Singapore, Indonesia, and Malaysia: brand squatting in ASEAN
Introduction : The rapid growth of Indian business presence in Southeast Asia has created many opportunities for India in such sectors as pharmaceuticals, food and beverages, consumer goods, technology, fashion and healthcare. Such countries as Singapore, Indonesia and Malaysia have become an important point of commercial entry into the ASEAN region. However, the lack of intellectual property strategy on entering these markets makes Indian businesses vulnerable to an invisible threat.
Brand squatting is defined as the situation when some third party registers a trademark without having any connection to the trademark owner, but with intent to protect an identical or similar mark. If it comes to international business expansion, such risk will be even more evident, considering the registration nature of trademark protection. This means that the original owner of the trademark may find himself or herself in the position when he or she is not able to secure his or her trademark because it is already registered by some third party. Such risk does not apply only to English trademarks. Hence, it is necessary for Indian firms to see trademark protection as an important component of the market entry strategy. In addition, they need to avoid disputes through careful arrangements.
Legal framework
There are different laws relating to trademark squatting in Singapore, Indonesia, and Malaysia, but in all of them, there is provision for prevention or opposition of registrations made in bad faith or conflicting registrations. It is important for Indian companies to be aware of the same as the existence of a solution even after registering a trademark does not solve the problem created by the issue of squatter.
The main legislation in Singapore is the Trade Marks Act of 1998. As per Section 7(6), an application can be declined if the same is made in bad faith. This section comes into play when one registers a trademark belonging to another company fully aware and having no genuine business justification for doing so. Section 8 is the section which takes care of applications which conflict with prior trademarks. In some cases, it helps in protecting well-known trademarks. The statute also offers means for taking legal action against improperly registered trademarks, such as the action for invalidity in accordance with Section 23. Moreover, Section 55 provides protection to well-known trademarks in specified cases even when the mark is not registered in Singapore.
Trademark laws in Indonesia are provided mainly under the Trademarks and Geographical Indications Act No. 20 of 2016. According to Section 20 of this Act, there exist certain absolute grounds on which the trademark can be refused, while Section 21 of the Act is of special importance regarding the practice of brand squatting. This section deals with the refusal of the mark when it is identical to, or similar to, an already existing or applied for trademark and covers certain well-known marks. Cancellation procedures in Indonesia are regulated by Sections 76 through 79. These sections are specifically applicable to companies from India owing to the registration-based system of Indonesia.
Trademark protection in Malaysia is provided mainly through the Trademarks Act 2019. Relative grounds for refusal under Section 24 of the Act include conflict with existing trademarks and protection of well-known trademarks. Section 38 of the Act sets out an opposition procedure whereby a party with interest can oppose a trademark application before it is registered. The Act also includes provisions for revocation and cancellation of registration in some particular instances. Crucially, Malaysian laws provide for some unregistered rights and the common law tort of passing off. In such a case, prior usage could be a factor, although it would be more costly to rely on unregistered rights compared to registration.
As can be seen from the foregoing discussion, the laws of Singapore, Indonesia and Malaysia allow for redress against trademark registrations done in bad faith and in conflict with those already existing. But such solutions usually come up when disputes are already underway. Thus, the advisable strategy for any Indian company looking to enter the ASEAN markets would be to register trademarks before entering the respective market, appointing local distributors or officially launching the trademark into the market. This will help avoid future problems associated with opposition, cancellation, invalidation, or legal action due to the third party’s right to use the trademark.
Legal Analysis
The probability of brand squatting in Singapore, Indonesia, and Malaysia depends to a large extent on the importance that is placed on the registration of trademarks and protection of prior rights. In Singapore, Section 7(6) of the Trade Marks Act 1998 allows rejection of the application for a trademark filed in bad faith, whereas Sections 8 and 23 protect from conflicting marks. The provisions of Section 55 protect well-known marks even when they are not registered in Singapore. These provisions can help foreign brand owners, although resorting to such measures after registration is a lengthy and costly process.
Indonesia is one country that represents a particular risk for companies abroad due to Indonesia’s Law No. 20 of 2016, where great importance is attributed to registration. Article 21 specifies reasons for rejecting trademarks that clash with previously registered or applied trademarks, and also certain well-known trademarks; meanwhile, Articles 76-79 provide procedures for cancellation. Thus, late filing can put an Indian trademark at risk of registration by a third party.
Similarly, the Trademarks Act 2019 of Malaysia gives protection to conflicting marks under Section 24 and also allows for opposition under Section 38. There are also certain unregistered rights recognized by the Trademarks Act 2019, including the doctrine of passing off. These however are difficult to prove.
It is therefore evident that in all three countries, early registration is the best defense against brand squatting.
Conclusion
Brand squatting represents a serious threat in terms of intellectual property to Indian companies intending to enter the markets of Singapore, Indonesia and Malaysia. While the legal means of opposing, voiding, canceling or challenging problematic trademarks exist in all of the aforementioned countries, resorting to such measures once an infringement situation occurs is likely to lead to serious financial losses, delays and other inconveniences. The legal systems of the above-mentioned countries clearly illustrate the significance of such concepts as bad faith, protection of well-known marks, prior rights and opposition/cancellation procedures. The situations that have been considered also reveal real-life dangers resulting from doing business through distribution channels and using local versions of one’s brands. In order to minimize the risk of trademark hijacking by squatters, Indian firms should consider developing a trademark strategy prior to their entry into ASEAN countries’ markets. Conducting thorough trademark searches, registering essential trademarks and their local versions, drafting contracts containing clear ownership clauses with respect to distributors and agents and continuously monitoring trademark applications could prove to be highly beneficial.
Author:- Twinkle Singh, in case of any queries please contact/write back to us at support@ipandlegalfilings.com or IP & Legal Filing.
Endnotes / References
- Trade Marks Act 1998 (Singapore), s. 7(6).
- Trade Marks Act 1998 (Singapore), s. 8.
- Trade Marks Act 1998 (Singapore), s. 23.
- Trade Marks Act 1998 (Singapore), s. 55.
- Law No. 20 of 2016 on Trademarks and Geographical Indications (Indonesia), arts. 20–21.
- Law No. 20 of 2016 on Trademarks and Geographical Indications (Indonesia), arts. 76–79.
- Trademarks Act 2019 (Malaysia), s. 24.
- Trademarks Act 2019 (Malaysia), s. 38.
- Intellectual Property Office of Singapore (IPOS), information and guidance on well-known trademarks and multilingual trademark protection.
- World Intellectual Property Organization (WIPO), resources on trademark protection and intellectual property in international trade.
