Other BriefingsThe Three Most Common IPR Mistakes for SMEs in ASEAN
By the South-East Asia IPR SME Helpdesk
A wide range of foreign industries are now looking to ASEAN not just to take advantage of an abundance of cheap labor for exportables, but also to tap into new consumer markets formed by a growing middle-class population. While these opportunities can lead to substantial returns for European businesses, in terms of both production and sales, the underdeveloped nature of business-related legislation means that the dangers of intellectual property (IP) infringement can be great.
There are very few SMEs that would not take the issue of intellectual property rights (IPR) seriously in their home countries, but IPR legislation can be opaque when they move overseas. There are several key issues that are commonly overlooked by companies expanding abroad – these have the potential to lead to commercial disaster. Here we take a look at the top 3 IPR mistakes SMEs make in ASEAN.
Late Registration of Trade Marks
SMEs thinking about entering the South-East Asian market are regularly unsure when to register a trade mark. The answer is: as soon as possible. As soon as a company considers moving abroad, they should take steps to register their trade marks, even if they are not completely ready to go.
The key point to keep in mind is that trade mark regimes in South-East Asia generally use a ‘first-to-file’ system, meaning that the first person to file a trade mark application in a particular South-East Asian country will own that right in the country once the registration is granted, irrespective of first use. Thus, if an owner does not apply for protection on time, others may do so first and reap the related benefits – free-riding the reputation of another’s brand or registering a trade mark in ‘bad-faith’ in order to sell it back to, or even sue, the rightful owner.
Additionally, a business should consider how their trade mark would translate into local languages. If a local equivalent is not chosen consumers will almost certainly choose their own. If this local name is not registered, companies run the risk of another company freely copying, or registering the trade mark themselves.
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Failing to Register Copyrights
Failing to register any or all types of IP is a common mistake for many foreign SMEs. However, particular attention should be paid to the extra provisions available to copyright owners in most South-East Asian countries. In this region, as in Europe, copyrights are granted at the point of creation for creative works such as artistic designs, books, and computer software. It is also possible to register copyrights independently – other than in Brunei, Myanmar, and Singapore – and in most cases it is not expensive to do so, typically costing less than US$35.
In an enforcement action a copyright registration can be used as presumptive evidence of ownership, so that the owner does not need to produce an original work, with a name and creation date, or relevant contracts as proof (though these may help too). Furthermore, a registered copyright can be useful for backing-up other IPR in enforcement cases. For instance, a business can usually protect a logo under both copyright and trade mark law, or defend an innovative packaging design via a design patent and copyright.
Giving Away Trade Secrets
The main issue with trade secrets is that many SMEs do not realize what constitutes a trade secret and are therefore not prepared to protect them. A trade secret can constitute any confidential business information – such as a distribution method, consumer profiles, an advertising strategy, or a client list – that has considerable commercial value and gives a business a competitive edge. Generally, in law, a trade secret must not be known to the public; it should give some economic benefit to the holder; and it should be subject to reasonable efforts by the owner to keep it secret.
SMEs may not be familiar with using formal Non-Disclosure Agreements (NDA), but it is worth considering such documents before entering into discussions with a partner, particularly where specific IP or confidential information will be disclosed during discussions. Such agreements are concise, clear, and generally easy to draft, though it is best to have a different NDA for each South-East Asian country, as each has different laws and legal systems. Obtaining one by no means provides a ‘watertight’ case, but it certainly assists in protecting trade secrets, not only when it comes to enforcement but also as a signal to potential infringers of the steps an SME is prepared to take.
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The South-East Asia IPR SME Helpdesk, co-funded by the European Commission’s Directorate-General for Enterprise and Industry under the Competitiveness and Innovation Framework Programme, supports European Union (EU) small and medium sized enterprises (SMEs) to both protect and enforce their Intellectual Property (IP) rights in or relating to South-East Asia, through the provision of free information and services. These take the form of jargon-free, first-line, confidential advice on intellectual property and related issues, plus training, materials and online resources.
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