In today’s blog post we are discussing how to protect your software IP rights in South-East Asia, where ICT and software sector has been booming in recent years, offering many promising opportunities to European SMEs. This article takes a closer look at the source code protection with copyrights, patent protection for software related inventions and discusses how to safely licence your software in South-East Asia.
The Information Technology services and software sector in South-East Asia have been booming in recent years as South-East Asian nations continue to develop through many innovative technological solutions. In particular, South-East Asia is experiencing a rapid growth of Internet, digital and social media and mobile activities. With more than 320 million Internet users in 2017, increasing connectivity and therefore dependence on computer technology is to be expected in this region. This translates to growth in the software industry which leads to many promising opportunities for the European SMEs in the region, whose top-notch technology and know-how will be sought after.
Before entering South-East Asian markets, however, EU SMEs should be aware of the different IP rights and how they apply to the software industry, as well as the possible risk of IP infringement in these markets. This is increasingly important with many companies developing their own software, and software development being an ever-growing industry. European SMEs should thus have a comprehensive IP strategy in place when entering the promising markets of South-East Asia.
Copyrights protect the source code
Copyright is an IP right which gives the owners of original literary and artistic works a set of exclusive rights over their works, including copying, translating, adapting and altering, communicating and performing to the public, distributing, renting and lending copies of the copyrighted works. In case of software copyright can protect the source code, the object code and the user interface.
Copyright arises automatically upon the creation of a work, which means formal registration is not required for protection to exist, although registration – where possible – is still recommended, as proof of ownership EU SMEs obtain from registering their copyright may prove useful in the event of a copyright dispute or infringement. Furthermore, citizens of signatory countries to the Berne Convention for the Protection of Literary and Artistic Works are afforded copyright protection automatically. This Convention currently includes all EU member states, and most of the ASEAN member states. As the software industry is characterized by constant and cumulative innovations, with later software often incorporating new features aiming to extend the capabilities of the earlier software, EU SMEs should take full advantage of copyright as a form of protection for their software in South-East Asia.
Except for Myanmar, the Philippines and Thailand, software programmes are expressly protected by copyright in South-East Asia. However, it should be noted that copyright protects the expression of ideas, and not the ideas per se. In other words, copyright does not protect the ideas underlying the software that is often the source of commercial value. However, copyright provides protection against any unauthorised running, copying, modifying or distribution of the software.
It is advisable to include prominent copyright notices on the software sold to the end users, as an IP strategy. An example of a copyright notice may include the symbol © or “Copyright” followed by the year, the company name and the phrase ‘All rights reserved’. Such a notice should be affixed to the wrapping, disks and first page of the screen when the software programme is launched on a computer.
Another important issue is the ownership of the copyright. Generally, an author of a work owns the copyright for that work. However, when it comes to software development, copyright ownership can be more complex. If software is created by a developer during employment, the employer usually owns the economic rights to the works, while the employee owns the right of attribution of authorship. It, however, depends on the particular South-East Asian country. For example, in Indonesia, the copyright for works created by an employee during employment, does not automatically belong to the employer. As such, before entering the South-East Asian countries, EU SMEs should consult local legal counsels and draft employment contracts that clearly define the ownership of the copyright in the works created by their local employees.
Patents for software-related inventions
As copyright protection extends only to the expression of ideas, and not to ideas, procedures, or method of operation as such, many software developers and software companies seek to patent their software and software-related inventions, to add another layer of protection in addition to copyright.
Typically, for an invention to be patentable, the invention must meet the following three requirements: (1) novelty, (2) inventive step, and (3) industrial applicability. A patent must be applied for in the all the jurisdictions of interest. However, EU SMEs should note that not all countries in South-East Asia offer patent protection for computer software. In the Philippines and Thailand, for example, it is explicitly provided in IP laws that computer software or programs are not patentable. On the other hand, other countries such as Singapore and Cambodia, software may be patented.
Obtaining a patent may take a long time and require substantial resources to prosecute the applications through to grant. EU SMEs should thus avail themselves of the ASEAN Patent Examination Cooperation (ASPEC) Programme as well as any other Patent Prosecution Highway Programmes between the national patent offices. Such programmes allow the sharing of search and examination results between the participating patent offices, thereby allowing applicants in participating countries to obtain corresponding patents faster and more efficiently.
Furthermore, it can be wise to use the Patent Cooperation Treaty (PCT) international patent filing route. By filing one international patent application under the PCT, applicants can simultaneously seek protection in a very large number of countries, including all South-East Asia countries except for Myanmar.
Keep your top-notch software a trade secret
Another way that EU SMEs in the software industry may protect their rights is by keeping the software as a trade secret. While copyrights and patents are made public and are limited in duration, trade secrets are private and can last indefinitely, if proper measures are put in place to ensure the confidentiality of such trade secrets.
In this regard, EU SMEs should develop trade secret protection strategy for their software. For example, a proper protection strategy will require entering into confidentiality agreements with the EU SMEs’ employees, independent contractors or other third parties that may have access to the software, ensuring limited access to the source code, and having password protection or another encryption method for documents containing the source code. In South-East Asia trade secrets are only enforceable, if they are appropriately protected, thus a comprehensive trade secret protection strategy combining the above is necessary.
Software and IP licensing
A significant portion of the income of software companies stems from licensing their software. EU SMEs wishing to enter the South-East Asian market may want tap on this business model to establish themselves in the local markets and subsequently enhance their market position, by licensing their software to local manufacturers, clients and other key players.
To license software, SMEs need to conclude license agreements. A license agreement involves a licensor assigning the exclusive rights of its IP to a licensee for an agreed fee or royalty. A license agreement should be in writing, must clearly identify the products being licensed, and state that the ownership of the IP contained in the products belongs to the company (licensor). The agreement must also identify the permissible uses of the products. Where there is access to a source code of a software programme, EU SMEs should consider including a confidentiality clause to ensure that their IP rights are sufficiently protected.
Additionally, the license agreement should clearly indicate the fee payable, as well as the manner and frequency of payment. The agreement should also provide for circumstances under which the agreement may be terminated, and clearly spell out the consequences of such termination.
Dispute resolution is another important clause that is often overlooked by parties to the license agreement. Increasingly, contracting parties provide for a multi-tiered alternative dispute resolution clause that includes several methods of alternative dispute resolution rather than litigation. For example, when a dispute arises, parties may attempt to amicably settle the dispute through negotiation, or mediation, followed by arbitration as the final resort. Alternative dispute resolution is often preferred because of lower costs as well as other advantages offered by alternative dispute resolution, including for example flexibility and confidentiality. Alternative dispute resolution is oftentimes seen as the most effective ways of enforcement of IP rights in South-East Asia.
When entering into IP license agreement, EU SMEs should also be mindful of the different restrictions on such agreements under the respective local laws. For instance, in Singapore, subject to certain conditions, a term of a license to work a patented invention that purports to require the licensee to acquire from the licensor, or to prohibit the licensee from acquiring from any specified person, or from acquiring except from the licensor, anything other than the product which is the patented invention may be void under the Singapore Patents Act.
South-East Asia IPR SME Helpdesk
The South-East Asia IPR SME Helpdesk supports small and medium sized enterprises (SMEs) from European Union (EU) member states to protect and enforce their Intellectual Property Rights (IPR) in or relating to South-East Asian countries, through the provision of free information and services. The Helpdesk provides jargon-free, first-line, confidential advice on intellectual property and related issues, along with training events, materials and online resources. Individual SMEs and SME intermediaries can submit their IPR queries via email (email@example.com) and gain access to a panel of experts, in order to receive free and confidential first-line advice within 3 working days.
The South-East Asia IPR SME Helpdesk is co-funded by the European Union.
To learn more about the South-East Asia IPR SME Helpdesk and any aspect of intellectual property rights in South-East Asia, please visit our online portal at http://www.ipr-hub.eu/.