Malaysia: The Trans-Pacific Partnership – Implications For Malaysia

Last Updated: 30 December 2015
Article by Marks & Clerk

Malaysia entered into the Trans-Pacific Partnership (TPP) together with 11 other countries on 5 October 2015. The official TPP was released on 5 November 2015 in Malaysia by the Ministry of Inter­national Trade and Industry (MITI), and can be found on the MITI website in the Malaysian Free Trade Agreements section. In this article, we have reviewed the IP-related issues concerning Malaysia.

Patent Term Extensions

The existing patent term regime in Malaysia lasts for 20 years and there are currently no provisions for patent term extensions in Malaysia.

Article 18.46 of the TPPA introduced an obligation to prevent unreasonable delays to the patent application process. Crucially, it imposes a duty on signatory states to adjust patent terms to compensate for any unnecessary delays. According to Article 18.46(4), an unreasonable delay shall include a delay in the issuance of a patent of more than five years from the date of filing of the application in the territory of the party (applicant), or three years after a request for examination of the application has been made, whichever is later.

While Article 18.46(4) also provides for the exclusion of periods of time that are not directly attributable to the patent application and the parties involved from the calculation of ‘unreasonable’ delays, a concern raised in Malaysia is that the ambiguous criteria effectively lowers the barrier for drug companies to obtain patent term extensions beyond the standard 20 years. Another concern is that this will subsequently incur significant delays to the entry of cheap generic drugs into the market. Nevertheless, the Ministry of Trade and Industry has stressed that the TPP will not alter patent policy in Malaysia.

Data and Marketing Exclusivity

According to current practice, data exclusivity in Malaysia is limited to a maximum of five years for a new drug product containing a new chemical entity, and three years for data concerning a second indication of a registered drug product. No exclusivity period applies to other categories of drugs or drug-related products.

Under TPP rules, both data and marketing exclusivity for new agricultural products are set at a minimum of 10 years. For new pharmaceutical products, both data and marketing exclusivity shall be granted for at least five years. A company can also apply for exclusivity for new combinations of an old drug and a new chemical entity.

For new biologics, data exclusivity shall be granted for at least eight years, while marketing exclusivity is set at a minimum of five years. However, Malaysia recently affirmed that it will set a five-year limit on data exclusivity periods for new biologics, a class that includes new cancer treatments, even though the TPP clearly stipulates an eight year data exclusivity period.

The TPP does not state a maximum period for any of the mentioned exclusivity periods.

If the provisions relating to patents are successfully implemented in Malaysia, competing firms seeking regulatory approval to market a generic drug will be unable to utilise new clinical data submitted by the original drug manufacturer until the relevant exclusivity period and/or patent term expires. This may result in delayed availability of generic drugs and higher manufacturing and marketing costs, which will likely be transferred to the end consumers.

This potential situation has fueled local concerns that increased flexibility for patent term extensions and longer exclusivity periods will jeopardise public access to affordable medicines. Nevertheless, the Ministry of Trade and Industry highlighted that Malaysia has been well aware of the importance to prioritise access to medicines, and that steps have been taken to ensure that the TPP does not result in increased drug prices.

Summarily, the TPP has introduced noteworthy changes to existing patent term extension and data and market exclusivity guidelines in Malaysia.

Industrial designs

The official TPP specifies that it is subject to Article 25 and Article 26 of the TRIPS Agreement, which the earlier leaked version did not include. Notably, Article 26 of TRIPS provides that the duration of protection shall be allowed to be extended for a minimum of 10 years. In Malaysia, the Industrial Designs Act 1996 allows an extension of duration of protection to 25 years, which is compliant with its TRIPS and TPPA obligations.

Copyright duration

The prevailing law in Malaysia provides for a 50-year limit copyright protection period calculated from either the end of the author’s natural life, or from the beginning of the calendar year which follows the year the work was first published. The period of protection differs in respect of literary, artistic or musical works, which is stipulated in the current legislation.

The implementation of Article 18.63 of the TPPA will require Malaysia to implement a 70 year period of copyright protection, not dissimilar to half of the TPPA signatories who already enforce this 70 year period within their respective jurisdictions. This will also include the requirement that protection of a performance, work or phonogram is to now be calculated to a term no less than 70 years from the natural life of the author.

However, on the basis other than the life of a natural person, the term shall be no less than 70 years calculated from the end of the calendar year. If no such authorised publication is materialised within 25 years of the creation of work, the same 70 year copyright period will be calculated from the end of the calendar year the work was first created.

Extending the copyright period means Malaysian consumers and businesses will forego savings they otherwise could have made from books, music and films coming off copyright earlier.

Malaysia has increased its enforcement activities to curb online piracy, and has recently amended its copyright laws to include penalties for unlawful web hosting – such as streaming and linking. Article 18.68 of the TPP has proposed more robust copyright protection laws, especially in regards to Technological Protection. This covers fraudulent and deceptive commercial activities such as piracy and other forms of infringement to ensure that privacy and other consumer protection laws can be enforced.

Internet Service Providers (ISPs)

Malaysian law has not clearly defined the role of ISPs with regards to online copyright infringement. However, this will likely change with the TPP in force. The TPP sets out guidelines to implement enforcement procedures to counter online copyright infringement. The framework includes legal incentives for ISPs to cooperate with copyright owners to deter unauthorised retention of copyrighted materials. It also introduced limitations to exclude ISPs from monetary liability for online copyright infringements that are not within the control of ISPs.

The TPP provides that eligibility for liability exclusions should not be construed by introducing a requirement for ISPs to actively monitor their services or seek information regarding potential infringing activity. However, ISPs will be required to remove or disable access to material containing copyright infringement immediately upon receiving notice. Here, it seems that ISPs will be required to cooperate with rights owners in a passive role.

The new copyright extensions stipulated in the TPP have given rise to local concern with many believing the extension could effectively render works as protected under copyright to be excessive in a country whose copyright laws are still relatively new. Another issue that has been previously raised, in relation to the new 70-year copyright protection limit, involves the retrospective nature of the provision which could halt many works which are nearing the end of their copyright tenure and as such make them unavailable to the public domain and for local artists.

There has been criticism from technological sectors in regards to the copyright extension period’s effect on technology and software development. The main issue raised here deals with the possibility of a decline in technological innovations and stunt in the growth of Malaysia’s own technological industry if the 70-year copyright protection if the provisions become implemented in Malaysian Law.

As of November 2015, there was no official statement from the Ministry of Trade and Industry regarding the effects of the TPPA provisions on existing copyright durations in Malaysia, or the role of ISPs in preventing online copyright infringement.  

The TPP calls for stronger IP protection with the aim of providing good incentives for innovation. However, local reactions to the TPP in Malaysia have been mixed: official sources are mostly positive on the signing of the TPP, whereas public sentiment seems comparatively negative. International Trade and Industry Minister Datuk Seri Mustapa Mohamed has said that the agreement will be debated and decided on in Parliament in either January or early February 2016. Conclusively, the practical effects of the TPP on Malaysia will be clarified with the release of two cost-benefit analyses commissioned by the Government, which are expected to be publicly available in early 2016.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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