YKL Engineering Sdn Bhd v Sungei Kahang Palm Oil Sdn Bhd & Anor [2022] 6 MLJ 1

Introduction 

The case of YKL Engineering Sdn Bhd v Sungei Kahang Palm Oil Sdn Bhd & Anor [2022] 6 MLJ 1 represents a significant legal dispute in Malaysian intellectual property law, particularly concerning patent validity and copyright infringement. The litigation traversed multiple judicial levels, commencing at the High Court, proceeding to the Court of Appeal, and ultimately reaching the Federal Court of Putrajaya, which is the supreme court in Malaysia. The Federal Court bench consisted of Rohana Yusuf PCA (President of the Court of Appeal), Azahar Mohamed CJ (Malaya), and Zawawi Salleh FCJ (Federal Court Judge).

Parties

The appellant in this matter was YKL Engineering Sdn Bhd, a Malaysian company specialising in the design and manufacture of palm oil processing machinery. The respondents comprised two entities, which were Sungei Kahang Palm Oil Sdn Bhd (referred to as R1), which operated a palm oil mill and had purchased two allegedly infringing machines known as the SK Machines, and the manufacturer of those machines (referred to as R2). 

Facts 

The dispute originated when the appellant, YKL Engineering Sdn Bhd developed a prototype Fruit Bunch Splitter (FBS) machine and installed it at Keck Seng Bhd’s palm oil factory for operational testing purposes. On 12 January 2006, YKL filed a patent application for the FBS machine. The patent (Patent No. MY139512-A) was granted on 30 October 2009, and hence, the appellant became the registered patent holder of the Fruit Bunch Splitter (FBS) machine. 

Later, in April 2009, YKL conducted a demonstration of its FBS machine at R1’s (Sungei Kahang Palm Oil Sdn Bhd) premises with the intention of securing a commercial sale. Despite extensive negotiations and follow-up communications by the appellant, the transaction did not materialise. Subsequently, in September 2009 and January 2010, R1 procured two similar machines (the SK Machines) from R2 (a machinery manufacturer). 

The legal conflict emerged when YKL discovered in April 2011 that the SK Machines bore substantial resemblance to its patented FBS machine. YKL consequently initiated legal proceedings in the High Court, alleging both patent and copyright infringement against the respondents. The respondents countered by challenging the validity of YKL’s patent, contending that it lacked novelty and inventive step. The High Court ruled in favour of YKL, upholding the validity of both the patent and copyright while finding that infringement had indeed occurred.

Dissatisfied with this outcome, the respondents appealed to the Court of Appeal, which delivered a contrary judgment. The Court of Appeal reversed the High Court’s decision, as it declared that YKL’s patent was invalid due to anticipation by prior art and further ruled that copyright did not subsist in the technical drawings. 

YKL then filed a final appeal to the Federal Court, where several crucial pieces of prior art were analysed, including drawings of a Kim Loong Machine, the prototype machine at Keck Seng Bhd’s factory, and the Desa Kim Loong Machine.

Legal issues

The hearing at the Federal Court centered on a few principal legal issues. First, whether patent MY139512-A remained valid under the Patents Act 1983, and whether the Respondents had infringed this patent through their manufacturing, sale, or use of the SK Machines. Second, whether copyright protection existed for YKL’s technical drawings and whether the respondents had committed copyright infringement. 

Outcome 

In its unanimous decision, the Federal Court dismissed the appellant’s appeal and ruled in favour of the respondents, with no order as to costs. The court determined that YKL’s patent was invalid because the invention had been publicly disclosed prior to the patent’s priority date. In particular, it held that the prototype FBS machine installed at Keck Seng’s factory qualified as prior art. Regarding the issue of copyright, even though the court acknowledged that copyright subsisted in YKL’s design drawings, but it concluded that YKL had failed to establish all necessary elements to prove copyright infringement.

Legal reasoning/ ratio decidendi 

• In regard to patent

Regarding patent validity, the court emphasised the requirements under Section 11 of the Patents Act 1983 for a patent to be valid, which are novelty, involve an inventive step, and possess industrial applicability. The patent will be invalid if it lacks any of them. The crux of this dispute revolved around novelty. The concept of novelty, as defined in Section 14(1), requires an invention not to be anticipated by prior art. Section 14(2) further clarifies that prior art encompasses any disclosure to the public before the patent’s priority date, irrespective of the form such disclosure may take.

Therefore, the main question to be determined is whether the appellant’s patent is anticipated by prior art. The court examined three potential instances of prior art. 

• Desa Kim Koong Machine 

Regarding the Desa Kim Loong Machine, the court refused to consider it as prior art to invalidate the appellant’s patent for lack of novelty because the respondents had failed to specifically plead this in their claim. This decision was made based on Order 18 Rule 7(1) of the Rules of Court 2012, which requires material facts to be pleaded with specificity. The court explained that this pleading requirement exists to avoid an element of surprise and to prevent injustice and prejudice to the appellant. Since the Desa Kim Koong Machine was not pleaded in the respondents’ claim, it could not be considered as prior art to demonstrate the lack of novelty of the appellant’s patent.

• Prototype at Keck Seng’s factory 

The court determined that the prototype’s presence in Keck Seng’s mill constituted public disclosure, even though it was privately owned. The court noted that the prototype was located and operating in Keck Seng’s factory, where it was incorporated into and formed part of the whole process of mill operations at the premises. Importantly, the inventor of the SK Machines (from the respondent’s side) testified that he had seen the prototype prior to the priority date while performing contract work for Keck Seng, which subsequently led to the invention of a similar design.

This raised a critical sub-issue: whether the prototype of a patented machine that was kept on private property for testing purposes could be regarded as public disclosure under Section 14(2)(a) of the Patents Act 1983. The court eventually held that it did amount to public disclosure in this case. 

• Whether respondents have infringed the appellant’s patent

Regarding the question of whether the respondents had infringed the appellant’s patent, the court’s conclusion followed logically from its prior findings. Since the patent was held invalid due to lack of novelty, there could be no finding of patent infringement. This decision demonstrates an important principle of patent law, which is that infringement can only happen if the patent is valid.

• In regard to copyright 

The court’s analysis of the copyright issues was equally thorough. The court first assessed whether YKL’s technical drawings were protected under the Copyright Act 1987. The dispute centered on the copyright surrounding the design drawings of its fruit bunch splitter, which had been created by one of its employees and later reduced to material form. The court noted that the author had expended substantial effort to render the drawings original in character.

The court explained that YKL’s technical drawings had fulfilled all the elements required for copyright to subsist. First, the drawings belonged to one of the categories of protected works. In accordance with section 7(1) of the Copyright Act 1987, ‘artistic works’ are eligible for copyright protection. The court referred to section 3 of the Copyright Act 1987, which defines artistic works to include ‘graphic works’, which in turn are defined to include any ‘drawings’. Second, the drawings were reduced to material form. Third, they complied with the qualifications for copyright protection. Most importantly, the court found that the work was considered original. The court clarified that the concept of ‘originality’ in copyright law does not require that a work be completely new in comparison to existing works. Instead, sufficient efforts must have been expended in terms of time, labour and skills to make the artistic works original in character, as mentioned under section 7(3) of the Copyright Act 1987. In this case, since there were substantive efforts being made by the appellant’s employee in the design drawing, so the court concluded that copyright did subsist in the drawings.

Having established that copyright subsisted in the drawings, the court then examined whether there had been infringement. The court outlined three essential elements for establishing copyright infringement, which are (1) sufficient objective similarity between the works, (2) causal connection, and (3) that what had been copied constituted a substantial part of the original work. The court emphasised that the burden of proof for establishing these elements lay upon the appellant. After careful consideration, the court found that the appellant had failed to prove all of these elements. Consequently, the court ruled that no copyright infringement had occurred.

Critical analysis

The Federal Court’s decision in YKL Engineering Sdn Bhd v Sungei Kahang Palm Oil Sdn Bhd & Anor presents several significant legal implications that warrant careful examination. One of the most notable aspects of the ruling concerns the pleading requirements for prior art in patent invalidity challenges. While the Patents Act 1983 and Patents Regulations 1986 do not explicitly mandate that a party seeking to invalidate a patent on grounds of novelty must specifically plead the prior art, however, the court relied on Order 18 Rule 7(1) of the Rules of Court 2012, which requires material facts to be pleaded with sufficient particularity. This raises an important question: whether prior art should be considered a “material fact” that must be expressly pleaded.

The Federal Court affirmed that prior art must indeed be specifically pleaded to challenge a patent’s validity, emphasising the need for procedural fairness and the prevention of trial by ambush. This approach ensures that patent holders are not taken by surprise by unpleaded prior art introduced late in litigation. However, this strict pleading requirement has drawn criticism, as it may unduly restrict defendants from relying on newly discovered prior art that emerges during trial. The inflexibility of this rule could potentially hinder a robust defence against patent validity, particularly in cases where prior art surfaces only after thorough investigation during the discovery phase. A more balanced approach should be adopted to allow courts to exercise discretion in admitting unpleaded prior art where justified, provided that the opposing party is given adequate opportunity to respond.

Another contentious aspect of the decision is the court’s interpretation of “public disclosure” in relation to the prototype tested at Keck Seng’s factory. The court held that the prototype’s presence in an operational industrial setting, even though privately owned, still constituted public disclosure under Section 14(2) of the Patents Act 1983. This broad interpretation of public disclosure has significant ramifications for innovators, as it will discourage essential field-testing of prototypes. Innovation often requires real-world testing in controlled environments, and treating such testing as public disclosure could force inventors to choose between refining their inventions and preserving patent rights. 

Conclusion

In conclusion, the YKL Engineering case plays a significant role in Malaysian intellectual property jurisprudence. It clarifies important aspects of patent law, particularly regarding novelty and prior art, while reinforcing copyright protection for technical drawings. 

This case also serves as a critical reminder for inventors and businesses to file patent applications promptly, implement robust confidentiality measures during research and development, and adhere strictly to procedural requirements in litigation. Ultimately, this case provides a reflection on how Malaysia’s legal system can best foster innovation while maintaining fair competition in the marketplace.

Reference(S) 

Primary Sources

Statutes and statutory instruments 

Copyright Act 1987

Patents Act 1983 

Rules of Court 2012

Cases 

YKL Engineering Sdn Bhd v Sungai Kahang Palm Oil Sdn Bhd & Anor [2017] 11 MLJ 331
Sungei Kahang Palm Oil Sdn Bhd v YKL Engineering Sdn Bhd [2020] LNS 1072
YKL Engineering Sdn Bhd v Sungei Kahang Palm Oil Sdn Bhd & Anor [2022] 6 MLJ 1

Secondary Sources 

Websites

‘Malaysia: Federal Court Gave Much Needed Clarity On Patent and Copyright Infringement Issues’ (Adipven, 13 October 2022) <https://adipven.com/2022/10/13/malaysia-federal-court-gave-much-needed-clarity-on-patent-and-copyright-infringement-issues/> accessed 18 April 2025

Hawa Diyana Saim, ‘Invalidation of Malaysian Patent – Prior Art – No Surprises’ (Henry Goh & Co, 5 December 2022) <https://henrygoh.com/invalidation-of-malaysian-patent-prior-art-no-surprises/> accessed 18 April 2025