10 February, 2018
As water management is becoming an ever more pressing issue for the Philippines, there are also more opportunities for European SMEs to find promising business opportunities in the Philippines’ water management sector, especially as European top-notch technology is highly sought after. With every opportunity also comes a risk, especially as counterfeiting and other IP violations are still commonplace in the Philippines. In today’s blog post we are taking a closer look at how European SMEs, wishing to do business in the Philippines’ water management sector, can best protect their IP.
For a country surrounded by the ocean, it comes as no surprise that water is a priority sector in the Philippines. A large majority of its 7,000 islands directly deals with water management challenges: while some islands have water-sources still left unexplored, others are actively searching for solutions in light of a decreased water-quality. The quality of the Pasig River flowing through Manila is notorious even for international standards, especially as progress to revive its water-quality has been slow and without considerable success. This is further enhanced in light of ongoing trends related to climate change, where a combination of rising sea-levels and an ever-present risk for natural disasters – like 2013’s Super Typhoon Haiyan – continuously shapes how people live and engage with water.
The range of solutions needed in the Philippines is not limited to just more traditional approaches of dikes or hydro-dams. Its geographical set-up in combination with local livelihoods highly dependent on water forces European companies providing water-related services to often look for case-specific and dynamic solutions. From electricity-generation, to water-sanitation, waste-water management or disaster risk reduction, this often results in a quite complex and innovative solution where European technology can play a central role. As European companies start to tap into this promising market, they should not neglect protecting their IP rights in the Philippines a good IP strategy can make the difference between succeeding or failing in the Philippines’ market, while counterfeiting and other IP violations are still relatively commonplace in the country.
Protect your Technology with Patents and Utility Models
Patent protection is perhaps the most common form of IP protection used by companies active in the water management industry since many water treatment solutions rely on innovative technologies. Patents confer the exclusive right to restrain, prohibit and prevent any unauthorized person or entity from making, using, offering for sale, selling or importing the patented product, thus protecting technological inventions and thereby increasing the competitiveness of companies. It is therefore crucial to obtain ownership of their patents in the Philippines in order to enjoy those exclusive rights.
Similarly to patent requirements of European countries, invention subject of the patent has to be new (not disclosed to the public), inventive and industrially applicable to be granted a patent in the Philippines. The Philippines adopts a ‘first-to-file’ patent system, meaning that the first person to file a patent in the jurisdiction of the Philippines will own that right within the country once the application is granted.
Utility model registrations for inventions with lesser degree of inventiveness are also allowed in the Philippines and this would be an important tool for EU SMEs to protect their inventions in the country. The water management sector often relies on the improvements of existing technologies through incremental innovation and a convergence of existing solutions. It is important to recognise that such new technologies, even though being less inventive, can still be protected with a utility model patent if not an invention patent, and should not be overlooked by development teams. It is worth knowing that the process for obtaining a utility model is shorter, however, there is a reduced term of protection – in the Philippines patents are protected for 20 years after filing whilst utility models are only protected for 10 years after filing.
Domestic patent applications in the Philippines are registered with the Intellectual Property Office of the Philippines (IPHOL) and the cost of the application fee is based on whether the applicant is considered a small-medium or large entity. Entities with assets worth PHP 20 Million (approximately EUR 385,000) or less are considered small entities while entities with assets exceeding the said amount are considered large entities. Foreign companies able to prove the quantitate requirement regarding their assets will be qualified and charged accordingly. In order to qualify as a small entity, a foreign company must submit an affidavit including the statement. Application fees starts from approx. EUR 70.
Water treatment companies wishing to make their patent protection more far-reaching covering also other countries in the South-East Asia region, may opt to file for a patent through the Patent Cooperation Treaty (PCT) route which allows for patent protection in PCT multiple member states by filling out just one patent application. The PCT application route also gives applicants an extra 18 months to assess the commercial viability of the invention and the likely market.
As practical tip, EU SMEs are recommended to always indicate the wording “Philippines Patent No.” or “Philippines Patent Pending” on all patented products commercialized in the country. This is to establish the presumption that infringers had known of the existence of the patent and therefore the intentional motive to commit an infringement. According to the local laws, damages may not be recovered for acts of infringement if the infringer shows that he/she has not known, or had no reasonable grounds to know of the existence of the patent, says Valentina Salmoiraghi, IP Business Advisor.
Some Things Are Better to Be Kept as Trade Secrets
The importance of trade secret protection cannot be overemphasized in technology intensive companies. By protecting trade secrets, most businesses can take advantage of the lead time, meaning the ability to commercialize the innovation well ahead of competitors, so that substantial revenue can already be captured before copycats are introduced in the market. This is especially true in case of smart water technology solutions like smart water meters, advanced sewage treatment systems or mobile workforce platforms taking advantage of ITC technologies and other smart technologies. Additionally maintaining technology and know-how as trade secrets is a helpful approach for companies with products that are expected to have a short life cycles, provided that proper measures are in place.
While there is no trade secret law in the Philippines, this can be protected under Article 40(e) of RA 7394 or the Consumer Protection Act and Article 292 of the Revised Penal Code. However, given the lack of provisions for legal protection of trade secrets, SMEs should take practical steps to protect them; this includes inserting confidentiality provisions into employee contracts, internally restricting access to sensitive information and ensuring that confidential information is revealed on a need-to-know basis only and under Non-Disclosure Agreements or relevant clauses. This would enable SMEs to still achieve sufficient protection using contractual clauses.
Companies should include confidentiality clauses within employee contracts covering not only the duration of employment, but even after the employee has left. It should also be of paramount importance to ensure that confidentiality agreements are signed with business partners whenever disclosing confidential information. Furthermore, companies wishing to get compensation for trade secrets revealed in the Philippines should stipulate contractual obligations to all parties involved and, resort to civil action for breach of contract and damages in the case of any violations.
Don’t Forget to Protect your Brand
Last, but not least, SMEs engaged in water management sector should pay close attention to brand protection as part of their business strategy in the Philippines. Protecting the company name is a must as it could be potentially damaging to SME’s reputation if someone would use a similar or an identical sign to provide substandard services and it could directly translate into loss of clients’ confidence in the original service provider, continues Valentina Salmoiraghi.
SMEs planning to enter the Philippines water management market should register their trade mark in the country well in advance, ideally before even starting their business there since the Philippines applies a ‘first-to-file’ trade mark registration system, meaning that the first person or entity to register a trade mark owns that mark in the country, regardless of the first use. It is particularly important to register trade marks in the Philippines because ‘bad-faith’ registrations is still a major problem in the country. Bad-faith registrations exist where a third party (not the legitimate owner of the mark) first registers the mark in the Philippines, thereby preventing the legitimate owner from registering it in the country. These unscrupulous companies would normally try to resell the trade mark back to its legitimate owner at an inflated price.
European SMEs should keep in mind that according to the Trade Mark Law of the Philippines, in order to maintain the registration of a mark, a Declaration of Actual Use of the mark together with the proof of use of the mark must be filed after 3 years from the application date of the mark and then again within 1 year from the 5th anniversary of the registration. This is required to prove that the mark is in use, and that it is used consistently without substantial modifications as well as to try prevent a construed and obstructing system of trade mark cancellations.
In addition to direct national filing, EU SMEs may also seek to protect their marks in the Philippines as part of an international registration under the Madrid Protocol, subject to compliance to local requirements, (particularly with the filing of the Declaration of Actual Use).
Helika Jurgenson, China IPR SME-Helpdesk
