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Asean roundtable: the latest developments

Rights holders are looking to Southeast Asia as the next growth region. Lawyers from Hechanova & Co, Henry Goh & Co and Tilleke & Gibbins discuss the latest changes and what companies need to consider when entering the market in a roundtable discussion moderated by Peter Leung

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?

Azlina Aisyah Khalid (AAK) of Henry Goh & Co: One important development in Malaysia is the Industrial Designs (Amendment) Act 2013. The law passed in December 2012, was gazetted in January this year, and came into force on July 1. The new law has brought about three major changes.

The first change is that the standard of novelty for industrial designs is now based on a worldwide body of prior art. Second, the period of protection has been extended to 25 years from 15. Third, under the previous law, industrial designs were recorded in the government gazette and published by government printers. The new law shifts this to a new IP journal maintained by the IP Office.

The first two changes will have the biggest practical effects for rights holders. Because the novelty standard is now worldwide, foreign owners need to be more vigilant with the prior disclosure of their designs outside of Malaysia. Also, rights owners whose protection under the current law had expired under the 15 year window can now get an extension of 10 more years of protection under the new law. The third change, while important formally, won't really change the day-to-day practice for rights owners.

There are also a few long term changes that are being discussed. There are plans to set up a national IP valuation model to help with the commercialisation of intellectual property, such as using IP rights as collateral and the securitisation of intellectual property. Right now, the Malaysian IP Office is training the second batch of valuation experts, but we are not sure when the plan will be implemented.

In addition, Malaysia is going to accede to the Madrid Protocol by 2015 as part of the ASEAN IPR Action Plan, 2011-2015. There are also plans to revise the trade mark and patent laws as well, but the amendments have not yet been passed by Parliament.

Darani Vachanavuttivong (DV) of Tilleke & Gibbins: 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 trade mark 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.

Editha R Hechanova (ERH) of Hechanova & Co: For The Philippines, three laws come to mind. The Cybercrime Prevention Act was signed into law by President Benigno Aquino in September of last year. It penalises illegal acts committed on a computer or via the internet not covered by previous laws, such as cybersquatting, cybersex, child pornography, identity theft, illegal access to data (hacking) and libel. Due to several actions filed against its implementation now pending before the Supreme Court concerning issues such as freedom of expression, the Court has issued temporary restraining orders on the law.

Republic Act No 10372, which took effect on March 22 2013, amended the IP Code. The major changes are: establishment of the Bureau of Copyright within the Intellectual Property Office of the Philippines (IPOPHL), grant of specific enforcement functions to the Director General of IPOPHIL, implementation of technological protection measures and rights management information for copyrighted works disseminated through the internet, copyright limitations and exceptions for the benefit of visually-impaired persons, fair use exceptions to copyright, and clarifications on copyright infringements. The IPOPHL has issued the regulations which took effect on October 7 2013. Another reason why this act is significant is because it adopts the international exhaustion principle.

Thomas Treutler (TT) of Tilleke & Gibbins: 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:

  • Increased fines, with fines on companies are now twice as high as fines on individuals.
  • 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.
  • 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?

ERH: In The Philippines, the criminal case of Victorio Diaz v People and Levi Strauss issued on February 18 2013 is significant on two points.

Diaz, the owner of a tailoring shop and using his own registered trade mark LS Jeans Tailoring with a leather patch showing two buffaloes on made to order denim jeans, was found guilty of infringing Levi Strauss's marks (the arcuate design and two horses logo) and was sentenced to imprisonment, fine and civil damages. He appealed this decision to the Court of Appeals but because his lawyer failed to file his appellant's brief on time, his appeal was dismissed. He appealed this dismissal to the Supreme Court which reversed the decisions of the lower courts and declared him innocent of the crime of infringement. The Supreme Court stated that it does not mind if this was mislabelled as excessive leniency because no one should be left to suffer from the "incompetence, mindlessness or lack of professionalism of any member of the law profession". Applying the holistic test, the Supreme Court also said that the evidence of guilt did not satisfy standard of proof beyond reasonable doubt required for a criminal conviction.

Furthermore, the court held that there was no likelihood of confusion between the trade marks involved.

DV: 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 trade marks Anna Is and Anna in a designed square, covering the same types of goods. The Court recognised 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 trade mark application was filed in Thailand.

In Matsuda & Co v Department of Intellectual Property and Valentino, the trade mark 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 trade mark 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 (TW) of Tilleke & Gibbins: 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.

AKK: In Malaysia, registration is very important. Rights holders have to determine what their rights are and register them as soon as possible. The next step is to determine how you can enforce your rights. For copyright, industrial designs and patents, you can only enforce your intellectual property through civil actions in court. However for trade marks, there are a couple of enforcement methods.

The first is through the Trade Descriptions Act, which was also recently amended. The Act allows a registered trade mark owner to apply for a trade description order (TDO) at the High Court, which declares that another mark that is similar or identical is a false trade description. The TDO is valid for one year and can be renewed at the court's discretion. Once a brand owner has a TDO, it can then lodge a complaint with the Ministry of Domestic Trade and Consumerism (MDTC). Once that happens, the Ministry will take the initiative to investigate the matter. However, the rights owner still needs to provide evidence, such as showing that you have a valid registered mark, that it has been in use in Malaysia or other parts of the world, and evidence that someone is infringing on your mark.

In addition to pursuing actions through the use of TDOs through the MDTC, brand owners may also pursue actions through civil court.

Another important thing to remember that IP owners sometimes overlook is that before initiating any legal action, they have to take care to update evidence about the chain of ownership of the intellectual property. Whenever a right is transferred or licensed, the registrar has to be aware of it. Even if there's a valid contract transferring the right but it is not reflected in the registrar, there will be problems.

Finally, patent owners need to pay special attention to the statute of limitations for bringing an infringement action. While most other causes of action have statutes of limitations of six years, for patent infringement cases, the statute of limitations is five years. This can be something that can get rights holders in trouble if they are not careful.

ERH: When entering The Philippines market, the IP owner should have its IP rights, whether trade mark or patents registered with the IPOPHL. For trade mark owners, even if it failed to register, provided that it is the true owner of the mark, it can still enforce its rights in the Philippines, either in an opposition or cancellation action or through an action for unfair competition.

For a holder of an industrial design which has not been registered in the Philippines and it is too late to register, the IP owner can consider obtaining a copyright registration, if the design is original and artistic, to be able to sue for copyright infringement more easily, and/or consider an unfair competition action, if the design is distinctive and used as trade dress or a three dimensional mark.

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

Oon Yen Yen (OYY) of of Henry Goh & Co:Malaysia has a first to file patent system with a worldwide novelty standard. The patent law provides for a 12-month novelty grace period, but this will only protect the applicant from his own acts within 12 months preceding the Malaysian filing date; the grace period does not protect applicants from third party acts of disclosure.

In addition, there is a list of inherently non-patentable subject matter in Malaysia, which includes among other things business methods, scientific formulas and methods of treatment.

Malaysian patent law also has rules regarding foreign filing. Section 23A provides that the first patent application for an invention made by a person (inventor) resident in Malaysia must be first filed in Malaysia. If it is necessary to first file outside Malaysia, a request for foreign filing permission must be submitted. This is only applicable if at least one inventor is resident in Malaysia, regardless of citizenship. Failure to comply with section 23A may result in a fine of up to MYR 15,000 ($4,800), up to two years imprisonment or both.

Malaysia is a signatory to the PCT. The time limit for entering the national phase is strictly 30 months regardless of whether a demand for international examination has been filed. While Malaysian patent law does not provide for extension of the 30-month national-phase entry deadline, in cases where failure to meet the 30-month deadline is unintentional, it is possible to seek reinstatement. The application for reinstatement must be filed within 2 months of removal of the cause for missing the regular national-phase entry deadline. Apart from the usual minimum filing requirements and payment of a surcharge, the application for reinstatement must be accompanied by a written statement stating the reasons for the missed deadline and a Statutory Declaration.

There is also a provision for expedited patent examination, which can be very useful. Under this provision, an applicant can potentially get a patent in less than a year. This is a significant improvement over the standard pendency period. Five years is not considered unusual in Malaysia, and I have heard of cases with a 10-year pendency period.

Applicants requesting expedited examination must provide a reason for the request. Expedited examination may be granted: (a) for inventions involving national or public interest; (b) where infringement proceedings are ongoing or there is evidence of potential infringement; (c) where registration is a condition to obtaining government grants; (d) where the invention has already been or there is intention to commercialise within two years of requesting expedited exam; or (e) if the invention is related to green technologies. There is also a catch-all provision for other reasonable grounds to support a request for expedited review.

Somboon Earterasarun (SE) of Tilleke & Gibbins: 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.

ERH: In The Philippines the Patent Office will substantively examine an application where the applicant requests it. This examination is independent and essentially examines the application for patentability, novelty, inventive step and sufficiency. There are not different types of substantive examination provided in the patent rules. In particular, it is worth noting that there is no modified substantive examination where the assignee will obtain a granted patent in Philippines based on a corresponding granted European or US patent.

Furthermore, the patent law allows for method of use (process) claims, with the exception of methods of treatment applied on humans and animals. Process, with respect to chemical inventions, refers to the preparation/method of manufacture/method of producing a product or composition. Method of treatment claims disallowed by express provision of law, but an examiner may deem it allowable if the method of treatment claim format is redrafted to a Swiss use type during prosecution.

In addition, second medical use is not patentable if it is a mere discovery of a new form or new property of a known substance which does not result in the enhancement of the known efficacy of that substance, or if it is a mere discovery of any new property or new use for a known substance, or the mere use of a known process unless such known process results in a new product that employs at least one new reactant.

It is also important to note that there are no post-grant opposition actions, only cancellation actions when a patent is granted. However, third parties may submit observations to the examiner during the prosecution of an application within six months from the date of the publication of the application or the date of filing the request for substantive examination, whichever comes later.

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?

ERH: While Myanmar is a signatory to the TRIPs agreement, it is still in the process of developing and strengthening its own Intellectual Property Code, a project which began in 2004. This April, Myanmar was the host country of the annual ASEAN IP Association (AIPA) Conference entitled "The Darkness into the Brightness". Daw Tin Ohn Mar Tun, the new president of AIPA, proudly announced that the 10th draft of the IP Code is about 80% complete and hopes that the same can be signed and approved by early next year. According to a number of IP lawyers, they foresee a significant increase in foreign investments once the IP Code is passed. There is some opposition to its passage from some segments of the population who say that a drive against counterfeits could bring prices up. That said, the IP system is developing well, and Myanmar's compliance with TRIPs has been extended to 2021. The development of the IP system in Myanmar can only strengthen the region.

DV: 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 trade mark 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 trade mark rights under the new Trademark Law, as soon as it comes into effect, thus ensuring full protection of their trade mark 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 south-east Asia?

Alan Adcock (AA) of Tilleke & Gibbins:South-east Asia is a proven manufacturing powerhouse. As labour 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 south-east 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 unauthorised 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.

AAK: Rights holders interested in moving their manufacturing to Malaysia need to be aware of how to enforce their rights, which we discussed a bit in response to question three. One other specific issue that companies that are looking to source goods from Malaysia need to be aware of is that manufacturing itself is considered use. That means that if you are manufacturing your product for sale only outside of Malaysia, you still need to register your trade mark.

Another useful tip for multinationals interested in doing business in the ASEAN region is the existence of the ASEAN Patent Examination Co-operation (ASPEC), which allows for the sharing of search and examination results between Patent Offices of ASEAN member countries for speedier prosecution of patent applications.

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