At a glance: patent enforcement proceedings in Malaysia

Patent enforcement proceedings

What legal or administrative proceedings are available for enforcing patent rights against an infringer? Are there specialised courts in which a patent infringement lawsuit can or must be brought?

Patent rights are only enforceable by the patent owner by way of a civil action. There are presently no administrative proceedings available for the enforcement of patent rights.

There is a specialised Intellectual Property High Court in Kuala Lumpur and most civil actions for patent infringement are filed here. However, there is no legal prohibition for a patent owner to institute a civil action in high courts in other states of Malaysia if the parties reside outside Kuala Lumpur.

What is the format of a patent infringement trial?

The format of a patent infringement trial is the same as any general civil suit trial. Due to the nature of patent infringement, where substantial dispute as to facts is inevitable, a civil action is generally brought by way of a writ of summons together with a statement of claim setting out the material facts of the claim and the remedies sought. Malaysia adopts the common law system of pleadings where the parties are required to exchange pleadings within the prescribed time frame. After being served with the statement of claim, the defendant must file his or her defence and counterclaim (if any) within the prescribed period, followed by a reply by the plaintiff if necessary. Where the defendant disputes the validity of the patent, he or she must include the particulars of objections, setting out the grounds of objections clearly in his or her defence.

There is no trial by affidavit in Malaysia. Parties are required to prove their case by calling witnesses who state their cases in the first stage of trial, namely examination in chief, by way of written witness statements. However, all witnesses must be present in court during the trial for cross-examination.

Experts are invariably called to assist the court during a patent suit. In fact, expert opinions on the issues of novelty and inventive steps are indispensable in a patent trial.

Malaysia does not have a jury system, hence disputed issues are decided by a judge (or judges). A trial will typically last between one and two weeks, depending on the complexity of the matter and the issues in dispute.

What are the burdens of proof for establishing infringement, invalidity and unenforceability of a patent?

The burden of proof in a patent infringement suit is the civil burden of balance of probabilities. This same burden of proof applies to the issues of infringement, invalidation and unenforceability.

In order to make out a case for infringement, the following need to be proved:

• that each and every essential integer or feature of the plaintiff’s patented claim is taken by the defendants; and
• the defendants’ product works the same way as the plaintiff claims in his or her patent.

Who may sue for patent infringement? Under what conditions can an accused infringer bring a lawsuit to obtain a judicial ruling or declaration on the accusation?

The owner of the patent (section 59, Patents Act 1983), licensee and beneficiary of the compulsory licence (section 61, Patents Act 1983) have the right to sue for patent infringement.

The issue of the right of a licensee to bring an infringement action was discussed in a recent decision of the IP High Court of Kuala Lumpur, Kingtime International Ltd & Anor v Petrofac E&C Sdn Bhd [2018] MLJU 1840. In this case, the second plaintiff was a licensee of the first plaintiff. The defendant challenged the right of the licensee to be named as a co-plaintiff in a patent infringement action. The High Court agreed with the challenge and held that the licensee’s right to sue is only applicable in two limited circumstances stipulated in section 61 of Patents Act 1983, namely:

• If three months upon receipt of the request from the licensee to file a patent infringement action, the owner of the patent has refused to do so or failed to do so; or
• if the licensee is able to prove that immediate action is required to avoid damage to the patent licensee, the licensee may apply for an injunction to restrain a patent infringement.

The court decided that based on the facts of the case, the second plaintiff had no right to file a patent infringement action against the defendant as the first plaintiff had already filed the action.

An accused infringer can bring a lawsuit against the owner of the patent to obtain a declaration from the court that committing the act in question does not constitute an infringement of the patent. However, if the act in question is already the subject of an infringement action, and the accused infringer is already a defendant to that suit, the claim for a declaration of non-infringement is not allowed (section 62 PA). An accused infringer can also bring a lawsuit against the owner of the patent for the invalidation of the patent (section 56 PA). 

To what extent can someone be liable for inducing or contributing to patent infringement? Can multiple parties be jointly liable for infringement if each practises only some of the elements of a patent claim, but together they practise all the elements?

There is no provision for indirect or contributory infringement under the PA. To prove infringement, each and every essential integer or feature claimed by the patented invention must be present in the defendant’s product or process. In a process or method patent, the defendant must be shown to have taken every step of the patented process. Thus, it is not possible to make the defendants jointly liable if they merely carried out part of the patented claim.

However, it is possible to sue based on the tort of conspiracy to injure, if the parties are acting in concert to injure the interests of the plaintiff.

Can multiple parties be joined as defendants in the same lawsuit? If so, what are the requirements? Must all of the defendants be accused of infringing all of the same patents?

Multiple parties can be joined as defendants in the same lawsuit with the leave of the court or if separate actions are brought against each of the defendants, where there are some common questions of law or fact that would arise in all the actions, and all rights to relief claimed in the action (whether they are joint, several or alternative) are in respect of or arise out of the same transaction or series of transactions (see Order 15, Rule 4 Rules of Court 2012 (ROC 2012)).

Because of the requirement of commonality of issues of law and fact, it appears that all of the defendants have to be accused of infringing all of the same patents. Where it appears to the court that the joinder of causes of action or of parties may embarrass or delay the trial or is otherwise inconvenient, the court may order separate trials or make such order as may be expedient (see Order 15, Rule 5 ROC 2012).

To what extent can activities that take place outside the jurisdiction support a charge of patent infringement?

Only committing an infringing act within Malaysia would constitute an act of patent infringement (see section 58 PA).

To what extent can ‘equivalents’ of the claimed subject matter be shown to infringe?

The court does recognise infringement by way of the ‘equivalents’ of the claimed subject matter. An assessment of the same would be done by way of a purposive interpretation of the claim set out in the widely accepted case of Catnic Components Ltd v Hill and Smith Ltd [1982] RPC 183. This approach has been accepted in the Court of Appeal’s decision of Cadware Sdn Bhd v Ronic Corporation [2013] 6 MLJ 19 where the Court of Appeal adopted the purposive construction doctrine laid down in the Catnic case as well as applying the Improver test (as expounded in the case of Improver Corpn v Remington Consumer Products Ltd [1990] FSR 181) when considering whether there is infringement of patent.

Related to the issue of infringement by equivalents is the issue of how Malaysian courts decide on whether there is a patent infringement. The Malaysian courts have adopted a combination of tests in determining whether there is an infringement of a patent. This is evident from the decision of the High Court in Kingtime International Ltd & Anor v Petrofac E&C Sdn Bhd [2018] MLJU 1840. The learned judge considered three tests:

• the ‘Essential Integers’ test (as propounded in the UK House of Lords case of Rodi & Wienenberger AG v Henry Showell Ltd [1969] RPC 367;
• the Improver test (as propounded in the UK High Court case of Improver Corp & Ors v Remington Consumer Products Ltd & Ors [1990] FSR 181); and
•  the Actavis test, as propounded in the UK Supreme Court case of Actavis UK Ltd & Ors v Eli Lilly and Co, and other appeals [2018] 1 All ER 171, which reformulated the Improver test.

Applying all three approaches, the court found that the defendant has infringed the plaintiff’s patents.

Kingtime was the first Malaysian court decision to adopt the Actavis test. Subsequently, the following two High Court decisions have adopted the Actavis test: Mohammad Mubde Absi & Ors v Hyat Collections Sdn Bhd & Ors [2019] MLJU 1355 and Emerico Sdn Bhd v Maxvigo Solution Sdn Bhd [2020] MLJU 340.

What mechanisms are available for obtaining evidence from an opponent, from third parties or from outside the country for proving infringement, damages or invalidity?

Discovery of evidence is limited to the issues that had been raised by the particulars of infringement and particulars of objection to the validity of the patent (in a counterclaim). This may be done through the processes of discovery of documents or by interrogatories.

The Court may at any time order any party to a cause or matter to give discovery by making and serving on any other party a list of the documents that are or have been in his or her possession, custody or power, and may at the same time or subsequently also order him or her to file an affidavit verifying such a list and to serve a copy thereof on the other party. The documents where discovery may be ordered include documents on which the party relies or will rely; documents that would adversely affect his or her own case; adversely affect another party’s case; or support another party’s case (see Order 24, Rule 3 ROC 2012).

Where discovery is by way of interrogatories, a party to any cause or matter may apply to the court for an order giving the party leave to serve on any other party interrogatories relating to any matter in question between the applicant and the other party in the cause or matter and requiring that other party to answer the interrogatories on affidavit within a specific period of time, which shall not be less than 14 days from the date of service of the interrogatories (see Order 26, Rule 1 ROC 2012).

What is the typical timetable for a patent infringement lawsuit in the trial and appellate courts?

Depending on the complexity of the matter, a patent infringement lawsuit typically takes about nine to 18 months for the decision of first instance to be handed down. Proceedings in the appellate court may take about six to 12 months.

What is the typical range of costs of a patent infringement lawsuit before trial, during trial and for an appeal? Are contingency fees permitted?

The costs of a patent infringement suit are dependent on many factors, primarily the law firms and legal personnel involved, the complexity of issues involved and the time taken in prosecuting the case. The costs of the expert may be significant as well and vary from one case to another.

A typical range of legal costs of a patent infringement lawsuit is approximately as follows:

• pre-trial costs, which will include the settling of pleadings, case management, preparation for trial (eg, preparation of witness statements and expert reports), but excluding interlocutory applications such as application for injunction: 150,000 to 300,000 ringgit;
• trial proper: 200,000 to 500,000 ringgit for a three-to-five day trial and the preparation of written submissions; and
• appeal (to the Court of Appeal): 100,000 to 250,000 ringgit.

Contingency fees are prohibited under the Legal Profession Act 1976.

What avenues of appeal are available following an adverse decision in a patent infringement lawsuit? Is new evidence allowed at the appellate stage?

A patent infringement lawsuit, which invariably includes a claim for permanent injunction, must be brought in the High Court. An appeal from the High Court can be made to the Court of Appeal as of right. There is a second chance for appeal to the apex court, namely the Federal Court. However, an appeal to the Federal Court is not automatic. The would-be appellant must first obtain leave from the Federal Court. Leave will be granted if there is a question of law that is of general application and not previously decided by the Federal Court or, alternatively, if it is a question of importance upon which further argument and decision of the Federal Court would be to public advantage. In the Federal Court decision of Spind Malaysia Sdn Bhd v Justrade Marketing Sdn Bhd and Anor [2018] 4 MLJ 34, the apex court of Malaysia held that the appeal should be confined only to the questions of law as determined by the Federal Court and other grounds which are necessary to decide on those questions.

New evidence is not allowed at the appellate stage, unless the Court is satisfied that the new evidence was not available to the party previously or reasonable diligence would not have made it so available, and the new evidence, if true, can reasonably be assumed to have had a determining influence upon the decision of the High Court.

To what extent can enforcement of a patent expose the patent owner to liability for a competition violation, unfair competition, or a business-related tort?

A patent owner is granted the exclusive rights to ‘exploit’ the patented invention, to assign or transmit the patent, and to conclude licence contracts.

‘Exploitation’ of a patented invention is defined to include, among other things, the making, selling or using the patented product. Besides that, the owner of a patent is expressly given the right to institute court proceedings against any person who has infringed or is infringing his or her patent.

In enforcing a patent by way of infringement action, there is generally no risk of being liable for unfair competition or any tortious liability except when a case for ‘unlawful interference with trade’ is made out. The essential requirement for unlawful interference is that the claimant must prove ‘a deliberate interference with the claimant’s interests by unlawful means’. Case law has established that to enforce an IP right, even if the same is subsequently invalidated, is generally not to be regarded as unlawful. In view of this, it is generally believed that a claim for unlawful interference is hard to maintain based solely on the institution of an infringement action.

In enforcing a patent by way of concluding licence contracts or other agreements, a patent owner may be liable if the following two broad circumstances are proved:

• if the agreement has the object or effect of significantly preventing, restricting or distorting competition in any market for goods or services; or
• if the patent owner is engaging in, whether independently or collectively in any conduct that amounts to an abuse of a dominant position in any market for goods or services.

The above-mentioned dual prohibitions of anticompetitive conduct are clearly provided under the Malaysian Competition Act 2010 (CA 2010), which came into force on 1 January 2012. However, there is an express exception laid down in the CA 2010 whereby it is clearly stated that the prohibition against abuse of dominant position does not apply to the relevant enterprise in a dominant position in ‘taking any step which has reasonable commercial justification or represents a reasonable commercial response to the market entry or market conduct of a competitor’ (section 10(3) of CA 2010).

Recognising the need to address the increasing tension between the protection of intellectual property (IP) rights and anticompetitive conduct, the Malaysian Competition Commission (MyCC), a statutory body that is empowered to implement and enforce the provisions of the CA 2010, introduced the Guidelines on Intellectual Property Rights and Competition Law (the Guidelines) on 6 April 2019. The Guidelines outline some approaches adopted by the MyCC with respect to any competition issues under the CA 2010 relating to IP rights. The Guidelines, among others, address the interaction between IP rights and competition law and offer some guidance for acceptable contractual arrangements involving IP rights. Intellectual property owners, especially patent owners, may refer to the Guidelines to ascertain the scope of their IP rights and to protect themselves against anticompetitive activities.

To what extent are alternative dispute resolution techniques available to resolve patent disputes?

The court will generally propose the option of mediation during the stage of pretrial case management. Mediation may be carried out in the following ways:

• by way of a judge-led mediation;
• by way of a mediation to be carried out at the Asian International Arbitration Centre;
• by way of a mediation to be carried out at the Malaysian Mediation Centre; or
• by other mediators agreeable by both parties.

On 30 June 2016, the Chief Justice of Malaysia issued Practice Direction No. 4 of 2016 (Practice Direction on Mediation), directing that all judges of the High Court and the deputy registrars and all judges of the Sessions Court and magistrates and their assistant registrars may, at the pretrial case management stage, give such directions that the parties facilitate the settlement of the matter before the court by way of mediation. IP cases are listed as examples of cases that are easy to settle by mediation. In practice, mediation of a patent lawsuit rarely happens, possibly because the issue of infringement is normally keenly contested and it is factually and legally complex.

Law stated date

Give the date on which the information above is accurate.

30 March 2021.