Intellectual Property Corporation of Malaysia

Proposed Trade Marks And Patents (Including Utility Innovations) Fees Revision

The Intellectual Property Corporation of Malaysia (MyIPO) is proposing to increase the filing fees of numerous applications in respect of trade mark and patents (including utility innovations) applications. The reason for the increase is due to “The escalating costs of upgrading the ICT system“.

The revision introduces the waiver of certain patents searching fees (online) and the reduction of certain fees for trade marks and patents. Meanwhile for certain patents and trade marks fees, an increase at an average of 5% to 50% is also proposed.

The most notable change for trade mark filing is the combination of application and advertisements fees (proposed rate of RM990 for efiling). The current fees structure requires applicants to pay the application fee (RM330 for efiling) and upon approval, the advertisement fees must be paid (RM600 for efiling). There is no indication as to whether the advertisement fees will be refunded if the application is not accepted.

I do not know whether this proposal will be rolled out and when it will be rolled out.

For more details, please see Consultation Paper – Proposed Trade Marks And Patents (Including Utility Innovations) Fees Revision

Bread & Kaya: Choosing a good trademark for your startup

Choosing a good trademark for your startup
Foong Cheng Leong
Aug 16, 2013

– A descriptive name has its advantages, but can be very hard to protect legally
– Register your mark, or you might find yourself in court when you go to market

Bread & Kaya by Foong Cheng Leong

WHEN George Eastman, founder of Eastman Kodak Company, chose the name Kodak for his camera, he explained why:

… because I knew a trade name must be short, vigorous, incapable of being mis-spelled to an extent that it will destroy its identity, and, in order to satisfy trademark laws, it must mean nothing. The letter K had been a favourite with me – it seemed a strong, incisive sort of letter. Therefore the word I wanted had to start with K. Then it became a question of trying out a great number of combinations of letters that make words and ending with K. The word Kodak is the result.

Although great advice from a man 100 years ago, it is difficult to come out with such special name for a product. It is enticing for traders to choose a name that best describes their products. It saves them the trouble of promoting extensively or even explaining to customers what the name is all about.

But the use of a name which directly describes one’s goods or services generally attracts problems.

A few years ago, the National ICT Association of Malaysia (known by its Malay-language acronym Pikom) initiated action against EM Exhibitions (M) Sdn Bhd and one of its directors for using the trademark ‘PC EXPO’ for its computer exhibitions.

Pikom alleged that the mark PC EXPO infringes and passes off its trademark ‘PC FAIR.’ The High Court held that the ‘PC FAIR’ is a common descriptive term and is used by numerous traders in the computer industry.

Thus, in short, the mark PC FAIR is not protectable and EM Exhibitions (M) Sdn Bhd is free to use the mark PC EXPO. [For the full judgement, click here].

The moral of the story is, always choose a distinctive mark. A distinctive mark is a mark which distinguishes your products from other traders. A distinctive mark can be registered and protected.

Although an unregistered mark can also be protected, you will need to produce voluminous evidence in court to show that your mark is protectable.

A distinctive mark should be a mark that does not have direct reference to the character or quality of your products. For example, the ‘e-Commerce Shop’ trademark for websites is not a distinctive mark as it describes the character of your product.

However, if you name your fruit stall ‘e-Commerce Shop,’ then you may be able to register it as it does not describe the goods and services provided by your stall.

If you are selling clothes on your e-commerce store, you should avoid using words like ‘clothing,’ ‘fashion,’ ‘haute’ or ‘couture’ as your trademark unless it is combined with a distinctive word or words such as ‘Digital News Asia Fashion.’ [A hint we should diversify? – ED]

Words that extol your products also should be avoided. For example, ‘cheap,’ ‘good,’ ‘great,’ ‘pretty,’ ‘fabulous,’ ‘sexy,’ ‘awesome,’ ‘cool,’ ‘cute’ and ‘best.’

The mark also should not be a name of a place – for example, ‘Silicon Valley’ for software.

Lastly, using a mark which is similar to your competitor’s trademark is a big no-no! If you do so, you’ll be beaten down with a lawsuit before you can start doing business.

You should do an online search at the Intellectual Property Corporation of Malaysia’s database.

Notwithstanding the above, there is nothing wrong with using generic words as your trademark. However, you may not be able to obtain protection.

If you wish to use a generic word, it should be accompanied with a distinctive word or set of words – for example, ‘FCL&Co Legal Services.’

Why register?

Your intellectual property is an asset. Registration gives you exclusive rights over the mark. You may sell it or license it.

There are many horror stories where marks were misappropriated by third parties when the owners did not register them. This usually results in a long and expensive legal suit. Some even had to change the marks that they had been using for years.

You may register the mark yourself by heading to the Intellectual Property Corporation of Malaysia or alternatively, engage a Trade Mark Agent to assist you. The latter would be recommended as they can provide you with proper advice and services.

To conclude, choose a distinctive mark before rolling out your products!


First published in Digital News Asia on 16 August 2013

Bread & Kaya: Start-ups, get your house in order

My 4th Bread & Kaya’s column was published on Digital News Asia on 3 April 2013.

Bread & Kaya: Start-ups, get your house in order

– There are a number of things you need to get done before potential investors do due diligence on your start-up
– Seek advice from others, ensure any legal advice is professional, and do due diligence on your investor as well

Bread & Kaya by Foong Cheng Leong
3 April 2013

WHEN I was in high school, I invested a few thousand ringgit on a web-hosting company operated by a ‘friend.’ Unfortunately, the web-hosting company didn’t materialize and I never saw my money again, nor the ‘friend.’ In fact, there was no such web-hosting company!

That was my first failed investment. Looking back, I realized that the investment was purely done by trust. I did not do any background check on the company or even the ‘friend.’

But years later, I was approached by a stranger (at that time) to help his start-up by providing my services to him, in return for shares in his company. I did not invest a single ringgit. I am glad to report that the start-up is doing well, with offices around South-East Asia and other parts of the world.

Today’s column sets out some tips before opening your start-up for funding.

Before you think about attracting investors, you need to get your house in order. Prudent investors would usually do an in-depth due diligence of your company to see, among others, what assets and liabilities you have.

They will check your background, hence you need to make sure it’s squeaky clean. They will obtain a company search report from the Companies Commission of Malaysia to verify the details of your directors and shareholders, shareholding structure and financial reports – so make sure you file your reports on time.

They will also go through your memorandum of association and articles of association (documents that are required before incorporating a ‘Sdn Bhd’). Take some time to read them and amend if necessary. Board and shareholders minutes will also be part of due diligence exercise.

Investors usually come with high expectations. Thus, educate your investors of the nature of your business and industry, business plans, goal, competitors and obviously, monetizing strategy. Over-promising will create legal trouble for you.

When meeting your investors, appoint someone presentable who speaks well to deal with them. This raises investor confidence.

Other than your financial records and information, here are some common matters that should be addressed before the due diligence stage.

1) Intellectual property rights

Intellectual property rights generally refer to your trademarks, copyright, industrial designs, confidential information and patents.

Start-ups generally file their trademarks first as it is affordable. If you have a physical product and the design is new, do consider filing an industrial design to protect the design.

Patents are usually not filed due to budget constraints. A patent application (with the assistance of a patent attorney) costs at least RM5,000 and above. However, if the invention is novel and you think it’s worth protecting, do file it within one year otherwise it will not be afforded protection.

You can file for protection with the Intellectual Property Corporation of Malaysia (MyIPO), or if your business or operation extends to other countries (e.g. Singapore), you should register your rights there too.

A registered intellectual property right gives you the exclusivity over your product, thus you may stop others from using them. Also, the Income Tax (Deduction for Expenditure on Registration of Patent and Trade Mark) Rules 2009 provides tax deduction for the registration of trademarks and patents in Malaysia for certain start-ups.

2) Proper contracts

All terms and conditions between the founders, with merchants, customers, vendors and employers must be properly spelled out. For existing contracts, review them to see whether they are still applicable or have to be changed or terminated.

Here are a few tips:
– In your agreements with customers, investors will look on how revenue is generated and to find any unfavorable terms, etc. Do make sure your contracts (or invoice or receipt) with service providers (e.g. graphic designer, website, software) do not state that intellectual property rights (in particular, copyright) belong to them (by default, intellectual property rights belong to the person who commissioned the work, unless stated otherwise). Such contracts should describe the subject matter in detail and that the rights to the intellectual property are properly assigned to your company.
– If you are using a website or a software application to deal with your customers, put terms of use or services and a privacy policy in place as required by the Consumer Protection (Electronic Trade Transactions) Regulations 2012. Do not rip off terms of use or services and a privacy policy of others as those agreements are drafted specifically for their businesses.

3) Non-disclosure agreement

Before opening your door to investors, do get them to sign a non-disclosure agreement (commonly known as an NDA). This agreement is crucial in making sure that they do not misuse the information they gathered from the due diligence. Such information may include your finance information, source codes and customer data.

Your investors may also want to look into the source codes of your proprietary software. Although an NDA may be signed to protect it, you may want to take an extra step to request that the software due diligence is done by an independent third party.

Also, when dealing with your vendors or employees, get them to sign a NDA. Your information is your asset.

4) Employee matters

If you have employees, make sure that there are employment contracts. If you have promised the employees something (e.g. equity), make sure you state it in writing. Ensure that you have been contributing to statutory contributions such as the Employee Provident Fund (EPF) and Social Security Organization (Socso).

This guide is a non-exhaustive basic guide and merely an idea on what you need to do before attracting investors. Do seek out advisers or mentors for help and advice. Get an experienced lawyer when dealing with terms and conditions. Speak to other fellow entrepreneurs who have done it before for advice.

Most importantly, do due diligence on your investor as well!

Docudeer – Your source of sample legal agreements and documents!
1. General Terms of Services
2. Comprehensive e-Commerce Terms & Conditions
3. Simple e-Commerce Terms & Conditions (Free!)
4. General Privacy Policy
5. Simple Non Disclosure Agreement
6. Letter of Employment

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