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Monday, June 27, 2016

Public outcry over fake vaccines in Indonesia

Following a police investigation and discovery of a counterfeit vaccines network across Indonesia a public outcry is bringing politicians, bureaucrats and health organisations into the fray. 

The police uncovered sales in Central Java, Jakarta and Riau. 13 arrests were made, including factory operators, distributors, couriers and label makers after raids across Jakarta and surrounding areas of West Java last week.  Two further Central Java distributors arrested have apparently been operating for 10 years. Pictures of the couple's lavish lifestyle went viral on social media. Suspects are to be charged under Health and Consumer Protection Laws. The Jakarta raids netted 195 packages of hepatitis B vaccine, 221 bottles of Sanofi's Pediacel combination vaccine, 364 bottles of measles vaccine, 81 packages of polio drops, 55 snake anti-venom packs, along with sales invoices and vaccine manufacturing equipment.

Various hospitals, public health clinics and pharmacies have been involved in the investigations. Jakarta's mayor Ahok has ordered the city's Health agency to inspect public hospitals, following reports of the availability of fake vaccines in the capital's hospitals. Testing is ongoing, some fakes are believed to contain harmless liquids, but the public have been scared, because many are vaccines for children. 

The Minister of Health has tried to downplay the issue, citing that only 1% of drugs are fakes. However health and consumer groups have made statements to the press about the fact that this problem is common knowledge in the country, that Indonesia is a haven for fake medicines. Government departments have been accused of gross incompetence by political parties. The Ministry of Health's BPOM unit is taking the most flack. BioPharma the state owned drug producer has announced that its supply chain integrity is strong. 

Of course those in the anti-counterfeiting world have long known of this. See here for previous reports. The Indonesian Anti-Counterfeiting Society has spoken about it. The US government mentions pharma makes most years in its 301 report on Indonesia. The real problem is the lack of investigation and enforcement of counterfeiting, the fault of which lies with the police's failure to investigate commercial crimes, the IPO's PPNS department which has virtually ceased raids, and BPOM who tended to focus on fakes drugs in pharmacies only, not going back into the distribution chain. Pharma companies for years were unable to complain about the health Ministry's lack of action, because the same Departments are also their regulatory supervisory bodies.

The current position is that counterfeiting is a growth industry with little government attempt to stop it due to a weak legal system. Several spots in Jakarta are well known for fake medicines like Pasar Pramuka but are notoriously dangerous for investigation and enforcement. Perhaps a public outcry is needed to drive more action by the government. Fake medicines are the worse tip of the counterfeiting industry which prospers due to lax law enforcement offering no deterrent.

Sunday, June 26, 2016

Indonesia civil trademark damages calculations

The Plaintiff Andy Najarudin owns the NAKAMICHI trade mark covering textiles. After discovering sales of counterfeit NAKAMICHI products he sought help from the Indonesia Textile Association. One Harry Sucipto and his business partners had been manufacturing and trading fabrics using the NAKAMICHI mark without authority since 2011.

After a failed mediation by the Association, the Plaintiff reported the Defendants to the police and filed a criminal case with the West Jakarta District Court. The District Court found the Defendants guilty of trademark infringement so sentenced then to three months imprisonment and a fine of IDR 30 million (USD2,200).

Then the Plaintiff filed a damages claim with the Central Jakarta Commercial Court as a result of the infringement. They claimed actual loss damages of IDR 5,178,765,000 (USD 380,000) as well as a total of IDR 20,000,000,000 (USD1.5 million) of intangible loss damages. The Plaintiff provided a comparison of the profits they made during 2009-2013, which showed a significant decrease from 2011 onwards, to support their claim.

The Central Jakarta Commercial Court granted parts of the Plaintiff's claim. They declared infringement of the NAKAMICHI trade mark. The Judges ordered the Defendants to cease their infringing activities and to pay a total of IDR 1.5 billion (USD110,000) in actual loss damages and IDR 1 billion (USD78,000) of intangible loss damages.

The Supreme Court rejected the defendants' appeal, but amended the Central Jakarta Commercial Court's decision removing the intangible loss damages. The criteria to calculate this amount could not be determined they said.

It is rare to see a case where the plaintive puts in evidence of its losses. Typically, judges get very little real evidence to assess damages. Plaintiffs do frequently make outlandish claims of intangible losses but often these are refused. Damages here of IDR 1.5 billion (USD110,000) seems broadly reasonable for a textiles business. In Indonesia legal costs are never awarded.

Thursday, June 23, 2016

Philippines implements data protection rules

Under the Data Privacy Act of 2012 the National Privacy Commission administers and implements the Data Privacy Act. It has now established implementing regulations.  These cover:
  • Data Privacy Principles (e.g. Transparency, Legitimate Purpose and Proportionality)
  • Processing of Personal Data (e.g. purposes, methods, data integrity, data sharing)
  • Security Measures for Data Protection (privacy officers, Accountability and Transparency, Physical security)
  • Government Data Security
  • Rights of Data Subjects
  • Data Breach Notifications to the Commission
  • Rules on Outsourcing and Subcontracting
  • Registration, Adminsitration and Penalties
This comes after a massive recent breach - details here. Companies will need to review their operations immediately for compliance.

Saturday, June 18, 2016

Domain name cases and cybersquatting in Vietnam

Image result for vietnam internet

On 8 June 2016, the Ministry of Information and Communication (MoIC) and Ministry of Science and Technology (MoST) jointly held a meeting to sign a new circular on handing domain name infringements. For some time domain name infringements have been impossible to handle effectively due to uncertain ministerial responsibilities for enforcement of decisions. See here for more detail. 

However this new joint circular surprised everyone. It only covers (i) domain names identical or similar to others' IP along with content on associated websites which infringe others' IP; (ii) domain names used for publishing content infringing IP laws. This is inconsistent with a previous 2015 Circular which covered bare cybersquatting (registering domain names similar without actually using the names or merely intending to resell the names or to prevent the IP holders from securing the names).  

This is disappointing. The most typical problem has not been addressed. To enable administrative action, IP holders must prove infringement on the associated websites. The MoIC has in effect sent a message: cybersquatting disputes must be resolved in court, not through the administrative route. This is in fact consistent with what the Law on Information Technology says but there is still arguably a conflict between the Law on Intellectual Property and the Law on Information Technology. Only serious content infringements will be resolved by the administrative authorities, less serious cybersquatting must go to the civil courts.

Friday, June 17, 2016

Designs in SE Asia

Designs are creeping up the region's agenda as the adoption of the Hague designs filing system in SE Asia gets closer. Now the World Intellectual Property Organization (WIPO) will conduct a study on the use of designs in 3 SE Asian countries namely: Indonesia, Philippines, and Thailand. These all show large numbers of designs in the region. Here are the ASEAN published details for the major emerging markets in SE Asia.

Design Applications














959  (half year data)




The key point to note is that in most SE Asia countries the proportion of local applicants is higher for designs than for other types of IP. More local designers use the filing systems than say for patents. This justifies a focus on this type of IP in the region.  


Wednesday, June 15, 2016

Singapore and IP financing

Singapore's IPOS last week announced the first IP financing deal under IPOS' IP Financing Scheme (IPFS) which helps IP-rich companies monetise their IP for business growth and expansion. A loan through DBS was arranged for Masai Group International, a Singapore owned specialist footwear business, backed by its patents. Masai Group CEO Andy Chaw stated “We are honoured to be the first company in Singapore to have successfully obtained the IP financing to unlock the value of our intellectual property. With the financing, we will continue to invest and strengthen our global IP portfolios and brand marketing, as well as continue our research and development efforts in new technologies and products development.” Various Singapore banks participate in the system and UOB has announced that it has a pipeline of deals coming through soon. This certainly makes Singapore more attractive for IP ownership.

Tuesday, June 14, 2016

Philippines and data privacy

Image result for data privacy
Data privacy and security is a somewhat new issue in SE Asia. It has been on the radar for a while and countries have slowly been putting in place various levels of protection, with the expectation of a regional system, perhaps under the AEC. Now a massive data hack just before the recent Philippines’ election has raised major concerns. The leak exposed names, birthdays, addresses, emails, parents’ names and passport details for millions of voters. Security experts had to be called in to verify no harm to the poll had occurred.  Manwhile millions of Filipinos now live in fear of having their online lives compromised.

There is concern that SEA countries are not equipped with security strong enough to deal with serious hacks. This determined to steal private data target the weakest links and that means many SE Asian nations.  Taking security measures (anti-virus and other systems) is one part of the solution, but this has cost attached to it. So unless this is made obligatory by strong data privacy laws, the belief is that the whole region remains vulnerable.

Wednesday, June 1, 2016

Hague design filing in SE Asia

The Hague international designs system allows for a single design application to be filed with WIPO for protection in multiple markets. Applicants must be from a contracting state. The Hague system has two separate treaties but the 1999 agreement is increasingly popular. It is ASEAN policy for its 10 South East Asian members to join Hague. Singapore is already a member and discussions are ongoing in several other SE Asian states now. Indonesia's draft design amendment law refers to Hague.

Filing can be done electronically at WIPO or through national offices. Care must be taken when designating Japan and the US as there are additional requirements. WIPO only examines the formalities. Upon publication each national office may substantively examine the design, based on their own domestic legislation.

The major benefit of the system is the significant cost reduction and multi-country protection which will help designers in South East Asia tremendously.

Tuesday, May 31, 2016

Shipment of fakes in SE Asia

The diversity of transport methods for counterfeit goods in Asia is an increasing headache for IP holders. Once upon a time, all you needed to worry about was catching containers shipped by sea. Customs enforcement involved seaport training and seizures. Now there are many more ways fake goods are shipped such as the following:

-   Some products, such as household detergents or alcohol that are large in volume but low in value are often shipped in containers to be economically viable. Malaysia's Langkawi island has a reputation for being an alcohol smuggling centre.

-   Smaller higher value products, such as luxury goods, watches or phones can be posted / couriered or airfreighted. The vast majority of customs seizures around the world these days are couriered and posted, helped by the fact that online orders for small volumes are now so easy in the age of e-commerce.

-   Many of SE Asia's land borders with China, especially Myanmar, Vietnam and Laos have road and river crossings with large numbers of people crossing daily with stocks of counterfeit goods. Last week Thai authorities arrested a Cambodian man crossing the Thai border. In his  car were 20 fake bags and 52 pairs of fake adidas shoes which he allegedly planned to deliver to a customer in Bangkok. Vietnam has a porous border with China and many people cross daily without passing through the border gates just walking over the hills, or by boat over the rivers. An entire industry of smuggled and counterfeit goods porters exist for hire.

-   Often heard also are tale of air crews and others in the transportation industry carrying fake goods with them.

All of this makes the issue of border interception much more complex than it once was. Meanwhile still SE Asia is far behind the rest of the world in terms of its Customs border protection systems, with only Thailand seizing meaningful volumes of products.


Monday, May 30, 2016

Expanded Indonesian FDI rules

Image result for foreign direct investment

Changes to Indonesia's negative investment list of interest to IP owners have been announced. The country needs to attract more foreign investment and to compete within the ASEAN  Economic Community ;laucned in 2016. Areas now with expanded conditional foreign investment (the condition being 67% ownership limits) include certain hotels, department stores, telecoms and data centres. Retail and internet delivery services are now open to conditional foreign investment (the condition being partnership with an SME). Film production is now 100% derestricted so are cafes, bars and restaurants.


Saturday, May 7, 2016

Asics beaten in TIGER logo race in Indonesia

Image result for asics tiger logo
Asics Corporation the Japanese sportswear company has various brands including its name ASICS, its logo and variations as well as brands like the Onitsuka Tiger logo, a heritage shoe brand. In a very typical Indonesian brand piracy situation two defendants: Theng Tjhing Djie, Liong Hian Fa registered various logos in Indonesia between 1994 to 1996, which look very similar to the ASICS TIGER logo and incorporated their sub brands.  One Defendant appears to have transferred copyright in them from one to the other and they appear to have had copyright registrations too. 

The Plaintiff sued to cancel the marks claiming that the Defendants registered the marks in bad faith to take advantage of the Plaintiff’s popularity. The Defendants argued that the Plaintiff’s claim is unclear and should not be accepted. The Defendants filed a counter-claim to declare that they are the rightful owners of the logos’ copyright which are also registered in Indonesia, so the Plaintiff Asics was suing them in bad faith. 

The Central Jakarta Commercial Court accepted parts of the Defendant’s argument. In particular Asics had mixed up copyright and trademarks its its claims so the Judges rejected much of Asics' arguments. Asics filed an appeal to the Supreme Court. But this claim related to copyright too, around who first published the logo. So the Supreme Court confirmed the lower court's appeal.
Cases are frequently rejected for containing mixed claims like this. 

Asics could have filed a pure bad faith trademark case, and then a separate case to cancel the copyrights. The Defendants exploited a rigid approach taken by the law in Indonesia, and claimed both trademark and copyright to support their pirate registrations. The Plaintiff needed to deal with these separately.

Tuesday, May 3, 2016

Singapore's role in the counterfeit goods trade highlighted

Singapore is one of the world's largest ports and supposedly the world's largest transhipment port. A recent OECD report points the finger squarely at Singapore for having a major role facilitating the global trade in fake goods. As much as 2% of the world's fake goods are alleged to pass through the city state's port. Despite having a strong IP system, that protection stops at the wharves and docks. Transiting through Singapore, contributing revenues to government coffers and supporting global criminal enterprises, are millions of dollars of fake shipments. This will come as no surprise to anyone who has seen the myriad of container ships parked offshore.

The government is however unwilling to discuss the situation, preferring like an ostrich to avoid the problem. After all they earn money from each shipment that passes through and the cost of inspecting or seizing illegal goods would be very high. Unfortunately this is believed to be only the tip of a far bigger illegal goods iceberg; that counterfeits are only one category of a vast array of much nastier illicit goods that pass through country's ports each year. As the criticism mounts eventually the ostrich will need to take notice.

Thursday, April 28, 2016

The legs of a Man causes problems in Indonesia

Image result for cap kaki tiga

Singapore health drink maker Wen Ken Drug Co. Pte. Ltd is in trouble over a law suit in Indonesia. It makes Cap Kaki Tiga (Three Legs Brand) drinks, an old Singapore brand, popular in Indonesia. However the Central Jakarta Commercial Court found it nearly identical to the flag of British dependent territory Isle of Man. A British citizen Russel Vince applied to cancel the mark on the basis that it was filed in bad faith and an unauthorized use of a state symbol. The Plaintiff also requested the Court to ban production, distribution, and promotion, as well as to recall from market all drinks that bear the logo.

The Defendant argued that the Plaintiff had no legal standing, with no authority to represent The Isle of Man and no legal interest such as trademarks in Indonesia.

The Court granted parts of the Plaintiff's claim. The Panel of Judges declared that the Defendant's 49 trade mark registrations of CAP KAKI TIGA were filed in bad faith because it is similar to the flag of the Isle of Man. The Panel of Judges ordered the cancellation of the registrations but rejected the order to cease use of the mark.

The Defendant appealed to the Supreme Court twice but was rejected. They argued that the Plaintiff's claim does not fit the criteria of Article 6.3 of the Trade Mark Law because the Isle of Man is not a sovereign state and not a member of the WTO or UN.  The argument was not accepted.

There are several legal problems here - this was a cancellation action, so difficult for the Plaintiff to include infringement remedies - no wonder he failed on that part. It is not exactly clear who he is, and why the court didn’t investigate his standing further. Article 6.3 protects states or institutions. While the Isle of Man is not a state per se it is a part of one (along with many other British dependencies). Presumably Indonesia wouldn't want to start a battle on that front. However that wasn’t raised in the lower courts by the Defendant so was correctly refused as not new evidence on appeal.
The decision overall seems right - essentially national symbols will always trump privately owned IP. The Defendant will need to rebrand, which should be simple as there are other ways to show three legs.