The Importance of Intellectual Property in Economic Development

The Importance of Intellectual Property in Economic Development

The K-economy

Malaysia is emerging with a “new” notion of workplace literacy, taking the form of what is called a knowledge-driven economy or k-economy. This means that employees no longer enter a company with the expectation to have a stable or lifelong employment, because they know that employers will choose to retain employees primarily based on their skills and knowledge.

This means knowledge is now a commodity which carries a lot of financial value.

However, many people don’t quite understand the
importance of intellectual property (IP), especially in
the role it plays in the k-economy in Malaysia.

Awareness of Intellectual Property in Malaysia

IP provides individual owners of industrial design, copyrights, patents, trademarks and geographical indications as well as utility innovations a monopoly over an invention or an original work for a specific period of time. In turn, this protection serves as a means to secure a return on investment from the innovation.

Only a third of patent applications in Malaysia are filed by local companies. This means we are still paying a hefty price to import knowledge and technologies from foreign countries.

To put it in perspective, developed countries, for instance, China, receives 1.2 million patent applications on average each year. Comparatively, we only get around 8,000. Our neighbour, Singapore, receives about 10,000, the US sees about 600,000 and Japan, around 560,000.

If the economically dominant countries are doing it in such large quantities, then clearly there is an inherent value in IP protection. Employers are also very willing to invest in the skills of their employees to improve productivity and the profitability of the company. Training costs can be substantially higher than that of academic education but are justified when the value of the company’s earnings and productivity exceed the cost of the training.

However, creating new knowledge or skills is one thing, but commercialising or making people accept your invention is a different ball game altogether. That’s probably the number one deterrent factor of a lower patent applications.

Malaysians need to learn to convert their IP into
monetary value and look at IP as a tool to improve
their international standing.

During the pre-internet era, IPs were probably seen as a less valuable and even an unnecessary procedure in a company or an individual’s career. But starting from as early as the 2000s, the widespread use of the internet makes copying so much easier. At the same time, Malaysia was transitioning towards becoming a knowledge-based economy. The role of IPs was seen as paramount. As a result, MyIPO (which was then known as the Intellectual Property Corporation of Malaysia) was corporatised in 2003 and enforced in accordance with the Intellectual Property Corporation of Malaysia Act 2002.

Prior to this, IP rights in Malaysia were administered by the humble Pejabat Cap Dagangan dan Jaminhak, which was renamed Pejabat Cap Dagangan dan Paten and, subsequently renamed again as the Trade Marks Act 1976 and Copyright Act 1987. The Industrial Designs Act 1996 came into force in 1999, followed by the Layout Designs of Integrated Circuits Act 2000 and the Geographical Indications Act 2000.

All these changes and adaptations showed that the Malaysian government has been adamant in encouraging awareness of what IPs are and can do. Even so, not many people were filing for patents or offering such services because there weren’t many lawyers with the appropriate technical background. Malaysia didn’t have many technical experts in areas like pharmaceuticals, engineering, and biotechnology. It was easier to just accept foreign applications with established patent systems and portfolios.

In addition, many still misunderstand the rights they get with a patent. It doesn’t mean nobody can copy their designs. What it means is that when you have a patent registration under your name or your company’s name, it gives you a legal tool to take patent infringement action against imprints. In a way, you can’t stop others from copying, but you will have a document to support your patent infringement case at court.

Patents in Government Organisations and Private Companies

Patents generally protect technologies which comply to the three requirements: processes or products that are new, inventive and industrially applicable.

In the one-third of Malaysia’s patent applications originating locally, most of them are filed by government-linked organisations such as research institutions and universities This is unfortunate – R&D isn’t exactly a cheap exercise, especially as success is not guaranteed. We all know public universities and the organisations struggle with the finances needed for commercialisation.

It takes a lot to bring an invention up to an industry scale, involving a lot of money, resources and time. Universities are not even looking at breaking even, so it’s very unsustainable in the long run as government funding for research is constantly shrinking.

In developed countries, private companies are actually the front runners for patent applications. Private companies typically have the proper funding and they can evaluate the monetary value of these IPs in the long run as they are more motivated by finances and technological advancement, much more than government-funded research which is primarily driven by “knowledge for the greater good”.

It’s not that Malaysian private business owners don’t invent anything new, it’s just that there are misconceptions that IPs are like insurance, that you only need them when you face a problem. IP is not what you require when you’re in trouble. By then, it is often too late.

IP is something you need when you are still small
because you never know when you will get hit.

No matter how small an invention is, it can still be copied, at the cost of your time, effort, and money to build and market the product. IPs are intangible assets that is to be viewed as an investment, the same as spending on fixed assets for your office.


If there’s one thing you must takeaway from this article, it is this: at the very least, the name of your company should be trademarked.

The biggest risk a company takes is always its employees. You trained your employee well and a few years later, after he has learnt everything, he leaves to start his own company. He could contact your clients and say he is still representing you or is still linked to your company to push his products.

Having your brand name trademarked can at least protect you from anything that is associated with your brand or logo. It is not a magic wand, but will give you at least some leverage, should an infringement case be brought to court.