Counterfeit goods in South-East Asia: Saving money may risk your health

Facts and trends

Over recent decades, counterfeiting has been causing serious harm, not only to the global economy but also to consumer health and safety. The huge, quickly generated profits made from illicit trading (comprising counterfeiting activities) has encouraged counterfeiters to find new ways to evade the detection and restriction of their illegal activities and to speedily adapt to changing circumstances. Booming e-commerce, the intensive use of social media platforms and most recently, the Covid-19 pandemic, have all driven the counterfeiting issue to become a critical concern.

Photo source: www.pexels.com

Photo source: www.pexels.com

In a report published in 2019 by the Organisation for Economic Co-operation and Development (OECD) and the European Union Intellectual Property Office (EUIPO)[1],  half of countries in South-East Asia (SEA), such as Singapore, Thailand, Malaysia, the Philippines and Vietnam, are listed among the top 25 economies for the provenance of counterfeit and pirated goods between 2014 and 2016. In this article, we will take a look at how counterfeit trading activities are evolving in SEA as well as the explicit and implicit consequences on human health of using counterfeit products.

In many areas in the world, including the South-East Asian region, the Covid-19 outbreak has caused the authorities to apply strict restriction measures, such as lockdowns, social distancing, working from home, etc. During the crisis, online shopping has become an efficient way to fulfil people’s need. E-commerce platforms, including Shopee, Lazada and Tokopedia, or social media platforms, such as Facebook, TikTok and Instagram, are popular places where people make millions of orders every day. A joint e-Conomy report in 2020 by Google, Temasek and Bain emphasised significant changes in the digital life of the region: 36% of digital consumers were new to the online services due to Covid-19 and 94% of them intend to continue using digital services going forward[2].

Moreover, the Covid-19 crisis caused a sharp slowdown in the 2020 GDP growth of major countries such as Indonesia (-2.1%), Malaysia (-5.6%), Myanmar (-10%), the Philippines (-9.6%), Singapore (-5.4%) and Thailand (-6.1%)[3]. Given the current environment of uncertainty and fear, and the real threat of significant declines in income, many consumers are now unable to purchase branded goods and services. Consequently, buying cheap counterfeit products is a tempting option for consumers with low budgets.

Amid the chaos, counterfeiters have promptly taken advantage of the new situation and, unfortunately, they are often one step ahead of authorities and policy. Recently, an overwhelming number of counterfeits being sold on e-commerce sites, social media platforms and dark-net markets have been detected, warned about, and reported by authorities, brand owners and consumers.

IEO-charts-IPV-Reports-as-of-Sept-2020_stFor instance, according to the IP Violation Reports from the Intellectual Property Office of the Philippines (IPOPHL), from January to September 2020, IP complaints lodged at the IPOPHL increased to 135, surpassing the total of 129 complaints received in the previous 5 years (from 2015 to 2019)[4]. Among those, the majority of violators were operating online.

In 2020, the General Department of Market Surveillance in Vietnam checked more than 5 000 suspected cases, uncovering about 4 500 violations. This resulted in monetary fines that came to a total of VND 30 billion (approximately USD 1.3 million). The value of counterfeit goods, and goods without a certificate of origin infringing IP rights, recorded in the first 7 months of 2020 by this department was VND 40 billion (approximately USD 1.74 million)[5].

Furthermore, according to the enforcement statistics of the Department of Special Investigation and Customs, Royal Thai Police, the number of seized items from January to May 2021 increased by 83.33% compared to the same period last year[6].

More importantly, the Covid-19 pandemic has made people seriously anxious about getting sick. Many people stockpiled medicines, testing kits, and protective equipment (such as face masks, medical devices, disinfectants, sanitisers, etc.), causing a dramatic surge in demand for those products. During the peak crisis, global transportation was seriously affected, resulting in higher prices for raw materials. There were not enough products originating from genuine sources to meet the huge spike in demand. Consequently, broken supply chains, a strong demand for essential products, and the high level anxiety among consumers, have accelerated the surge in illicit trade and counterfeiting. ‘When the supply does not meet the demand, it creates an environment where poorer quality or fake medicines will try to meet that demand,’ said Pernette Bourdillion Esteve from the World Health Organization (WHO)[7].

A report by Check Point Research[8] revealed that there has been an alarming increase of fake Covid-19 vaccines available on the dark web since November 2020 – when the positive news about vaccine trials and the imminent availability of vaccines was released. Phrases such as ‘available corona virus vaccine $250’, ‘Say bye bye to COVID19=CHLOROQUINE PHOSPHATE’ and ‘Buy fast. CORONA-VIRUS VACCINE IS OUT NOW’ were used to tempt people into buying fake medicines. Check Point’s expert also noticed that a dark-net search for Covid-19 returned multiple results, including hundreds of advertisements – an increase of over 400% since early December 2020.

Photo source: INTERPOL

Photo source: INTERPOL

Recently, INTERPOL (with the support of local police, customs and health regulatory authorities) carried out Operation Pangea XIV in 92 countries, targeting the sale of counterfeit and illicit medicines and medical products. The operation resulted in 113 020 web links, including websites and online market places, being closed down or removed. This Operation oversaw the seizure of 9 million medical devices and illicit pharmaceuticals (fake and unauthorised Covid-19 testing kits accounted for more than half of those) and 277 arrests worldwide during one week of action (18–25 May 2021). The potentially dangerous pharmaceuticals seized during the operation had an estimated value of more than USD 23 million[9].

The health and safety consequences of counterfeits

Using counterfeit products, especially fake medicines, can cause serious harm to health and safety for consumers, as they are more likely to contain dangerous ingredients than authentic goods. Furthermore, counterfeit products usually do not go through the required consumer compliance and safety tests before being put on the market.

Recently, some alarming figures related to counterfeiting were released in the EUIPO’s Qualitative Study on Risks Posed by Counterfeits to Consumers[10]. This study clearly displays the extent of the dangers to health posed by counterfeit goods, as evidenced by the alerts submitted by EU market surveillance authorities (MSAs) using the European Commission’s ‘Rapid Alert System for dangerous non-food products’ (RAPEX system). The report concentrates on the seven most common risks reported: chemical, injuries, strangulation, choking, electric shock, damage to hearing and fires.

An analysis of RAPEX alerts carried out from 2010 to 2017 pointed out that:

  • A total of 97% of the dangerous counterfeit goods recorded were assessed as posing a serious risk.
  • Toys are the most popular type of product, followed by clothing, textiles and fashion items. In fact, the end-users of 80% of the goods reported as being dangerous and counterfeit (toys, childcare items and children’s clothing) were children. The most common danger reported (32%) was related to exposure to hazardous chemicals and toxins that could cause acute or long-term health issues (from both immediate or long-term exposure).
  • A total of 24% of the dangerous products recorded as counterfeit posed more than one danger to users.
  • The causes of the risks identified ranged from poorly constructed products or the use of inferior supplies and components, to a lack of understanding of regulations or safety mechanisms.

With counterfeit medicines, the impact can even be life-threatening. According to a WHO study on public health and the socioeconomic impact of substandard and falsified medical products[11], many counterfeit drugs contain undeclared active ingredients that might have serious unwanted health consequences. These can pose very serious threats to consumer health and public systems, such as:

  • adverse effects (for example toxicity or lack of efficacy) from incorrect active ingredients;
  • failure to cure or prevent future disease, thereby increasing mortality, morbidity and the prevalence of disease;
  • contributing to the progression of antimicrobial resistance and drug-resistant infections;
  • a loss of confidence in health-care professionals, health programmes and health systems;
  • an increase in individual and health system spending on health care;
  • lost income due to prolonged illness or death;
  • lost productivity costs to patients and households when seeking additional medical care, the effects of which are felt by businesses and the wider economy, etc.
Photo source: www.pexels.com

Photo source: www.pexels.com

According to the report from the United Nations Office on Drugs and Crime (UNODC), many South-East Asian people are at risk as the amount spent by consumers in this region on falsified medicines is estimated to range between USD 520 million and USD 2.6 billion per year[12]. The report also pointed out that ‘some of the falsified medicines manufactured in South-East Asia involve mainstream companies that cut corners by deliberately diluting products with substitute or cheaper chemicals or by altering the expiration dates on packaging. Others are produced as the result of insufficient mixing, contamination and degradation, and other simple sloppiness, as evidenced by some samples containing more than the specified dose’. For example, during Interpol’s Operation Pangea VIII in 2015, Indonesian authorities detected that criminals were altering the expiry date or the amount of the active ingredient on packages of counterfeit, expired and unregistered medicines at the warehouse and returning them to pharmacies for sale. Other follow-up investigations in Indonesia uncovered counterfeits in 37 medical facilities across 9 provinces, including counterfeit imported child vaccines for hepatitis B, tetanus, measles and polio. More than 20 individuals, including 3 health professionals, were arrested due to their involvement in these illegal operations[13].

Illegal trading and counterfeiting have negative consequences, not only for the economy (decrease of revenue and profits, erosion of brand confidence and reputation) but also for consumer health and safety. The boom of e-commerce and the extensive use of social media platforms, along with the recent Covid-19 outbreak, have been creating fertile ground for the production, distribution, and consumption of counterfeit products. To tackle this threat, continuous actions, efforts, and financial resources are required from the authorities, agencies, and IP owners to track, monitor and stop the illegal activities of counterfeiters.

But above all else, it is the responsibility of the consumer to adopt a wise attitude and to avoid buying and using counterfeit products. Purchasing counterfeit goods may instantly save some money, but paying with our health means a higher cost for all of us.

The South-East Asia IP SME Helpdesk developed and published a Guide on How to Remove Counterfeit Goods from e-commerce Sites in South-East Asia (link here), an E-commerce Infographic (link here) and IP Country Factsheets (link here).

For more information about IP in South-East Asia, check out our website at https://intellectual-property-helpdesk.ec.europa.eu/regional-helpdesks/south-east-asia-ip-sme-helpdesk_en.

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

Author: Xuan Nguyen, SEA IP SME Helpdesk

LOGO LA IP SME HD_EC ENE-21 lr

[1] https://www.oecd-ilibrary.org/docserver/g2g9f533-en.pdf?expires=1617871694&id=id&accname=guest&checksum=5A2965E4B201677AA07AB112CEE181F9

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

[3] https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG

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

[5] https://vir.com.vn/preventing-counterfeit-during-explosive-e-commerce-growth-during-pandemic-84285.html

[6] http://www.ipthailand.go.th/en/ipr-enforcement-operation/item/total2021.html

[7] https://www.bbc.com/news/health-52201077

[8] https://blog.checkpoint.com/2020/12/11/covid-19-vaccines-touted-for-just-250-on-darknet/

[9] https://www.interpol.int/en/News-and-Events/News/2021/Thousands-of-fake-online-pharmacies-shut-down-in-INTERPOL-operation

[10] https://euipo.europa.eu/tunnel-web/secure/webdav/guest/document_library/observatory/documents/reports/2019_Risks_Posed_by_Counterfeits_to_Consumers_Study/2019_Risks_Posed_by_Counterfeits_to_Consumers_Study.pdf

[11] https://www.who.int/medicines/regulation/ssffc/publications/SE-Study_EN_web.pdf?ua=1

[12] https://www.unodc.org/documents/southeastasiaandpacific/Publications/2019/SEA_TOCTA_2019_web.pdf

[13] Ibid.

 

Trade mark search: Why it is important and how to conduct it properly

WRITTEN BY XUAN NGUYEN

Trade marks (brands) represent one of the principal assets of a company. Trade mark is crucial to your success because it allows clients and consumers to easily identify and find products and services. Protection comes with a price, and startups and SMEs often have limited budgets. However, in the digital economy, trade mark protection is well worth the investment. It secures legal certainty and prevents others from illegally copying or using your mark to take advantage of your reputation. Strong trade mark protection enables you to stay competitive and nurture a safe environment for thriving cross-border expansion.

search-2951638_1920(Photo source: https://pixabay.com/)

Trade mark searches are an integral part of any trade mark protection strategy, but many companies do not routinely perform them or do not do so thoroughly enough. In this article we will provide you with a full rundown of the importance of trade mark searches and how to effectively conduct them.

1. Why are trade mark searches needed?

A pre-filing trade mark search

By finding out what other trade marks are out there, you will learn whether there is room for the trade mark you want to protect. A pre-filing trade mark search allows you see if there are any pre-registered/pre-filed trade marks that are identical or significantly similar to yours (which may lead to their registration being refused). If the search results reveal the existence of trade marks that are likely to block your trade mark registration, at least you have a hint before taking further steps, for example by changing the proposed trade mark or removing prior trade marks if feasible (this may be achieved via amicable negotiations or by cancellation actions, which are usually attempted with the support of a trade mark expert). As a result, these searches will help businesses to avoid wasting significant time and resources preparing and filing an application for a trade mark that may not be available for registration.

Watch out for potential infringements

Owning a registered trade mark does not automatically guarantee that someone else do not use it, or register a similar trade mark. Regular trade mark monitoring is highly recommended, as it can result in the early detection of potential infringements such as counterfeits, copycats, bad faith registrations, etc.

In practice, copycats usually operate in the same industry as the trade mark holder; by using your marks they can easily mislead consumers about the quality and origin of their products and services. Consequences can include damaging your reputation, decreasing your revenue and preventing your expansion plans. The early detection of infringement allows you to quickly initiate a proper solution to stop or mitigate the violations and to notify your clients in a timely fashion, thereby avoiding brand dilution or misleading messages.stop-634941_1920

(Photo source: https://pixabay.com/)

Moreover, trade mark protection is territorial: protection exists only in the country where you have registered your trade mark. Developing an efficient brand protection plan for cross-border markets has been seen as a big challenge for many businesses, especially SMEs. In fact, like many other countries, most South-East Asian countries apply the first to file principle for trade mark protection, which gives priority to those who first file an application to register the trade mark. This rule, unfortunately, opens the door for bad-faith registration practices i.e., a third party (a trade mark squatter, local company or any other party) intentionally files a trade mark application in a particular country before the trade mark owner to become a legal owner of the trade mark. By successfully registering your trade mark, they can take advantage of your successful business for commercial gain in your target market – this can have various consequences, from damaging your reputation to excluding you from the market. However, after a trade mark filing, intellectual property (IP) offices will usually publish the trade mark application for public inspection for a specific period of time, to allow third parties to file an opposition (for example, oppositions can be filed in Cambodia within 90 days, in Singapore within 2 months and in the Philippines within 30 days of the publication date). Detecting bad faith registrations promptly allows you to react in a timely fashion.

2. Where to search?

There are many sources that a brand owner can use to run a trade mark search. Some suggestions are detailed below.

a) Trade mark databases

Global Brand Database 

The Global Brand Database, administered by the World Intellectual Property Organization (WIPO), automatically uploads trade mark records sent by national, regional and international collections – for example from Madrid – The International Trademark System (details of database content sources here).

Through the Global Brand Database, you can:

  • conduct a search to cover multiple sources simultaneously in a large number of countries;
  • search by text, class, goods or services, holder names, countries and even images (using AI search-by-image filter functions).Screenshot 2021-07-01 13.29.51

National trade mark databases

Although the Global Brand Database covers a large number of trade mark collections, it depends on how often national offices communicate updated information to the WIPO. Also, some national databases are not available on the Global Brand Database, Myanmar is one example. Therefore, it is also advisable to run simultaneous and additional searches in the database of your target national IP office to get the latest updates on applications that have been filed/registered.

In South-East Asia, SingaporeVietnamIndonesiaMalaysiathe PhilippinesBruneiLaos and Cambodia are the countries in which trade mark databases are available in English.

b) The internet, e-commerce platforms and social media networks

A comprehensive trade mark search should not only review trade mark databases, it should also detect unregistered marks that are being used by third parties on the market and may be infringing your trade mark rights. Conducting searches of multiple sources that counterfeiters, copycats and other criminals may be using to take advantage of your marks is always recommended. Searches should be conducted on the internet, e-commerce platforms and prevailing social media networks.

pexels-photomix-company-230544

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

With over 87% of the search market share, Google is a dominant search engine worldwide and its share is even higher in South-East Asia (over 90% for most countries in the region)[1]. Conducting a Google search can take you to numerous websites, links, apps and networks that may contain signs of potential infringement. The Covid-19 crisis is accelerating the already thriving digitalisation process, driving more and more businesses and consumers online. Amid this overwhelming wave of online activity, e-commerce platforms have become vital market places to fulfill people’s needs. In South-East Asian countries, Shopee, Lazada, Tokopedia, Bukalapak, Tiki, etc. are the most-visited e-commerce sites[2] where you can find various types of fake products in different price ranges. Using social media networks such as Facebook, Instagram or TikTok in order to reach out to consumers and sell counterfeits is also quite common in the region.

3. Conclusion

Some popular methods that businesses can use to run trade mark searches have been outlined above. However, consulting a trade mark specialist to obtain better search results and practical advice is usually recommended. Comprehensive trade mark searches should take various factors into account. As well as names, key words and images, translations and national phonetic variations of the search terms should be included. Many South-East Asian countries, such as Thailand, Laos, Cambodia, Indonesia, and Myanmar, have their own alphabets, which do not use Roman characters. Using a local specialist to help with trade mark searches is advisable, as they will maximise the search effectiveness by avoiding any gaps.

Moreover, when the results come in, expertise is required in order to carry out a proper analysis. For example, when considering the likelihood of identical or similar marks being confused with one another, an experienced trade mark specialist will know how to assess the situation by properly reviewing the similarity of the products and services that the marks are being used for. They can provide you with a practical assessment of the likely success of your registration application or if you will be able to take actions against potential infringements.

Trade mark searches are vital for your brand protection strategy, especially in the fast-paced digital economy. Being well informed will save you a huge amount of time and resources, and secure a safe way for your business to grow and thrive.

The SEA IP SME Helpdesk developed and published a Guide to Trade Mark protection in South-East Asia (here) and How to Remove Counterfeit Goods from e-commerce Sites in South-East Asia (here).

For more information about IP in SEA, check out our website at https://intellectual-property-helpdesk.ec.europa.eu/regional-helpdesks/south-east-asia-ip-sme-helpdesk_en.

The SEA 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://gs.statcounter.com/search-engine-market-share/desktop/worldwide

[2] https://www.campaignasia.com/article/the-top-10-most-visited-southeast-asia-ecommerce-sites/468523

The EU–Vietnam Free Trade Agreement (EVFTA) and intellectual property (IP) protection: What EU SMEs should know

WRITTEN BY XUAN NGUYEN

Vietnam is a thriving economy with a GDP of USD 340.821 billion – the fourth biggest in South-East Asia (after Indonesia, Thailand, and the Philippines), a population of 97.406 million people and a GDP per capita of USD 3 499 (in 2020)[1]. Despite the challenges of Covid-19, Vietnam has remained resilient, it expanded its GDP by 2.9% in 2020 – one of the highest growth rates in the world[2].

(Photo source: https://pixabay.com)

The European Union (EU) and Vietnam have enjoyed robust commercial relations in recent years. Vietnam is the EU’s 15th most important trade partner worldwide, and the EU’s largest trading partner in South-East Asia in 2020[3]. The EU is also one of the largest foreign investors in Vietnam, with a total foreign direct investment of EUR 6.1 billion in 2019[4].

The EVFTA, which entered in force on 1 August 2020, is one of the important strategic enablers for boosting the economic growth of, and the cooperation between the two parties through the elimination of customs duties and non-tariff barriers, driving a boom in exports and imports as well as encouraging investment flows. The EVFTA also includes a dedicated chapter on IP protection (Chapter 12) that requires Vietnam to implement substantive changes to improve their current IP system.

According to the South-East Asia IP SME Helpdesk, the major commitments related to IP protection under the EVFTA that EU companies should know about are as follows:

Photo source: www.pexels.com

Photo source: www.pexels.com

  • Geographical indications (GIs). A total of 169 European GIs (full list here) have been automatically recognised and directly protected in Vietnam since the EVFTA came into effect. Champagne, Feta, Parmigiano Reggiano, Rioja and Roquefort are some examples of EU GIs now being protected in Vietnam. EU farmers, businesses or associations producing and distributing products labelled with these GIs can now take action to stop illegal activities that sully their reputations through counterfeiting, misuse or other acts of unfair competition.

 

  • Patents. Pharmaceutical products are subject to a marketing authorisation procedure before being allowed onto the Vietnamese market. When there are unreasonable delays (i.e. if the Vietnamese authority fails to respond to an applicant without justifiable reasons after more than 24 months from the date of filing for marketing authorisation), the pharmaceutical patent owner is entitled to claim compensation by deducting the fee for using the patent. To be entitled to deduct the fee, the patent owner must submit a document confirming the delay (issued by the marketing authorisation authority) to Vietnam’s IP office within 12 months of the marketing authorisation being granted. Please note that Resolution No. 102/2020/QH14 (dated 8 June 2020) currently provides the legal background for this specific issue, and will remain applicable until an amendment to the existing IP law comes into effect.
  • Trade marks. Vietnam will apply the WIPO recommendations on the protection of well-known trade marks, which take additional parameters (not restricted exclusively to a trade mark’s degree of prominence amongst relevant consumers in a country) into consideration. In addition, a registered trade mark can be revoked if it misleads the public, particularly as to the nature, quality or geographical origin of a product. Thus, if EU companies notice that their trade mark has been registered in Vietnam by others and its use is misleading the public, this can be grounds for cancelling the infringing registered mark. Please note that this additional basis for revocation was included in Resolution No. 102/2020/QH14 (dated 8 June 2020) and will remain applicable until an amendment to the existing IP law comes into effect.
  • Copyright. Vietnam will accede to the WIPO Internet Treaties (the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty) to address the challenges associated with unauthorised access to and use of creative works on the internet and other digital networks. Phonogram performers and producers gain additional rights through the EVFTA, including the right to a single equitable remuneration for broadcasts and communications to the public.
  • Industrial designs. Following a commitment made in the EVFTA, on 30 September 2019 Vietnam deposited its instrument of accession to the Geneva Act (1999) of the Hague System for the International Registration of Industrial Designs. EU design applicants can now seek protection for their designs in Vietnam by using the Hague system (a practical business solution for registering up to 100 designs in 74 contracting parties, covering 91 countries, through the filing of a single international application).
  • Undisclosed information. If undisclosed test results or other data regarding pharmaceutical or agrochemical products are required by government agencies for marketing approval, the protection of such data against unfair commercial use or disclosure will be set for 5 years from the approval date.
  • Enforcement. Customs officers will be able to act ex officio – in other words, they can actively target and block shipments containing IP infringing goods without having to wait for a complaint. If needed, the IP rights holder can ask the authorities to apply provisional measures, such as the precautionary seizure or blocking of the movable and immovable property of the alleged infringer, including the blocking of his/her bank accounts and other assets. The authorities may consider ordering pecuniary compensation to be paid to IP owners in certain cases of unintentional infringement, instead of applying injunctions or corrective measures.

Vietnam’s government and relevant agencies are currently working on numerous changes to leverage the existing IP protection system, such as an amendment to the IP law (the draft amendment to the IP law has been published on the official site for public examination since November 2020 and will be submitted to the National Assembly for comments in October 2021), updating the Decree on E-commerce (to include stricter provisions related to IP infringement online), improving the online registration system and strengthening the effectiveness of IP enforcement measures (customs checks, investigations, the imposition of sanctions, etc.). These are positive steps from the Vietnamese government to align their entire IP protection system with international standards. This, in return, will enhance Vietnam’s competitiveness by creating a favorable environment for EU companies to safely access and operate in Vietnam’s markets.

The South-East Asia IP SME Helpdesk will continue monitoring the IP landscape in Vietnam to provide EU SMEs with further updates and practical IP advice. Check out our infographic on the EVFTA and IP protection here for further information.

South-East Asia IP SME Helpdesk (website here).

The South-East Asia IP SME Helpdesk is an initiative of the European Commission to support EU SMEs to protect and enforce their IP rights in the 10 South-East Asian countries. All services offered by the Helpdesk are free of charge.

In a nutshell, the Helpdesk’s services cover: (i) enquiry helpline (tailor-made confidential advice to EU SMEs on IP related to South-East Asia within 3 working days), (ii) IP guides and country factsheets and (iii) onsite and online trainings.

[1] https://www.imf.org/en/Publications/WEO/weo-database/2021/April/select-country-group

[2] https://www.worldbank.org/en/country/vietnam/overview

[3] https://ec.europa.eu/trade/policy/countries-and-regions/countries/vietnam/

[4] https://webgate.ec.europa.eu/isdb_results/factsheets/country/overview_vietnam_en.pdf

IP protection in the South-East Asia region: What EU SMEs should know

Why is IP protection important for EU SMEs?

Small and medium-sized enterprises (SMEs) are the backbone of the EU economy. They represent 99 % of all businesses in the EU, account for more than half of Europe’s gross domestic product (GDP) and employ about 100 million people[1]. The positive association between economic performance and ownership of intellectual property rights (IPRs) is particularly strong for SMEs.

World IP Day_1200x675px

SMEs that own IPRs generate 68 % higher revenue per employee than SMEs that do not own any IPRs at all, according to the latest study published in 2021 by the European Patent Office (EPO) and the European Union Intellectual Property Office (EUIPO) on IPRs and firm performance in the EU [2]. As the study shows, IPR protection has become crucial to the success of SMEs, and it is thus key for SMEs to be aware of the value of intellectual property (IP) and of the best ways to benefit from it.

IP relates to intangible assets, which comprise intellectual and industrial property. IPRs can be protected by law under patents, trade marks, industrial designs, copyright, plant variety protection, but also via trade secrets, unfair competition, civil and criminal law.

SMEs can benefit from IP protection and seize business opportunities globally if their IP portfolio is managed effectively. A strong IP strategy also helps SMEs attract funds from potential investors, enabling them to internationalise in emerging markets. According to a joint report between the EPO and the EUIPO in 2019[3], IPR-intensive industries generated approximately 45 % of the total GDP in the EU, worth EUR 6.6 trillion. Those sectors also accounted for most of the EU’s trade with the rest of the world, comprising 96 % of goods exported from the EU.

IP protection is also crucial to fostering innovation by providing a return on investment on Research and Development (R&D). Furthermore, a well-prepared IP protection strategy will help SMEs prevent others from free-riding on their IP. Importantly, an SME, being the legitimate owner of IPRs, will have recourse to enforcement actions to stop an activity infringing their IPRs.

IP protection is the key to success of EU SMEs expansion in the SEA region[4]

Southeast Asia (SEA) region is a promising destination for EU SMEs, thanks to their open policies and incentives for attracting foreign investment. The region is a thriving economy with a combined GDP of USD 3 trillion in 2018 (the 5th largest in the world) and a population of 649.1 million people[5].

The SEA region represents the EU’s 3rd largest trading partner outside Europe (after the US and China) with more than EUR 237.3 billion of trade in goods in 2018. The EU is the SEA region’s 2nd largest trading partner after China, accounting for around 14 % of SEA trade. The EU is by far the largest investor in the SEA countries with the Foreign Direct Investment (FDI) stocks in the SEA region accounting for EUR 337 billion[6].

To date, the EU has two Free Trade Agreements already in force with Vietnam and Singapore, respectively – EU-Vietnam Free Trade Agreement (EVFTA) and EU-Singapore Free Trade Agreement (EUSFTA) – and is negotiating a comprehensive economic partnership agreement with Indonesia. These FTAs facilitate market access through the elimination of customs duties and non-tariff barriers from both sides, as well as stimulating investment flows. Each Agreement includes a comprehensive IPR chapter with commitments to enhance IPR protection and enforcement in line with international standards.

The report of the Organization for Economic Co-operation and Development (OECD) and the EUIPO published in 2019[7] shows that companies suffering from counterfeiting and piracy continue to be primarily registered in Europe. China continues to be the biggest origin of counterfeit and pirated goods, but some of the major SEA economies are also listed among the top 25 provenances. As the study shows, the exposure of EU SMEs to IPR infringements in the SEA region is high; and EU SMEs should consider this when preparing their IP strategy.

In the COVID-19 context, IP infringement in the online environment appears to be increasing in SEA countries, via e-commerce and social media platforms, due to the lack of effective regulations addressing online IP violations. IP owners are advised to seek registration for protection of their IPRs in each country of interest. Registration at the IP Offices and in the customs registers may contribute to successful enforcement.

Stay tuned to IP Key South-East Asia and South-East Asia IP SME Helpdesk for success stories of EU SMEs operating in Southeast Asia and how IPR protection supports these businesses during the pandemic.

***

How is the European Union supporting EU SMEs in SEA?

On top of bilateral trade agreements introducing commitments for enhanced IPR protection and enforcement, the EU counts on IP Dialogues and IP technical cooperation programmes to support EU businesses trading and investing in the region, including SMEs.

The European Commission (EC) launched, among others, the following initiatives to support EU SMEs.

South-East Asia IP SME Helpdesk (website here)

The South-East Asia IP SME Helpdesk is an initiative of the EC to support EU SMEs to protect and enforce their IPRs in SEA. All services offered by the Helpdesk are free of charge.

In a nutshell, the Helpdesk’s services cover (i) Enquiry Helpline (tailor-made confidential advice to EU SMEs on IP related to SEA within 3 working days), (ii) IP Guides and Country Factsheets and (iii) Onsite and online Trainings. The South-East Asia IP SME helpdesk is part of the IP SME Helpdesk initiative which EU/COSME SMEs and researchers participating in EU-funded projects both to protect and enforce their Intellectual Property (IP) rights in relation to Europe, China, India, Latin America and South-East Asia.

IP Key South-East Asia (website here)

IP Key South-East Asia (IP Key SEA) is a four-year programme funded by the EU and implemented by the EUIPO aimed at supporting IP rights protection and enforcement across South-East Asia, with a view to creating the appropriate legal and economic environment conducive to trade and investment in the region. By contributing to the enhancement of IP frameworks and implementation of best practices, IP Key SEA aims to ensure a level playing field for both local enterprises and EU stakeholders. IP Key SEA is one of three IP Key flagship programmes that are being implemented by the EUIPO, together with IP Key China and IP Key Latin America.

Other incentives for EU SMEs

EU SMEs now can apply for assistance to protect their IPRs under the following programmes:

  • The Ideas Powered for Business SME Fund: a 20 million Euro grant scheme created to help SMEs develop their IP strategies and protect their IPR, at national and EU level (more details here).
  • Horizon IP Scan: Helping SMEs manage and valorise IP in research and innovation collaborations (more detail here).

#KNOWBEFOREYOUGO

IPR protection in SEA is crucial for EU SMEs to ensure a safe ground for their business activities. Without protection, enforcement of the IP rights will not be possible. Therefore, it is highly advisable for EU SMEs to make an effective use of the various EU initiatives to set up their IP strategy before expanding to the region. Get in touch with the SEA IP SME Helpdesk (question@southeastasia-iprhelpdesk.eu) and IP Key SEA (IPKEY-SEA@euipo.europa.eu) to learn more about the available tools.

Drafted by:

IP Key SEA & South-East Asia IP SME Helpdesk

EN IP Key SEA 1200x675_02                                     

[1]https://ec.europa.eu/growth/smes_en#:~:text=Small%20and%20medium%2Dsized%20enterprises%20(SMEs)%20are%20the%20backbone,every%20sector%20of%20the%20economy.

[2]http://documents.epo.org/projects/babylon/eponet.nsf/0/7120D0280636B3E6C1258673004A8698/$File/ipr_performance_study_en.pdf

[3] https://euipo.europa.eu/tunnel-web/secure/webdav/guest/document_library/observatory/documents/IPContributionStudy/IPR-intensive_industries_and_economicin_EU/summary/IP_Contribution_Report_092019_execsum_en.pdf

[4] The South-East Asia (SEA) region consists of 10 countries, including Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Viet Nam.

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

[6] https://ec.europa.eu/trade/policy/countries-and-regions/regions/asean/

[7] https://euipo.europa.eu/tunnel-web/secure/webdav/guest/document_library/observatory/documents/reports/trends_in_trade_in_counterfeit_and_pirated_goods/trends_in_trade_in_counterfeit_and_pirated_goods_en.pdf

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

Quote

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/