October 30, 2013

Managing IP Roundtable: How to Approach IP Rights Across ASEAN

Rights holders are looking to Southeast Asia as the next growth region. In this virtual roundtable in the November 2013 edition of Managing Intellectual Property magazine, attorneys from various law firms explain the latest changes in the region. The Tilleke & Gibbins team focused on updates in Indonesia, Laos, Myanmar, Thailand, and Vietnam. Our responses are provided below, while the full roundtable is available on the Managing IP website.

Have any law changes been passed in your jurisdiction in the last 12 months and what effect will they have on IP owners? Are any law changes under discussion?

Darani Vachanavuttivong: In Thailand, a great number of amendments have been proposed for the country’s IP laws. Out of all of them, however, the amendments to the Trademark Act have been the most progressive. The current Trademark Act will be amended in two sets of proposed amendments, with the first seeking to provide protection for new types of marks, including smells and sounds, allow multiple-class applications, change the maximum number of days for oppositions and responses to official actions to 60 days, instead of 90 days; allow for a six-month expiry grace period for trademark renewals, and increased government fees. The second set of proposed amendments will make the registration process less time-consuming, cancel association mark requirements, and as a result, allow for partial assignments, and ensure Thailand’s compliance with the Madrid Protocol by 2015. The amendments to the Trademark Act are currently being reviewed by Parliament and are expected to come into effect by 2014.

Thomas Treutler: In Vietnam, on August 28, the government passed Decree No 99/2013/ND-CP (Decree 99) on administrative measures for handling violations regarding intellectual property rights. This will come into effect on October 15. Decree 99 could have a major impact on IP owners, as administrative measures are more common than criminal or civil measures for handling IP violations in Vietnam.

Among the changes instituted under Decree 99 are the following:

  1. Increased fines, with fines on companies are now twice as high as fines on individuals.
  2. Fine levels for counterfeit marks or stamps based on the quantity of counterfeit marks or stamps seized. This is a major change from the previous legislation, which did not take quantity into account.
  3. Stricter procedures for resolving disputes regarding company names and domain names, and stronger legal consequences for infringers. The timeframe for an infringer to voluntarily change its company name or withdraw a disputed domain name has been shortened, and if the deadline is missed, the competent authorities can now automatically change the infringing company name or domain name.

Have the courts handed down any landmark IP cases in the last 12 months? What was important about them?

Darani Vachanavuttivong: Two recent Supreme Court judgments in Thailand provide new insights into how brand owners can achieve concurrent-use registration under Section 27 of the Trademark Act.

In Anna Sui v Department of Intellectual Property, the Supreme Court allowed concurrent-use registration, despite the registrar’s finding that the plaintiff’s word mark Anna Sui was confusingly similar to the prior-registered trademarks Anna Is and Anna in a designed square, covering the same types of goods. The Court recognized the plaintiff’s mark was registered in the United States in 1983; products under the mark had been widely distributed and promoted for a long time in many countries, including Thailand; and “Anna Sui” is the name of an American fashion designer. The Court determined that the mark Anna Sui was created without copying the marks of any other party, and that the mark was used in good faith before the prior trademark application was filed in Thailand.

In Matsuda & Co v Department of Intellectual Property and Valentino, the trademark application for Valentino Rudy & V device was rejected, because it was confusingly similar to the mark Valentino & V device, the goods were in the same class and there was no evidence showing use of the mark with the applied-for goods in Thailand before the application date of the mark.

Based on these decisions, it is clear that use of a trademark in Thailand is very important when seeking registration under Section 27.

What advice would you have for IP owners looking to enforce their rights in your country?

Titirat Wattanachewanopakorn: There are both criminal and civil remedies available to enforce intellectual property rights in Thailand. An IP owner may pursue a criminal suit against an infringer directly before the Central Intellectual Property and International Trade Court (IP&IT Court), or cooperate with the Royal Thai Police or the Department of Special Investigation to launch a raid action against a retailer, wholesaler, distributor, or manufacturer involved in counterfeiting activities. For civil cases, an IP owner may file suit against an infringer with the IP&IT Court to seek a permanent injunction and compensation to recover any actual proven damages. Alternatively, an IP owner can submit a formal letter to request assistance from the Department of Intellectual Property to mediate and resolve such IP dispute in an amicable manner.

In addition, by filing an application to participate in the Customs Watch List, the Customs Department will actively monitor for suspicious shipments that may contain counterfeit goods and will immediately contact the IP owner or its local representative when they detain possible counterfeit goods. If the IP owner confirms that the seized goods are indeed counterfeit, the importer or infringer will be charged with a violation of the Customs Act and the Trademark Act or Copyright Act.

In Laos, an IP owner can initiate a criminal case against an infringer by filing a complaint with the Economic Police or by pursuing a criminal suit directly before the People’s Court. An IP owner can also pursue civil litigation with the People’s Court to obtain a court order to seize the counterfeit goods, cessation of the infringing activities, compensation, reimbursement for damages and expenses incurred by the IP owner, destruction of counterfeit goods and disposal of materials and tools related to infringing activities. In practice, however, IP owners must first consult with the Laos Department of Intellectual Property (DIP) about such violation of intellectual property and request that anti-counterfeiting administrative proceedings are implemented prior to initiating any criminal or civil actions. If the infringer fails to comply with a demand for settlement or ignores the orders of the DIP, the information and evidence from the administrative proceedings can be used during the trial.

Customs recordation is available as an option for IP owners who want to stop counterfeit goods that violate the IP from entering the country and being exported to other countries. In the case that an IP owner or its local representative comes across information about a possible shipment containing counterfeit goods, they can file a request with the Customs Department to detain that particular shipment and inspect the suspect goods at the border on a case-by-case basis.

What are the key issues that patent owners should be aware of when filing in your country?

Somboon Earterasarun: A key characteristic of the patent system in Indonesia is that a request for substantive examination may be filed at the same time as filing an application. In addition, particularly for petty patents (simple patents), a request for substantive examination shall be filed at the time of filing the application.

During the substantive examination process, examiners typically recommend that applicants amend their claims to conform to granted claims of corresponding patents in other jurisdictions in order to hasten the examination process.

It is also interesting to note that among the list of unpatentable inventions under article 7 of Law No 14 of 2001, computer programs are not listed. However, in the corresponding explanation of the law, it states that “invention does not include: …. rules and methods regarding computer program[s]”. Nevertheless, due to the vagueness of the statement, many inventions on computer programs have been filed as patent applications in Indonesia, with inventions consisting of technical features that would solve a technical problem. Conforming to granted claims of corresponding patents, such as U.S. patents, has been allowed. In addition, the filing deadline for Patent Cooperation Treaty national phase entry into Indonesia is 31 months from the filing date. Indonesia allows a late entry for the PCT national phase, provided that the applicant pays an additional fee for the late entry and provides an excuse for the delays in meeting the time limit.

There is a lot of interest from investors in Myanmar at the moment. What is the latest on the development of its IP system and how could its development affect other countries in the region?

Darani Vachanavuttivong: In Myanmar, the Ministry of Science and Technology, the Ministry of Commerce, and the Office of the Attorney General have collaborated with WIPO to begin drafting its IP laws. Myanmar’s Trademark Law is currently in its tenth draft (as of July) and it is expected to take effect in the near future. It is likely to be the first IP law established in the country. The Myanmar Intellectual Property Office (MIPO) will be set up as the responsible government body, and it will accept and register applications for trademark registration.

This will mark a huge change for the legal framework in Myanmar, as there have not previously been specific IP laws. During this transition period, many IP owners are in a state of flux, wondering how best to safeguard their IP rights in this unfamiliar jurisdiction. As a best practice, we recommend that IP owners should immediately seek protection for their rights under the current Registration Act by way of recordation of Declaration of Ownership. IP owners should do this now, without waiting for the new Trademark Law to be enacted. By securing this prior registration, the IP owner will qualify for trademark rights under the new Trademark Law, as soon as it comes into effect, thus ensuring full protection of their trademark rights, even as the new system is still in the process of being established.

There is a lot of interest in the region as a new manufacturing hub for multinationals. What are the IP issues facing companies looking to move manufacturing to Southeast Asia?

Alan Adcock: Southeast Asia is a proven manufacturing powerhouse. As labor costs in China continue to rise, multinationals are finding the region increasingly attractive. Efficient and expanding infrastructure, a very large and young work force, and fast-growing consumerism all help to attract more manufacturing investment. Such factors, coupled with the possibility of a fully integrated ten-nation economy by 2015, are all the normal reasons economists point to when discussing ASEAN economic growth. But as more factories are built and more manufacturing knowledge is gained locally, will the region experience the same proliferation of illegitimate production and counterfeit manufacturing as China did in the 2000s? Companies will have to fully understand the implications of registering their IP in all ten jurisdictions if their legitimate goods flow freely across borders alongside counterfeits.

Companies will also need to think carefully about how they will transfer their manufacturing technology to their new partners in Southeast Asia, and more importantly, how they will protect it. Some quantum of diligence on a potential partner is always recommended, and restraints against unfair competition and unauthorized disclosure are generally acceptable to the courts of the region. Of course, with manufacturing comes the possibility of local innovation or improvements on transferred technology, particularly if there will be a research and development component to the investment. How this is encouraged on one hand but controlled on another will be key to the success of any manufacturing business.

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