Battling Trademark Infringement in Malaysia: Challenges and Pathways to Improvement

 

1.  Introduction

 

 

Imagine the letdown: you snag what you think is a fantastic deal on designer clothes, only for a friend to reveal they are fakes. This scenario is becoming all too common, as the rise of counterfeit goods, both within countries and across borders, continues to reshape the retail landscape.

 

 

Several key factors contribute to this surge. A significant one is the growing consumer acceptance of counterfeit products, as many are increasingly drawn to the allure of popular brand status symbols, even if they are not authentic. Fuelling this trend is the powerful influence of social media influencers, who often promote personal expression through fashion, inadvertently or directly boosting the appeal of readily available, albeit fake, designer items.

 

 

2. Evolution of Counterfeit Sales

 

 

Historically, the sale of counterfeit goods was largely restricted to physical marketplaces, where you might stumble upon fake designer bags or jerseys. However, the advent of the digital age has completely transformed this landscape. The booming e-commerce sector has created fertile ground for counterfeiters, with online marketplaces now serving as primary hubs for their operations. These platforms connect a massive network of sellers with millions of unsuspecting consumers.

 

 

The problem is further amplified by social media, which provides new and insidious channels for distributing fake products. What’s more, artificial intelligence is now being employed to generate fake reviews, cleverly misleading impulsive online shoppers. Here in Malaysia, counterfeiters are proving incredibly inventive, leveraging services like ride-hailing, food delivery, and even grocery delivery apps to get their illicit goods into consumers’ hands.

 

 

Geopolitical tensions, like trade wars, can significantly influence the market for genuine and counterfeit goods. When tariffs and taxes are imposed on legitimate products, their prices often increase. This surge in cost can inadvertently steer some consumers toward more affordable, albeit often counterfeit alternatives.

 

 

Cross-border challenges such as abuse of Free Trade Zones (FTZ) may also linked to the increase of counterfeit goods, with studies showing a clear correlation between the number of FTZs in a country and the volume of counterfeit exports. A Free Trade Zone is an area within which goods may be imported, handled, manufactured or reconfigured. Weak oversight, lack of transparency, and limited customs control make it difficult to track the movement of goods within and between FTZs^[1]. Counterfeiters exploit these regulatory gaps to store, repackage, relabel, and re-export fake products—often under generic descriptions that avoid detection^[2].

 

 

3. Local Context and Statistics

 

From 2020 to February 2023, Malaysia’s Ministry of Domestic Trade and Cost of Living (MDT) made significant strides in combating counterfeit goods. They seized RM69 million worth of fake products across 976 cases, ranging from clothing and food to cosmetics, medicines, and communication devices. During this period, 99 arrests led to RM3.5 million in fines and penalties under the Trademarks Act 2019^[3].

 

Looking at 2024 specifically, counterfeit cases were most prevalent in communication devices (99 cases), followed by clothing (82 cases), and leather goods (66 cases). In terms of seized value, shoes accounted for the highest amount at approximately RM1.7 million, with apparel at around RM1.3 million, and communication devices at approximately RM1 million. Consumables collectively amounted to RM666,702.30, broken down into food/beverages (RM198,879.70), medicine (RM7,192.60), and liquor/beer (RM460,630)^[4].

 

 

 

4. The Perilous Threat of Counterfeit Consumables

 

 

Beyond the financial implications, counterfeit goods, especially consumables like food, medicine, beverages, and cosmetics present serious health and safety risks. Since these products are ingested, applied to the body, or consumed, their counterfeit versions can have immediate and severe consequences. Unlike non-consumable fakes, their unregulated production can introduce harmful ingredients, contaminants, or incorrect dosages, directly jeopardising consumer well-being.

 

 

Malaysia has recently faced a concerning surge in methanol poisoning cases linked to counterfeit liquor, resulting in numerous fatalities. A tragic wave of incidents in 2018 saw 29 deaths by September, attributed to illicit alcohol.^[5] The problem continued into 2019, with three deaths in early May and an additional ten fatalities over two days in mid-June. Beyond Malaysia’s borders, Laos experienced a tragic incident in November 2024 where six tourists succumbed to methanol poisoning^[6]. These incidents underscore how counterfeit alcohol, frequently sold cheaply, refilled into recycled genuine bottles, and entirely lacking in quality control poses a lethal threat comparable to that of fake medicines or cosmetics.

 

 

 

5. Tackling the Counterfeit Market

 

 

As the demand for counterfeit goods rises, so too does their supply, incentivising illicit production. To effectively protect consumers and address this pervasive issue, a multi-pronged approach is crucial.

 

 

The Malaysian government has demonstrated a proactive stance against illicit trade, which is commendable. The MDT operates an Intellectual Property (IP) protection taskforce, working collaboratively with agencies like Customs and the Police to directly tackle intellectual property infringements. Similarly, the Ministry of Finance’s Multi-Agency Taskforce, while primarily focused on mitigating tax leakages, underscores a broader commitment to combating illicit activities.

 

 

Further exemplifying these efforts, the Malaysian Health Ministry launched the “Tolak Ubat Tidak Sah” (‘Reject Unlawful Medicine’), or “TOBaTS” campaign, effectively educating the public on the dangers of unregistered and counterfeit medicines^[7].

 

 

Another key initiative is the MDT’s “Basket of Brands” program. Under this program, participating trademark owners can submit detailed product information to MDT in advance, allowing enforcement officers to swiftly identify and seize counterfeit versions without needing time-consuming verification.

 

 

6. Strengthening Anti-Counterfeiting Efforts in Malaysia

 

 

Effective anti-counterfeiting strategies require more than just rigorous enforcement. While consistent monitoring and crackdowns by officials are crucial, their impact is severely limited without strong post-enforcement actions and proactive deterrents.

 

 

A major challenge stems from the current outcome where counterfeiters often face only minimal fines or lenient compounds upon appeal. This perceived leniency drastically reduces any real disincentive. When the financial and legal consequences do not outweigh the potential profits from illicit activities, the cycle of infringement persists.

 

 

To effectively break this cycle and establish a credible deterrent, Malaysia’s legal framework and its application must evolve to ensure:

 

 

• Consistent and Robust Prosecution: Every seizure and investigation should be diligently pursued through the courts. This sends a clear message that IP infringement is a serious offence with tangible consequences. 

 

• Meaningful Financial Penalties: Fines must genuinely impact the financial viability of counterfeiting operations, rather than simply being a cost of doing business. This could involve penalties that are a significant multiple of the seized goods’ value or the estimated illicit profits.

 

• Appropriate Custodial Sentences: For serious or repeat offenders, imprisonment should be a more frequently applied and enforced.

 

• Reduced Avenues for Lenient Outcomes: The system should minimise opportunities for infringers to avoid significant penalties through appeals that result in drastically reduced fines or administrative compounds that lack genuine punitive effect.

 

7. Enforcing your IP Rights in Malaysia 

 

 

In Malaysia, the MDT is responsible for enforcing intellectual property rights, primarily through the Trademarks Act 2019 (TMA 2019) and the Trade Descriptions Act 2011 (TDA 2011). Before the enactment of the TMA 2019, the MDT largely relied on the TDA 2011 to combat counterfeiting. However, the TMA 2019 has since streamlined these efforts by consolidating relevant provisions from the TDA 2011, providing a more comprehensive framework for tackling trademark infringement.

 

 

Lodging a Complaint

 

Brand owners who suspect their trademarks have been infringed can lodge a complaint with the MDT. To do so, they will need to submit the following documents:

 

 

• Letter of Complaint: A formal letter detailing the alleged infringement.

• Trademark Certificate (including renewal certificate): Proof of ownership and validity of the trademark.

• Power of Attorney: If an agent or representative is lodging the complaint on behalf of the brand owner.

• Surveillance Report: Documentation of the counterfeit activities, such as evidence of sale or distribution of infringing goods.
   

 

Post-Enforcement Cooperation

 

 

Following an enforcement raid, it’s crucial for brand owners or their representatives to cooperate fully with the MDT. This involves verifying all seized goods, preparing a detailed verification report, and being ready to provide statements to the investigating officer. Furthermore, they must be prepared to testify in court should the infringer be charged when the matter proceeds to trial. Of course, brand owners can always engage and seek counsel from a law firm familiar with these processes and procedures to guide them through each step.

 

 

 

8. Conclusion

 

 

Counterfeit goods present a significant and complex challenge for Malaysia, fuelled by consumer demand, technological advancements, and persistent regulatory hurdles. As counterfeiters increasingly exploit online platforms, it is crucial for law enforcement agencies to adopt more advanced and collaborative strategies for detection and prevention.

 

 

The unchecked proliferation of counterfeit goods directly harms legitimate businesses, discouraging vital investment in Malaysia. Without robust enforcement and diligent prosecution, this dilution of legitimate markets will only intensify. To safeguard Malaysia’s economic future and encourage continued investment, we must urgently enhance our efforts against increasingly sophisticated counterfeiters or face detrimental consequences.