USTR's Special 301 report 2019 - Indonesia

The US government announced its US Special 301 review last week, and perhaps the most interesting question is whether President Donald Trump’s US protectionist policies and provocation of trade disputes suggests any change in the Special 301 approach. The purpose of the Special 301 review is to identify US trading partners that do not adequately or effectively protect and enforce IP rights or otherwise deny market access to U.S. innovators and creators that rely on protection of IP rights.

Of course China comes in for the most criticism, given the extent of copyright piracy and trademark counterfeiting and trade secret theft among other issues. However it is probably correct to say that the larger the trading relationship the more scrutiny a country faces, so the final Report doesn’t exactly compare like with like. So China (which is supposed to be the source of 75% of the world’s fake goods) and other large trading partners always feature. Over the last 20 years most SE Asian countries have fallen off the Priority Watch List and Watch list as IP protection improved.

This year Indonesia features on the Priority Watch List and Thailand and Vietnam on the Watch lists. This is the same as 2018. The last changes for SE Asia was the downgrading of Thailand in 2017.

Indonesia the report says suffers from many problems; these are broadly:

• widespread piracy and counterfeiting and, in particular, the lack of enforcement, as well as low deterrent penalties
• conflicts between GI rules and pre-existing trademark rights and common food names
• problematic patentability criteria for incremental innovations, local manufacturing and use requirements, ease of compulsory licenses, and burdensome patentable material disclosure requirements and excessive patent annuity fees. 
• Poor protection against unfair commercial use and unauthorized disclosure of undisclosed pharma and agrochem regulatory /test data for marketing approvals
• Market  access barriers for the pharm and movie industry especially

Much of these are longstanding complaints. Weak IP enforcement for example, is an old one, which the USTR suggests needs better enforcement coordination and a specialist IP police unit. However the patent barriers were only created in the last few years. With no improvements in the longstanding complaints, the direction of travel i.e. more IPR barriers is not likely to lead to Indonesia coming off the Priority Watch List any time soon.

Elections in Indonesia, IP and fake ballots?

  The world’s largest one day direct election, Indonesia's presidential election completed last week. The count continues but President Joko Widodo looks set to win with a 55% majority.  Most commentators seem to think that continued stability is good for the economy and country generally. And in terms of continuation of the bureaucrats in position, that should mean no major changes for IP.

One curious incident occurred in an otherwise calm and peaceful election. In Selangor, a city in the neighbouring country of Malaysia thousands of ballot papers were found pre marked in favour of Indonesian candidates. The Indonesian General Elections Commission (KPU) and the Election Supervisory Agency (Bawaslu) are investigating with the Royal Malaysian Police. It is not clear what these papers were. Were they genuine ballot papers intended for Indonesia's diaspora living in Malaysia but never distributed? Or fake ballot papers printed abroad intended to be added to the count?

Myanmar IP laws update

Laws pass through the legislative process in Myanmar as follows:-

1. Bills go to Upper House Bill Committee
2. Bills go to Lower House Bill Committee
3. Bill then goes back to Upper House Joint Committee for review
4. Bill then goes to Assembly of Union for debate /approval of Bill
5. Approved Bill then goes to President for signing to enact the Bill as a law within 14 days or receive comments, (thus a Bill may return to the Assembly with comments of the President within 14 days for further review)
6. Bill goes to President again and whether or not the President agrees it, the President shall sign and Bill is enacted as law
7. Notification is then be issued within a period of a few months to fix the date for the law to enters into force on the prescribed date in the Notification

If a Bill is not enacted as a law within 14 days from the date of receipt of the Bill at the President Office, it must be returned to the Assembly with the President’s comments.  

The Patent, Design and Trademark laws are now at stage 6; they are due to be signed into effect. However the challenge now lies in stage 7, because of the program of implementation required for registration based IP rules. Implementing rules, a new IP Office, the oversight committee and a physical move to the Ministry of Commerce al need to be planned and scheduled before the Notification can be issued. Once these laws have a date of entry into force, IP owners must be able to file their patents designs and trademarks. Right now the implementation team is working with the Ministry of Commerce to create the plans to put everything in place so that the Notification can be issued.

 

Meanwhile the Copyright Bill is at stage 5. This law does not have mandatory registration of course, so it can take effect immediately. However there are concerns about how the law will apply to certain existing translations and music (which could be rendered infringing), and how the transition period will work. Potentially some debates need to be resolved before the President can sign it.

Indonesia’s online streaming piracy

Copyright piracy today is largely driven by illegal streaming of television and video content. A key concern in the last few years has been tackling the sale of illegal streaming devices  like physical boxes or USB sticks that plug into a TV. The boxes often come pre-loaded with illegal applications allowing ‘plug-and-play’ access to pirated content. The Illegal streaming devices are often referred to as ‘Kodi boxes’ or Android TV boxes. Kodi is in fact a software and a free and open-source media player that allows people to play and stream video content. These boxes run on a legitimate software which is why they are widely available.

 

In Indonesia, according to a recent survey conducted by YouGov, it was found that TV set-top boxes that can stream pirated video content are used by 29% of online viewers in Indonesia. This survey, commissioned by the Asia Video Industry Association (AVIA) Coalition Against Piracy (CAP), found that the IndoXXI Lite, LiveStream TV and LK 21 Reborn are the most popular illicit streaming devices (ISDs) in Indonesia. This impacts international subscription services which include pan-Asia online offerings as well. Of the 29% of consumers who purchased an ISD for free streaming, two in three (66%) cancelled all or part of their subscription to legal pay-TV service(s) in favour of ISD free streaming. The surge in popularity of ISDs occurs throughout SE Asia and beyond.

 

Many of these devices come with security threats. The content industry also cites concerns about malware. Security experts have warned how hackers can exploit these devices to infect consumers’ computers and other devices. But owing to the low cost of these boxes and availability of free content, the users, most of whom belong to the younger generation, are perhaps not concerned as much about issues of malware. However, the loss of subscription services and harm to businesses in the production and distribution of legitimate content is an economic problem and a major concern across the whole industry, both on a local and international level.

 

 

 

 

 

 

Vietnam civil copyright decision

A copyright dispute in Vietnam indicates that civil litigation is increasingly common. This month the Hanoi People’s Court ruled in a civil decision on copyright.

 

It concerned a musical called Tinh Hoa Bac Bo (Quintessence of Tonkin). This is an open-air water stage musical about the region of Tonkin, in north Vietnam. It premiered in late 2017 and met with critical success and awards. The show was produced by Tuan Chau Hanoi JSC. It is alleged to have reproduced components of another musical play called Ngay Xua (Back Then). This was produced by TCHN and directed by renowned director Viet Tu in June 2017. Tu’s show was not a success and stopped running after 10 shows. Tu used to be an employee of Tuan Chau Hanoi JSC.

 

Expert evidence from the Vietnam Stage Artists Association was provided during the case. TCHN defended in court that The Quintessence of Tonkin was a separate product solely researched and created by directors Hoang Huu Nhat Nam and Dao Thuy Phuong Thao. Nam argued that he was the author of The Quintessence of Tonkin, and had already been granted an independent copyright for his work by the Copyright Office on July 31, 2017.  However when summoned to give evidence he did not appear.

The panel of judges decided that The Quintessence of Tonkin was a derivative work of Back Then. They awarded Viet Tu VND660 million ($28,000) in damages from TCHN. They calculated 10 percent of ticket sales, royalties, and interest for late payment.

 

There has already been an appeal and a separate defamation case has been filed by Name against Tu in in the People's Court of Binh Thanh District, Ho Chi Minh City.

Indonesia Madrid trademarks update

The Madrid trademark system has been operating in Indonesia since 2 January 2018. By March 2019, over 8,000 international applications have designated Indonesia. On average, it takes around 2-3 months for WIPO to complete the formalities stage and forward the applications to the TMO in Indonesia. So far over 5,000 applications have been received and are undergoing examination. It is taking around 7 months to complete examination. A number of office actions have been issued since the start of 2019. Around 80% are passing without office actions.  

One of the major challenges is unrecorded assignments – the Indonesian TMO’s proprietor data needs to be updated faster. The result is the TMO does not always know who the correct proprietor of a blocking mark is. Another is when the specification is limited in Indonesia compared to other markets; this negates many conflicts; applicants need to ensure they know whether this has happened to avoid unnecessary conflicts.

Indonesians are also using Madrid. So far 28 local companies have filed 32 international applications. 

Facebook Marketplace and IP infringement in the Philippines

The Intellectual Property Office of the Philippines (IPOPHL) aims to regulate small and medium enterprises (SMEs) that are selling products online using Facebook as a sales platform. Philippines is a fast growing digital commerce market in the SEA region. In January 2018, Facebook introduced its marketplace service in the country allowing Facebook users to use Facebook as a platform to buy and sell goods online. However, plenty of sellers on Facebook are selling their products without having registered stores and this leads to problems in relation to intellectual property violations as it becomes very difficult to trace these people if they sell fake goods. 


In order to address this issue and regulate the FB marketplace, IPOPHL is working with the Department of Trade and Industry (DTI) to push for the registration of online retailers with the DTI. So, in case an online seller is found without registration, it may be removed/taken down from Facebook. IPOPHL intends to seek help from the National Telecommunications Commission (NTC) as well, to gain more authority to ask Facebook to take down the social media pages of illegal online businesses. IPOPHL is also keen to work with trademark owners as their cooperation is key in enforcing intellectual property. Many may not be aware that how the Facebook marketplace is so used in the Philippines.

The trade in fakes from and through SE Asia

The publication of the OECD/EUIPO updated report Trends in Trade in Counterfeit and Pirated Goods provides more data and corroboration on the role of SE Asia in the global fakes trade.

 

Of course China dominates as the global source, including transited goods through Hong Kong. But the report identifies other SE Asian countries too. Malaysia, Thailand, and Vietnam are all small but important producers in many goods sectors. Singapore features as a source as a result of transhipment of fakes through its port.  The global fakes trade is valued at half a billion Euros and growing. Footwear and clothing are the largest volumes of fake goods seized, but the usual range of products from consumer and household to pharma remain common, as well as IP-infringing packaging and labels.

 

Places with weak governance attract counterfeiting. This includes bot  countries with large grey economies, and specifically Free Trade Zones. The boom in internet orders and small parcel deliveries by post or courier services is now dominating seizures. For customs and IP owners this means more work for less volumes.  Weak port systems (lack of shipment information transparency, no advance clearance systems etc) encourages the fakes trade.

 

The authors also note a change to the rights owners affected with an increasing spread to companies from all countries. In SE Asia they identify a number of Singapore IP owners as facing fake goods problems.

 

 

 

 

 

 

Myanmar passes Patent law

On March 11, 2019, the Assembly of the Union of Myanmar (the Parliament) passed the Patent Law No. 7/2019. 

The next and final step is for the President of Myanmar to issue and sign a notification informing the date of entry into force of the Laws.


With the passing of the Trademarks and Designs laws earlier this year the parliamentary process is now complete, except for the Copyright Law.