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.

Intellectual property violation in Thailand and the Philippines thriving during Covid-19

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WRITTEN BY XUAN NGUYEN

Due to the social distancing measures imposed during the Covid-19 pandemic, people are massively relying on the internet for both their work and their leisure activities. Online shopping has dominated the market as a result of quarantine and isolation.

The Covid-19 emergency has engendered many challenges for intellectual property (IP) protection thanks to the rocketing increase of counterfeit goods being offered for sale on the internet. This is especially prevalent among products in high demand, such as facemasks, hand sanitisers, antiviral medication, vitamins, pharmaceuticals, foods, beverages, household products, electronics, DIY tools, entertainment technology, etc.

In this article, we present some updated statistics reflecting the alarming rise in IP infringement during the crisis in some South-East Asian countries.

Thailand

According to the latest IP Enforcement Statistics for Thailand, the number of raids and seizures between January and April 2020, compared to the same period in the previous year, has risen acutely (by 31.82% and 1 967.6%, respectively).

Thailand

Philippines

The Intellectual Property Office of the Philippines (IPOPHL) recently published 2019 vs 2020 IP rights violation data showing the dramatic surge in complaints that they received in the first 6 months of 2020 compared to the previous year.

Philippines

Suggestions for protecting your IP during the crisis

  • Proactively monitor e-commerce and social media platforms. As counterfeiters overwhelming use online platforms to sell their products, regularly checking to detect fakes and initiating early interventions will save you a lot of money and time. Online shopping makes payments cashless; this also enables companies to easily track and investigate the sources of fake goods. This is a big advantage when it comes to stamping out counterfeiting.
  • Conduct online trainings and encourage the community to report fakes. Providing trainings to consumers on how to distinguish between authentic products and fake ones, and on where they can buy the real ones, is worthwhile. Companies should also encourage the community to report cases of counterfeiting and make online tools available so people can easily submit complaints.
  • Take-down notices. If you have reliable evidence of counterfeit goods being sold on e-commerce or social media platforms, prepare a take-down notice (with the supporting documents necessary) asking the operators to immediately remove the infringing products.
  • Inform the competent authorities. For larger cases, you can consider to inform the competent authorities to promptly stop the infringement, for example by blocking the importation of the counterfeit goods or by seizing them.
  • Seek advice from local IP experts. It is always advisable to consult local experts with experience in enforcement to be sure you are doing things the right way; in South-East Asia, neither the law nor business practices are the same as in Europe.

 

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

COVID-19 and overwhelming amounts of counterfeits online: What businesses should do — right away!

Written by Xuan Nguyen

 

According to an update from the World Health Organization (WHO), by 15 April 2020 the coronavirus disease (COVID-19) had already infected 1 918 138 people in 213 countries, territories and areas, resulting in 123 126 deaths. Various governmental interventions have been applied, including border closures, strict quarantines, travel bans, and the forced closure of many businesses. 

It is expected that a deep economic crisis will follow the pandemic (which is still evolving and unpredictable). So far a dramatic slump in economic activities has been witnessed, affecting not only the supply chain (production of goods and services) but also demand (consumption and investment). Many people are forced to stay at home, factories have stopped operating, restaurants, shops and public places are closed. Consumers are being driven toward online shopping marketplaces. While major parts of the world, including, Europe, the USA and a lot of Asia, are struggling to fight against the crisis, in China the situation is now apparently under control and factories are gradually returning to normal.

Photo source: https://pixabay.com

Photo source: https://pixabay.com

The current situation has also created fertile ground for the sale of counterfeit goods online, especially in sudden upsurge sectors such as pharmaceuticals and medical devices. According to Interpol, during one week of action (3–10 March 2020), authorities in 90 participating countries seized more than 4.4 million units of illicit pharmaceuticals, more than 37 000 unauthorised and counterfeit medical devices, and closed down more than 2 500 web links, including websites, social media pages, online marketplaces and online adverts for illicit pharmaceuticals[1].

In South-East Asia all 10 countries have reported a substantive number of COVID-19 cases. Since there was already a high number of local counterfeit manufacturers available, and a significant trade exchange with nearby China, the region is very high risk in terms of counterfeits invading the market. Recently, Thai police seized 45 000 fake COVID-19 test kits, 350 000 medical masks, and 1 200 infrared thermometers that were smuggled into the country by two Chinese men. All products sold online claiming to be COVID-19 test kits at the moment are fake, according to the Thai Food and Drug Administration (FDA)[2].  Vietnamese authorities also found that a company in Vietnam had been making masks out of toilet paper amid the coronavirus outbreak and skyrocketing demand[3].

These figures are just the tip of the iceberg. There are overwhelming numbers of counterfeit products. This article will discuss how counterfeits are being fueled by an online market and what the brand owner should do to mitigate the impact.

Why have counterfeits surged in the shadow of the COVID-19 outbreak?

  • The COVID-19 crisis has resulted in a spike in demand for essential products, such as personal protective devices (facemasks, hand sanitizers and antiviral medication), vitamins, pharmaceuticals, foods and beverages, as well as non-essential products, such as cosmetics and personal care items, household products, electronics, work-from-home tools, entertainment technology and children’s toys. Meanwhile, the majority of factories are being shut down, causing the shortage of supplies of genuine products. ‘In moments of high demand and rushed buying decisions, counterfeiters can jump on the opportunity and sway buyers in their direction[4].’
  • People are shopping online much more than ever. According to analysis by ACI Worldwide, ‘The COVID-19 crisis is driving the global growth of e-commerce sales, with millions of consumers worldwide in quarantine shopping for goods, services and entertainment online. Transaction volumes in most retail sectors have seen a 74 percent rise in March compared to the same period last year.’ The dark side of this phenomenon is that people can be more easily tricked. Many sellers use photos of genuine products while offering extremely low prices to attract online buyers during a time of crisis, and then provide fake products to consumers. It can also create a backlash for brand owners, leading consumers to mistakenly believe the product quality is very low and to lose interest in the brand.
  • The crisis has caused an immediate reduction in the income of many people across the globe, and consumers are looking for the cheapest possible versions of goods because of their reduced budgets. While the pandemic is still evolving, millions of people have lost their jobs following business restrictions and closures. According to a report by the International Labour Organization (ILO), if we are experiencing a ‘“High” scenario where COVID-19 has serious disruptive effects, reducing GDP growth by around 8 percent: Global unemployment would increase by 24.7 million, with an uncertainty ranging from 13 million to 36 million[5].’ Given the current environment of uncertainty and fear, and the real threat of significant declines in income, consumers in many economies are unable to purchase branded goods and services as before; buying cheap counterfeit products can be a tempting option.
  • Many counterfeit suppliers are concentrated in China where the situation is under control and factories have gone back to their normal operations. This means counterfeiters may be in a better position to jump onto the upsurge in demand before legitimate sellers can reopen production. Amid the panic of the crisis, a lot of companies, especially small and medium-sized enterprises (SMEs) are concentrating on solving critical issues such as declines in revenue, insolvencies and job cuts, rather than keeping an eye on monitoring the marketplaces for fakes. As a result of the lack of the legitimate owners’ attention, counterfeiters can more easily flood the market with fakes.
  • Customs checks, market investigations, and raid and seize activities have been reduced following social distancing and safety measures. In the same way as many other public services during this health crisis, officers involved with anti-counterfeiting activities have been physically limited to avoid the risk of infection. This means that infringers have more opportunity to take a free ride on the market.

What should brand owners do?

During volatile market conditions and the resulting increase in online shopping, consumers easily become targets for counterfeiters. Brand owners need to stay on top of monitoring and combating fakes more than ever. Otherwise, they may lose sales to counterfeiters.

  • Focus on monitoring e-commerce and social media platforms and proactively communicate with the customers. During the current social distancing measures and travel bans, a majority of customers has been using the internet for buying stuff instead of shopping physically, you need to keep a close eye to the net to protect your revenue and maintain safe channels for your business during the crisis, and after it ends. When some sectors have a spike in demand while genuine supply chains are being disturbed, fakes become a more serious issue. Brand owners should be more protective about their communications with their consumers, guiding them to available supply channels with authentic products and warning them about fakes.
  • 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 quickly 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: Utilise the available complaint functions on the e-commerce platforms and encourage social media operators to quickly take down infringing products. In the meantime, as a legitimate brand owner, you can also consider sending Warning Letters to the counterfeiter to ask them to stop their illegal activities.
  • Inform the competent authorities: In South-East Asian countries, local governments have recently made many efforts and improvements in combating online counterfeits. Brand owners can find available complaint tools — such as hotlines, emails or complaint submissions on the websites of customs, market police departments and other relevant national bodies — to promptly notify the authorities.
  • Seek advice from local IP experts. In critical cases, companies are usually advised to consult with local experts that are familiar with infringement cases and have close relations with enforcement bodies such as customs, investigators and the police. It is worth noting that many counterfeits are advertised in local languages or posted on local websites, so monitoring using detection software or search tools (usually in Roman characters) doesn’t work effectively.

The COVID-19 pandemic is unprecedented. Our lives, and the way we do business, have changed in recent weeks. Brand owners should swiftly adapt to the new situation to protect their businesses against counterfeiters. Neglecting this during the crisis might cost you more than you imagine, i.e. from losing your faithful customers to losing your entire share of the market. Keeping your company safe amid the chaos, and getting ready for normal business to resume, is the only way to retain both your revenue and your reputation.

[1] https://www.interpol.int/en/News-and-Events/News/2020/Global-operation-sees-a-rise-in-fake-medical-products-related-to-COVID-19

[2] https://thethaiger.com/coronavirus/big-arrest-on-price-gouging-of-covid-19-safety-gear-and-fake-test-kits

[3] https://www.insider.com/vietnam-company-using-toilet-paper-for-coronavirus-masks-faces-penalty-2020-2

[4] https://www.redpoints.com/pdfs/market-research-impact-of-covid-19-on-ecommerce-sales/?utm_campaign=HS284-market-research-survey-impact-of-covid-9-on-ecommerce-sales&utm_medium=email&_hsmi=84691783&_hsenc=p2ANqtz-_KXO0X8sOU11ZaL9gXi53LxFBQjYdtj-ZtCHwLlocKYxHxgibn05yKKsXyfyIzVAccGKAF&utm_content=84691783&utm_source=hs_automation

[5] https://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/documents/briefingnote/wcms_738753.pdf