Author name: ELP Law

The Malaysian Personal Data Protection Act (PDPA), effective since November 15, 2013, governs the processing of personal data within Malaysia. It applies to all businesses involved in commercial transactions. However, as Malaysian enterprises increasingly expand their operation across international horizons, a pressing question arises: does compliance with the PDPA seamlessly align with the stringent requirements of GDPR (General Data Protection Regulation)? Indeed, the GDPR is relevant to Malaysian companies if they either provide goods or services to, or monitor the activities of, individuals within the European Union – Article 3 of GDPR[1]. Failure by Malaysian companies to adhere to GDPR standards when collecting or processing personal data of EU citizens may result in the imposition of hefty fines of up to 4% of global annual turnover or €20 million, whichever is greater, for non-compliance[2]. To introduce GDPR briefly, it is a regulation in EU law, since May 25, 2018, on data protection and privacy in the European Union (EU) and the European Economic Area (EEA) which aims primarily to give control back to citizens and residents over their personal data and to simplify the regulatory environment for international business through harmonised regulation within the EU. Complying with PDPA the same with GDPR? While both the PDPA and GDPR share the common goal of safeguarding an individual’s right to their personal data, however, GDPR provides individuals within the European Union with more extensive rights in relation to their personal data. GDPR stands as a more comprehensive and rigorous data protection law compared to the PDPA. It grants individuals greater control over their personal data and places stricter obligations on organisations engaged in personal data processing. Nevertheless, the detailed comparison between PDPA and GDPR merits a separate discussion. Should a Malaysian companies adopt GDPR standards? The Golden Standard. GDPR’s inception was driven by the aim of advancing the Digital Single Market[3] strategy, seeking to establish a unified set of regulations in the digital realm while encouraging innovative thinking in areas pivotal to competitiveness and future technological growth. GDPR’s comprehensiveness is geared towards establishing leadership in the global digital economy. By offering enhanced protection, it bolsters fundamental societal rights. GDPR, notably, mandates that individuals must provide explicit consent – Recital 32 of GDPR[4][LPP1]  before data processing is permitted and enables individuals to request for deletion of their data (the right to be forgotten – Article 17 of GDPR[5]), these are provisions which are absent in PDPA [LPP2] and grant individuals greater control over their own data. One Set of Regulations for Eeveryone. The GDPR is the unified legislation on personal data protection throughout the European countries. It provides similar benefits and rights for all individuals regardless of the company size. This means that Malaysian companies that adopt GDPR standards will only have to comply with one set of regulations, rather than multiple sets of regulations in different countries. Modern Personal Data Protection Framework. GDPR introduces innovative concepts that are absent in the PDPA, like data portability and streamlined data transfer mechanisms, which are vital components of its modernity, aligning with the borderless nature of the digital age. Data portability – Article 20 of GDPR[6], a hallmark of GDPR, empowers individuals by allowing them to request their personal data in a machine-readable format. This facilitates easy transfer of their data to another service provider (data controller), ensuring modern data practices align with user-centric principles. Additionally, GDPR’s approach to international data transfers – Article 44 of GDPR[7] is noteworthy. It offers a range of mechanisms, such as mandates data protection impact assessments[8][LPP3]  ,Standard Contractual Clauses[9] (SCCs) and Binding Corporate Rules[10] (BCRs), to facilitate secure and compliant cross-border data flows (contrast with the default position on transfer under PDPA[11]). [LPP4] The GDPR reflects the modern reality of global data transfer requirements and ensures that individuals’ personal data remains protected regardless of geographical boundaries. By adopting GDPR standards, Malaysian companies can embed data protection principles into the earliest stages of product development emphasis on “privacy by design and default”. Stricter Personal Data Legislation. GDPR stands out as notably stricter than PDPA in safeguarding personal data. It enforces significantly higher fines for non-compliance, imposes rapid data breach notification requirements, and sets a higher standard for obtaining and recording consent. As consumers are increasingly aware of their data privacy rights and are more likely to do business with companies that they trust to protect their data. Adopting GDPR standards not only shows that a company is committed to protecting its customers’ data privacy but a strategic move that positions companies favourably in the global marketplace. Conclusion In conclusion, while Malaysian companies are inherently bound by the PDPA, the adoption of GDPR standards, which represent a more comprehensive and rigorous data protection regime, presents an array of advantages, particularly for companies venturing into the European market. However, it is crucial to acknowledge that embracing GDPR standards necessitates meticulous deliberation by companies, as it entails significant shifts in data collection practices and often requires substantial technological investments. [1] https://gdpr-info.eu/art-3-gdpr/ [2] https://gdpr-info.eu/art-83-gdpr/ [3] https://edps.europa.eu/data-protection/our-work/subjects/digital-single-market_en [4] https://gdpr-info.eu/recitals/no-32/ [5] https://gdpr-info.eu/art-17-gdpr/ [6] https://gdpr-info.eu/art-20-gdpr/ [7] https://gdpr-info.eu/art-44-gdpr/ [8] https://gdpr-info.eu/art-35-gdpr/ [9] https://gdpr-info.eu/recitals/no-168/ [10] https://gdpr-info.eu/art-47-gdpr/ [11] https://www.azmilaw.com/insights/data-protection-limits-to-the-lawfulness-of-transborder-flow-of-personal-data-outside-malaysia/

As professionals involved in corporate and commercial law, a question that often comes to the forefront is: Is initialling every page of a contract necessary for its legal validity? Whether you’re a legal advisor, a business owner, or someone about to sign a substantial contract, the uncertainty around this topic can be daunting. We delve deep into this area, comparing it against established legal norms and drawing upon real-world scenarios to give you a comprehensive understanding. What Does Initialling a Page Mean? Just like seasoning enhances the flavor of food, initialling a contract can serve to enhance its validity, though it’s not the primary ingredient that makes it enforceable. Initialling usually involves marking the bottom right corner of each page of a contract with your initials, essentially an abbreviated form of your full signature. The Many Forms of Initials While there’s no one-size-fits-all approach to initialling, the most common form is the first letter of your first name combined with the first letter of your last name. Think of it as your personal seal, not unlike a medieval knight’s coat of arms, offering identification and a smidgen of authority. Is Initialling a Legal Requirement? Malaysia’s Stance on Initialling Contracts In Malaysia, and indeed many jurisdictions, initialling each page of a contract isn’t legally mandated. A contract can be valid if it fulfills key elements like offer, acceptance, consideration, legal capacity of parties, intention to create legal relations, and mutual consent. Case Law Insights The Malaysian High Court, for instance, has clarified this aspect through various rulings. In the case of Tan Suan Sim v Ooi Joo Aik [2023], the focus was on the signature at the end of the will, not any initials on preceding pages. Similarly, in the Mohd Pkhruddin Bian v Zulkarnain Diris [2021] case, the court looked beyond mere signatures and initials to ascertain whether the contract was entered into voluntarily. Sectoral Variations However, it’s worth mentioning that some industries, particularly banking, financial services, and real estate, prefer the practice due to their stringent contract requirements. Think of it like using both a belt and suspenders; it may be overkill for everyday wear, but if you’re doing acrobatics, it’s prudent. The Benefits of Initialling Even if the law doesn’t explicitly demand it, think of initialling as a “best practice.” Here are some compelling reasons: Enhancing Clarity and Confirmation: Like a series of breadcrumbs in a dense forest, initials can guide both parties through the labyrinth of legal jargon, confirming mutual agreement on each clause. Enhancing Contract Security: Imagine your contract as a house. Initialling each page is akin to installing additional locks on each door. It serves as a deterrent against unauthorized insertions or alterations. Reinforcing Contract Enforceability: Initialling can add a layer of robustness to your contract, especially when deliberating contract validity in court. It acts as tangible evidence that both parties were in full agreement, down to the very last page. Electronic Contracts: A Different Ball Game  With the advent of digital technology, we see a shift towards electronic contracts. Unlike paper contracts, e-contracts come with unique identifiers and audit trails that serve the same purpose as handwritten initials. Document IDs and Audit Trails In e-contracts, document IDs and audit logs provide a digital footprint that tracks the contract’s history. It’s like having a built-in security camera system, recording every change and signature. Risks Associated with Digital Signatures However, digital technology isn’t foolproof. The risks of tampering and unauthorized changes exist in both handwritten and digital contracts. Conclusion So, is initialling every page of a contract necessary for its legal validity? In a nutshell, no. But is it highly recommended? Absolutely. Initialling serves as both a protective measure and a clarification tool, leaving no stone unturned in affirming the mutual agreement between parties. It may not be the law, but it certainly is a wise practice. Frequently Asked Questions (FAQs)   Is it legally mandatory to initial every page of a contract in Malaysia? No, it is not legally required but is often considered best practice. How does initialling benefit the parties involved in a contract? It enhances clarity, security, and enforceability. Are electronic contracts safer than traditional contracts? Both have their own set of risks and benefits; it’s essential to understand your specific needs. What elements make a contract legally valid? Offer, acceptance, consideration, legal capacity, intention to create legal relations, and mutual consent are key. Is initialling prevalent in certain industries? Yes, especially in banking, financial services, and real estate. ***** About the author: This article was written by Daphne Sit, Senior Associate, Corporate & Commercial – law firm in Kuala Lumpur, 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.

Introduction: In the rapidly evolving landscape of the digital age, startups are emerging as vital drivers of innovation and economic growth. Intellectual property (IP) plays a pivotal role for these budding ventures as it empowers them to gain competitive edge in the market. What is Intellectual Property? At its core, intellectual property encompasses the intangible assets resulting from human intellect and creativity. It recognizes and safeguards the products of our imagination, enabling creators to control and benefit from their unique works. Whether it’s a ground-breaking invention, a thought-provoking novel, an inspiring artwork, a captivating design, or a recognisable brand logo, intellectual property rights play a pivotal role in promoting progress, encouraging competition, and driving economic growth. Types of Intellectual Property: Copyright: Copyright is a legal term used to describe the rights that creators have over their literary and artistic works. Works covered by copyright range from books, music, paintings, sculpture, and films, to computer programs, databases, advertisements, maps, and technical drawings. Securing copyrights enables startups to prevent unauthorised reproduction, distribution, and public display of their works, especially crucial in the digital landscape.  Patent: A patent is an exclusive right granted for an invention. Generally speaking, a patent provides the patent owner with the right to decide how or whether the invention can be used by others. In exchange for this right, the patent owner makes technical information about the invention publicly available in the published patent document. Patents encourage technological advancements and foster innovation, protecting novel and non-obvious inventions. Startups with unique products or technologies can rely on patents to safeguard their innovations. Trademark: A trademark is a sign capable of distinguishing the goods or services of one enterprise from those of other enterprises. Trademarks date back to ancient times when artisans used to put their signature or “mark” on their products. Trademarks protect distinctive signs, symbols, names, and logos used to identify and differentiate products or services in the marketplace. They serve as valuable assets for businesses, establishing brand recognition and consumer trust. It is worth noting that the new trade mark law now also extends protection to non-traditional marks, including colour, shape, sound, and motion. Registering trademarks provides startups with the means to safeguard their brand identity from potential confusion among consumers, allowing them to establish a strong brand presence and foster customer loyalty. Industrial Design: An industrial design constitutes the ornamental or aesthetic aspect of an article. A design may consist of three-dimensional features, such as the shape or surface of an article, or of two-dimensional features, such as patterns or lines. Industrial designs safeguard the unique visual appearance of a product, encouraging innovation in design and preventing unauthorised copying. Geographical Indication: Geographical indications and appellations of origin are signs used on goods that have a specific geographical origin and possess qualities, a reputation, or characteristics that are essentially attributable to that place of origin. Most commonly, a geographical indication includes the name of the place of origin of the goods. Geographical indications provide protection against misappropriation, fostering economic development and preserving local traditions. Trade Secrets: In addition to the aforementioned types of intellectual property, trade secrets also play a crucial role in protecting confidential information. Trade secrets are IP rights on confidential information that may be sold or licensed. They encompass valuable business information, such as manufacturing processes, formulas, algorithms, customer lists, and marketing strategies, which provide a competitive advantage to companies. While the name of the individual client is not confidential, the list or database of clients on which a business has expended time and effort to compile may be.[1] The unauthorised acquisition, use, or disclosure of such secret information in a manner contrary to honest commercial practices by others is regarded as an unfair practice and a violation of trade secret protection. Trade secrets are not publicly disclosed like patents or trademarks but are protected through confidentiality agreements, non-disclosure agreements, and strict internal protocols. The Importance of Intellectual Property: Competitive Advantage: IP protection empowers startups to safeguard their unique products, services, or brand identities, differentiating them in the market and attracting customers. Market Value and Investment Opportunities: Intellectual property assets enhance a startup’s market value, attracting potential investors or partners. Strong IP protection demonstrates the company’s commitment to innovation and potential profitability. Revenue Generation: IP protection enables startups to commercialise their innovations through licensing or franchising agreements, generating revenue by granting others the right to use their IP in exchange for royalties or fees. Legal Recourse: IP protection empowers startups to take legal action against infringers, deterring potential competitors from copying or misusing their innovations and helping to maintain market share. Conclusion: In conclusion, intellectual property is a valuable asset for startups, paving the way for growth, innovation, and commercial success. By recognizing and protecting their intellectual property rights, startups can thrive in the competitive market and realize their full potential in the dynamic world of entrepreneurship. [1] Schmidt Scientific Sdn Bhd v Ong Han Suan [1997] 5 MLJ 632 ***** About the author: This article was written by Lim Yong Lin, Trainee Lawyer – law firm in Kuala Lumpur, 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.

Meta Platforms, formerly known as Facebook, recently launched an app called Threads, which quickly gained over 10 million users within the first seven hours[1]. The app aims to provide a more personal and intimate way for users to connect with their friends and followers. However, Meta’s competitor, Twitter is not happy with Threads, and has accused Meta of misusing its “trade secrets and other intellectual property” to develop the Threads app. Twitter attorney Alex Spiro claims that Meta hired several former Twitter employees who still had access to confidential information and trade secrets. Twitter also accused Meta of using such information to further develop the “copycat” app[2]. In a letter sent to Meta’s CEO and founder Mark Zuckerberg, Twitter’s lawyer Alex Spiro wrote: “Twitter intends to strictly enforce its intellectual property rights, and demands that Meta take immediate steps to stop using any Twitter trade secrets or other highly confidential information.” In response, Meta has denied these allegations, asserting that Threads is a “new and innovative” app that does not infringe on Twitter’s intellectual property. The company has expressed confidence that it will prevail in the face of these accusations. So is Meta’s Thread a threat to Twitter’s trade secrets? It’s still early to say for sure. However, the allegations against Meta are serious, and the outcome of the allegation could have a significant impact on the tech industry when trade secrets are involved. Interestingly, this turn of events includes a shift in perspective from Twitter’s owner, Elon Musk. In the past, Musk has criticised the farcical[3] nature of intellectual property registration and has made many of his own inventions open source[4]. However, in a surprising move, Musk has decided to take legal action and threaten to sue Meta for alleged trade secret violations. This suggests that Musk now sees Meta’s Thread as a genuine threat to Twitter, contradicting his previous stance on open innovation and the importance of safeguarding intellectual property, particularly trade secret. This gripping case raised crucial questions about the importance of safeguarding trade secrets and intellectual property. Trade secrets confer a competitive edge and valuable assets for businesses, and they must be safeguarded carefully. Instead of waiting for potential infringements that could lead to future difficulties, businesses should focus on safeguarding their trade secrets. What is Trade Secret? A trade secret is confidential information that gives a business a competitive advantage[5]. Trade secrets can include anything from product formulas to marketing strategies. In Twitter’s case, the source codes and users’ database are their trade secrets. Trade Secret Protection in Malaysia In Malaysia, trade secrets are recognised as confidential information but do not require registration for protection. Unlike other forms of intellectual property, trade secret protection is enforced through legally binding contracts rather than specific legislation. Disputes regarding trade secret infringement can only seek remedy for infringement under the common law tort of breach of confidentiality as no direct statutory protection nor definition of trade secret exists. Trade secrets are eligible for protection as long as they meet specific criteria: they must be commercially valuable, known only to a limited group, and the rightful holder must take reasonable steps to keep them confidential. How to Safeguard Trade Secret We learned that trade secrets confer a competitive edge to businesses. To safeguard trade secrets, it is recommended that you establish confidentiality agreements, non-disclosure agreements (NDAs), and clauses to prevent employees and other parties from divulging confidential information. These agreements should be in place during and after employments to ensure the ongoing protection of trade secrets. In Malaysia, trade secret protection relies on legally binding contracts rather than specific legislation. Disputes regarding trade secret infringement are typically resolved through Malaysian courts. In Dynacast (Melaka) Sdn Bhd v Vision Cast Sdn Bhd[6], the court ruled that for a trade secret dispute to be actionable, the specifics on the trade secrets must be identified. In this case, the plaintiff’s failure to specifically identify the confidential information (the trade secret) led to their case being dismissed. This shows the importance of carefully identifying the trade secrets that you believe have been infringed upon. Conclusion: The case between Twitter and Meta is a complex one, and the outcome is still uncertain. However, the case raises important questions about the future of trade secrets in the tech industry. As the tech industry becomes more competitive, it is likely that we will see more cases of trade secret theft. Businesses in the tech industry need to be aware of the risks of trade secret theft and take steps to protect their confidential information. [1] https://www.forbes.com/sites/siladityaray/2023/07/06/zuckerberg-says-threads-crossed-5-million-signups-in-first-four-hours-as-musk-rails-against-instagram/?sh=29ccc4ad632c [2] https://www.cbsnews.com/news/twitter-threatens-lawsuit-meta-threads-elon-musk-mark-zuckerberg/ [3] https://www.businessinsider.com/elon-musk-patents-2012-11 [4] https://www.tesla.com/blog/all-our-patent-are-belong-you [5] https://www.wipo.int/tradesecrets/en/ [6] [2016] 3 MLJ 417. ***** About the author: This article was written by Lim Yong Lin, Trainee Lawyer – law firm in Kuala Lumpur, 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.

In our previous article, we explored the significant transformation brough about in the legal industry by Artificial Intelligence (AI), perceiving “the law as data”, which has brought about significant transformations in the legal industry. However, it is crucial to fully grasp the phrase “AI sees the Law as data” as “AI sees the Law as data but not as Law”. While AI serves as a valuable tool in the legal field, it is essential to acknowledge the challenges it faces in practical legal applications, particularly in niche areas of law or smaller jurisdictions. Drawing a parallel, let’s consider the example of a knife: while it is an indispensable instrument in culinary settings, it can also pose potential danger if not used appropriately. While technology has made significant advancements, it still faces challenges when dealing with complex legal knowledge, especially in niche areas of law or smaller jurisdictions. According to Neil Sahota, the essence of AI lies in the training process provided to the machine which depends on supplying the system with data and algorithms to discern patterns, make predictions, or accomplish specific tasks. In simple terms, despite being fed with vast amount of data, AI still lacks critical thinking abilities and a practical understanding of the law. It relies solely on detected patterns and does not possess the same understanding of the law as a human lawyer. This results in a garbage-in-garbage-out scenario, hindering its effectiveness in addressing complex legal matters. Accuracy: Acquiring high-quality data for an AI system poses a challenge in the legal field. While diverse sources are used, ensuring accuracy becomes difficult once resources such as published books, Wikipedia articles, and a refined “Common Crawl” repository are exhausted. Unlike human lawyers who learn from handpicked reliable sources, AI models are fuelled by both labelled and unlabelled data, potentially leading to erroneous outcomes. Additionally, if trained on inaccurate data, AI models may generate hallucinations or fabricate facts. Interestingly, AI systems are only as good as the data on which they are trained. If the data is inaccurate, the AI system will also be inaccurate. A New York lawyer is facing possible sanctions after citing fake cases generated by OpenAI’s ChatGPT in a legal brief filed in federal court. The incident occurred in a personal injury lawsuit against Avianca, where the lawyer used ChatGPT to supplement his legal research. However, the judge discovered that six of the cited cases were bogus, leading to doubts about the reliability of the lawyer’s sources. The mistake gained media attention and prompted discussions about the need for verification when using AI-powered tools in legal research. Therefore, one should approach AI as a helpful starting point, rather than a definitive source. AI system may also have limited awareness of different legislation and jurisdictions. In a niche area or a small jurisdiction, AI models might not be effectively trained to address specific needs. Therefore, legal professionals should exercise caution when relying solely on AI-generated content for legal drafting. It is important to consider the limitations and potential inaccuracies of AI models and ensure that human expertise and verification are incorporated into the process. Bias Concerns: Similar to their human counterparts, AI systems can exhibit biases. Biased training data or algorithms design can result in unfair treatment of certain individuals or groups. Using historical data that reflects past mistake can lead AI systems to replicate these biases. AI systems can learn from the data they are trained on. This means that if an AI system is trained on data that is biased, the AI system will also be biased. For example, if an AI system is trained on a dataset of legal cases that predominantly favours men, the AI system may be more likely to recommend that men be given lighter sentences than women. The bias in AI systems can damage public trust in the legal system. For example, if people believe that AI systems are biased against them, they may be less likely to report crimes or cooperate with law enforcement. Addressing this challenge requires mechanisms for detecting, measuring, and mitigating biases in AI systems, ultimately promoting fairness and equity in the legal field. Transparency: Understanding the decision-making process of AI systems is crucial in the legal field. Transparency builds trust among legal practitioners, clients, and the public. By providing clear explanations and justifications for AI-generated outcomes, we can ensure ethical and responsible use of AI. Achieving transparency involves explainable AI techniques, documentation of AI processes, and external audits of AI systems. Despite these challenges, the use of AI in the legal field is expected to continue growing. AI has shown us the potential to pave the way towards AI Lawyer but not as a replacement of human expertise and judgement, yet. Even though there are many examples online where AI falls short, the reality is that it is very suitable for handling legal tasks under the supervision of a knowledgeable legal expert. While AI cannot replace human expertise and judgement, it serves as a valuable tool that enhances the capabilities and efficiency of legal professionals in the digital age.   ***** About the author: This article was written by Lim Yong Lin, Trainee Lawyer – law firm in Kuala Lumpur, 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.