IP Without Borders: The Real Challenge of Doing Business Across ASEAN
INTRODUCTION: The term “ASEAN Economic Community” (AEC) implies an Economic Zone without borders. In the case of goods, services and capital, integration has made significant progress since the AEC was established in 2015. It has not been so for intellectual property. There is no triangular or supranational body which has binding authority over the courts or IP offices of ASEAN member states. The ten members states (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) have each their own trademark, patent, copyright and design laws, examination procedures and courts.
This is important because IP is just the type of asset that transcends markets before formal entry. A brand is identifiable in one country before a company has even registered it in another country, and the most effective way to achieve this is by traveling, media or e-commerce. An “opportunist” (or a true independent business getting to the idea first) may register the mark locally first, under the first-to-file rule that holds in most of ASEAN, and then occupy the “original owner’s position”, which the original owner will only be able to take off, after years and significant funds.
The concept of “IP without borders” reflects the aspiration for seamless protection of intellectual property across various multiple jurisdictions. Yet businesses operating within the SEAN framework encounter diverse legal systems, varying enforcement standards, language barriers and administrative inconsistencies. Consequently, obtaining and enforcing intellectual property across the region remain both costly and complex.
The ASEAN IP Landscape
Since the 1995 ASEAN Framework Agreement on Intellectual Property Cooperation, ASEAN has been working towards IP cooperation through the ASEAN Working Group on Intellectual Property Cooperation (AWGIPC) and subsequent IP Rights Action Plans.
These work has resulted in real, albeit partial, convergence:
•All ten member states are WTO members and thus subject to the minimum standards of the TRIPS Agreement.
•However, most ASEAN countries have signed the Madrid Protocol for international trademark filing (Cambodia, Brunei, Vietnam, Singapore, Philippines, Laos, Thailand and Indonesia, among others) which makes filing easier but does not lead to a unified ASEAN trademark right.
•In order to share search and examination information between national patent offices, the AWGIPC has been conducting an AWWIPC program called ASEAN Patent Examination Co-operation (ASPEC).
None of these mechanisms provides a single ASEAN registration, a common substantive standard for distinctiveness or a protection of the well-known mark, and none establishes a regional court with a binding cross-border jurisdiction. No agreement leaves a member bound to a supranational body to settle a domestic dispute regarding the infringement of a right, and infringement cases are heard only in the courts of the country of the right’s registration or protection.
The bottom line: If a company desires to have legal rights in ten ASEAN markets, in effect it must have ten different legal strategies — ten filings, ten standards for examining each, ten different litigation systems, and (as the case studies below demonstrate) ten different outcomes for the same fact pattern.
Territoriality of IP Rights
One of the major issues for enterprises engaged in cross border activities in ASEAN is the territoriality of IP rights.
While goods can freely flow through the integrated market, protection of IP is generally limited to the jurisdiction in which rights are granted. Registration of trademark in Singapore does not automatically grant rights to protect the trademark in Indonesia or Thailand. Likewise, the power to enforce a patent does not exist in Malaysia in a country where the patent is not granted.
This territoriality imposes significant costs on companies trying to expand into the region. Companies must:
•Make multiple country applications.
•Involve lawyers that have knowledge about local laws.
•Follow various procedures.
•Pay several filing and maintenance fees.
•Oversee violation in different jurisdictions.
These requirements can be quite expensive and burdensome for start-ups and small business enterprises
Challenges to trademark protection in the ASEAN region
Trademarks are one of the most valuable intellectual property assets for businesses in the ASEAN region as they assist in creating brand identity, consumer trust and market recognition. But it is important to note that businesses wanting to register a trademark in ASEAN have to tackle the hurdles of the absence of a single trademark system in the region. The rules governing trademark registration and examination, as well as the legal requirements differ from country to country across the ASEAN region, meaning that a company must make a separate trademark application in each place for trademark protection. This is an additional cost and delays the time required for rights to be secured in several markets. Apart from this, the issue of bad faith trademark registration – where local parties register foreign well-known trademarks before the original registrants – is another major problem. These registrations can result in lengthy litigation, cost and delays to market. In a few cases, firms must acquire their trademarks from unauthorized registrants or litigation to achieve them. However, the problem of counterfeiting is not unique to any country of ASEAN, but is present in multiple sectors including luxury goods, electronics, pharmaceuticals and consumer products. This issue has been exacerbated by the widespread growth of e-commerce and online marketplaces that allow for the sale and distribution of counterfeit goods.
The different degrees of administrative effectiveness and legal protection across member states can make enforcement difficult. This has made it a major investment for businesses to monitor, enforce and take counterfeiting action. The problems faced show that while the economy has been integrated within ASEAN, the protection of trademarks is still fragmented, which is a significant difficulty faced by enterprises in establishing and maintaining their foothold in ASEAN.
Patent Protection and Innovation barriers
Patents are vital to fostering innovation by providing the inventor with exclusive rights to his/her technological breakthrough and incentivising investment into research and development. But for businesses and innovators looking to benefit from patent protection, there are a lot of challenges they have to face when doing so across ASEAN. Unlike other parts of the world like in Europe, where there are centralised procedures to obtain patent rights, ASEAN has no single patent registration system. This means that an inventor has to file his patent applications in the various countries for which he wants coverage, which can be costly, complicated and even time consuming. In addition, ASEAN member states have varying standards of determining patentability, especially regarding novelty, inventive step, biotechnology inventions, software related inventions and pharmaceutical products. These differences mean that companies trying to devise a total regional patent strategy are in a difficult situation. Even if a company gets the patent in one ASEAN jurisdiction, it might not be approved in another jurisdiction, necessitating adaptation to different legal requirements. There are also enforcement issues.
Patent litigation tends to be costly and lengthy, and the court bench experiences wide-ranging differences in their experience and knowledge regarding technological issues. The varying procedures, evidentiary requirements and remedies might result in inequitable results and make it challenging for owners to know how effective an enforcement action will be. Further, SMEs may not have the funding needed for multi-jurisdictional infringement actions. All of these factors may hinder innovation and lower the business’ willingness to invest in new technology. With ASEAN’s push for a knowledge-based economy, eliminating these patent issues will be crucial to encouraging innovation, investments, and increasing competitiveness in the region.
Copyright protection in the digital economy
The digital economy was not only rapid in growth, but also has significantly changed the character of copyright protection in ASEAN. Copyright is an important legal tool to protect creative works, such as literature, music, movies, software, digital content and artworks. Internet access and digital technologies are becoming more common across the region, which presents copyright owners with new problems in protecting their works from unauthorized use and distribution. Online piracy is one of the important problems that is still existing in many ASEAN countries. Unauthorized websites, streaming platforms, social media channels and peer-to-peer networks are common sources of copyright infringement, resulting in significant financial damages to creators and copyright owners.
Digital content enforcement is made even more difficult by the international nature of digital content, and by the ease with which infringing content may be accessed anywhere in the region with just one click.
The other problem lies in the various strategies implemented by the ASEAN member countries on copyright enforcement. The approach to intermediary liability, blocking websites, notice and takedown and penalties for infringement differ across countries. Such ambiguities leave businesses and content creators with uncertainty when engaging in cross-market activity. In addition, new and developing technologies like artificial intelligence, blockchain and digital platforms have raised new issues on who will own what, who wrote it and what will be covered by copyright. Current legal frameworks are far from adequate to tackle matters related to AI-generated content and digital rights management. With the ongoing development of ASEAN’s digital economy, it will be essential to build regional cooperation and harmonise copyright laws to adequately protect creative works, foster innovation and promote sustainable development of creative industries across the region.
CASE STUDIES
1- McCurry Restaurant (KL) Sdn Bhd v McDonald’s Corporation [2009] 3 MLJ 774 (Court of Appeal), affirmed by the Federal Court, 8 September 2009 .
McDonald’s, which has been operating in Malaysia since 1982, and which applies the ‘Mc’ prefix to all its food items (‘McChicken’, ‘McNuggets’, ‘McMuffin’), filed a passing off suit against a small restaurant in Kuala Lumpur called ‘Restoran McCurry’ (the owners claimed that ‘Mc’ meant ‘Malaysian’). The Malaysian High Court initially held that an association would be presumed by consumers who are familiar with the McDonald’s mark.
The Court of Appeal reversed, and the Federal Court affirmed its reversal in 2009, in an eight-year battle. The courts of appeal concluded that McDonald’s get-up, the golden arches and red and white McDonald’s branding, was sufficiently different visually and commercially from that of McCurry’s signage, that the two restaurants catered to different customer groups to different foods and that McDonald’s had failed to demonstrate any actual confusion. The court ruled that costs should be paid to the McCurrells by McDonald’s. This is the most frequently quoted area in the region for the idea that a well-known trademark does not give exclusive rights to a common syllable or prefix removed from the entirety of its usage and market context.
2- Pierre Cardin (Paris) v Alexander Satryo Wibowo; Indonesian Supreme Court Decision No. 49 PK/Pdt.Sus-HKI/2018
An Indonesian businessman registered “Pierre cardin” as a local trademark in 1977, this was done decades before the French fashion house pursued the same registration in Indonesia, and renewed it continuously. When the French company later sued to cancel the Indonesian registration on the grounds of bad faith and similarity to the globally well known brand, the commercial court in 2015 rejected the claim, the reasoning that followed was that the suit was filed too late given thelong standing local registration. The French company ultimately filed a suit for reconsideration which the supreme court rejected keeping the Indonesian mark intact. This shows a broader problem in the ASEAN region, indonesia’s constitutive first to file trademark system, combined with strict procedural deadlines for challenging existing registrations, can leave even globally famous marks unable to dislodge a decades old registration, regardless of the original owner’s international reputation.
3-Burberry Ltd v Megastar Shipping Pte Ltd [2019] SGCA 1
In this case counterfeited goods bearing burberry trademarks were shipped from china and through Singapore for transshipments to Indonesia. Although the goods that were being transported remained in sealed containers and never entered the market, the court of appeal held that they were imported under the countries trade mark act. This ruling was significant in nature because it laid down that the trademark owners may take action against the trademark infringement in Singapore even though they were mere passing through the territory. The case highlighted difficulties in IP disputes, the right holders may challenge the counterfeit goods in regional transit hubs but establishing liability against the intermediary dealing in logistic is very difficult and knowledge of involvement must be proved.
CONCLUSION
The vision of “IP without boarders” remains an ambitious but largely unrealised objective within the framework of ASEAN. Although ASEAN has made considerable progress in this field, intellectual property continues to be governed by national laws, as discussed above business in the ASEAN region face various problems, they have to navigate through various jurisdiction, laws and differing enforcement standards across multiple countries. The above case studies throws light on various challenges a business has to face in the ASEAN region, be it, first to file system, procedural barriers, consequences that arise because of territoriality, enforcement mechanisms that are inconsistent.
Despite these several challenges, ASEAN has laid important foundations for greater cooperation through initiatives such as ASEAN intellectual property rights action plans, the madrid protocol, and the ASEAN patnet examination cooperation ( ASPEC) Programme. However, these mechanism facilitate coordination rather than harmonisation, the need of the hour in ASEAN jurisdiction is harmonisation so that business can easily grow.
Author:-Arindam Chakravarty, in case of any queries please contact/write back to us at support@ipandlegalfilings.com or IP & Legal Filing.
REFERENCES
1. Association of Southeast Asian Nations, ASEAN Intellectual Property Rights Action Plan 2016–2025 (ASEAN Secretariat 2016).
2. Association of Southeast Asian Nations, ASEAN Framework Agreement on Intellectual Property Cooperation (ASEAN, 1995).
3. World Trade Organization, Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) (1994) 1869 UNTS 299.
4. World Intellectual Property Organization, Madrid Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (adopted 27 June 1989, entered into force 1 December 1995).
5. McDonald’s Corporation v McCurry Restaurant (KL) Sdn Bhd [2009] 3 MLJ 774 (FC) (Malaysia).
6. Pierre Cardin (Paris) v Alexander Satryo Wibowo Indonesian Supreme Court Decision No 49 PK/Pdt.Sus-HKI/2018 (Indonesia).
7. Burberry Ltd v Megastar Shipping Pte Ltd [2019] SGCA 1 (Singapore Court of Appeal).
