Bread & Kaya 26: 2019 Malaysian Cyberlaw Cases, Part 2

• 2014 fatwa directing MCMC to block certain sites, deemed not contravening law
• Movement Control Order to generate more cyber & IT related disputes in the Court

Legality of online contracts

Thousands of contracts are made online every day. Many of us accept that such contracts are binding on the parties without having to meet each other physically or putting in a manuscript signature. Unfortunately, many do not read the contracts whenever they purchase the goods or services.

One of these online contracts is called browsewrap agreement. In a browsewrap agreement, the contract is located in another page. To view the contract, the user would need to click on the link to access the page. The defining feature of browsewrap agreements is that the user can continue to use the website or its services without visiting the page hosting the browsewrap agreement. 

In Ragindran a/l Sivasamy v Airasia X Berhad (Penang Magistrate Court Civil Suit No. PD-A72-1-1/2019), the Magistrate Court dealt with the legality of an online contracts commonly known as a browsewrap agreement.

The Plaintiff had purchased his air ticket from the Defendant’s website to travel to Melbourne, Australia. The Plaintiff lost his luggage during his flight to Kuala Lumpur International Airport 2 (KLIA 2) and thereafter to Melbourne. The Defendant then offered compensation to the Plaintiff based on the tariff that had been set at USD20.00 per kilogramme. The Plaintiff however rejected the tariff and claimed for the sum of RM11,700 for the loss of, among others, his watch, glasses, winter wear, clothing and additional clothing that he had to purchase in Melbourne due to the loss of clothing.

The Defendant argued that the Plaintiff is bound by its terms and conditions incorporated into the Terms and Conditions of the Defendant's international flight and are available on the Defendant's website.

However, the Plaintiff claims that he is not bound to the Defendant's terms and conditions as-

(a)        the terms and conditions were not brought to his attention at the time of purchase of the tickets. Instead each purchaser is required to click on the words "Terms and Conditions" to see the complete terms and conditions of the flight;

(b)       the terms and conditions were only applicable to his domestic flight to Kuala Lumpur but not his international flight to Melbourne;

(c)        the Defendant had caused the loss of his luggage; and

(d)       the total compensation offered by the Defendant is lower than what he had lost.

During the trial, one of the Defendant's witnesses demonstrated in Court how to purchase tickets through the Defendant's website. The said witness testified that there is a notice above the payment button stating “By clicking “Purchase”, you confirm that you understand and accept our Terms and Conditions of Carriage, which address cancellation, refund and rebooking, no show, baggage allowance and travel documents, and other policies. ”

The “Purchase” button is placed next to the notice. For the display of the detailed flight terms and conditions, a user simply has to click on the words “Terms and Conditions of Carriage ” in red in the notice and upon doing so, the website will direct the user to another page displaying the terms and conditions of flight.

The learned Magistrate held that it would be reasonable for the Defendant to expect that any person purchasing an airline ticket from the Defendant's website would know of the terms and conditions of the flight.

The Magistrate found that the Defendant had put sufficient notice on its website for its users by putting a notice next to the Purchase button with a red hyperlink. It is the Plaintiff's obligation to read the terms and conditions. A contract is formed as soon as the payment is made, and any terms and conditions of the flight would bind the parties as soon as the contract is made.

This matter is pending before the Penang High Court (Civil Appeal Suit No. PA-11B-37-09/2019).

Trade marks

After 43 years, the Trade Marks Act 1976 was repealed and replaced with the Trademarks Act 2019. The new law finally implemented the Madrid Protocol which allows a trade mark owner to file an international trademark application in 122 countries (subject to additional fee for every country) through the Intellectual Property Corp of Malaysia (MyIPO) beginning from 27 December 2019.

Prior to the repeal of the old law, the Court made a few important decisions in respect of online trade mark infringement.

In 30 Maple Sdn Bhd v. Siti Safiyyah Mohd Firdaus Chew [2019] 1 LNS 404, the Defendant was found to have infringed the Plaintiff’s registered trade marks for selling counterfeit dUCk products on her social media accounts such as Instagram, Instagram Stories, Facebook, etc. In addition, the Intellectual Property High Court found that the social media postings amount to advertising circulars or other advertisement representing as having the right either as the registered proprietor or user to use the trade mark. Therefore, the Defendant was in breach of s. 38(1)(b) of the Trade Marks Act 1976 (repealed and replaced by the Trademarks Act 2019) which prohibits the use of a registered trade mark on goods or in physical relation thereto or in an advertising circular, or other advertisement.

In Telekom Malaysia Berhad & Anor v CA Multimedia Sdn Bhd & Ors [2019] MLJU 1664, the Intellectual Property High Court found that certain Defendants had infringed and passed off the trade mark TMPOINT for using the domain name tmpoint.com and the mark TMPOINT on their website. The Defendants have attempted to differentiate between website and domain name. Though they may be technically different in function, the Court found that they operate in unison and hence ought to be treated as one for purposes of trade mark infringement.

What amounts to parody?

Prior to the fall of the Barisan Nasional Government in the 2018 General Election, several people were charged in Court for publishing content which were themed as anti-Government. One of them is Fahmi Reza, who is also known as kuasasiswa. He was charged under s. 233(1)(a) of the Communications and Multimedia Act 1998 in the Sessions Court for publishing a false notice purporting to be by the Malaysian Communications and Multimedia Commission featuring the logo of the Commission and an image of a clown resembling the then Prime Minister Najib Bin Razak on his Facebook page with an intent to annoy (Mohd Fahmi Reza Mohd Zarin lwn. PP [2019] 1 LNS 120). He was found guilty and sentenced to 1 month jail and fine of RM30,000.

On appeal, the accused argued that the notice is a parody and political satire to criticise the authorities for restricting freedom of expression and the Internet.

Justice Mohd Radzi Harun found that the notice is a fine and creative artistic work created by the accused to criticise the authorities, however it is false in nature and was created with an intention to annoy a person. His Lordship was of the view that there is no need for the Prosecution to prove that the accused annoyed the complainant but whether he intended to annoy him.

His Lordship also found that the notice cannot be considered as a parody because it does not fall within the definition of parody set out in the case of Sepakat Efektif Sdn Bhd v. Menteri Dalam Negeri & Anor and Another Appeal [2015] 2 CLJ 328 which provides-

“The pithy observation by Justice Albie Sachs of the Constitutional Court of South Africa in Laugh it Off Promotions CC v. South African Breweries International (Finance) Case[2005] 5 LRC 475, is quoted to indicate the proper approach courts should take when assessing parodies and satires:

“If parody does not prickle it does not work.”

Therefore, his Lordship held that the notice is an artistic work but due to its nature of annoying another, it therefore has no right to be displayed by the accused and is not protected by freedom of speech.

His Lordship however replaced the Sessions Court’s sentence with a fine of RM10,000 in lieu of 6 months imprisonment in view of, among others, media reports stating that the Minister of Communication and Multimedia is making amendments to s. 233 of the Communications and Multimedia Act 1998 to repeal elements which are considered as draconian.

Challenging website access blocking order 

The Malaysian Communications and Multimedia Commission (MCMC) is known to block websites without notice. The power to block website is purportedly based on s. 263(2) of the Communications and Multimedia Act 1998. MCMC or any authorities may request MCMC to "request" internet service providers to disable access by end-users in Malaysia to online location for the purpose of "preventing the commission or attempted commission of an offence under any written law of Malaysia or otherwise in enforcing the laws of Malaysia, including, but not limited to, the protection of the public revenue and preservation of national security".

Sometime in 2014, Fatwa Committee of the State of Selangor issued a fatwa declaring that SIS Forum deviates from the teaching of Islam and directed that the MCMC block any social websites which is against the teaching of Islam and "Hukum Syarak" (see SIS Forum (Malaysia) & Ors v. Jawatankuasa Fatwa Negeri Selangor & Ors [2018] 6 CLJ 748).

The Plaintiff challenged the fatwa and filed an action in the High Court praying for, among others, a declaration that the fatwa to the extent that it directs the MCMC to block social websites is contrary to s. 3(3) of the Communications and Multimedia Act 1998 which provides that nothing in the Act shall be construed as permitting the censorship of the Internet.

After some years, the High Court recently held that the fatwa only requested the Malaysian Communications and Multimedia Commission to block any website which contravene the teaching of Islam and Hukum Syarak. The fatwa does not create any law that can block any website. As such, the issue of contravention of s. 3(3) does not arise.

Furthermore, the fatwa itself is not an offence but the offences were the acts prohibited by ss. 12 and 13 of the Syariah Criminal Offences (Selangor) Enactment 1995. The fatwa merely states certain acts are within the Hukum Syarak or otherwise. The fatwa therefore cannot be said to create offences infringed the provision of s. 3(3).

Short Term Lodging - AirBnB Effect

Last year, I reported that the High Court in Verve Suites Mont’ Kiara Management Corporation v Innab Salil & 8 Ors (Kuala Lumpur High Originating Summons No: WA-22NCVC-461-09/2017) upheld the ban of short term lodging by the Management Corporation of Verve Suites Mont Kiara through its House Rules. 

The matter went up to the Court of Appeal ([2019] MLJU 1496) and the Court of Appeal upheld the High Court's decision. The Court of Appeal held, among others, that the Strata Management Act 2013 (SMA 2013) is to advance interest in communal living within a strata scheme. Therefore, it would defeat the spirit and purpose of the SMA 2013 for the proprietors such as the Defendants to use their residential units in the form of business enterprise such as short term rentals. The majority of the residents have voted against the same. The majorities’ wish has to be taken heed of, hence there could never be any violation of s. 70(5) when House Rules No. 3 was adopted.

Challenging Court's decision in implementing electronic bidding 

Last year, I reported that The Council of Auctioneers Malaysia challenged the decision by the High Court Registrar to implement electronic bidding or e-Lelong in all courts in West Malaysia (Majlis Pelelong Malaysia v. Pendaftar Mahkamah Tinggi Malaya (Kuala Lumpur Judicial Review Application No. WA-25-313-10/2018). The High Court held that the issue of implementation of e-Lelong is justiciable as the decision to implement the e-Lelong system was made and translated with the issuance of Registrar's Practice Direction No. 1 of 2018. This decision is made based on the Respondent's public duty.

However, the High Court held that the implementation of the e-Lelong system is in accordance with law, in particular, O. 31A r. 7 of the Rules of Court 2012. Further, based on the literal interpretation of s. 259(1) and (2) of the National Land Code, the appointment of licensed auctioneer in a public auction is based on the discretion of Court and not a mandatory requirement to make such appointment in a public auction. Public auctioneers therefore cannot be said to have a right under the law to be appointed in a public auction.

In addition, the Registrar's Practice Direction No. 1 of 2018 cannot be said to have infringed Article 5(1) of the Federal Constitution which provides that no person shall be deprived of his life or personal liberty save in accordance with law. The High Court held that the right of a person under Article 5 can be restricted by law. In any event, the applicant has no right in law in a public auction as the involvement of licensed auctioneers are based on the discretion of Court. The e-Lelong system is to increase the efficiency of public auction and to ensure transparency of the system. The Applicant had also failed to show any basis for the application of Article 8 of the Federal Constitution which provides that all persons are equal before the law and entitled to the equal protection of the law.

Therefore, the Applicant has failed to show that the e-Lelong system in the High Court is tainted with illegality, irrationality and procedural impropriety.

In closing

In 2020, we can expect more interesting developments in the cyberlaw and IT sphere.

• Earlier this year, it was reported that Artificial Intelligence (AI) was implemented by our Court to aid sentencing for crimes committed. It will only be used for two offences in Sabah and Sarawak courts – s.12(2) of the Dangerous Drugs Act 1952 for drug possession and Section 376 of the Penal Code for rape. 

In the first case where AI was used, Magistrate Jessica Ombou Kakayun sentence Christopher Divineson Moinol to nine months' jail after he pleaded guilty to a charge of possession of 0.16g of methamphetamine.

In another case, the counsel of Denis P. Modili objected to the use of the AI to his charge of possession of 0.01g of methamphetamine. Counsel for the accused argued that the use of the AI will be a breach of Articles 5(1) and 8(1) of the Federal Constitution. He further argued that the court should confine to only materials presented in the court. The use of the AI is not in accordance with the law. Although the court can choose to ignore (the AI recommendation), it might influence the decision.

The learned Magistrate noted the defence's objection and said she would proceed with AI use, which makes recommendations based on information derived from the court's database between 2014 and 2019. The AI system proposed 10 months' imprisonment and the accused was sentenced to 12 months' jail, to run concurrently from his existing sentence of eight months from the date of arrest.

It is understood that an appeal was filed against the Magistrate's decision over the sentencing and the use of the AI.

Our Court however did not publish any information on this AI system. Based on reports, it is merely a system that recommends sentencing based on the decisions of other identical or similar cases. It is not an artificial intelligence per se but merely a software making a recommendation based on existing database. Lawyers have argued that such system should be accessible to them so that they can address any recommendation provided by the system. So far, there is no news of the Court allowing such access.

• With the outbreak of Covid-19 and the Movement Control Order, we can expect this to generate more cyber and IT related disputes in the Court. People are spending more time on the Internet and using more online services and implemented work from home policy. Interesting, the Prevention and Control of Infectious Diseases (Measures Within the Infected Local Areas) Regulations 2020 and Prevention and Control of Infectious Diseases (Measures Within the Infected Local Areas) (No. 2) Regulations 2020 declared e-commerce as one of the essential services that may operate during the Movement Control Order. Once the Movement Control Order is lifted, we can expect more and businesses adopting e-delivery of their businesses. This would result in development and licensing of more software which would definitely cause disputes, especially, involving the quality of the development and late delivery of software.
• Courts in the world are also commencing their virtual Court to ensure that the administrative of justice is not heavily disrupted by Covid-19. Our Courts have also adopted virtual and video conferencing hearings. Court documents will soon need to be crafted in a manner which suits online conferencing or allows a Judge to peruse it seamlessly, like reading a website.