The e-commerce sector has flourished across the world, especially in Southeast Asia, where online retail marketplaces are projected to be worth US$53 billion by 2023. However, the rise of online shopping has also exaggerated the problem of intellectual property (IP) infringement, as e-commerce firms fruitlessly tackle the onslaught of counterfeit goods flooding their platforms.
But as storefronts shift to the digital realm, the problem of IP infringement may have a digital solution. With this in mind, let’s explore the intellectual property rights (IPR) landscape and how blockchain technology has been leveraged to combat rampant piracy in Southeast Asia.
In their joint report, “Trends in Trade in Counterfeit and Pirated Goods,” the Organisation for Economic Co-operation and Development (OECD) and the EU’s Intellectual Property Office noted that the counterfeit goods trade made up 3.3% of global trade in 2016, with footwear and clothing topping the list of counterfeit goods.
Copyright infringement is also rampant in the music industry. The “Music Consumer Insight 2018” report by the International Federation of the Phonographic Industry (IFPI) estimates that one-in-three music consumers engage in piracy activities, with stream-ripping being the most popular form of unauthorized use of music content.
Other than trademarks and copyrights, patent rights constitute a subset of intellectual property, and the ingenuity of reverse engineering skirts a fine line between legal innovation and patent infringement.
Based on the 2019 International Intellectual Property Index released by the U.S. Chamber of Commerce’s Global Innovation Policy Center (GIPC), which benchmarks the IP environments of 50 economies around the world, Singapore tops the rankings for Southeast Asian countries at 10th, followed by Malaysia at 24th and Brunei at 34th. The remaining Southeast Asian nations are comparably ranked, with the Philippines at 37th, Thailand at 42nd, Vietnam at 43rd, and Indonesia at 44th.
The protection of intellectual property rights is considered an essential prerequisite for Southeast Asian countries to transition from manufacturing-based economies to ones driven by innovation.
In 1995, the Association of Southeast Asian Nations (ASEAN), then comprising Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, signed the ASEAN Framework Agreement on Intellectual Property Cooperation. The Agreement acknowledges the importance of IPR for securing trade and investment in the region, and signatories recognized the importance of collaboration among ASEAN member states to ensure IPR protection in order to provide a firm basis for economic development in the region.
As part of implementing the Agreement, the ASEAN Working Group on Intellectual Property Cooperation (AWGIPC) drafted a 10-year roadmap in the form of the ASEAN IP Rights Action Plan 2016-2025. Under the Action Plan, ASEAN countries are to leverage intellectual property to collectively transform the region’s economic landscape as part of the bloc’s goals set out under the ASEAN Economic Community Blueprint 2025.
To harmonize IPR legislation across the bloc, ASEAN is conducting a study to explore the establishment of a regional trademark registration system — a system that could benefit from the interoperability of blockchain technology.
One of the most critical issues faced by the IPR industry is proving ownership. From music and literature to design blueprints, verifying the creators of intellectual property is by no means a straightforward undertaking. In any dispute over the authorship of intellectual property, blockchain, with its automated and immutable records, allows the original author to timestamp their works and secure ownership from the moment of creation. This is particularly useful in copyrighted material, automatically declaring ownership AT the moment of creation without the need for registration.
Generally speaking, distributed ledgers can also help with tracking the duplication of such works. Furthermore, the use of smart contracts would facilitate the disintermediation of the IPR industry by affording creators greater autonomy in setting the licensing terms of their work, while reducing the costs associated with middlemen.
In Southeast Asia, Thailand is leading the way in developing blockchain for IP protection. In November last year, the Ministry of Commerce launched a feasibility study to explore the use of blockchain for IP registration in the country. In March this year, the Thai Trade Policy and Strategy Office (TPSO), in collaboration with the British Embassy, organized a focus group meeting on “Enhancing Intellectual Property Management by Blockchain,” which aimed to translate the findings of the feasibility study into action plans.
In Indonesia, Project Portamento is slated to be launched next year as a platform for Indonesian musicians. Music uploaded to the database will be indexed and tracked using blockchain.
Another notable use case lies in Vietnam, where startup Cryptorobo is allowing authors of copyrighted works to secure ownership using a blockchain-based timestamping mechanism that also complies with the EU’s electronic IDentification, Authentication and trust Services (eIDAS standards), ensuring authorship evidence of the highest probative value.
For an example of the titanic ramifications of inadequate IP protection, look no further than the ongoing US-China trade war. A major complaint put forward by the US administration is the theft of intellectual property and forced technology transfers committed by Chinese companies. Regardless of their respective rankings, Southeast Asian countries need to move quickly to upgrade their IP protection frameworks, lest they find themselves the next target of economic retaliation.
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