Asian Enforcement Practice

F. David LaRivierefdlariviere@lgpatlaw.comEdward J. Kellyekelly@lgpatlaw.com

IP Protections

Patents

Trademarks

Trade Secrets

Copyrights

• Creative expression• Author’s life

+ 70 years

• Signs/symbols/source indicator for goods & services

• Perpetual

• New “ideas”

• 20 years

• Idea that’s kept secret

• Perpetual

Recommended Reading

“Illicit” by Moises Naim “Knockoff: The Deadly Trade in Counterfeit Goods” by Tim Phillips

 

 

John Dillinger: “Why do I rob banks? That’s where the money is!”

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5The Dark Side of Globalization

• Traffickers▫ Exploit child and slave labor▫ Pay no taxes▫ Provide no benefits to society▫ Are nimble, organized and

ruthlessly efficient▫ Are essentially criminal “service

providers” diversified in their portfolios of criminal activity: Counterfeits/pirate goods Weapons Drugs Documents Prostitution Art and Antiquities Endangered species Human organs (Yes! Even

organs!)

©Nation News©Nation News

6What Vulnerabilities do Traffickers Look For in Setting Up a Base of Operations?

• Example of SE Asia as Trans-shipment hub: determining factors▫ Loose visa rules and relaxed “rule of law”▫ Geography: Thailand controls land route from

China to Singapore▫ “Indochina” central location between India and

China▫ Miles and miles (4863 KM) of open borders

between Thailand and Myanmar, Laos, Cambodia and Malaysia- just lines on the map

▫ Extensive river networks (Mekong Delta) rife with smuggling

▫ Smuggling routes developed over centuries (narcotics, human smuggling, arms, contraband)

▫ Close family ties between 2nd and 3rd generation Thai-Chinese (Teo-chiew) and southern Chinese merchants (Pearl River Delta region)

▫ Low paid government officials gives rise to low level corruption to “look the other way”

• Result: 30 Million people trafficked in/from SE Asia in last ten years: compare transatlantic slave trade

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Victims of the Global Trade: Modern Day Slavery

Former US Secretary of State, General Colin Powell: "It is incomprehensible that trafficking in human beings is taking place in the 21st Century – incomprehensible but true. Trafficking leaves no land untouched, including our own.”

Slave Camps & Child Labor

GET REAL - The Truth About Counterfeiting

• Counterfeiting is big business.• It is estimated that counterfeiting is a $600 billion a

year problem.• In fact, it’s a problem that has grown over 10,000

percent in the past two decades• Approximately 5%-7% of the world trade is in

counterfeit goods.

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The Powell Doctrine

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• FORCE, when used, should be overwhelming and disproportionate• Internal company support is

strong• No Half Measures• Objective clearly identified

• Commercial vs. Legal objective

• Exit strategy necessary

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Strategies• Creating a climate of deterrence• Counterfeiter generally won’t stop, it’s too lucrative, so best to

move them away from your brand to another less aggressive rights holder

• Combination of Customs Watch List, police raids, warnings and follow up, market patrols, calling cards, threats of civil action, publicity: bring all weapons to bear on the source to decrease their ROI.

• Rational party will move away from the brand which is turning up the heat

• Strategy is most effective when different affected brands in the same industry work together to share intelligence and costs: e.g., software alliance, sports apparel, electronics, video games, pharma, cosmetics, tobacco. More bang for the (limited) budget

Strategies• Creating a climate of deterrence• Counterfeiter generally won’t stop, it’s too lucrative, so best to

move them away from your brand to another less aggressive rights holder

• Combination of Customs Watch List, police raids, warnings and follow up, market patrols, calling cards, threats of civil action, publicity: bring all weapons to bear on the source to decrease their ROI.

• Rational party will move away from the brand which is turning up the heat

• Strategy is most effective when different affected brands in the same industry work together to share intelligence and costs: e.g., software alliance, sports apparel, electronics, video games, pharma, cosmetics, tobacco. More bang for the (limited) budget

IP Enforcement: Holistic StrategyIP Enforcement: Holistic Strategy

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▫ Investigation: Tracking Source of Supply Developing leads- client info network Private Investigators Customs & Immigration Hotline- phone and email Informants and law enforcement tipsters Trap purchase: building trust and confidence: Follow the

money trail Tracing phone/emails of vendor/supplier (no privacy in

Thailand) Surveillance of retail and internet sales Placing CI in factory as employee for 2-3 months Documentary discovery not available in civil procedure so

must obtain documents surreptitiously Flipping low level operators (carefully) to work up the

food chain

IP Enforcement: Holistic StrategyIP Enforcement: Holistic Strategy

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Brand Owner’s Goals

• Business Goals▫ Fast result▫ Punish unfair

competition▫ Deal defendant a

hard, possibly fatal blow and recapture market share lost to infringer

▫ Send message to the market (distributors) and competitors that brand owner will enforce its valuable IP: risk to copy

▫ Maximize value of legal rights by use of media to promote products and designs

• Legal Goals▫ Immediate seizure

of infringing stock▫ Stop the

infringement NOW▫ Develop useful

precedent▫ Judgment of

injunction and damages where feasible

▫ Forfeit/Destruction of stock

▫ At least recover damages and costs

▫ Avoid countersuit

14The “Brand Protection” Puzzle

Maintenance

Brand Protection

Education

Enforcement

Supporting

government

authorities

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Law Enforcement

• Department of Special Investigation (“DSI”)

• Economic Crime Police (“ECOTECH”)

• Royal Thai Police Crime Suppression (“CSB”)

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Established on October 3, 2002 under the jurisdiction of the Ministry of Justice

(DSI = US FBI)

Established on October 3, 2002 under the jurisdiction of the Ministry of Justice

(DSI = US FBI)

Criminal Raid Action with Assistance from Department of Special Investigation : DSI

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Ministry of Justice

Police General Chidchai Minister of Justice

On behalf of • IP Association • LGP Asia

On behalf of • IP Association • LGP Asia

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Royal Thai Customs Watch List

• Ex-officio action• Fines for violations imposed by Customs

Authority are higher (4X value of seized goods) than the fines imposed by the Courts for TM Act violations (Maximum 400,000 Baht)

• Cost-effective (no need for private investigation)

• Shipping documents can generate leads in source or destination countries (better intel)

• Seizures can lead to civil actions against importers, generating compensation to fund additional anti-counterfeiting measures

Thailand as Transshipment Hub

Source: DG TAX UD European CommissionSource: DG TAX UD European Commission

20Perception: Anything Goes . . .Perception: Anything Goes . . .

21Perception Becomes Reality as OC moves in

Guns, Knives and

Axes

Guns, Knives and

Axes

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Predators on the Prowl

Ukrainian Hacker

• Maksym Kovalchuk, 26• Ring leader of a worldwide

software piracy/tech crime ring: caused $100 Million in losses

• Arrested Bangkok May 20, 2003• Offer software deals in e-mails,

take orders and payment by money order mailed to intermediaries, including a Russian exchange student in Philadelphia and a businessman in Massachusetts

• Extradited to the US and imprisoned for 36 months

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Busted: Christopher Neil & John Mark Karr

25Busted: “Merchant of Death”Victor Bout: Russian Arms Dealer

Fighting Fire with Fire: Dealing with Ethical Dilemmas

• Bribery and corruption: public and private• “Persons of influence”, “poohyaibaan” or

friends in high places. Beware of “Seh ______”• Death threats and reprisals• Foreign operators: guests in the Kingdom• Lesser threats: Blacklisting, grey listing• Targeting family members• Transparency issues: Self-dealing, cutouts,

outsourced work • Methodology: Violation of civil liberties, e.g.,

privacy▫Ethical question: given the tactics of the

adversary, is it ethical to get the results “by any means necessary”?

27WHY CARE? Winners & Losers in the Globalized Economy

• Why the State Should Care▫Encourage investment in manufacturing

▫Encourage investment in domestic R&D, the knowledge -based economy & mind share- a form of technology transfer- training workforce to world class standards

▫Trade preferences with partners (i.e., “301”, FTA, GSP) & competitiveness

▫Disrupt funding for Black Markets, Organized Crime & Terrorism www.customs.gov/custoday/nov2002/interpol.htm IACC White Paper January 2006 www.iacc.org/WhitePaper.pdf www.interpol.int/FinancialCrime/IntellectualProperty/

Default.asp

28Examples of Success: Industry Collaboration

• October 5, 2005: Auto Parts• DaimlerChrysler Mercedes Benz, GM, BMW,

Honda and Department of Special Investigation (“DSI”)

• 50,000 plus goods seized, machinery attached, bank accounts frozen, foreign owner arrested, tax avoidance charges filed (example of piling on to create deterrence)

• DSI : “largest operation ever discovered in SE Asia”; investigating money laundering, funding for terrorism activities, illegal labor practices, immigration charges

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Mercedes Benz ® ExampleMercedes Benz ® Example

DaimlerChrysler & General MotorsRaid Action Against Autotrim

International Transaction Co., Ltd.

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DSI Raid at Hatyai Factory, Songkla

NGK Raid Action Against Retail_& Wholesale Shops in Lampang & Lamphun

Province

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Destruction Ceremony

Shiseido-Raid Actions Against Shops/Warehouses (Donmuang

Market) on August 2008

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WHY CARE? CHILD LABOR

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Modern Day Slave Trade

47Human Trafficking: Victims are criminals?

Human Trafficking: Victims are criminals?

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QUESTIONS/FOLLOW UP/CONTRIBUTE

• Contact Ed Kelly 24/7/365▫www.lgpatlaw.com/attorneys/ed_kelly▫www.sisha.org▫www.facebook.com/thaifixer?ref=profiler▫+1 831 645 7308(dd); +6689 526 5305 (m)▫ekelly@lgpatlaw.com▫ekelly_in_thai@yahoo.com▫ekelly@sisha.org

Thank You!