US and EU IP judgement on SE Asian countries; part 1 Thailand

The US 2018 Special 301 Report and the EU report on the protection and enforcement of IP in Third Countries have been released in recent months. Its an interesting exercise to compare the different views. 

In SE Asia the combined conclusions are that, overall, major economies including Indonesia, Thailand, Philippines, Vietnam and Malaysia have made positive developments in IP over the last 2 years however more work is needed. Indonesia remains a Priority concern in both reports – it is the last SE Asian country on the USTR Priority Watch List, but was moved from Priority 2 to 3 in the EU list in recognition of some improvement in its IP protection. Philippines, Thailand and Malaysia remain on Priority 3 in EU report, while USTR lists Thailand and Vietnam on its Watch List.

This post focuses first on Thailand. Thailand remains on both the EU Priority 3 List and improved its ranking on the USTR Watch List.

Both the EU and USTR credited Thailand on its establishment of a National Committee on IP Policy and a subcommittee to improve the coordination of IP enforcement agencies. Both reports also took note of Thailand efforts to catch up with its backlog of IP applications and joining the Madrid Protocol. Concerns remain especially for USTR regarding a range of copyright issues, including a widespread use of unlicensed software in both public and private sectors, lengthy Court proceedings and low damages, extensive cable and satellite signal theft, and counterfeiting and piracy remain rife.

The EU urges Thailand to strengthen its IP protection by including landlord liability for trade mark infringement and putting in place an effective “notice and take down procedure” against copyright infringement. The USTR also emphasises strengthening copyright laws and protection against unfair commercial data use, and to address its public health challenges while maintaining a patent system that encourages innovation.

At a general level Thailand is having to address complex IP issues, and its national policy and coordination is strong. This reflects the more advanced state of Thailand's IPR system. 

2017 Special 301 report

This time of year sees the US issue its Special 301 IP assessment of trading partners, and the Priority Watch List (PWL) which lists countries not doing enough to seriously protect IPRs. In SE Asia Thailand and Indonesia remain listed. In previous years Vietnam and Philippines have both appeared, but now they appear on the lesser Watch List. That is perhaps a reflection of the steps taken to progress, and level of commitment, and not an actual comparison. 

 

For Indonesia the main problem is that “IP enforcement has been insufficient and Indonesia still has not issued long-awaited regulations confirming ex officio authority for border enforcement”. Widespread counterfeiting, especially of dangerous goods with no deterrence is raised as a basic concern. There is a lack of coordination across the various Ministries with IP responsibility and the USTR encourages the formation of a dedicated Police IP team to tackle serious criminal complaints.

 

Thailand is perhaps a surprising inclusion  given how much more developed its basic IP systems are than say Indonesia. But this illustrates the Special 301 review’s subtle approach. The focus shifts to more complex and technical issues – poor landlord liability provisions, a patent backlog, unlicensed software, lengthy civil IP trials and lack of high damages awards. Thailand does have an IP Roadmao and a National IP committee and a number of improvements are recognised,  such as steps to reduce the patent backlog and the large number of criminal IP cases that do occur.

 

All of this reflects an IP reality that you must first get the basics of IP enforcement right, and only then can you make progress at effective technology protection, using patents, trade secrets copyright and the like.   

Innovation report slams Thailand and Indonesia

Thailand and Indonesia receive a damning verdict in a report by the Information Technology and Innovation Foundation, a US think-tank. It seeks to measure innovation by looking at new technologies, new business models, new products and services and entrepreneurship. The reports cites the race for leadership in the global innovation economy.

They studied the innovation policies of 56 major countries. They looked at basic scientific R&D; effective science, technology, engineering, and math education; promotion of ICT; technology transfer and commercialization from universities and national research centers; tax incentives for innovation and brain drain policies. They also looked at negative barriers to innovation and trade such as currency or standards manipulation, forced IP transfer, domestic sourcing of production as a condition of market access, export subsidies and inadequate protection of IPRs.

Interestingly they categories these policies into 4 areas: 

good: benefit to the country and the world
bad: negative effect on the country or the world
ugly: benefit to the country but harms other countries self-destructive: negative effect on the country but helping the rest of the world

The usual innovation stars from Scandinavia to Singapore fared well. Two of the weakest countries are Indonesia and Thailand. They both contribute poorly at a global level and also come out as destructive to their own economies.  The report says they underinvest in research, produce fewer science researchers, use trade barriers, have weak IPR system, don’t focus on ICT enough and have relatively poorer innovation policies.

Thailand's 2015 Special 301 report

In its Special 301 report this year Thailand was maintained on the Priority Watch list. There are concerns over a lack of government priority for IP enforcement and weak coordination among government entities despite the National IPR Center of Enforcement operating since in 2013.

Outside practical enforcement, issues are raised about the backlog of pending patent applications, widespread unlicensed software in the public and private sectors, growing Internet-based copyright piracy, rampant trademark counterfeiting, lengthy civil IPR proceedings and low civil damages, the protecting of unfair commercial use, as well as unauthorized disclosure, of test data generated to obtain marketing approvals for pharma and agrochem products, and finally extensive cable and satellite signal theft.
 
On one hand the report praises the new Customs Act that provides Thai Customs officers with ex officio authority to suspend and seize illegal goods in transit, as well as copyright law amendments to address unauthorized camcording. On the other it complains of poor laws relating to the lack of a much-needed landlord liability provision, inadequate protections against the circumvention of technological protection measures and unauthorized modification of rights management information, and unclear operation of ISP notice-and-takedown procedures.

The Special 301 Priority Watch List doesn't compare countries at the same level. The interesting comparison with Indonesia reads in Thailand's favour since many of the above are complex IPR issues most of which are not even discussed in relation to Indonesia, given that Indonesia faces much more fundamental problems. Thailand is a more developed market so the US expects a higher level of IPR protection.

The Trans-Pacific Partnership and IP

The controversial Trans-Pacific Partnership (TPP) is still off and on. TPP negotiations in Washington this week on various free trade matters including IPRs broke down again.  The TPP is an initiative from the United States which aims to grow trade and investment in Asia-Pacific. The partners are Australia, Canada, Chile, Japan, Mexico, New Zealand, Peru and from SE Asia, Singapore, Brunei, Vietnam and Malaysia.

Controversially the TPP includes stronger standards for IPR protection and a number of emerging 21st century IP issues. However its application to emerging economies is worrying many people.

The TPP agreement previously made the news for the wrong reasons. Secretive, unbalanced, leaked by Wikileaks, contentious and so on. It includes a number of emerging markets including like Vietnam which have IP systems far less developed than the others and perhaps not able to cope with sophisticated issues.

Areas of international public concern relate to medicines, publishers, ISPs, criminal offences and biological patents. They include:

restrictions on the making of ‘temporary copies’ of copyright works in electronic form

• allowing the patentability of surgical methods
• placing limitations on access to affordable medicines
• making ISPs responsible for policing copyright infringement
• lengthening the term of copyright protection.

Criticism from the online community has been directed towards the so-called hard line approach being taken by the US. The access to medicines lobby complain that these provisions will harm public health. So far the draft chapter seen from the WikiLeaks release is complex and convoluted. The negations are broken but not over yet.

 

Thai protests impact IP world

Thailand's tense political standoff between government and opposition took a dramatic turn when the military declared martial law yesterday. The Prime Minister had previously been forced to stand down and planned elections are now uncertain. The standoff has impacted IP business in several ways. Some government offices have been shu off and on or temporarily had to move. Many had been blockaded by protesters so closed for periods. Here is a brief summary of the difficulties of the past 5 months-

The IP office itself had to relocate to temporary offices including to the offices of the TOT Public Company on Chaeng Wattana Road. It moved back to its own offices recently.

There are several criminal authorities handling IP cases. The police are undertaking IP cases on an ad hoc basis only - and probably not now martial law is in effect.  The DSI's IP teams have also had to move their office from the government complex on Chaeng Wattana Road to Thailand Post Office's headquarters on the same road. A number of files are in fact trapped in the old office and cannot be actioned.  The Prosecutors at the IP court likewise had to relocate to the Criminal Court on Ratchadapisek  Road, but have recently moved back to their permanent office.

The IP/IT court. The court was periodically closed and partially relocated to the Court of Appeals on Ratchadapisek Road for a period between January and February. However, it has now reopened.

Given recent developments it is possible there will be more disruption. There is an impasse between the yellows (the urban classes, currently protesting mismanagement of the economy and wasteful populist policies) and the reds (the rural supported government, led by the Shinawatra clan). With the military threatening to take control, more disruption is possible.

 

USTR Special 301 review 2014

The US government has released its annual Special 301 Review of its trading partners’ IP practices. See here last year’s. The SE Asian countries mentioned this year are as follows:

Priority Watch List:

Indonesia. Complaints remain around legislative gaps and enforcement failures, especially in judicial and prosecutorial systems as regards transparency and deterrent sentencing, despite rampant piracy and counterfeiting.  Growing piracy over the Internet and widely available counterfeit pharmaceutical products are problems, so is Media Box piracy, typically the sale of hard drives loaded with large quantities of pirated works. Compulsory patent licenses, protection of undisclosed regulatory data and cable piracy are also mentioned.

Thailand. The new National IPR Center of Enforcement is recognized as an important development. Legislative deficiencies identified include landlord liability, unauthorized film camcording, Thai Customs’ ex officio authority, implementing the WIPO Internet Treaties and improving the Trade Secret law. Specific industry concerns include media box piracy and illegitimate governmental use of software. Problems in practice include slow patent examination, copyright piracy and trademark counterfeiting including on the Internet and piracy of cable and satellite signals.

On the lower level Watch List is:

Vietnam. Despite new decrees and circulars significant legislative areas of concern remain, growing internet piracy and sales of counterfeit goods, physical markets for counterfeit goods, book and software piracy cable and satellite signal theft, media box piracy and illegitimate governmental use of software are all mentioned.  Enforcement remains difficult due to weak resources and IPR expertise, poor coordination and weak criminal implementing guidelines.

The big difference from last year is the removal of the Philippines. This is a reflection of various efforts including legislative reforms and a move toward more effective civil and administrative enforcement efforts along with IP authorities’ engagement with the U.S. Government and private sector. This is probably mostly the efforts of the Philippines IP Office, which has been extremely active in trying to improve its IP system. Indeed when the IPO couldn’t fix the weak enforcement system, long a problem of multiple ministries, the IPO decided to set up its own enforcement system. Hopefully this will incentivize other countries to make improvements.

Thailand's domestic IP struggles

A WSJ article about infringement of Thai IP illustrates the classic developing country IP conundrum. Thai IP owners suffer just as much as foreign companies, but it's the luxury items sold from sidewalks to tourists that hit the headlines.  Some interesting examples of infringement of local IP and growing awareness and desire to own IP are cited.

 

Propangandist, a distinctive lighting maker is taking action against copycat lamps. See this picture of it's unique lamps.

 

Thai music publisher, GMM Grammy says it is preparing lawsuits to collect performance fees from musicians who routinely play famous music as part their cover repertoires. The musicians are fighting back claiming a longstanding tradition of local cover music.

 

A local TV station Blue Sky claims copyright in whistles shaped as lightning bolts, commonly an antigovernment symbol. 

 

It is not all bad news as the IP recognition given to Thailand's Siam Cement Group shows - see here.

 

It has long been a tragedy that local creative industries in South East Asia are ignored by their governments. They often have the least resources, understanding and capability to stop IP problems.  

A Thai business' struggle against infringers abroad

Following on from the Starbucks v Starbung case, Thailand's Nation newspaper published a great story about Doi Chaang, a Thai coffee brand. Doi Chaang coffee is a premium, single-estate, organic Arabica coffee from a Golden Triangle village in Northern Thailand that pursues sustainable agriculture and minimal impact on the natural environment. With a GI in hand they began international promotion with Canadian assistance. Their president Wicha Promyong marketed the product as he has travelled around the world.

However he has also had to fight several IP cases in Japan and South Korea against companies using logos that look like Doi Chaang's albeit with slight changes - like extra words - added to the logos to render them less similar.  He won both cases. Now he is fighting another case in China.

 
This is yet another example of a Thai IP rich business expanding globally (more about which see here). A natural outcome of which will be IP disputes against imitators of their success. And a timely reminder that while IP disputes at MNCs are often part of life, for smaller businesses they can be devastating. Governments would do well to bear that in mind when developing their IP systems.

Thailand's IP strategy

IP Komodo always praises countries with clear IP policies. In SE Asia, some emerging economies struggle to find a direction for IP. Thailand, often a leader, has a national IP strategy is called the Creative Economy initiative. It aims to help Thailand transition to an innovation-driven country. A 20-year plan being drawn up. A series of key industries will be the first stage focus to establish a leading industrial position in SE Asia. Thailand is already strong in agriculture, vehicles and IT. The next step is to drive IP creation in these sectors, and the goal is for these sectors to lead innovation initially in SE Asia, then later further afield internationally. Ambitious plans indeed. 

And Thailand is developing some interesting national IP champions. Siam Cement Group (SCG) is one example. SCG seems to have embraced IP as a driver of business growth. Its corporate technology office is the business unit for technology and IP management at SCG. SCG can be seen at leading IP events around the region alongside some of the biggest global technology companies.

Another example is the widespread embrace of GIs by Thai agricultral and handicraft industries - see the link on the right for Thailand GIs for reports on this.  

Could it be that Thai government IP policy and on the ground results are in fact coinciding?

Thai FTA IP stumbling blocks

The EU Thai FTA talks are attracting far more than usual attention. Talks ended a couple weeks back without a deal again. Demonstrators took to the streets in the northern city of Chang Mai - their T shirts read "Life is not for sale, IPR out of FTA". 

FTA Watch a local pressure group has been lobbying to pressure Thailand not to accept TRIPS Plus rules notably on patent expansion, data exclusivity and stronger IP enforcement.  To do so they say would breach 2010 Thai Parliament's rules on the FTA, which prohibit public health issues being subject to international arbitration. 

It seems that while trade in goods and services issues are largely agreed, the more sensitive IPR ones especially as to patents, are causing roadblocks, rather like the protesters!

2013 USTR Special 301 report - Indonesia and Thailand

This years report is out and for South East Asia the news is generally one of improvement.
 
Indonesia remains on the Priority Watch List (PWL). While there have been some educational and awareness steps, the copyright law (under amendment) remains deficient, but the real problems are around enforcement. Criminal remedies are weak, with inefficiencies in judicial and prosecutorial systems including a lack of transparency and deterrent sentences. There are specific industry concerns over internet infringement, media box piracy (preloaded disks & drives of content), product counterfeiting (especially pharmaceuticals), copyright piracy, cable theft, trade secret protection for agrochemical and pharma products and compulsory licensing of pharma products. Interestingly it refers to collaboration on an Action Plan to improve IPR protection and enforcement against the high levels of IPR infringement in Indonesia.
 
Thailand remains on the PWL too. But only by a whisker as a possible downgrade is mentioned. There is praise for the Anti-Money Laundering Act, which includes IPR offenses as a predicate crime, and the launch of the National IPR Center for Enforcement. The police and customs are well regarded by IP holders. One key barrier seems to be legislative delay in tacking landlord liability, unauthorized film camcording, Ex officio Customs authority, implementing the WIPO Internet Treaties and establishing improved legal mechanisms to address internet infringement. The report cites that IP violation remains widespread despite the improvements, especially for cable and satellite signal theft. The report also mentions the IP issues around access to medicine.  Overall the balance seems right, with Indonesia facing more fundamental problems, while the more sophisticated Thai system faces some more complex challenges. Improving an IP regime is not a defined step, but more of a process over time.    IP Komodo will continue with other SE Asia markets in the next post. 

EU analysis of IP regimes in South East Asia

The US has long been vocal about protection of IPRs around the world, with one element being the USTR's Special 301 review, an analysis countries' IP regimes. The EU tended to have a different approach, less around public measurement of others' IP systems. That seems to be changing with the EU Strategy for the Enforcement of IPRs in Third Countries and a recent EU survey on IP around the world. This survey led to an assessment of the situation of IP protection and/or enforcement and where it is the most detrimental to EU IP owners. The results were as follows.

Priority 1 - China
Priority 2 - India, Indonesia, the Philippines, Turkey
Priority 3 - Argentina, Brazil, Canada, Israel, Korea, Malaysia, Mexico, Russia, Thailand, Ukraine, USA, Vietnam.

The bold ones are all in SE Asia. The issues in these places in summary were:

Indonesia - the government makes the right noises; there have been small improvements in IP registration speed.  Poor criminal enforcement and low deterrence, weak training, failure to prosecute cases, low transparency, no public data on IP enforcement, no usable Customs IP system and severe digital piracy are problems. The EU has an EU Indonesia Business Dialogue, several trade projects involving IPR components, such as ECAP III and plans to open an ASEAN IPR SME Helpdesk.

Philippines - solid IP laws, lots of recent training and awareness activities and new IP litigation rules are recent improvements, backed by apparent political will.  Slow IP registration, lack of interagency cooperation prevents IPR enforcement improvements, little public data, difficult and slow enforcement procedures, very slow litigation, lack of court expertise in IP, few criminal arrests and prosecutions are concerns.  The ECAP III project is under way.

Malaysia - recent developments are the specialized IP Court, the amendment of the Trade Descriptions Act, and now the Copyright Act. Difficulties centre around political will, lack of clarity on Customs IP powers, an unimplemented patent term restoration, weak data protection and low deterrent penalties. An EU FTA is under negotiation.

Thailand - The DIP is recognized as cooperative and nationally Thailand has made IP a priority through its National Task Force. PCT membership and Customs improvements are recognized. Enforcement remains a key concerns, copyright law has insufficient rules for the digital world, patent pendency is poor, and compulsory licensing of medicines is mentioned. The EU dialogue with Thailand, technical assistance programs such as ECAP III are under way.

Vietnam - post WTO legislative amendments are good and IPR is increasingly recognized. But implementation of the new laws requires monitoring to ensure effectiveness. Awareness training is also needed. Complexity of rules and weak authority cooperation are problems, along with poor understanding of IPR issues by officials and weak resources. An FTA is being negotiated with an IPR chapter.

IP Komodo observes that they captured the IPR problems well, reflecting the different development stages and relative sophistications of the different IP/legal systems.