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Malaysia Contemplates Intellectual Property Rights Sharing

With the increased realization by the government of Malaysia that it is imperative to develop an innovation-driven economy, the government is taking steps to allow the IP rights derived from inventions made in research work undertaken with government grants to be jointly owned by the government, the respective research institute as well as the inventors involved. With this proposal, Malaysia aims to create incentives for inventors allowing them to have a financial stake in the inventions.

In the United States of America, under the Bayh-Dole Act, exclusive control over many government funded inventions are allowed to be transferred to universities and businesses operating with federal contracts for the purpose of further development and commercialisation. The universities and businesses are then allowed to license the inventions to other parties. The US federal government, however, can license the inventions to third parties, even without the consent of the universities and businesses or their licensees, if the government feels that the invention is not being made available to the public on a reasonable basis, i.e. by issuing a compulsory license.

Currently, the conditions on the ownership, use and exploitation of patents are designed to reflect the general position under the law wherein it is provided under Section 20 of the Malaysian Patents Act 1983, the rights to a patent for an invention made by an employee shall be deemed to accrue to the employer.

As things stand now, all employers including research institutes assert their right to ownership and use of all patents generated by their employees during the course of their employment. At the same time, they also claim their right to ownership and use of all patents generated by their employees outside the course of their employment where substantial resources have been used. Some employers presently do reward employees who made inventions, which generate revenue for the company when the patent concerned was successfully exploited.

If the Malaysian government is serious in providing equal rights to inventors, the above said Section 20 should first be amended to provide such rights to the inventors. Until this Section is amended, the inventors will not be able to claim any rights to the inventions made by them.

In commercialising inventions where the patent rights are being shared between the government, research institutes and inventors, the options for commercialisation must be selected. The option chosen must be the one that best serves the development objective of the nation and the research institute in question. In the event a joint decision is not reached, the government should be allowed to make a final decision.

Some of the research institutes, particularly foreign universities, have reported that inventors who are involved in the marketing effort are much more likely to see their inventions commercialised. Malaysia research institutes should therefore allow the inventors to help the government and the research institutes in identifying companies whom they think will be interested in commercialising their inventions.

The government is yet to announce on how royalties or other payments received will be divided between the government, research institutes and inventors. Obviously, the government with the assistance of the research institutes will come up with an agreement on this issue. The agreement should not be a standard agreement, which will be applicable to all research institutes. This is as the nature of the research and the potential revenue generated would vary. The agreements should be drafted on a case by case basis, with a proper view to ensure that all parties enjoy an equitable share.

There are cases where employers decline to obtain patent protection on any invention made by their employees if the invention is not within the business interest of the employers or if the invention was made without any expense to the employers. In such a situation, the patent rights will be passed to the inventor. To ensure the effectiveness of the research being conducted, the government should encourage inventors to file for patent protection, and help maintain patent rights and commercialise the inventions by providing funds for the same.

Unlike their foreign counterparts, there are very few Malaysian research institutes who are successful in commercialising inventions. The notable exception will be Malaysian Palm Oil Board (MPOB) who has been actively involved in protecting IP rights for inventions made by its researchers. The majority of the research institutes, including universities are known to be dependent on the government in providing funds. With this new proposal, the government should encourage research institutes and their researchers to be pro-active in commercialising inventions and reduce the burden on the government to provide funds. The research institutes should be allowed to form a new company to develop and commercialise any suitable and commercially viable inventions.

Another issue which should be seriously considered by the government, is that by having the government retaining part of the patent rights, this may slow down the commercialisation of the invention because of the existence of at least three owners to patent, at least two of them being government bodies, who would have to negotiate among themselves before anything useful can be done. This will delay the public benefit from each advance, which is the use of the actual technology by the public. To end this potential gridlock, Malaysia should develop a system where the terms on licenses are granted can be agreed beforehand, which will enhance the development and commercialisation of the patents concerned.

The government is looking for the best model for the country on how these IP rights (in terms of percentage) should be shared among the three parties involved in research work. Malaysia needs to conduct a study to compare how these rights are assigned across many nations, and seeing which way has worked best. Admittedly, it would be difficult to do well, since various factors vary among countries. However this is a bold step in the right direction for the development of IP in Malaysia.