MALAYSIA Law and Practice Contributed by: Tai Foong Lam and Amy Lim Yun Jin, Gan Partnership
which may be defined by the parties in their respective agreements. To constitute a trade secret and/or confidential infor- mation, it is pertinent that the confidential nature of the information must be communicated expressly or under circumstances reasonably understood. The information, in this case a trade secret, must not be public knowledge, trivial or generally accessible to the relevant industry. 5.2 Reasonable Measures and Confidentiality Generally, Malaysia does not have a specific statute dedicated to trade secrets. The common law is often referred to. It is expected of the owners to take rea- sonable steps to maintain the confidentiality of infor- mation, such as restricting access to trade secrets. Access limitations, confidentiality markers and con- fidentiality clauses in agreements, including non- disclosure agreements, are common ways to keep information private. The confidentiality of a trade secret is not always dis- regarded when it is disclosed to employees. Employ- ees are frequently required by contract to maintain the confidentiality of trade secrets. The confidential- ity of trade secrets may be somewhat compromised by disclosure to third parties, depending on the third party’s role. When disclosing trade secrets to third parties, care should be taken. This includes signing a non-disclosure agreement, enforcing confidential- ity clauses and limiting the number of trade secrets disclosed to reduce the likelihood of a trade secret being leaked without permission. But it’s crucial to remember that unchecked disclosure can ruin concealment. The owners should take appro- priate and consistent steps to protect the confidential- ity of such information. 5.3 Misappropriation of Trade Secrets In Malaysia, misappropriation or unlawful acquisition of trade secrets generally occurs where confidential information is obtained, used, disclosed or exploit- ed without authorisation. The common law breach of confidence would be applicable in the Malaysian context.
In the event of a dispute regarding breach of confi- dence by an employee, joint venture partner or com- petitor, the dispute may be resolved via arbitration and/or the Malaysian courts, subject to the jurisdic- tions and dispute resolution agreed by the parties under their respective agreements. Arbitration is usu- ally the preferred dispute resolution method due to its ability to preserve the confidentiality of information. 5.4 Duration and Loss of Protection In Malaysia, a trade secret is not time-limited and is subject to the confidentiality clause agreed by the par- ties in their respective agreements. The impact of accidental disclosure is very signifi- cant. Protection is typically lost if private information is inadvertently made public without taking appropri- ate action to stop or reverse the exposure. However, depending on the degree of exposure and whether the information is practically retrievable from the public domain, a court may still find that confidentiality per- sists if the disclosure is genuinely accidental and the information is promptly contained before becoming truly public knowledge. On the other hand, authorised disclosure does not always eliminate trade secret protection. In com- mercial practice, disclosure to workers, contrac- tors, suppliers or joint venture partners is typical and won’t remove protection if it’s coupled with explicit or implicit duties of confidence. However, if author- ised disclosure is made without sufficient confiden- tiality safeguards, it might still undermine protection. Regardless of the initial intent, Malaysian courts will typically treat information as no longer confidential once it is freely released to the public or shared in a way that permits uncontrolled dissemination. 5.5 Enforcement and Remedies In Malaysia, certain professions are statutorily bound to maintain the confidentiality of information. Accord- ingly, non-compliance with applicable cost of practice may result in: • a fine not exceeding MYR100,000; or • imprisonment not exceeding one year; or • both, depending on the nature of the offence.
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