A Malaysian court has ordered the country's government to return 172 rainbow-coloured watches it seized from watchmaker Swatch last year.
The government said it took the timepieces from the Swiss company because they featured "LGBT elements" - homosexuality is illegal in Muslim-majority Malaysia and punishable by up to 20 years in prison.
However, a court ruled the government did not have a warrant to confiscate the items and a law prohibiting their sale was only passed later, making the seizure unlawful.
Malaysia's Home Affairs minister Saifuddin Nasution Ismail said the government's legal team will need to "examine the basis of the judgement" before deciding to appeal against the order.
He said the government "must respect the decision, or else it would be viewed as contempt of court".
He went on to say his ministry may appeal against the ruling but must first "examine the basis of the judgement thoroughly".
Authorities raided Swatch shops across Malaysia in May 2023, but an order prohibiting sale of the watches was not issued until August 2023.
Therefore, Swatch had not committed an offence at the time of the seizure, the court ruled.
But the prohibition order has not been overturned, so although the watches - worth $14,000 (£10,700) - have been returned they cannot be sold.
The authorities must hand back the items within 14 days, government prosecutor Mohammad Sallehuddin Md Ali told the Kuala Lumpur High Court today.
Swatch took legal action contesting the seizure in June 2023, arguing the product was "not in any way capable of causing any disruption to public order or morality or any violations of the law".
Homosexuality is illegal under both secular and religious laws in Malaysia.
Swatch described the Pride flag as a "symbol of humanity that speaks for all genders and races", but at the time of the confiscation, the Malaysian government claimed the acronym "LGBTQ" could be found on the watches themselves.
The Swiss manufacturer argued the company's reputation had been damaged and business had suffered after the seizures.
Malaysian authorities claimed the watches "may harm... the interests of the nation by promoting, supporting and normalising the LGBTQ+ movement that is not accepted by the general public".
The Swatch Group declined to comment.