By Foong Cheng Leong
– Large increase of 40.6% in civil cyber cases between 2020 and 2021
– Applying correct reasonable man test based on current development of society
– Once a person clicks on a button agreeing to terms, such terms are binding
– In a tiff over live streaming and streamers being poached by competitors
– Leading artists, Red Hong Yi & Namewee cash in on hot 2021 NFT market
– Eye on digital banks, Grab and constitutionality of s. 233 of the CMA 1998
When the Government of Malaysia announced its 2nd lockdown in January 2021, our Courts quickly opened virtual doors for remote hearings and trials.
Today, virtual hearings and trials have now become a norm in Malaysia with many Courts, particularly, the civil Courts, operating as virtual Courts.
The Chief Justice, in her speech on the occasion of the Opening of the Legal Year 2022 entitled “Access to Justice and the New Normal” said that judges have adjusted well to remote hearings at least in the context of civil cases, criminal applications and criminal appeals.
The screen-sharing technology had assists them with reference to documents and the level and nature of advocacy has improved irrespective of whether counsel before the judge is senior or junior.
Some criminal courts have also moved to conduct matters virtually. Prior to this, criminal proceedings were still done physically. S. 173(a) of the Criminal Procedure Code provides that when an accused appears or is brought before the Court a charge containing the particulars of the offence of which he is accused shall be framed and read and explained to him, and he shall be asked whether he is guilty of the offence charged or claims to be tried unless a dispensation is allowed. This would mean that the accused would have to be present in Court when the charge is read to him.
It was not until the Sessions Court case of Pendakwa Raya v Syamsul Zaman Bin Sukri (Pasir Mas Sessions Court Criminal Case No. DJ-62JSK-36-08/2021) that a charge was read to the accused via remote communication technology i.e. Zoom as the accused tested positive for Covid-19 and could not attend Court physically. The learned Sessions Court Judge, Tuan Badrul Munir Mohd Hamdy relied on the provisions of s. 101 and s. 101B of the Subordinates Courts Act 1948 to exercise his discretion to have the matter conducted via remote communication technology.
The Malaysian Bar Council has also moved on with times. They have finally lifted the ban on the use of virtual offices by lawyers and recognised that “a virtual office offers benefits like convenience, flexibility, and cost effectiveness”. To regulate the use of virtual offices, Chapter 7A entitled “Virtual Offices” was introduced in August 2021 into the Rules and Rulings of the Bar Council. Essentially the new rulings require members to ensure the confidentiality of client’s information.
The Chief Justice in her speech also highlighted the increase of cyber defamation cases between 2020 and 2021. There was a large increase of 40.6% of civil cyber cases between 2020 and 2021. The steady rise of such cases reflects the greater use of social media and perhaps the greater tendency to misuse it.
The rise in such cases also saw Courts taking into factors such as current trends, development and behaviour of society in determining whether a statement is defamatory. Here are some interesting cases decided in 2021.
Defamation via photograph and subject matter of article
In Restoran Nasi Kandar Irfanah Sdn Bhd v The New Straits Time Press (Malaysia) Berhad & Anor Appeal  1 LNS 2465, the plaintiff claimed that, among others, a Facebook posting containing a photograph of one of the plaintiffs seated at the other plaintiff’s restaurant to be defamatory even though the publication was referring to two (2) other nasi kandar restaurants. The Facebook post links to an online article entitled “2 famous Penang Nasi Kandar restaurants infested with rats, cockroaches, ordered shut”. The online article was not in reference to the plaintiff’s restaurant.
The Court of Appeal held that any person who clicked on the post itself would be directed to the said online article and would easily come to know of the identities of the said 2 famous nasi kandar restaurants in Penang which plainly did not include the second respondent. The Court of Appeal held that the High Court had failed to adopt and/or apply the correct reasonable man test based on the current development of society on the reading of news reported on social media such as Facebook when the learned High Court Judge concluded that the reader would not know of the restaurants actually implicated simply because there was no link below the offensive photograph stating “click here to read more.” Society today being widely exposed to social media, it is most unlikely that the ordinary reader would not be able to access the full article by clicking on the relevant link which can be regarded as a simple process in this time and age.
Recognition of the use an asterisk (*) to correct a typo by the Court
In Tan Sri David Chiu Tat-Cheong v Seema Elizabeth Soy  1 LNS 1162, the plaintiff initiated an action for defamation against the defendant for allegedly publishing certain defamatory statements on a WhatsApp Group over the plaintiff’s family, company and allegedly previous convictions. The plaintiff is the founder and managing director of Malaysia Land Properties Sdn Bhd (also known as “Mayland”). Mayland is the developer of Waldorf & Windsor Towers Service Apartments (“W&W”). The defendant on the other hand, was the owner of an apartment unit at W&W and was involved in the management committee and sub-committee of W&W in various capacities.
In one of the impugned text, the plaintiff stated, “The same don (David Chiu) is the Founder and Chairman of Mayland!!!” but she later corrected the word “don” with the word “son” with an asterisk (*). The plaintiff claims that these words meant that he is a Don and is associated with the criminals or underworld.
The High Court accepted that the use of asterisk (*) to correct a word is a common way of correcting a misspelling on WhatsApp. Particularly, in this case, the letters “s” and “d” are next to each other on the mobile phone keypad used in the WhatsApp application. Moreover, the correction was done in the space of a minute.
Extension of defence of Qualified Privilege for publications on WhatsApp groups
The High Court in Tan Sri David Chiu Tat-Cheong v Seema Elizabeth Soy  1 LNS 1162 also extended the defence of qualified privilege, which is a defence for defamation, to a person who published alleged defamatory statement to members of a WhatsApp group. Qualified privilege is afforded to those who make defamatory statements in the discharge of some public or private duty, whether legal or moral, or in the conduct of their own affairs, in matters where their interest is concerned. But only if the publication derived from right and honest motives.
The impugned text was communicated in a closed and private WhatsApp chat group setting constituted by participants who were interested in the welfare of W&W. It was transmitted in line with the purpose for existence of the WhatsApp Group. The defendant sent the text in pursuance of her duties and in her capacity as a member of the management committee of W&W. In order to raise awareness of the various legal disputes in which Mayland and its related entities were the counter-parties with opposing interests.
Liability of Online Marketplace Operators
Those in the intellectual property protection industry will have to wait again for the Court to decide on whether a trade mark owner can stop an online marketplace operators from allowing its merchants to list products bearing their trade mark under the new Trademarks Act 2019.
An online marketplace operator was found to be liable for trade mark infringement under the old Trade Marks Act 1976 (now repealed and replaced with the Trademarks Act 2019) (Nexgen Biopharma Research & Innovation SARL v Celcom Planet Sdn Bhd (Kuala Lumpur High Court Suit No. WA-22IP-3-01/2018). Unfortunately, there is no grounds of judgment available for this case.
Online marketplace operators generally take down counterfeit products from their platforms upon receiving notice from the trade mark owner. However, when it comes to unauthorised genuine products (e.g. parallel imports or direct marketing products which online sales are prohibited by the principal), the general position by online marketplace operators is that they will not delist such products.
In the case of Deka Marketing Sdn Bhd v Shopee Mobile Malaysia Sdn Bhd  10 CLJ 395, the plaintiff, being the trade mark owner of the mark DEKA, sought to restrain Shopee from allowing and permitting resellers of DEKA products from utilising Shopee to conduct business involving the DEKA products, including the advertising, distribution, publication and offer for sale of the said products, without the plaintiff’s licence, permission or authorisation.
According to the plaintiff, only exclusive distributors and authorised dealers appointed by the plaintiff are allowed to sell its products. The plaintiff applied for an order for summary judgment so that the matter can be disposed summarily without going to trial.
Shopee on the other hand argued that, among others, there is no law that prohibits the reselling of products that have been purchased without having to get prior consent or authorisation from the brand owner, as the title of the goods has passed to third parties, the plaintiff’s action lies against the resellers and not Shopee and this issue cannot be resolved through a summary judgment application, and Shopee merely provides the platform enabling the third party sellers to put their goods for sale and for buyers to purchase them.
The buyers will liaise with the sellers directly, not with the Defendant. Thus, the defendant does not advertise, publish, sell, make offers of the DEKA products listed in the Shopee platform for sale by those resellers. The defendant also applied to have the matter disposed summarily under Order 14A and 33 of the Rules of Court 2012 by answering the following questions of law-
(a) Whether the plaintiff has the right in law to restrict the resale of authentic products bearing the “DEKA” mark (“Deka Products”) on the defendant’s online marketplace (www.shopee.com.my) (“Platform”)?
(b) Whether the advertising, distributing, marketing and/or offering for sale of Deka Products on the Platform gives rise to a cause of action for trademark infringement against the persons advertising, distributing, marketing and/or offering for sale Deka Products on the Platform (“Resellers”)
(c) If the answer to (b) above is in the affirmative, whether the Resellers are liable to the Plaintiff for trademark infringement?
(d) If the answer to (c) above is in the affirmative, can claims for trademark infringement be made against the defendant by reason of the alleged advertising, distribution, marketing and/or offering for sale of Deka Products by the Resellers on the Platform?
(e) If the answer to (d) above is in the affirmative, can findings of infringement be made against the defendant without the Resellers being made parties to the proceedings?
The High Court dismissed both applications on the ground that, among others, the matters should be adjudicated through a trial and not summarily.
In respect of the application for summary judgment, the High Court concluded that the following issues are triable-
(i) that being an online marketplace platform, the defendant does not carry out distribution or retail marketing of electrical or household products;
(ii) despite being the registered owner of the “DEKA” trademark, the plaintiff does not have any right to prevent any seller who trades the plaintiff’s products by accurately describing the product by its brand name;
(iii) no one is prohibited from reselling the plaintiff’s products once those products are sold and the title of the goods passed to the said seller/reseller;
(iv) the plaintiff’s claims against the defendant instead gave rise to concerns under the Competition Act 2010;
(v) the third party sellers using the impugned Shopee platform are independent with no contractual or business associations with the defendant;
(vi) the defendant does not advertise, publish, sell or make offers for the sale of products listed on its Shopee marketplace; and
(vii) the plaintiff’s products placed for sale by the said sellers on the defendant’s platform does not in any manner infringed the plaintiff’s DEKA trademark. Even if it does, the quarrels should be between the plaintiff, the resellers and the plaintiff’s so-called authorised dealers/exclusive distributors, fell squarely within the meaning of triable issues.
As for defendant’s application under Order 14A and 33 of the Rules of Court 2012, the High Court concluded that the questions raised by the defendants in its application involved mixed questions of facts and law that could be justly determined after this court having the benefit of hearing evidence of witnesses at a full trial.
Enforceability of electronic contracts
It is settled that electronic contracts are enforceable in Malaysia. Once a person clicks on a button agreeing to the terms, such terms are binding on him regardless of whether or not he read it or not.
In Vijay Kumar Natarajan & Anor v Malaysia Airlines Berhad  1 LNS 881, the plaintiffs wanted a refund of their airflight with the defendant to Manila which was rescheduled due to the Movement Control Order as the 1st plaintiff’s meeting in Manila had been cancelled.
The High Court struck out the case as the Court was of the view that the plaintiffs are bound by the terms and conditions of the airlines presented online via the airlines’ website. One of the terms and conditions states that the flight tickets are non-refundable tickets. The plaintiffs had agreed to the terms and conditions when they clicked the button ‘I understand and accept the Terms and Conditions of Carriage and Fare Conditions’ at the time of purchase of the air ticket.
Enforceability of hyperlinked contracts
The Court of Appeal dealt with the issue of whether a contract, located on a website, is enforceable. In Able Food Sdn Bhd v Open Country Dairy Ltd  7 CLJ 716, the Court of Appeal held that the terms of trade located on a website is applicable as the sales contract expressly referred to a hyperlink containing the terms of trade. The Court of Appeal held that the burden was on the person served with the contract to look up the terms of trade via the hyperlink. The failure on their part to do so is akin to a contracting party not bothering to avail themselves of the terms, and to read and understand the same, with the benefit of legal advice or otherwise. Leave to appeal to the Federal Court was later refused.
Similarly, in MISC Berhad v Cockett Marine Oil (Asia) Pte Ltd  MLJU 563, the High Court held that the plaintiff’s terms and conditions, which was attached to their tender, were applicable in the transaction instead of the defendant’s terms which was merely linked on the foot of the defendant’s emails to the plaintiff. There was no indication that the defendant’s offer made pursuant to the plaintiff’s invitation was a counter-offer on the plaintiff’s terms. There was no step taken by the defendant to draw the attention of the plaintiff to the application of the hyperlink which only appeared in the foot of the defendant’s emails.
You may read more about this topic in my previous Bread & Kaya article entitled “Practical tips to ensure your electronic contracts are enforceable“.
Non Fungible Token
2021 saw the rise of Non Fungible Token (NFT) in Malaysia. Malaysian artists Red Hong Yi reported sold her NFT art, known as Doge to the Moon for 36.3 ETH which was valued at RM325,000. The successful bidder of the NFT owns both the physical (i.e. a copper plate) and digital artworks. Malaysian singer, Namewee also sold 100 NFTs of his song which reportedly valued at RM3.5 million. Particulars of the sale of these NFTs are not publicly known.
There is no legal definition to the term NFT in Malaysia. But it can be described as a digital token, and a digital asset. It is stored on a digital ledger, called a blockchain. It can be traded on an online marketplace such as OpenSea and Binance. In Malaysia, we have our own online marketplace such as pentas.io.
It is usually represented by an item, such as a digital art, a song or a video. However, the unique thing about NFT is that a person purchasing the NFT does not necessary own the intellectual property in the NFT. For example, you may have purchased an NFT of a digital art which the creator had issued 100 tokens. You are the owner of that particular token. The owner of the intellectual property residing in that digital work may still be the creator or the intellectual property owner.
This may sound novel but when we compare this with a real-life scenario, this is nothing new. We can see this in stamps trading or trading card such as football cards or Pokémon cards. One may trade such stamps or cards without limitation but the intellectual property rights in those artistic work will still belong to the copyright owner. The value of an item would depend on how rare it is, and the same item may differ in value depending on various circumstances such as its condition, the year of production, the number of circulating copies etc.
The United States Courts are now dealing with NFT disputes. In Roc-A-Fella Records, Inc. v. Dash, 1:21-cv-05411-JPC (S.D.N.Y. Jul. 29, 2021), the plaintiff owns all rights to the album Reasonable Doubt, including its copyright. It alleged that the defendant —a minority shareholder in the company — unlawfully stole and attempted to auction the copyright to Reasonable Doubt as an NFT.
In Miramax, LLC v Quentin Tarantino et al (US District Court, Central District of California: 2:21-cv-08979), production company Miramax sued director Quentin Tarantino after he announced that he would be auctioning off “exclusive scenes” from the 1994 motion picture Pulp Fiction in the form of NFTs. According to his website www.tarantinonfts.com, “the collection holds secrets from Pulp Fiction,” and “each NFT contains one or more previously unknown secrets of a specific iconic scene from Pulp Fiction”. The “privileged” purchasers “will get a hold of those secrets”.
So far, there is no reported case about NFTs in our Courts. However, there are numerous complaints by copyright owners about their work being used on NFTs and sold on NFT marketplaces. Steps were also taken by companies to ensure that their trade mark protection extends to NFTs. For example, Riot Games, Inc, the brand of owner of the popular game League of Legends, have filed an application to register their trade mark which included “digital materials, namely, nonfungible tokens (NFTs)” with the Intellectual Property Corporation of Malaysia.
Public Prosecutor v Wang Jianquan  MLJU 1708;  5 LNS 109 is an interesting case about a “love scam” operation in Malaysia. The accused was one of the two (2) Chinese nationals arrested and investigated for love scam activities deceiving Chinese nationals. There were nine (9) Malaysians involved too. One of the items seized was an exercise book containing “script of conversation” used against the victims.
The investigation revealed that the phone belonged to one of the arrestees (B8), contained her semi-nude photos, which were sent to the potential victims by the rest of the arrestees (including the accused person). The arrestees would first communicate with the victims. The said arrestee (B8) would make a video call to the victims and lured them into exposing themselves (literally – by exposing their private part). The video calls were recorded and used to extort monies from the victims. Refusal to accede to their request was at the peril of the obscene videos and photos being revealed to the victim’s family members.
The accused pleaded guilty to an offence under s. 420 of the Penal Code (cheating and dishonestly inducing delivery of property) and was sentenced to a one month imprisonment and RM8,000 fine, in default of payment two months imprisonment.
The learned Magistrate was of the view that the offence concerns conspiracy to cheat. The manner the offence was committed was horrendous. The victims were lured and deceived into exposing their private parts, which was captured and used as a bargaining chip to extort money, leaving the victim with the only other option of perpetual embarrassment facing their own family members. It is inhuman, gross and short of dignity. Scaling the plea of guilty as well as being a first offender against the manner of the offence was committed does not tip the scale in favour of the accused person.
The learned Magistrate also took judicial notice of the prevalence of online scam-related activity in Malaysia. Statistics issued by CyberSecurity Malaysia show that online fraud has continued to be the highest reported incidents totalling 7,774 reports in 2019, 5123 reports in 2018, and 3,821 reports in 2017, compared to other incidents, i.e. cyber harassment, intrusion attempt, denial of service, vulnerabilities report, content-related, spam, malicious code and intrusion. In 2020, out of 8,366 online incident cases reported, 6,048 were online fraud cases.
Service of Court Documents on Facebook
Last year, I reported that the High Court allowed the service of court documents on Facebook Malaysia Sdn Bhd as the Court found that Facebook Malaysia is the agent of Facebook, Inc under Order 10 Rule 2 of the Rules of Court 2012 (Abu Jamal Bin Sulaiman & Anor v Facebook, Inc (Kuala Lumpur High Court Original Summons No. WA-24NCVC-57)).
The Court of Appeal however has overturned the decision in Civil Appeal No. W-02(IM)(NCvC)-1222-09/2020 on the grounds that, among others, there is insufficient evidence to prove that Facebook Malaysia Sdn Bhd is an agent of Facebook, Inc.
On another note, Facebook, Inc changed its name to Meta Platforms, Inc. Any legal action filed against Facebook, Inc in Malaysia should now be against Meta Platforms, Inc and served on to them with an order to serve out of jurisdiction to their office in California, United States.
Whether Grab drivers are “employees”
Last year, I reported that one Loh Guet Ching filed an action for judicial review (Loh Guet Ching v. Menteri Sumber Manusia & Ors (Kuala Lumpur High Court Judicial Review Application No. WA-25-296-10/2020) after the Minister of Human Resource refused to refer the matter to the Industrial Court without giving any reasons under s. 20(3) of the Industrial Relations Act 1967 (this provision has now been amended to require the Director General for Industrial Relations to refer to the Industrial Court for an award when there is no likelihood of the representation being settled). She had earlier brought a case against Grab at the Labour Department after she was terminated as an e-hailing driver. The High Court dismissed the application for judicial review. The learned Judge held that, among others, the Minister has no obligation to give any reason for his decision and not to refer the representation to the Industrial Court. The learned Judge also found that Ms Loh is not an employee of Grab as-
(1) there was no employee and employer relationship as Ms Loh had only registered herself as a driver using Grab’s platform and she had to prepare a vehicle herself to bring passengers using the platform provided by Grab.
(2) she does not receive a salary but Grab receives a 20% commission from the profit she made using Grab’s platform,
(3) Grab does not make any statutory contributions for employees (i.e. KWSP, PERKERSO and Employment Insurance Scheme (EIS),
(4) Grab does not provide a salary statement for the purpose of taxation for Ms Loh, and
(5) Grab does not control Ms Loh. Instead, Ms Loh is free to use the application provided by Grab following her schedule and suitability. Further, Grab does not stop her from using other applications such as MyCar, JomRides, Mula and the like.
In respect of the new trend in other foreign Courts such as in the United Kingdom and Europe which had acknowledged and defended the status of e-hailing drivers as employees of e-hailing companies, his Lordship held that such cases are only persuasive and are not binding to our Courts in Malaysia. There are no provisions in law that acknowledge that a e-hailing driver is a workman. Therefore, it is no surprise that the Minister made a decision based on the current laws in Malaysia.
The matter is now pending at the Court of Appeal.
In 2022, we can expect more interesting developments in the cyberlaw and IT sphere.
– New NFT legal disputes are starting to pop in Courts beginning of 2022. It was reported OpenSea was sued by a user of its platform after the latter’s “Bored Ape Yacht Club NFT – Bored Ape #3475” was stolen when OpenSea was hacked (McKimmy v. OpenSea, No. 4:22-cv-00545). The same “Bored Ape Yatch Clut NFT” was a subject matter of another dispute in the Singapore High Court where the Singapore High Court had blocked potential sale and transfer of the said NFT after an online user by the name of “chefpierre” had taken it wrongfully from him.
Meantime, local artist Fahmi Reza launched a NFT of his Monyet Istana artwork on his website monyetistana.com to raise funds for the Freedom of Expression Legal Defence Fund. The legal fund will help support fellow Malaysians who are investigated and prosecuted for exercising their right to freedom of expression. He successfully raised RM48,000 from the sale of this NFT in 48 hours. However, it was later reported that monyetistana.com was blocked from access by our local internet service providers.
Three other noteworthy developments I am going to follow this year are:
– Bank Negara has awarded digital banking licences to five consortiums. Three consortiums, namely Boost Holdings Sdn Bhd and RHB Bank Bhd, GXS Bank and Kuok Brothers, and SEA and YTL Digital Capital will be licensed under the Financial Services Act 2013.
Meanwhile, a consortium comprising AEON Financial Service Co Ltd, AEON Credit Service (M) Bhd and MoneyLion Inc, and a consortium led by KAF Investment Bank will be licensed under the Islamic Financial Services Act 2013. These new banks can help individuals and businesses gain better access to more personalised solutions backed by data analytics. It will be interesting to see what cyber and electronic legal issues that may arise from this new industry.
– Health news portal CodeBlue broke the news about the ownership of Malaysia’s contact tracing application, MySejahtera, which stores the personal data of millions of Malaysians and its residence.
Whilst the Government had claimed ownership of the MySejahtera application, CodeBlue revealed that one Entomo Malaysia Sdn Bhd was the owner of the intellectual property rights (except for the trade mark and date collected through MySejahtera which is owned by the Government of Malaysia) in and to MySejahtera application, and thereafter transferred it to one MySj Sdn Bhd.
This was based on the Court documents revealed in the shareholder disputes between the company behind MySejahtera (P2 Asset Management Sdn Bhd v MySj Sdn Bhd (Kuala Lumpur High Court Suit No. WA-22NCC-516-11/2021), Hasrat Budi Sdn Bhd v Entomo Malaysia Sdn Bhd (Kuala Lumpur High Court Suit No. WA-24NCC-118-02/2022)).
The Government of Malaysia later clarified that it only owned the trade mark and certain modules and their source codes. There are other rights residing in the MySejahtera application which is owned by other parties. Nevertheless, it seems that the Government of Malaysia is slowly transitioning MySejahtera to a non-Covid-19 pandemic related application.
– And, to close, activist Heidy Quah Gaik Li’s challenge to the constitutionality of s. 233 of the Communications and Multimedia Act 1998 hit a wall after the High Court refused to refer the matter to the Federal Court based on the following question –
Whether the provision of s. 233 of Communications and Multimedia Act 1998 is a permissible restriction under Art. 10(2)(a) Federal Constitution read together with Article 8 Federal Constitution (infringement of freedom of speech & expression).
The matter is now pending at the Court of Appeal (Heidy Quah Gaik Li v Kerajaan Malaysia (Civil Appeal No. B-01(IM)-130-03/2022)). She was earlier charged for sharing alleged content over a Facebook post that alleged mistreatment of refugees at an Immigration detention centre. The Sessions Court then granted a discharge amounting not to acquittal after the Court found that her charge was defective.