Background:
Textra Automotive (“Textra”) is a medium-sized European company known for producing high-tech sensors for cars. After an extensive market study, Textra has decided to enter the ASEAN market. It identifies Siam Manufacturing Group (“Siam”) as a promising partner in Thailand and enters into an agreement with the latter to manufacture and distribute sensors to vehicle manufacturers in Thailand. If the products prove profitable in Thailand, Textra will expand its business to the other major automotive manufacturing countries in the region.
Following three successive profitable quarters, Textra decides to pursue sales of the products in Indonesia, Malaysia, Vietnam and the Philippines. It applies to register its name as a trade mark in Thailand, with a plan to register the same mark in the other four countries, claiming priority from the Thailand application. However, Textra discovers that the trade mark has already been registered by Mais Manufacturing Ltd. (“Mais”).
Action taken:
Upon further investigation, Textra is very surprised to learn that Mais has manufactured sensors of inferior quality and sold these for a reduced price under Textra’s trade mark. It turns out that Siam has been selling faulty Textra sensors that it manufactured to Mais, despite the contract between Textra and Siam specifying that all faulty sensors were to be destroyed. The problems are compounded when Textra receives a Letter of Demand from Mais alleging trade mark infringement.
Textra seeks consultation from a local lawyer discovers that “Textra” trade mark was legitimately registered in Thailand by Mais as Mais was the first registrant of the mark in the country. As result, Textra cannot claim the ownership of the trade mark against Mais in Thailand.
Outcome:
Faced with the threat of lawsuits for trade mark infringement by Mais, Textra feels forced to negotiate with Mais to ‘buy-back’ the “Textra” trade mark from the latter at a substantial price.
IP Lessons:
- EU SMEs should conduct due diligence on their local partners before working with them.
- EU SMEs should register their trade marks in the South-East Asian countries of interest before or as soon as they enter the respective countries.
- Trade mark searches are very important to determine if a trade mark has been already registered in the country by other parties and shall be done before entering the market.
- EU SMEs should actively monitor the market for infringement products and set aside a budget for commencing actions against the infringers.