Author name: Edwin Lee

The Trade Descriptions Act 2011 (“New TDA”) has effectively come into force on 1 November 2011. The New TDA seeks to reform the law on trade descriptions by repealing the Trade Descriptions Act 1972 (“Old TDA”). The New Trade Description Act, like its predecessor, is enacted to promote good trade practices in the market by prohibiting false trade descriptions and false or misleading statements, conduct and practices in relation to the supply of goods and services, thereby protecting the interest of consumers. This article sets out to highlight some of the key provisions in the New TDA that every trademark owner should be aware of when protecting their trademarks in Malaysia. Methods to Enforce Trade Mark Rights In Malaysia, there are several methods in which a trademark owner can use to enforce and protect his rights. One of the most common methods is by initiating a civil action against the trademark infringers. However, a civil action is usually expensive, time-consuming and it places the burden of proof on the trademark owners to establish their case. In most cases, trademark owners usually prefer to stop the infringement immediately in the most cost-effective manner. As a first step, the trademark owners may issue a letter of demand or what is commonly known as a “cease and desist letter” to the infringers stating the trademark owners’ rights and how those rights have been infringed by the infringers. Issuing a cease and desist letter has proven to be quite effective in stopping further infringement. However, if the infringers deny their infringing acts, the trademark owners may resort to a civil action under the Trade Marks Act 1976. The trademark owners may also apply for an injunction to restrain further infringement or an order for delivery up of the infringing goods. In addition, the Trade Marks Act 1976 also provides a remedy for border measures control in which it allows the trademark owners (with the co-operation from the Royal Malaysian Customs Department) to stop the importation of counterfeit goods into the country. Similarly, like the Old Trade Description Act, the New Trade Description Act also provides for certain criminal remedies which would allow the trademark owners to stop their trademarks from being misused as false trade descriptions. Trademark owners may apply for a Trade Description Order (“TDO”), which is basically a declaratory order granted by the High Court declaring that a trademark or get-up used by an infringer amounts to a false trade description. The TDO empowers the officers from the Ministry of Domestic Trade, Cooperatives and Consumerism (“MDTCC”) to receive official complaints from the trademark owners and to raid and seize goods to which a false trade description has been applied. As a TDO is applied on an ex parte basis without having to call the respondent to the court, this lessens the procedures usually associated with injunctions and thus it saves substantial time and cost for the applicant. Besides, the enforcement and prosecution of the offence are carried out by the MDTCC at minimal cost to the registered trademark owners. As a result, an action under the TDO has proven to be the most commonly used and cost-effective way in curbing the sale of counterfeit goods. “Trade Description” A trademark owner should be aware that the New TDA expressly defines a “trade description” to include an indication, whether direct or indirect and by any means given, in respect of any goods or parts of goods relating to any rights in respect of trade marks registered under the Trade Marks Act 1976. A “false trade description” is a trade description which is false to a material degree or is misleading. Under the New TDA, it is an offence for any person who applies a false trade description to any goods as if the goods were subject to any rights relating to a registered trademark, or who supplies or offers to supply, exposes for supply or has in his possession, custody or control for supply any goods to which a false trade description is applied as if the goods were subject to any rights relating to a registered trademark. Upon conviction, the person will be liable to a hefty fine or imprisonment or both. Key Features of the New Trade Description Act (TDA) One of the key features under the New TDA is that only registered trademark owners in Malaysia can apply for a TDO. Previously, under the Old TDA, any trademark owners who have not registered their trademarks in Malaysia were allowed to enforce their common law trademark rights through the TDO. It appears that the Parliament has decided to restrict the right to the TDO, to only trademark owners who have registered their trademarks in Malaysia. No explanation was proffered for such a radical move. It should be noted that the Old TDA was modelled upon the UK Trade Descriptions Act 1968 and the UK law still allows common law trademark owners to enforce their rights regardless of whether they have a registered trademark in the UK. In the light of these changes, trademark owners should ensure that their trademarks are duly registered in Malaysia in order to protect their rights and interest. The validity period of a TDO has also been reduced from 5 years under the Old TDA to 1 year under the New TDA. Although the TDO can be renewed for a further period as may be determined by the court, this would incur further cost and time to the trademark owners. As such, the trademark owners who have obtained a TDO from the court should initiate the enforcement action as soon as possible rather than procrastinate. It should be noted that the TDO is only required in cases where the trademark or get-up used by the infringer is not identical but can be passed off as a registered trademark. A TDO, once granted, shall be taken as conclusive proof of a false trade description. Due to its far-reaching effects, the courts have held that a TDO will only

Malaysian Airline System Berhad (“MAS”), AirAsia Berhad (“AirAsia”) and AirAsia X Sdn Bhd (“Air Asia X”) have recently entered into a Comprehensive Collaboration Framework to explore opportunities to collaborate on a broad range of areas in which all parties will strive to complement each other’s businesses so as to leverage on their respective core competencies and optimise efficiency for the benefit of consumers. Does it violate the competition law? The collaboration has sparked concerns that the tie-up between the two airlines may result in a monopoly or anti-competitive behaviour in the airline industry. Many have expressed their worries that the collaboration may result in less frequent flights, limited travel options and that AirAsia may stop offering low price airfares since MAS is no longer a competitor to AirAsia. The collaboration agreement would only come into effect after a full competition analysis is completed and is in compliance with the applicable laws with regard to competition law in all the markets that the airlines operate in. It is noted that the recently-established Malaysian Competition Commission is also looking into the possible impact of the collaboration on the local market. Competition Act 2010 The Competition Act 2010 (“Act”) was passed by Parliament last year and is scheduled to come into force on 1 January 2012. The Act applies to any commercial activity by any company (including Government-linked companies) within and outside Malaysia which has an effect on competition in any market in Malaysia. Generally, competition law in most jurisdictions around the world covers three main pillars, prevention of anti-competitive agreements; abuse of a dominant position as well as a ruling against anti-competitive mergers and acquisitions. The Act does not, however, provide for regulation of mergers and acquisitions which may be anti-competitive, although the Government has not ruled out the possibility of introducing the third pillar in the future. Anti-Competitive Agreements The Act prohibits horizontal and vertical agreements between enterprises where an agreement has the object or effect of significantly preventing, restricting or distorting competition in any market for goods or services. Horizontal agreements which have the effect of price-fixing; market sharing; limit or control of production, market outlets or market access; bid rigging are deemed to be an anti-competitive agreement. Vertical agreements include tie-in arrangements and exclusive dealings which have the object of setting up barriers of entry against new entrants in a particular industry. Abuse of a Dominant Position Enterprises are prohibited from engaging in any conduct which amounts to an abuse of a dominant position such as imposing unfair purchase or selling price; limiting or controlling production, market outlets or market access, refusing to supply; applying discriminatory conditions that discourage new market entry; engaging in predatory behaviour towards competitors; or buying up scarce supplies in excess of the dominant enterprise’s own needs The Application of Competition Law to the Airline Industry In the airline industry, the typical competition issues include global alliances, tariff coordination, code-sharing, price-fixing, airport capacity and slots allocation, predatory pricing, frequent flyers programme, corporate discount schemes, travel agent commission, etc. These competition issues may arise from day-to-day dealings with competitors, joint venture partners, airport operators, suppliers, agents as well as customers, and will likely come under the scrutiny by the competition authority. In many countries, airlines have to seek permission and clearance from the competition authorities before they are allowed to form an alliance. The competition authorities will consider the terms of the agreement, the potential impact on the relevant markets as well as whether the alliance would result in excessive market domination. The competition authorities in many jurisdictions are generally supportive of airline alliances as they would result in cost savings, better connectivity and foster greater synergies between the airlines unless the alliances would result in the elimination of competition. Code-Sharing Code-sharing is an arrangement between two airlines where one airline (operating airline) allows another airline (marketing airline), as a codeshare partner, to market and sell tickets on the operating airline’s flights. The marketing airline that sells tickets under its own code does not actually operate the flight. While code-sharing agreements are generally permissible as they provide substantial benefits to consumers (such as seamless connections, greater network access and competitive airfares), some code-sharing agreements may give rise to anti-competitive concerns as the multiple displays of code-shared flights on computer screens push down other airlines’ flights to be displayed on following screens which may be missed by consumers searching for other flight options. It may also go beyond this and cover comprehensive integration of marketing and sharing of operational information that results in distortion of healthy competition practices. In this respect, AirAsia has dismissed the possibility of entering into a code-sharing agreement with MAS as it claims that both airlines operate on different market segments and different business models. It is believed that both airlines are likely to have a common understanding of joint planning, operating and coordinating routes, flight schedules and airfares. In Europe and the US, exemptions have been granted to a number of co-operation agreements between airlines on the condition that the whole arrangement benefits the customers of each party by providing access to a wider range of routes. Price Fixing In the past few years, dozens of airlines around the world have been slapped with hefty punishments by competition authorities for involvement in price-fixing cartels. For example, in November 2010, 11 airlines were fined a total of €799 million (about US$ 1.1 billion) by the European Commission for fixing the price of fuel and security surcharges on cargo flights worldwide over a six-year period from 1999 until 2006. Back at home, in July 2011, MAS announced that it would pay US$ 3.35 million to a number of freight forwarders in the US to settle claims alleging that MAS was involved in price fixing of airfreight shipping services and related surcharges, although MAS has denied any wrongdoing and claimed that the settlement was to allow MAS to focus its full attention on further strengthening its business and to keep its legal costs to

The Government recently enacted the Price Control and Anti-Profiteering Act 2011 (“Act”), which came into force on 1 April 2011. The purpose of the Act is to enable the Government to determine prices of goods or charges for services with the object of curbing excessive profiteering of essential goods and services by unscrupulous traders. Previously, the Price Control Act 1946 was the main legislation regulating the prices of goods and services. However, the Government recognized the need to revamp and update the law to deal with today’s realities. The Act is also meant to prevent businesses from hiking up prices excessively once the proposed Goods and Services Tax (“GST”) is implemented. Anti-Profiteering Under the Act, it is an offence for any person who, in the course of trade or business, makes an unreasonably high profit in selling goods or services, and this is not restricted to price-controlled goods or services. The Ministry of Domestic Trade, Co-operatives and Consumerism (“Ministry”) will prescribe the mechanisms to determine when profit would be deemed unreasonable. Factors such as tax, supplier’s cost, conditions of supply and demand, and geographical and product market considerations may be taken into account in formulating these mechanisms. Different mechanisms may be prescribed to cater for different conditions and circumstances. The Ministry is currently working with the Malaysian Institute of Economic Research, Institute of Strategic and International Studies Malaysia as well as other organizations to formulate these mechanisms. Therefore, anyone who unreasonably increases prices of goods or services, especially during festive seasons, when there is a shortage of supply of goods, or where there is an increase in petrol or commodity prices, none of which may have any tangible impact on the cost of the goods or services, would commit an offence under the Act. Key Provisions of the Act The Price Controller may, with the approval of the Minister of Domestic Trade, Cooperatives and Consumerism, determine the maximum, minimum or fixed price for any goods or services. Where prices or charges are determined by the Price Controller, such prices or charges would include all government taxes, duties and any other related charges, and businesses are not allowed to impose higher prices or charges just because of taxes such as GST. A list of the prices or charges must also be displayed in a conspicuous position so as to be easily read by anyone intending to purchase such goods or services. The Act also sensibly gives the Price Controller the power to determine different prices and charges for different geographical areas in respect of like or similar goods and services. Offences and Penalties Under the Act, anyone who sells or offers to sell any price-controlled goods or services inconsistent with the prices or charges determined by the Price Controller commits an offence. Interestingly, the Act also makes buyers liable to prosecution. Therefore, anyone who purchases or offers to purchase any price-controlled goods or services at prices different from those determined by the Price Controller is liable to prosecution unless he can prove that he had no knowledge of the price-controlled goods or services and that he acted in good faith in acquiring the goods or services at that price. If the offence is committed by a company, it will be liable to a maximum fine of RM500,000 and, for a second or subsequent offence, up to RM1,000,000. A director or CEO of a company may also be charged severally or jointly with the company unless he can prove that the offence was committed without his knowledge, consent or connivance and that he had taken all reasonable precautions and exercised due diligence to prevent the commission of the offence. If the offence is committed by an individual, he is liable to a maximum fine of RM100,000 or to imprisonment for a term not exceeding 3 years or both and, for a second or subsequent offence, to a fine of up to RM250,000 or to imprisonment for a term not exceeding 5 years or both. Conclusion While the Price Control and Anti-Profiteering Act 2011 will have an impact on businesses, it is not anti-business or intended to stop people from making a profit. What it aims to do is to prevent greedy traders and unscrupulous businesses from charging exorbitant prices for their goods and services. The enactment of the Act should therefore be welcomed as a safeguard for consumers against opportunistic profiteers. However, as it gives the Price Controller broad powers that will have a direct effect on the rakyat, prices should only be determined after thorough consideration of the impact on stakeholders. The success of the Price Control and Anti-Profiteering Act 2011 in achieving its objective is therefore very much dependent on its implementation. ***** About the author: This article was written by Edwin Lee Yong Cieh, Partner of LPP Law – law firm in Kuala Lumpur, Malaysia (+6016 928 6130, [email protected]). Feel free to contact him if you have any queries. This article was first published in CHIP Magazine Malaysia. The view expressed in this article is intended to provide a general guide to the subject matter and does not constitute professional legal advice. You are advised to seek proper legal advice for your specific situation.

Unquestionably, FinTech has continued to take centre stage in recent months. Not only that FinTech players are raising millions of funding from investors, governments and regulators around the world (including Malaysia) are also looking to regulate and facilitate the growth of FinTech industry in their respective countries through the creation of FinTech frameworks. To this end, it is recognised that some form of policy and regulatory framework is necessary to be put in place so that FinTech participants can operate in a safe, efficient and transparent manner, as rightly pointed out by the Governor of Bank Negara Malaysia, Datuk Muhammad bin Ibrahim. Equity crowdfunding (“ECF”) The first player to the FinTech party scene in Malaysia is ECF. In February 2015, the Securities Commission of Malaysia (“SC”), a statutory body in charge of the securities and derivatives markets in Malaysia, released guidelines to facilitate ECF market. Six (6) ECF platform operators (Alix Global, Ata Plus, Crowdonomic, Eureeca, pitchIN and Propellar Crowd+) were approved by the SC to operate ECF platforms. Malaysia is the first country in the ASEAN region to have introduced an ECF regulatory framework. The SC describes ECF platform as “a new form of fundraising platform that allows startups or other small-and-medium-sized enterprises to obtain funding through small equity investments from a relatively large number of investors, using online portals to publicise and facilitate such offers to investors”. Investors receive shares in return for their investments and can expect a return in the form of dividends if the company performs well. According to the SC, from May 2016 until October 2016, the combined amount SMEs have raised through the six regulated ECF platforms amounted to RM8 million for 11 Malaysian businesses. The platforms have also received widespread interest from across 38 different sectors. In April 2016, the SC released another guideline and this time, it sought to regulate the even more lucrative P2P Lending market. The first round of application was opened from 2 May 2016 to 2 July 2016 and the SC had received more than 50 applications from interested applicants. Six (6) P2P Lending platform operators (B2B FinPAL, Ethis Kapital, FundedByMe Malaysia, ManagePay Services, Modalku Ventures and Peoplender) were approved by the SC in early November 2016. These platforms are expected to launch their operations in 2017. Malaysia is once again the 1st country in the ASEAN region to have formally authorised such platforms to operate in the P2P Lending market. P2P financing, as described by the SC, is a “web-based innovation that broadens the ability of entrepreneurs and SME business owners to unlock capital from a pool of individual investors in small amounts and provides a quick turnaround time to obtain financing for their businesses, through an online digital platform”. Individuals, however, are not allowed to seek personal financing via a P2P Lending platform. Investors may now use P2P Lending platforms to buy securities in the form of an investment note or Islamic investment note, which are issued by businesses or companies. Once purchased, the issuer of the investment note or Islamic investment note will be obliged to pay the investors over a period of time, with interest or profits. Both borrowers and lenders benefit from better interest rates and returns on investment, respectively, compared to traditional financing methods. In addition, there are no intermediation parties as money change hands directly. Bank Negara Malaysia’s FinTech Regulatory Sandbox Following a public consultation exercise in July-September 2016, Bank Negara Malaysia (“BNM”) released the Financial Technology Regulatory Framework on 18 October 2016. The framework seeks to provide a regulatory environment that is conducive for the deployment of FinTeech in the form of a FinTech sandbox. With this framework, FinTech product, service or innovation can be deployed and tested in a live environment within certain testing parameters and timeframes. In order for a participant to participate in the sandbox, the participant must show the following: its product, service or innovation is genuinely innovative; it has conducted an adequate and appropriate assessment to demonstrate the usefulness and functionality of the product, service or innovation and identified the associated risks; it has the necessary resources to support testing in the sandbox; it has a realistic business plan to deploy the product, service or innovation on a commercial scale in Malaysia after exiting from the sandbox; and it is led and managed by persons with credibility and integrity. Additionally, in determining an application to participate in the sandbox and the extent of regulatory flexibilities to be granted to the participants, BNM has indicated that they would take into account various factors which include, but not limited to the following: the potential benefits of the proposed product, service or innovation; the potential risks and mitigating measures; and the integrity, capability and track record of the participants. The test will run for a period not exceeding 12 months. Participants may extend the testing period by submitting a written application to BNM no later than 30 days before the expiry of the testing period. At the end of the testing period, BNM will work with the participants to develop a transition plan for the deployment of the solution on a commercial scale in Malaysia upon successful testing. On the other hand, if the test fails or is discontinued, BNM will then consult the participants and develop an exit strategy for them. Beefing Up Cyber Resilience in Capital Market Industry While the SC is advocating the benefits of digital finance, the SC is also mindful of the new forms of risks and challenges posed by technology. To address this, the SC published a new Guidelines on Management of Cyber Risk on 31 October 2016 to raise awareness of industry-wide cyber resilience. The objective of the new guidelines is to enhance governance measures and counter cyber risk so as to protect investors within the capital market. Against a backdrop of increased dependency on information technology and Internet connectivity in capital market activities, operations of market intermediaries, market infrastructure and market-based financing platforms, there is a need to

Here are some recent legal developments in the technology, media and telecommunications sphere in Malaysia that happened in Q3 of 2016. Bank Negara Malaysia (“BNM”) Discussion Paper on FinTech Regulatory Sandbox On 29 July 2016, BNM issued a discussion paper on FinTech regulatory sandbox (“Sandbox”), inviting financial institutions, FinTech companies and the public to provide general feedback on the discussion paper. Additionally, BNM has also requested interested stakeholders to comment on the adequacy, appropriateness and adequacy of the initially set eligibility criteria and to suggest alternatives to the current minimum standards. The introduction of the Sandbox would allow FinTech innovations to be deployed and experimented in a live environment within certain testing parameters and timeframe. Pursuant to the discussion paper, in order for a participant to participate in the Sandbox, the participant must show the following: (a) its solutions are genuinely innovative, novel, and not similar to solutions which are already available in the Malaysian market; (b) it intends to deploy its solutions on a commercial scale in Malaysia after its exit from the Sandbox; and (c) its solution will contribute to the development of Malaysia’s financial sector, bring about an enhancement to the Malaysian financial institutions, or significantly benefit the Malaysian economy or customers. Additionally, in determining an application to participate in the Sandbox and the extent of regulatory flexibilities to be granted to the participants, BNM has indicated that they would take into account various factors which include, but are not limited to the following: (a) the potential benefits of the proposed solution; (b) the potential risks and mitigating measures; and (c) the integrity, capability and track record of the participants. The test will run for a period not exceeding 12 months. Participants may extend the testing period by submitting a written application to BNM no later than 30 days before the expiry of the testing period. At the end of the testing period, BNM will develop a transition plan for the deployment of the solution on a commercial scale in Malaysia upon successful testing. On the other hand, if the test fails or is discontinued, BNM will then consult the participants and develop an exit strategy for them. Legality of Airbnb Services Recently, it has been reported that some hoteliers had complained to the authorities that Airbnb services were illegal as the online platform allows the public to provide short-term rentals on residential premises to tourists for business purposes. The Malaysian Association of Hotels has indicated that not only this causes unwanted disturbance to the neighbours of Airbnb hosts (“Hosts”), users of Airbnb services are not adequately protected as the Hosts are not required to adhere to any safety requirements such as ensuring their customers against any risks or installing safety equipment on their premises. Additionally, unlike the Malaysian Homestay Programme, where the locals are authorized to offer tourists the unique lifestyle of rural villages, Airbnb operates without any licence or approval from the authorities, and the Hosts are not required to pay or collect taxes. As such, the hoteliers have urged the Government to regulate such services. In June 2016, the Penang Municipal Council (“MBPP”) issued a number of fines to several Hosts in Penang for providing homestay or lodging services to tourists without a valid licence issued under section 4 of the Municipal Council of Penang Island (Trade, Business and Industries) By-Laws 1991. Some of the Hosts have challenged this decision on the ground that since they do not provide homestay nor hotel services, there is no licence required. In August 2016, the Urban Wellbeing, Housing and Local Government Ministry (“KPKT”) was quoted by the media as saying that Airbnb’s home sharing service was not illegal and no licence was required. The KPKT, Tourism and Culture Ministry and Malaysia Productivity Corporation have also announced that there are no immediate plans to draft any new law on the matter or to issue any licences similar to those granted to hotels. It remains to be seen whether there will be further developments in this area. Announcement of the Fees for Spectrum Reallocation In Q1 of 2016, the Government announced that spectrum for the telecommunications industry would be reallocated in a move to optimize revenue. It was reported that this move was made pursuant to the Budget 2016 recalibrations. Soon after, the Malaysian Communications and Multimedia Commission (“MCMC”) announced that the 900 MHz and 1,800 MHz frequency bands would be reallocated among the four major telcos, namely Maxis, Celcom, Digi and U Mobile. On 31 August 2016, the MCMC announced the respective fees for the reallocation of spectrum in the 900 MHz and 1800 MHz bands. The MCMC states that the fee of spectrums will be determined per block of 2 x 5MHz in both 900 MHz and 1800 MHz frequency bands. It was reported that the spectrum fee is structured in two parts. First is a one-off payment for the price component which is determined at RM499,725,000.00 per block for the 900 MHz band and RM217,770,000 per block for the 1800 MHz band. The second part is an annual maintenance fee that is payable annually. The assignment will be valid for 15 years, with an implementation date set on 1 July 2017. Furthermore, to prevent the cost of spectrum assignment from trickling down to the consumers, the MCMC added that it is a condition of reallocation that telcos must offer packages that are cheaper than what is currently being offered to their subscribers. Establishment of 1st Special Cyber Court The purpose of this initiative is to arm the judicial system with sufficient and adequate means of handling cybercrime offences, such as hacking, online fraud/scamming, botnet, online defamation, sedition and harassment, web-defacement, stealing of online information, cyber gambling and pornography, etc. The Special Cyber Court will deploy specialised and trained judges to hear cases relating to cybercrime. The Special Cyber Court is expected to function in the same way like any other special courts such as those that are already in place to deal with intellectual property,

Pokemon Go has officially arrived in Malaysia. This augmented reality mobile app game has taken the world by storm and become a worldwide phenomenon since its debut in July 2016. It has more daily active users than Twitter and is fast becoming one of the most downloaded mobile app games ever. Pokémon Go is an augmented reality game that uses GPS on smartphones to identify players’ (in the game, such players are called “trainers”) physical location and shows trainers a map of their real-life surroundings. The game combines real-life surrounding places such as parks or buildings with virtual characters or objects that appear on the smartphone. The goal is to collect and train virtual Pokémon characters. The more Pokémon the trainer catches, the higher his or her ranking rises. Like all things, what comes with a wildly popular and innovative technology is always a series of fascinating legal issues that it raises. For Pokemon Go, some have raised concerns about its impact on privacy, property rights, trespass, public safety and liability. To make matter worse, the game has been linked to serious crimes such as kidnapping, robberies and sexual offences. Privacy When it was first launched, the Pokémon Go app requested permission to access and control all of the data associated with the trainer’s Google account (including emails, calendar entries, photos and even stored documents). This had caused some privacy concerns to the trainers and Niantic (Pokémon Go’s developer) has since remedied this by restricting access to only Google IDs and email addresses. However, the app still tracks the location data every time a trainer uses the app. Due to the nature of the game, most trainers leave the app and GPS on at all times while waiting for some rare Pokémon to appear. This means that, effectively, the movements of trainers could be tracked whenever and wherever they go. The app has access to a lot of data which if falls into the wrong hands, could lead to a privacy nightmare for trainers. The app also has a feature which places “gyms” at certain locations to attract trainers to battle against each other. There are news reports claiming that gyms that are placed at private residences and business premises have attracted dozens to hundreds of trainers, which potentially infringe the privacy and peace and quiet enjoyment of individuals and businesses. Also, as the app allows trainers to turn on their cameras when playing the game, there is a possibility that perverts or paedophiles may use their cameras to take pictures of girls or young children in public places on the pretext of playing the game. Trespass and Unlawful Assembly The game also places PokéStops at certain places that invite trainers to catch Pokémon at PokéStops. While most PokéStops are found in public places, do be mindful that not all public places are freely open to the members of public without any form of restrictions. For example, you cannot simply walk into the military bases, prisons and certain government-controlled offices without a proper permit. Anyone who does so can be found guilty of wilful trespass on government property under Section 22 Minor Offences Act 1955 (Revised 1987). For PokéStops that are found in private residences, you are also not allowed to climb over the fence or gate of your neighbour’s yard to catch Pokémon, as that would constitute a criminal trespass on private property under Section 441 Penal Code, which if convicted, you can be jailed up to 6 months or fined up to RM3,000 or both. If there is a wake or funeral proceeding, you can be found guilty of criminal trespass if your act of entering the area insults the religion of any person or disturbs the performance of a funeral ceremony, and you can be jailed up to 1 year or fined under Section 297 Penal Code. If you together with a group of friends (more than 5) gather at a place, all of you might commit a crime of unlawful assembly, if your intention is to commit an offence there or if the police ask you to leave but you stay on and you resist the execution of any legal process by the police. You and your friends can be jailed up to 6 months or fined under Section 141 Penal Code. Nuisance Even if you do not walk into someone’s house but you loiter around the perimeter of the house and create a lot of noise late into the night, the house owner can sue you for the tort of private nuisance if your activity interferes with his quiet enjoyment and use of the house. Both trespass and nuisance are also civil wrongs which allow the property owner or lawful occupier to sue you for compensation. If you cause any property damage, you will also be responsible for that. Pokemon Go Developer’s Liability It has also been reported that some trainers had suffered injuries while playing Pokemon Go (running into physical surroundings such as trees or lamp posts, getting into car accidents, falling off cliffs). Can the trainers sue Niantic for such injuries by arguing that it is predictable that trainers would stare at their phones while walking distractedly and ignore oncoming cars and natural hazards? Such argument might be weak, considering that Pokémon Go has put in place certain warnings and safeguards to warn trainers “be mindful of surroundings and play at their own risk”. This is very much like if an individual gets hit by a car while text-walking, and assuming no fault on the part of the driver, the individual only has himself to blame for his injury. The Terms of Service also includes disclaimers against any damage, injury or death that may occur during the use of the game. All trainers are required to agree to the Terms of Service in order to play the game. Pokemon Go Occupiers’ Liability Some small businesses and organisations are riding on the popularity of Pokemon Go by paying the game a daily fee

The issue of the need to maintain net neutrality and an open Internet concept has been a considerable debate for years, with the most recent development being the landmark ruling of the US Court of Appeals for the District of Columbia Circuit on 14 June 2016 in favour of net neutrality. Net neutrality is a principle which requires all Internet Service Providers (“ISPs”) to treat all sources of online content equally and provide all consumers with the right to access the content on a non-discriminatory basis. The idea behind net neutrality is that the Internet should remain open and neutral with uninhibited access to online content without the ISPs being allowed to block, impair or establish fast/slow lanes on the delivery of online content to consumers. However, ISPs argue that they have the right to optimise the use of the network resources and that Internet traffic or traffic prioritisation measures are necessary to ensure a reasonable quality of service standard for all Internet users, especially as Internet traffic continues to grow. The Open Internet Rules in the US In the US, the Federal Communications Commission (“FCC”) has developed Open Internet Rules, which are designed to protect free expression, innovation and economic growth on the Internet, as well as to promote investment in broadband networks. The Open Internet Rules are also intended to ensure that consumers and businesses alike have access to a fast, fair and open Internet. The FCC’s Open Internet Rules came into force on 12 June 2015 and apply to both fixed and mobile broadband Internet access services, which is classified as a “telecommunications service” by the FCC. Essentially, the Open Internet Rules set out five bright-line rules, as follows: (a) No blocking: ISPs are not allowed to block access to lawful online content, applications, services or non-harmful devices; (b) No throttling: ISPs are not allowed to impair or degrade lawful Internet traffic on the basis of content, applications, services or non-harmful devices; (c) No paid prioritisation: ISPs are not allowed to favour some lawful Internet traffic over other lawful traffic in exchange for consideration of any kind (in other words, ISPs are not allowed to provide “fast lanes” to certain content/service providers who are willing to pay in exchange for fast lanes); (d) No unreasonable interference: ISPs are not allowed to interfere unreasonably with their end users’ ability to use broadband Internet access services, or with their edge providers’ ability to make lawful online content, applications, services and devices available to end users; and (e) Enhanced transparency: ISPs must publicly disclose accurate information regarding the network management practices, performance and commercial terms of its broadband Internet access services to allow end users to make informed choices and for content, application and service providers to develop, maintain and market Internet offerings. As many as 4 million Americans have overwhelmingly voted to support the FCC’s initiative in keeping a free and fair Internet. Many tech giants like Google, Facebook and Netflix have also rallied in favour of the Open Internet Rules. It is said that without net neutrality, ISPs may choose to deliver certain online content at a slower speed, for example, making the video streaming on Netflix or YouTube buffer, unless they pay extra to get in the fast lane. However, the Open Internet Rules were not welcomed by the ISPs and they brought a case against the FCC. They argued, amongst others, that as broadband is an information service, as opposed to a telecommunications service, hence the FCC lacked statutory authority to create the Open Internet Rules and impose them on ISPs. They also argued that some of the rules were unconstitutionally vague and ran afoul of the US Constitution. The US Court of Appeals rejected the ISPs’ arguments and held in favour of the Open Internet Rules. The court held that: FCC had the authority to reclassify broadband as a telecommunications service. This was based on the evidence that consumers generally viewed broadband as essential communication and information platform that transmits data of their own choosing to their desired destination, as opposed to a mere information service; interconnection arrangements are derivative of the broadband Internet access service and hence, they could be regulated under the law; FCC had the authority to come up with measures to encourage the deployment of broadband infrastructure and rules to govern ISPs’ treatment of Internet traffic; and the Open Internet Rules generally require ISPs to offer a standardised service that transmits data on a non-discriminatory basis. Such equal access rule did not run afoul of the First Amendment to the US Constitution (which affirms the right to freedom of expression). This decision affirmed the US Government’s view that broadband is a utility that should be made equally available to all consumers, rather than a luxury that does not require government supervision. This decision marks a landslide victory for net neutrality in the US and an enormous win for consumers. With this decision, all ISPs must treat all Internet traffic equally, and this assures a level playing field for all online content and benefit both consumers and online content developers alike. President Obama – The Man behind the Push for Net Neutrality Rules The current US President, Barack Obama, is known as an ardent supporter of net neutrality. He has been instrumental in calling on the FCC to take up the strongest possible rules to protect net neutrality. In an open letter to the FCC in November 2014, he wrote, “an open Internet is essential to the American economy, and increasingly to our very way of life. By lowering the cost of launching a new idea, igniting new political movements, and bringing communities closer together, it has been one of the most significant democratizing influences the world has even known… The Internet has been one of the greatest gifts our economy and our society has ever known… there is no higher calling than protecting an open, accessible and free Internet.” Net Neutrality Concept in Malaysia & ASEAN In ASEAN, Singapore’s telecommunications

Facebook, arguably the world’s most successful and influential social networking site, has just turned 10 last month. On 4 February 2004, Mark Zuckerberg launched The Facebook from his Harvard dorm room. Originally intended to just serve as a social networking site exclusively for university and college students in the United States, Facebook has since grown by leaps and bounds to become the largest social networking site in the world. Facebook has attracted 1.23 billion users worldwide so far, and reportedly earned $7.9 billion in revenue in 2013. Facebook made a grand entrance into Nasdaq stock exchange when it went public in May 2012 by having one of the largest initial public offerings in Internet history, and it continues to make headlines every now and then, the latest being the acquisition of WhatsApp for a whopping $19 billion (Facebook bought Instagram for $1 billion in April 2012, just before it went public). This article is not intended to talk about how awesome Facebook is, or the benefits or changes that Facebook has brought to our daily lives (for better or worse). This article is meant to set out the various social and legal implications arising from the rapid growth and widespread use of Facebook in the last 10 years. In this article, reference will be made to Facebook’s Statement of Rights and Responsibilities (“Facebook’s Terms”), which is essentially the main document that sets out the terms of use that governs the relationship between Facebook with users and others who interact with Facebook. Violation of any provisions under Facebook’s Terms will result in the individual’s Facebook account being terminated or suspended. Posting third party content Very often, we find users posting contents such as text, graphics, photos or videos not belonging to theirs on Facebook without realising that such actions could potentially amount to infringement of copyright law which can result in both criminal and civil liability. According to Facebook’s Terms, users are not allowed to post content that infringes or violates someone else’s rights or otherwise violates the law. Facebook has set up a special tool to enable users to report to Facebook if their intellectual property rights have been infringed by other users. Facebook has the right to take down the infringing content upon receipt of such a report. It also states that repeated or continuous infringement of other’s intellectual property rights may result in the individual’s Facebook account being terminated or disabled by Facebook. Who owns and controls your content? When Facebook first started, it tried to claim ownership over all contents posted on Facebook. This had, of course, resulted in much criticism, which prompted Facebook to change its terms of use. The Facebook’s Terms now state that all users own all of the content and information they post on Facebook, and they give Facebook a non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use any content that users post on Facebook. Facebook also tried to remove a sentence from the Facebook’s Terms saying that “the license will automatically end when the user removes the content”, and this had again caused an uproar, forcing Facebook to restore that particular sentence. Disclosure of sensitive or confidential information The ease of posting information online and the desire to share (or show-off) information have resulted in instances where users (knowingly or unintentionally) leak sensitive or confidential information (such as trade secret, corporate intelligence or financial disclosure in violation of securities laws) to the public. We all know what once information gets published on the Internet, it will never get deleted. The instantaneous and far-reaching nature of social networking makes it difficult for users to recall information that has gone public. The implication can be very serious because for information to remain confidential, it must have the necessary “quality of confidence”. The confidential information will lose its confidential nature the moment it is disclosed to the public. Defamation Lawsuits alleging defamation based on content posted on social networking sites such as Facebook are on the rise. A defamation claim may be actionable when a person has published words which connote any imputation which may tend “to lower the other person in the estimation of right-thinking members of society generally”, “cut him off from society” or “to expose him to hatred, contempt or ridicule”. Courts have ruled that posting on Facebook amounts to a publication to the world at large. Facebook’s Terms require users not to post content that is hate speech, threatening, or pornographic; incites violence, or contains nudity or graphic or gratuitous violence. Users should, therefore, avoid making statements that are harmful, offensive or inflammatory. Cyber-stalking and cyber-bullying Stalking and bullying that used to only take place in real life, are now also happening on the Internet, particularly on social networking sites. Many users tend to post too much of personal information on their profile pages, which enables anyone with access to that information to stalk them. What is more worrying is, many users are not aware that everything posted on Facebook is by default made public, and it is up to the users to restrict the access to the information to just friends or family. Cyber-bullying can take many forms, such as posting hurtful or threatening messages on users’ page, spreading false rumours online, starting pages to ridicule or spread gossip about individuals, or circulating embarrassing or compromising pictures about individuals. It has been reported in the newspapers that many teenagers have committed suicide or suffered from anxiety and depression due to cyber-stalking and cyber-bullying that they had experienced on social networking sites. Facebook’s Terms explicitly state that users are not allowed to bully, intimidate or harass any other users on Facebook, or use Facebook to do anything unlawful, misleading, malicious or discriminatory. Electronic discovery Lawyers and prosecutors have resorted to fishing for evidence from information posted on Facebook. Some have even applied for court orders to obtain such information. In one instance, a photo of a wife hugging an unidentified man on Facebook was accepted as evidence to support a

This marks a new series of articles that I am writing, with the aim of providing you with a snapshot of important legal developments to keep you informed of the significant legal developments in the technology, media and telecommunications sphere in Malaysia on a quarterly basis. Issuance of Compounding Regulations pursuant to the Personal Data Protection Act 2010 On 15 March 2016, the Commissioner issued the Personal Data Protection (Compounding of Offences) Regulations 2016 (“Compounding Regulations”). The Compounding Regulations provides a list of offences which are prescribed to be “compoundable offences”. For offences which are compoundable, the Commissioner may offer data users an opportunity to pay a monetary penalty (which penalty can be up to half of the maximum fine stipulated in the Personal Data Protection Act 2010 (“PDPA”) within the time period stipulated in the offer. If no payment is received within the stipulated period, prosecution for the offence will be instituted against the data user. It is important to note that only some and not all offences under the PDPA and its regulations are compoundable. The issuance of the Compounding Regulations points to the focus of the Commissioner and the Personal Data Protection Department (“PDP Department”) moving to the next phase of implementation of the PDPA, namely investigation and enforcement. Most data users would favour the use of compounds as it is likely to reduce the penalties for not complying with the PDPA significantly, as well as save both the prosecution’s and alleged offender’s time and costs, as parties would be spared the time and expense of court proceedings. Malaysia to step up cybersecurity measures in the capital market and national defence sectors On 21 March 2016, the Securities Commission Malaysia (“SC”) published a consultation paper seeking public feedback on the proposed regulatory framework relating to the management of cyber security risk by capital market participants. The SC recognises that with the increased dependency on information technology and Internet connectivity, there is a need to put in place cyber security policies and procedures to safeguard and protect the confidentiality, integrity and availability of information systems used by capital market participants. Sound management of cybersecurity risk has been identified as a critical component to further strengthen the resilience of the Malaysian capital markets. Towards this objective, the SC intends to introduce regulatory requirements to guide the capital market participants to achieve a certain state of cybersecurity resilience. The SC recommends that the board of directors of capital market participants set a clear direction and give adequate priority in their respective board’s agenda for the effective management of cybersecurity risk and require their senior management to develop and implement appropriate cybersecurity frameworks (which includes policies, procedures, awareness programmes and risk reporting mechanisms) throughout their organisations. On the defence front, the Deputy Defence Minister Datuk Seri Mohd Johari Baharum, during his keynote address at the Cyber Security Conference in conjunction with the 15th Defence Services Asia Exhibition and Conference on 20 April 2016, proposed a three-pronged approach to enhance cybersecurity in Malaysia. The three-pronged approach consists of: reorientation of the design philosophy of the Information Communications Technology (ICT) systems, in particular focusing on cyber defence systems to ensure all computing systems reflect uniform reliance; establishment of inter-disciplinary centres, specifically on the need to connect academia, the private sector, national laboratories and the government in sharing information and offering innovative and creative solutions; and getting the military defence and security community to provide “leadership by example” and “provide support to the national and global efforts in meeting cybersecurity challenges to the defence and security domains”. The above announcement was made in response to the rising threat of cyber-attacks in Malaysia. Cyber Security Malaysia (a government agency tasked with being Malaysia’s Cyber Security Reference and Specialist Centre) reported that 11,900 cybersecurity-related cases were recorded in 2015, as compared to only 1,038 cases recorded in 2007, which may lead to some legislative reforms to bolster and/or to introduce new legislation that deals with cybersecurity threats to Malaysia’s critical information infrastructure. Land Public Transport Commission to regulate ride-sharing and taxi-booking apps by Q4 of 2016 Following an endorsement by the Special Economic Committee chaired by the Prime Minister of Malaysia, ride-sharing and taxi-booking apps such as Uber and Grab may be subject to a new regulatory framework to be introduced by the Land Public Transport Commission (“SPAD”) by Q4 of 2016. This proposal was made in response to the rising tide of a new form of competition introduced by these third party ride-sharing and taxi-booking apps and complaints filed by the incumbent taxi companies. Although no draft of the regulatory framework has yet been circulated, it is understood that for the conventional taxi industry, a profit-sharing concept or guaranteed percentage of the day’s income for the taxi drivers will be introduced. For the private car drivers, they would be required to obtain a public service vehicle license and register themselves with SPAD for vetting purposes, before they are allowed to offer their services. Private car drivers are also required to send their vehicles for annual inspections and take up passenger insurance coverage, much like what taxi drivers are currently required to adhere to. It is also understood that this third-party ride-sharing and taxi-booking companies may be subject to local taxation laws when the regulatory framework is introduced, as the government has realised that there is a potentially massive outflow of the Ringgit due to the widespread use of these booking apps. Several laws, such as the Land Public Transport Act 2010, Road Transport Act 1987 and Communications and Multimedia Act 1998, will need to be amended to facilitate these new changes. The Amendment Bills may be tabled in Parliament during its sitting in October 2016, and “if everything goes well, a new dawn of taxi industry may begin the end of the year,” SPAD chairman said. Spectrum reallocation in the telecommunications industry On 27 January 2016, the Prime Minister of Malaysia, Dato Sri Mohd Najib bin Razak, during the Budget 2016 recalibration, announced that