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Malaysia: One Belt One Road brings opportunity and risk

One Belt One Road (OBOR) is a government initiative proposed by China's President Xi Jinping in September 2013 for joint economic development spanning 65 countries. OBOR is a proposed economic belt along the land-based historic silk road and the 21st Century maritime silk road from Asia to Europe, through South East Asia, South Asia, Central Asia, West Asia and the Middle East. This initiative aims to improve connectivity and cooperation between countries in this region in order to promote trade exchanges in this area. This briefing examines intellectual property strategies that may be adopted by foreign companies, particularly by Chinese companies trading in Malaysia to keep their IP risks under control.

The general principle that IP is territorial in nature essentially means that IP protection will only be accorded to the rightful proprietor in the jurisdiction where the IP rights are granted either through registration, or use, or in any other manner provided under the relevant laws of the particular jurisdiction. One cannot claim legal protection elsewhere other than in the jurisdiction where the IP rights are registered or recognised. For example, a patent or trade mark registered in China will not be entitled to protection in other countries or regions such as Malaysia.

Cost has been a long-standing concern for most companies when it comes to protecting their IP rights. It has always been a top priority for rights owners to consider the most cost-effective IP protection strategies. While it is understandable for rights owners to file what they need, they have to learn the importance of protecting their IP rights, rights they cannot afford to lose. Based on the statistics from the Malaysian Intellectual Property Office, the top applicants for various IP rights in Malaysia were, among others, the USA and Japan.

Patent and utility innovation Trade marks
Country Number of applications Country Number of applications
USA 1941 USA 1941
Japan 1443 Japan 144300%
Malaysia 1375 Malaysia 1375
Germany 490 Germany 49000%
Switzerland 341 Switzerland 341
South Korea 247 South Korea 247
China 246 China 246
United Kingdom 245 United Kingdom 245
France 215 France 215

It is surprising to note that China, as Malaysia's largest trading partner was only ranked number seven for both trade mark and patent filings in Malaysia. This is below some of the countries that are not major import partners of Malaysia.

Not only is IP registration the prima facie evidence of ownership of IP rights but such registration is of utmost importance when it comes to enforcing IP rights through the criminal route. The relevant enforcement authorities must be satisfied that the complainant has in fact obtained registration and is entitled to the protection of IP rights in Malaysia before they commence any action. The rights owners must always play an active role in protecting and enforcing their IP rights. This can be done by devising an effective IP enforcement strategy in Malaysia which includes, but is not limited to, customs and border enforcement measures as well as diligent internet monitoring in view of seamless cross-border trade. Parallel to enforcing IP rights through criminal action, the rights owners should exercise their civil rights including, but not limited to, sending a cease and desist letter and/or commencing court action against the infringer. Active enforcement of your IP rights will certainly discourage violation of your IP rights by unauthorised third parties in Malaysia.

With great opportunities come great risks. While capitalising on the opportunities that the OBOR initiative provides, the associated IP risks must not be overlooked.

Lee Chiao Ying

Shearn Delamore & Co
7th Floor, Wisma 
Hamzah-Kwong Hing
No 1 Leboh Ampang, 50100 Kuala Lumpur, Malaysia
Tel: +603 20272727
Fax: +603 20785625


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