Report on Anti-Counterfeiting Activities in Thailand 2004

Report on Anti-Counterfeiting Activities in Thailand 2004 (Thailand) Punjaporn Kosolkitiwong, Esq. Dej-Udom & Associates

Measures for dealing with counterfeit goods sold via the Internet And Border measures to stop importation of goods infringing on patent rights

Measures for dealing with counterfeit goods sold via the Internet

Government Policies

In an attempt to cope with the strong presence of the counterfeited goods sold in Thailand in the normal trading and those sold via internet, the Thai government has vigorously adopted and implemented a number of anti-counterfeiting measures aiming to reach international IP law enforcement and the concern of foreign IP owners particularly the IP products sold via internet. The recent crackdown by Thai police against local pirated DVD/CD copiers of local and foreign song copyright owner which was sold or exchanged through internet would justify the strong policy of the government towards this goal. There have been several measures implemented by the Thaksin Shinawat administration dating back since the last quarter of 2003 and herebelow is a summary of the policy and endurance.

1. On September 12, 2003 the Ministry of Commerce by the Intellectual Property Department has entered into a Memorandum of Understanding on the Cooperation of the Relevant Government Agencies and the Private Sector aiming to Prevent and Suppress the Smuggling of Infringing Products.

The said MOU prescribed the guidelines of practice that the Customs shall inform the IPR owners to inspect the goods when it comes to the point of possible smuggling of counterfeited products. The IPR owners are eligible to request for the detention of the goods for 10 days, provided that a security deposit made with the Customs to guarantee for possible damages from the detainment, if any. Alternatively, IPR owners may elect to work with the police investigator to inspect suspected products and arrest the wrongdoers under all relevant IP laws. Every RTG agency shall take all necessary legal actions against smugglers under the relevant IP laws. The IPR owners and the Customs Department shall cooperate to inspect the counterfeited products at the custom houses. 2

Representatives from both the IPR owners and the customs officer shall sign their names to certify their joint undertaking. Private and public sectors shall set up another operation unit to follow up on the results of cases and proceed to arrest the actual wrongdoers. The Customs Department shall proceed to destroy the counterfeit and pirated products. Prior to the destruction of such products the Customs shall verify the actual number of seized goods and ensure that they are all destroyed. Unless there are adequate customs warehouses not available for storing suspected products, the IPR owners whose rights are infringed shall grant a financial support for the expenses of storing the products, if necessary. The IPR owners shall also provide computer program in support of the operation and there shall be a linkage of database between those of the Department of Intellectual Property and the Customs Department. Any expenses incurred in connection with the establishment of the databases shall be borne by the RTG and the IPR owners. A database on exporter and importers involved in IPR related crimes shall be created by the Customs, and the IPR owners shall provide additional data concerning IPR infringed suspects known to them to the customs. The IPR owners shall issue IPR certificate to both the exporter and the importer of IPR products. The Customs Department shall put in place recordable system for IPR product exporters and importers and relevant information such as description of products, brand name/ trademark, and origin of products., etc. Finally, there shall be training or seminars for relevant officers on intellectual property matters such as IP laws and identifications of pirated or counterfeit products organized by both private and public sectors.

2. On September 12, 2003 the Ministry of Commerce by the Intellectual Property Department has entered into a Memorandum of Understanding on the Cooperation for the Prevention and Suppression of Pirated Products with the relevant government agencies and private sectors. The objectives of the said MOU are:

2.1 Prescribing the operating Jurisdictions for responsible Sectors

2.1.1 Bangkok Metropolitan Area

For copyrights - Patpong and Silom area Sukhumvit area (Soi 3-19) Klong Thom and Sapaanlek area Baanmor area Panthip area Zeer Rangsit shopping center

For trademarks - Patpong and Silom area Sukhumvit area (soi 3-9) Maboonkrong shopping center 3

2.1.2 Provincial Area

For copyrights and trademark Phuket Province - Patong, Kata, and Karon beach area

Chiangmai Province - Night Bazaar area, Computer Plaza Icon and Rindharma market

Chonburi Province - Pattaya beach area, Jatuchak Chonburi market, Sriracha District, and Computer Plaza

Songkla Province - Haad Yai District, Yongdee, Santisuk, Kimyong market, All night and Public Transport Company market areas

2.2 The relevant private sector and/or injured right-owners will declare the number and location of the desired shop/ stalls in accordance with 2.1 to the RTG prior to the signing of the MOU for the purpose of evaluation as well as to declare their acceptance of duties and responsibilities for the protection of their IPRs and shall give their full cooperation in all related legal proceedings. In addition, both will provide a sufficient number of personnel to administer their IPR and to cooperate with the Royal Thai Police and the DIP for the enforcement of IP laws. Furthermore, the private sector and/or injured right-owners shall give financial support to the RTG in combating against privacy. The goal for the reduction in the pirated materials in the shops/stalls are:

(1) by September 2003 – reduction of piracy by 50% (2) by October 2003 – reduction of piracy by 60%-70% (3) by November 2003 – reduction of piracy by 80% or more.

A periodical review of the progress of the implementation will be established for fruitful evaluation.

3. On December 6, 2003 the Ministry of Commerce by the Intellectual Property Department has entered into a Memorandum of Understanding on the Cooperation of the 7 Government Agencies on the Enforcement of Intellectual Property Rights. 4

The seven government agencies are: 1). The Royal Thai Police 2). The Public Relations Department 3). The Department of Intellectual Property (DIP) 4). The Metropolitan Electricity Authority 5). The Provincial Electricity Authority 6). The Customs Department 7). The Excise Department.

These seven agencies have agreed to cooperate under the MOU with the following objectives and details:-

1). To facilitate the efficient enforcement of IPR and the cooperation between all relevant agencies by strictly utilizing all the relevant laws.

2). To strictly implement the existing laws and regulation with regard to IPRs protection and cooperation to initiate new measures to increase the effectiveness of the IPRs enforcement activities.

3). To initiate new measures that will improve, promote or create new and systematic enforcement mechanisms that will increase the effectiveness in the combat against piracy.

4). To improve the business environment and ethics among operators and increase the public awareness of the negative effects of piracy and related pirated services, and

5). To develop the Thai IP system in order to facilitate the development in trade, industry and technological development.

Functions and Responsibilities The Royal Thai Police is responsible for keeping the peace, preventing, protecting and enforcement against violators under the Criminal Act, all of the Intellectual Property rights laws, the Act Controlling the Cassette Business and Television Devices, and other responsibilities as set forth by those laws. 5

The Customs Department is responsible for the detainment and inspection of all exported and imported products in the case that they are deemed to infringe on IPRs in accordance to the complaint as lodged by the right-owners, the directives and procedures of the Customs Department, and all the relevant laws.

The Revenue Department is responsible for the inspection, and collection of taxes in accordance with the Revenue Code.

The Department of Intellectual Property is responsible for the coordination of all IPRs enforcement efforts.

The Metropolitan Electricity Authority is responsible for the production, transportation, selling and all other activities concerning electricity for the Bangkok Metropolitan area in accordance with the Metropolitan Electricity Act.

The Provincial Electricity Authority is responsible for the generation, acquisition, transmission, and distribution concerning electric energy and other businesses incidental thereto, or those which will be for the benefit of the Provincial Electricity Authority. The services of the Provincial Electricity Act B.E.2503 including any other responsibilities provided in other relevant laws.

The Public Relations Department is responsible for the administration, supervision, control, inspection, and broadcasting of the cable TV subscription operators in accordance with the rules and regulations of the Radio and Television Broadcasting Act.

The scopes of the MOU are to exchange information and news (general and specific intelligence) concerning the enforcement of IPRS by utilizing the Royal Thai Police as the center of all information, news, and intelligence, to cooperate in accordance with each agency’s laws and regulations for inspection the major subscriber of cable television service in hotels, condominiums, apartments, and office buildings on a nationwide basis by utilizing the officials of the relevant government agencies namely the Royal Thai Police, the Customs Department, the Department of Intellectual Property, the Metropolitan Electricity Authority, the Provincial Electricity Authority, and the Public Relation Department. The cases concerning factories or the producers of infringing trademarks and patents are under the jurisdiction of the Royal Thai Police, the Customs Department, the Revenue Department, the Department of Intellectual Property, the Metropolitan Electricity Authority, and the Provincial Electricity Authority. Moreover, the parties concerned have to cooperate in the budgeting of all activities in order to consolidate all financial practices, facilitate a combined plan of action for all the agencies involved, set up in both a combined taskforce consisted of representatives of all the agencies involved in order to coordinate and cooperate in the most efficient manner and a 6 contact person among all the relevant agencies in order to increase speed and efficiency of the operations. Lastly is to appoint Duty Officers under various laws from the other relevant agencies in accordance with the law and regulations of each agency and as they see appropriate.

4. On June 26, 2004 the Ministry of Commerce by the Intellectual Property Department has entered into a Memorandum of Understanding on the Cooperation for the Prevention and Suppression of Pirated Products with The Royal Thai Police and Private Sectors.

Measures taken In Thailand

The Royal Thai Government is well aware of the critical importance of the issue of IPRs piracy as can be seen through the various protection and enforcement measures which are utilized congruently as follows.

1. Protection of Rights through the registration of patents, trademarks, layout-designs of integrated circuits, and the recordation of copyrights information, traditional knowledge, and geographical indications.

2. Enforcement the public and private sector has cooperated closely in the enforcement efforts.

The Ministry of Commerce (MOC) has worked closely with all the relevant government agencies in order to improved the roles, system, responsibilities and cooperation in the comprehensive enforcement efforts against IPRs piracy through the making of he Memorandum of Understanding on the Cooperation of the Relevant Government Agencies on the Enforcement of Intellectual Property Rights between the 13 relevant government agencies namely, the Royal Thai Police, the Office of the Consumer Protection Board, the Customs Department, the Revenue Department, the Excise department, the Department of Industrial Works, the Department of Foreign Trade, the Department of Internal Trade, the Department o Business Development, the Department of Intellectual Property, the Special Investigation Department, the Metropolitan Electricity Authority, and the Provincial Electricity Authority.

The MOC has initiated the Plan of Action for the enforcement of IPR by issuing some measures to control the importation of CD producing machinery Measures taken. The machinery that can be used for the production for CDs is subject to license. Those who would like to import such machineries are required to be the legitimate right-owners or under licensed by the official right-owners. (Approval by the Department of Foreign Trade, MOC). The MOC has sought the cooperation of 11 CD machine producing 7 countries to ensure that their manufacturers supply only to Thai importers with valid licenses. Measures being introduced The MOC is in the process of amending the regulation to require an indicator on the number of CD produced to be installed in each CD to be installed in each CD machine.

Measures to control the production of CDs Measures taken Those who have in their possession CDs producing machineries are required to report to the Department of Internal Trade, MOC on the quantity and location of such machineries. There are 45 reports to date. (Some operators are cassette tape producers. Some have had their machineries confiscated, and some have rented out their machines.) There are 37 cases left that still and need to be inspected. Producers or production licensee of CDs are required to report the quantity of CDs to be produced or hired to produce, sell, deliver and remaining inventory at the end of every month, and the name and address of the buyer, contractor, and producers. The contractor of the CDs production is required to report to the Department of Internal Trade on the quantity of the order, sales figure, and remaining inventory at month end, including he name and address of the contractor. Producers, contractors, or licensors are required to make detailed accounts of products produced, quantity of the order, and quantity of the production, sales figure, products delivered, and daily remaining inventory. All the accounts and details must be dept at the company’s headquartered and must be ready to be inspected at all time. The producers and importers of tapes, CDs, and videotapes must show their retail prices. The productions, transportation, selling and all other activities concerned utilizing electricity will be monitored by the Metropolitan Electricity Authority, and the Provincial Electricity Authority. Goods produced by the certified factories and required to have labels. Individuals or unregistered partnerships involving in the production of sound recordings and optical disc products are required to keep account and report to the Department of Business Development. All of the CD producing factories are required to be in the control of the Department of Industrial Works. The Director General of the Revenue Department requires the CD producers of contractors to have separate account for the purpose of income tax. The MOC requires the producers, contractor, of CDs, cassette tapes, videotapes, VCD, DVD, or other digital audio visual recordings, particularly those that deals with entertainment throughout the Kingdom to have commercial registration certificates.

Measures being introduced The Council of State has completed its review of the Draft Optical Disc Control Bill and submitted to the Cabinet. The Bill is currently awaiting the final consideration of the Cabinet before being submitted to Parliament for further deliberation and approved 8

Measures to control CD distribution Shops and stalls selling CDs must have the required license from the Royal Thai Police. Video games, laser discs, DVD, VCD, and CD-ROM which contain both picture and sound are subject to censer by the Royal Thai Police. Individuals or unregistered partnerships selling CD products are required to keep account and report tot he Department of Business Development. The sellers or renters of CDs for entertainment purposes must register their business with the Department of Business Development. The seller of CDs, cassette tapes, and videotapes (and other audio/visual products) are required to sell the products with covers or packages that have the information of the producers or contractor of those products, the trade names, and trademark of copyright owners. The operators are required to register their businesses with the Department of Business Development, as well. The MOC has already compiled and forwarded the names of the stores that sell legitimate products as well as the lists of shops that are suspected pirates to the Royal Thai Police.

Measures on the Granting of Rewards and Bounties Measure taken The Cabinet of Ministers, on 26 May 2003, grant approval for the MOC draft regulations on the granting of rewards and bounties for official and individuals involved in the executing of the pirated CDs cases, and for a budget of 24,750,000 Baht.

The substances of the said regulations are as follows.

(1) Cases concerning the confiscation of factories, which resulted in the impounding of one CD production machine, the reward will be 1,000,000 – 2,000,000 baht.

(2) Cases concerning storage or sales facilities of pirated products that resulted in the confiscation of more than 300 baht per pieces of evidences.

(3) Persons involved in activities under (1) and (2) will be entitled to 10% of the total rewards.

The Council of State (Group 5) has deliberated the said draft, and submitted for final Cabinet’s approval.

Suppression Measures

(1) Special operation units started 1 March 2003 onward. 9

(2) The MOC has set up task force to suppress IPRs violation. The 7 task forces are composed of officials from all the relevant agencies, representatives of the copyright owners, the copyright owners, the CD factories and the relevant shopping centers or arcades. Five units are assigned to take daily inspection of 15 shopping centers, and other tow units will make daily inspection of CD plants. The task forces have been in a non-stop operation mode since May 1, 2003 without holidays.

Additionally, MOU on the Cooperation of the Relevant Government Agencies on the Enforcement of IPRs between the cable television copyright owners, and the 7 relevant Relation Department, the Department of Intellectual Property, the Provincial Electricity Authority, the Metropolitan Electricity Authority, the Customs Department and the Excise Department. Regulating of the internal trade; this measure is aimed at improving the roles and responsibilities and enlisting the help of the owners of copyright and trademarks in the combat against piracy through the setting of realistic goals and effective evaluation of ongoing progress. This can be seen through the conclusion of the MOU on the Cooperation for the Suppression of Pirated products (19 agencies). The protection against the importation/exportation of pirated materials through the cooperation of the right-owners of copyrights and trademarks and the Customs Department under the MOU on the Cooperation of the Relevant Government Agencies and the Private Sector to Prevent and Suppress the Smuggling of Infringing Products which was signed by 20 various government agencies and companies. The Customs Department will grant cooperation in the prevention and strict inspection of suspected products (all parties shall proceed in accordance with all relevant customs regulations) and will continue to improve the rules and regulations on customs in order to accommodate this important directive.

Prevention

The Optical Control Bill, which shall be legislated in due course, will increase the effective means of administering the CDs production by organizing seminars and workshops aiming on training police officers, operations and the public about IP laws and procedures, disseminating information and organizing campaigns to educate people on IPRs via radio and TV stations, and newspaper. DIP has persuaded owners of the shopping centers and the traders to sell only legitimate products and seek right-owners of IPRs to lower their product prices in order to minimize the differences between the prices of legitimate and pirated products. DIP will also organize the Intellectual Property Festival with various activities including IP exhibitions, advise on IPRs matters and showcases of IPRs products and the One Tambon One Product (OTOP), and free concerts. 10

STATISTICS OF SUPPRESSION O FINTELLECTUAL PROPERTY RIGHTS VIOLATION

“(Copyright, Trademark, Patent, The Act Controlling the Cassette Business and Television Devices)”

2001 2002 January-July 2003 Total OFFENCES Arrest Materials Arrest Materials Arrests Materials Arrest Materials Under Seized Seized Seized Seized

Copyright Act B.E. 2,515 1,038,301 3,363 743,724 2,363 244,725 8,241 2,026,750 2537

Trademark Act B.E. 2534 (as 1,456 917,893 1,295 1,409,845 855 2,806,626 3,606 5,134,634 amended in 2542)

Patent Act 14 1,848 16 150,376 22 1,102,564 52 1,254,788 B.E. 2535

The Act Controlling the Cassette Business and 17 1,268 114 10,911 1 461 1320 12,640 Television Devices B.E. 2530

Total 4,002 1,959,310 4,788 2,314,856 3,241 4,154,376 12,031 8,428,542

Sources : The Royal Thai PoliceBy : The Department of Intellectual Property - The Metropolitan Police Bureau The Co-Coordinating Center for - The Economic Crime Investigation Suppression of Intellectual Property 11

Division Rights Violation July 31, 2003 - The Registration Division - The Provincial Police Region

The Protection and Enforcement of Intellectual Property Rights (IPR)

In practice, an injured person can lodge a complaint with a police investigator (any police station or Economic Crime Investigation Division ("ECID")). Most of the cases are under the supervision of the Economic Crime Investigation Division. At this present, (in the part of manufacture) the trend of counterfeit's product is diminishing. The factors are the hard working of police investigator to confiscate and eliminate the manufacture; the counterfeit's products are importing from other country.

Someone infringes on someone patent rights by adjusts its said patent and registered as a pretty patent. The Department of Intellectual Property ("DIP") and ECID have a conclusion that an injured person has to seek a court order to revoke the said registered pretty patent before commencing the criminal case against the infringer.

If there is any counterfeit product sold via internet, the police investigator will search the owner of the e-mail address who posts the counterfeit product via the internet and subpoena such person for investigation in order to find the manufacturers and arrest them.

The auction website which the police investigator used to find the counterfeit products sold is www.ebay.com.

Online counterfeiters in Thailand

There is a series of successful raids against a sophisticated counterfeiting operation. Most of online counterfeit products sold via the auction website or on the website which operate for selling products via internet. The web-master is now have to post the warning message on the website that the goods sold in this website must not be any counterfeit product and the webmaster is entitled to delete any counterfeit product sold via such website without giving any further notification. If there is any seller posting the counterfeit product to be sold via the website, the web-master will promptly post the notification to such seller to stop selling the counterfeit product, or delete the said selling item with the notification posted on the website that such selling item is deleted because of the illegal doing.

Recently, there is a successful case which has demonstrated that the machinery and willingness to trace and prosecute online IP infringers exists in Thailand. The raids were conducted against a syndicate of non-Thai nationals who were operating a coordinated counterfeit operation vending sports and leisure products via a number of websites, including ‘designershirts.net’, ‘hotf1.com’, ‘kitshirts.com’, ‘team-shirt.com’ and 12

‘tshirtbymail.com’. The get-up of the websites was that many purchasers would have been unaware that they were buying counterfeit goods. It is thought that the counterfeiters may have registered the domain names and hosted the websites outside Thailand so as to avoid detection. Approximately 15 of some of the world’s leading sports and leisure brands (including Adidas, Ferrari, Levi Strauss, Puma, Reebok and Timberland) coordinated their efforts in order to bring about a successful sting operation. After initial trap purchases and subsequent examinations of the goods confirmed that the products were counterfeited, an intensive investigation lasting around eight months was launched. The investigation was conducted in conjunction with the Royal Thai Police and private investigators. It entailed such activities as the interception and surveillance of telephone calls, and identification, tracing and monitoring of suspect bank accounts. As a result of the evidence gathered during the investigation, a number of search warrants were obtained and executed over a period of three days by police at five separate private homes in Pattaya in the south of Thailand. Each home represented a location from where the online counterfeiting operation was being managed by four UK nationals and their Thai spouses together with an Ukrainian national. The raid was the first search and seizure operation to be conducted in Thailand against an organization selling counterfeit clothing online and yielded numerous counterfeit goods, in addition to various computer records, orders, and bank details. It also revealed the counterfeiters’ high level of technical sophistication.

The success of the raids has led to the arrest of the individuals involved for trademark infringement. As well as these charges, the brand owners involved have also sought to initiate criminal actions based on tax and illegal business offences under Thai law. Importantly, due to the perceived seriousness of online counterfeiting activities can cause, charges under the Thai Anti-Money Laundering Act are also likely. This legislation was recently amended to bring various IP offences within its remit; a development that could result in asset seizure and confiscation for the infringers in the present case.

A great deal of work lies ahead, however. Despite the success of detecting and enforcing against the online offenders in the case at hand, it is anticipated that counterfeiters in Thailand will increasingly look to the Internet as a means of avoiding detection.

Border Measures to stop importation of goods infringing on patent rights 13

As the law in Thailand regarding to the border measures is inefficiency, the law which is related to is the Customs Law. Under the MOU dated December 6, 2003 The Customs Department is responsible for the detainment and inspection of all exported and imported products in the case that they are deemed to infringe on IPRs in accordance to the complaint as lodged by the right-owners, the directives and procedures of the Customs Department, and all the relevant laws. The MOC also has initiated the Plan of Action for the enforcement of IPR by issuing some measures to control the importation of CD producing machinery Measures taken. The machinery that can be used for the production for CDs is subject to license. Those who would like to import such machineries are required to be the legitimate right-owners or under licensed by the official right-owners. (Approval by the Department of Foreign Trade, MOC). The MOC has sought the cooperation of 11 CD machine producing countries to ensure that their manufacturers supply only to Thai importers with valid licenses. In practice, The owner, with a cooperation of the custom’s officer, must sent their staff to attend the border or investigate the importation goods which the owner believes that they are infringing on patent rights.

From the above summary, it certainly proves that Thai government agencies shall cooperate in implementing, outsourcing to the private sector and collaborating for fruitful actions against the manufacturer and the seller of the counterfeit goods. There is a strong hope from the local IP owner as well as representatives of foreign IP owner that this policy will last forever and the implementation will remain actionable al all times.