The court emphasized the burden of proof lies with the patent holder to establish infringement and upheld that a patent can be invalidated due to prior art.

Introduction

[1] The 1st appellant (the 1st plaintiff in the High Court) is the owner of Malaysian Patent MY-125572A relating to an apparatus and process for the manufacture of mosquito coils ("the patent"). The 2nd appellant (the 2nd plaintiff in the High Court) is in the business of manufacturing and exporting mosquito coil making machine known as "Yeohata" The appellants are seeking for orders to, inter alia, restrain and/or prohibit the respondents from infringing the patent and using the confidential information of the appellants, delivery of books, records and other documents relating to the patent, damages and costs.

[2] The respondents (the 1st, 2nd and 3rd defendants in the High Court) have counterclaimed for the invalidation of the patent on the ground that there is prior art.

[3] At the conclusion of the trial of the action, the High Court dismissed the appellants' claim with costs and allowed the respondent's counterclaim for the invalidation of the patent with costs. The appellants have appealed against the decision of the High Court. In this judgment, we will refer to the parties as they were referred to at the High Court.

Background Facts

[4] The 1st plaintiff's application for the patent bearing the title "Improvement in mosquito coil production" was filed on 21 October 1997 and the patent was granted on 30 August 2006. According to the Certificate of Grant of the patent, the inventor is one Loo Yuen Weng and the patent owner is the 1st plaintiff.

[5] The invention provides apparatus for the production of mosquito coils in which much of the handling of the trays is automatically carried out and in which many of the operations which in the prior art apparatus are effected mechanically, can be effected pneumatically or hydraulically.

[6] The 2nd plaintiff was granted the licence by the 1st plaintiff to manufacture the Yeohata and to deal with all confidential information relating to the apparatus and process of the Yeohata.

[7] The 2nd defendant was a Director and Marketing Manager in Moscoil Enterprise (M) Sdn Bhd ("Moscoil") which was appointed as the marketing arm of the 2nd plaintiff. The 3rd defendant is the son of the 2nd defendant; he was, at the material time, working as the Research and Development Engineer of the 2nd plaintiff.

The Plaintiffs' Case

[8] The plaintiffs' claim is predicated on the following causes of action: (i) Infringement of the patent, (ii) Breach of confidential information, (iii) Breach of fiduciary duties, (iv) Fraudulent misrepresentation; and (v) Conspiracy to injure.

[9] Briefly stated, the plaintiff's case is that:

(i) in their respective capacities, the 2nd defendant had acquired confidential information relating to the sale, marketing and customers of the plaintiffs and the 3rd defendant had acquired confidential information relating to the manufacture, production and operation of the Yeohata;

(ii) in breach of their fiduciary duties, the 2nd and 3rd defendants incorporated the 1st defendant company to manufacture and sell mosquito coil making machine by the trade name "Coilmaster MK-1" without the consent of the plaintiffs which is an infringement of the patent; and

(iii) the defendants conspired to defraud and injure the plaintiffs in its business in that the defendants have induced a potential customer of the 2nd plaintiff and of Moscoil Enterprise (M) Sdn Bhd, an Italian company by the name of Zobele International BV to be a shareholder of the 1st defendant company in a bid to induce other customers to switch over to the 1st defendant's machines.

[10] Before us, the learned counsel for the plaintiffs premised his appeal on the following five main grounds:

i. The learned trial judge misdirecte