Please click here to read a complete transcript of the roundtable.

PO: What are the main problems that IP owners encounter when trying to work with Customs?

KM: Before the admission of Vietnam, Laos, Myanmar and Cambodia, Malaysia was the only country in ASEAN that shared borders with all ASEAN countries. So geographically we are special, but this also poses a challenge.

Section 70 of our Trade Mark Act deals with border measures. Customs falls under the category of authorised officer and they also have an ex-officio function. But the issue is one of cooperation between the IP owners, the rights owners and the enforcement officers.

There is no problem with the law: the provision is there. All the IP owner needs to do is to come and make a report to us, and then we will liaise with the Customs official. A Customs official can also take ex-officio action, but the issue here is, if you have two t-shirts, both Polo Ralph Lauren, how do you distinguish which is genuine, which is fake? I now know how. Again it's a question of general capacity. Customs needs to be in a position to tell what is good and what is not.

But costs is another issue. Who will pay for the costs if you seize the goods? If it's a large shipment, there is always a cost. There are a lot of issues here on the developmental side. But I have to tell you that, despite the complaints, ever since I have been in the office I have yet to sign any order on this that I have received from an IP owner.

DW: The laws in Malaysia are in place, I believe. The question is how are we going to tackle this issue of enforcement?

The problem we are facing on enforcement is time: how can we stop goods entering the country? Of course we can take civil remedies. Lawyers can make a complaint to the ministry concerned, the enforcement officer will liaise with the Customs officer, and at that entry point the goods that have been found to be counterfeit can be stopped there.

IS: The way I look at it the provisions are good. They've got, I think, about five or six provisions which set out in detail what needs to be done and how it's supposed to be done.

The problem that Encik Kamel very rightly pointed out is that he's not signed a single order, and I think I have a reason for it. If you look at the form which needs to be filled out, the details that have to go into the form start off with stipulating that you first have to be a registered trade mark owner, so if you have common law rights, you can't fill out the form. Secondly, you have to identify the ship and you have to identify the estimated time of arrival. Often when you are dealing with counterfeit products, that sort of intelligence is not easy to come by for any trade mark owner.

I think the registrar has got just a couple of days to approve it or not approve it. And I'm finding that if the timelines are followed I think the provisions are good, but from a practical point of view, what sort of intelligence does a trade mark owner have? And there are more onerous responsibilities for trade mark owners. Assuming the goods are seized, they've got to provide security as well for the enforcement action, and if the security isn't enough, they have to top it up as well. And assuming the goods are seized, you have to file a civil action within 30 days. And to prevent the goods from being released to the person who has imported it you actually have to get a court order within 30 days, and that's not often very easy to get.

Interaction with Customs and the enforcement office is key here to ensure that you can solve all these sort of practical difficulties.

Participants
	Indran Shanmuganathan (IS) Partner, Shearn Delamore & Co
	Mohd. Shah Bin Hashim (SBH) Executive director, legal & secretarial, Malaysia & Singapore, Nestlé
	Heng Gee Lim (HGL) Professor, Law Faculty, MARA University of Technology
	Burhanuddin Bin Md Radzi (BR) Managing director, Les’ Copaque Production
	Desmond Wee Tian Peng (DW) President, Malaysian Intellectual Property Association
	Ruzairi Abdul Rahim (RAR) Director, Research Management Centre, Universiti Teknologi Malaysia
	Kamel Mohamad (KM) Director general, Intellectual Property Corporation of Malaysia (MyIPO)
	Peter Ollier (PO) Asia editor, Managing IP

KM: I agree. To a certain extent we at the IP office would like to facilitate this kind of cooperation. I also agree with the view that with the level of technology right now, I'm sure we can track shipping.

PO: What problems has Les' Copaque [see box] had within Malaysia in enforcing the IP that it has created?

BR: We started merchandising last year before the release of the film, just to test how good it would be when we released it. But we found out that the products came out earlier than we wanted in the pasar malam [night market], so we were very disappointed. But I told people: "Don't be disheartened, because when they start to pirate it, it means that we are on a par with Hollywood and our product is famous!" So to make our characters famous, in business terms we need to invest in promotion and advertisements. I thought about it and decided: let the pirates make it famous first. So when our film came out, we used the two characters, Upin and Ipin to make the kids persuade their family to the cinemas. That's why our film was successful in term of ticket sales, which raked in RM6.3 million ($1.9 million). It's the second highest grossing local film in Malaysian history.

PO: How do you deal with the night markets?

BR: For us to take action on these traders we need to do civil proceedings, but it's not worth it. So we work with KPDN [Ministry of Domestic Trade]. They are the ones who raid, and they take legal proceedings.

We want to find out who the supplier is, because if we raid the night traders we can only get about RM100 to RM200 [$30 to $60] of goods. We have to find the suppliers, and it's a very risky job, because this kind of trade normally involves gangsters. So far I think we have 21 cases pending. Some of them, we managed to get them to become our official supplier. For example, we asked KPDN to raid Giant Hypermarket, in Shah Alam. They were selling our pirated t-shirts. After the KPDM raided the place, we brought a civil proceeding. Then the owner flew in from Hong Kong to negotiate an out-of-court settlement with us. We told them, "Yes, an out-of-court settlement is fine, but we want to enter all your markets with no strings attached, under our terms and conditions". So we managed to turn their chains into an outlet for our product.

RAR: My background is engineering, it's not law. I think that it is very important to improve civil protection and raise awareness among the public. My children like Upin and Ipin. When they say to me: "Buy the CD of Upin and Ipin" they also say: "We should go to pasar malam – it's RM5". But I reply: "No, I want the original one." So we go to the shop and buy it. So my children know it's Malaysian, have awareness of IP, so you've got some public awareness developing.

PO: How effective is civil enforcement of IP in Malaysia?

DW: I think ever since the IP court was launched in July 2007, we have seen an increase in IP cases being filed. Of course the delay in the civil procedures comparatively with the criminal is there because of paperwork, final pleadings, and then serving of pleadings and fixing of dates by the courts. But a civil remedy is still very important, especially for the IP owner, because they need to get back what they have lost.

PO: What experience does Nestlé have of using the courts in Malaysia?

SBH: First of all, it's a Nestlé principle that we try not to go to court. However, there are some cases where we really have to litigate if only to prove a point. My view is that it has to be a win-win, because the target is the consumer. There's no point in two trade mark owners just litigating endlessly. There must be a win-win and each party must be able to give certain things in order to avoid the publicity that surrounds court action.

Coming back to Malaysia, there is a delay which comes with the system. And no matter how you try, there will always be delay. What we need to see in Malaysia is improved quality of IP judges, people who are trained. In Thailand there is a higher level of expertise. Maybe in Thailand there is volume – I do not know where that is coming from.

IS: Over the last two or three years we've certainly seen an increase in speed when it comes to cases coming up and decisions being handed down. Part of the reason for this was probably the judge who was initially in charge of the IP court in KL. It was extremely fast and efficient.

Now there is no single judge doing just IP in KL; there are a few judges doing it. And yes, cases have been heard faster, and I think the previous fear of looking at IP matters, which for some reason many judges thought was not a normal piece of litigation, has changed. I think Encik Shah's comment there was correct, in the sense that are we confident that we have judges who understand IP? I won't be too hard on the judges. They are trying to familiarise themselves with a topic which is not day-to-day, and I think as we go on we will develop if everyone is patient.

PO: Professor Ruzairi, how have you managed to increase awareness of IP at your university?

RAR: At the University usually there's a lot of invention and innovations going on. We go to exhibitions, we publish papers and we disclose all our findings to the public.

About four years ago we attended a MyIPO seminar and the University management said, "What about our IP?" They decided that our level of IP ownership was very low and that we needed to do something.

Upin and Ipin: a Malaysian success story

The story of Les' Copaque Production began in 2005 when Burhanuddin Md Radzi was looking for investments in the film industry. He found three graduates with degrees in film and animation who wanted to create a full-length feature film and they persuaded him to launch a new animation company. "When I started I told the government that I'm going to produce the Mickey Mouse of Malaysia," said Burhanuddin Md Radzi at the roundtable. The company released its first feature film, Geng the Adventure Begins, in February this year to rave reviews. The film became the second highest grossing Malaysian film in history. The company is also expanding internationally and has already become popular in Indonesia. But this success has also created the same problems with copyright and trade mark infringement that Disney battles on a daily basis.

We tried to reduce the bureaucracy first. Then we went to each faculty and raised awareness of IP: what is IP, what is a patent, what is a trade mark, invention disclosure, copyright and so on. We would also give a percentage of money generated to our researchers – for any Patent Information (PI) number, you get a certain amount of money. But more important than the incentive is the awareness and the reduction in bureaucracy.

Now in UTM we have changed the process. All the IP applications must go through Research Management Centre Universiti Teknologi Malaysia. We promise our researchers that they will get a PI number within four months.

HGL: We also give talks to people from the sciences and engineers about what to do when there's a possibility that an invention has been created. And we see that the number of applications for patents has actually increased, and this is not only in UPM [Universiti Putra Malaysia]. In fact if you look at the average rate of Malaysian applications, from the time the 1983 Patent Act was in force in 1986, up to 2004, the total number of applications from Malaysian universities is around about 2% to 3%; below 5%. But in the last few years, from 2006 onwards, we have increased up to 12% of applications. In fact, in the first half of 2007 about 23% of applications came from universities and research institutions.

PO: What about the broader problem of raising awareness of IP among the general population?

KM: This is my favourite subject! Sometimes awareness is very general, and sometimes very specific. I think this year we became the first or the only nation in the world that has an IP mobile clinic that educates people about IP.

To raise awareness we also have to leverage IT. Let's look at Facebook. I told my staff, this is a perfect awareness medium channel, like it or not.

Rather than putting up a billboard to promote IP Day, I think I could have done it cheaper by going through Facebook, or even a blast using SMS.

We also want to work together with the IP owners and practitioners. During IP day this year, we also had part of a seminar in Mandarin, for example. But we still have more to do, especially among SMEs, for example.

BR: I think awareness of pirated goods is going up. Even the children, they also want the original. But this is not the west – our standard of living is still very low.

As a business owner we have to take this into consideration when creating strategy. We cannot always complain about pirates. Those t-shirts are for the masses. Somehow the lower end, we let the pirates run it, to get our characters more popular. For the t-shirts we only go for the niche type, which are a bit expensive, a good product. And we use images that people will never get from YouTube or whatever we release: we create a new image – the character, the design is different. Then we sell in an upmarket environment.

Raising awareness: MyIPO’s IP Mobile Clinic

PO: What do you think about that strategy of allowing low-level infringement and then aiming at the high-end market?

IS: There's one small difficulty with that approach. Now it's fine – you can allow those so-called counterfeiters to go away and do whatever they want to do. My concern about letting them go on too long is this: you are in a way accepting that they can do what they are doing. It's what you call acquiescence. There will come a point when these trade mark characters don't identify you any more, they just identify anybody in the market. And at that point your trade mark loses its ability to function as a trade mark; you may have difficulties maybe filing an action against somebody else.

SBH: I beg to differ as to where the industry is. Industry has zero tolerance to counterfeits. We are very clear that there is zero tolerance to counterfeit infringement, look-alike goods, whatever. We have to take action from the earliest possible moment, and if we need to coexist then we will enter into coexistence agreement.

PO: But you still try to avoid going through the courts?

SBH: Going to court is the final option. But the Nestlé branding and Nestlé trade marks are very, very protectable and heavily protected. We are very clear about that.

I'll share with you a recent exercise that we did. It was painful for everyone, but we did it. What happened was the price of cocoa went up, and the price of Milo powder (see box) went slightly up. This meant the coffee shops were selling a Milo drink product, but not using Milo powder as an ingredient. They were using a different cocoa malt brand, and they were calling it a Milo drink. If you sell something and call it a Milo drink, you will derive a premium pricing although the product is not made from Milo powder.

We collaborated with the enforcement people. We pinpointed every coffee shop and raided them and we asked for evidence of whether they've got receipts to show that they've used the original Milo powder, and they didn't. Some of these incidents are actually percolating through the court system, and we're going to give evidence. That's how serious we are.

I give you another example of our brand protection policy. Milo powder is such a famous brand and some of the hypermarkets were selling our Milo powder below price to use it as a loss-leader. At the beginning of this year, we put our foot down. We said: "If you want to undercut us, there's a certain level you can reach. If you sell Milo powder below the invoice price, that means you're actually positioning the brand lower and we will not supply you with Milo powder." We've done that, and slowly the hypermarkets are towing the line and they know the difference.

PO: Malaysia's IP laws are in the process of being revised. What amendments would you like to see?

IS: I'm going to pick up trade marks because our law comes from the 1938 UK Act. We've seen some amendments, but I think we have to start recognising more non-traditional trade marks, shapes, sounds and at some point, eventually smell.

The other area is of course protection of well-known trade marks. There's protection of well-known trade mark provision in the Trade Marks Act: it takes two forms. First, a well-known trade mark is used to prevent the registration, or an application for a registration of a mark when the well-known trade mark is not being used in Malaysia, or has not been registered in Malaysia. The other one is the injunctive remedy.

But looking at well-known trade marks, the area of bigger concern for me is the type of remedies that one would associate with a well-known trade mark. And here one area which I feel very strongly about is the protection against dilution of trade marks, which is not recognised by the Trade Marks Act. We tried to run on that argument in the McDonalds case and failed. You try to do it in a passing-off context. I think the traditional way of looking at losses in a trade mark context is diversion and losses to goodwill and reputation. I think the bigger form of loss today is the dilution sort of loss, where there's no confusion actually as to source, but when the trade mark degenerates into common use, the value of the trade mark diminishes.

HGL: A lot of amendments need to be made to refine our Acts. But I think the one major problem now is the interface between copyright protection and functional designs, because there seems to be some confusion and apparent contradictions between the provisions (in the Copyright Act 1987). For example, section 7(5) says that if you have registered the design, then you cannot rely on copyright law. Section 7(6) says that if it is capable of being registered but you have not registered it, but once you start making more than 50 articles by industrial process, you are going to lose your copyright. Then we have section 13A, that says basically functional designs will not be protected by copyright law. But then there is a gap there – how do you protect functional designs then?

So it's a bit messy and the reason why this has occurred is because about 14 years ago, when they put in these provisions, they sort of cut and pasted from the UK Act without realising that there is an unregistered designs right. And also, those provisions that they cut and pasted had already posed some problems in the UK.

RAR: In our case we have a lot of patents pending, so we would like to speed up the time it takes to get a patent granted.

PO: Is there a timetable from when the amendments might go before parliament?

KM: We were talking originally about 2010, early 2011. But right now I think that, especially on the copyright side, there is pressure to make it faster. So that's why I need to sit down with the committee again and think about how we can move the process forward. With copyright things are happening very fast. The technology is changing, especially as it impacts on ISP liability. We are also addressing the context of fair use for education, for example, especially on the exemption and limitation. In fact we see, like the UK, you have a very comprehensive exception and limitation. I think it covers all education, and we are trying to understand this as well.

Milo battles to register its green

Milo, a chocolate and malt powdered drink, has a 90% market share in Malaysia and Malaysians are said to be the world's largest consumers of Milo. During the discussion on proposed reforms to the IP system, the participants discussed whether Milo green should be registered as a trade mark. KM: We are seriously considering adding in protection for colour marks. Currently, getting a trade mark registered for a single colour is not easy. For a combination of colours, however, it is possible provided they're distinctive. SBH: We have a single colour for Milo that we have been struggling to get approved – the Milo green. It's still before the registrar and they have been looking at it for a long time. We've been giving them as much information as we could. The pantone green does not change for Milo, and that's standard. We've given lots of examples of usage of the Milo green and the registrar is still deliberating. We do not mind if the Milo green is given protection just for that category. IS: The problem with colours is there's often this difficult balancing exercise, and while I think some colours are extremely distinctive and should be registered, there's the other niggling issue of whether you confer existing or non-existing rights. It's the same problem with well-known trade marks and dilution again: are you giving extensive monopolistic rights at the expense of granting registration? And of course you can't apply the normal examination standards for something like that; you need to be absolutely sure that the mark is extremely factually distinctive through extensive use – I don't think Milo would have a problem showing that – coupled with the limitation on the exclusivity to certain limited products. HGL: I believe that colours, shape of products, sounds and smells should be registrable in principle but you have to be very careful. If you look at the European Court of Justice cases, they have actually been restricting registration of all these as trade marks. The BP colour was allowed at an early stage when the trade mark directive was implemented, but in recent cases where they tried to register the colour – just the colour blue and yellow – the court says no and said: "Look, you have not limited it. You are just claiming these two common colours without spatial limitation." So there must be a special limitation so that there is certainty in relation to what your mark actually is. You have to be very clear what the sound is and isolate it. The moment you look at it, you know this is what it means, so there's no confusion. So in principle, yes, but I think we need to wait until the law in the EU is clarified, then we can put in all these sorts of limitations in our statute. SBH: I go back to Milo. The Milo mark has certain properties. The Milo green is used worldwide. And that's a brand property that we want to protect if the colour is given in whatever form. We're prepared to limit it to that kind of product. Milo is iconic in Malaysia. We need to prove that this means something. Internally, we are very concerned about our green, and we protect it ourselves.

Please click here to read a complete transcript of the roundtable.