Online IP Infringement in South-East Asia: How to protect your business

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The South-East Asian internet economy has witnessed a striking increase

According to the latest report by Google, Temasek and Bain & Company, the number of internet users in South-East Asia (SEA) has increased rapidly, reaching 360 million in 2019 — 100 million more than in 2015. Powered by rapid adoption and changing consumer preferences, the South-East Asian internet economy has leapt nearly 40 % from last year to exceed USD 100 billion, and is on track to hit USD 300 billion in 2025. The region has seen booming development, especially in the e-commerce sector. In 2015, 49 million people bought or sold items online. Today, that number has tripled to 150 million.[1]

Photo source: https://pixabay.com

Photo source: https://pixabay.com

The internet is fueling a dramatic rise in counterfeit and pirated products

It is obvious that the internet has brought enormous opportunities for companies, especially Small and Medium-sized Enterprises (SMEs) to develop and expand their business internationally. However, on the other hand, digitalisation also creates fertile ground for online intellectual property (IP) infringement, such as counterfeiting products, pirated goods, cybersquatting, stolen trade secrets, etc. As a result, it has caused various negative impacts on the sales, profits and reputations of affected companies as well as having broader adverse effects on the economy and public health, safety and security.

‘The Economic Impacts of Counterfeiting and Piracy’ report from Frontier Economics pointed out that the estimated value of total counterfeit and pirated goods in the world was USD 923 billion – 1.13 trillion in 2013 and is forecasted to reach an astounding USD 1.90 – 2.81 trillion in 2022.[2]

As it is now easier for everyone to buy and sell goods online, fake and pirated products are booming in SEA, across various e-commerce platforms, social media channels (Facebook, Instagram, TikTok) and a number of local websites. Consumers are offered a wide variety of counterfeit and pirated products. These items can be labelled with a counterfeited trade mark or just replicate the appearance of the original goods, and they are sold at any price-scale. Products majorly exposed to online counterfeiting are fashion retail, electronics, perfume and cosmetics, pharmaceuticals, FMCG, baby products, alcohol and automotive.[3] The origin of the fake products being sold in SEA varies, they can be produced locally or imported from  other countries notorious for manufacturing counterfeits, such as China, India and Turkey.

Online counterfeit and pirated goods have caused serious damage to the sales and profits of IP owners, jeopardised brand reputations and rendered the consumer less interested in authentic products. Vendors often use pictures of the original goods to attract consumers and then provide a counterfeit product. Ultimately, customers start to lose interest in affected brands.

An even more serious concern is connected with the use of fake products in the pharmaceutical, chemical, foods and beverages sectors. These products are not subject to controls like the original ones, and can seriously affect the consumers’ health.

How to combat online infringement

Online IP infringement is growing exponentially in SEA, for many reasons. IP rights are territorial, however online IP infringement is borderless. ‘While there is a degree of harmonization of the laws and regulations governing IP rights and their enforcement, these are not unified. Varying laws and practices in different jurisdictions make it difficult to navigate the legal landscape, fuelling legal uncertainty about outcomes.’[4] In any jurisdiction, the internet itself makes it harder to track down infringers effectively and stop them, but it is particularly difficult in SEA. The effectiveness of IP enforcement in the region is still a major concern. As a result, online trading is quickly becoming more and more attractive for IP infringers as they are less likely to be caught in SEA. In addition, although laws and regulations in South-East Asian countries generally prohibit the sale of counterfeit and pirated products, they do not specifically deter the sale of these products online. There is a lack of effective laws against online IP infringement, and the authorities have little experience in dealing with it.

The majority of the online trade in counterfeit products and pirated goods is at the retail scale, it means there is a huge number of infringers that companies must monitor in order to combat them. The internet makes it easy for anyone to set up a new online business. This means that even if  the culprits agree to stop their infringing actions after receiving a warning from the IP owner, e-commerce operators or enforcement authorities, it is still possible that they will quickly set up a new shop to continue with the illegal selling.

However, taking no action is inadvisable for companies seeking to safeguard their business in SEA. If your products have been infringed and sold in various places, a ‘no actions’ strategy will have a negative impact on your global business and jeoparadise your reputation.

To protect IP effectively, a company should build up a proactive and multi-faceted strategy to act swiftly and effectively against online infringers. The following options can be considered.

  • Actively monitor the online marketplace, and shopping and social media platforms, to identify infringement: Companies can do this by themselves or hire service companies with expertise in the field. In addition, today there are many advanced technological tools for searching and detecting sources of IP violation.
  • Conduct an investigation and gather facts: Don’t make a groundless claim, it will cost you both time and money. Once you have found a suspected infringement on the internet, the first step is to collect evidence on the infringer, e.g. basic information (name, address, other contact details, the scale of their business and the origin of their products).
  • Take-down Notices and Warning Letters: The majority of online infringers in SEA are small businesses, therefore sending a Warning Letter to online infringers has often proved to be a time- and cost-effective option. Also, submitting a Take-down Notice and Infringement Complaint to the e-commerce platform and social media operators can be another effective approach. Read and understand the IP policy against online infringment of each platform so that you can provide the appropriate information and documents as required to ensure the take-down is fast and effective.
  • Work with local enforcement agencies: Companies should be well prepared, with at least a basic understanding of the enforcement agencies available in each country in SEA and of how companies are eligible to use the enforcement options in the jurisdiction. It is worth noting that to enforce your rights in SEA, you are usually required to register your IP with the IP office of the country where you seek enforcement. Raid actions to seize infringing products, filing a claim to a court, or using customs to block counterfeit and pirated goods are also enforcement options that companies may consider in specific cases.
  • Seek advice from local experts: There are still many differences between IP laws and practices between the EU and SEA, and even within SEA inconsistencies abound. As many of the counterfeit and pirated products for sale are advertised in local languages or posted on local websites, monitoring by detection software or searching tools (usually in Roman characters) doesn’t work effectively. Therefore, companies should always seek advice from local experts who are familiar with local cases of infringement and who have close relations with enforcement bodies such as the courts, police and customs authorities.

SEA is a promising destination to expand your business in. However, there are still major concerns there relating to IP protection, especially in the digital era. European companies should be aware of the risks and prepare their IP strategy before going abroad. A proactive and well-prepared IP protection programme will secure sustainable business growth in SEA.

By Xuan Nguyen – Project Officer, South-East Asia IPR SME Helpdek

[1] e-Conomy SEA 2019: https://www.bain.com/insights/e-conomy-sea-2019/

[2] ‘The Economic Impacts of Counterfeiting and Piracy’ by Frontier Economics: https://www.inta.org/Communications/Documents/2017_Frontier_Report.pdf

[3] Industries exposed to online counterfeiting: https://www.group-ib.com/brandprotection/anticounterfeiting.html

[4] ‘IP Infringement Online: the dark side of digital’: https://www.wipo.int/wipo_magazine/en/2011/02/article_0007.html

 

Blockchain and Copyright Protection

shutterstock_107811341Blockchain is quickly becoming the hot topic also for IP protection in China. Today’s blog post, which has been kindly shared with us by Nancy Leon from Ferrante Intellectual Property, will be focusing on how new technological solutions like blockchain can be used in China for copyright protection. 

The recent IP summit hosted in Shenzhen included the Copyright summit.

Experts highlighted the importance of new technologies including blockchain, which will be widely used to protect Intellectual Property in China; this will improve efficiency and accuracy as well as lower costs.

The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value. In this way blockchain can secure the safety of the original work and prove an efficient and economical way to protect the intellectual property for large number of contents.

Xiamen Anne Corp is among China’s first groups that have applied blockchain technology into Copyright protection, which can verify the author’s creative work start date, grant authorization when the work is used and safeguard the rights when infringement is detected. Continue reading “Blockchain and Copyright Protection” »

IP Enforcement Litigation in Taiwan: Some Basics

courtToday’s blog post has been kindly shared with us by our external experts Mr. John Eastwood and Ms. Eve Chen from Eiger. In this article, Mr. Eastwood and Ms. Chen give a basic overview of IP enforcement litigation in Taiwan. You will learn more about the options you have in Taiwan to take action against the infringements of your IP rights and how to prepare to defend your rights. The article first appeared on Eiger website.  

INTRODUCTION

Rights holders looking at Asia-Pacific enforcement budgets often have to make hard decisions about where to take action. Although Taiwan’s population is small (about 22 million), it has a big role in financing massive overseas infringement in China and Southeast Asia and it is still a major manufacturer of fake optical-media products (CDs, DVDs, CD-ROMs), auto parts, and high-tech products involving infringements of patents and misappropriation of trade secrets. Fortunately, the Taiwan court system offers some solid options to rights holders who want to take action.

PREPARING FOR ACTION

Rights holders need to prepare evidence and documents establishing their rights and the facts of infringement before they take action, as the Taiwan police, prosecutors and judges involved with authorizing raid actions are sticklers for details. As a preliminary matter in trademark and copyright cases, it is important to assemble copies of the Taiwan trademark certificates (front and back sides) and any supporting documentation needed to establish copyright protection. Continue reading “IP Enforcement Litigation in Taiwan: Some Basics” »

Intellectuele eigendom toetsing bij buitenlandse overnames in China

denver-business-law-firm-intellectual-propertyIn onze meest recente blog-post, vertelt externe China IPR SME Helpdesk expert Reinout van Malenstein, als Senior Counsel werkend bij HFG Law & Intellectual Property, u meer over intellectuele eigendom toetsing bij buitenlands overnames in China. Voor bedrijven die geïnteresseerd zijn in dit onderwerp zal deze blog u meer vertellen hoe de huidige beleiedsstrategie CM2025 intellectueel eigendom in China zal beïnvloeden, en hoe u daar als Nederlands bedrijf in China het best mee om kunt gaan. Deze blog is geschreven in het Nederlands en is eerder gepubliceerd op China2025.nl, het China crowdblog.

Behoud de Nederlandse innovatieve eredivisie op het wereldtoneel

Zoals de European Union Chamber of Commerce in China de laatste jaren meerdere malen heeft aangegeven, is het zeer lastig voor Europese bedrijven om Chinese bedrijven over te nemen, terwijl dit omgekeerd relatief gemakkelijk is. De regelgeving in Nederland en Europa is gemaakt als fair level playing field voor binnenlandse en buitenlandse bedrijven. Dat is natuurlijk heel fair en ideaal, maar het is belangrijk dat Nederland en Europa zich realiseren dat China een andere agenda heeft, en dat Chinese ondernemingen in bepaalde sectoren worden beschermd ten opzichte van buitenlandse ondernemingen op de Chinese markt.

China Manufacturing 2025

De bescherming van bepaalde markten en het doel om in bepaalde sectoren controle te verkrijgen over intellectuele eigendom blijkt duidelijk uit China Manufacturing 2025 (CM2025). CM2025 is door de Chinese overheid in 2015 ingevoerd als lange termijn strategie om China op het internationale toneel tot innovatieve speler te maken. In dit beleid verandert China van goedkoop land met betrekking tot het produceren van goederen in een innovatief land. Een strategie à la Apple: “made in China, designed in California“, maar dan in die zin dat de grote winsten van de intellectuele eigendom naar China gaan en niet naar buitenlandse bedrijven. Fijn voor China in dit beleid, is dat veel grote Chinese spelers op de markt staatsbedrijven zijn, en dus makkelijk kunnen inspelen op voorgeschoteld beleid van de overheid. Continue reading “Intellectuele eigendom toetsing bij buitenlandse overnames in China” »

General Office of Communist Party of China and State Council issued Opinion regarding Reform and Innovation for Trial of Intellectual Property Cases

RegisteredToday’s blog post has been kindly shared with us by our China IPR SME Helpdesk external expert Mr. Charles Feng from East & Concord Partners. In this article, Mr. Feng interprets and explains the recent “Opinion regarding Improvement of Reform and Innovation for Intellectual Property related Trials” jointly issued by the General Office of Chinese Communist Party and the State Council.

On February 6, 2018, General Office of Chinese Communist Party and State Council jointly issued the official document namely “Opinion regarding Improvement of Reform and Innovation for Intellectual Property related Trials” (the “Opinion”). Vice President of Supreme People’s Court (“SPC”), Judge Tao, made interpretation to the IP Opinion during the press conference and was interviewed following the issuance on February 27.

The IP Opinion consisting of four parts includes the General Requirement, Perfection of IP Trial System, Enhancement of IP Court System, and Improvement of Arrangement and Coordination, which were specified as follows.

I General Requirement

The Opinion positioned the IP protection issue as the basic measure for encouragement and guarantee to innovation and creation that builds the foundation to the National Strategy to establish a Nation that is strong in IP as well as science and technology.

Comments by Charles Feng

The Opinion was the first strategic document issued by CPC and State Council, the top administrative body of China, which declared the IP protection as the major approach to protect innovation and development.  Continue reading “General Office of Communist Party of China and State Council issued Opinion regarding Reform and Innovation for Trial of Intellectual Property Cases” »