04 April 2005
Piracy and counterfeiting offences remain widespread in the Philippines, but a boost to the country’s IP protection and enforcement law could change the situation. Ignacio S Sapalo and Augusto R Bundang of Sapalo & Velez give a detailed outline of what is available to rights owners
Recent efforts to curb incidents of counterfeiting and piracy in the Philippines appear to have succeeded as shown in the latest report by the International Intellectual Property Alliance (IIPA), disclosing that in 2004 piracy rates had declined in three key areas – movies, business software and entertainment software (applications and games). The issuance by the Bureau of Customs (BOC) of Customs Administrative Order (CAO) No 6-2002, which strengthens the procedures on border control measures, and the passing by Congress of the Optical Media Act of 2003, which regulates the manufacture, mastering, and replication of optical media, show the seriousness of the Philippines in protecting IP rights.
However, with the continuing inclusion of the Philippines in the US Trade Representative’s (USTR) Priority Watch List under Section 301 of the US Trade Law, there is no denying that much remains to be done in the seemingly endless battle to improve the piracy situation.
Republic Act No 8293 of 1998, known as the Intellectual Property Code of the Philippines (IP Code), provides for judicial and administrative remedies for the protection of IP rights.
Trade marks
Under Section 156 of the IP Code, the owner of a registered trade mark can file for damages against anyone who infringes his rights, and can be granted an injunction before the final judgment. Where actual intent to mislead the public or to defraud the owner is shown, the court may award damages twice the amount of the ascertained damages. The court can order the confiscation of sales invoices and other sales documents and the disposition or destruction of infringing goods without compensation.
Because the IP Code imposes a prison sentence and a fine on anyone found guilty of infringement, the registered trade mark owner can file a criminal action, applying the same test to establish whether the infringing mark is deceptively or confusingly similar to the registered trade mark.
A trade mark owner who fails to register his trade mark can protect it against fraud by filing a civil or criminal case for unfair competition. Under Section 168 of the IP Code, the competitor who passes off his goods, business, or services as those of the trade mark owner, can be sued for unfair compensation.
Copyright
Pursuant to Section 216 of the IP Code, a copyright owner can file an action for payment of actual, moral and exemplary damages against the copyright infringer and seek an injunction to restrain the infringement. The aim is to prevent infringing goods from entering the channels of commerce immediately after Customs clearance of the goods. The court can order the confiscation of sales invoices and other sales documents or the destruction of all infringing copies or devices used to make the copies.
Alternatively, the rights owner can file a criminal case for copyright infringement against the infringer or anyone aiding or abetting such infringement. To make the law a deterrent against infringement, copyright infringement penalties were increased under the IP Code.
Patents
Section 76 of the IP Code allows a patent owner to bring a civil action to recover damages and secure an injunction for the protection of his rights. The court can also grant a triple damages award, and order the disposition or destruction of the infringing goods, materials and implements used. Parties found to have actively induced the patent infringement can be liable as contributory infringers and can be found jointly liable with the infringer.
If the infringer or anyone involved repeats the infringement after the court judgment in a civil infringement case, the patentee can file a criminal suit against the infringer. Upon conviction, the infringer faces a three-year imprisonment and/or a fine.
Search and seizure in civil actions
In an en banc resolution on January 22 2002, the Philippine Supreme Court issued AM No 02-1- 06-SC. It governs the provisional seizure and impounding of documents and articles in pending and intended civil infringement actions under the IP Code, article 50 of TRIPs and other related laws and international conventions.
This rule allows a rights owner in a civil infringement action to apply under oath and ex parte for a search and seizure order (Anton Piller Order) from the court. The aim is to get into the alleged infringer’s premises to search, inspect, copy, photograph, record or seize any documents and articles specified in the order. The rights owner may avail of this remedy where any delay is likely to cause irreparable harm to him or where there is a demonstrable risk of evidence being destroyed. A key feature of this rule is that if no case is filed with the court within 31 calendar days from the date of the writ being issued, it will be set aside and the seized documents and articles will be returned to the expected adverse party.
Criminal search warrant
Before filing a criminal case for infringement or unfair competition, the rights owner can secure a criminal search warrant from the court. This is a special process which can help facilitate the search of an offender’s personal properties in his premises, which has been an effective tool because of the surprise element for the alleged offender in it.
The Constitution and the Rules of Court, especially Section 1, Rule 126, dictate that a search warrant can only be issued if there is probable cause in connection with one specific offence. The judge will determine this after taking statements from the complainant and his witnesses, describing the place to be searched and the things to be seized in the Philippines.
Investigators, authorized by the rights owner, will survey the premises to be searched and the availability of the infringing products at the target location. Once the information has been gathered, the rights owner secures the assistance of a law enforcement agency, either the National Bureau of Investigation (NBI) or the police, to carry out the investigation, including test-buys of the infringing products for comparison with the genuine products. Those involved will take pictures and draw sketches of the premises and location, conduct interviews with the occupants, and secure receipts issued by the infringer for the test-buy.
The law enforcement agency representative then proceeds to apply for a search warrant with the court, supported by the affidavits of the investigators and the rights owner. The court will set a time for a hearing, and question the applicant/law enforcer and witnesses. Documentary evidence in support of the application will later be formally offered in evidence. Once a probable cause has been determined, the court can issue the search warrant (valid for 10 days), which will describe the place to be searched and the persons or things to be seized. After the applicant/law enforcer has seized the appropriate property under the warrant, he shall give a detailed receipt of the same to the lawful occupant of the premises in whose presence the search and seizure were made. The applicant/law enforcer must then deliver the seized property and an inventory to the court.
Alternative complaints procedure
As an alternative to court proceedings, the IP Code grants jurisdiction to the Bureau of Legal Affairs (BLA) of the Intellectual Property Office (IPO) to adjudicate contested IP rights proceedings. Following the IPO’s Rules and Regulations on Administrative Complaints for Violation of Laws on IP rights, a complaint related to trade marks, copyright or patent infringement, unfair competition, false designation of origin and false or fraudulent declaration in a trade mark registration can be filed with the BLA within four years from the date of commission of the violation or discovery of the violation.
Border control measures
The issuance of CAO No 6-2002 by the BOC, has introduced clearer guidelines to expedite the seizure of imported commercial goods that infringe IP rights. The BOC has set up a record system for products covered by IP rights with the newly created IP Unit of the BOC.
2003 Optical Media Act
The Optical Media Act of 2003 has paved the way for the creation of the Optical Media Board (OMB), which will regulate and supervise the manufacture, mastering, replication, importation, and exportation of optical media through licensing, inspection, and/or prosecution and address the issue of music, movie, video game and software piracy. The new Act fills the gaps in the IP Code for the protection of optical media. Under Article IV Section 19 of the law, any person without the necessary licence from the OMB, 1) who possesses or operates “manufacturing equipment, parts and accessories” intended for the production of optical media, 2) possesses or acquires in commercial quantities “manufacturing materials” used or intended for use in the mastering, manufacture or replication of optical media, or 3) knowingly possesses items of the same content or title, produced in violation of said law and used for the purpose with the intent to profit, will be punishable by imprisonment and/or fine.
The fight against piracy is not a hopeless fight. A relentless drive to prosecute pirates and counterfeiters to the full extent of the law is essential to improve IP rights protection in the Philippines.
IGNACIO S SAPALO
Ignacio S Sapalo is the managing partner of Sapalo & Velez. He obtained a BSC degree, major in engineering, in 1963 and his Bachelor of Laws in 1967 from Ateneo de Manila. He was the director of the Bureau of Patents, Trade marks and Technology Transfer of the Philippines government from 1987 to 1996, during which time he led the group which drafted the 1998 IP Code of the Philippines. He is author of Background Reading Material on the Intellectual Property System of the Philippines (WIPO, 1994) and has been professor of intellectual property at the Ateneo School of Law since 1991. He has also lectured at WIPO seminars and acts as a consultant on IP matters for the Department of Trade and Industry of the Philippines. He worked for the ASEAN Secretariat in 1998 and acted as WIPO consultant to Cambodia in 1999. He is founder and president of the Intellectual Property Foundation, a member of the executive board of the International Chamber of Commerce of the Philippines and of the board of trustees of the Philippine Dispute Resolution Center. He is also a member of the Integrated Bar of the Philippines, the Philippine Bar Association, Association Internationale Pour la Protection De La Propriete Industrielle, Asian Patent Attorney’s Association, and Intellectual Property Association of the Philippines.
AUGUSTO R BUNDANG
Augusto R Bundang is a partner of the firm Sapalo & Velez and heads its litigation department. He obtained his BA degree, major in economics, in 1985 and his Bachelor of Laws in 1989 from Ateneo de Manila. He was a former college instructor at the St Scholastica’s College and AMA Computer College, and is a columnist of Business World. He is an honorary member of the Association of Fellows and Legal Scholars of the Center for International Legal Studies in Salzburg, Austria.
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