IP Considerations In South-East Asia For The Food And Beverages Industry.
Legal News & Analysis - Asia Pacific - ASEAN - Intellectual Property
30 October, 2017
In today’s blog post we are taking a closer look at the IP protection in the food and beverage sector in South-East Asia, a sector that has recently seen a lot of attention from the European SMEs as it offers many promising business opportunities. In this blog post you’ll learn more about branding, protecting your product packaging and protecting your authentic products from specific geographical region with Geographical Indications.
South-East Asia is home to more than 600 million people and it is the third largest market in the world, with ten countries integrated in a common market under the ASEAN Economic Community. South-East Asia also has high economic growth between 3-10 percent per annum, which is driven primarily by consumption, due to the large population and a growing middle-class.
With higher disposable incomes and increasing health-consciousness, today’s consumers in South-East Asia are seeking healthier food and beverage choices. They tend to look for higher quality products, including those imported from overseas. This has opened up a range of attractive opportunities for European as European products are generally considered to be of high quality. However, diversity and regulatory affairs can sometimes be challenging in various local markets. South-East Asia has a wide mix of cultures, religions, customs, culinary preferences, and demographics that greatly impacts the F&B sector. For example, Indonesia and Malaysia have large Muslim populations, which could provide many business opportunities for halal-certified F&B products manufactured in Europe. Conversely, there are limited opportunities for imported wines and spirits in Indonesia and Malaysia due to the religious limitations on alcohol consumption.
European SMEs should, however, not forget to pay attention to protecting their IP, because despite the fact that most South-East Asian countries have good IP laws and regulations in place, IP infringements are relatively commonplace throughout South-East Asia. Well-managed IP is often a key factor for business success and neglecting these rights could be costly. Thus, a comprehensive IPR strategy is needed, when entering South-East Asia’s markets.
Brand Protection is important to your success in South-East Asia
Brand name and company name have a high value for F&B companies, as customers place trust in brand names and company names. It is also vital to register trade mark in South-East Asian countries because trade mark squatting due to ‘bad faith’ registration is a serious problem in many South-East Asian countries. The registration of a trade mark in bad faith refers to cases where a third party, who is not the legitimate owner of a particular trade mark, registers the mark before the original owner manages to register the trade mark in South-East Asian countries. This would prevent the legitimate owner from entering the market or continuing to use its trademark. In many cases, registration in bad faith is designed to obtain trade mark rights and use those rights as an asset to be sold to the original owner of the mark at an inflated price. It is therefore suggested to register trade mark in South-East Asian countries of interest well in advance, before having entered the markets.
Regional trade mark registration for the ASEAN Economic Community is not yet available in South-East Asia, therefore, separate trade mark applications have to be filed in each jurisdiction in South-East Asia, where one wants to obtain trade mark registration. It is very important for EU SMEs to be informed of the local trade mark registration rules and practices because rules and practices in this region differ from country to country. For example, the Trademark Office in Thailand is known for having a more extended interpretation of the meaning of trade marks, under which it deems trade marks to be descriptive/non-distinctive. On the other hand, Indonesia’s Trademark Office would usually allow trade marks that are arguably non-distinctive to be registered. It is thus recommended for the European SMEs to consult with local IP experts before filing trade mark applications in South-east Asia.
European SMEs should also keep in mind that most South-East Asian countries use the ‘first-to-file’ system, meaning that the first person to apply for the trade mark is normally granted the right to use that trade mark in the country. It is therefore vital for trade mark owners to file their trade mark applications in these countries as early as possible.
In addition, trade mark owners should not only register their marks in English (or Roman characters), but also register the equivalent transliteration (or translations) of the same mark in local languages as well. This is because registration of the mark in one language does not automatically extend protection to the same or similar mark written in the equivalent local scripts, such as Thai, Lao, Burmese, or Khmer.
Packaging is important in South-East Asia, protect it also with design patents
Packaging plays an important role in consumers’ choices of purchasing food and beverage products. Especially when EU SMEs enter new markets or when a new product is presented on the market, smart and attractive packaging usually triggers the interest of customers and it can be an important deciding factor which leads to the purchase.
Packaging can be protected as designs, three-dimensional trade marks and also copyright. When possible, adding layered protection of packaging is recommended, thereby combining different IP registrations, and allowing maximum protection.
A whole range of food and beverage products may be protected by design rights, including innovative or cutting-edge packaging, bottle shapes, fruit-shaped jellies, superhero-shaped candies, and distinctive patterns on boxes. Design protection should be obtained as early as possible before the product enters the market in order to keep competitors at bay, prevent counterfeiting and replication and obtain maximum profit.
In general, design registration in South-East Asian countries is done using a first-to-file system, whereby the first person to file for registration will own the rights irrespective of first use. Design rights, either under patents or industrial designs, protect the outer look and shape of the product design which may cover one or a combination of the shape, pattern, and color of the product design in two- or three-dimensional forms.
The countries in this region, however, have different rules regarding the scope of design rights. For example, color is not protected by a registered design in Singapore. In Thailand, if photographs or drawings of the product design are shown in specific colors, then only the product design designated in those colors will be protected. However, if they are in black and white, protection will be granted for all colors. For Thailand, dotted lines depict fold lines in a packaging box or envelope, whereas in other jurisdictions, such dotted lines can represent a part of the design that is there for illustrative purposes or that depicts something that is variable. It is thus recommended to consult with a local IP specialist before applying for design protection in South-East Asia.
To be eligible for design registration, the laws of most South-East Asian countries require an industrial design to be novel, meaning that it has not been made available to the public prior to the date of filing the design application. As most South-East Asian countries are members of the Paris Convention, priority can be claimed back to the first foreign filing date for novelty assessment, provided that no more than six months have lapsed. The priority right helps to maintain the novelty of the design that was first filed in a foreign country.
Use Trade Secrets to protect your secret recipes
Sometimes a secret recipe could be the cornerstone of businesses’ success in the market, like in the famous cases of Coca-Cola or the KFC. Secret recipes can be protected by trade secrets. Trade secrets are broadly defined as confidential information that provides a business with a competitive edge. The subject matter of trade secrets can be very broad, including things such as sales methods, distribution methods, consumer profiles, advertising strategies, lists of suppliers and clients, manufacturing processes, recipes, and formulas, among other things.
In most of the South-East Asian countries, to qualify for trade secret protection, it is generally required that: (1) the information is secret or only shared in a confidential context; (2) the information has commercial value derived from its secrecy; and (3) the information’s owner has made reasonable efforts under the circumstances to maintain the information’s secrecy.
Some ASEAN countries have also enacted a specific law or intellectual property laws for the protection of trade secrets (including Indonesia, Laos, Thailand, and Vietnam). Some on the other hand rely on existing laws to protect secret information, such as contract law, tort law, and laws on breach of confidence (including Brunei, the Philippines, Malaysia, and Singapore). Generally, both damages and injunctive relief are measures to prevent unauthorized and intentional disclosure of a trade secret.
For example, Indonesia has a Trade Secrets Act, which protects secret information with commercial value on condition that the owner has taken appropriate measures to guard its secrecy. In Laos for example, trade secrets are protected under the Intellectual Property Law, which states that the information must be secret, commercially valuable, and protected under reasonable steps taken by the owner. The law also provides that the trade secret owner may protect his or her rights by taking court action against unauthorized disclosure, but it does not state what damages are available.
On the other hand, Thailand provides protection under its Trade Secrets Act, and a trade secrets owner may petition the court for an injunction (interim or permanent) in the event of infringement and, under some circumstances, claim damages. Vietnam also protects trade secrets, but this protection is scattered across the Law on Intellectual Property, the Labor Code, and the Law on Competition, however there are regulations governing the relationship between the trade secret provisions of these laws.
While the means of protection should be tailored on an individual basis, there are several general strategies that can be employed in South-East Asia to ensure that a trade secret remains secret. For instance, if an SME wants to manufacture and assemble the final finished food or beverage product in South-East Asia, it should consider importing premixed ingredient combinations or other partially finished parts of the product from elsewhere in order to ensure that no one location has the entirety of the recipe or manufacturing process.
Food and beverage SMEs should also ensure that employees and/ or agents sign confidentiality and non-disclosure agreements prior to commencing their employment and having access to any proprietary information. Furthermore, it should be ensured that only a limited number of people have access to the secret information. When confidential information is stored electronically, there is a need for stringent cyber security measures to protect the confidentiality. Also, since food and beverage products are generally required to be registered with the national regulatory authorities before they can be sold on the market, food and beverage SMEs need to take great care in selecting their agents to register their products.
Geographical Indications (GI) protect your authentic products
Geographical Indications protect the products that originate from a specific geographical location and thus possess certain qualities associated with that area. Geographical indications are generally recognized throughout South-East Asia. Some countries protect GIs under trademark law. For example, in Laos, the Law on Intellectual Property Concerning Trademarks and Trade Names covers the rights to GIs and classify the use of registered geographical indications by any means, including the unauthorized use of the geographical indication on labels of products from other regions as an act of unfair competition. Other countries, such as Thailand and Indonesia, choose to adopt specific laws and regulations covering geographical indications.
A common criterion for registration of GIs from foreign countries in South-East Asia is that such GIs must also have been recognized in the country of origin. For example, the ‘Parmigiano Reggiano’ GI must be protected in Italy before benefiting from protection in anywhere in South East Asia. At the same time, when a GI has become generic in the country of origin, it will also be denied protection in the South East Asian countries. The term of protection of GIs is usually unlimited, until cancelled due to reasons such as the change of geographical specifications or when they are no longer protected in their territory.
To register a GI anywhere in South-East Asia, the registrant must belong to a collective organisation representing a group of producers in the area that produces the goods they want to register. The European SMEs should thus ask their GI organisations to register the GIs in South-East Asian countries. GIs, like other IP rights, are territorial, so they should be registered in each South-East Asian country, where SMEs intend to sell their products.
Helika Jurgenson, China IPR SME-Helpdesk