Table of contents
- Why IP is important for small and medium-sized enterprises (SMEs) from the European Union (EU) when planning to expand to or within SEA
- How to build a dynamic IP strategy
The EU and the Association of Southeast Asian Nations (ASEAN ) are two dynamic regions that have built a strong trading and economic relationship over 45 years of cooperation. The EU is ASEAN’s third-largest trading partner (after the US and China), accounting for 10.6% of ASEAN’s trade; and ASEAN is the EU’s third-largest partner outside Europe (after the US and China), accounting for more than EUR 215.9 billion of trade in goods in 2021 (in which the EU’s exports to ASEAN were worth EUR 79.7 billion) and EUR 93.5 billion of trade in services in 2019 . The EU is also by far the largest investor in ASEAN countries. In 2019, the EU provided EUR 313.6 billion of foreign direct investment stocks in SEA.
IP, as part of the intangible assets owned by a company or an individual, plays a significant role in the successful growth of any business. This is especially the case for EU SMEs, which are considered as the backbone of the EU’s economy, representing 99% of all businesses in the region. Although there are no harmonised or regional IP regulations within SEA at the time of writing, IP should remain one of the core focuses for EU SMEs when trading in this region.
This article will guide you through some of the most practical IP recommendations so you can plan your business development strategy within SEA in a secure way.
Are you an EU SME or a start-up doing, or willing to do, business in SEA? Check out the FREE IP services offered by the SEA IP SME Helpdesk.
- Why IP is important for SMEs from the EU when planning to expand to or within SEA
In 2021, the European Patent Office (EPO ) and the European Union Intellectual Property Office (EUIPO ) published a joint study on IP rights (IPRs) and firm performance in the EU. It showed that SMEs that own IPRs can generate 68% higher revenue per employee than SMEs owning no IPRs . IP should be considered as one of the core assets of a company, and not understanding the basics in relation to IP can put your business at risk.
In the post-COVID-19 era, which is now mainly digitally focused, SMEs have to deal with IP infringements, not only in physical forms but also online (notably on e-commerce platforms). The reality is that companies are often not even aware of the importance of protecting IP, and of which aspects should be taken care of at an early stage.
First of all, registering, maintaining and monitoring your IPRs would allow you to protect your intangible assets from your competitors. Trademarks, Patents, Industrial Designs and Copyright and related rights are the main types of IPRs. They cover all types of creations of the mind (from inventions to literary and artistic works, designs, symbols, names and images used in commerce).
Secondly, understanding the importance of IP and taking steps to protect it will help to enhance a company’s value and to create a competitive edge over other businesses in similar sectors.
Thirdly, IP may generate income for SMEs through licensing, franchising, sale, or any other form of commercialisation of your IPRs. Spending money on IP protection is not a mere expense, it is an investment.
Last but not least, owning IPRs as well as having an IP strategy is usually seen as a positive indicator for potential investors and financing institutions. It makes them feel reassured and therefore helps to secure financial agreements.
In a nutshell: having a detailed and budgeted IP strategy is key to the success, sustainability, and competitiveness of any business . In light of the above, IP should always be one of your top concerns when planning to expand activities to or within SEA.
- How to build a dynamic IP strategy
Identifying your intangible assets (including Trademarks, Patents, Industrial Designs, Copyright and related rights, Trade Secrets, etc.) is the primary step on your journey in SEA. This auditing step is crucial and should be performed with the help of an IP expert or lawyer as IP exists in various forms (you may even be surprised to discover new intangible assets held by your company after running the audit).
As in other parts of the world, EU SMEs willing to expand to SEA can choose between direct distribution (by opening branch offices or establishing a new business in the region) or indirect distribution (through distributors, using franchising and licensing agreements). For more information about franchising and licensing in SEA, please refer to one of our previous articles here.
Several IP recommendations for EU SMEs when building an IP strategy for SEA are outlined below.
- Register your intangible assets
As IPRs are strictly limited to the territory of the country in which they have been applied for and granted, you should make sure that all relevant territories are covered in your IP strategy. Owning IPRs will enable you to carry out enforcement actions against IP infringements (which are increasingly complex in some countries in SEA). Registering your IPRs will enable you to show official documents issued by a national IP office to local authorities and third parties in case of IP disputes or infringements. In some cases, registering your IP may be a compulsory step before concluding a contract (i.e. for a trademark licensing contract) or for requesting the removal of infringing goods from e-commerce platforms.
The SEA IP SME Helpdesk also published several Guides, on the protection of Copyright (here), Trademarks (here), Patents (here), Industrial Designs (here), and Trade Secrets (here) in SEA.
- Review your contracts
When you enter SEA using indirect distribution methods, contracts (including manufacturing/licensing/distribution/franchising contracts) will play a pivotal role and utmost attention should be paid to their drafting.Since each country has its own IP regulations and local practices, you should make sure that you and your local partner have clear provisions covering IPRs in each contract, especially in licensing and franchising contracts.
These specific contracts should comply with the local laws of each country and include the following: terms on the scope of use of IPRs, so that you can safely get out of a contract or an agreement and ensure that the IPRs are not used beyond the contract term, monitoring process and quality control; terms on confidentiality; terms to ensure the IPRs holder is the legal owner of the IPRs; terms to ensure the continuation of the business after the contract ends. In some countries in SEA, you may have to carry out extra steps (e.g. licensing contracts must be recorded with the national IP office in order to be valid ).
- Monitor IP infringements and take enforcement measures
As previously mentioned, IP infringement remains a major challenge for SMEs as the volumes and levels of complexity related to this issue are constantly increasing. Your IPRs will thus be under permanent threat, weakening your competitiveness. After registering your IPRs, you should also monitor the markets (both online markets, which today represent a very sensitive trading environment, and physical ones) and your competitors to detect counterfeits and take swift enforcement measures. The worst case scenario you want to avoid is consumers thinking that they are buying official products from unscrupulous third parties.
For more information on counterfeits in SEA, and ways to deal with this issue, please refer to our articles:Intellectual property protection in the e-commerce era: What has changed recently in South-East Asia?; Counterfeit goods in South-East Asia: Saving money may risk your healthand Online IP Infringement in South-East Asia: How to protect your business.
- Other recommendations
In addition to the recommendations above, seeking help from local IP experts in SEA (see the list of External IP Experts that support the SEA IP SME Helpdesk project here) who are familiar with local IP laws and practices is highly advised. IP is technical and some situations require a quick and properly adapted response that you will not be able to provide by yourself.
For detailed and updated information on the different IP systems of SEA, you may also check the websites of each national IP office in the region (some of which are partially or fully accessible in English) and check out our country factsheets (here) related to the 10 South-East Asian countries.
For confidential, jargon-free, first-line IP advice, plus trainings, materials and online resources, visit our website athttps://intellectual-property-helpdesk.ec.europa.eu/regional-helpdesks/south-east-asia-ip-sme-helpdesk_en, or send your IP-related questions to firstname.lastname@example.org. You will receive a reply within 3 working days.
- Publication date
- 28 September 2022