What to Watch: The Next Chapter of Intellectual Property Reform in Malaysia
Malaysia’s intellectual property (IP) landscape may be heading for significant change. The Intellectual Property Corporation of Malaysia (MyIPO) has held public consultations on proposed reforms to patents, copyright and integrated circuit layout-designs. While none of the proposals has been finalised, it will be worth watching for a review of the Copyright Act 1987, particularly as it seeks to keep pace with digital technology, the creative economy, and artificial intelligence (“AI“).
Perhaps the most anticipated development is a proposed copyright framework for AI, addressing issues such as (i) AI training; (ii) the use of copyrighted works for training purposes; and (iii) copyright protection for AI-generated outputs.
Beyond AI, Malaysia may also align its copyright laws with international standards through accession to the Beijing Treaty on Audiovisual Performances 2012, which strengthens the rights of audiovisual performers; and the Brussels Convention 1974, which protects satellite broadcast signals against unauthorised distribution.
Enforcement in the digital space is another area to watch. Proposals include strengthening online service provider responsibilities in addressing copyright infringement; and introducing court orders for the seizure and forfeiture of domain names used for copyright infringing activities.
The review will also consider new protections for creators, including an artist’s resale right, allowing visual artists to benefit from subsequent resales of their works. Other proposals include mechanisms for using orphan works – whose owners cannot be traced; and reversion rights to allow creators to reclaim previously transferred copyright after a specified period.
Although the final shape of these reforms remains uncertain, their potential impact is wide-ranging. Creators, technology companies, online platforms and businesses should closely follow these developments as Malaysia considers the next chapter of its copyright framework.
Liberty Technology Resources Sdn Bhd v Suruhanjaya Syarikat Malaysia : When a Contractual Remedy Expires
Background
The recent Court of Appeal decision in Liberty Technology Resources Sdn Bhd v Suruhanjaya Syarikat Malaysia [2026] 8 CLJ 493 serves as a reminder that a time-bound contractual option lapses if it is not exercised within the stipulated period.
In 2017, Suruhanjaya Syarikat Malaysia (“SSM”) engaged Liberty Technology Resources Sdn Bhd (“Liberty”) to develop an enterprise resource planning (“ERP“) system. After four extensions of time, SSM terminated the contract on 23 December 2019 on grounds of Liberty’s default, with the project approximately 88% complete.
A key point of contention was clause 25.3(b) of the ERP agreement. Upon termination for default, it entitled SSM to either (i) require Liberty to remove the ERP solutions “within a period of thirty (30) days from the date of termination” and refund all monies paid; or (ii) retain the completed ERP solutions.
High Court’s Ruling
The High Court held the termination to be lawful and ordered Liberty to both refund the RM12,228,365.80 paid by SSM under the ERP agreement and pay liquidated damages of RM1,966,812.94. Liberty argued that SSM could recover one or the other, not both. The Court disagreed and held that SSM was enforcing a contractual right to a refund and liquidated damages to compensate for delays.
Court of Appeal’s Decision
The Court of Appeal upheld the termination but set aside the refund. SSM argued that the 30-day period merely governed Liberty’s removal, and that its counterclaim constituted an election. The Court disagreed. As removal had to occur “within 30 days from the date of termination”, SSM necessarily had to elect the first option within that period, failing which the option lapsed. An election made through pleadings could not “create, extend, or revive” a lapsed contractual right. The Court also reduced the Liquidated Ascertained Damage (“LAD”) award to RM1.47 million after finding that part of the claim duplicated a period already covered by another LAD claim.
Merchant Shipping (Amendment) Act 2017 Now in Force
The Merchant Shipping (Amendment) Act 2017 (“MSAA 2017”), which amends the Merchant Shipping Ordinance 1952 (“MSO 1952”), came into force in Peninsular Malaysia and the Federal Territory of Labuan on 1 September 2026, nearly nine years after its enactment. The commencement of the MSAA 2017 introduces significant reforms to Malaysia’s ship registration, financing and licensing regimes.
The key amendments include:
Ship registration: The Malaysia International Ship Register (“MISR”) has been expanded to allow foreign individuals and foreign-incorporated companies to register vessels under the Malaysian flag, subject to the appointment of a local representative. The amendments also introduce a statutory framework for bareboat charter registration, allowing vessels to be registered in Malaysia or Malaysian ships to be registered in another country under bareboat charter arrangements.
Ship financing: The amendments clarify the legal framework governing (i) the transfer and transmission of ship ownership; (ii) the registration and priority of ship mortgages; and (iii) the rights of registered mortgagees, including their power to sell mortgaged vessels when mortgage monies become due. Where multiple mortgages are registered, a subsequent mortgagee may only exercise its power of sale with the concurrence of prior mortgagees or pursuant to a Court Order. Bareboat chartered-in vessels cannot be mortgaged under the Malaysian registration regime, with mortgage matters remaining subject to the laws of their primary registry.
Licensing requirements: The amendments introduce a revised licensing framework for maritime services and port undertakings. They also impose licensing requirements on vessels below 15 net tonnes operating in Malaysian waters, subject to specified exemptions. Non-compliance with the applicable vessel licensing requirements may attract a fine of up to RM100,000 or imprisonment for up to two years, or both.
- Domestic shipping: The amendments reinforce Malaysia’s cabotage regime by regulating domestic shipping activities and maintaining restrictions on foreign vessels undertaking domestic shipping without the requisite authorisation.
National AI Office Issues Public Consultation Paper on the Proposed AI Governance Bill
On 10 July 2026, the National AI Office (“NAIO”) issued a public consultation paper on the proposed AI Governance Bill (“PCP“) for public feedback, and the consultation period concluded on 31 July 2026.
The PCP proposes the establishment of a comprehensive national foundation to govern the entire artificial intelligence (“AI“) lifecycle for AI systems marketed, developed, or operated in Malaysia, while exempting personal household use and national security.
The PCP proposes a three-part regulatory approach:
Institutional oversight: Establishing a Central AI Authority to enforce a national baseline in active coordination with sectoral regulators.
Principle-based framework: Setting out five core principles that focus on (i) human dignity and agency; (ii) transparency and explainability; (iii) clear accountability; (iv) safety and resilience; and (v) responsible data stewardship. Developers and deployers must demonstrate due regard to the phased implementation of these principles.
- Risk-based mandate: Introducing a three-tier risk framework comprising Unacceptable Risk, High Risk, and Low Risk, with risks evaluated against baseline harms such as death, bodily injury, unlawful deprivation of constitutional liberty, or legal contraventions.
Under the governance structure, the Central AI Authority will perform three core functions: (i) AI Safety to supervise risk assessments and testing; (ii) Investigation and Enforcement to investigate AI incidents and apply penalties, and (iii) AI Enablement for AI capacity building and sandboxes. Appointed sectoral leads will translate this national framework into sector-specific codes.
To maintain operational integrity, the AI Governance Bill has proposed to introduce structured incident reporting mechanisms allowing developers, deployers, and users to report system weaknesses, failures, or unexpected harms. It also establishes controlled AI sandboxes operated by the central authority or sectoral leads to facilitate supervised testing, model evaluation, and evidence-based policymaking under adjusted regulatory conditions.
The Digital Minister has indicated that the AI Governance Bill may be tabled before Parliament in early 2027.
MCMC Consults on Proposed Enhancements to the Communications and Multimedia (Licensing) Regulations 2000
On 21 September 2026, the Malaysian Communications and Multimedia Commission (“MCMC”) issued a public consultation paper on the proposed enhancements to the Communications and Multimedia (Licensing) Regulations 2000 (“Licensing Regulations”), inviting public feedback until 23 October 2026.
The Proposed Enhancements are particularly significant for applications service providers in the more recently regulated areas of cloud services, social media and internet messaging. Such providers should note the following key implications:
| Who You Are | What To Expect |
|---|---|
| Applications service providers (including cloud service, internet access, social media, internet messaging or IP telephony providers) or holders of other class licences |
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| Applications service providers operating outside Malaysia |
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| Deemed licensees (social media or internet messaging providers) |
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| Holders of individual licences |
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| All licensees |
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Together, these proposals aim to modernise Malaysia’s telecommunications licensing framework.
For a more detailed overview of the consultation paper, including key questions that licensees and prospective market entrants should be considering, click here to read our Legal Update.
High Court Rejects Listed Company’s Attempted “Redesignation” of Staff and Upholds Claim of Unfair Dismissal
In Minetech Resources Berhad (“Company”) v Abdul Farid bin Abdul Kadir (“Claimant”) & Anor (High Court, Kuala Lumpur, Judicial Review No. WA-25-349-09/2024), the High Court dismissed the Company’s judicial review application to quash an Award of the industrial Court, which had allowed the Claimant’s claim for unfair dismissal.
Facts
The Claimant was appointed as Non-Independent Non-Executive Director of the Company on 24 April 2020, and then re-designated as Executive Director of Finance on 12 June 2020.
On 13 November 2020, the Company informed the Claimant that, through a Board Resolution (“Board Resolution”), he had been redesignated from Executive Director of Finance to Non-Independent Non-Executive Director with immediate effect.
On 16 November 2020, the Company issued a letter informing the Claimant that his service with the Company as Executive Director of Finance had ceased on 13 November 2020, pursuant to the Board Resolution (“Notice of Cessation”), and that a sum of RM128,330.77 would be paid to him as salary in lieu of notice.
The Claimant filed a claim for unfair dismissal, which was allowed, leading to this judicial review.
The Company contended that the Board Resolution and Notice of Cessation were neither a dismissal nor a termination, but merely a re-designation which was justified by the Claimant’s poor performance.
Court’s Findings
The Court found that:
The Notice of Cessation referred to the Claimant’s Letter of Appointment dated 12 June 2020 which allowed either party to terminate employment with two months’ notice or salary in lieu.
The Notice of Cessation stated that the Company would pay the Claimant two months’ salary in lieu of notice.
- Read together, both documents constituted a letter of termination, and the Industrial Court’s finding that poor performance was not proven, as evaluation of evidence is the function of the Industrial Court.
Takeaways
Courts will go beyond labels used and examine the substance of what has occurred to determine whether there is a termination with just cause and excuse.
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice
