Intellectual property protection in the e-commerce era: What has changed recently in South-East Asia?

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WRITTEN BY XUAN NGUYEN

 

Over the past few years, South-East Asia (SEA) has witnessed a huge shift to, and booming expansion in, online shopping platforms. As a result, counterfeiters have also quickly adapted to the new trade environment, making large profits by flooding the digital marketplace with a huge amount of counterfeit products. At the same time, governmental agencies need months or even years to update their regulations and rules to catch up. In this article, we will update you on how regulatory authorities in SEA are stepping up to tackle intellectual property (IP) infringement issues in the e-commerce market.

Global consumer shopping habits have changed considerably over the years. According to research conducted by Salesforce, 87% of customers conduct online searches while making decisions on purchases[1]. This has driven brand owners to embrace this trend and shape consumer habits in a way that is favourable for their growth. For example, nowadays live-streaming tactics or the opinions of influencers are very effective solutions for leveraging product sales. In a new report from Payoneer[2], since the height of Covid-19 (March–April 2020), the live-streaming sector has grown by 45% and the live-streaming market is expected to be worth USD 184.3 billion by 2027.

Photo source: https://www.pexels.com/

Photo source: https://www.pexels.com/

More importantly, the Covid-19 pandemic has been one of the most influential factors ever to accelerate digitalisation and shift businesses and consumers online. The new e-Conomy South-East Asia (SEA) research program[3] by Google, Temasek and Bain has revealed significant changes in the digital life of the region. In 2020 alone, 40 million new users joined the internet, making a total of 400 million internet users (which now accounts for 70% of the South-East Asian population). On average across SEA, one of every three (~36%) digital service consumers are new to the service due to Covid-19, and 94% of those intend to continue with the service post-pandemic.

From a legal perspective, the thriving evolution of the digital market has also created a fertile ground for listings that infringe on IP. Let’s take a deeper look at the development of the counterfeiting market online in some SEA countries and analyse the government reactions to these threats.

In Vietnam, during 2020, the national market surveillance agency carried out a high number of raids and seized fake products bound for the market through online sales. Many Vietnamese sellers are willing to pay to advertise their products in order to reach a large audience on Facebook, YouTube, TikTok or Zalo (a widely used messaging app). Live-streaming is used to present products to consumers and encourage them to commit to purchases in a short time. This quickly increases sales of overwhelmingly counterfeit products. For example, vendors in Lao Cai Province (located near the border with China) sourced products from China to sell online, and have made approximately USD 28 million within the past two years[4].

Photo source: https://e.vnexpress.net/

Photo source: https://e.vnexpress.net/

In December 2019 Vietnam’s Ministry of Industry and Trade (MoIT) launched a portal http://chonghanggia.online.gov.vn/ to deal with e-commerce disputes and counterfeits. Individuals and businesses can now access the portal and report infringing activities, such as fake products, brand violations, fraudulent websites or apps, etc. After receiving the information, the respective agencies (such as the eCommerce and Digital Economy Agency, the Market Surveillance, Competition and Consumer Authority, and the Department of Industry and Trade) will work together to settle the case and inform the complainant about the result.

Moreover, a new e-commerce decree has been drafted and is expected to be released soon. This will restrict the sales of fake goods on e-commerce platforms and monitor online trading activities. The decree states that e-commerce platform operators are required to proactively prevent prohibited goods and services, remove them within 24 hours of receiving a request from competent agencies, and to co-operate with relevant rights holders to take-down IP-infringing content or products[5].

Another interesting country to observe is the Philippines, which has witnessed an unprecedented surge of IP-violation complaints during the pandemic. The IP Rights Enforcement Office (IEO) of the IP Office of the Philippines (IPOPHL) received up to 135 complaints in only 9 months in 2020, surpassing the total complaints received in the previous 5 years (2015–2019)[6].

Photo source: https://www.ipophil.gov.ph/

Source: https://www.ipophil.gov.ph/

Among the 135 complaints, 79 are related to online activities. With the alarming increase of IP-violation reports on digital platforms, the IPOPHL set the IEO the task of proposing updates to the 2013 Rules and Regulations on Enforcement as a high priority in order to help the agency to effectively monitor infringement online.

In addition, the IPOPHL is working on an agreement between e-commerce platforms and representatives of rights holders related to requests to take-down IP-infringing content or products. The IPOPHL also strongly supports the adoption of the solidary liability principle in order to improve the online environment by making platforms and service providers entirely accountable for the infringing acts of their client vendors.

Thailand saw a sharp increase in seizures related to IP violations over the course of 2020. According to IP enforcement statistics from the Royal Thai Police[7], the Department of Special Investigation, and the Customs Department, the number of seized items from January to November 2020 (compared with the total amount of seized items in 2019) increased dramatically, by up to 3 427.01%. The majority infringed trade marks and copyright.

IP Enforcement Statistics (Calendar Year) (by the Royal Thai Police, the Department of Special Investigation and the Customs Department) January – November, 2020 Source: https://www.ipthailand.go.th/

IP Enforcement Statistics (Calendar Year) (January – November 2020)
(by the Royal Thai Police, the Department of Special Investigation and the Customs Department) 
Source: https://www.ipthailand.go.th/

To encourage the fight against online counterfeiting, a Memorandum of Understanding (MOU) on the protection of IP rights on the internet was signed between the major online platforms operating in Thailand (Lazada, Shopee, and JD Central) and the representatives of IP rights holders on 11 January 2021[8]. This MOU is expected to facilitate the take-down process on e-commerce platforms, and reduce the amount of fake products being sold online in Thailand.

According to a recent report from the European Commission (the Counterfeit and Piracy Watch List[9]), Indonesia has three e-commerce sites (Bukalapak, Shoppee, Tokopedia) that are to be included in the watch list. They allegedly sell high volumes of counterfeit goods such as electronics, clothing, fashion items, accessories, books, films, mobile phones, cars, spare motor parts and industrial goods. These sites are the top three most popular B2B platforms in the country – Shopee is the most clicked e-commerce site, followed by Tokopedia and Bukalapak. The proactive measures for filtering and detecting infringing offers on the above-mentioned sites are allegedly ineffective, and their processes for removing counterfeit listings are still unreasonably long.

While online counterfeiting is becoming a critical issue in Indonesia, the government has made some initial progress in addressing concerns about it by recently issuing Regulation No. 80 of 2019[10] and Regulation No. 50 of 2020[11]. These regulate several aspects of e-commerce trading, and includes obligations for protecting consumers. The regulations state that e-commerce businesses must provide a complaint service for consumers, must have proper complaint procedures, and must set out a time period for resolving complaints. Moreover, e-commerce operators have to establish a consumer complaint service including the contact details of the Directorate-General of Consumer Protection and Trade Compliance. In addition, consumers can make complaints about online ads that are not in compliance with the relevant laws and regulations through the Director-General of Consumer Protection and Trade Compliance.

Due to SEA’s geographical proximity to China (known as a hotspot for counterfeiting goods but also as a booming centre of online trading), significant efforts are required from governmental agencies in SEA to improve regulations, enhance the effectiveness of their enforcement agencies and establish user-friendly complaint systems to deal with thriving IP-infringing listings in the digital trading environment.

Importantly, IP rights owners should proactively monitor e-commerce and social media platforms to detect counterfeits and quickly proceed with the most appropriate resolution such as take-down notices, warning letters or informing the competent authorities so they can remove the IP-infringing items.

The SEA IP SME Helpdesk developed and published a Guide on How to Remove Counterfeit Goods from e-commerce Sites in South-East Asia, which can be downloaded here.

For more information about IP in SEA, check out our website at https://www.southeastasia-iprhelpdesk.eu/.

The SEA IP SME Helpdesk is an EU initiative that provides free, practical IP advice to European SMEs in SEA. EU companies can send questions to question@southeastasia-iprhelpdesk.eu and will receive a reply within 3 working days.

[1] https://www.salesforce.com/blog/customer-retail-statistics/

[2] https://register.payoneer.com/the-state-of-live-streaming-in-2020/

[3] https://www.bain.com/globalassets/noindex/2020/e_conomy_sea_2020_report.pdf

[4] https://e.vnexpress.net/news/business/economy/vietnam-unhappy-with-facebook-s-lack-of-support-for-tackling-fake-goods-4135371.html

[5] https://www.vir.com.vn/new-draft-decree-tackles-e-commerce-drawbacks-77765.html

[6] https://www.ipophil.gov.ph/news/jan-sept-2020-reports-complaints-on-ip-infringement-surpasses-2015-2019-total/

[7] https://www.ipthailand.go.th/en/ipr-enforcement-operation/item/total2020.html

[8] https://satyapon.com/mou-on-protecting-ip-rightd-on-the-internet-signed/

[9] https://trade.ec.europa.eu/doclib/docs/2020/december/tradoc_159183.pdf

[10] https://www.aseanbriefing.com/news/indonesias-law-on-e-commerce-clear-guidelines-and-compliance-by-november-2021/

[11] https://www.aseanbriefing.com/news/indonesia-issues-implementing-regulation-e-commerce-sector-key-features/

Online services of intellectual property offices in South-East Asia

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WRITTEN BY XUAN NGUYEN

Digitalisation has changed the way intellectual property (IP) offices operate, and made them more effective. During the Covid-19 pandemic, when many IP offices were physically closed, online systems played an essential role. Thanks to this, filing and processing services avoided disruption.

Photo source: https://pixabay.com

Photo source: https://pixabay.com

Let’s explore how the South-East Asian IP offices improved, and are still improving, their online systems and what type of online services are currently available!

  1. Brunei

To increase efficiency of the services, the Brunei Intellectual Property Office (BruIPO) has recently launched an e-filing portal for patents, trade marks, industrial designs and post-filing. For more information on how the e-filing works, check out here.

There is also an online database (here) that allows companies to search for IP rights such as patents, trade marks and industrial designs which have been registered or applied in Brunei.

  1. Cambodia

Cambodia launched an online filing system for trade mark registration in 2017. Following recent updates to reduce the need for in-person filings during the Covid-19 pandemic, the Department of Intellectual Property (DIP) has urged applicants to make use of the e-filing system as much as possible. The DIP expanded the e-filing system to include post-registration services such as renewals, the submission of affidavits of use/non-use, responses to refusals, and the appointment of a new agent.

To use the system you must create an account with the DIP and also possess a local bank account. It is only open to domestic applicants and registered IP agents. The portal can be accessed here.

In addition, a trade mark search can be conducted online via the Cambodia Trademark Database, here.

  1. Indonesia

The Indonesian Directorate General of Intellectual Property (DGIP) officially launched a new, mandatory e-filing system in 2019. Online filing has been continuously improved and covers almost all aspects of the registration process, from searching or filing to post-filing for patents, trade marks, designs and copyrights. For further information, please click here.

  1. Laos

An online system providing information and services has been developed, it was launched in February 2019 and is now operational. Although the e-filing services are not yet functioning, the trade marks database can be accessed. The Department of Intellectual Property (DIP) has begun to publish the Official Gazette for trade marks and geographical indications (GIs) on a regular basis. Detailed information can be found here.

  1. Malaysia

The Intellectual Property Corporation of Malaysia’s (MyIPO’s) offers online searches and filing services for patents, trade marks, industrial designs and GIs. This system also allows applicants to check the status of their pending IP applications. For more detailed information, please click here.

  1. Myanmar

Myanmar recently launched an e-filing system for trade marks. However, the system can only be used by IP agents. For more details, please click here.

  1. The Philippines

The e-service portal of the Intellectual Property Office of the Philippines (IPOPHL) is very comprehensive. It covers almost all aspects of the process, from searches or filing to post-registration steps for patents, trade marks, designs and copyrights. Further information can be found here.

  1. Singapore

The Intellectual Property Office of Singapore (IPOS) provides comprehensive IP databases. You can use the e-services portal here. It provides effective and comprehensive functions for searching, filing, amending and renewing patents, trade marks and designs. In addition, you can also download the IPOS Go app for on-the-go access to key functions for new trade mark applications, IP renewals (trade marks, patents and designs) and IP searches.

  1. Thailand

The Thai Department of Intellectual Property (DIP) introduced an e-filing system for copyright, patents and trade marks in 2016. The system, however, needs substantial improvements as it is quite unstable, and the e-filing portal is displayed in Thai only (no English version is currently available). For more information, please click here.

  1. Vietnam

The National Office of Intellectual Property of Vietnam (NOIP) launched an Online Public Service portal that covers both filing and post-filing tasks for patents, designs and trade marks. The services are open for both local agents and applicants domiciled in Vietnam. However, the NOIP now only grants account access to applicants who have already been assigned an electronic signature. Check it out here.

Conclusion

The online systems of IP offices in South-East Asia have been hugely improved over the past few years, especially during the Covid-19 pandemic. More improvements are expected in the upcoming years.

Photo source: https://pixabay.com

Photo source: https://pixabay.com

It is worth noting that the online filing systems in South-East Asian countries can only be used by local IP agents or companies with office addresses in the country in question (except for Myanmar where only agents can use the e-filing portal). If a foreign applicant does not reside or carry out their principal business in the country, a local IP agent must be appointed to work with the IP office on their behalf.

For more information about IP in South-East Asia, check out our website at https://www.southeastasia-iprhelpdesk.eu/.

The South-East Asia IP SME Helpdesk is an EU initiative that provides free, practical IP advice to European SMEs in South-East Asia. EU companies can send questions to question@southeastasia-iprhelpdesk.eu and will receive a reply within 3 working days.

TEN HIGHLIGHTS OF CHINA’S NEW PATENT LAW

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Written by Mr. Jian Xu, IP Expert and collaborator of the China IPR SME Helpdesk

On 17 October 2020, China approved the fourth amendment to the China Patent Law (CPL), which will take effect on 1 June 2021. It has been 12 years since the last amendment made in 2008, so there a number of notable changes. Below is a brief summary of the highlights of the new CPL.

Design patents

There are two significant changes to the design patent in China via design patent term extension and the introduction of partial designs.

1. Partial design allowed

“Partial designs” is formally introduced in China. This is in line with international practice such as in the USA, Europe, UK, Japan and Korea. A significant boost of design filing activity can be expected due to allowance of this new category of design patents.

2. Design patent term extended to 15 years

The term of design protection has extended from 10 years to 15 years. This signals that China is under preparation to join the Hague system, which stipulates a minimum of 15 years protection term for member countries.

Phamarceutical patents

Another significant change is in the area of pharmaceutical patents through patent term compensation and introduction of patent linkage system. Continue reading “TEN HIGHLIGHTS OF CHINA’S NEW PATENT LAW” »

Revision of PRC Patent Law

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Charles Feng
Partner Attorney-at-Law
East&Concord Partners

On October 17 2020, Xinhua News Agency revealed the progress of the revision of eight laws, which includes the fourth revision of the PRC Patent Law (the “Law”). The revision attracted huge attention from international IP communities as it addressed multiple issues that has been awaited by international and domestic IP owners.
According to the disclosed information, the revision will substantially strengthen the protection in multiple aspects.

I. Enhancement of Protection for Interests of Patentee
1. Increase of damages against patent infringements
2. Perfection of the system of burden of proof
3. Addition of principle of honesty and trust in patent law
4. Perfection of the administrative protective mechanism against patents
5. Addition of patent term compensation system as well as patent infringement solution mechanism in earlier stage

II. Promotion of implementation of patents
1. Perfection of employment invention system
2. Addition of open licensing system for patents
3. Perfection of system for grant of design patents
4. Addition of situation of grace period of novelty
5. Perfection of patent evaluation report system

III. Enhancement of protection of patents
1. Addition of punitive damages
Chinese courts are authorized to rule the punitive damages as much as one to five times of amount as calculated on basis loss of right owner, profits made by infringer as well as multiplies of royalties.
2. Increase of statutory damages
The statutory damages are increased from CNY 3 million to CNY 5 million, the minimum amount of damages is increased to CNY 30 thousand

IV. Perfection of Design patent system
1. Addition of protection against partial design
2. Extension of term of design patent protection from 10 years to 15 years
3. Addition of domestic priority system against design patents

V. Addition of situation for exception of loss of novelty
In order to deal with emergent situation including control of pandemic as well as promote the timely use of invention and creation to solve the public health issue, the revision added the situation “when the situation of emergency or specialty occur, the first publication for the public interests” as an “exception for loss of novelty”.

Mr. Feng is an IP Specialist with substantial experience on intellectual property and anti-trust law. Mr. Feng was ranked as one of Top 15 China IP Lawyers by Asian Legal Business under Thomson Reuters as well as ranked as Top IP Attorney by WTR in 2020. Mr. Feng was also recommended by LegalBand as Leading IP litigator and Leading non-litigation lawyer consecutively from 2016 through 2020. A case represented by Mr. Feng was ranked as one of 50 Model IP Cases by Supreme People’s Court of China in 2013.

Email:   Charlesfeng@ecp-ip.com ; fchao7847@hotmail.com

Cell Phone: +86-13910336970  Wechat: Fchao7847

Protecting your intellectual property during technology transfers in South-East Asia: Why is it important?

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WRITTEN BY XUAN NGUYEN

The South-East Asian region consists of 10 countries with a combined GDP of USD 3 trillion (the 5th largest in the world) and a population of 649.1 million people[1]. Over the past few years, the region has emerged as a location for manufacturing diversification, particularly as a result of the USA–China trade war and, most recently, the Covid-19 pandemic.

ASEAN GDP

Technology transfers are the key enablers in the supply chain relocation process, and intellectual property (IP) is considered to be the crucial element – the factor that contributes the value. In this article, we will provide you with some tips on how to build and manage your IP portfolio in relation to technology transfers in South-East Asia.

Why is IP important in technology transfers?

A broad definition of technology will be used here, one including not only production technology, but also management expertise, marketing skills and general intangible corporate assets. Commercially exploiting technology across geopolitical borders can be managed through licensing agreements, joint ventures or by setting up your own business in order to share advanced skills, knowledge, or facilities among interested parties.

Companies most commonly transfer their technology by licensing their IP rights (such as patents, trade marks, designs, software, trade secrets, know-how, etc.). Protecting your IP before disclosing it is crucial to ensuring your monopoly on the information in question, allowing you to expand your market presence, providing you with a return on investment in research and development (R&D) and encouraging further innovation. According to the Ocean Tomo survey, today intangible assets have increased their contribution to account for up to 90% of a company’s value[2].

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Secure your IP through registration, non-disclosure agreements (NDAs) and a strategic plan

The first step in managing your IP is to identify it. Therefore, in your transfer strategy, you should think about what kind of intangible assets you are considering disclosing to your potential partners. Based on your resources and target destination, evaluate the elements you want to be part of your technology transfer strategy, and consider whether it is beneficial to monetise the specific IP in question (such as the patent, trade mark, design, software, trade secrets, know-how, or a combination of the above).

For example, in a franchising deal, you not only transfer your brand and business model, but also operating manuals, quality control procedures, training policies, marketing strategies, business advisory support systems and many other confidential aspects of your business. Be aware of all the information you will disclose to your partner during the process – from commencing negotiation until entering into a deal – so that you can anticipate the possible risks and initiate a suitable protection plan.

You must be aware that IP protection is territorial. Therefore you need to formally register patents, trade marks and designs in each country you want to be protected in. An IP protection strategy must be front and centre when considering investing in South-East Asian countries. Obtaining registration before the start of a technology transfer negotiation is ideal. However, even having an application in place before opening talks is worthwhile; it strengthens your position and reduces the risk of a failed discussion ending up with the theft of your IP by your potential local partners.

In the era of digitalisation, the software is a crucial part of the IP involved in many technology transfer deals. You should pay special attention when licensing your software; there are two main ways to protect it, patent and copyright. Patents ensure extraordinarily strong protection but are not easy to obtain, firstly because it’s a long and costly procedure, secondly because not all software is deemed to be patentable.  Therefore, you probably have to rely on protection under copyright law. In almost all South-East Asian countries works are automatically protected by copyright upon their creation, however a system for voluntary registration also exists. Copyright registration is very useful when there are disputes over a copyrighted work. It’s much to better to have it before entering a tech transfer agreement.

There is no registration system for trade secrets, know-how or other intangible assets, therefore companies should always have a strategic policy in place to retain such assets, and their competitive edge. A good starting point is to sign an NDA with your potential partner before entering into any initial negotiations, and ensure that it’s translated into the local language. This is also a way to detect the intentions of your potential partners, and to test their reliability.

It’s an unfortunate truth that people won’t pay for what they can steal. Many licensees attempt to reverse-engineer your products to save costs and gain an advantage in the marketplace (i.e. they are able to sell their products at much lower prices). Under current IP legislation, there is little you can actually do about this process other than to build a strategy that prevents such activities from taking place. For example, in your technology transfer plan, you may consider having certain components of your products manufactured/assembled by different parties, or using separate locations to help reduce the risk of your IP being misappropriated.

Searching for a partner and due diligence

The crucial factor in the success of technology transfers is choosing the right partner. During the negotiation process, you are going to disclose your IP in order to attract potential partners. It is worth spending some time reviewing all the assets in question, including any registered IP belonging to your potential partners, any litigation in which they have been involved, or any issues that could arise in the future when signing a deal with them.

Entering into a contract

The risk to IP associated with technology transfers varies depending on the type of IP you want to transfer and the form of collaboration planned (such as licensing, a joint venture or setting up your own business). You should analyse the potential risks and include the necessary clauses in contracts to prevent IP violation.

pexels-bongkarn-thanyakij-3740400

First of all, make sure a confidentiality clause or NDA is a part of your contract. Taking the fact that the information may be used by your partner’s employees – or that the information might be disclosed to third parties – into account, appropriate measures to protect confidential information should be clearly written into the contract.

It is also worth having a formal procedure in place to deal with the identification of both the existing IP and IP that would arise in the future. In many cases, your partner may be able to improve on your IP and use it to develop another generation of products. Therefore, it is wise to include a clause that deals with the ownership of any potential improvements.

Importantly, companies must ensure that the contract allows local enforcement methods to stop the sources of IP violation, rather than reverting to EU legislation or systems of arbitration. In cases of infringement, you have the right to seek direct remedies from the local authorities. This resource can enable you to quickly obtain emergency injunctions, search-and-seize orders or asset-freezing orders, which are especially helpful in cases of trade secret theft by an employee or a third party. It is common practice to include an accompanying arbitration clause as a secondary means of resolving disputes. In the South-East Asian region, Arbitration in Singapore is usually recommended as the country has the advantage of excellent legal and technological expertise, a highly skilled judiciary and widespread English fluency.

South-East Asia has become a promising destination for supply chain relocation. Technology transfers are the key enablers of this process. However, the risks of IP infringement there always threaten your revenue and reputation. Companies should understand the degree of their exposure to risk and make sure to put the appropriate measures in place to protect their intangible assets when investing in the region.

For more information on technology transfers in South-East Asia, check out our latest guide here.

The South-East Asia IP SME Helpdesk is an EU initiative that provides free, practical IP advice to European SMEs in South-East Asia. EU companies can send questions to question@southeastasia-iprhelpdesk.eu and will receive a reply within 3 working days.

[1] https://www.aseanstats.org/wp-content/uploads/2019/11/ASEAN_Key_Figures_2019.pdf

[2] https://www.oceantomo.com/intangible-asset-market-value-study/