Suddenly, it’s not so easy to invalidate a patent in Malaysia
26 September 2022
A landmark decision gives much needed guidance on patent invalidation in Malaysia – not just from a substantive viewpoint but also in practice as it clarifies what needs to be pleaded. Bahari Yeow, Zhi Jian Lim and Alex Choo explain why it also gives encouragement to patent owners that their grant of patent will not-so-easily be challenged.
Imagine this: You’ve spent years and large amounts of money on research and development to invent a life-changing invention. You then apply to register your patent. After several years, HOORAY! You finally have your grant which entitles you to exclusive rights to exploit your patent.
After enduring the arduous registration process, safe to say it is a patent owner’s greatest fear that his or her patent may be invalidated. Unfortunately, this is a common defence by infringers when faced with a patent infringement action. But the question begs – is it that simple to invalidate a patent?
The recent Federal Court decision in YKL Engineering Sdn Bhd v. Sungei Kahang Palm Oil Sdn Bhd & Anor  8 CLJ 32 provides some much-needed guidance patent invalidation. This article aims to analyze the findings and ascertain the implications of this landmark decision.
The subject patent was a machine used in the oil palm industry entitled the ‘Fruit Bunch Splitter’ which reduces the size of oil palm fresh fruit bunches by splitting them into smaller pieces (the appellant’s patent). Sometime in April 2009, the appellant approached the first respondent to showcase the appellant’s patent which led to it being installed in the first respondent’s factory. The appellant’s patent was used for test run purposes with a view to a sale. The sale fell through.
Sometime in April 2011, the appellant received information that the first respondent was operating two units of oil palm fruit bunch splitters (the impugned products) in its factory which closely resembled the appellant’s patent. As it turned out, the first respondent purchased the impugned products from the second respondent. The first impugned product was purchased in September 2009, and the second in January 2010.
The appellant thus commenced patent and copyright infringement action against the first and second respondents. The respondents denied infringing the appellant’s patent and counterclaimed to invalidate the appellant’s patent on the grounds of lack of novelty (citing two prior arts) and obviousness. After the appellant closed its case, the respondents sought leave to introduce an additional prior art (the third prior art). The application was dismissed and thus the third prior art was not a pleaded prior art.
High Court’s decision
The High Court ruled in favour of the appellant and found the respondents guilty of patent and copyright infringement. The respondents’ counterclaim for invalidation was dismissed. In so doing, the learned High Court Judge did not consider the third prior art because it was technically not pleaded.
Court of Appeal’s decision
Dissatisfied with the decision of the High Court, the respondents appealed. The Court of Appeal set aside the High Court’s decision and allowed the respondents’ counterclaim, thereby invalidating the appellant’s patent. In this regard, the Court of Appeal held that the learned High Court Judge fell into error by failing to consider the third prior art.
Federal Court proceedings
Leave was granted on seven questions of law. Questions 1 to 3 essentially relate to rules of pleadings in patent infringement/invalidation action; Questions 4 and 5 were on public disclosure of a patent as a ground for invalidation; Question 6 pertains to rules for interpreting patent claims and Question 7 relates to copyright law.
The Federal Court dismissed the appellant’s appeal, and its key findings are as follows:
Prior art to challenge novelty must be pleaded with specificity. Unlike other jurisdictions such as the United Kingdom, Australia and Singapore, neither Malaysia’s Patents Act 1983 nor its Patents Regulations 1986 require a party seeking to destroy the novelty of a patent to specifically plead the prior art(s). Turning to the Rules of Court 2012, the rules provide that only ‘material facts’ need to be pleaded. Thus, the question that begs answering is whether a prior art is a ‘material fact’ that must be pleaded? The Court of Appeal answered in the negative and held that evidence relating to the third prior art which was not pleaded is admissible. The Federal Court disagreed with the Court of Appeal. The Federal Court held that a party attacking the validity of a patent should particularize the prior art in question in the pleading so that the patent owner and its expert may come to trial prepared and not taken by surprise.
Not all public disclosures destroy the novelty of a patent, it must be enabling disclosure. As a precursor, the respondents also challenged the novelty of the appellant’s patent by alleging that there was a prototype that was installed in a third-party premise in 2002. The Federal Court upheld the Court of Appeal’s decision in holding that the prototype was an enabling disclosure thereby destroying the novelty of the appellant’s patent.
‘Originality’ for subsistence of copyright is distinct from ‘novelty’ in patent law. The Court of Appeal held that no copyright subsisted in the design drawings of the appellant’s patent in view of the lack of novelty pursuant to the prior art documents. The Federal Court disagreed with the Court of Appeal and held that the test applicable on the subsistence of copyright is not ‘newness’ or ‘novelty’ but originality. The fact that a work is based on the existing work, or parts of the work is lifted from another work will not prevent it from being original. Copyright law does not require that a work should be unprecedented or new in comparison with already existing works. What the Federal Court concluded upon perusing numerous foreign and domestic case laws is that the concept of ‘newness’ or ‘novelty’ in the patent law is not a relevant consideration for copyright to subsist. What is more important is that sufficient efforts have been expended to render the work original in copyright law. The Federal Court upheld that Court of Appeal’s decision that the appellant had failed to establish copyright infringement.
Invention and innovation in Malaysia
This landmark decision gives much needed guidance on patent invalidation – not just from a substantive viewpoint but also in practice as it clarifies what needs to be pleaded. Further, it gives encouragement to patent owners that their grant of patent will not-so-easily be challenged as an infringer will have to plead the prior art(s) intended to be relied on with specificity, failing which it will not be considered by the court. This in turn may galvanize invention and innovation in Malaysia.