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

 

The role of Intellectual Property in the development of a green future in the ASEAN countries

The COVID-19 pandemic hitting the entire world has provided big challenges for 2020. But this new problem should not make us forget the bigger picture, and the even bigger challenges: Climate change is now a reality, and we are all called to act to prevent the worst scenarios.IPday2020_Profile_picture_Social_Media_2

This is why this year the WIPO has decided to dedicate their World Intellectual Property (IP) Day 2020 to a green future, focusing on innovation — and the IP rights (IPR) that support it.

The IP community should work together to foster green innovation, especially in developing countries.

In this examination, we are going to try to understand the current role of green technologies in the ASEAN countries, and at the same time, see how IP can fit into the picture.

It’s no secret that in recent years, Asia has based its economic growth on a ‘grow now, clean up later’ model. Economic success has come at a high environmental cost. Taking Indonesia as the main example, we can see that deforestation and peatland burning are major sources of greenhouse gas emissions and drivers of biodiversity loss. While an increasing number of countries have committed to phasing out unabated coal use, Indonesia’s 2014 National Energy Policy envisages nearly doubling it by 2025 (compared to 2015 levels) to achieve an affordable electricity supply for all.

Pollution is not just putting pressure on the natural capital of the country, but could ultimately put the economic development and the wellbeing of its citizens at risk.

This is not just unacceptable from a moral standpoint, it’s also highly inconvenient from an economic point of view.

This is why we are starting to see a slight change in attitude towards green technologies from the peoples and the governments of the ASEAN nations.

According to a report by Clean Energy Pipeline (quoted by Intern Asia), investments in solar projects in Southeast Asia increased at an annual growth rate of 8 % between 2010 and 2014.

Since there are still 70 million ASEAN citizens without access to reliable electricity, the potential for renewable energy is huge — and solar energy is one of the best solutions.

Energy production is one of the main focuses of green development, but it’s not the only one. Waste management, water purifying, clean building and smart cities are among the top priorities. There is also an increase in demand for ‘green’ products from consumers that are developing an environmental consciousness.

This huge demand for new technologies and innovative solutions also provides an opportunity for SMEs to contribute to a greener future.

As the WIPO suggested, ‘Transitioning to a low-carbon future is undoubtedly a complex and multi-faceted endeavour. But we have the collective wisdom, ingenuity and creativity to come up with new, more effective ways to shape a green future and the IP system has a pivotal and enabling role in supporting us on this journey.’

IP alone cannot ‘make the innovation happen’, however, without IP an innovation framework would be doomed to collapse.

It cannot be doubted that fostering and protecting innovation is one of the main functions of IPR. Without IP protection, investments in intangible assets would be less secure; these assets could not be claimed, protected or traded. In other words, if any competitor can use intangible assets without an investment, no investor will be willing to risk their capital.

This is especially true for patents. Patents ensure inventors have the exclusive right to exploit an invention; this form of commercial reward can potentially encourage companies to invest in new, clean and efficient technologies. On the other hand, patented technologies are disclosed to the public, this ensures that the technical knowledge surrounding invention research is publicly accessible and can inspire further innovation. The WIPO and many IP offices around the world, including the European Patent Office (EPO), have implemented better databases to promote the dissemination of information regarding green tech and, in the end, the development of new inventions.

Patents are also pivotal in the business strategy of many green companies; they do not just attract and secure funding, they are also a source of revenue (through patent licensing and technology transfer agreements, non-commercial licenses and other arrangements).

Collaboration between government and startups has been seen to help meet climate challenges while growing small businesses. It’s not a huge surprise, but it’s still worth noting, that US-based startup patents in green-tech development tend to rise by 73 % when there is a collaboration with government behind them.

However, when it comes to the international exploitation of patents, some caution is needed.

IP protection is territorial, this means that your patented invention is not automatically protected in the world, while it’s disclosed worldwide. Therefore, preparing a good international patenting strategy and/or putting in place additional protections, for example wrapping your technology in Non-Disclosure Agreements, is of paramount importance.

Also keep in mind that free technology transfers are not always encouraged by ASEAN governments that prefer to keep some form of control over them, for example by imposing registration obligations on contracts.

Moreover, according to the TRIPS Agreement (here), national laws can provide exceptions to the exclusive rights conferred by a patent, as long as they are not unreasonable and properly balance the expectations of the patent owner and those of third parties. Some countries, including Indonesia, have taken advantage of this provision to impose some form of compulsory licenses.

As mentioned, instead of patents you can rely on trade secrets to protect your new technologies. This is particularly useful for SMEs as trade secrets don’t need to be registered, so they don’t have cost implications or time limitations. However, trade secrets provide weaker protection, and the best strategy is probably to combine patents with trade secrets.

As a general rule, a good IP strategy is not limited to patent protection — and the green sector is no exception.

Design protection can, for example, play a very important role in providing protection from copycats and cheap reproductions. A small change in the design of a product can significantly change its performance in terms of energy use (for example in vehicles or aircraft). In ASEAN countries, protection for industrial designs is quite sophisticated and is usually less constrained and easier to obtain than patent protection.

Software and, in particular, Artificial Intelligence have, and will have, an important role in the development of new solutions for a green world (for example, helping to measure and regulate demand, and offering energy-optimizing resource use).

From the traditional viewpoint of IP law, software is protected as a literary or artistic work under copyright. This is not the time nor place to discuss if copyright is the best way to protect software and the problematic topic of the patentability of computer-based inventions. Let’s work with what we have.

The good news is that thanks to the Berne Convention copyright does not entail any formal registration process and arises automatically upon the completion of the work. This protection should be ensured in every country that is a member of the convention (including ASEAN ones). However, registration is advisable as it provides proof of ownership in potential conflicts.

As mentioned, the green economy also means that greener options are available to consumers. In ASEAN countries, the middle class is developing an interest in healthier foods. This includes many European Geographical Indications (GIs), as they are perceived to be natural and good. GIs, as well as attracting consumers, also provide a good way to uphold sustainable production standards.

Finally, do not forget the power of branding! Your trade mark is your value and your reputation, if you manage to build a strong bond with your consumers and market yourself as a legitimate ‘green brand’ you will acquire more and more customers that share your values.

However, do not forget that the best trade marks are the distinctive ones. Simply adding ‘green’ to your name might convey a good message, but it can be deemed to be a descriptive element and hinder your trade mark protection. It’s always better to choose trade marks that, as well as being connected to green topics, have a more distinctive flavour. Think about plants, animals or even rocks … be creative!

It’s worth noting, that if you claim to be green and clean you should be. Otherwise, you will not just be betraying the consumers’ faith, but also breaking consumer protection laws.

Protecting your brand and registering your trade marks is even more important when doing business in areas like SEA where counterfeiting is rampant. Registering a trade mark early is the first, and sometimes also the most effective, step towards protecting yourself.

To sum up, a good IP strategy can foster growth in every sector, in particular in fast-developing industries like green tech. Be ready and do your bit.

Happy IP Day!

 

South-East Asia IPR SME HD: https://www.southeastasia-iprhelpdesk.eu/

 

WIPO World Intellectual Property Day 2020 – Innovation for a Green Future: https://www.wipo.int/ip-outreach/en/ipday/2020/green_future.html

 

AIPPI Report on Intellectual Property and Green Technology, 2014: https://aippi.org/enews/2014/edition38/images/reports.pdf

 

OECD Green Growth Policy Review, Indonesia 2019: https://www.oecd-ilibrary.org/sites/1eee39bc-en/index.html?itemId=/content/publication/1eee39bc-en

 

ASEAN fast becoming a renewable energy hub: https://theaseanpost.com/article/asean-fast-becoming-renewable-energy-hub

 

Eurocham Vietnam Greenbook: https://www.eurochamvn.org/node/16988

 

The Role of IP Rights in Green Technologies Innovation: http://metispartners.com/2019/11/22/the-role-of-ip-rights-in-green-technologies-innovation/

 

Green technology in Asia: https://www.internasia.com/Green-technology-Asia

 

Environmental issues are top priority for Asia’s youth: https://www.eco-business.com/news/environmental-issues-are-top-priority-for-asias-youth/

 

Compulsory Licensing Procedures in Indonesia Revised: https://www.rouse.com/magazine/news/compulsory-licensing-procedures-in-indonesia-revised-again/

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” »

IP Enforcement Litigation in Taiwan: Some Basics

courtToday’s blog post has been kindly shared with us by our external experts Mr. John Eastwood and Ms. Eve Chen from Eiger. In this article, Mr. Eastwood and Ms. Chen give a basic overview of IP enforcement litigation in Taiwan. You will learn more about the options you have in Taiwan to take action against the infringements of your IP rights and how to prepare to defend your rights. The article first appeared on Eiger website.  

INTRODUCTION

Rights holders looking at Asia-Pacific enforcement budgets often have to make hard decisions about where to take action. Although Taiwan’s population is small (about 22 million), it has a big role in financing massive overseas infringement in China and Southeast Asia and it is still a major manufacturer of fake optical-media products (CDs, DVDs, CD-ROMs), auto parts, and high-tech products involving infringements of patents and misappropriation of trade secrets. Fortunately, the Taiwan court system offers some solid options to rights holders who want to take action.

PREPARING FOR ACTION

Rights holders need to prepare evidence and documents establishing their rights and the facts of infringement before they take action, as the Taiwan police, prosecutors and judges involved with authorizing raid actions are sticklers for details. As a preliminary matter in trademark and copyright cases, it is important to assemble copies of the Taiwan trademark certificates (front and back sides) and any supporting documentation needed to establish copyright protection. Continue reading “IP Enforcement Litigation in Taiwan: Some Basics” »

IP Protection in the Philippines for the Environmental Technologies Industry

MC900437625In today’s blog post we take a closer look at how European SMEs can protect the IP rights of their environmental technologies in the Philippines. This sector has recently started to boom and offers many promising business opportunities to European SMEs. You will hear more about patent protection and trade mark protection. We will also offer some tips on how to enforce your rights. 

European SMEs that are working on high-tech sustainable solutions for environmental problems find the Philippines quite a promising market. The country that is highly vulnerable to climate change faces many environmental challenges including deforestation, costal degradation, air and water pollution as well as issues arising from waste disposal, just to mention the few most pressing issues. At the same time, the government of the Philippines is committed to looking for solutions, including sustainable high-tech solutions to the most pressing environmental issues, as it is annually allocating over 16 million EUR for climate change adaptation and mitigation funding[1].

European SMEs offering technological solutions to energy efficiency issues, environmentally sustainable transportation, sustainable infrastructure or waste management sectors, are expected to find many promising business opportunities in the Philippines, as these are the sectors that the government of the Philippines is highlighting as the priority sectors in its National Framework Strategy on Climate Change 2010-2022.[2]

European environmental technology providers wishing to enter the Philippines’ market need to keep in mind that despite the recent improvements in the Philippines’ IP laws and regulations, counterfeiting and other IP infringements are still commonplace in the country and thus a robust IP strategy is needed to grow their business in the Philippines. Continue reading “IP Protection in the Philippines for the Environmental Technologies Industry” »