The Essential Startup Guide to Intellectual Property in Malaysia

The Essential Startup Guide to Intellectual Property in Malaysia

Startup intellectual property is a crucial asset for new businesses in Malaysia. It provides a competitive edge and protects innovations and creative works.

While often preoccupied with product development and market entry strategies, startups might overlook the significance of Intellectual Property (“IP”) in establishing a solid business foundation during the initial stages.

Understanding and managing IP effectively not only safeguards a startup’s unique offerings and notable market position but also propels it from a local entity to a competitive player on both local and global stages.

Understanding Intellectual Property Rights

Before all else, IP rights are crucial for protecting the innovations and creative outputs that differentiate a startup from its competitors. It prevents illegal and unauthorised use by legally safeguarding ideas and creations.

These rights are a set of exclusive protections provided to creators and inventors, enabling them to control and benefit from their creations.

Here’s a breakdown of the primary types of IP relevant to startups:

  • Patents: Patents protect novel inventions by giving their holders the exclusive right to manufacture, use, and sell the invention for a specific period, up to 20 years. For an invention to be patentable, it must be new and innovative processes or designs that offer a brand-new technological solution to an industrial problem.
  • Trademarks: This form of IP protects a wide range of registrable trademarks which includes symbols, names, colours, and logos that distinguish goods or services. Trademarks are critical for brand identity and consumer recognition, and they can be renewed indefinitely, each term lasting 10 years.
  • Copyrights: Copyrights protect original literary and artistic works, including software, music, and artwork. In Malaysia, they automatically apply upon creation and last for the creator’s lifetime, including an additional 50 years, ensuring long-term protection before being released to the public domain upon expiration.
  • Industrial Designs: These protect a product’s aesthetic aspects, such as its shape, pattern, and configuration. They are crucial in preserving unique visual features, especially when the product’s design is a key selling point. Protection lasts for an initial period of five years, which can be extended up to 25 years.

Read More: 12 Frequently Asked Questions (FAQs) About Contracts in Malaysia

Types of Intellectual Property Rights in Malaysia

Next, understanding the specifics of Malaysian IP law is essential for startups that aim to fully leverage their intellectual assets:

  • Patents in Malaysia are governed by the Patents Act 1983, which requires that inventions be new, involve an inventive step, and be industrially applicable.
  • Trademarks are monitored under the Trademarks Act 2019, allowing businesses to secure their brand identity effectively. Once registered, a trademark is easier to enforce and can significantly deter any potential infringement.
  • Copyright protection does not require registration in Malaysia. It offers automatic protection from the moment of creation, which is crucial for creators to understand. However, it is advisable to register a copyright to legally secure ownership and to exclusively exploit any creations made.
  • Industrial Designs are governed by the Industrial Designs Act 1996 to be protected, which is particularly important for startups in design-driven sectors.

Read More: What To Know About ChatGPT and Malaysia’s Copyright Act 1987

Common Intellectual Property Mistakes Startups Make

Common Intellectual Property Mistakes Startups Make

However, startups often fall into several common pitfalls when it comes to intellectual property management, which can significantly impact their business’s growth and protection:

1. Neglecting IP Clearance Searches

Firstly, many startups eager to launch their products or brands skip the crucial step of conducting IP clearance searches. This involves a detailed checking and verifying existing:

  • Patents
  • Trademarks
  • Designs

It is to ensure that the new products or services from the startup do not infringe on existing intellectual property rights.

Consequently, failing to conduct these searches can lead to costly legal disputes and the potential need to rebrand or redesign products, significantly affecting the business.

2. Overlooking Formal Agreements

Furthermore, intellectual property ownership can become a contentious issue for a startup if not clearly defined from the beginning.

Startups frequently neglect to draft formal agreements that specify who owns what IP among founders, employees, and third parties such as freelancers or contractors, making the IP ownership unclear.

This oversight might hinder startups from utilising the IP and may lead to disputes due to the loss of IP rights when team members part ways or when third parties claim ownership of developed IP.

Read More: The Importance of the Entire Agreement Clause

3. Delaying IP Protection

Startups may also delay registering their intellectual property in an attempt to cut costs. This delay can be risky as it leaves the startup vulnerable to others who might register the IP first, effectively locking out the original creators from leveraging their own inventions or designs.

Additionally, unregistered IP is harder to enforce and offers less legal protection against infringement.

4. Lack of a Comprehensive IP Strategy

Lastly, startups often view IP protection in isolation rather than as part of a comprehensive business strategy.

This limited view can prevent them from fully leveraging their IP assets for business growth, such as through licensing or strategic partnerships that could be facilitated by robust IP protection.

Read More: NFT and Digital Art: Legal Implications in Malaysia

Best Practices for Protecting IP in Malaysia

Hence, to navigate the complexities of intellectual property effectively, startups in Malaysia should adopt a strategic approach to IP management:

1. Early IP Evaluations

Firstly, startups should prioritise conducting early IP evaluations to identify their core intellectual assets and determine the most effective types of protection required.

This assessment should include identifying which innovations, brands, and creative works are central to the business’s value proposition and competitive advantage.

2. Professional Guidance

Secondly, consulting with IP professionals, such as specialised intellectual property lawyers in Malaysia, is crucial.

These professionals can provide not only legal representation but also strategic advice on aligning IP protection with the startup’s broader business goals. Not to mention, they can provide assistance with searches for existing patents, trademarks, and designs for a more accurate result.

They can also assist in navigating complex registration processes and advise on the nuances of Malaysian and international IP law.

3. Leveraging International Treaties

Moreover, Malaysia participates in several international IP treaties. This can be advantageous for every startup looking to protect their intellectual property beyond national borders.

Utilising treaties such as the Madrid Protocol for trademarks and the Patent Cooperation Treaty can facilitate protection in multiple countries, saving time and reducing costs compared to filing in each country separately.

4. Regular IP Audits

Conducting regular audits of intellectual property also helps ensure that all new creations are appropriately assessed and protected as well as in compliance with the IP laws and regulations.

These audits can also help startups identify potential breaches or opportunities to further capitalise on their IP assets.

5. Educating the Team on IP Importance

Equally crucial is educating all team members about the importance of IP and their roles in protecting it.

This includes training on confidentiality, proper documentation of the creative and development processes, and the implications of IP breaches.

6. Implementing Proper Documentation and Security Measures

Finally, proper documentation of all developments, designs, and creative outputs is essential for establishing IP ownership.

Additionally, implementing security measures to protect digital and physical representations of intellectual property can prevent unauthorised and illegal access and use.

The Bottom Line

In summary, intellectual property is not just a legal checkbox but a foundational element of business strategy that should be managed from the outset for every startup in Malaysia.

Effective intellectual property management not only protects a startup from infringement but also enhances its valuation and attractiveness to investors.

By consulting with IP professionals at Sabrina Hashim & Co., your business can secure the necessary protections to compete and thrive both in local and international markets.

Discover how our specialised legal services can strengthen your startup against potential legal challenges and drive its long-term success.