<img alt="" src="https://secure.leadforensics.com/61439.png" style="display:none;">
Previous Next
Posted By Chris Bailey on October 21, 2020

Cylynt Summit Guest Blog: A Snapshot of Anti-Piracy Enforcement, Challenges, and Advantages in Southeast Asia

Chris-1Preview: Guest blogger Chris Bailey, a Rouse principal, is joined by his colleagues Yen Vu, principal and country manager (Vietnam), Kaew (Peeraya) Thammasujarit, principal, deputy country manager, and head of dispute resolution (Thailand), and Kin Wah Chow, principal and registered foreign lawyer (Indonesia) in an overview of enforcement in these three countries. Join the Cylynt 2020 Software Monetization and Anti-Piracy Summit on October 28-29 to see the full presentation.

Rouse has recently announced a strategic partnership with Connor Consulting to offer combined lead generation, license compliance, and anti-piracy enforcement programs in China and the ASEAN region.

The ASEAN region is already one of the largest and fastest-growing markets for enterprise software licensors. This likely boosted by the trend of diversification of manufacturing supply chains away from China, and long-standing foreign investment, particularly from Japan and Korea. For our clients, a large portion of licensees in this region in the engineering, construction, automotive and electronics sectors are foreign subsidiaries and joint ventures, and this profile plays a role (usually helpful) in licensing compliance. Even if these local entities are not directly covered under global licensing agreements, their business practices are often closely aligned to their headquarters and they may more willing to remedy the situation if non-compliance is found.

However, if it is necessary to escalate matters to legal enforcement, the ASEAN countries present a very diverse range of systems for protection of intellectual property (IP), some more effective than others. In addition to this complexity is the issue of corruption. Unfortunately, in several of the ASEAN countries, law enforcement officials, especially the police, and sometimes the courts, are susceptible to bribery. In Thailand and Indonesia for example, it is an open secret that the police will only conduct raids if cash incentives are paid. For our firm and our clients, this is clearly a no-go, and we have to use alternative ways to try to assert our client’s rights.

Compliance Enforcement in Thailand

In Thailand, it is well known that the specialized police will not conduct raids without payment, and there is no legally compliant and effective way to use this enforcement route. Fortunately, the IP specialist courts are very professional and corruption is not a concern in this venue. While a full civil litigation in Thailand can be a long-drawn out affair, taking up to 2 years to judgment, it is commonplace however for the parties to settle at an earlier stage. The main challenge is to obtain evidence of piracy: without being able to use the resources of the police to obtain evidence via a raid, the licensor must do so itself using private investigators or whistle-blowers. Coordinating investigations to bring evidence sufficient to file a strong lawsuit is a core competency for our Thailand team. Apart from launching a lawsuit, there can be good results from law firms sending letters and following up persistently with calls and requests for meetings, with the threat of a lawsuit kept in reserve as the last resort.

Compliance Enforcement in Indonesia

In Indonesia, the options are much more limited. The evidential requirements for end user piracy is almost impossible to comply with and certain police units may “investigate” based on a promised share of the compensation. In such cases, their "raids" are essentially an informal shakedown of the target. Furthermore, the courts are also susceptible to corruption and therefore unreliable. Not surprisingly, Indonesia is consistently on the United States Trade Association's (USTR’s) "Special 301" watchlist for its inadequate IP enforcement regime.

In this environment, we largely avoid the formal legal systems and need to rely on creative means to persuade non-compliant businesses to legalize. This means primarily using warning letters, supported with evidence of infringement, and followed up persistently with calls and doorstep visits. As noted earlier, the nature of the target can very much determine how they respond. A foreign-invested company helmed by a foreign executive will often be more concerned about his or her own exposure to criminal sanction and more willing to legalize their software.

For the most stubborn infringers, we may need to further increase leverage by filing a police complaint. Even if a raid does not happen (because of the reasons cited above), if a complaint is brought to them, the police may still proceed with the initial steps in the case, which may include summoning the responsible individual for questioning. This added psychological impact helps with the negotiation. Because the procedures and evidence required to file a criminal case are uncertain, so this is a time-consuming option and not something we use regularly.

Compliance Enforcement in Vietnam

Turning to Vietnam, this is a bright spot for anti-piracy, given the government’s willingness to tackle this problem over the years. Vietnam’s enforcement regime is similar to that of China: in addition to criminal and civil options, Vietnam also has administrative route, that is, a government agency with independent powers to conduct “raids” and issue fines without court proceedings. These different routes are not mutually exclusive – an administrative raid can be a simple means to obtain evidence that can be transferred to the police for a criminal prosecution or form the basis of a civil claim. The availability of effective legal remedies also means that warning letters can be effective too.

Another advantage of Vietnam is there is a legitimate and transparent channel for IP owners to support enforcement costs through a voluntary cash or in-kind donation system. These donations are made officially to the law enforcement departments (not lining the pockets of individual officers) under a regime created by the government. The system can generally meet the anti-bribery compliance standards of our multinational clients, although they do not experience any implicit penalties if they chose not to make any donations.

Conclusion

What all these jurisdictions have in common are limited formal means to obtain evidence of piracy happening behind the closed doors of the target business. The software licensor has to do its own groundwork to obtain evidence sufficient to drive a decisive settlement. Currently this evidence gathering is mainly through use of undercover investigators and whistle-blowers, but the use of technical evidence from “phone home” technology like that offered by Cylynt will be increasingly important in the future in the ASEAN region.

To summarize, anti-piracy enforcement in ASEAN is a varied landscape. In several countries, unfortunately, corruption in the police and court system is endemic and legally compliant means of enforcement are limited. However, in the software compliance context, enforcement is always a last resort. The primary aim is to avoid confrontation and convert pirates to customers. Our role as a local law firm partner to the compliance function is not to turn first to formal enforcement methods, but to use patient and persistent negotiation to achieve our goal, often alongside the compliance team and resellers, with legal remedies as the implied outcome if settlement can not be reached. We are therefore very excited about our collaborations with Cylynt, Connor, and other partners to improve outcomes for our clients in the region.

If you have questions or need more information, please contact me at cbailey@rouse.com.

Share This Story, Choose Your Platform!

Contact Info

Elisabeth Glover
Marketing Communications
Cylynt
e.glover@cylynt.com

Subscribe to Email Updates