First landlord liability action filed in IP case

Malaysia

Malaysia has witnessed the filing of the first local landlord liability suit in an IP infringement case. The owners of two shopping malls, one in the east coast state of Pahang and the other located in the southern state of Johore, were named defendants in suits for allegedly allowing their tenants to sell pirated optical discs that infringed the copyright of the Recording Industry Association of Malaysia (RIM).

The question of the liability of landlords for the acts of their tenants has been of considerable debate in Asia of late. In December 2005 a Beijing court handed down a landmark decision holding the landlord of Beijing's notorious Silk Street Market jointly and severally liable to Burberry, Chanel, Gucci, Louis Vuitton and Prada for allowing five of its tenants to sell items that infringed the IP rights of these brand owners. The court was of the view that the landlord had failed to take appropriate steps to curb the activities of its tenants and ordered the landlord to pay the brand owners Rmb200,000 in damages. The ruling has since been affirmed by the appellate court and followed by other similar decisions (see Chinese courts continue attack on landlords).

In the Malaysian suits, RIM named the landlords of the Berjaya Megamall in Kuantan, Pahang and the landlord of a shopping mall in Johore as defendants in a claim against them founded in the tort of negligence.

The other defendant in the suits filed was a tenant of the premises of the Johore shopping mall. The claim against this individual was based on Section 36 of the Copyright Act 1987 for carrying out acts restricted by copyright without a licence from the copyright owner.

RIM has applied for injunctions against both the landlords and tenants to restrain them from further allowing their premises to be used to sell materials that infringe IP rights. RIM is also seeking an unspecified amount of damages, which is to be determined by the courts.

According to RIM's chief executive officer Tan Ngiap Foo, RIM has written to some 200 landlords requesting their cooperation in ensuring that their premises are not used to sell pirated goods.

This landmark action has brought the fight against piracy a step further insofar as the liability of landlords in relation to their tenants' activities are concerned. This will be of interest to mark owners that are also victims of the acts of landlords who allow their tenants to sell infringing items. Trademark owners will be keen to know the outcome of this suit, as it may afford them the opportunity to consider other options to enforce their rights in Malaysia.

Harjinder Singh Sandhu, Shearn Delamore & Co, Kuala Lumpur

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