The Southeast Asia IPR SME Helpdesk – a European Union co-funded project that provides free, practical business advice relating to Intellectual property in the region – gives its tips on handling intellectual property concerns in a new market
Intellectual property (IP) refers to the legal rights awarded to ‘creations of the mind’ – inventions, artistic and literary works, designs and logos, names and images used by businesses. IP is protected by law in the form of patents, trademarks, copyright and trade secrets. This enables individuals to financially benefit from their creations.
According to the World Intellectual Property Organisation (WIPO), IP is protected for two principal reasons. The first is “to give statutory expression to the moral and economic rights of creators in their creations and the rights of the public in access to those creations”, and the second is “to promote, as a deliberate act of government policy, creativity and the dissemination and application of its results and to encourage fair trading which would contribute to economic and social development”.
Swat-up on local IP
Taking time to inform yourself on IP regulations in your destination country can help you exploit business opportunities and avoid pitfalls of local laws and regulations. If handled correctly, IP assets can offer increased commercialisation, income generation and value-adding opportunities. However, while Southeast Asia is increasingly seen as ‘one area’ when it comes to IP protection, there are still differences between the IP system in the region and areas such as Europe.
It is perhaps most prudent that SMEs consider applying for IP protection in those Southeast Asian countries that are of commercial interest to them. On the other hand, given the increasing prominence and attractiveness of the Southeast Asian market, and the fact it will become a region with free movement of goods, services and investment by the end of 2015, it is perhaps advisable that IP owners give all ten countries serious consideration. This is advisable, even if they do not have immediate plans to expand into the rest of the region, since it is increasingly common for local businesses to look outside of Southeast Asia for ‘inspiration’ – a trend that could easily lead to theft of brands, technologies and other IP assets developed and protected in places such as Europe.
Understand your company’s IP needs
It is crucial that companies, particularly SMEs, clearly understand the aspects of their business that constitute IP and identify their IP assets accordingly before entering a new market. Remember, IP includes more than just technology-related inventions. Branding, down to the colour and style of restaurant furniture, constitutes an integral part of a company’s external image. This is part of what sets a company apart from its competitors.
Be prepared to enforce your rights
Entering a new market and protecting IP rights sometimes means being ready to enforce or defend rights in order to ensure that business objectives are met. Defending your IP rights can prevent brand dilution further down the line. There are four main avenues of enforcement that can be considered: criminal prosecution, administrative action, civil litigation and customs seizures. Before enforcement action, it is key to establish which avenue you should take.
Criminal raids are possible with the police or administrative departments. In most Southeast Asian countries, police or administrative raids are the quickest way to end the infringement. Prior to any raid action, it is important to first establish whether the infringer has an association with any person of influence that can undo or disrupt the raid.
Civil litigation is more suited to addressing large-scale infringements. However, very few cases are brought to court in this way, as civil litigation is seldom the preferred option when dealing with trademark infringements. Civil litigation is likely to be more expensive than carrying out criminal raids. Moreover, it is usually easier to secure compliance through government enforcement agencies than through the service of a court order demanding compliance.
Warning ‘cease and desist’ letters can still be effective to some degree against infringers operating out of a permanent address where the business is retail in nature. Warning letters work best where monitoring of compliance is possible. Border control is another option in cases where the infringing goods are believed to be imported or exported. Border control through customs detention is possible if the customs authorities in question have adequate recording systems. Countries that have such systems are Thailand, Vietnam and the Philippines. These systems allow trademark owners to record their trademarks with customs, so that customs can be on the lookout for possible infringements.
Franchising is a system for expanding sound businesses, based on a business model that is replicated through the creation of a network under the same brand name. The franchise business model is widespread in Southeast Asia, particularly in Singapore, Thailand, Malaysia and Indonesia. Franchise agreements should contain clauses that license the use of a company’s IP (usually trade marks, trade secrets and certain copyright work) to the franchisee. The clauses must be carefully drafted to cover all anticipated use by the franchisee, but also to ensure good quality control within the franchise.
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