IP exploitation strategy in South-East Asia

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Written by Marta Bettinazzi

In these changing times, we all need to find the time to prepare for the future and draft our strategy for success. This should also mean reevaluating our resources to see if we can make better use of them.

A good shift of perspective is to stop considering your intellectual property (IP) only as a cost (registration, maintenance). IP is an asset and you should learn how to make the best out of it. We will briefly look at the options that exist for exploiting intellectual property rights (IPR), then examine both the risks and the best practices to put into place in South-East Asia (SEA).

The best way to exploit your IPR depends on the kind of IP you own, but it can be summarised in two big categories: licensing and selling.man-sitting-near-fruits-723991

Selling means that you permanently transfer your IP (or better, the economic rights connected to it) to someone else. For example, you sell your patent to a bigger company that can mass-produce the invention you have patented or, more commonly, your IP is purchased as part of a merger-and-acquisition operation. In this case one company would acquire all the IPR that were part of your assets (trade marks, copyrights, patents, etc.). A famous example is the acquisition of WhatsApp by Facebook for the unimaginable price of USD 21 billion (more info here).

Licensing means that you, as an IPR owner (licensor), authorise someone to use your rights (licensee) in exchange for an agreed payment (fee or royalty).

This can allow you to expand your global presence and also ensure a source of revenue. On the other hand, the licensee can manufacture, sell, import, export, distribute and market various goods or services that they may otherwise not have had the rights to.

We can group the license agreements in three categories: Technology License Agreement; Trademark Licensing (and Franchising) Agreement; Copyright License Agreement.

Often these kinds of agreements are combined with and/or included in broader contractual settings, for example distribution contracts.

Therefore, the first step in an effective IP strategy is to review the agreements you already have in place with your partners and distributors to be sure that they include clear rules regarding the use of your IP.

In SEA it’s not uncommon for local distributors to register the IP (usually the trade marks) of their international partners under their own name. This way the local company acquires de facto an exclusive license on the product(s) of the SMEs. In fact, if the local company is the owner of the trade mark, it can prevent others from using it, including other companies authorised by the SME (the original owner of the trade mark). It might be said that you are in a marriage with your partner, and you might need an expensive and lengthy divorce (judiciary decision) to be able to leave it.

Before entering any kind of distribution agreement, give special attention to the difference between the registration of the trade mark (and IP in general) and the registration of the product itself. The latter is an administrative step needed to import a ‘new’ product into a country, but it does not ensure any protection for your IPR.

In other words, if your distributor is offering to do the product registration to allow you to import goods into the country, this does not imply that he/she is also going to help you with the registration of the trade mark or patent (or any other IP).

Keep in mind that a formal licensing agreement is possible only if the IPR you wish to license is also protected in the country or countries of interest to you. Without registering your IP in the country, you are not only unable to properly license it, but you also have no legal right to put any restriction on its use by anyone else.

Despite provisions in international treaties, courts and administrative bodies in SEA seldom extend protection to well know trade marks (see, as a reference, the famous IKEA case in Indonesia). Only Malaysia and Singapore ensure some level of protection for de facto trade marks and take into account the use of a non-registered trade mark.

On a side note, do not forget to consider registering your trade mark in local scripts as well, for example in Thailand, Malaysia, and Myanmar. This ensures complete protection for your trade mark, limiting the possibility of cheaper copycats riding on your reputation by using a transliteration of your trade mark. pink-and-white-weighing-scale-3964619

Also, note that many countries in SEA require license agreements to be registered if they are to be enforced. Some countries, like Thailand, also require the registration of trade mark licenses, others, like Vietnam, only require the registration of technology transfers.

To recap, be sure to register your IP before entering into any agreements with local partners. If this is not possible in the immediate future at least include a clause in your agreements to prevent the local company from registering your IP ‘for you’.

Technology transfer agreements can be very remunerative, but can also put your business at risk — you could be creating your own, stronger competitor. Therefore, it is advisable to either license a technology you have patented in the country where your counterpart will operate or you license something (an idea, a technology, some know-how, a recipe, etc.) that is secret. In this case, you have to be sure that your partner is bound by the same level of secrecy.

Reality is not that simple. Even if something is patented (and therefore publicly disclosed, for example in Europe) local companies might not be advanced enough to copy it, and may be interested in entering an agreement with you to acquire the know-how surrounding the patent.

This might present itself as an unpredicted and very welcome source of revenue for you, but you are running the risk of your new partner becoming your competitor in the future.

A good way to balance this issue is to bind your partner to secrecy regarding the unpatented part of the technologies.

As mentioned, technology transfers are not always encouraged by legislation in SEA and can often be subject to registration requirements. This means that if the agreement is not registered at the public office it cannot be enforced (in cases of breach or liability). Some countries have also limitations regarding the kind of technologies that can be transferred to and from their territory.

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In short: the best strategy is always to patent all your cutting-edge technologies in as many countries as possible (including new markets like SEA); combine a good patent strategy with a high level of secrecy and be aware of local legislation.

A final thought: do not forget to prepare all your contractual documents in both English and the local language and be sure to agree and sign the local language version. Most of the courts in SEA can only accept (and understand) documents in the local language. A later translation could be not only expensive but also problematic; your counterpart could propose their own translation of the text, which could lead to endless interpretation problems.

For more information you can have a look at our guides on trade marks, patents and technology transfers, or at our country factsheets.

Do not hesitate to reach out to the Helpdesk if you have any questions on IP in SEA.

Marta Bettinazzi

IP Business Advisor

South-East Asia IPR SME Helpdesk

E: marta.bettinazzi@southeastasia-iprhelpdesk.eu

W: www.southeastasia-iprhelpdesk.eu

 

DOMAIN NAME REGISTRATION AND PROTECTION IN CHINA

With the development and usage of World Wide Web, mobile internet and mobile phones, the Chinese E-Commerce market got an enormous growth. According to “Chinese E-Commerce Market Data Monitoring Report 2016”, the E-Commerce transaction amount reached 22.97 trillion RMB in 2016.

For both Chinese and international enterprises, to join this market is a trend but also a necessity. As one of the mainly path for entering E-Commerce market, the meaning of domain name registration is therefore getting more and more important.

Worldwide exist 330 million registered domain names currently. In China is the number in the amount of 50 million. China is becoming the second largest domain name market in the world. This market is interesting for both domain name service providers and enterprises as domain user. The foreign providers need to know the policy and rules for running a domain name business in China. And how to register and protect domain name in China is now an important issue that the enterprises should pay attention to. Continue reading “DOMAIN NAME REGISTRATION AND PROTECTION IN CHINA” »

E-Commerce Platforms Up, Trademark Holders Down!

The First China E-Commerce Law lightens the burden of E-commerce platforms when dealing with IPR infringements, while making it more expensive and burdensome for the holders of IP Rights!

The long awaited E-commerce Law of the PRC has been finally approved, entering into force on August 31, 2018. This is the first Law that expressly regulates the relation between IPR owners and e-commerce platforms. The Law seems to favor e-commerce platforms by shifting the whole burden to the right holders to prove infringement in case of disputed takedown notices. Compared to the established business practices, the Law appears to be more e-commerce than IP friendly.

1. An overview of the relevant provisions

Instead of providing strict rules regarding the protection of IP rights online, the new Law has simply codified the current practices on takedown notices. This will leave it to the e-commerce platforms to continue self-regulate the procedures for the takedown of IPR infringing content. In particular, the Law has neither introduced any measure or standards to lighten the burden of proof of infringement of the right holders when filing takedown notices, nor has provided a procedure of effective cross examination of the defenses filed by the alleged infringer in case of disputed takedowns. The platform retains the discretion to examine and interpret the evidence and is free from the burden of having to make a final decision in case of a disputed takedown notice. This is particularly critical in those cases in which the alleged infringer denies liability, shifting the whole burden on the right holders to overcome such refusals by filing judicial or administrative lawsuits!! As we shall see below, this will give counterfeiters a good tactical advantage and will likely increase the number of disputed takedown notices in the future.

Also, the Law does not provide any strict obligation and standards imposing on the platforms the creation of preventive IPR protection systems. Article 45 of the Law only provides a generic obligation for a platform to take appropriate protection measures if the former knows or should have known that a user has infringed others IP rights. Aside from failing to define the standard of “knowledge”, the provision refers to cases where the infringement has already taken place. No specific obligation to prevent postings of obviously infringing content has been introduced, thus freeing the platforms from the obligation and burden of having to take preventive measures. If any such measures are or will be in place, this will be the result of lobbying and self-regulation, and not a consequence of this new law.

As we mentioned above, the Law acknowledges that the IPR holders have a right to request the removal or the block of infringing content by filing a notice with the platform, which must be supported by prima facie evidence of infringement. This is nothing new. It has been the common practice of e-commerce to allow so called takedown notices supported by evidence of infringement.

Like in the consolidated business practice, the Law allows the alleged infringer to defend itself by filing a response to the notice supported by evidence. However, and unlike the text of the 3rd and last draft, the final text of the Law has added to the safe harbor rule of e-commerce platforms, a 15 days time limit for the IPR owner to file a litigation or complaint (maybe with the IP office) or drop the case. If a lawsuit/complaint is filed, the take down measures already taken by the e-commerce platform will remain in place, with the e-commerce platform’s measures becoming a de facto “preliminary injunction”. If not, the measures will be revoked. In practice, an unlike the previous drafts, the platform is taking no further responsibility in deciding who is right or wrong and the law helps her out of trouble by forcing the right holder to escalate the dispute to the judicial level. Continue reading “E-Commerce Platforms Up, Trademark Holders Down!” »

How to Remove Counterfeit Goods from E-Commerce Sites in South-East Asia

2. Credit CardE-commerce has also been growing in South-East Asia and it’s attracting many European Companies. Together with the growth of e-commerce, the presence of counterfeit goods on these e-commerce sites has also been growing. In today’s blog post we are discussing how to remove counterfeits from the major e-commerce sites like Lazada in South-East Asia. 

A growing middle class coupled with increasing internet access has led to fast-paced e-commerce growth in South-East Asia in the past decades. The middle-class population of ASEAN, according to expert estimates, may grow from 190 million in 2012 to 400 million in 2020[1] . Additionally, there are approximately 200 million people in South-East Asia with access to the internet and this number is expected to grow three-fold by 2025. E-commerce in South-East Asia can thus offer many promising business opportunities for the European SMEs.

Besides being a forum for legitimate vendors and original products, the internet is also used by unscrupulous businesses as a platform for the distribution of counterfeit goods which infringe intellectual property rights of others. The explosive growth in access to the internet has resulted in counterfeiters to move their illegal activities online. Online e-commerce websites might become easy and anonymous options for counterfeiters to reach out to potential customers as well as popular social media platforms. A recent study reported that 20% of 750,000 posts on the popular social media platform Instagram alone in relation to well-known fashion brands involved the offer of counterfeit products for sales, with many of the vendors identified to be based in China, Malaysia and Indonesia among others[2]. Continue reading “How to Remove Counterfeit Goods from E-Commerce Sites in South-East Asia” »

Domain Name Registration and Protection in China

matrix-2502958_1920Today’s blog post on domain name registration and protection in China has been kindly shared with us by China IPR SME Helpdesk external expert Daniel Albrecht from Starke Beijing. The article first appeared on the Starke Beijing website. In this article, Mr. Albrecht gives a comprehensive overview of how and why to register and protect internet domain names in China. 

With the development and usage of World Wide Web, mobile internet and mobile phones, the Chinese E-Commerce market got an enormous growth. According to “Chinese E-Commerce Market Data Monitoring Report 2016”, the E-Commerce transaction amount reached 22.97 trillion RMB in 2016.

For both Chinese and international enterprises, to join this market is a trend but also a necessity. As one of the mainly path for entering E-Commerce market, the meaning of domain name registration is therefore getting more and more important.

Worldwide exist 330 million registered domain names currently. In China is the number in the amount of 50 million. China is becoming the second largest domain name market in the world. This market is interesting for both domain name service providers and enterprises as domain user. The foreign providers need to know the policy and rules for running a domain name business in China. And how to register and protect domain name in China is now an important issue that the enterprises should pay attention to.

Chinese government is trying to improve their laws and rules of internet administration service. The Ministry of Industry and Information Technology of the PRC (MIIT) released a new version of the “Measures for the Administration of Domain Names on Internet” on September 1, 2017. These new measures took effect on November 1, 2017. The rules should further promote the foreign investment to come into the Chinese registration market on one hand; on the other hand encourage the user to choose the registrar, which is a in China registered legal person. At the same time the rules accelerate also the development of domain name with Chinese characters. Continue reading “Domain Name Registration and Protection in China” »