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

 

EUIPO: New Image Recognition Technology in Design and Trade Mark Search

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The European Union Intellectual Property Office (EUIPO) has implemented a new  artificial intelligence solution to allows its users to carry out image-based searches for designs and trade marks, with new algorithms both in eSearch Plus and TMView.

In the advanced search function of eSearch Plus, the new algorithms can make Locarno and Vienna class suggestions based on uploaded images, thus making searches for trade marks and designs easier. Users can upload up to seven view images of a design to see if anything similar is already registered at the EUIPO. This service is free of charge, supporting users before filing and afterwards, for monitoring purposes.

More details about the new AI solution and image-based searches are available at the EUIPO website.

Terroir IPR Part 1: Geographical Indications and IP Protection for Your Appellation of Origin

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The wine industry is characterised by a wide variety of producers, often very much linked to specific grapes, blends and terrains. The European Union has put in place a system of Geographical Indications (GIs), that are used to distinguish the origin of goods, often also linked to the quality and reputation of a purple-grapes-vineyard-napa-valley-napa-vineyard-45209specific product. In China, a large market for European wines, these GIs are as important, and once registered they are protected as trademarks. Nonetheless, as with trade marks, it is important to monitor the market for infringement of GIs and act against illegitimate users of your collective mark.
Wine has been classified by region for almost the entirety of its long and varied history, the Ancient Greeks stamped amphorae with the seal of the region they came from, and references to wine, identified by region are found throughout the Bible and other religious texts. Whilst this tradition of geographical identification continued throughout Antiquity and the Middle Ages, it was only in 1716, with the introduction of the Chianti region in Italy, protected by edict of the then Grand Duke of Tuscany.

Today, the concepts of appellation and terroir have spread around the world. France protects over 300 Appellation d’Origine Contrôlée (AOC)[1], and Italy over 400 Denominazione di Origine Controllata e Garantita (DOCG) and Denominazione di Origine Controllata (DOC) wines[2]. With similar systems and numerous varieties are grown and protected throughout Europe and the rest of the world, appellation of origin plays an important role in the classification of wines, as well as consumer decision making. As a result, the protection of the integrity of this classification system is of paramount importance to producers, distributors, retailers, and of course, consumers.

Protection of the appellation of origin of a product falls to the legal principles associated with so called Geographical Indications (GIs). Similar to trade marks, GIs are distinctive signs used to distinguish the origin of goods, thereby enabling consumers to accurately associate a particular quality or reputation with the products in question.

GIs differ from trade marks however in that rather than protecting a single producer’s rights, they protect a whole class, based on their geographical location and the production methods used. GIs therefore ‘belong to all those resident producers who comply with the specific by-laws and regulations set to ensure that the consumer ‘link’ between the quality /reputation of a product and its place of origin is maintained.[3]

Continue reading “Terroir IPR Part 1: Geographical Indications and IP Protection for Your Appellation of Origin” »

IP Protection Strategies in Indonesia for the Logistics and Transportation Industry

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Logistics3Indonesia’s logistics and transportation industry is growing rapidly due to the strong economic development of the country and gradual increase in domestic demand fueled by the rise of the country’s middle class.  Opportunities for logistics providers also continue to expand thanks to the strong growth in Indonesia’s e-commerce sector.  

However, transportation costs in Indonesia are still significantly higher than in many of its neighboring countries. This is reasonably due to the geographic challenges that Indonesia faces as a conglomerate of thousands of islands composing the country, and also due to Indonesia’s strict logistics and transportation policies regulating import and export of goods. For example, the requirement that ships with imported cargo are obliged to call at particular ports, which means, for example in the case of agricultural imports, that they all would need to go through Surabaya port before being shipped to the other markets where they are needed1  causing an inevitable congestion of shipments rather than a procedure to streamline the logistics. 

On the other hand, as an emerging and fast growing economy, the industry is expected to offer in the near future many lucrative business opportunities to European SMEs specialised in logistics, as also recently outlined by Indonesia’s President including ambitious expenditure plans for building new roads, airports and railways and to develop a modern maritime transport system together with better regulations2.    

European logistics and transportation SMEs wishing to enter the Indonesian market need to keep in mind that despite improvements in Indonesia’s IP laws and regulations, counterfeiting and other IP infringements are still  commonplace in Indonesia and thus robust IP strategies are needed to grow their business in Indonesia.  

Continue reading “IP Protection Strategies in Indonesia for the Logistics and Transportation Industry” »

Bodega Branding: The How, What, When, and Why of Wine IPR Protection

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In our last article we sang a song of growth and prosperity for the wine industry in China, fuelled by the staggering figures of industry growth and Chinese wine consumption in recent years. This was tempered somewhat by the somewhat tragic tales of the relatively unimpeded development of a parasitic counterfeiting industry which continues to sap the profits of wine producers, damage reputations, and in some cases harm consumers in the process1. 

Today however we’ll be striking a more positive note, and looking at how producers and distributors can utilise the established IPR protection framework maintained by the People’s Republic of China and defend the reputation of their products. 

Traditional Anti-Counterfeiting Measures 

Tamper proof seals, holograms, and other authentication technologies have long been used by vintners to identify the authenticity of their products to their consumers. Unfortunately, counterfeiters have been working almost as long to develop copies of these so-called preventative measures, and as a result they have done little more than slow the progress of counterfeiters in copying new products. 

In fact, even if consumers have the inclination or opportunity to check these identifiers, the sophistication of counterfeiters has now reached the point where even the producers themselves have difficulty in identifying fakes, and are forced to rely on laboratory testing to identify counterfeits2. 

Producers and distributors can no longer rely on traditional, physical measures alone to combat counterfeiting, and must also take advantage of the other tools at their disposal. 

Continue reading “Bodega Branding: The How, What, When, and Why of Wine IPR Protection” »