Eugene Ee analyses the appellate court’s decision which summarily allowed a claim for copyright infringement.

In Siemens Industry Software Inc. v KB Engineering Coatings Sdn Bhd (Civil Appeal No. W-02(IM)(IPCv)-624-04/2022), the Court of Appeal overturned the High Court’s decision  in dismissing the Plaintiff/Appellant’s (“SIS”) summary judgment application against the Defendant/Respondent (“KB”) in respect of the former’s claim for infringement of copyright in its computer program known as NX12 and its license file (“Software”).

Background

The Software was originally registered in the name of Siemens Product Lifecycle Management Software Inc. (“SPL”) in the Copyright Office of the United States of America on 7 November 2017. SPL subsequently changed its name to SIS.

On 14 December 2020, Siemens Industry Software Pte. Ltd. (“SISW”) notified KB about its infringement of the copyright in the Software. KB conducted an internal investigation into the matter and discovered that one of its employees had used the Software allegedly for personal purposes.

On 29 January 2021, SIS’s compliance partner visited KB’s premises to investigate the matter and later concluded that the Software had indeed been infringed. Accordingly, SIS instituted an action against KB at the Kuala Lumpur Intellectual Property High Court for copyright infringement and thereafter applied for summary judgment on the basis that there were no triable issues which warranted a full trial.

Decision by the High Court

The High Court dismissed the summary judgment application as it found that the following issues could only be resolved at trial:

• Whether SIS had the locus standi to commence the action as its website showed that SPL had changed its name to “Siemens Digital Industries Software Inc.”, which was not a party to the action.
• Whether there was a “double claim” of copyright ownership as the notification of infringement was issued by SISW while the affidavit made pursuant to section 42 of the Copyright Act 1978 (“Act”) claimed that SIS was the copyright owner of the Software.
• Whether KB had indeed committed copyright infringement.
• Whether KB had knowledge of its employee’s conduct in downloading the unlicensed copy of the Software (“unlicensed software”).
• Whether KB, as an artificial personality, could be held liable for the employee’s actions.

Decision by the Court of Appeal

The Court of Appeal unanimously allowed the appeal and overturned the High Court’s decision as it found that the trial judge had erred on the following issues in dismissing SIS’s application.

SIS has the locus standi to commence the action

The Court observed that KB had failed to challenge SIS’s locus standi in its pleadings and therefore it was not an issue which warranted a determination by the trial judge to begin with. Additionally, the trial judge had erred by relying on his own internet research in questioning SIS’s locus standi instead of referring to the certificate issued by the Secretary of State of the State of Delaware that was adduced by SIS on its name change. In doing so, the trial judge’s approach was contrary to trite law as the facts in issue and the relevant facts must generally be established through evidence.

SIS is the copyright owner of the Software

The Court reiterated that copyright can be proved by way of an affidavit or statutory declaration made pursuant to section 42 of the Act. Given that SIS, through its authorised representative, had made an affidavit claiming copyright, such is prima facie evidence that the plaintiff is the copyright owner of the Software. Thus, the notification issued by SISW, which did not meet the requirements of section 42 of the Act, could not displace SIS’s prima facie ownership of the Software. The trial judge had erred in placing emphasis on SISW’s notification instead of SIS’s affidavit.

KB had infringed the copyright in the Software

The Court found that the requirement for copyright infringement under section 36(1) read with section 13(1) of the Act (i.e. that there was reproduction of the copyrighted work without the owner’s licence) had been established by virtue of the following:

• the on-site review by SIS’s compliance partner at KB’s premises confirmed that the unlicensed software was installed in the device;
• KB had admitted in writing that its employee had downloaded and used the unlicensed software; and
• SIS confirmed that it had never issued any licence to SIS for the reproduction of the Software, and KB failed to produce any such licence.

KB’s intention or knowledge is irrelevant

It was emphasised by the Court that a defendant’s lack of intention or knowledge pertaining to the infringement is not a statutory defence to copyright infringement. As such, it is not a triable issue to be determined at the trial.

KB is vicariously liable for its employee’s conduct

Despite KB’s contention that the unlicensed software was installed by its employee for his own personal use, the Court found there was no evidence in support of its contention. On the contrary, it was established that the unlicensed software was installed on the employee’s work laptop (i.e. KB’s property) and used during the course of his employment. Although KB is an artificial persona, it can still be held vicariously liable for its employee’s unlawful conduct.

Conclusion

The decision reinforces that Malaysian courts are willing to grant summary judgment in intellectual property cases, particularly involving a claim for copyright infringement, where the defendant fails to raise legitimate triable issues. The Court’s ruling also underscores the established principle that liability for copyright infringement is strict and does not require knowledge or intent on the part of the defendant.

For copyright owners, this case is a win for software protection in Malaysia. For businesses, it serves as a cautionary tale: the use of unlicensed software by employees — even without the employer’s knowledge — can result in serious legal consequences. To mitigate such risks, businesses should implement robust IT policies and safeguards to prevent unauthorized downloads and the use of unlicensed software within their organisation.

Eugene is a Partner at Wong Jin Nee & Teo. His practice principally focuses on contentious IP and commercial matters. Outside the courtroom, he assists clients in the enforcement of their IP rights by working closely with the Enforcement Division of the Ministry of Domestic Trade and Cost of Living (MDT) in coordinating raid actions against software pirates and counterfeiters.