Recent developments in IP legislation

New copyright provisions

On February 28 2013 Congress enacted the Act Amending Certain Provisions of Republic Act (RA) 8293, Otherwise Known as the Intellectual Property Code of the Philippines, and for Other Purposes (RA 10372), which amended the copyright provisions of the IP Code. RA 10372 creates the Bureau of Copyright and Other Related Rights. It also provides that a person infringes a right protected under RA 10372 when it:

• commits an infringement directly;
• benefits from the infringing activity of another person, if it had notice of the infringing activity and has the ability to control the activities of that other person; or
• with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another.

Under the law, the award of actual damages shall be doubled when any person:

• circumvents effective technological measures; or
• having reasonable grounds to know that this will induce, enable, facilitate or conceal infringement, removes or alters any electronic rights management information.

A fair use provision for the blind and visually or reading impaired was also included. Schools and universities must now adopt IP policies to ensure that the rights of the academic community in their works are clearly delineated and respected.

In addition, RA 10372 grants the Intellectual Property Office of the Philippines (IPOPHL) visitation and enforcement powers, which it can exercise with the support of the Philippine National Police, the National Bureau of Investigation, the Ombudsman and local government units for raids on and seizures at establishments and businesses which are violating IP rights and the IP Code. Pursuant to this, the IPOPHL issued Office Order 13-170/2013, creating the Intellectual Property Rights Enforcement Office. The office shall formulate policies and programmes to ensure the enforcement of IP rights and shall prepare an annual report on the achievements, progress and challenges of IP rights enforcement in the country.

Rules on inter partes proceedings

The Rules and Regulations on Inter Partes Proceedings have been amended. The opponent or petitioner now has 10 days (previously five), with the possibility of two five-day extensions, to resolve any defects in its opposition or answer.

The following provisions of the Rules and Regulations on Trademarks, Service Marks, Trade Names and Marked or Stamped Containers have also been amended:

• Rule 202(b) has been amended to provide that, should a mark be allowed for publication for the purposes of opposition, such publication shall be suspended until it has been ascertained that the mark has been registered in the applicant’s country of origin.
• Rule 203 has been amended to provide that the applicant need not submit a certified copy of the foreign application or registration that serves as the basis for a claim of priority right.
• Rule 204 on the filing of a declaration of actual use has been amended to grant a six-month extension period at the applicant’s or registrant’s request, provided that such request is made before the expiry of the three-year period and the required fee is paid. The amendment also dispensed with the requirement to indicate the date of first use in the declaration of actual use.
• Rule 205 has been amended to provide that should the goods or services be available only online, the website must be included on the form in lieu of the name or address of the establishment or outlet.
• Rule 206 provides for instances where a declaration of non-use may be filed.

The IPOPHIL has also adopted Rules and Regulations on the Accreditation of Collective Management Organisations (Office Order 13-173/2013). Collective management organisations must now be accredited before collectively managing the economic and moral rights of owners of copyrights and related rights.

To protect and secure further artists’ exclusive rights in their creations, the Rules on Resolution of Public Performance Disputes (Office Order 13-169/2013) have been promulgated to resolve disputes relating to the terms of a licence involving an author’s right to the public performance or other communication of his or her work.

Section 191 of the IP Code provides for the registration and deposit of works with the National Library of the Philippines and the Supreme Court Library at any time during the subsistence of the copyright to complete their records. Pursuant to the memorandum of agreement (January 25 2011) between the National Library and the IPOPHL, whereby the latter was deputised as a receiving office for the registration and deposit of copyrighted works, the Rules on Copyright Registration and Deposit (Office Order 13-171/2013) were adopted. These rules outline the requirements for an application for a certificate of copyright registration and deposit with the IPOPHL.

Patent Cooperation Treaty

The IPOPHL has withdrawn the Notice of Incompatibility of the IP Code and the Implementing Rules and Regulations of the IP Code through Rules 20.8(a) and (b) of the Regulations under the Patent Cooperation Treaty in relation to Confirmation of Incorporation by Reference of Elements and Parts. The IPOPHL issued an order to the effect that any adverse decisions against such confirmation made by the IPOPHL, as a receiving office, were considered to be null and void. Although the withdrawal was made on January 24 2013, the action is retroactive to the date of entry into force of amended Rules 20.8 (a) and (b) (April 1 2007).

Other laws affecting IP rights

On April 17 2013 the Act Prohibiting and Penalising Unauthorised Interception, Reception or Use of Any Signal or Service Over a Cable Television System or Cable Internet System and/or Network, and for Other Purposes (RA 10515) was signed into law. RA 10515 punishes the act of intercepting or receiving any signal offered over a cable television or cable internet system obtained through tapping. It also prohibits the recording, reproduction, distribution, import or sale of any intercepted or received cable television system or network signals for commercial purposes without the authority of the relevant cable television or cable internet service provider.

The Food and Drug Administration (FDA) has mandated, as of June 30 2015, the adoption of a system of unique global product identification numbers or global trade item numbers as a requirement for all products seeking registration with the FDA. This system is expected to strengthen enforcement against counterfeit products and will also enable the global identification of products manufactured in the Philippines by local companies.

Bills pending before Congress

Senate Bill 707 seeks to criminalise the reproduction of copyrighted books and printed materials without the written consent of the copyright owner. The operators and employees of the establishment reproducing the materials will be held liable for the crime and will face either a fine or imprisonment. The bill also provides that the senior officers of educational institutions may be liable if the reproduction of printed materials is committed on their premises.

Senate Bill 2010 seeks to amend Section 173.1(a) of the IP Code on derivative works protected by copyright. The bill proposes that makers of derivative works – particularly literary translations – must obtain the prior written consent of the owner of the original work before obtaining copyright in the derivative work. This is a major departure from the existing provision, which expressly allows translators of literary works to obtain copyright in the derivative work without incurring liability for copyright infringement of the original work.

Senate Bill 2000 proposes an amendment to Section 92 of the IP Code regarding the effect of non-compliance with Sections 87 and 88 of the IP Code on prohibited and mandatory provisions in a technology transfer agreement, without obtaining an exemption from the IPOPHL. Under the existing provision, non-compliance renders the agreement unenforceable, which means that while the agreement is valid between the parties, their rights thereunder cannot be enforced by a proper action in court. To ensure compliance with Sections 87 and 88, the proposed amendment seeks to declare non-compliant technology transfer agreements void instead of merely unenforceable.

In an effort to increase IP awareness, Senate Bill 659 seeks to require the teaching of IP ownership, particularly copyright law, at all primary, secondary and tertiary schools in the Philippines.

Court decisions

Supreme Court rules on validity of laws and regulations

In Disini v Secretaryof Justice (GR 203335, February 11 2014) the Supreme Court ruled on the validity of several provisions of the Cybercrime Prevention Act 2012. Among the provisions declared valid was Section 4(a)(6), which defines and punishes the crime of cybersquatting, in order to address computer-related IP violations. ‘Cybersquatting’ is defined as the acquisition of a domain name with the intent to profit or mislead persons if the domain name is:

• similar, identical or confusingly similar to an existing registered trademark; or
• acquired without rights or with IP interests in it.

Prosecution of IP violations

In several decisions, local and foreign businesses have obtained relief from the Supreme Court for the prosecution of IP violations:

• A liquefied petroleum gas (LPG) refilling business was held liable for unfair competition and trademark infringement. The Supreme Court found that the unauthorised use of LPG containers bearing the registered trademarks of Petron Corporation and Pilipinas Shell in connection with the sale and distribution of LPG would cause confusion to consumers, thus amounting to infringement (Republic Gas Corp v Petron Corp, GR 194062, June 17 2013).
• Birkenstock Orthopaedie GmbH and Co Kg successfully cancelled a trademark registration owned by Philippine Shoe Expo Corporation, which had obtained a prior registration for the mark BIRKENSTOCK. The Supreme Court stressed that registration does not necessarily confer ownership over a trademark, particularly if it has been proven that another party is the true and lawful owner of the mark (Birkenstock Orthopaedie GmbH & Co Kg v Philippine Shoe Expo Marketing Corp GR 194307, November 20 2013).
• The Supreme Court ordered unfair competition charges to be filed against a party which produced counterfeit Unilever Philippines, Inc shampoo products. It emphasised that proof of ownership of the warehouse or establishment housing the counterfeit items was unnecessary before anyone could be indicted of such offence (Unilever v Tan, GR 179367, January 29 2014).

Recent developments in IP practice

Enforcement of IP rights

In April 2014 the Office of the US Trade Representative (USTR) removed the Philippines from the Special 301 Watch List, the result of the United States’ annual review of IP rights protection and enforcement around the world. The Philippines first appeared on the watch list in 1989 and had been on it continuously since 1994. The USTR noted that: “[I]n recent years, the government has enacted a series of significant legislative and regulatory reforms to enhance the protection and enforcement of intellectual property rights in the Philippines. Philippine authorities have also made laudable civil and administrative enforcement gains.”

With the removal of the country from the watch list, authorities are shifting their focus to programmes to increase awareness among Filipinos of the illegality and drawbacks of buying counterfeit products. The IPOPHL aims to increase awareness of IP laws among Filipinos from the existing 54% to 100%. The IPOPHL is working with the Department of the Interior and Local Government to set down a model ordinance for activities to raise public awareness, while continuing to train prosecutors in this specialised field.

Actions to enforce IP rights have also increased. In the first quarter of the year, goods seized by law enforcement agencies under the National Committee on IP Rights for trademark and copyright infringement reached a value of P6.8 billion, surpassing those seized in the same period in 2013 by almost 80%. The total value of seized goods in 2013 was P7.8 billion.

The Bureau of Customs has intensified its IP rights enforcement efforts. In the second half of 2014 it will implement a new pre-shipment inspection (PSI) system for imported goods. At present, PSI covers only cargo entering the country in bulk – and not that packaged, bundled or packed in boxes, bales and pallets. The PSI now requires the documentation of a shipment from its port of origin to specify the items being shipped in order to prevent the entry of infringing goods.

The FDA has been active in issuing warnings regarding unregistered food and cosmetic products. In 2013 it cautioned the public about the possible entry of frozen processed food products from Japan containing toxic pesticides, slimming capsules with unknown components, lead-infused lipstick and chili-laced food supplements. It has also imposed fines on infringing corporations, including a P16 million administrative fine on Eli Lilly Philippines for importing and distributing unregistered products.

Patent prosecution

The IPOPHL and the Korean Intellectual Property Office (KIPO) have signed a memorandum of understanding to enable patent work sharing between the two countries. This will allow patent examinations conducted in the Philippines to be recognised in South Korea, and vice versa. In addition, the IPOPHL has entered into similar agreements with the US Patent and Trademark Office and the Japan Patent Office. The Philippines is also a participating member state of the ASEAN Patent Examination Cooperation (ASPEC) Programme. As such, the IPOPHL may utilise the search and examination results of the IP offices other participating member states as reference in its own search and examination work. These other participating IP offices are located in Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Singapore, Thailand and Vietnam.

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Patricia AO Bunye

Senior partner

[email protected]

Patricia AO Bunye is a partner in the IP department of Philippine law firm Cruz Marcelo & Tenefrancia. She also heads the mining and natural resources department and the energy practice group.

Her IP practice is focused on trademarks, copyright, due diligence, commercialisation, including licensing and franchising, and the registration of food, cosmetics and pharmaceutical products with the Food and Drug Administration.

She has served as vice president of the Licensing Executives Society International (LESI) from 2011 to 2013. Before her appointment to the LESI board, she held positions in the LESI Asia-Pacific Committee, most recently chair. During her term as president of LES Philippines (2006-2009) she chaired the organising committee for the LESI Annual Conference 2009.