This article was first published in Managing Intellectual Property and is available at www.managingip.com. It was co-authored with Henry Goodwin at Taylor Vinters.
The ASEAN Economic Community (AEC), set to come into effect on December 31, has the goal of transforming Southeast Asia into a region with free movement of goods, services, investment, skilled labour and a freer flow of capital.
With a population of over 600 million, greater than that of either Europe or North America, the combined economy of the 10 states comprising the Association of Southeast Asian Nations (ASEAN) is forecast to become the world's fourth largest economy by 2050.
AEC envisages the following key characteristics for the new community of nations: (a) a single market and production base; (b) a highly competitive economic region, (c) a region of equitable economic development and (d) a region fully integrated into the global economy.
In addition, the AEC continues to acknowledge the important role played by intellectual property in creating a community displaying those characteristics, while as stated in the ASEAN IPR Action Plan 2011-2015 (IPR Action Plan), also "recognising that different levels of development within ASEAN require some flexibility as ASEAN moves towards a more integrated future."
With its IPR Action Plan, the ASEAN Working Group on Intellectual Property Cooperation (AWGIPC) has taken into account the different levels of capacity among the ASEAN members and the status of their IP protection regimes, in order to create a coordinated ecosystem capable of engaging with and meeting the future demands of the global IP system.
While some argue that the AEC project is behind schedule for its proposed launch on December 31 (postponed from the original launch date of January 1), there are encouraging signs that the overall IP protection framework is making progress across the member states, with potential long term benefits for all.
Making steady progress
Looking at the individual member states, Singapore and Thailand were historically seen as the more advanced Southeast Asian countries in terms of IP protection, but now many other countries in the region have made great steps in this regard.
The Malaysian Intellectual Property Office (MyIPO) has been working hard over the past four years to improve its trade mark registry, including upgrading its information systems and clearing the backlog of trade mark applications. MyIPO has also come up with a draft set of amendments to the Malaysian Trade Marks Act to facilitate entry to the Madrid Protocol. However, as this bill has not been tabled in Parliament, it is unlikely any developments will occur until 2015 at the earliest.
Since 2011, Myanmar has embarked on a series of sweeping reforms including the liberalisation of its foreign investment laws. As part of the reforms, Myanmar is in the process of updating its antiquated trade mark registration law, currently based on the Registration Act 1908, a piece of colonial legislation providing limited remedies once a trade mark is declared and recorded with the Settlement and Land Records Department, usually followed by a cautionary notification in the daily newspaper. The draft regime, now in its eleventh version, is a collaboration between WIPO and the Myanmar Government. It is comparable to international standards: establishing an intellectual property office, an opposition procedure, and an examination and registration procedure with renewals every 10 years. Although the law will operate largely on a first-to-file system, prior use evidence may be submitted if an opposition is lodged and there will be a bad faith ground of opposition. The new law is a welcome step forward to bring Myanmar's trade mark laws in line with global standards.
"There are encouraging signs that the overall IP protection framework is making progress across the member states, with potential long term benefits for all"
Although the Indonesian Government has outlined plans to amend its trade mark law with a view to entry to the Madrid Protocol, a number of challenges need to be overcome so that progress can be made. The Indonesian Trade Mark Office does not currently have an electronic filing system and it is facing a significant backlog of trade mark applications. Some of the practices and regulations of the Indonesian trade mark office are outdated and extremely unfriendly to businesses. What effect, if any, the new Indonesian Government will have on efforts to improve Indonesia's trade mark regime remains to be seen.
Brunei, Cambodia and Laos
Brunei, Cambodia and Laos have been slower to embark upon trade mark reform. For Cambodia and Laos, in the process of industrialising, and for Brunei, with its limited population, trade mark protection and enforcement are not particularly high on the respective governments' list of priorities.
Vietnam continues to be pose challenges to trade mark owners seeking to enforce their trade mark rights. The National Office of Intellectual Property (NOIP) has a huge backlog of pending applications that continues to mount with the increase in foreign direct investment and more companies bringing their brands into Vietnam. This obstacle to securing registered rights has not deterred rights owners from enforcement actions, and civil litigation is on the rise. It is also an encouraging sign that fines and damages awards for infringements are increasing.
Ever since Ricardo Blancaflor took over the helm of the IP Office of the Philippines in 2010, the IP ecosystem in the Philippines has made significant progress, culminating with the removal of the Philippines from the US Trade Representative's Special 301 Report Watch List. The past few years witnessed the Philippines passing new legislation to strengthen IP rights and provide for more effective civil and administrative enforcement actions. The Philippines became a member of the Madrid Protocol in 2012, making it the third ASEAN country to do so.
Sadly, the political turmoil in Thailand has had an adverse effect on its IP regime. At the height of the political unrest and protests in Thailand, the Department of Intellectual Property (DIP) was closed for about a quarter of the year because the Ministry of Commerce was occupied by demonstrators. Progress on the proposed amendments to Thailand's trade mark law has come to a standstill. Given the continued political instability in Thailand, it is doubtful that the trade mark regime will be receiving much attention from the government in the near future.
Amidst the ups and downs of neighbouring IP regimes, Singapore continues to enjoy its reputation as the safest harbour for IP protection in the region (and indeed, ranks very highly globally). The World Economic Forum's Global Competitiveness Report 2014/2015 ranks Singapore second in the world and top in Asia for having the best IP protection. Singapore has taken steps with its ASEAN IP Portal, providing IP information for the entire ASEAN region from a single, consolidated platform.
Work-share programmes (for example, the January 20 memorandum of understanding between Singapore and Cambodia on patents and industrial designs) allow neighbouring ASEAN countries to piggyback on Singapore's more mature IP regime.
The future of brand protection in ASEAN
There is potential for the ASEAN countries to develop a more consistent IP protection framework which matches the increased trade flows and rate of economic development across the region, but this will take time.
For the time being, businesses should consider protecting their brands in each ASEAN country which is relevant to them commercially, and the measures being brought in under the AEC should strengthen cross-border protection of innovative ideas and products in the years to come.
Practical tips for brand protection in the region
Companies looking to break into this market must not only follow the usual rules of brand building, but must also take into consideration the diversity of the region as well as the practical and logistical realities of each country as we discussed earlier.
The first step is to pick a unique and distinctive name – your brand name should differentiate you from your competitors and not be descriptive of your product. Similarly, a brand should have good connotations and convey the right image of your product and company to your customers. Remember, it is not just about selling a product, it is about selling a lifestyle image!
In a multi-jurisdictional region like ASEAN, a brand must transcend language and cultural differences. A word that sounds good in a certain language may mean something totally inappropriate in the language of a neighbouring country. Research and brand planning is vital.
Furthermore, registration for a trade mark in the English language in most countries will not protect the transliteration of the mark in the local language, so this should be factored into budgetary considerations as additional applications may have to be filed for transliteration of your mark in the local language.
Trade mark filing strategy should complement business plans. Markets where you have immediate business plans will certainly be top priority, but you should also think about your plans for expansion in the next three to five years. This will determine where you should carry out clearance searches and apply to register your trade marks.
Furthermore, how might your business look in a few years' time? If you have plans to expand geographically over the next few years it is worth carrying out clearance searches in countries you plan to operate in later, as well as those you initially plan to operate in. This will help to avoid a situation where your brand is not available for use in a country that you plan to enter in future.
Some ASEAN territories require special consideration and prioritising even if they are not immediate markets of interest. For instance, Vietnam is a first-to-file regime, so it is important to secure a filing in Vietnam as soon as possible, rather than risk your mark being taken by another applicant, as a first-to-file regime offers little recourse when a third party has beat you to applying for the mark.
Meanwhile, countries like Myanmar with less structured regimes are also worth considering filing in well before you plan to enter the market, simply because the costs of obtaining protection are far lower than the costs and trouble of getting your trade mark back if it has been registered by a third party.
It is always a good idea to get an idea of estimated costs as they can quickly escalate when multiplied across jurisdictions. Obtaining a cost estimate for filing the applications is relatively easy and may be useful in prioritising which countries to file in. Do not forget to factor in the costs of additional filings that may be required over and above the house mark, for instance an application for the transliteration of the mark into the local language.
There will also be post-filing prosecution costs to be incurred. It is very useful for budgeting purposes to work with a specialist who is able to give you an realistic indication of what these costs are, and when you can expect to incur these costs.
When dealing with multiple jurisdictions, rights holders should consider if the applications should be filed by way of separate national applications or by way of an International Registration via the Madrid Protocol. However that at the moment, only Singapore, Vietnam and the Philippines are members of the Madrid Protocol. Thus, it may be of limited use in the ASEAN region, depending on which are your priority territories.
For now, separate national applications are often the better strategy for brand protection in ASEAN.
Like all opportunities, Southeast Asia and the upcoming AEC presents challenges for brand holders. Though many of these challenges stem from the unique circumstances of the individual countries that will make up the AEC, companies should also remember many of the brand building strategies they've used elsewhere, such as the importance of using a unique and memorable name, and find ways to adapt those strategies to their specific markets and goals.
One community, but many countries
Though much of the talk about the AEC is the advantages of having a unified economic community, it is important to remember that the region covers a range of countries at different levels of development and with their own unique IP laws. Though it is impossible to cover all these differences in one article, here are some of the issues to look out for.
- It's important to understand that timelines can differ greatly from country to country. As mentioned above, countries like Vietnam and Indonesia have significant backlogs and registration will be slow to complete. A long runway is needed in such jurisdictions.
- Even pre-filing timelines need to be considered as some ASEAN members have filing formalities requirements that will take time to fulfil. For instance, before an application can be filed in Myanmar, one of the documents required is a power of attorney that must be notarised and endorsed by the Myanmar embassy in the applicant's home country.
- Post-filing timelines can be even more crucial because completion of the registration process is usually required before an infringement action can be taken out against a third party.
- In Indonesia, the registration process must be completed before any IP transaction can be recorded with the Indonesian trade mark office. Since the registration process in Indonesia is a lengthy one due to an extensive backlog, filing should be carried out as soon as possible in the business cycle. Many trade mark owners have been caught out by this requirement in Indonesia, resulting in a situation where they enter into agreements to license or transfer ownership of their trade mark, only to have their deal fall apart subsequently because such transactions cannot be recorded with the trade mark office until the registration has been completed.