ASEAN FREE TRADE AREAS ( AFTA )

ARE YOUR INTELLECTUAL PROPERTY RIGHTS AFTA READY?

By 1st Jan 2010, ASEAN Free Trade Aras (AFTA) will become fully operational amongst six countries in South East Asia, namely Indonesia, Malaysia, Philippines, Singapore, Brunei and Thailand. To meet the challenges and tap the full potential of AFTA, companies that do business in the South East Asian countries have to seriously look at their Intellectual Property portfolios and determine whether they are sufficiently covered in the AFTA region.

The Association of Southeast Asian Nations or ASEAN was established in year 1967 initially by five countries, namely, Indonesia, Malaysia, Philippines, Singapore, and Thailand. The membership of ASEAN was subsequently enlarged by the joining of Brunei Darussalam in 1984, Vietnam in 1995, Lao PDR and Myanmar in 1997 and Cambodia in 1999.

To promote the regional competitive advantage as a single production unit, the ASEAN Free Trade Area (AFTA) was conceived and launched by member countries in 1992. Under AFTA, the elimination of tariff and non-tariff barriers among member countries is expected to promote greater economic efficiency, productivity, and competitiveness. The member countries have also signed the Protocol to Amend the CEPT-AFTA Agreement for the Elimination of Import Duties in year 2003 and pledged to gradually lower intra-regional tariffs through the Common Effective Preferential Tariff (CEPT) Scheme. By 1st January 2010, tariffs for the original ASEAN 6 comprising of Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand will be completely eliminated, while tariffs for the remaining 4 countries will be eliminated by 1 Jan 2015.

Ever since its launch, AFTA has contributed significantly to the growth of intra-Asean trade, making it one of the fastest growing economic zone. In year 2008, AFTA has a total population of 587 million people with gross domestic product of USD1.4 trillion. Intra-Asean trade in year 2008 stood at USD 453 Billion (in 1998, it was only USD 120 B).

At the micro level, companies based in or doing business in the ASEAN region regions must also wake up to the fact that in a single economic market under AFTA, national IP filing in one ASEAN member country may no longer be sufficient. As more goods and services move freely across ASEAN countries in the aftermath of removal of tariff and non-tariff trade barriers, no IP owner would want to see their goods and services blocked at ASEAN countries’ borders due to wrongful misappropriation of their IP rights by imitators in another ASEAN countries. Going to court to challenge the IP hijackers is not only expensive, but also time consuming and in some cases not effective ( especially in countries like Cambodia that follow first to file system ). The most cost effective solution is for IP owners in ASEAN countries to proactively extend protection of their national IP filings to other ASEAN members countries. Likewise, companies doing business in the ASEAN region must also take the necessary precautionary steps. To protect their future market share and secure their freedom to operate in the AFTA regions, it is also prudent to filing their IP rights in all member countries of AFTA before it is too late.

Malaysia Update: McLaren not an ‘aggrieved person’

In one of the latest trademark cases involving well-known marks, McLaren International Ltd v Lim Yat Meen [2008] 1 CLJ 613, the Federal Court of Malaysia has affirmed the decision of the Court of Appeal to disallow the appellant, McLaren International, from expunging the respondent’s “McLaren” trademark on the grounds that the appellant does not have the requisite right to address the court as a person aggrieved to contest the respondent’s registration under Section 45 of the Trade Marks Act 1976. The respondent, Lim Yet Meen, in this case had been the registered proprietor of the trademark MCLAREN in Class 25 in respect of "articles of clothing, including boots, shoes and slippers" since 1992.

In 1999, McLaren International Limited, claiming to be the genuine proprietor of the trademark MCLAREN, filed an application in Class 25. The application was rejected by the Registrar of Trade Marks pursuant to Section 19(1) on account of the respondent’s prior registration for the same mark. The reason was that the appellant's mark was either identical to the respondent's registered trademark or so similar that it would be likely to deceive or cause confusion.

Consequently, the appellant applied for an order to eliminate the entry of the respondent's mark from the Trademarks Register. The appellants cited sections 14, 25, 45 and 46(1) of the Trademarks Act 1976. To succeed under either provision, they had to show that they were a person aggrieved and that they had a case under either section, which means, they had to establish that they have the right to address the court on a matter before it (locus standi) and to show merit.

With regard to the first issue, the judge referred to a local case of Fazaruddin bin Ibrahim v Parkson Corp Sdn Bhd [1997] 2 CLJ 863 and held that a party whose application for registration of its trademark is jeopardized by Section 19(1) of the Trade Marks Act cannot, without more evidence, qualify as a person aggrieved, because it could be a mere busybody.

Abdul Aziz bin Mohamad, FCJ also relied on the case of Re Arnold D Palmer ([1987] 2 MLJ 681), which stated that: " If an applicant for rectification has no such interest to begin with, and therefore cannot suffer any damage at all by the existence of a conflicting trademark on the register, it cannot be right, in principle, that the mere filing of his application can confer the necessary locus standi on the applicant for the purpose of rectifying proceedings.”

The judge proceeded to state that if the appellant were to succeed in this appeal on the question of locus standi, it would allow the appeal, but only to the extent of granting the alternative request under the second issue above. On the facts, since the appellants failed on the question of locus standi, the appeal was dismissed with costs and order that the deposit is paid to the respondent to account of his taxed costs. Hence, it has been observed that from this case, the standard of ‘aggrieved person’ had been raised to new heights. This may be likely to be a hindrance for foreign proprietors or investors, which now must satisfy the strict approach formulated by the court.

Singapore Update:‘Rooster’ not ordinary name in cordyceps trade

The courts in Singapore had restored and reestablished some fundamental concepts relevant to the laws of trade mark in the country. Here, the Singapore Court of Appeal dismissed an appeal brought by Wing Joo Loong Ginseng Hong Co Pte Ltd and rejected its application to invalidate and revoke a Singapore trade mark registration in the name of Qinghai Xinyuan Foreign Trade Co Ltd.

In Wing Joo Loong Ginseng Hong (Singapore) Co Pte Ltd v Qinghai Xinyuan Foreign Trade Co Ltd & Anor and Another Appeal [2009] SGCA 9, the issue is whether a ‘Rooster’ device trade mark registered for cordyceps was liable to be revoked or declared invalid. This case involved a scuffle over a mark bearing a picture of a rooster within a stylized flower border, registered in Singapore, in respect of cordyceps (“Registered Mark”).

On the facts, the Rooster mark had been used for cordyceps trade in China since the 1950s. Qinghai Medicines & Health Products Import and Export Corp of Qinghai, China (“Qinghai Meheco”) was the proprietor of the Registered Mark since 1995. In 2003, Qinghai Meheco assigned ownership of the Registered Mark to Qinghai Xinyuan Foreign Trader Co (“First Defendant”). The action was commenced by the plaintiff, Wing Joo Loong Ginseng Hong Co Pte Ltd, in retaliation to a raid conducted on the plaintiff’s premises where they were charged for trade mark and copyright infringement in respect of the rooster mark.

The plaintiff argued that the Registered Mark should be revoked because it had become a common name in the trade due to the proprietor’s act or inactivity. Under the Trade Marks Act, a party may apply for revocation of a registered trade mark if it can satisfy any of the several grounds under Section 22. After much deliberation, the judge found that there was no evidence to prove that the rooster mark had been commonly used to mark cordyceps from mainland China, regardless of whether they bear the same mark. He further added that Section 22 would only apply if the mark had become a household name. He refused to revoke the Registered Mark.

The plaintiff also argued that the specific mark ought to be invalidated. The judge decided that the Rooster mark had not become customary within the meaning of Section 7(1)(d) of the Act. To succeed on this argument, the plaintiff would have to prove that the sign become the generic name among the general public or among the trade, and become incapable of distinguishing the cordyceps of one supplier from another. Having found that the plaintiff failed to discharge this burden, the court concluded that the ‘Rooster’ mark clearly had the capability to distinguish, and dismissed the application for invalidation on the mark.

The court also considered the plaintiff’s allegation of bad faith, fraud and misrepresentation and ruled that the plaintiff had failed to discharge its burden of establishing each of these allegations. It was ruled that the registration of the ‘Rooster’ mark was allowed to remain on the register. However, there are some important points to be taken into account on this case. Firstly, it is not easy to establish a ‘customary’ trade mark; a popular mark does not mean it is generic. And, there is no discretion under the Act not to grant relief where the grounds for revocation and invalidation had been made out.

Malaysian Budget 2010: Tax Incentives For Small and Medium Enterprises to Register Patents and Trademarks

The Malaysian Budget Proposals for 2010 tabled on Oct 23, 2009 proposed that expenses incurred on the registration of patents and trademarks by small and medium enterprises (SME) in Malaysia be allowed a deduction against the business income. The registration expenses include fees or payments made to patent and trademark agents registered under the Patents Act 1983 and the Trade Mark Act, 1976. The incentive is aimed at encouraging innovative and intellectual property development among SMEs and shall be effective for year of assessments 2010 to 2014.

Thailand Update: Thailand Accedes to PCT on 24 Dec 2009

In September 24, 2009, the Government of the Kingdom of Thailand has deposited the instrument of accession to the Patent Cooperation Treaty (PCT) with the World Intellectual Property Organization (WIPO) in Geneva. The Treaty will enter into force with respect to the Kingdom of Thailand on December 24, 2009 and Thailand will become the 142nd contracting party of the PCT.

Thailand’s Deputy Minister of Commerce, Mr. Alondkorn Ponlaboot, on September 24, 2009 deposited his country’s instrument of accession to the Patent Cooperation Treaty (PCT) with WIPO Director General Francis Gurry. Thailand is the 142nd contracting state of this multilateral pact that facilitates the filing of patents in multiple countries. The treaty will enter into force for Thailand on December 24, 2009.

The accession by Thailand means that in any international application filed on or after December 24, 2009, Thailand (country code: TH) will automatically be designated, and as it will be bound by Chapter II of the Treaty, will automatically be elected in any demand for international preliminary examination filed in respect of an international application filed on or after December 24, 2009. Also, as of that date, nationals and residents of Thailand will themselves be able to file PCT applications.

In a meeting with Mr. Ponlaboot, Mr. Gurry welcomed Thailand’s accession to the PCT which he said was “an extremely important step” that helps make the treaty a “more global and attractive system.”

Vietnam Updates: Vietnam Amends Intellectual Property Law

On 19 June 2009, the National Assembly of Vietnam voted and approved an amendment to the Intellectual Property Law of Vietnam, these updates will be effective on 1 January 2010. Highlights of changes to this Law are stated below.

1. Royalties and remuneration for use of publishing works without permission.

2. Copyright protection

3. ‘First-to-file’ principle

4. Time limit for examining industrial property registration applications

5. Right of prior use to inventions and industrial designs

6. Intellectual Property representation service organizations

7. Plant varieties

8. Infringement liable for administrative remedies

9. Monetary fine rates under administrative procedure

10. Suspension of custom procedure