Strengthening IP in the Philippines

31 March 2020

Strengthening IP in the Philippines With a partnership between the private sector and government enforcement agencies, IP enforcement rights remain strong in the Philippines. Excel V. Dyquiangco reports from Manila on the future of IP enforcement. 

The enforcement of intellectual property rights has always been a vital part of the life cycle of IP in the Philippines. Through Republic Act 10377, the Intellectual Property Office of the Philippines (IPOPHL) in 2012 was given an enforcement function via the IP Rights Enforcement Office (IEO) created by law and mandated to enforce IP rights, tasked to ensure compliance with laws, regulations, rules, and standards as provided by the IP Code of 1998, and other IP-related laws in effect to this day. Its functions include the following:  

 

  • Receive and docket complaints or reports relating to IPR violations from right holders or authorized representatives, other government agencies, and the public in general;  

  • Evaluate the complaint or report and take appropriate action thereon to ensure enforcement of IPR;  

  • Coordinate with right holders, industry associations and/or relevant government agencies in the conduct of its enforcement functions;  

  • Formulate policies and programs to ensure enforcement of IPR, and to prepare an annual report on the accomplishments, progress, and challenges of IPR enforcement in the country;  

  • Keep all records of enforcement such as, but not limited to, complaints, reports, minutes of enforcement meetings, post-operation reports, and other similar or related documents; and 

  • Provide assistance in the enforcement of orders, writs, and processes issued by Bureau of Legal Affairs and the Office of the Director General. The IEO is an office within the IPOPHIL and as a result, the IPOPHIL is one of the very few intellectual property offices given enforcement and visitorial powers.  

 

With a partnership among the private sector and the government enforcement agencies, IP enforcement rights remain strong in the Philippines. One of the success stories at IEO involves the pirate site filebook.com, which was offering pirated content. The story went that since the pirate server was located in another country, the IEO’s hopes of being able to do something about it were squashed. Eventually, however, during the course of monitoring the site, they discovered that filebook.com was using GCash, a product of Philippines-based Globe Telecom and Alibaba affiliate Ant Financial, as its payment facility. In order to curtail its illegal activities, the IEO wrote to GCash to stop allowing their payment facility to be used by this infringing site. GCash heeded to IPOPHL’s order, barring filebook.com from generating profit for its illegal operations.  

Because of this case and many others, in the first half of 2019, the National Committee on IP Rights (NCIPR) which has been active in helping brand owners in enforcing their IP in the Philippines, successfully seized about P13.73 billion (US$271 million) worth of counterfeit goods, which was nearly 60 percent of the full-year 2018's record-high haul of P23.6 billion (US$466 million). These high figures are being used by many to claim that the Philippines is a hotspot for counterfeiting and piracy whereas such levels of seizure can also mean that the National Committee on Intellectual Property Rights (NCIPR) is increasing its enforcement operations every year, which is the case. 

Aside from robust support from partner agencies such as the courts, the National Bureau of Investigation (NBI) and the Philippine National Police (PNP), the Bureau of Customs (BOC) has also increased its sighting reports to IP owners which have registered their IP with the BOC. These sighting reports have increased the volume of seizure of counterfeit items for IP owners year after year, which help address the arrival of counterfeit products in its borders. 

For this year, the IEO is action-packed with activities spanning IP rights enforcement training of PNP Officials and private investigators; a series of focused group discussions with logistics companies while continuing its engagement with e-commerce platforms; and, ultimately, implementing the National Intellectual Property Strategy by mainstreaming IP rights enforcement across society. The IEO is also going to revise the IEO procedures and IRR to incorporate online notice and take-down (with the National Telecommunications Commission), among others.  

“The IEO handles complaints and reports it receives from rights holders and consumers,” says Ann Edillon, assistant director, IEO officer-in-charge and Bureau of Patents. “We also refer cases outside of the IPOPHIL jurisdiction to the proper agencies. In this regard, the IEO extends a direct hand in assisting these stakeholders. We also have an interagency team formed to work on preventing counterfeit items from reaching consumers: the National Committee on Intellectual Property Rights (NCIPR). The NCIPR is composed of various law enforcement agencies which are all tasked with responding to IP right infringement.” 

 

As the IEO starts implementing the NCIPR Action Plan 2019-2022, among its tasks are the following:  

 

  • Improve the operational capability of NCIPR by regularly allocating funds and providing adequate personnel for its operations;  

  • Coordinate with the Department of Information and Communications Technology and other concerned government agencies for the issuance of government ICT policies that are attuned with the IP laws;  

  • Ensure compliance with Memorandum Circular No. 115 dated April 5, 1999, which mandates the use of only licensed software and applications in government offices; 

  • Strengthen institutional arrangements with the Bureau of Immigration, to penalize/deport aliens violating IPR; the Bureau of Internal Revenue, for possible tax evasion cases; and the Anti-Money Laundering Council for money laundering cases;  

  • Engage the Department of Justice for the issuance of a Department Order instructing prosecutors to furnish the Anti-Money Laundering Council of all information filed with the court for possible money-laundering investigation and prosecution;  

  • Work with the local government units and the Department of Trade and Industry to ensure that mayor’s permits/business permits will not be issued to erring store owners and that IP rights violations will warrant cancellation of mayor’s permits/business permits; 

  • Strengthen IPR awareness campaigns and education drive through more activities and by tapping new technologies for information dissemination;  

  • Bolster IPR Enforcement capacities of authorities, judges prosecutors and other players relevant to the Enforcement environment, through more rigorous training which are benchmarked with international standards; and 

  • Advocate for the passage of amendments to the IP Code of 1998, the Optical Media Act of 2003, and the E-Commerce Act of 2000. 

 

In addition, the IPOPHL has been working closely with the Supreme Court to amend the Special Rules on IP Litigation in a bid to fast track current procedures in courts. “We are also pushing for the revival of special IP courts, separate from commercial courts where all sorts of cases are docketed,” says Edillon.  

 

Solving the challenges of IP enforcement 

However, as IP rights are private rights, the government cannot bring violators to prosecution. As such, a huge part of the IPOPHL’s efforts is encouraging IP right holders to be proactive in going after those who infringe on their rights and even take these criminals to courts so they can recoup losses resulting from the infringement.  

“IP rights are still considered ‘private’ rights in the Philippines, such that law enforcement will not go out of their way to enforce IP rights without any formal complaint from IP owners,” says Bienvenido Marquez, a partner at Quisumbing Torres in Manila. “To build the capacity of these frontliners, IP owners often conduct training sessions for law enforcement officials to assist them in identifying and distinguishing genuine from counterfeit products. These training sessions help search warrant applicants in securing search warrants from the courts and BOC officials flagging suspect counterfeit shipments entering our border.” 

Marquez says that while laws generally provide a sufficient basis for civil, administrative and criminal actions to address or prevent counterfeiting, there are a number of practical difficulties in IP enforcement in the Philippines. 

“The weakness in IP litigation has always been the long process of prosecuting infringers, whether through a civil, criminal or administrative case,” he says. “To tackle this challenge, the Supreme Court has issued its rules on IPR cases and rules on continuous trial, which have helped accelerate trial proceedings and plug loopholes which were exploited by infringers previously. In addition, the IPOPHL administrative cases have also improved their turn-around time in terms of trial length as it found mediation to be an effective and efficient mechanism in resolving IP cases filed with the IPOPHL.” 

Another practical problem is the limited number of commercial courts available to hear search warrant applications. While the current crop of special commercial court judges are highly knowledgeable in IP cases, the sheer number of search warrant applications make scheduling search warrant application hearings on the part of law enforcement difficult. Marquez says that it might be time to designate additional special commercial courts, especially in Manila (which is near the NBI office) and Pasig City (which is near the PNP office). 

 

Marquez adds that further challenges lie in the fact that infringers are getting creative in running their operations: 

 

  • Infringers continue to use dummy names and identities, and some of their businesses are not even registered in the Philippines. Without proper identification and registration, prosecutors usually find it more difficult to prosecute trademark infringement cases. 

  • Big importers of counterfeit products immediately distribute their shipment to their buyers and avoid storing their shipment in their warehouses. This quick distribution of counterfeit products makes it difficult to catch the “big fish.” 

  • Infringers are better at reproducing or copying genuine products. Nowadays, most counterfeit products in the market look exactly like the original products. 

 

According to Edmund Jason Baranda, managing partner at Baranda & Associates in Manila, the Philippines member firm of the Rouse network, one challenge that has been resolved is the cost of storage. “After a raid is conducted, the goods seized are usually stored at private warehouses pending litigation, the costs of which are shouldered by the IP owner – the private plaintiff,” he says. “Our court procedures were amended and now the destruction of counterfeits may be done – subject to some conditions such as retention of samples – pending litigation, specifically after the filing of a criminal complaint with the Department of Justice.” 

Baranda adds that the liability of landlords for the infringing activities of their tenants, such as lessees of stalls engaged in the sale of infringing goods, was also an issue as the IP Code did not expressly provide for one. “With the amendment of the IP Code, landlords may now be held liable with their tenants who are selling copyright infringing goods,” he says. “Unfortunately, the amendment was not extended to trademark infringing goods. A further amendment of the IP Code to include landlord liability for trademark infringement is being pushed.”  

Baranda adds that the IEO provides an alternative remedy against infringers outside the usual court procedures such as raid actions and criminal actions.  

“The IEO can conduct visits and issue warnings and notices to establishments engaged in IP infringing activities,” he says. “They may also initiate administrative complaints against the said establishments. The IEO can also collaborate with law enforcement units such as the NBI, the PNP or the BOC, and help facilitate raid actions against IP infringers.”  

Technology also poses a challenge. According to Edillon, the globalization of trade, made possible by the digital environment, presents another challenge not only to IPOPHL’s IEO but to any other enforcement office around the world, including highly experienced ones like those of the European Union and the United States.  

“We are working on implementing a site-blocking mechanism through the proposed new intellectual property bill and the NTC-proposed online infringement bill,” she says. “Under both laws, the IPOPHL will lead an administrative body which would be given power to order the shutdown of websites illegally channeling copyrighted works. There is also a pending internet transactions bill which proposes that an eCommerce Bureau under the Department of Trade and Industry shall handle site blocking and notices-and-takedowns.” 

Marquez says that due to the advancement of technology, counterfeit goods continue to proliferate even in the online space. “Now, you can also see and purchase counterfeit items from popular online platforms,” he says. “Unfortunately, our country lacks laws which definitively tackle these kinds of situations, which has made enforcing IP rights online quite difficult. Thus, the IPOPHL has submitted a legislative bill pushing to amend the Intellectual Property Code of the Philippines which includes new measures such as the power to take down online sites that violate IP rights, among others, in order to address this problem.” 

 

Other challenges 

Aside from online infringement, traditional infringement has also been an issue. According to Edillon, it is about pinning down the identity of the suspect. “You cannot push through with litigation without someone to put to trial,” she says. “To track them, we need strategic investigators who are tasked to be at the forefront of solving a case. They are usually hired by the brand owners whose IP rights have been infringed on. In addition, we’d like to debunk the myth that only big businesses deal with IP rights infringement. Small businesses are equally vulnerable, because as starting enterprises, they cannot afford to have their reputations tainted when low-quality products are selling under the guise of [being] increasingly popular brands.”  

Adds Baranda: “In the Philippines, there are identified counterfeit hotspots such as areas where counterfeits are known to be sold. These hotspots are usually also the source of other sellers (both at physical stores and online). Raid actions have repeatedly been taken against sellers and distributors in such hotspots. While effective in the short term, a more effective solution is to cut their supply, prevent the importation of and seize the counterfeit goods at the border.”  

Baranda adds that the registration with the Department of Trade and Industry (DTI) (for sole proprietorship businesses) of business names which are identical and confusingly similar to registered trademarks of their clients is also of concern. 

 

“The registration of domain names that are identical or confusingly similar to registered trademarks is also a problem,” he says. “If the registrants do not comply with our cease and desist letters then we are constrained to file the necessary complaints with the DTI/domain registry.”  

Other common issues involving traditional infringement cases revolve around the rules governing the release and destruction of counterfeit items seized from infringers during an enforcement operation.  

“Under our rules, one of the requirements before an order of destruction may be issued by the court is the posting of a bond in the amount fixed by the court,” says Marquez. “While we understand the importance of a bond, which is to indemnify the adverse party for any loss or damage he or she may suffer or incur in the event that the court finds that the issuance of the order of destruction was not warranted and justified under the circumstances, in practice, however, many of the respondents or accused are normally at large, with no interest whatsoever to reclaim or withdraw the seized counterfeit goods. In fact, the process of destroying these counterfeit goods is more costly on the part of the IP rights owner, as it is the latter who bears not only the storage and warehousing costs, but also the bond requirement in order to move for the destruction of these items.” 

Marquez adds that with the Supreme Court reviewing existing rules governing enforcement of intellectual property rights in the Philippines, his firm has submitted the comments containing the same.  

“It is our earnest hope that in the succeeding version of said rules that new guidelines be issued in order to guide our special commercial courts in determining the proper value of the bond requirement, as well as consider dispensing the bond requirement altogether, provided that the IP rights owner certifies under oath that the items seized during the enforcement operation are indeed counterfeit,” he says.  

For those infringing on the rights of others, Edillon issues a stern warning. “IP counterfeiting and piracy cases cannot be viewed in isolation of national welfare and development, especially that these illegal transactions dodge taxes that could fuel greater development. Worse, profit from counterfeiting, due to its low-investment and high-reward nature, can be used to perpetrate other crimes. On the economic aspect, it weakens businesses and entrepreneurs who eke out a livelihood from the commercial exploitation of their IP rights which may cover products or solutions that are scalable for environmental, social, or business development. Culturally speaking, it robs us of creators whose works contribute to strengthening our cultural identity.” 

 

The consumer roles in IP strengthening  

Even with challenges in the IP sector, IP awareness and enforcement are constantly being strengthened, again due to the efforts of the IPOPHL, which is considered to be among the best IP offices in the region. There are constant training sessions for officials, enforcement agents and IP practitioners provided and organized by the IPOPHL.  

Also, the campaign to educate the public in respecting IP has also been strong in the past years. According to both Baranda and Marquez, consumers have a pivotal role.  

“Consumers have a great part in strengthening IP rights and enforcement in the Philippines,” says Baranda. “I’d like to see the day when consumers no longer patronize infringing goods and pirated materials but I realize this would need a change in mindset, which is not an easy thing to do. In any event, consumers should be vigilant and carefully assess their purchases especially from online merchants. Once a consumer identifies counterfeit products or online advertisements for potential counterfeits, they should report immediately to the proper authorities or use reporting mechanisms available online. To report IP violations, consumers may submit a report to operations@ipophil.gov.ph or use the notice and take down procedures of online marketplaces.”  

For Marquez, it all starts with awareness and education – and asking the question, why is intellectual property important? 

“To a layman, the term intellectual property may be quite complex; however, the ordinary consumer can easily understand what it is by simply looking at everyday things, such as the soap they use or the medicines they take,” he says. “Using counterfeit soap may result in skin irritation or allergies. Taking counterfeit medicine may result in more dire consequences. It is followed by respect for IP – how would you feel if the picture, poem, invention or logo that you made is used by others? As a consumer, you should be mindful of your actions, especially those that may cultivate and encourage infringers from further committing infringing acts. If consumers stop entertaining these counterfeit products because they respect the original works made by others, there will be less to no demand for these counterfeit products.” 

He continues, “Finally, it goes without saying that consumers must likewise be vigilant, as this responsibility is not with the IP rights owner alone, but also with the general consuming public. If you see a counterfeit product being sold in store or online, report it. If you see your family or friends purchasing counterfeit products, educate them. Make them aware and teach them why it is important to respect IP rights. Evidently, this quest of strengthening IP enforcement in the Philippines is not a one-way street. It takes an influx of support, especially from the consuming public, in order to curb the further spread of counterfeit activities in the country.” 

Meanwhile the future of IP in the Philippines appears to be quite promising, considering that the IPOPHL has been lobbying for the amendment of the current Intellectual Property Code which includes provisions which grants the power to take down online sites that infringe the rights of IP rights owners, and the applicability of landlord liability in trademark infringement cases, among others.  

“The future of IP enforcement is in the online space,” says Baranda. “As infringers shift their activities from the physical to the online space, such as through online marketplaces, enforcement agencies as well as online marketplaces and IP owners must work hand in hand to address this. E-commerce regulations should be in place to facilitate this.”  

Adds Marquez, “The partner agencies of the NCIPR must continue its close coordination under the leadership of the IPOPHL. It is important that these agencies provide full support to the government’s policy against counterfeiting and piracy.” 


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