Bread & Kaya 30: 2021 Cyberlaw cases in the recovery period

• Large increase of 40.6% in civil cyber cases between 2020 and 2021
• Applying correct reasonable man test based on current development of society

When the Government of Malaysia announced its 2nd lockdown in January 2021, our Courts quickly opened virtual doors for remote hearings and trials.

Today, virtual hearings and trials have now become a norm in Malaysia with many Courts, particularly, the civil Courts, operating as virtual Courts.

The Chief Justice, in her speech on the occasion of the Opening of the Legal Year 2022 entitled "Access to Justice and the New Normal" said that judges have adjusted well to remote hearings at least in the context of civil cases, criminal applications and criminal appeals.

The screen-sharing technology had assists them with reference to documents and the level and nature of advocacy has improved irrespective of whether counsel before the judge is senior or junior.

Some criminal courts have also moved to conduct matters virtually. Prior to this, criminal proceedings were still done physically. S. 173(a) of the Criminal Procedure Code provides that when an accused appears or is brought before the Court a charge containing the particulars of the offence of which he is accused shall be framed and read and explained to him, and he shall be asked whether he is guilty of the offence charged or claims to be tried unless a dispensation is allowed. This would mean that the accused would have to be present in Court when the charge is read to him.

It was not until the Sessions Court case of Pendakwa Raya v Syamsul Zaman Bin Sukri (Pasir Mas Sessions Court Criminal Case No. DJ-62JSK-36-08/2021) that a charge was read to the accused via remote communication technology i.e. Zoom as the accused tested positive for Covid-19 and could not attend Court physically. The learned Sessions Court Judge, Tuan Badrul Munir Mohd Hamdy relied on the provisions of s. 101 and s. 101B of the Subordinates Courts Act 1948 to exercise his discretion to have the matter conducted via remote communication technology.

The Malaysian Bar Council has also moved on with times. They have finally lifted the ban on the use of virtual offices by lawyers and recognised that “a virtual office offers benefits like convenience, flexibility, and cost effectiveness”. To regulate the use of virtual offices, Chapter 7A entitled “Virtual Offices” was introduced in August 2021 into the Rules and Rulings of the Bar Council. Essentially the new rulings require members to ensure the confidentiality of client’s information.

Defamation

The Chief Justice in her speech also highlighted the increase of cyber defamation cases between 2020 and 2021. There was a large increase of 40.6% of civil cyber cases between 2020 and 2021. The steady rise of such cases reflects the greater use of social media and perhaps the greater tendency to misuse it.

The rise in such cases also saw Courts taking into factors such as current trends, development and behaviour of society in determining whether a statement is defamatory. Here are some interesting cases decided in 2021.

• Defamation via photograph and subject matter of article

In Restoran Nasi Kandar Irfanah Sdn Bhd v The New Straits Time Press (Malaysia) Berhad & Anor Appeal [2021] 1 LNS 2465, the plaintiff claimed that, among others, a Facebook posting containing a photograph of one of the plaintiffs seated at the other plaintiff’s restaurant to be defamatory even though the publication was referring to two (2) other nasi kandar restaurants. The Facebook post links to an online article entitled “2 famous Penang Nasi Kandar restaurants infested with rats, cockroaches, ordered shut”. The online article was not in reference to the plaintiff's restaurant.

The Court of Appeal held that any person who clicked on the post itself would be directed to the said online article and would easily come to know of the identities of the said 2 famous nasi kandar restaurants in Penang which plainly did not include the second respondent. The Court of Appeal held that the High Court had failed to adopt and/or apply the correct reasonable man test based on the current development of society on the reading of news reported on social media such as Facebook when the learned High Court Judge concluded that the reader would not know of the restaurants actually implicated simply because there was no link below the offensive photograph stating “click here to read more.” Society today being widely exposed to social media, it is most unlikely that the ordinary reader would not be able to access the full article by clicking on the relevant link which can be regarded as a simple process in this time and age.

• Recognition of the use an asterisk (*) to correct a typo by the Court

In Tan Sri David Chiu Tat-Cheong v Seema Elizabeth Soy [2021] 1 LNS 1162, the plaintiff initiated an action for defamation against the defendant for allegedly publishing certain defamatory statements on a WhatsApp Group over the plaintiff’s family, company and allegedly previous convictions. The plaintiff is the founder and managing director of Malaysia Land Properties Sdn Bhd (also known as “Mayland”). Mayland is the developer of Waldorf & Windsor Towers Service Apartments (“W&W”). The defendant on the other hand, was the owner of an apartment unit at W&W and was involved in the management committee and sub-committee of W&W in various capacities.

In one of the impugned text, the plaintiff stated, “The same don (David Chiu) is the Founder and Chairman of Mayland!!!” but she later corrected the word “don” with the word “son” with an asterisk (*).  The plaintiff claims that these words meant that he is a Don and is associated with the criminals or underworld.

The High Court accepted that the use of asterisk (*) to correct a word is a common way of correcting a misspelling on WhatsApp. Particularly, in this case, the letters “s” and “d” are next to each other on the mobile phone keypad used in the WhatsApp application. Moreover, the correction was done in the space of a minute.

Extension of defence of Qualified Privilege for publications on WhatsApp groups

The High Court in Tan Sri David Chiu Tat-Cheong v Seema Elizabeth Soy [2021] 1 LNS 1162 also extended the defence of qualified privilege, which is a defence for defamation, to a person who published alleged defamatory statement to members of a WhatsApp group. Qualified privilege is afforded to those who make defamatory statements in the discharge of some public or private duty, whether legal or moral, or in the conduct of their own affairs, in matters where their interest is concerned. But only if the publication derived from right and honest motives.

The impugned text was communicated in a closed and private WhatsApp chat group setting constituted by participants who were interested in the welfare of W&W. It was transmitted in line with the purpose for existence of the WhatsApp Group. The defendant sent the text in pursuance of her duties and in her capacity as a member of the management committee of W&W. In order to raise awareness of the various legal disputes in which Mayland and its related entities were the counter-parties with opposing interests.

Liability of Online Marketplace Operators

Those in the intellectual property protection industry will have to wait again for the Court to decide on whether a trade mark owner can stop an online marketplace operators from allowing its merchants to list products bearing their trade mark under the new Trademarks Act 2019.

An online marketplace operator was found to be liable for trade mark infringement under the old Trade Marks Act 1976 (now repealed and replaced with the Trademarks Act 2019) (Nexgen Biopharma Research & Innovation SARL v Celcom Planet Sdn Bhd (Kuala Lumpur High Court Suit No. WA-22IP-3-01/2018). Unfortunately, there is no grounds of judgment available for this case.

Online marketplace operators generally take down counterfeit products from their platforms upon receiving notice from the trade mark owner. However, when it comes to unauthorised genuine products (e.g. parallel imports or direct marketing products which online sales are prohibited by the principal), the general position by online marketplace operators is that they will not delist such products.

In the case of Deka Marketing Sdn Bhd v Shopee Mobile Malaysia Sdn Bhd [2021] 10 CLJ 395, the plaintiff, being the trade mark owner of the mark DEKA, sought to restrain Shopee from allowing and permitting resellers of DEKA products from utilising Shopee to conduct business involving the DEKA products, including the advertising, distribution, publication and offer for sale of the said products, without the plaintiff's licence, permission or authorisation.

According to the plaintiff, only exclusive distributors and authorised dealers appointed by the plaintiff are allowed to sell its products. The plaintiff applied for an order for summary judgment so that the matter can be disposed summarily without going to trial.

Shopee on the other hand argued that, among others, there is no law that prohibits the reselling of products that have been purchased without having to get prior consent or authorisation from the brand owner, as the title of the goods has passed to third parties, the plaintiff's action lies against the resellers and not Shopee and this issue cannot be resolved through a summary judgment application, and Shopee merely provides the platform enabling the third party sellers to put their goods for sale and for buyers to purchase them.

The buyers will liaise with the sellers directly, not with the Defendant. Thus, the defendant does not advertise, publish, sell, make offers of the DEKA products listed in the Shopee platform for sale by those resellers. The defendant also applied to have the matter disposed summarily under Order 14A and 33 of the Rules of Court 2012 by answering the following questions of law-

(a) Whether the plaintiff has the right in law to restrict the resale of authentic products bearing the “DEKA” mark (“Deka Products”) on the defendant's online marketplace (www.shopee.com.my) (“Platform”)?

(b) Whether the advertising, distributing, marketing and/or offering for sale of Deka Products on the Platform gives rise to a cause of action for trademark infringement against the persons advertising, distributing, marketing and/or offering for sale Deka Products on the Platform (“Resellers”)

(c) If the answer to (b) above is in the affirmative, whether the Resellers are liable to the Plaintiff for trademark infringement?

(d) If the answer to (c) above is in the affirmative, can claims for trademark infringement be made against the defendant by reason of the alleged advertising, distribution, marketing and/or offering for sale of Deka Products by the Resellers on the Platform?

(e) If the answer to (d) above is in the affirmative, can findings of infringement be made against the defendant without the Resellers being made parties to the proceedings?

The High Court dismissed both applications on the ground that, among others, the matters should be adjudicated through a trial and not summarily.

In respect of the application for summary judgment, the High Court concluded that the following issues are triable-

(i) that being an online marketplace platform, the defendant does not carry out distribution or retail marketing of electrical or household products;

(ii) despite being the registered owner of the "DEKA" trademark, the plaintiff does not have any right to prevent any seller who trades the plaintiff's products by accurately describing the product by its brand name;

(iii) no one is prohibited from reselling the plaintiff's products once those products are sold and the title of the goods passed to the said seller/reseller;

(iv) the plaintiff's claims against the defendant instead gave rise to concerns under the Competition Act 2010;

(v) the third party sellers using the impugned Shopee platform are independent with no contractual or business associations with the defendant;

(vi) the defendant does not advertise, publish, sell or make offers for the sale of products listed on its Shopee marketplace; and

(vii) the plaintiff's products placed for sale by the said sellers on the defendant's platform does not in any manner infringed the plaintiff's DEKA trademark. Even if it does, the quarrels should be between the plaintiff, the resellers and the plaintiff's so-called authorised dealers/exclusive distributors, fell squarely within the meaning of triable issues.

As for defendant's application under Order 14A and 33 of the Rules of Court 2012, the High Court concluded that the questions raised by the defendants in its application involved mixed questions of facts and law that could be justly determined after this court having the benefit of hearing evidence of witnesses at a full trial.

Tomorrow: Enforceability of electronic contracts and Live streamers go to court