Author name: ELP Law

Artificial intelligence (AI) has revolutionised various industries, and the legal field is no exception. Traditionally, the law has been seen as a set of rules and principles, however, AI sees the law as data. This perspective allows for the analysis and processing of legal information, leading to improvements in the legal domain. With the current progress on the technology and the introduction of Large Language Model (LLM), such as powerful models like OpenAI’s ChatGPT (Generative Pre-trained Transformer), AI has become an integral part of the legal profession. Law is a profession of words, and LLM is simply really good at that. AI’s application extends beyond automating tasks, analysing data, and generating legal documents. It signifies a paradigm shift in the legal field, introducing a novel approach for integrating AI with the law. In the legal field, AI is still in its early stages of adoption. It has the potential to identify patterns in legal data, predict case outcomes, identify areas of risk, and develop new legal strategies. Today, AI can even generate legal documents. This allows legal professionals to focus on more complex tasks, such as providing strategic legal advice and representing clients in court. AI’s impact on the legal field can be summarised in three key areas: Automating tasks:  AI excels at automating generic and repetitive tasks. AI-powered software can draft contracts, review documents for relevant information, and conduct legal research in a fraction of the time it would otherwise take by  a human lawyer. By freeing up time previously spent on these tasks, AI enables legal professionals to focus on more complex and strategic aspects of their work. Analysing data:  The legal field generates vast amounts of data, including case law, statutes, and regulations. AI system can analyse rapidly these data, extract valuable insights, identify patterns, and predict outcomes. Let’s say a legal team is handling a large volume of documents related to a case. AI software can quickly scan and analyse the documents to identify specific keywords, relevant information, or potential evidence, helping lawyers locate the most crucial details without manually reviewing each document individually. By leveraging AI’s data analysis capabilities, legal professionals can make more informed decisions, assess risks, and develop effective legal strategies. AI’s ability to rapidly process and analyse complex legal information provides a powerful tool to enhance legal research and augment human expertise. Generating legal documents:  AI technology offers the capability to generate accurate and tailored legal documents using predefined templates and algorithms. AI can also assist in generating legal briefs by automatically analysing relevant case law, extracting key arguments, and creating a structured and coherent document. Lawyers can use these AI-generated briefs as a starting point, allowing them to focus on refining and tailoring the arguments to fit the specific context of their case. This saves time, reduces errors and ensure adherence to legal requirements. 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. The transformation of the legal practice is evident through the automation of tasks, data analysis, and document generation, which are just a few examples of how AI is reshaping the legal practice. While the use of AI in the legal field is still in its early stages, however, it has the potential to revolutionize the way the law is practiced. By viewing the law as data, AI can streamline workflows, enable informed decisions, and deliver legal services more efficiently and accurately. ***** 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.

Have you ever considered the amount of personal data you disclose each time you use your smartphone or computer? As technology advances, we willingly share our data, trusting that software or applications will handle it appropriately. However, the reality is that our personal information is constantly collected, stored, and shared, whether online or offline. In today’s economy, data has become a valuable commodity. As Mark Cuban describes it, “Data is the new gold. It’s the new oil.”. This highlights the need for vigilance regarding how our data is collected and managed. By understanding the value of our personal data and taking proactive measures to protect it, we can reduce the risk of financial loss and identity theft while promoting ethical and responsible use of our information. Data breaches have become a pressing concern in Western countries. Recent reports have shed light on how a popular short-form video app that was perceived by its user as a mere entertainment platform, is now under scrutiny due to its potential threat to national security. Malicious entities exploit user’s information, raising concerns about identify intelligence prospects for espionage or blackmailing unsuspecting targets. Consequently, data breaches can have severe consequences for both individuals and businesses. According to a 2022 report by Statista, online frauds were the most reported cyber threat incidents announced by Cybersecurity Malaysia, with over four thousand reports, followed by malicious codes. For individuals, safeguarding personal data preserves privacy and shields sensitive information from cybercriminals. In the digital era, where sharing every memorable detail of our lives through news feeds has become effortlessly accessible. We have immersed ourselves in the allure of easy sharing, inadvertently lowered our guard and forgetting the inherent value and preciousness of our personal data. This prevailing mindset has led to a collective oversight and boundaries of personal data and privacy in exchange for necessary enjoyment. Businesses, on the other hand, must recognise that personal data protection stands as a frontline defence against data breaches, which can lead to financial losses and irreparable damages to their hard-earned reputation. By prioritising robust personal data protection measures, businesses can fortify their foundation, instilling trust among customers and safeguarding their long-term success. In Malaysia, the Personal Data Protection Act 2010 (“PDPA”) aims to safeguard sensitive information from unauthorised access, use, or disclosure. Additionally, the European Union’s General Data Protection Regulation (GDPR) sets standards for organisations processing personal data of EU residents. While both PDPA and GDPR share some similarities in terms of their objectives to protect the privacy and personal data of individuals, however, the level and threshold of protection may differ. Personal data includes any data in any form, whether it is collected, recorded, stored, or processed by any means. For example, Personal data can be the information provided when filling out a survey form or even your thumbprint used for office door access. Although we may feel comfortable sharing our personal data in our daily activities, without proper protection and safeguarding, this information can be stolen or misused, resulting in financial loss, identity theft, and even reputational damages. The Malaysian legislator has introduced seven (7) data protection principles for data users to comply with. These principles provide guidelines for safeguarding personal data from unauthorised access, misuse, or disclosure. The 7 principles are as follows: Security – it imposes an obligation on a data user to take measures to protect personal data from loss, misuse, modification, unauthorised or accidental access or disclosure, and alteration or destruction during its processing; Purpose – it prohibits a data user from processing personal data without the consent of a data subject; Data Integrity – it requires a data user to take steps to ensure data hygiene; Notice and Choice – it requires data user to inform a data subject of various matters relating to the information of that data subject; Disclosure – it prohibits disclosure of personal data; Access – it gives right for data subject to access their own data; and Retention – personal data shall not be retained longer than necessary. Adhering to these principles helps ensure that personal data is processed and protected in a lawful and responsible manner. While individuals enjoy the services provided by data users, finding a balance between enjoying digital services and protecting personal data is crucial for safeguarding privacy and security. In conclusion, personal data protection is essential in today’s digital age and cannot be compromised. By implementing practical measures and adhering to relevant regulations and laws, individuals and businesses can protect their personal data from unauthorized access, use, or disclosure. ***** 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.

As AI technology continues to advance, the question of copyright ownership for AI-generated images becomes increasingly important. With AI systems capable of creating highly realistic and original images, the issue of who owns the rights to these works becomes increasingly complex and contentious. Under traditional copyright law, ownership is granted to the person or entity that created the work. However, in the case of AI-generated images, it may be difficult to determine who the “creator” is. If the AI system is considered to be the creator, then the copyright may belong to the person or entity that owns or operates the AI system. On the other hand, if the person who trained the AI system or provided the data is considered the creator, then they may own the copyright. The question of AI-generated copyright ownership has already come up in some legal cases. In 2018, a monkey took a selfie with a camera left unattended by a nature photographer, and the photographer claimed copyright ownership of the image. However, a court later ruled that the monkey was the true author of the photograph, and therefore the photographer had no ownership rights. While this case involved a non-AI system, it highlights the legal complexity of determining authorship and ownership in non-human contexts. Another legal case involving AI-generated images is the dispute between artist Richard Prince and photographer Patrick Cariou. Prince used Cariou’s photographs as the basis for a series of works, which he altered and then sold. Cariou sued Prince for copyright infringement, but the court ultimately ruled that Prince’s use of the images constituted fair use. While this case did not involve AI-generated images, it raises questions about the extent to which derivative works created using other people’s material can be considered original works. Some experts argue that AI-generated images should be treated as works of collaboration between the AI system and its operator or trainer, with ownership shared between them. This approach would recognize the creative input of both the AI system and the human operator or trainer, who provided the data or parameters that the AI system used to create the image. Others believe that the law should be updated to explicitly address the issue of AI-generated works and determine a clear ownership framework. This could involve creating a new legal category of “AI-generated works” or clarifying existing copyright law to determine ownership based on the degree of creative input from both the AI system and the human operator or trainer. In conclusion, the question of copyright ownership for AI-generated images is a complex and evolving legal issue that currently has no clear answer. As AI technology continues to advance, it is likely that this issue will become increasingly important, and it will be up to legal experts and lawmakers to determine a clear framework for determining ownership of these works. Well, to our surprise, the above well written article is, in fact, generated by ChatGPT when provided with the input text prompt “Who owns the copyright in AI-generated arts?”. Imagine this: if the article were to be published without any alteration, in this scenario as a literary work, would I be considered the copyright owner of the article? Additionally, would I be infringing the copyright of ChatGPT? So who should have the copyright ownership towards the image generated by AI? First, we need to understand how copyright subsist in an artwork. It is important to consider eligibility criteria under the Malaysian law. According to section 7(3) of the Copyright Act 1987, an artwork must demonstrate there has been sufficient effort expended to make the work original in character and fixed in a tangible medium for expression to qualify for copyright protection. Here, the crux for the subsistence of copyright is that: work must be produced (expressed) with sufficient effort; and work must be original. Malaysian legislation has made it clear that a copyright subsists only in works that demonstrate sufficient effort expanded towards the originality of an Artwork. As such, a mere human involvement, by providing a text input prompt, in the creation of an AI-generated image does not automatically confer copyright ownership in the absence of sufficient effort expended. If the individual is able to establish that there is sufficient level of contribution in the creation of the work then they may be the owner of the artwork. Similarly, if an individual makes substantial alterations towards the AI-generated image to create derivative work under Section 8 of the Act, they may then be eligible for copyright ownership in the resulting work. In the scenario where AI-generated image is substantially produced by the AI, assuming the AI is considered a legal person, then the AI should be the copyright owner of the image. However, Malaysian copyright law does not explicitly address whether an AI can claim ownership and authorship. In the United Kingdom, the Copyright, Designs and Patent Act 1988 (CDPA 1988) already includes provisions related to computer-generated artwork. Section 9(3) of the CDPA 1988 states that, in the case computer-generated artwork, the author shall be taken to be the person by whom the arrangements necessary for the creation of work are undertaken. As an illustration, let’s consider a scenario where a graphic designer creates a piece of art using a computer. Without a doubt, the rightful author of the art is indeed the graphic designer and not the computer, which serves merely as a tool for designer to complete their work. The graphic designer is considered an author because, logically, he has applied his creativity, skills and experience to the art. While examining the provision, it seems to address the issue of ownership. However, who can say with certainty who made the necessary arrangements? Could it be: The person or organisation that developed the AI software? The person or organisation that “trained” the AI software? or The user, by providing their free and creative inputs into the software? One should understand the AI software frameworks, such as OpenAI’ DALL E or Stable Diffusion, are machine

Friendly loans between companies offer a valuable avenue for financial support. When granting or borrowing a friendly loan, companies must ensure compliance with their internal governance structures and ensure such an action is within the boundaries of legal landscape. This article explores the essential considerations and insights for granting or borrowing friendly loans in Malaysia. Compliance with Internal Governance Structure: Obtaining board approval is a crucial step before initiating any loan transaction, as the board of directors typically holds the authority to approve such decisions. In addition to a board’s approval, it is also important to examine the company’s constitution, memorandum and articles of association as well as shareholders’ agreement to identify any specific requirement such as obtaining shareholders’ consent for loan approval. These internal governance structures serve to safeguard the interests of all stakeholders, including shareholders, by providing a mechanism for checks and balances. Crafting A Comprehensive Loan Agreement: Besides complying the internal approval processes, a well-drafted loan agreement is important to establish clarity and protect the rights of both lenders and borrowers. This agreement typically covers important aspects including the loan amount, interest rates, repayment terms and any additional terms and conditions. In certain cases, companies may request for collateral security as part of the friendly loan arrangement including property, shares, or other valuable possessions that the borrower offers as security against the loan. By documenting these terms in the loan agreement, both lenders and borrowers gain a comprehensive understanding of their rights and responsibilities as well as the consequences of default. Understanding the Moneylenders Act 1951: Companies that provide loans to a non-related company often question whether granting a friendly loan, particularly when interest is charged, infringes the Moneylenders Act 1951 (“Act”).   If companies lend money as part of their regular business activities and meet the definition of a moneylender under the Act, they must obtain a license and comply with the Act. According to Section 2 of the Act, “moneylender” means any person who carries on or advertises or announces himself or holds himself out in any way as carrying on the business of moneylending, whether or not he carries on any other business. Such broad definition would include even those one-off loan transaction with genuine intention to help out family members, friends or business partners, and our courts have expressed their view that surely, this cannot be the intention of the Parliament. Operating a moneylending business without a license is a serious offence, carrying fines from RM 250,000 up to RM 1 million, and potential imprisonment for up to 5 years.  However, if companies lend money on a one-off basis, they are likely to fall outside the purview of the Act. The courts have recognised the validity of friendly loan transaction and recognised that interest can be charged in such transaction if it is justifiable and reasonable.   Having said that, it is essential for companies lending money to be cautious. In legal proceedings against these companies, a single loan with interest can raise a presumption that such companies are conducting moneylending activities. The burden of proof is shifted to the lender to prove against such presumption, in order to clear his name from being deemed as a moneylender under the definition of the Act. This presumption can be rebuttable by examining the specific facts and circumstances of each case. Factors such as the companies’ actual business activities and the frequency of lending money play a significant role in rebutting the presumption and demonstrating the non-moneylending nature of the transaction. Conclusion: By understanding the legal landscape, adhering to internal governance structures, and drafting well-documented loan agreement, companies can engage in friendly loans that comply with the law, protect the interests of all parties involved, and foster trust in their financial transactions. ***** About the author: This article was written by Wong Shen Ming, Corporate Associate – 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.

During peak seasons or in service-based sectors, working overtime becomes an inevitable necessity. Consequently, the issue of overtime payment frequently arises in such circumstances. According to the Employment Act 1955 (“EA”), overtime is defined as the additional hours worked by employees beyond their normal hours of work per day. Normal hours of work are the working hours agreed upon between the employer and the employee in the employment contracts. When employees worked beyond the agreed-upon hours of work, it becomes the employers’ obligation to provide overtime payment. It is important to note that not all employees are entitled to overtime payment. Employees earning a monthly salary above RM 4,000 are not entitled to overtime payment as mandated by the law. This means that any overtime payment is subject to the employers’ discretion. The EA provides specific rates of overtime payment that employers must follow. Employers have the flexibility to offer higher rates, but they are not allowed to offer lower rates. The rate of overtime payment varies depending on whether it is a normal working day, a rest day, or a public holiday. The table below illustrates the rates of overtime payment for various occasions. Day Prescribed Overtime Rate Normal Working Day HRP x 1.5   Rest Day HRP x 2 Public Holiday HRP x 3 ORP (ordinary rate of pay) = monthly rate of pay/26   HRP (hourly rate of pay) = ORP/normal hours of work The mandatory overtime payment can significantly increase the employers’ expenses, particularly during peak seasons or when a significant number of employees fall within the salary range of RM 4,000 and below. As such, some employers are exploring alternatives to preserve cash flow while still meeting the legal requirement. One commonly considered alternative is granting replacement leave to employees at a later date. However, the question is whether this approach is legally acceptable. It is important to note that the EA does not explicitly prohibit the use of alternative arrangements to replace overtime payment. Furthermore, there is a provision in the EA allowing employers and employees to agree on more favourable terms than the provisions outlined in the EA. It is subject to discussion as to whether a replacement leave is a better alternative and is more favourable to the employees. It is undeniable that some employees prefer monetary compensation over a day off. The safest approach for employers is to comply with the EA by providing overtime payment to eligible employees. If employers decide to pursue an alternative arrangement, they should clearly communicate the alternative to their employees, explain the rationale behind such a decision, and obtain the employees’ written consent for such arrangement. These will ensure transparency and fairness when dealing with the issue of overtime. To further assist employers in navigating the issue of overtime, the employers may consider the following: Requesting employees to work overtime only when necessary. Conducting performance reviews to identify the root causes of performance deficiencies if overtime is required due to performance issues. Hire more freelancers during peak seasons if the cost is lower than the cost of overtime payment. Establishing well-defined procedures and guidelines that clearly state when overtime is permissible, how it should be requested, and how it will be compensated. Establishing a system for recording overtime work, calculations, and payments. While it is important to comply with the law regarding overtime payment, it is equally important to address internal governance issues that may be causing excessive overtime. By reviewing and improving internal systems and procedures, employers can create a more productive work environment and reduce the need for excessive overtime. By striking a balance between hard work, fair compensation, and a healthy work environment, employers can create a foundation for employees’ satisfaction. ***** About the author: This article was written by Wong Shen Ming, Corporate Associate – 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.

Consultancy services have become increasingly popular among individuals and businesses. Consultants offer a wide range of services such as digital marketing, branding, and others. They bring industry experiences and fresh perspectives to the table, assisting clients to address specific issues, improve performance and drive revenue growth. However, one of the common concerns shared by consultants is the potential risk of not receiving timely and full payment for their services, even if they have diligently fulfilled their obligations. On the other hand, clients are concerned about the lack of significant improvements in their business or consultancy fees that are disproportionate to the results achieved. To address these valid concerns and foster a win-win situation, a well-structured consultancy agreement with customised clauses plays an important role to protect the interest of both parties. Protecting the Consultants: A consultancy agreement outlines the scope of work, deliverables, and expected outcomes provided by the consultants. These clauses establish a clear understanding between the consultants and the clients. To address the issue of non-payment or delayed payment, consultants may include clauses such as late payment charges or suspension of services until full payment is received. These clauses ensure protection and compensation for consultants in the events of payment-related issues. Besides that, the consultants may include an outcome disclaimer clause in the consultancy agreement, specifying that certain results or outcomes cannot be guaranteed. For example, a successful franchise application or a top 3 Google ranking. This clause is especially important when the consultancy services involved third parties or are subject to external circumstances. By managing clients’ expectations and clarifying the limitations of the services provided, this clause protects consultants from unrealistic demands. Protecting the Clients:  To address concerns of performance not up to the standards, clients can specify milestones or performance targets within the consultancy agreement. This ensures that consultants must meet these targets before clients are obligated to make payments. Such an arrangement safeguards clients’ interests by ensuring that satisfactory results are delivered before any financial commitments are made. Additionally, clients can explore alternative payment mechanisms, such as offering free shares, as a means to motivate consultants and enhance their performance. For clients who pay a substantial consultancy fee, it is reasonable for them to expect exclusive services for a specified duration. To formalise this expectation, an exclusive service clause can be included in the consultancy agreement, stipulating that the consultants will solely provide services to the clients during the specified period. This clause ensures undivided attention from the consultants to the clients’ business and helps prevent conflicts of interest. Protecting Both Parties:  To safeguard the interests of both consultants and clients, the consultancy agreement can include clauses relating to intellectual property rights, confidentiality, and dispute resolution. These clauses protect the parties’ proprietary information and confidential information as well as help the parties to find a mutually agreeable solution to solve disputes. In conclusion, a customised consultancy agreement ensures that the consultants and the clients are aligned towards achieving their goals. Most importantly, it establishes a solid foundation of understanding and sets realistic expectations for both parties. This clarity not only helps consultants to focus their efforts on addressing specific issues, but also allows clients to have a clear understanding of what they can expect from the consultancy engagement. ***** About the author: This article was written by Wong Shen Ming, Corporate Associate – 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.

Whether engaging in joint venture arrangements, strategic partnerships, or any other form of collaborative relationship, maintaining, protecting, and preserving confidential information are important for businesses. In a business collaboration, parties often share critical and proprietary information. This may include financial data, marketing strategies, ideas, customer list, and other forms of confidential information. Without a non-disclosure agreement (“NDA”), the disclosing party exposes itself to substantial risks as the receiving party could exploit the information for its own benefit or even share it with the disclosing party’s competitors. An NDA is a contract that protects confidential information exchanged between the parties. The primary purpose of an NDA is to establish the manners and restrictions in using the confidential information. In an NDA, the receiving party is often required to get prior written consent from the disclosing party before using or disclosing the confidential information beyond the agreed-upon purposes. Failure to obtain the written consent amounts to unauthorised use of confidential information. The NDA imposes an obligation on the receiving party to maintain the confidentiality of the information for a specified duration, thereby preserving the confidentiality of information even if the collaboration ends. An NDA ensures that the receiving party understands its obligations and the potential legal consequences of breaching its obligations. Besides that, it allows the disclosing party to seek legal remedies such as monetary damages or injunctive relief to protect its interest in the event of a breach. Additionally, an NDA sends a strong signal that the disclosing party prioritises the protection of confidentiality and expects the receiving party to do the same. This establishes a foundation of trust, encourages open communication and mutual respect between the parties involved, thereby facilitating the business collaboration. In conclusion, an NDA is an essential tool for safeguarding confidential information in a business collaboration. By signing an NDA, parties can establish clear expectations, minimise unauthorised disclosure, and have legal remedies in case there is an incident of an unauthorised disclosure that breaches the NDA. ***** About the author: This article was written by Wong Shen Ming, Corporate Associate – 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.