Trends for Commercializing IP. THAILAND Tilleke & Gibbins International Ltd.

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1 Trends for Commercializing IP THAILAND Tilleke & Gibbins International Ltd. CONTACT INFORMATION Tilleke & Gibbins International Ltd. Supalai Grand Tower, 26th Floor Bangkok, Thailand PROTECTION OF INTELLECTUAL PROPERTY RIGHTS 1 Joint IP As a practical matter joint ownership is more common and relevant in the context of patent than in other areas of IP. The Patent Act provides that in case of joint ownership of a patent, each joint owner may separately exercise the following exclusive rights without consent of other joint owners: (c) in the case of product patents, to produce, use, sell, possess for sale, offer for sale or import into Thailand the patented products; and in the case of process patents, to use the process stated in the patent, produce, use, sell, possess for sale, offer for sale or import into Thailand products made by the application of the patented process. A joint owner may not grant a license (exclusive or nonexclusive) or assign the patent without consent from all other joint owners. In general, most IPRs can be jointly owned in Thailand. 2 Know how Licenses of know how are permitted. 1

2 PAYMENT STRUCTURE 3 Royalty Payments 4 Remittance of License Fees Generally, there are no such restrictions; however, when a know-how license involves transfer of trade secret information, the license would be subject to provisions of the Trade Secret Act which protects against misappropriation of confidential information qualified as a trade secret under the Act. Notably, while patent licenses must be registered with the Patent Office (see No. 5 below), no such requirement exists with regard to know-how licenses. The structure of royalty payments depends on the parties and the particular circumstances concerned. Cross-border licenses typically involve an upfront payment and structured royalty payments in line with the practice of that particular industry. For domestic licenses, especially university licenses, a onetime lump sum payment is often preferred by the parties. This is due to a common perception against collection of royalty payments. As above. There are no such restrictions, except that remittance of a license fee is subject to tax. There are no approvals required. APPROVALS/REGISTRATION 5 Government Patents Approvals/ All types of patent license must be in writing and submitted to the Registration Patent Office. Under Section 41 of the Patent Act, a license agreement of a patent must be in writing in compliance with the requirements, procedures, and conditions prescribed by the Ministerial Regulations, and it must be registered with and approved by the Patent Office. Otherwise, the license agreement is void. Trade Marks As with patents, under the Thai Trademark Act, before a license of a registered mark will be enforceable, it must be in writing and it must be registered with the Trademark Office. If the license agreement further permits the licensee to grant sub-licenses, any subsequent sublicense agreement must also be in writing and registered with the Trademark Office. 6 Registration The transfer/assignment of IP (e.g. patent, copyright, trade mark, trade secret) must be in writing signed by the transferor and the transferee. For patents and trademarks, the transfer/assignment must be registered with the Department of Intellectual Property. Otherwise, the transfer/assignment is void. No separate registration of new ownership is required. LICENCES 2

3 7 Registration of Licenses See above, Part 5. 8 Implied Terms There are no implied terms. 9 Prohibited Terms A license agreement cannot contain terms or conditions that would lead to a violation of the trade competition law, which prohibits the following activities. For a business operator having market dominion, the followings activities are prohibited: unreasonably fixing or maintain purchasing or selling prices of goods or services; unreasonably fixing compulsory conditions, directly or indirectly, requiring other business operators who are his customers to restrict services, production, purchase or distribution of goods, or restrict opportunities in purchasing or selling goods, receiving or providing services or securing credits from other business operators; suspending, reducing or restricting services, production, purchase, distribution, deliveries or importation without justifiable reasons, destroying or causing damage to goods in order to reduce the quality to that lower than the market demand; and Intervening in the operation of business of other persons without justifiable reasons. A business operator is prohibited from conspiring, colluding or collaborating with another business operator in order to create monopoly or reduce competition. (iii) (iv) Domestic and foreign business operators must not engage in an activity which will restrict the freedom or opportunity of a person residing in the Kingdom from purchasing goods or services for his/her own use directly from business operators outside the Kingdom. Hence, a completely exclusive distributorship is prohibited. A business operator must not engage in any act which is not free and fair competition and has the effect of destroying, impairing, obstructing, impeding or restricting business operation of other business operators or preventing other persons from carrying out business or causing their cessation of business. In addition, Thailand has adopted the Unfair Contract Terms Act in 1997 which, unlike in other jurisdictions, is not restricted to consumers. The terms of an agreement concluded between two parties contracting in a business capacity, in certain cases may attract scrutiny under this Act. Contractual terms which may be considered unfair under the Act include: terms which exempt or restrict liability arising from breaches 3

4 ENFORCEMENT 10 Dispute Resolution of contract; terms which allow contract termination without reasonable grounds or without any material breach by the other party; terms which force one party to shoulder more obligations and/or liabilities than that prescribed under the law; terms which allow one party to delay or not to comply with its contractual obligations without reasonable grounds; terms which allow one party to enforce further obligations than that agreed to on the date of contract execution, on the other party; terms, notices or statements made in advance that restrict or exempt liability for infringement or breach of contract with respect to injury to life, body, or health of a third person caused by a deliberate or negligent act committed by the party who sought to restrict or to be exempted by such liability, or by other persons to whom such party must also be liable. (These terms, notices or statements will be considered ineffective as will agreements or consents of the injured parties exempting or restricting the liability for wrongful acts arising from unlawful actions or actions which are contrary to public order or good morals). Unfair contract terms are enforceable only to the extent that they are fair and reasonable. In determining the extent to which a term would be enforceable as fair and reasonable, all circumstances of the case will be considered, including the following factors: (iii) (iv) good faith, bargaining power, economic status knowledge and understanding, adeptness, anticipation, guidelines previously observed, other alternatives, and all advantages and disadvantages of the contracting parties according to actual condition; ordinary usages applicable to such kind of contract; time and place of making the contract or performing of the contract; and Much heavier burden borne by one contracting party when compared to that of the other party. Instituting Court proceedings. Yes there has been such a trend, particularly with arbitration. 11 Courts The courts have jurisdiction to enforce IPR licenses which are governed by another jurisdiction. However, complications may arise if the agreement prohibited under the Unfair 4

5 Contract Terms Act. Thai intellectual property law and Thai civil laws (tort) are relatively underdeveloped. There is no doctrine of precedent in Thailand and there have been few cases involving technical issues of intellectual property infringement. Levels of damages before Thai Courts are somewhat low by international standards and the levels of proof are stringent. There is no concept of punitive or exemplary damages. 12 Non Compete Generally, post termination restrictions are lawful. The restrictions must not be unreasonably restrictive. 5