Revamped Trade Descriptions Act introduced
Legal updates: case law analysis and intelligence
The Malaysian government has introduced a revamped Trade Descriptions Act. The Trade Descriptions Act 2011, which was passed by Parliament and came into force on November 1 2011, repealed the Trade Descriptions Act 1972. The following are some of the salient changes made.
First, the new act widened the scope of definitions and offences:
- A 'trade description' is now clearly defined in the new act as including a registered trademark. The act also includes a provision stating that an oral statement may amount to use of a trade description.
- In contrast to the provisions of the repealed 1972 act, under which an offence had to be committed in the course of trade or business, the new act does not include this requirement.
- It is now an offence to be in possession, custody or control of, or to control for supply, any goods to which a false trade description is applied.
Under the old act, there were two principal offences:
- the application of a false trade description to goods; and
- the supply of goods bearing a false trade description in the course of trade.
The new act has thus clearly widened the scope of punishable offences.
In addition, the new TDA has introduced significantly increased penalties based on the number of infringing goods found:
- A body corporate will be liable to a fine of not more than RM15,000 (approximately $5,000) for each good bearing the false trade description. For a second or subsequent offence, the fine will be doubled to not more than RM30,000 ($10,000) for each goods bearing the false trade description. This is a departure from the previous act, under which a body corporate was liable to a fine not exceeding RM250,000 ($83,000) and, for a second or subsequent offence, a fine not exceeding RM500,000 ($167,667). It will be interesting to see if the courts will impose higher fines as a result of such changes.
- An individual will be liable to a fine not exceeding RM10,000 (approximately $3,333) for each good bearing the false trade description, or to imprisonment for a term not exceeding three years, or to both. For a second or subsequent offence, an individual will be liable to a fine not exceeding RM20,000 (approximately $6,667) for each good bearing the false trade description, or to imprisonment for a term not exceeding five years, or to both. Previously, the penalty for an offence committed by an individual was a fine not exceeding RM100,000 ($33,333) or imprisonment for a term not exceeding three years, or both.
Further, under the new act, the owner of a registered trademark has retained the right to file an application to the High Court for a 'trade description order' (TDO). However, it appears that the right to make an application for a TDO based on passing off (which was clearly provided for under Section 16 of the 1972 act) has now been removed.
Moreover, the term of a TDO has been reduced to one year only, as opposed to five years under the 1972 act. However, the High Court may allow an extension of the term by a further year or more if it is of the view that such a term is reasonable.
The new provisions limit the right of trademark owners to apply for a TDO in that an application can be based only on trademarks registered in Malaysia. This, coupled with the fact that the definition of a 'trade description' now clearly includes a registered trademark, indicates that the government prefers to promote the enforcement of registered trademarks, as opposed to common law marks. It is thus important for rights owners to review their trademark portfolios to ensure that all their core trademarks are registered in Malaysia, and that the registrations cover not only the essential classes of goods, but also other classes of goods that are likely to be counterfeited in the Malaysian marketplace.
Teo Bong Kwang and Azrul Hamid, Wong Jin Nee & Teo, Kuala Lumpur
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