5 dangerous intellectual property mistakes that might kill your startup

This post by Chua Sher Hann is the first-ever guest-post on The Malaysian Lawyer.

image - 5 dangerous intellectual property mistakes that might kill your startup

The last few years saw a proliferation of startups in Malaysia. You can eat your Dah Makan lunchbox, then GrabCar to your KFit class decked in your Ash Be Nimble active wear. If you are an aspiring entrepreneur or the founder of a fresh startup, you must be extremely careful when navigating the intellectual property minefield, and not overlook the importance of securing the intellectual property rights of your business.

Unless you’re someone like Jeffri Cheong of Kaodim (who was an intellectual property lawyer prior to co-founding the services platform which recently raised USD 4 million in its Series A round) and already have a solid understanding and knowledge of intellectual property, please read on.

Here are five common intellectual property mistakes that startup founders make.

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The Inaugural Inter-Firm Drinks

Friday 19 February 2016 saw more than 200 lawyers and pupils attend the inaugural Inter-Firm Drinks at The Rabbit Hole at Changkat Bukit Bintang. The attendees met up with old friends and made new ones at this event organised by a group of small law firms. This was an event open to all lawyers and pupils. I hope that this will be an annual tradition moving ahead. Helps bring people closer together and meet other fellow members of the Bar.

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Some of the attendees from Skrine

 

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10 tips on building an awesome legal career

10 tips on building an awesome legal career

Insights from corporate lawyer Marcus van Geyzel on taking your legal career beyond the ordinary.

There is a vast number of lawyers in Malaysia (at last count, there are 16,104 of us), with an ever-increasing number of law graduates coming into the market every year.

I’m often asked for insights on how pupils and young lawyers can set themselves apart in this crowd. These 10 tips are a condensed version of what I usually share — if you want the extended version, buy me a coffee and we’ll talk.

First off, I should make clear that these tips obviously aren’t magic beans that will instantly convert a mediocre lawyer into a good one. There are so many career possibilities open to law graduates, so it’s impossible to have a fixed formula.

There isn’t even an agreed definition of what a ‘lawyer’ is. The basic categories used in Malaysia are ‘corporate lawyer’ and ‘litigation lawyer’ (as all lawyers here are ‘advocates and solicitors’) — but countless nuances exist within these broad, clumsy categorisations. What one lawyer does on a daily basis can be extremely different from what another lawyer does, so these tips will have to be adapted accordingly.

Why do some lawyers seem to excel — at work and in life — while others struggle to make sense of the profession? How come some seem to have boundless enthusiasm for their work even after a decade, while others are burnt out and disillusioned within five years?

I don’t pretend to have a magic formula to building an awesome legal career. But I guarantee that anyone who practises these 10 tips will have a better chance at staying ahead of the disillusioned and unmotivated crowd who see lawyering as ‘just a job’.

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Credit Reporting Agency Sued for Defamation

In an interesting recent Court of Appeal decision (Grounds of Judgment dated 3 February 2016), the Court of Appeal allowed a defamation action against CTOS.

CTOS
Taken from the CTOS website

I can imagine this decision having quite serious repercussions for credit reporting agencies in Malaysia in general. It imposes an obligation on a credit reporting agency to ensure any information that it inserts into its database or report to be factually correct. Further, that information must continue to be factually correct at all times. A credit reporting agency cannot rely on any disclaimer in their report that the information may not be up to date and that the person relying on the report should conduct their own checks.

So for example, if an individual had originally been adjudged a bankrupt but he had since been discharged from his bankruptcy, a credit reporting agency must ensure that information is updated quickly. So quite a victory for individuals and companies worried about their creditworthiness.

Background to CTOS and Credit Reporting

CTOS is a credit reporting agency. It provides easily-accessible credit reports relied on by financial institutions in Malaysia. It not only picks up on financial worthiness but also legal proceedings like legal suits, bankruptcy and winding up proceedings.

Parties involved in litigation would normally face a difficulty. Information in the CTOS report on pending legal suits, financial institutions may be reluctant to extend loans to such parties.

On the other hand, CTOS itself will face difficulty in knowing the most recent updates to such litigation. I would imagine CTOS largely relies on the advertisements taken out (for instance, for service of court papers or substituted service) or the public court records on the Court website. A credit reporting agency would not know the immediate updates, or withdrawal of such legal proceedings.

Mr Tan’s High Court Suit against CTOS

In this decision, Mr Tan was aggrieved by the CTOS report listing out various pending legal proceedings, including pending bankruptcy proceedings. The information contained records as far back as the 1990s.

Mr Tan had been rejected by banks for loans for motor vehicles and property.

Mr Tan contacted CTOS, demanding that their records be updated as he had cleared all his debts and had been discharged from his bankruptcy. It appeared that Mr Tan provided CTOS with the information and documents to show this and CTOS subsequently updated their records in their database.

However, Mr Tan was still not satisfied and filed a suit for defamation against CTOS. HE claimed that CTOS had failed, refused or neglected to initially update their database and clear all outdated records.

At the end of the High Court trial, Mr Tan had lost his case for defamation. Briefly, the High Court found that Mr Tan could not show there was publication. Further, the High Court also found that there was a disclaimer wording in the CTOS report that the information was not intended to be a confirmation of the current status.

Mr Tan Succeeded in the Court of Appeal

At the Court of Appeal however, Mr Tan succeeded.

On the issue of publication, the Court of Appeal held that the CTOS database is available to anyone who subscribed to the services. It did not matter that access to the database is by way of subscription or by paying a fee. Further, CTOS could not be afforded protection by the law if CTOS also allowed the information to go outdated and stale such that it did not reflect the true state of affairs.

The Court of Appeal found that any reasonable reader of the information in the CTOS database would be led to be suspicious of the creditworthiness of Mr Tan.

Nonetheless, Mr Tan could not actually prove the actual damage that he suffered or the quantum of the damages. In such a situation, he was awarded nominal damages of RM5,000.00. Costs of RM40,000.00 was awarded in his favour as well.

Closing Down a Company: Winding Up Law in Malaysia

The winding up of a company is the process of bringing an end to a company. The company’s assets are sold off and then used to pay off the company’s debts. Any excess proceeds are then returned to the shareholders of the company.

Here, I will give a brief overview of winding up law in Malaysia. We will start with getting our terminology right.

Mind Your Language: Winding Up, Not Bankruptcy

mind your language

In getting our terminology right, we should refer to the term ‘winding up’ or even ‘liquidation’ when referring to this process of winding up a company. In Malaysia (and a few other jurisdictions like Singapore, the UK and Australia), these are the correct terms to be used. In contrast, in Malaysia at least, the term ‘bankruptcy’ is for individuals and where an individual may be adjudged bankrupt. Continue reading