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China and ASEAN IPR SME Helpdesks

Michał Kłaczyński20 February 2014

20 February 2014

Protecting Your Business and Innovation in Asia

220 February 2014

Michał Kłaczyński Lawyer and expert with China IPR SME Helpdesk and ASEAN IPR SME Helpdesk. Educated in USA (Harvard Law School), China (Sichuan University) and Poland (Jagiellonian University). Experience includes several commercial and investment projects in China, South-East Asia and Central Asia (also in Europe and USA) and IPR and regulatory matters in several jurisdictions.e-mail: michal@klaczynski.pl

320 February 2014

Agenda

• China and ASEAN – legal systems

• Intellectual Property – basic concepts

• National IPR regimes: patents, copyrights, trademarks, trade secrets

• Strategies for European SMEs

• The IPR SME Helpdesk – what we can do for you?

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Association of Southeast Asian Nations (ASEAN) population of 602 million

– Indonesia, Thailand, Malaysia, Singapore, Philippines, Vietnam, Laos, Cambodia, Brunei, Myanmar

– High economic growth, combined GPD US$3.5 billion– Free trade association => common market (goods,

services, capital/investments)– Trade agreements with major partners: China, Korea,

Japan, India, Australia, New Zealand

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China’s legal system– civil law, communist heritage, market reforms and legal implants, IPR

protection influenced by WTO/TRIPS

ASEAN – legal diversityTransplants from common law and civil law, socialist law and local traditions– Anything in common?

• Rule of law and economic growth• Protection of private property, freedom of contracting, fair quality

of judiciary, free international trade, liberal labour market

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Indonesia– Adat law (customary law) – diverse heritage, elements of Islamic law– Civil law system (Dutch law) – IPR similar to European continental law

Malaysia– Common law system with Islamic elements– Commercial law and IPR similar to English law

Thailand– Civil law with common law influences (real estate, companies)

Vietnam– Civil law (French) + socialist law– Since 1982 economic reforms

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What are Intellectual Property Rights?• Exclusive Rights + Intangible Property + Intellectual Component

– Arts (copyright)| Science/Technology (patent)|Know-how (trade secrets, competition) | Market identity (trademark)

• What can/should be registered?– Trademark, Patent (invention), Utility Model, Design

• What is not registered?– Copyrights, Trade Secrets

• Registration & protection is territorial

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Copyright: China Copyright Act (1990, revised in 2002): • "works of literature, art, natural science, social science, engineering

technology and the like which are expressed" in written form, or musical, dramatic, fine art, photography, cinematography and videographic works, drawings of engineering designs and product designs, maps, sketches and other graphic works, computer software

• Some tangible form required• Registration of copyright - not required but widely adopted• Creator's exclusive right to use (and benefit from) original work• Computer software protectable under copyright law and a separate

regime (Computer Software Protection Rules 1991)

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Copyright: Thailand, Vietnam, Malaysia , Indonesia• Copyrightable subject matter - works of literary, artistic and scientific

character (including musical, choreographic, software and databases)

• Exclusive use and economic benefits

• Protection for 50 years after author's death

• Automatic protection (Berne Convention regime), but commonly registered in Vietnam, Thailand, Malaysia and Indonesia (copy of the works and declaration of authorship); simplified evidence of infringement

• In Vietnam copyright protection available for logo and product design

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Trade marks: China • Recognizable sign, design or expression to identify products/services on

the market; • Territorial and temporary protection (but can be extended without

limitation);• China is a “first to file” jurisdiction (i.e., no protection for the “well-

known” but unregistered trademarks);• Localization of trademarks (translation).• Ping Guo / 苹果 Ke Kou Ke Le / 可口可乐 Xilaideng / 喜来登

–

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Trade marks: Thailand, Malaysia, Indonesia, Vietnam • Recognizable sign, design or expression which identifies products or services• Visual trade marks only - letters, words, graphics, 3D (but not scent or sound)• Simplified registration for TM already registered abroad (without Indonesia) • Protection of "well-known" trade marks (widely known by continuous use)• "first-to-file” jurisdictions (with exception for Malaysia)• Registration - National Office of Intellectual Property (Vietnam), Directorate

General of IPR (Indonesia), Registry of Trademarks (Malaysia), Trademark Office (Thailand)

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Technology Protection: China - Inventions Inventions – registration required

– Territorial and temporary protection (exclusive use)• 10 years for utility models and design patents• 20 years for invention patents

– In exchange for full disclosure to the public (after the protection

expires everyone can use it)

– China is a “first to file” jurisdiction

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Technology Protection: Vietnam• Inventions (novelty, industrial applicability and inventive step) –

protection for 20 years;• Utility Solutions (inventive step not required) – 10 years’ protection;• Industrial Designs (shape/visible attributes; creative nature, novelty

industrial applicability) – 5 years’ protection;• “First-to-file” jurisdiction

• if two or more applicants file for patents for identical items, the one whose application was filed first prevails

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Technology Protection: Thailand• “first-to-file” system• Invention Patent (20 years protection) • Design Patent (10 years protection)• Utility Model (6+2+2 years protection)• Patentability of software!

Technology Protection: Indonesia• “first-to-file” jurisdiction• Standard Patents (product or process, 20 years’ protection)• Simple Patents (product, 10 years’ protection)• Industrial Designs

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Technology Protection: Malaysia• Inventions (protection for 20 years)• Utility Innovations – “lesser inventions” concerning upgrading an existing

product or process (protection for 10 years, may be extended up to 20 years

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Protection of Technology - Trade Secrets• Any valuable information (commercial or technical nature) not available

to the public (deliberately kept secret); – No registration, no time limits for protection– Not-exclusive (can be circumvented)– Once discovered may be used by others– No infringement claims towards third parties– Could be patentable but even technology doesn’t need to be novel

• Reverse engineering and independent development allowed• Importance of contractual measures

– Non-disclosure of confidential information is not the only concern– Key issues: competitive activity usage or circumvention our IPR

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Trade Secrets – China• Unfair Competition Prevention Act (1993)

– only misappropriation of trade secrets by competitors covered (does not apply to employees)

• Reliance on contractual provisions– usually a standard NDA will not be sufficient – competitive activities

and circumvention of IPR need to be eliminated• Criminal liability for theft of trade secrets• Civil procedure – limited discovery• Administrative enforcement – AIC (Administration for Industry and

Commerce) may order to stop sales of infringing product and/or a penalty

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Trade Secrets – Malaysia• Trade secrets/confidential information - protected under the common law

principles.

Trade Secrets – Thailand• Trade Secrets Act BE 2545 (since 2002)• Industrial and commercial secrets

Trade Secrets – Indonesia• Trade Secrets Act of 2000– proprietary rights to confidential information of a commercial nature– information that is secret, has commercial value, and is appropriately

guarded by its owner– protected indefinitely– exclusive right to use the trade secret, or to license it to third parties

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Trade Secrets – Vietnam• Competition Law of 2005 and the

Civil Code (industrial property includes trade secrets)

• General provisions, not specifically crafted to protect confidential information

• Difficult to enforce – evaluated as unsatisfactory protection against abuse of trust/confidentiality

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Trade secrets – contractual safeguardsStandard NDA will not be sufficient!– Non-disclosure is not our only/main concern• Rather - using confidential information to for competitive activity or to

circumvent our IPR• Secure all three aspects: Non-Disclosure, Non-Circumvention, and Non-

Competition– Prevent IPR being used for other party:• Independent business activity• Creating and developing own products, technology, production methods or

management of their company• Creating and registering any IPR

– Secure that no supplier/manufacturer, distributor, consultant (and their employees, managers, shareholders, subcontractors) will establish a business relationship with such entities, that were contacted or introduced to him in relation to providing services to us.

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Case study – infringement of IPR in ChinaAMSC v. Sinovel Wind Group – dispute over proprietary product for wind turbines

– Background• Key components and software developed in USA• No patents in China (not available for software)• Reliance on effective protection of trade secrets (control of

production)• Vulnerable for industrial espionage, corrupted employees• Some remedies available (criminal and contractual), but not

against third parties

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Case study – infringement of IPR in ChinaAMSC v. Sinovel Wind Group – dispute over proprietary product for wind turbines

– Outcome • Litigation since 2011 (US$1.2 billion damages), so far AMSC

loosing, now pending before the Chinese Supreme Court• AMSC successful in bringing criminal charges against corrupt

employees

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Case study – trade mark dispute in China• European clothing brand decides to change the business model

– Relocate production from China to Pakistan, give up imports to EU for the high-end Chinese market

– Long-term supplier is not happy, tries to block imports to China with a registered trademark

– Dispute over validity of the trademark arises, but imports and shopping malls’ space rental difficult

– The court does not annul registration, but orders to transfer the trademark

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Take-away messages First: prevent infringements

– Register your trademarks and patents (also with customs administration)

– Due diligence– Enforceable contracts (non-disclosure, non-compete)

Cost-benefit analysis before litigation Enforcement: what are the best measures? Monitoring the market (early detection of infringements) Use different ways to protect the same IPR (assets) Manage confidential information appropriately Control key components, production or marketing stages

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China and ASEAN IPR SME HelpdesksEnquiry Helplines

IP Guides & Newsletters

E-learning & Business Tools

Training Workshops& Live WebinarsWebsites & Blog

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Enquiry Helpline

• IPR one-to-one consultations: E-mail, telephone, face-to-face• First-line advice on China and ASEAN countries IPR matters• Confidential• Delivered by China and ASEAN IPR specialists• Available for EU SMEs and SME intermediaries

question@china-iprhelpdesk.eu+86 (10) 64620892

question@asean-iprhelpdesk.eu

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Information & Materials• Library of publications:

– IP specific guides, incl. patents & trade marks– Industry specific guides, incl. textiles, machinery, creative industries– Business guides, incl. technology transfer– ASEAN IP Country Factsheets

• Quarterly Helpdesk newsletters• Article placement• Topical blog posts

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Training Workshops & Webinars

• Workshops across Europe, China and ASEAN countries• Addressing general IPR and industry specific IPR

matters

• Trainings delivered in several languages

• Free one-to-one consultations• Webinars: Save time by joining these interactive

training sessions from your own office or watch recordings online

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Online Portals

• Practical IPR guides• E-learning modules• Case study catalogue• FAQs• Helpdesk newsletters• Event information• Latest blog posts• Helpdesk videos

www. ASEAN-iprhelpdesk.euwww.China-iprhelpdesk.eu

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Feedback Questions Discussion

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The China and ASEAN IPR SME Helpdesk provides free, confidential, business-focused advice to European Small and

Medium Enterprises (SMEs) relating to IPR in China and Southeast-Asia

Helpdesk Enquiry Service – question@china-iprhelpdesk.eu / Training & Events

Materials

Online Services -www.china-iprhelpdesk.eu / www.asean-iprhelpdesk.eu

For more information about our services and how the China And ASEAN IPR SME Helpdesk can add value to EU SMEs, please contact: Telephone/Hotline: +62 21 572 2056 ext.108 Jakarta / +86 (10) 6462 0892 China

20 February 2014