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Tuesday, June 20, 2017

Singapore, transhipment and illicit goods

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Changes are proposed to the Singaporean customs regime. The aim is to increase the country’s attractiveness as a transhipment hub. Singapore is already the largest transhipment port in the world. But industry is worrying that the amendments leave enforcement gaps and increase the volumes of counterfeit and other illicit goods passing through Singapore.

A public consultation is under way. One change relates to the submission of manifest data which must be provided within 24 hours of arriving and 48 hours of exiting Singapore. Normally this must contain particulars such as the quantities, brands and description of goods. The amendments allow for exemptions for large swathes of shippers.

The European Chamber of Commerce opposes this - “Singapore’s free trade zone (FTZ) [is] vulnerable  to abuse as it weakens the country’s governance of them”. Indeed the Illicit Trade Environment Index cites Singapore’s 7 FTZs as a serious risk over the trade in illicit including fake goods. The Economist Intelligence Unit identified Singapore as a problem due to a lack of vigilance over its FTZs. Basically they said that Singapore the other way while large quantities of illicit and counterfeit goods pass through its port destined across the world. Singapore earns income from every container that passes through it, so looking the other way reaps the country a lot of money for the suspected volumes of illicit goods including fakes, travelling across the globe which are transhipped through Singapore.

Singapore still does not allow for customs recordals but requires rights owners to initiate civil proceedings to obtain civil court orders to seize fake imports, at great cost.  But for transhipped goods there is virtually no policing at all. Add to that the use of Indonesia’s nearby FTZ in Battam for export processing and long time experts in the region quietly talk of transhipment of illicit goods being Singapore’s dirty little secret.

Monday, June 19, 2017

Online businesses and tax in Indonesia

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In its bid to rein in tax revenue from foreign online businesses such as the social media giants, the Indonesian tax authority issued Circular Letter No. SE-04/PJ/2017 on the Determination of Permanent Establishments for Foreign Tax Subjects Which Are Providers of Applications and/or Content Services Through the Internet (“Circular Letter 4/2017”). 

The circular is addressed to Over-the-Top Services (application or content services through the internet). Under the circular, foreign Over-the-Top Services that come within the meaning of permanent estalishment under the circular will be subject to Indonesian tax. Permanent establishment within Indonesia includes the following whether owned, leased or used by Foreign OTT Providers for the operation of their businesses or activities:

a. Place for management activities;
b. Branch office;
c. Representative office;
d. Office buildings;
e. Garage or workshop;
f. Warehouse;
g. physical space for promotional and sales activities;
h. Computers, including servers and data centers;
i. Electronic apparatus (i.e. devices which contain computer programs that may perform activities or which may respond based on automatic inputs); and
j. Other automatic devices.

Entities are also considered as permanent establishments if it provides any form of services for period of 60 days or more within any given 12 month period.

There are still several aspects of the circular that requires clarification, namely:

1. Online businesses that does not have any physical assets or activiy in Indonesia may not be caught by the first definition of permanent establishment.
2. As for the meaning of “60 days or more”, it is not clear if this is computed in terms of accumulative hours of service on a 24-hour day.

It is hoped that the Government will help to clarify this for foreign online businesses that deliver Over-the-Top services without the need for any permanent establishment. As it is is the rules seem to be wide enough to catch anyone trying to establish an operation within a global digital business.

Tuesday, June 13, 2017

New Cambodian Consumer Protection law

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Cambodia's Ministry of Commerce will meet other ministries later this month to review progress on the country’s first consumer protection law and will formulate a plan to complete the draft legislation, a ministry official said recently.

This long-awaited legislation aims to level the playing field for businesses and protect consumers by reducing unethical and illegal retail and promotional practices. Its enactment will help empower authorities to crack down on fake or falsely advertised products, as well as food and medicinal products that pose a risk to the health of consumers. The law will also allow consumers affected by these products to seek recourse against their producers.

The Ministry of Commerce received financial and technical assistance from the ASian Development Bank to work on the draft law. Legal experts from New Zealand sent by the ADB worked with the Ministry to draft the law based on consumer protection laws in New Zealand and some ASEAN countries that have similar economic conditions to Cambodia.

Whilst not specifically an IP law, there will be a number of provision is relevant to IP holders to protect against unfair competition.

Monday, June 12, 2017

Patent working in Indonesia

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The Directorate of Intellectual Property (“DGIP”) is going to issue a Regulation on patent implementation, regulating Article 20 of the Law No. 13 of 2016 concerning Patent.  This controversial article, replicated in patent laws here since 1991 provides that the patent holder must manufacture the product or use the patented process in Indonesia. The new article provides that such manufacture, or use of a process, shall support technology transfer, attract investment and/or provide employment. It was originally intended to drive foreign investment and perhaps also prevent pharma companies blocking local pharma product production.

DGIP Patent Director Mr Timbul Sinaga stated that the Presidential Regulation will include the formation of a team that decides or will give recommendations to requests by patent holders as to whether they should manufacture the product in Indonesia immediately or may delay doing so.  Mr Sinaga also mentioned that some countries had relayed their responses and opposition to the provision - some of them from the pharmaceutical sector. According to Mr Sinaga, the pharmaceutical sector prefers to import products that they do not have manufacturing facilities for in Indonesia. But Mr Sinaga further elaborated that patent exclusive rights are considered to be one of the reasons why patented medicines have high prices. Sinaga stated that manufacturing the product in Indonesia might help to lower the prices.

A Director of the International Pharmaceutical Manufacturer Group (IPMG) Parulian Simanjuntak stated that the consumption of patented drugs in Indonesia is not always high. Therefore forcing manufacture in Indonesia might not be economically viable. profitable. He points out that the government sees technology transfer only in the narrow definition of a manufacturing facility. He suggested the government pays more attention to the development of wider patented technology concepts, particularly second-use products or products registered from existing inventions.

The worry over this provision has existed for decades, but the government may be taking steps closer to implementing it. At present it is not clear what the sanction for non working is, but presumably the government intends that it be that others can use the invention without infringement, possibly through compulsory licensing. Whether that is viable too is not at all clear.  

Sunday, June 4, 2017

Indonesia revises digital platform laws

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Indonesian's parliament passed its Amendment to the Electronic Information and Transactions (ITE) Law. This updates the ITE law for the digital environment as follows:

a. A wide definition of Electronic-system organizers is adopted to which the law applies;
b. Electronic information and documents are clearly classified as legal evidence;
c. New privacy rules, for example utilization of personal information through electronic media requires consent. Most of the privacy provisions however require further implementing rules.
d. Additional investigative tools such as disabling access or collection of information and evidence from Electronic-system organizers.

There are also new criminal penalties. Interesting to IP holders will be the offence of "Misleading information which could harm electronic- transaction consumers" which might apply to fake goods sold online. 

Thursday, June 1, 2017

Indonesian civil IP case statistics

Indonesian civil IP cases have declined a little last year but remain largely steady at around 100 per year. Most are trademark cancellation actions still. The Jakarta Commercial Court handles 85% of IP cases, followed by Surabaya Commercial Court (9%).

Tuesday, May 30, 2017

Philippines Customs inland focus

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Another Philippines Customs raid illustrates the usual worry around Customs border activity.

A statement by the Customs Intelligence and Investigation Service (CIIS) of the Philippines Bureau of Customs (BOC) indicated that they had seized an estimated Php 105 million worth of smuggled imported counterfeit goods in three warehouses in Manila last week. CIIS Director Neil Anthony Estrella said the fake goods  were all from China. They were stored in various storage rooms inside Dagupan Center at 1331 Dagupan Street, Tondo. The seized items included boxes of Rexona sachet deodorants, Safeguard soaps, Bulldog super glue, insect spray; baby diapers, Spalding basketballs, mosquito coils, lighters, Mongol pencils; toothbrushes, steel scrubs, spools and rain coats. He reported that the raid was a result of a three-month long covert watch and vigorous surveillance on the target based on a tip by legitimate brand owners.

The concern is that the BOC’s main interest is in headlines. These goods were not seized at the border. They were not goods recorded by concerned IP holders with Customs hoping to seize fake imports before they enter into Metro Manila. It was an opportunistic seizure from a distributor; in effect this was a police type raid on goods already in circulation. Whilst they may try to prosecute the operators for smuggling, (although they have long since vanished), the fact is the offence occurred previously when the goods were imported. Announcing raids like this as major successes underlines that Customs are not focused enough on the ports, on IP holders with recorded brands and on truly tackling the massive Chinese fake import problem with shipment risk assessment techniques designed to tackle the real issue.

Monday, May 29, 2017

Criminal prosecutions in Indonesia

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PT. Sasa Inti makes SASA food flavourings. Santoso Wiryanto was reported to the authorities for allegedly manufacturing a flavour seasoning  product using similar packaging to the complainant’s SASA registered trademark. The accused was alleged to have purchased bulk flavour seasoning and put it in similar packages.  The Jakarta Regional Police conducted a raid on the accused’s house on 11 February 2013 and secured evidence in the form of 110 boxes bearing the SASA trademark, 2 sealer machines and 13 boxes of ready-to-sell SASA products.

A criminal case was filed at the West Java District Court. The Court found the accused guilty of deliberately and without rights using a trademark that is similar in principle to a registered trademark The Court sentenced the accused to 7 months imprisonment and an IDR 50,000,000 ($3,800) fine.

The public prosecutor and the accused each filed an appeal with Jakarta High Court. The High Court supported the first instance decision. The accused filed an appeal with the Supreme Court. He argued technicalities over errors in the police documents. The Supreme Court rejected the accused’s argument. The Panel of Justices saw the lower court correctly found that the products made by the accused used similar packaging bearing the complainant’s SASA registered trademark. 

Criminal prosecution are rare. This case shows that the system can work; the shame is that so few cases ever get to trial.