction, erasure or destruction. It appears that PDPA would be applicable so long as there is some form of association between the processing of the data and its location in Malaysia i.e. (a) where the person is established in Malaysia and the personal data is processed by that person or anyone else employed or engaged by that establishment; or (b) the person is not established in Malaysia, but uses equipment in Malaysia for processing the personal data otherwise than for the purposes of transit through Malaysia. Where the person is not established in Malaysia, there is a further requirement that they would have to nominate a representative established in Malaysia. PDPA however DOES NOT apply to the Federal Government and State Governments. It also does not apply to personal data that is processed outside Malaysia unless that personal data is intended to be further processed in Malaysia. WHAT SORT OF DATA WOULD IT APPLY TO? There are 2 types of data mentioned in the PDPA, being personal data and sensitive personal data. Personal data refers to information in relation to commercial transactions. The personal data has to relate either directly or indirectly to a data subject (only individual) who is identifiable from that information or other information in the possession of a data user including any sensitive personal data and expression of opinion about the data subject. Personal data may include the name, identity card number, telephone number, photographs, address and DNA of an individual. Sensitive personal data on the other hand refers to personal data consisting of information as to the physical or mental health or condition of a data subject, his political opinions, his religious beliefs or other beliefs of a similar nature, the commission or alleged commission by him of any offence or any other personal data as the Minister may determine by order published in the Gazette. HOW DOES ONE COMPLY WITH THE PDPA? In order to comply with the PDPA, conformance towards principles known as the Personal Data Protection Principles is required. The Personal Data Protection Principles consist of 7 principles: (i) the General Principle; (ii) the Notice and Choice Principle; (iii) the Disclosure Principle; (iv) the Security Principle; (v) the Retention Principle; (vi) the Data Integrity Principle; and (vii) the Access Principle. Failure to comply with the Personal Data Protection Principles, upon conviction, could result in a fine not exceeding RM300,000 and/or a maximum jail term of 2 years. (i) General Principle The General Principle prohibits the data user, defined to mean a person who processes personal data or has control over or authorizes the processing of personal data, from processing personal data unless the data subject has given his consent. This is subject to various exceptions including for the performance of a contract, for taking 2

3 steps at the data subject s request with a view to entering into a contract, for compliance with a legal obligation, protecting the vital interest of the data subject, for the administration of justice or exercise of any functions conferred on any person by or under any law. The processing of sensitive personal data is similarly not allowed unless certain conditions are satisfied. This includes where the data subject has given his explicit consent, the processing is necessary for situations such as to exercise a right in law in connection with employment, for medical purposes, to obtain legal advice or where the information has been made public as a result of steps deliberately taken by the data subject. (ii) Notice and Choice Principle The Notice and Choice Principle requires the data user to inform a data subject in writing that personal data of the data subject is being processed, to provide a description and purpose of collection of the personal data, the data subject s right to request for access and correction of the personal data including how to contact the data user on any inquires or complaints, the classes of 3rd parties where the personal data would be disclosed to, the choice and means offered to the data subject for limiting the processing of personal data, whether it is obligatory or voluntary for the data subject to supply the personal data and where it is obligatory, the consequences for failing to do so. It should be noted that the notice must be in both English and Bahasa Malaysia and the individual must be given a clear and readily accessible means to exercise his choice, again in both languages. (iii) Disclosure Principle Under the Disclosure Principle, personal data can only be disclosed for the purposes and to parties in which the data subject has granted its consent subject to exceptions i.e. where the data subject has given his consent, where disclosure is necessary for the purpose to prevent or detect a crime or for investigations, or was required or authorized under any law or by order of a court, where the data user acted in reasonable belief that he had in law the right to disclose the personal data to the other person; where the data user acted in reasonable believe that he would have had consent of the data subject, or the disclosure was justified as being in the public interest in circumstances as determined by the Minister. (iv) Security Principle The Security Principle requires a data user to take practical steps to protect the personal data from any loss, misuse, modification, unauthorized or accidental access or disclosure, alteration or destruction. (v) Retention Principle With regard to the Retention Principle, personal data that is processed for any purpose cannot be kept longer than necessary for the fulfilment of that purpose. It is the duty of the data user to take reasonable steps in destroying such personal data when it is no longer required. (vi) Data Integrity Principle This principle requires a data user to take reasonable steps to ensure that the personal data is accurate, complete, not misleading and kept up-to-date by having regard to the purpose, including any directly related purpose, for which the personal data was collected and further processed. (vii) Access Principle Lastly, the Access Principle requires that a data subject be given access to his personal data held by a data user and to be able to correct that personal data where the personal data is inaccurate, incomplete, misleading or not up-to-date, except where compliance with a request to such access or correction is refused under this Act. In some situations such as where, personal data is processed for the prevention of crime, there may be exemption of some of the principles. Further information The PDPA also contains provisions of a class of data users which are required to be registered as data users under the Act. The particular class of data user would be specified by the Minister upon the recommendation of the Commissioner. At the moment, there is no particular class of data user specified. For transfer of personal data overseas, it is important to note that the PDPA specifically provides that a data user cannot transfer any personal data of a data subject to a place outside Malaysia unless to such place as specified and published in the Gazette or the consent has been granted by the data subject. Although the PDPA is not in force at the moment, it is advisable and prudent for parties to take immediate steps to comply with the provisions of the PDPA given that the grace period of 3 months for compliance after the PDPA is in force is relatively short. It is therefore important for organisations to designate a PDPA compliant officer to develop good personal data policies for handling personal data, to communicate the internal policies and processes to customers and employees, to handle inquiries or complaints about these issues and to ensure compliance with PDPA. Organisations should also take steps to map out their personal data inventory by determining the type of personal data that has been collected, how and where are the data stored and who is authorised to access the personal data, whether consent has been obtained and in what manner and the duration to be retained, depending on the type of personal data involved. In implementing the data protection processes, organisations should ensure that they are aligned with the 7 personal data protection principles outlined above. 3

4 TRINITY GROUP SDN BHD V. TRINITY CORPORATION BERHAD A Case Note by Min Lee BOO FACTS: The Plaintiff is Trinity Group Sdn Bhd, a private limited company involved in the business of project management, property development and investment holding. The Defendant is a public listed company previously known as Talam Corporation Bhd. It subsequently changed its name to Trinity Corporation Bhd. The Plaintiff seeks to restraint the Defendant from using the name Trinity in relation to the business of property development. The Plaintiff had issued press statements in various local newspapers to clarify that it is not in any way associated with the Defendant. Further, it had also lodged a complaint with the Companies Commission of Malaysia ('CCM') on the ground that the Defendant's company name, Trinity Corporation is similar to Trinity Group and would cause confusion amongst the trade and public. Subsequently, by a consent order, the Defendant had published notices in 3 local newspapers to clarify that it is not in any way associated with the Plaintiff. Despite the above, the Plaintiff discovered that one of its development project done in collaboration with another company, was reported in a local Chinese newspaper as being done by the Defendant. ARGUMENTS: The Plaintiff s claim is based on the common law of passing off whereby it claims that (i) it has acquired substantial reputation in the name Trinity in respect of the business of property development in Malaysia; (ii) that the Defendant s change of name and use of the name Trinity has resulted in confusion amongst members of the trade and public whereby the Plaintiff has been wrongly associated with the Defendant; and (iii) that the Plaintiff has suffered damages from the said confusion due to the Defendant s negative image as a property developer. In respect of the 1st point, the Plaintiff had adduced evidence that it had extensively and substantially used the name "Trinity" in relation to its property development business by way of sales, promotions and advertisements. It was held that although the projects had been carried out by the Plaintiff s subsidiary company, there was evidence that the Plaintiff's name and logo are referred to in every promotional material of its subsidiary development project and the Plaintiff had been identified as "TRINITY" by several newspaper articles which report about the Plaintiff and its projects. The learned Judge accepted that it is common in the property development industry for projects to be promoted under the name of a parent company with the property development being carried out by a subsidiary or associated company. As such, the Plaintiff had acquired a substantial reputation in the name Trinity even though the actual development is carried out by its subsidiary. With regard to the 2nd point on whether the Defendant's change of name had caused or is likely to cause confusion amongst members of the public and trade, the learned Judge further affirmed the position that the Plaintiff need not prove actual confusion. As the name Trinity of the Plaintiff and the Defendant are identical, he was of the view that the possibility of association would have been present, coupled with the fact that both parties are in the property development industry. This view was supported by the evidence of the Plaintiff's witnesses who testified on the confusion by potential buyers of the Plaintiff's project. The learned Judge also agreed that despite clarification by the Defendant on various newspapers, members of the trade were still confused and thought that the Plaintiff is the Defendant. The learned Judge agreed that it is a matter of public policy and interests that consumers and the public should be protected from confusion, which resulted from the Defendants name change. He was of the view that the word "Trinity" is a generic name which in the residential development has acquired a secondary meaning and has become distinctive of the Plaintiff by virtue of its extensive use by the Plaintiff. Although there exist numerous entities trading under the word "Trinity", there are no evidence that these companies are involved in the business of property development in the same scale as the Plaintiff. The learned Judge stated that the Companies Act does not envisage that the Registrar will consider whether the applicant truly does have a right to the name or whether its use will lead to confusion. In relation to the issue of damage, the learned Judge was persuaded by the case of Seet Chuan Seng & Anor v. Tee Yih Jia Food Manufacturing Pte Ltd [1994] 3 CLJ 7 that if damage to the goods in question are in direct competition with one another, the issue of damage to the Plaintiff's goodwill will be readily inferred. DECISION: Based on the above reasons, it was held that on a balance of probabilities, the Plaintiff has established a case of passing off against the Defendant in respect of the use of the name "Trinity" as part of its business name in relation to property development and the Plaintiff's claim is allowed with cost of RM80,000. 4

5 MASTERING THE SPECIALISED ART OF DESIGNING SURVEYS FOR USE IN IP TRIALS By Yueng May NG In our previous article entitled Survey Evidence in Light of Zegna Case published in the NOVITAS July 2009 issue, we examined the legal position in Malaysia in relation to survey evidence adduced for passing-off or trade mark infringement lawsuits. To recap briefly, the High Court in Consitex SA v TCL Marketing Sdn Bhd [2008] 8 CLJ 444 ( Zegna case ) rejected the survey evidence adduced by the claimant (the registered proprietor of the trade marks ZEGNA and ERMENEGILDO ZEGNA) to support its claim for passing-off and trade mark infringement against the Defendant arising from the latter s use of the trade name EMMER ZECNA. The survey evidence was rejected on the following grounds: the survey was conducted after the commencement of the suit (rather than at the relevant time of the alleged infringement); the questions were leading ; the answers were not recorded in verbatim; and no interviewee was called to give evidence to substantiate the survey evidence. The Zegna case was followed by Chocosuisse Union Des Fabricants Suisses De Chocolat & Ors v Maestro Swiss Chocolate Sdn Bhd & Ors [2010] 5 CLJ 794 ( Maestro SWISS case ) where the High Court also rejected the survey evidence adduced by the claimants on the following grounds: the survey form did not require respondents to leave their contact details and as such, it would not be possible for the respondents to be traced and called for cross-examination; the survey (which comprised of a survey on 84 respondents who were approached near offices and super markets within the Kuala Lumpur and Klang Valley areas only) did not represent a true cross-section of the chocolate-buying public in Malaysia; the questions posed in the survey forms were leading questions which presupposes that the SWISS chocolates concept existed; the surveys were conducted four years after the commencement of the lawsuit. The High Court decision in the Maestro SWISS case was eventually overturned by the Court of Appeal (in a decision delivered in December 2012). In their written grounds, the Court of Appeal examined the survey form which contains 5 questions relating to the subject of the lawsuit as follows: 1. Do you know anything about Swiss chocolate or chocolate from Switzerland? YES / NO 2. If yes, please describe why you know about Swiss Chocolate. 3. How long have you known this? Since 1990/Since 1995/Since 2000 /Since 2005/Others, please specify 4. Of these 4 chocolates shown to you, which do you think is from Switzerland or has connection with Switzerland? 1. VOCHELLE / 2. CADBURY S / 3. SWISS DELICE / 4. BERYL S 5. Why do you say so? Whilst agreeing with the High Court that courts must be cautious when considering survey evidence, the Court of Appeal nevertheless opined that being cautious is not equivalent to total disregard of such surveys. The Court of Appeal examined the methodology used by the surveyor in selecting the respondents and concluded that the scope of the survey was sufficient for the purpose of establishing the consumers perception of chocolate products which was considered as essentially urban consumer product. Based on this observation, it was accepted that passers-by near offices and supermarkets in the Klang Valley areas were sufficient to constitute the microcosm of the consumers in other urban centres in the country. On the issue of the questions that were posed in the survey form, the Court of Appeal was of the view that when considered as a whole, the questions were acceptable for their intended purpose. The Court of Appeal noted that if the respondents did not know what Swiss chocolates were, he/she could have picked the NO answer. The Court of Appeal also did not agree with the High Court that the survey evidence should be rejected 5

6 on the basis that it was conducted after the commencement of the lawsuit. The Court of Appeal noted that there was no evidence that the respondents in the survey knew about the lawsuit. On this basis, there was presumably no reason for the objectiveness of the respondents response to the survey questions to be doubted. In addition the Court of Appeal accepted that since the respondents had given their identity card numbers and there was no suggestion that the respondents did not exist or that the survey results were concocted or falsified, there was no reason for the survey evidence to be rejected on the basis that no contact details was provided by the respondents. The Court of Appeal reiterated the point that survey evidence should be treated with caution and cannot be used as the primary basis to prove the likelihood of confusion. However, since 2 witnesses (a tour manager who has led Malaysians on tours to Switzerland and a consumer witness) were already called to give evidence about the reputation associated with chocolates from Switzerland and the likelihood of confusion arising from the defendants use of the mark Maestro SWISS, the survey evidence could be accepted to corroborate the witness evidence. The Court of Appeal s decision in the Maestro SWISS case is helpful because it goes to a greater extent to clarify the approach that Malaysian courts would likely take to determine what would be considered as the relevant cross-section of the public. It can now be said that when considering what the relevant cross-section of the public would be for the purpose of conducting a survey, the court would be more inclined to give consideration to the nature of the product or service in question - i.e. the type and demographic of consumers that the product or service would ordinarily be directed at. Notwithstanding the clarifications provided through the High Court and Court of Appeal decisions in the Maestro SWISS case, it should be noted that the designing of surveys for use as evidence in court remains a tricky and high-risk undertaking. This has been recognized in Kerly s Law of Trade Marks and Trade Names (Fourteenth Edition, 2005) where it is said that designing a survey that will pass muster in court has become a very specialized art. With the coming into force of the Personal Data Protection Act 2010, it is essential that surveyors be briefed to ensure that the relevant consent is obtained from every respondent in the survey for their personal data to be collected As a starting point, it is advised that the 7 requirements as set out in Imperial v Philip Morris [1984] RPC 293 (and as adopted in Malaysia through the Service Master case and Lim Yew Sing v Hummel International Sports & Leisure A/S [1996] 4 CLJ 784) be borne in mind, namely the following: 1. Full disclosure of the methodology and results of the surveys conducted. 2. Full disclosure of all answers in the surveys conducted. 3. The questions that are posed must not be leading. 4. The questions that are posed must not lead the respondents into a field of speculation upon which he/she would not otherwise have embarked. 5. Verbatim answers should be recorded and disclosed. 6. Coding must be accurately carried out and the coding methods disclosed. 7. Full disclosure of the instructions given to the interviewers (who will be conducting the surveys). Kerly s helpfully suggested that surveys begin with a very open question (for example, what can you tell me about this product? ) followed by questions that are gradually more specific (for example, can you tell me who makes this product? ). Questions that provide only YES or NO options should be avoided as much as possible. In addition to the above, based on the Court of Appeal s decision in the Maestro SWISS case, it is advised that the identity card details or contact details of every respondent be recorded. As an added precaution, some respondents should also be called as witnesses to confirm their answers in the survey. The survey results can then be admitted to corroborate the witness oral evidence given at trial. On a related note, with the coming into force of the Personal Data Protection Act 2010, it is essential that surveyors be briefed to ensure that the relevant consent is obtained from every respondent in the survey for their personal data to be collected (i.e. to specify the purpose for the data to be collected and processed) and disclosed (i.e. for the lawsuit). For more information on the Personal Data Protection Act 2010, readers are advised to refer to the article Personal Data Protection Act 2010 also featured in this edition of NOVITAS. 6

7 INDUSTRIAL DESIGNS (AMENDMENT) ACT 2012 By Yean Yean LIM The Industrial Designs Act 1996 has recently been amended. The new amendment Act is now known as the Industrial Designs (Amendment) Act 2012 ( the Amendment Act ) which came into force on 1 July The following sets out some of the major changes with the coming into force of the Industrial Designs (Amendment) Act NOVELTY SECTION 12 Under the Amendment Act, an industrial design for which an application for registration is made is not considered new if it was disclosed to the public anywhere in Malaysia or elsewhere. This means that an industrial design which is disclosed anywhere in or outside Malaysia will not be considered new. This is in contrast with the previous provision where an industrial design is still considered new as long as it was not disclosed anywhere in Malaysia. AMENDMENT OF HEADING OF PART V The heading of Part V of the Amendment Act has been amended to Registered Industrial Design As Personal Property. REGISTERED INDUSTRIAL DESIGN IS PERSONAL PROPERTY SECTION 29 Under section 29(2) of the Amendment Act, any transmission of a registered industrial design or an application for the registration of an industrial design is subject to any rights vested in any other person of which notice is entered in the Register or of which notice is given to the Registrar. Further, it is clearly stated in section29(3) of the Amendment Act that an assignment of a registered industrial design or an application for the registration of an industrial design is not effective unless it is in writing and signed by or on behalf of the PERIOD OF REGISTRATION SECTION 25 The period of registration of an industrial design may now be extended for 4 consecutive terms of 5 year each. Previously, the period of registration of an industrial design may only be extended for 2 consecutive terms of 5 years each. 7

8 assignor and assignee, or as the case may be, a personal representative thereof. This section applies to an assignment by way of security and to any other assignment. In section 29(5) of the Amendment Act, it is stated that a registered design may be the subject of a security interest in the same way as other personal or moveable property. Previously, the above provisions were not in the Principal Act. RECORDING OF ASSIGNMENT SECTION 30 The Amendment Act has amended section 30 to include recording a security interest transaction. This means that a person may apply to the Registrar in the prescribed manner to record his title or interest in the Register where he becomes entitled to a registered industrial design by way of assignment, transmission or by operation of law or by a security interest transaction. REMEDIES FOR INFRINGEMENT SECTION 35 The Amendment Act has included an additional ground where the court may refuse to award costs. Under the Amendment Act, the Court shall refuse to award costs to the owner of a registered industrial design who becomes entitled to the registered industrial design by way of assignment or transmission or by operation of law or by a security interest transaction in respect of an infringement UNLESS (a) An application to record his title or interest is made under section 30 before the end of the period of 6 months beginning from the date of the relevant transaction; or (b) The court is satisfied that it was not practicable for the said application to be made before the end of that period and that an application was made as soon as practicable thereafter. INTELLECTUAL PROPERTY OFFICIAL JOURNAL NEW SECTION 46A The Amendment Act has included a new section 46A which states amongst others, that the Registrar shall publish an Intellectual Property Official Journal containing all matters relating to industrial designs which is required to be published under the Amendment Act or any regulations made thereof AND such other information or matters relating to industrial designs as the Registrar considers generally useful or important. Section 46A(4) further provides that a copy of the Official Journal shall on its production be admitted in legal proceedings as evidence without further proof being given that the copy was so published. Section 46A(5) provides that the Official Journal shall be prima facie evidence of the facts stated therein REGULATIONS SECTION 47 The Amendment Act has included 2 additional items where Regulations made can provide, namely: (ca) to regulate the procedure for the recording of matters required under section 30; (cb) to prescribe any matters or information to be published in the Official Journal SAVING AND TRANSITIONAL PROVISIONS The Amendment Act provides that any legal proceedings which are pending before 1 July 2013 shall continue as if the Amendment Act had not been enacted. The Amendment Act further provides that any application for the registration of an industrial design pending on 1 July 2013 shall be dealt with under the Amendment Act. This indicates that pending applications filed before 1 July 2013 but which are still pending on 1 July 2013, will still fall within the purview of the Amendment Act. However, Section 30 of the Interpretation Act 1967 provides that the repeal of a written law in whole or in part shall not amongst others, affect the previous operation of the repealed law or anything duly done or suffered thereunder. The preferred approach may therefore be to read the Amendment Act in tandem with section 30 of the Interpretation Act In addition, the Amendment Act provides that except for a registered industrial design saved under section 49 of the principal Act, an industrial design registered under the principal Act before 1 July 2013 may, on an application under section 25 of the Amendment Act, be extended for the available further consecutive terms of 5 years each. 8

9 FRANCHISE (AMENDMENT) ACT 2012 By Shie Ying LIEW The Franchise (Amendment) Act 2012 (hereinafter referred to as the FAA ) came into force on 1 January The FAA has extended the scope of the Franchise Act 1998 ( the Act ). Previously the Act is only applicable to the sale of any franchise in Malaysia. If interpreted literally, the Act would not apply where an offer to sell or buy a franchise is made and accepted outside Malaysia, even though the franchise business is operated in Malaysia. The FAA has since changed that. The Act is now applicable regardless of whether or not the sale of the franchise is concluded within or outside Malaysia, as long as the franchise business is operated in Malaysia. The FAA has also amended the definition of a franchise. Previously a franchise means a contract or an agreement either expressed or implied, whether oral or written, between two or more persons by which :- (a) The franchisor grants to the franchisee the right to operate a business according to the franchise system as determined by the franchisor during a term to be determined by the franchisor; (b) The franchisor grants to the franchisee the right to use a mark, or a trade secret, or any confidential information or intellectual property, owned by the franchisor or relating to the franchisor, and includes a situation where the franchisor, who is the registered user of, or is licensed by another person to use, any intellectual property, grants such right that he possesses to permit the franchisee to use the intellectual property; (c) The franchisor possesses the right to administer continuous control during the franchise term over the franchisee s business operations in accordance with the franchise system; (d) the franchisor has the responsibility to provide assistance to the franchisee to operate his business including such assistance as the provision or supply or materials and services, training, marketing, and business or technical assistance; (e) In return for the grant of rights, the franchisee may be required to pay a fee or other form of consideration; and (f) The franchisee operates the business separately from the franchisor, and the relationships of the franchisee with the franchisor shall not at anytime be regarded as a partnership, service contract or agency. The FAA has removed subsections (d) and (f). However, it is worthwhile to note that subsection (f) has been retained as the new section 29(3) of the Act. Franchisors are now required to obtain approval from the Registrar before making any material changes to the disclosure documents. Previously a franchisor is required to register his franchise before he can make an offer to sell the franchise to any person. Following the FAA, a franchisor is now required to register his franchise even before he can operate a franchise business or make an offer to sell the franchise any person. Failure to comply is an offence. The FAA has now introduced specific penalties for body corporates and non-body corporates in respect of this offence. A new section 64A has been inserted into the Act which requires franchisees of foreign franchisors to register the franchise before commencing the franchise business. Previously, franchisees of foreign franchisors were required to be registered under the then 9

10 section 55 of the Act (which has seen been deleted) but the Act was silent as to when such registration must be made. In addition, if such franchisee has been granted the right to sub-franchise, then such right is also required to be registered under the Act. A franchisee of a local franchisor or local master franchisee shall also register the franchise within 14 days from the date of signing the agreement under the new section 6B of the Act. Previously there is no such obligation imposed on franchisees of local franchisors or local master franchisees to register. Franchisors are now required to obtain approval from the Registrar before making any material changes to the disclosure documents. Previously no approval from the Registrar is necessary. Franchisors merely need to file the amended disclosure documents with the Registrar. Further, franchisors are required to submit an annual report which shall contain the updated disclosures documents within 6 months from the end of each financial year of the franchise business to the Registrar. Failure to do so is an offence. In addition, the Registrar may also cancel the registration of the franchise if the franchisor fails to submit the annual report. Under the FAA, franchise consultants are now required to be registered under the Act. Franchise consultant has been defined to mean a person who provides advice and consultancy services to another person on the registration of a franchise business and compliance of the related laws. The FAA has also made it an offence to discriminate between franchisees operating a franchise if such discrimination will cause competitive harm to a franchisee. Previously this was merely a contravention of the Act and not an offence provision. The FAA has now made it compulsory for the franchisee to give a written guarantee not to disclose any information in the operation manual or obtained while undergoing training by the franchisor and not to compete with the franchisor during the franchise term and two years post expiration or termination. Such written guarantee will not only bind the franchisee but also the franchisee s directors, the spouses and immediate family of the directors and the franchisee s employees. Previously only franchisors are prohibited from terminating the franchise agreement before the expiration date except for good causes provided under section 31 of the Act. This prohibition is now extended to the franchisees as well. Further, the FAA has introduced a new good cause to terminate the franchise agreement without the requirement of notice or opportunity to remedy the breach, namely, where the franchisor or franchisee becomes bankrupt or insolvent. Franchisees are now required to apply for an extension of the franchise term by giving not less than 6 months prior written notice to franchisors. Previously franchisees may give written notice to extend the franchise term at any time. The FAA has also introduced specific penalties for body corporates and non-body corporates who are involved in fraud or deceit under the Act and the offence provision has been extended to apply to franchise brokers and franchise consultants. The FAA has inserted a new offence provision under section 37A on anyone who uses the term franchise or any of its derivatives without approval of registration by the Registrar. Similarly specific penalties are provided for body corporates and non-body corporates in relation to this offence. The general penalty provision has been amended to provide different penalties for body corporates and non-body corporates. Section 57 of the Act has been deleted. This section provides that any advertisement relating to the sale and purchase of a franchise must be filed with the Registrar at least 5 days prior to publication/distribution. 10

11 ENFORCEMENT INITIATIVES IN THE NEWS By Azrul Hamid In its effort to tackle software piracy in Malaysia, the Enforcement Division of the Ministry of Domestic Trade, Co-operatives and Consumerism has an initiative requiring companies to provide the Enforcement Division with an audit report indicating the quantity and type of computer software that is used by respective companies. This initiative is dubbed Ops Tulen Semak which loosely translates to Genuine Check Ops. On 24 July 2013, the Director General of the Ministry of Domestic Trade, Co-operatives and Consumerism, Mohd Roslan Mahayudin issued astatement that there are about 12,605 companies that have failed to respond to the Enforcement Division s request to provide the audit reports in a complete manner. As a result of which, these companies are now said to be placed on a watch list of companies that are potentially using pirated software. It was also reported that out of 12,942 audit reports submitted to the Ops Tulen Semak secretariat, the 12,605 companies that are now in the watch list made a declaration that they are using licensed software but did not include an audit report identifying the software that is used. Based on a research conducted by the Business Software Alliance (BSA) in 2011, 78% of computer users in Malaysia admit to using pirated software. (See: bsa.org/2011/downloads/press/pr_ malaysia_en.pdf) In 2013 the Enforcement Division had taken up 110 cases pursuant to the Copyright Act 1987 (source: uasa-dan-pemeriksaan-2013) of which 30 cases are said to be software-piracy related enforcement actions. It has to be noted that notification of copyright can only be made by a citizen or a permanent ( PR ) of Malaysia. It is also reported that a total of 122 computers, peripherals and 530 copies of suspected infringing software with a value of RM4.7million (US$1.6 million) were seized in the 30 cases. Pursuant to the Copyright Act 1987, if found guilty, an infringer would be liable to pay a minimum of RM 2000 (US$667) or a maximum of RM 20,000 (US$6667) per infringing copy or in cases of individuals, directors or senior management of a company, if found guilty they can also be imprisoned for a maximum of five years. In other news, it was reported that on 11 June 2013 the Enforcement Division of the Ministry of Domestic Trade, Co-operatives and Consumerism conducted a raid action against an operator of a music sharing website suspected of distributing infringing copies of songs. The operator of the website jiwang.org who is located in Kubang Kerian, Kelantan was arrested. Jiwang.org is a popular local website specializing in local Malaysian music. It was believed that the website operator was earning substantial sums of money through subscriptions and online advertising space. An online search showed that the URL can no longer be located. 11

12 THE FEDERAL COURT CLARIFIES THE SCOPE OF APPLICATION OF THE HUMMEL S CASE By Bong Kwang TEO In 1996 the Court of Appeal in the case of Lim Yew Sing v Hummel International Sports & Leisure A/S [1996] 3 MLJ 7 ( the Hummel s case) held that trade mark law is territorial in nature and there is nothing unlawful under the Malaysian Trade Marks Act 1976 for a local trader to become the registered proprietor of a trade mark owned by a foreigner but which has not been used at all in Malaysia. Understandably, this decision has caused some unease among foreign trade mark owners. 16 years later, the Federal Court of Malaysia in Yong Teng Hing b/s Hong Kong Trading Co & Anor v Walton International Ltd [2012] 6 MLJ 609 FC affirmed the above statement of law but somewhat restricted its scope of application. It held that the Hummel s case however did not hold that the applicant who is the first to use and file a trade mark in relation to goods of that class enjoys absolute priority over another proprietor who has not used the mark in relation to the same goods of that class. In his speech, Zulkefli Chief Judge clarified that the Hummel s case did not decide the first user of the trade mark would be entitled to register the trade mark absolutely. His Lordship also distinguishes the Hummel s case on the ground that in the Hummel s case there was no issue of the foreign entity having used the trade mark at all in Malaysia prior to the application date Under the new provision of the Act, a foreign trade mark which is well-known in Malaysia, shall be the basis for the refusal of the registration of a similar mark by a different proprietor, notwithstanding that the foreign mark has not been used at all or registered in Malaysia (at para 18) in respect of different but related goods, unlike in the present case (at para 8 of the decision). With the clarifications from the Federal Court, it does appear that the Hummel s case will only apply if there is absolutely no use by the originator of the mark in Malaysia. Thus, if the foreign original owner has used the mark in Malaysia, albeit for goods different from the goods of the local trader, the court must enquire whether the mark of the local trader is likely to deceive or confuse the public as a result of such prior use by the foreign trade mark owner. In the present case, the facts show that the respondent i.e. Walton International Ltd which is the owner of Giordano mark, had used the mark in class 25 in respect of articles of clothing, leather belts, bags etc since the 1990s. The appellant, Yong Teng Hing had applied to register an identical mark Giordano but for different types of goods in class 9 i.e. optical goods and sunglasses. Based on this crucial fact, it is clear that Walton s use of the Giordano mark in respect of articles of clothing predates that of Yong s use for optical goods and sunglasses. Walton filed its notice of opposition against Yong s trade mark application in class 9 (for optical goods and sunglasses) before his trade mark could be registered. The Federal Court held that the onus was therefore on Yong rather than on Walton to prove that he was entitled to register the Giordano mark. In this respect, the Federal Court affirmed the finding of fact of the Court of Appeal that Yong 12

13 had not adduced any evidence to show that he had commenced use of the trade mark in relation to optical goods and sunglasses prior to the filing date of this application. Further, the Federal Court held that Yong had not independently devised the mark himself, but tried to obtain the benefit of the world-wide reputation of Walton. Likelihood of confusion is therefore very real and his application should be refused. In the course of its decision, the Federal Court declares that we would like to state here that after the Hummel s case there has been a shift in direction and approach towards the acceptance of the reputation of foreign trade marks which would bar the registration by a proprietor of a mark that is similar thereto. In this regard, an amendment was made to section 14 of the Act as of 1 August 2001 (Act A1078) by the introduction of the concept of well-known trade mark. Under the new provision of the Act, a foreign trade mark which is well-known in Malaysia, shall be the basis for the refusal of the registration of a similar mark by a different proprietor, notwithstanding that the foreign mark has not been used at all or registered in Malaysia (at para 18). It should be pointed out that section 14(1)(d) of the Trade Marks Act 1976 (after the 2001 amendment) clearly prohibits an applicant from registering a trade mark which is identical with or so nearly resembles a mark which is well-known in Malaysia for the same goods or services of another proprietor. And Section 14(1)(e) goes on to provide that if the mark under application is a well-known trade mark and this well-known trade mark has been registered in Malaysia, this will prevent the applicant from registering it even if the application is in respect of dissimilar goods or services provided that the use of the mark in relation to those goods or services would indicate a connection between those goods or service and the proprietor of the well-known mark, and the interests of the proprietor of a well-known mark are likely to be damaged by such use. The significance of the Federal Court decision in the Giordano case is such that it made clear that as long as a foreign trade mark owner has used the mark in Malaysia, and it does not matter whether the use is for the same goods as the local trader, this would probably suffice to stop a local trader from misappropriating it. Once it is proven that the foreign trade mark owner has used the mark in Malaysia, the Hummel s case does not weigh in at all and the competing claims to the trade mark must be resolved by making the enquiry whether there is a likelihood of confusion and deception. In this respect the onus is on the local applicant to prove that no such likelihood exists in order to secure the registration. However, in a case where there is absolutely no use of the trade mark by the foreign entity in Malaysia, it does appear that the Hummel s case still applies but then the local trader must contend and overcome the wide-ranging prohibitions laid down in section 14(1)(d) and (e). 13

14 Case Update COURT OF APPEAL AFFIRMS THE DECISION OF THE TRIAL COURT IN NEHEMIAH REINFORCED SOIL SDN BHD V. PATRICK CYRIL AUGUSTIN & ANOR By Bong Kwang TEO The Court of Appeal affirms the decision of the trial court in Nehemiah Reinforced Soil Sdn. Bhd. v Patrick Cyril Augustin & Anor (Shah Alam High Court Civil Suit No. MT ) (Reported In [2012] 9 MLJ 112) The High Court had, on 23 August 2011, in allowing the invalidation claim, ordered that the Appellants/Defendants patent be declared as invalid During the appeal hearing on 21 January 2013 at the Court of Appeal (Civil Appeal No. B ), before the quorum comprising Datuk Abdul Wahab bin Patail, JCA, Dato Alizatul Binti Osman Khairuddin, JCA and Tengku Maimun Binti Tuan Mat, JCA), the Defendants appeal against the decision of the High Court in Nehemiah Reinforced Soil Sdn Bhd v Patrick Cyril Augustin & Anor (Shah Alam High Court Civil Suit No. MT ) was unanimously dismissed with cost at RM100,000 (US$33,333). The Plaintiff/Respondent, Nehemiah Reinforced Soil Sdn Bhd had sought an order in the High Court to invalidate a patent in respect of a retaining wall granted to the Defendants/Appellants on grounds of lack of novelty, inventive step as well as insufficiency of descriptions. The Plaintiff had also sought a declaration that neither the use of the process of building a retaining wall called Anchor Earth Systems nor the said Anchor Earth Systems considered as an article nor their supply to third parties would constitute an infringement of the Defendants/Appellants patent. The Appellants/Defendants counter-claimed for the payment of arrears of fees pursuant to an agreement that they entered into with the Respondent/ Plaintiff. The High Court had, on 23 August 2011, in allowing the invalidation claim, ordered that the Appellants/Defendants patent be declared as invalid. It had also allowed the declaration of non-infringement sought by the Plaintiff/Respondent. The High Court also made an ancillary order that the licence fee paid by the Plaintiff/ Respondent be refunded by the Defendants/Appellants to the Plaintiff/Respondent pursuant to section 46 of the Patents Act, It had accordingly dismissed the counterclaim of the Appellants/Defendants. After hearing arguments from counsel for the Appellants and the Respondent, the Court of Appeal found that there is no basis to interfere with the High Court decision and has accordingly affirmed the decision of the High Court in toto and dismissed the appeal with cost. Mr Teo Bong Kwang (together with En Azrul Hamid and Ms Boo Min Lee) of Messrs Wong Jin Nee & Teo acted for the Respondent/Plaintiff in the trial and the appeal and Mr David Matthews (together with Ms S Janagasutha) of Messrs Mathews Hun Lachimanan acted for the Appellants/Defendants in the appeal. acted for the Appellants/ Defendants in the appeal. 14