Changes brought by amendment of 2011 to Trade Description Act:The Trade Descriptions Act 1972 has been repealed and replaced by the Trade Descriptions

Act 2011, new Act having come into effect since 1st November 2011. Its purpose is to promote

good trade practices by prohibiting false trade descriptions and false or misleading statements,

conduct and practices in relation to the supply of goods and services.

Some salient changes of the new Act include:

Section 9(1) – Trade Description Orders (TDO)1 are now reserved for owners of registered trademarks, in contrast to the 1972 Act where common law owners are also eligible. Such a limitation may not be popular but it will encourage registration of trade marks.

Section 9(2) – A TDO is now valid for a mere one year which was valid for five years earlier, unless renewed by the High Court on such terms and for such further period as the Court may decide. This is more administratively burdensome but renewal would not be withheld unreasonably.

Section 20 – It is now a punishable offence to make false or misleading statement in relation to contests and games. This would hopefully curb sham “scratch & win” games of chance, with false promises of prizes that abound in Malaysia.

Section 23 – Personal or domestic use is now a defense to a person charged under the Act. However, a body corporate is not entitled to rely on such defense.

Section 44 – It is an offence to disclose information that is likely to prejudice an investigation under the Act. Some defenses have been provided under this new “tipping-off” provision.

Sections 53 & 66 – These new sections allow admissibility of evidence obtained by agent provocateur (abetting the commission of an offence for the sole purpose of securing evidence) and rewarding whistleblowers with part (not more than 50%) of the fine imposed upon securing a conviction. This is to encourage the public’s participation; in an Act that is ultimately meant to protect the same public.

Section 28 & 29 -The Domestic Trade, Cooperative and Consumerism Minister is empowered to assign any expression or description used for goods or services and to appoint exclusive awarding bodies of such expression and description.

Border protection measures in Malaysia and Powers of custom officers regarding enforcement of IPR :

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.

1 A trade description order (“TDO”) is a court order obtained from the High court for a declaration that products bearing an infringing mark are a false trade description. A TDO is useful as conclusive proof that the use of a false trade description on a product is a use without authority.

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 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 (sec 70D – sec 70P)

Application

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

he is the proprietor of a registered trade mark

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

he objects to such importation.

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:

instituted an infringement action; or

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.

Powers of the custom authorities:

The competent authority for Intellectual Property Rights (“IPR”) enforcement in Malaysia is the enforcement division of the Ministry of Domestic Trade, Co-operatives and Consumerism (“MDTCC”). For border measure, the Royal Malaysian Customs may enforce criminal offences for infringement of IPR under the ex-officio capacity as provided for under the Trade Marks Act 1976. In brief, the Royal Malaysian Customs is authorised to detain counterfeit goods at a port of entry, provided that a complaint is lodged to the Registrar of Trade Marks by the brand owners.

There are no express provisions in the Customs Act 1967 that provides Customs officers to prohibit the importation and exportation of counterfeit goods and the existing provisions are not adequate for Customs to provide them with the authority to detain and seize suspected counterfeit goods at the border. The Customs play a limited role in enforcing intellectual property rights. Unfortunately, unlike many jurisdictions around the world, the Customs division does not maintain a formal recordation system. It is to be noted that whilst the Customs is empowered to seize infringing goods at port, the application must first go through the Registrar of Trade Marks. This is a time consuming and cumbersome task. Upon notification by the Registrar, Customs will take the necessary action to seize and detain the identified goods. If the IP owner does not commence an action for infringement within the time period specified in the notice given by the Customs, the seized goods will be released to the importer. The importer will then be given a right to apply to the court for an order of compensation against the applicant.

S.31 of the Customs Act 1967 prohibits the import and export of “prohibited goods”. Yet, counterfeit goods are not specifically defined as “prohibited goods” within the definition of the Act. Likewise, the Customs (Prohibition of Imports) Order 1998 also does not define counterfeit goods as one of the specified goods. There is no provision placing an obligation upon Customs Officials to independently investigate, seize or detain consignment of suspected counterfeit goods.

Nevertheless, there are residual powers granted to the Customs where the Customs may, on it own initiative take ex-officio action to detain or suspend the release of goods which, based on prima facie evidence, are counterfeit. Section 70(O) of the Trade Marks Act provides Ex-Officio powers to the Royal Malaysian Customs (CUSTOMS) wherein any authorized officer may detain or suspend the release of goods which, based on prima facie evidence that he has acquired are counterfeit goods. However, there are no regulations on how CUSTOMS are to effect and action this provision. In fact, CUSTOMS are usually not fully equipped and trained on IPR issues and hesitate to detain goods without full cooperation and training from the brand owner.