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

 

What to Pay Attention to When Registering Designs in Singapore: A Case Study

shutterstock_385731427Today’s second blog post takes a closer look at what SMEs should pay attention to when registering their designs in Singapore. It gives a brief overview of design protection in Singapore, followed by a case study demonstrating the importance of consulting with local experts or lawyers before filing for design registration in Singapore. 

Registered Designs in Singapore

A registered design is a right granted to the owner of a design to stop others from making, importing or selling, without their permission, an article to which that design or a design not substantially different from it has been applied.

In order to obtain a registered design, the design must be ‘new’ (i.e. not yet published or disclosed to the public) at the time the application for registered design protection is filed. It is possible to claim the filing date of an earlier application filed in a country that is a member of the Paris Convention or World Trade Organisation (WTO) for protection of the same design, provided that the Singapore application is filed within six months of the earlier application. Therefore, SMEs should ensure that their design is not disclosed to others until an application has been filed.

SMEs should consider applying for a registered design as soon as possible, as Singapore has a ‘‘first-to-file system’’. That is, the first person to file an application in respect of the design will have priority over others. This means that if a third party files his/her application on the design before the design owner, any registered design obtained afterwards will be in danger of being revoked for lack of ‘novelty’.

Singapore became a Member of the 1999 Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs on April 17, 2005. The Hague Agreement makes it easier for foreign businesses to obtain industrial designs in Singapore. Continue reading “What to Pay Attention to When Registering Designs in Singapore: A Case Study” »

The Importance of Patent Ownership in Employment Contracts in Indonesia: A Case Study

patent-without backgroundToday’s blog post explains the importance of identifying patent ownership in employment contracts. The blog post gives a brief overview of patent protection in Indonesia followed by a case study demonstrating the need to be clear on patent ownership.

Patents in Indonesia

A patent is a right granted to the owner of an invention to prevent others from making, using, importing or selling the invention without his permission. A patent may be obtained for a product or a process that gives a new technical solution to a problem or a new method of doing things, the composition of a new product, or a technical improvement on how certain objects work.

Indonesia adopts a ‘first-to–file’ patent system, meaning that the first person to file an IP right in the Indonesian jurisdiction will own that right once the application is granted. Two types of patent are recognized in Indonesia – ‘Standard Patents’ (for products and processes) and ‘Simple Patents’ (for products only). The process for obtaining a Simple Patent is supposed to be shorter, however, there is a reduced term of protection in this case, as indicated below. For all applications, applicants need to specify the scope of the protection sought and to explain how to work the invention by means of technical descriptions and drawings. Continue reading “The Importance of Patent Ownership in Employment Contracts in Indonesia: A Case Study” »

The Importance of Voluntary Copyright Registration in Malaysia: A Case Study

shutterstock_176603774In today’s blog post we will be taking a closer look at the Copyright registration in Malaysia. The article demonstrates through case study the importance of voluntary copyright registration in Malaysia 

Copyright in Malaysia

Copyright in Malaysia protects literary, artistic, musical and dramatic works. Copyright also protects sound recordings, published editions, films, broadcasts and performer’s rights. Copyright ownership could be held either by the author, his employer or the person who commissions the work.

It must be noted that an author retains the right to have his name identified as the author of the work based on what is called a moral right. The author also has the moral right against the distortion, mutilation or other modification of his or her work. Ownership of copyright entails an exclusive right to commercially exploit the work. A classic example of commercializing a copyrighted work is the distribution of copies of the work for sale. We can see this in traditional commerce such as books and compact discs. As an intangible property, copyright can also be licensed or assigned to third parties for royalties. When licensing, it is important to determine the extent of copyright use that is permitted.

In Malaysia, copyright exists as soon as the original work is created and belongs to the creator of the work automatically. There is no formal requirement for the work to be registered in order for copyright to be claimed or recognized, however a copyright owner may voluntarily register their copyright in Malaysia. Registration is still advisable for foreign SMEs as the registration can be extremely useful in enforcement proceedings as evidence of your ownership. To claim copyright ownership (i.e. to forewarn infringement), a notice with the symbol © may also be placed in/on the work followed by the name of the owner and the year of first publication. Continue reading “The Importance of Voluntary Copyright Registration in Malaysia: A Case Study” »

IP Considerations for the Textile Industry in Indonesia

towels-1511875_1920In today’s blog post, we are taking a closer look at the IP protection in Indonesia concerning textile industry. As the industry is attracting investments and offering many business opportunities, it is vital to remind to European SMEs about the importance of IP Protection. In this article you’ll  learn how to protect your brand, your design and patterns as well as your textile machinery. 

Being one of the 10 largest textile producing countries in the world, Indonesia has a vibrant and growing textile industry that contributes a considerable amount to the country’s GDP and offers employment to over 3 million people.[1] Furthermore, Indonesian government is committed to further developing the country’s textile industry and to increasing the nation’s value of exported textiles to 64 billion EUR in 2030[2]. The anticipated conclusion of the Free Trade Agreement between the EU and Indonesia would further offer European SMEs some promising business opportunities in Indonesia’s textile sector.

At the same time Indonesia’s textile industry still uses relatively old weaving and knitting machinery and is in need of new technologies if it wishes to stay ahead of its competitors in the region like Vietnam and Cambodia. This offers further business opportunities for European SMEs whose top-notch technology is highly appreciated in the region.

European SMEs, however, need to pay attention to protecting their intellectual property rights because despite improvements made in Indonesia’s IP laws and regulations, IP infringements are still commonplace in the country. IP rights are a key factor for business success and neglecting to register these rights could be very costly for SMEs. Thus, a robust and comprehensive IP strategy is needed when entering Indonesia’s market. Continue reading “IP Considerations for the Textile Industry in Indonesia” »