# Who Owns the IP Your Staff and Contractors Create?

> Each Malaysian IP statute vests employee and commissioned work differently, trademarks have no vesting rule at all, and every default can be displaced by a contract nobody read.

- Category: business
- Language: en
- Status: published
- Updated: 2026-07-20
- Canonical: https://negaraku.md/en/business/ip-ownership-malaysia

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A Malaysian founder about to sign a term sheet is asked for the IP assignments.
There are none. The designer was a freelancer, the first version of the platform
was written by a friend before the company existed, the logo came from an agency
whose terms nobody read, and the trademark is registered in the founder's
personal name. Everyone assumed that paying for something meant owning it.

In Malaysia that assumption is, unusually, mostly correct — and that is exactly
why nobody documents it, and why it falls apart at diligence.

## The four statutes vest ownership four different ways

There is no single rule. Each Act has its own provision, and they do not line up.

| Right | Employee work | Commissioned work | Provision |
| --- | --- | --- | --- |
| Copyright | Deemed transferred to the employer | Deemed transferred to the commissioner | Copyright Act 1987, s.26(2) |
| Patent / utility innovation | Rights accrue to the employer | Rights accrue to the person who commissioned the work | Patents Act 1983, s.20(1) |
| Industrial design | Employer is original owner | Commissioner is original owner, if commissioned for money or money's worth | Industrial Designs Act 1996, s.10(2) and (3) |
| Trademark | **No provision at all** | **No provision at all** | Trademarks Act 2019 |

Every one of the first three is expressed to operate *subject to any agreement to
the contrary*. They are defaults, not mandatory rules.

## Copyright: Malaysia is not the UK

Section 26(1) vests copyright initially in the author. Section 26(2) then
overrides that in two cases. Where a work **is commissioned by a person who is
not the author's employer under a contract of service or apprenticeship**, or
where it is **made in the course of the author's employment**, the copyright is
deemed to be transferred to the commissioner or the employer, subject to any
agreement between the parties excluding or limiting the transfer.

Most startup templates in circulation are drafted for jurisdictions where the
opposite is true — where a contractor keeps copyright unless there is an express
assignment. Malaysian law starts from the other end. Three qualifications kill
the comfort:

**It requires a commission.** Buying an off-the-shelf product, or receiving work
the author had already made, is not commissioning it. Section 26(2) attaches to
work created pursuant to the commission.

**The contract wins.** Agency terms of business, dev-shop master agreements and
freelance-platform terms very often say the supplier retains ownership and grants
a licence. That is an agreement excluding the transfer, and it displaces s.26(2)
entirely. This is the single most common finding at diligence.

**It is a deemed transfer, not first ownership.** The author still owns it at the
moment of creation. Which means moral rights under s.25 — the right to be
identified and to object to distortion, mutilation or modification prejudicial to
honour or reputation — remain with the author regardless of who holds the
copyright, and cannot be exercised against them without the author's consent.

Note also that s.26(2) is expressed to apply *notwithstanding s.27(6)*, the
provision permitting assignments of future works. And s.27(3) bites separately:
no assignment of copyright and no licence has effect unless in writing. A verbal
side deal with a contractor conveys nothing.

## Patents: the one term you cannot contract out of

Section 20(1) gives the rights to a patent for an invention made in the
performance of a contract of employment, or in the execution of commissioned
work, to the employer or the commissioner — *in the absence of any provisions to
the contrary*.

Two provisos change the commercial picture, and almost no Malaysian employment
contract addresses them:

- **s.20(1) proviso:** where the invention acquires an economic value much
  greater than the parties could reasonably have foreseen when the contract was
  concluded, the inventor is entitled to equitable remuneration, fixed by the
  Court if the parties do not agree.
- **s.20(2):** where an employee whose contract does *not* require inventive
  activity makes an invention in the employer's field of activities using data or
  means placed at his disposal by the employer, the right accrues to the employer
  — but the employee is entitled to equitable remuneration, taking into account
  his emoluments, the economic value of the invention and the benefit derived by
  the employer.

Then **s.20(3): the rights conferred on the inventor under subsections (1) and
(2) shall not be restricted by contract.** An assignment clause that purports to
extinguish the inventor's remuneration right does not work. Section 21 applies
the same regime to Government employees, unless the organisation's own rules
provide otherwise.

Separately, s.19 lets a person from whom the essential elements of an invention
were unlawfully derived apply to the Court to have the application or patent
assigned to him — but not more than six years after grant.

## Industrial designs: the consideration requirement

Section 10(1) makes the author the original owner. Section 10(2) transfers that
to the person commissioning the design, but only where the design is created
**in pursuance of a commission for money or money's worth**. An unpaid
collaboration, an intern arrangement with no consideration, or a design supplied
speculatively does not engage it. Section 10(3) covers employee designs created
in the course of employment. Both are subject to contrary agreement. Section
10(6) deals with computer-generated designs with no human author, treating the
person who made the arrangements necessary for creation as the author.

## Trademarks: no rule at all

The Trademarks Act 2019 contains nothing equivalent. Section 17(1) simply allows
any person claiming to be the bona fide proprietor of a trademark to apply. The
register records whoever applied.

That is how an agency ends up owning your mark, or a founder holds it personally
while the operating company trades under it, or a mark ends up in a dormant
holding entity nobody remembers. Fixing it is an assignment under s.64 plus a
recordal under s.65 at RM300 — cheap, but only once someone notices.

## What an assignment actually needs

**In writing, signed.** Copyright s.27(3); Patents s.39(3)(b), signed by or on
behalf of the contracting parties; Industrial Designs s.29(3); Trademarks
s.64(3), signed by or on behalf of assignor and assignee or a personal
representative.

**Precise about what is assigned.** Identify the works, inventions, designs and
marks. Partial assignments are allowed — Trademarks s.64(2) permits an assignment
limited to some of the goods or services, and Copyright s.27(2) permits limits by
act, period or territory. Silence about scope is a dispute in waiting.

**Forward-looking.** Copyright s.27(6) expressly allows an assignment or licence
of a future work, or an existing work in which copyright does not yet subsist.
That is the clause that makes an employment or contractor agreement work
prospectively rather than requiring a fresh assignment per deliverable.

**Explicit about moral rights.** Section 25 rights sit with the author. An
assignment that does not deal with the author's consent leaves you unable to
modify or re-present the work without argument.

**Recorded.** This is the step that gets skipped, and it has teeth:

- **Patents s.39(4):** no assignment, transmission or security interest has
  effect against third parties unless recorded in the Register.
- **Trademarks s.65(2):** until an application to record is made and approved, the
  transaction is ineffective against a person acquiring a conflicting interest in
  ignorance of it. And **s.65(3)** denies the new proprietor damages or an account
  of profits for any infringement occurring between the transaction date and the
  date of the application to record. Delay is not neutral; it costs you remedies.
- **Industrial Designs s.30:** a person entitled by assignment or transmission
  applies to have it recorded.
- **Copyright:** there is no register of title, but a notification of assignment
  on Form CR-11 costs RM50 and feeds into the Register of Copyright, whose
  certified extracts are prima facie evidence under s.26B(5).

## Common mistakes

**Relying on the statutory default without reading the supplier's terms.** The
default is displaced by any contrary agreement, and most professional suppliers
have one.

**Treating a purchase order as a commission.** Section 26(2)(a) needs the work to
be commissioned; s.10(2) of the Industrial Designs Act needs money or money's
worth. Buying finished goods is neither.

**Forgetting pre-incorporation work.** Anything a founder built before the company
existed was commissioned by nobody and created in the course of nobody's
employment. It needs an actual assignment, executed after incorporation.

**Assuming an employment contract covers contractors.** A contract of service and
a contract for services engage different limbs of s.26(2), and the industrial
design and patent provisions treat them differently again.

**Assigning but not recording.** Patents s.39(4) and Trademarks s.65(2) and (3)
make an unrecorded assignment weak against third parties and expensive in lost
remedies.

**Ignoring the inventor's remuneration right.** Section 20(3) makes it
non-excludable. A clause purporting to waive it is unenforceable, and the Court
sets the figure if the parties cannot agree.

## What's next

Build the chain of title backwards from every material asset: who made it, under
what contract, and is there a signed document. Where the statutory default does
the work, say so in a file note. Where it does not — supplier terms, pre-formation
work, a mark in the wrong name — execute an assignment now and record it, because
Trademarks s.65(3) charges you for waiting.

## Sources

- Copyright Act 1987 (Act 332) — https://www.myipo.gov.my/wp-content/uploads/2025/09/Copyright-Act-1987-Act-332.pdf (MyIPO)
- Patents Act 1983 (Act 291), updated text as at 1 November 2023 — https://www.myipo.gov.my/wp-content/uploads/2025/09/Patents-Act-1987-Act-291.pdf (MyIPO)
- Industrial Designs Act 1996 (Act 552) — https://www.myipo.gov.my/wp-content/uploads/2025/09/Industrial-Designs-Act-1996-Akta-552.pdf (MyIPO)
- Trademarks Act 2019 (Act 815) — https://www.myipo.gov.my/wp-content/uploads/2025/09/Trademarks-Act-2019-Act-815.pdf (MyIPO)
- Trademark Forms and Fees — recordal of assignment, licence and security interest — https://www.myipo.gov.my/trademark-forms-and-fees/ (MyIPO)
- Notifying Copyright — Form CR-11, notification of assignment or licence — https://www.myipo.gov.my/notifying-copyright/ (MyIPO)

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Source of truth: https://github.com/negaraku-md/NegaraKu.md
License: CC BY-SA 4.0