Intellectual property
1. Overview
A wide range of industries are dealing with and affected by various intellectual property (IP)
issues and concerns.
Local laws and regulations — particularly Republic Act No. 8293 or the IP Code, which took
effect on 1 January 1998, as well as its implementing rules and regulations and other issuances
of the Intellectual Property Office (IPO) — generally provide basis for the protection and
enforcement of IP rights. The IP Code and the relevant regulations also incorporate and
reinforce the Philippines’ commitments under various international treaties and agreements,
such as the Paris Convention for the Protection of Industrial Property, the Berne Convention for
the Protection of Literary and Artistic Works, the Protocol Relating to the Madrid Agreement
Concerning the International Registration of Marks (Madrid Protocol), and the General
Agreement on Tariffs and Trade (GATT) Uruguay Round, particularly the Agreement on the
Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement).
2. Types of IP rights
Under the IP Code, the term “IP rights” consists of the following:
2.1. Copyright and related rights
Literary, scholarly, scientific and artistic works, whether published or unpublished, may
be copyrighted. Copyright protection extends to computer programs, multimedia works
and databases that are original by reason of the selection, coordination or arrangement
of their contents.
In general, copyrights endure for the lifetime of the creator and for 50 years after his or
her death.
The IPO processes applications for copyrighted works and issues the corresponding
certificates of registration. Copyrighted works are deposited with the National Library
(and the Supreme Court Library for copyrighted works in the field of law).
2.2 Trademarks and service marks
Trademarks, service marks and trade names owned by persons, corporations,
partnerships or associations domiciled in the Philippines or in any foreign country may
be registered with the IPO. Kindly note, however, that trade names are protected even
prior to or without registration.
Rights to a mark are acquired by registration. Priority is given to whoever applies first
for registration. There is a single procedure for both foreign and local applicants for the
registration of marks.
Trademark registration is valid for 10 years. The registration may be renewed for a
period of 10 years, and for subsequent 10-year periods.
In order to maintain the registration, Declarations of Actual Use (DAUs) and evidence of
use must be filed within the following timeframes:
• Three years from the filing date of the trademark application
• One year from the fifth anniversary of the registration
• One year from the date of renewal of the registration
In the event that the applicant or registrant has valid reasons that prevent it from using
the mark commercially, a Declaration of Non-Use may be filed in lieu of a DAU, with
proof of reasons that must be beyond the control of the applicant or registrant.
Justifiable reasons include a requirement imposed by another government agency; an
existing restraining or injunctive order issued by a court of competent jurisdiction, the
IPO or another quasi-judicial body; or if the mark is subject of an opposition or
cancellation case.
2.3 Geographic indications
The IP Code does not specifically define a geographic indication (GI), and the IPO has
not yet promulgated any rules regarding the same. The definition of the World
Intellectual Property Organization (WIPO), however, may be used to define a GI, which
is a sign used on products that have a specific geographical origin and possess qualities
or a reputation that are due to that origin. In order to function as a GI, a sign must
identify a product as originating in a given place. In addition, the qualities,
characteristics or reputation of the product should be essentially due to the place of
origin. Since the qualities depend on the geographical place of production, there is a
clear link between the product and its original place of production.
2.4 Industrial designs
An industrial design is any composition of lines or colors or any three-dimensional form,
whether or not associated with lines or colors, provided that such composition or form
gives a special appearance to and can serve as pattern for an industrial product or
handicraft. To be registrable, an industrial design must be a new or original creation
relating to the ornamental features of shape, configuration, form, or a combination
thereof, of an article of manufacture, whether or not associated with lines, patterns or
colors, which imparts an aesthetic and pleasing appearance to the article. Furthermore,
a design that is embodied in any composition of lines, patterns or colors must be
inseparable from the article and cannot exist alone merely as a scheme of surface
ornamentation.
The IP Code provides that industrial designs that are either dictated essentially by
technical or functional considerations to obtain a technical result, or those that are
contrary to public order, health and morals, are not registrable.
The term of registration of an industrial design is five years from the effective date of
filing. Such term may be renewed for not more than two consecutive periods of five
years.
2.5. Patents
The IP Code defines a “patentable invention” as any technical solution of a problem in
any field of human activity that has the following qualities:
• New
• Involves an inventive step
• Industrially applicable
An invention is not considered new if it forms part of a prior art.
An invention involves an inventive step if, having regard to the prior art, it is not
obvious to a person skilled in the art at the time of either the filing or priority date of
the application claiming the invention. In the case of drugs and medicines, there is no
inventive step if the invention results from the mere discovery of a new form or new
property of a known substance that does not result in the enhancement of the known
efficacy of that substance, or the mere discovery of any new property or new use for a
known substance, or the mere use of a known process, unless such known process
results in a new product that employs at least one new reactant.
An invention that can be produced and used in any industry is industrially applicable.
A patent registration for an invention is valid for 20 years from the date of filing of the
application, subject to the payment of an annual fee starting from the expiration of four
years from the date of publication of the application.
2.6. Utility models
Under the IP Code, the provisions governing patents generally apply, mutatis mutandis,
to the registration of utility models. Regulations define a utility model as “any technical
solution of a problem in any field of human activity which is new and industrially
applicable.” To be registrable, therefore, a utility model must be new and industrially
applicable only. The inventive step is not a requirement.
The term of registration of a utility model is seven years, counting from the effective
date of filing of the application and automatically expires at the end of the period. There
is no opportunity for renewal of a utility model registration.
At any time before the grant or refusal of a patent, an applicant for a patent may, upon
payment of a prescribed fee, convert such into an application for registration of a utility
model, and vice versa.
Such converted application shall be accorded the effective filing date of the initial
application. An application may only be converted once. Furthermore, parallel
applications, or those involving the same subject filed as both a patent and utility
model, are not allowed by the IP Code.
2.7. Layout-designs (topographies) of integrated circuits
Layout-design is synonymous with “topography” and means the three-dimensional
disposition, however expressed, of the elements, at least one of which is an active
element, and of some or all of the interconnections of an integrated circuit, or such a
three-dimensional disposition prepared for an integrated circuit intended for
manufacture.
Republic Act No. 9150, entitled An Act Providing for the Protection of Layout-Designs
(Topographies) of Integrated Circuits amends certain sections of the IP Code. Its
provisions aim to conform to the internationally acceptable standards for the protection
of layout designs of integrated circuits. Notable provisions of the law include the
requisites for registrability of the layout designs, the first-to-file rule and remedies for
infringement. In order to be registrable, a layout design of integrated circuits must be
original, that is, the result of the creator’s own intellectual effort and is not
commonplace among creators of layout designs and manufacturers of integrated circuits
at the time of its creation. A layout design consisting of a combination of elements and
interconnections that are commonplace shall be registered only if the combination,
taken as a whole, is original.
The term of registration of a layout design is 10 years from the date of first commercial
exploitation or from the date of filing the application for registration, if not previously
exploited commercially. Such term may not be renewed. Inventions, utility models and
industrial designs (including topographies of integrated circuits) may be patented. A
patent is granted to the inventor who filed his or her patent application earlier than
others, thus simplifying the determination of who is entitled to own the patent.
A registration for a utility model is valid for seven years from the date of filing of the
application and automatically expires at the end of the period. The term of registration
of an industrial design is five years from the date of filing and may be renewed for two
consecutive periods of five years each.
2.8. Protection of undisclosed information
There is no specific law in the Philippines governing trade secrets, although the IP Code
recognizes the protection of undisclosed information as an independent IP right. Trade
secrets and other confidential commercial information may be protected by contract.
There are also some laws in the Philippines providing for protection of confidential
information, such as the Revised Penal Code, which prohibits the unauthorized
revelation of secrets or confidential information by either private individuals or public
officers, and the Food and Drug Act, which prohibits the unwarranted use or revelation
of confidential or undisclosed information, including confidential data consisting of the
active ingredient(s), formulation, dosages, clinical data, etc., from the registration files
of an innovative drug submitted for purposes of obtaining marketing approval from the
Food and Drug Administration (FDA).
Furthermore, the TRIPS Agreement, to which the Philippines is a signatory, requires
member states to protect against disclosure and unfair commercial use of undisclosed
data submitted by the originator/innovator in the process of securing approval for the
marketing of pharmaceutical or of agricultural chemical products that utilize new
chemical entities. However, it is still unclear whether Article 39 of the TRIPS Agreement
is self-executory or if there should be a legislative enactment to give it effect in the
Philippines. At present, Article 39 of the TRIPS Agreement does not have a counterpart
provision under any Philippine law or statute.
3. Protection of IP rights
The first step is to ensure that IP rights are duly protected, recognized and/or registered
with the relevant government agencies, such as the IPO.
Once IP protection is obtained, local laws would generally provide a sufficient basis for
administrative, civil, and criminal actions against IP rights violations. Administrative
actions are filed with the IPO and other government agencies, while civil and criminal
actions are lodged with the commercial courts.
However, there are a number of practical difficulties that make effective enforcement
elusive. For one, there is the inordinate length of time it takes to prosecute a criminal
case or pursue a civil case for infringement or unfair competition. A second major
practical problem is the lack of resources available to frontline government authorities
whose role is to enforce IP laws. The government’s declared policy is to discourage
intellectual property counterfeiting and to prosecute infringers. However, the
proliferation of counterfeit products in the Philippines has continued to be largely
unabated, despite earnest efforts to arrest the concern.
Efforts to enforce IP rights continue to be plagued by other problems, such as delays in
obtaining search warrants; varying levels of standard of evidence required by trial court
judges hearing search warrant applications; the under-funded investigative,
prosecutorial and judicial system; and the lack of heightened awareness of the public on
IP rights. Even after successful seizures, endless delays mar the post-raid enforcement
system. The abolition of the specialized IP Courts several years ago is considered a
setback in the country’s anti-counterfeiting campaign, as the judges that had been
assigned to Special IP Courts and had received specialized training on IP issues are now
also assigned to handle other types of commercial cases.
Notwithstanding many difficulties, experience has shown that immediate, decisive and
aggressive action on the part of the IP owner upon detection of any violation of IP rights
can lead to an expedited resolution of the problem. What is required is a detailed
knowledge of the workings of the enforcement systems available, a rapport with local
enforcement authorities, and a flexible and creative approach to enforcement actions.
The Supreme Court Special Rules for IP cases, which took effect in November 2011,
shortened the litigation period and included the appointment of eight courts in Metro
Manila that can issue search warrants that can be validly enforced anywhere in the
Philippines.
In addition, Republic Act No. 10372, which became effective on 22 March 2013,
amended portions of the IP Code and provided additional enforcement powers to the
IPO, which gives IP owners another option in pursuing the infringement of its IP rights.
The issuance by the IPO on the rules for IPO visits fully complements R.A. 10372.
In 2016, the IPO issued a memorandum amending the Revised Rules and Regulations
on Inter Partes Proceedings (IPC Rules), which expands the authority of the IPO
Hearing/Adjudication Officers. Under the amended IPC Rules, IPO Hearing/Adjudication
Officers may now issue and sign decisions and final orders and perform other functions,
such as issue orders relating to the IPO’s enforcement and visitorial powers.
4. Technology transfer arrangements
A technology transfer arrangement (TTA) refers to a contract or an agreement involving
the transfer of systematic knowledge for the manufacture of a product, the application
of a process, or the rendering of a service, including management contracts. A TTA also
refers to an agreement to transfer, assign or license all forms of IP rights, including the
licensing of computer software, except computer software developed for the mass
market.
Parties are free to negotiate the amount or the rate of royalties to be paid under the
TTA. Under the IP Code, however, the IPO has quasi-judicial jurisdiction to settle
disputes regarding technology transfer payments, including the fixing of the appropriate
amount or rate of royalty.
TTAs should not contain certain prohibited clauses that are deemed to be adverse to
competition and trade, and should contain certain mandatory provisions. Non-conformity
to the requirement on prohibited clauses6 and mandatory provisions7 will automatically
render the TTA unenforceable. However, there are exceptional cases8 where
exemptions from the prohibited and/or mandatory clauses may be allowed by the IPO
on a case-by-case basis, upon showing that substantial benefits will accrue to the
Philippine economy as a result of the implementation of the TTA.
A TTA that conforms with the IP Code provisions need not be registered with the IPO.
However, there are practical benefits to registering a compliant TTA, particularly for
license agreements. These are as follows:
• The registration will serve as the best evidence that the agreement is compliant with
the IP Code requirements and is enforceable in this respect. Philippine courts generally
lend great weight to findings of administrative agencies like the Documentation,
Information and Technology Transfer Bureau (DITTB) of the IPO. In the event of
litigation over the agreement, the DITTB ruling may be used as evidence of the
enforceability of the agreement.
• If the licensor intends to avail itself of tax treaty relief with respect to royalty income
derived under the agreement, a DITTB registration or certificate of compliance must be
submitted to the Philippine Bureau of Internal Revenue (BIR) in support of an
application for tax treaty relief.
• If the agreement involves the licensing of a trademark, the registration of the
agreement may serve as evidence of the use of the trademark and against the
cancellation thereof for non-use. Under the IP Code, a trademark license agreement that
is not recorded with the IPO will have no effect against third parties. Thus, non-
recordation of a trademark license may render the registration of the mark(s) covered
by the license vulnerable to cancellation actions by third parties due to non-use. The IP
Code specifically provides that a trademark registration may be cancelled any time if the
registered owner of the mark, without legitimate reason, fails to use the mark in the
Philippines or fails to cause it to be used in the Philippines under license during an
uninterrupted period of three years or longer.
The regulations also provide that as part of the evaluation procedure of TTAs, the DITTB
shall take into account acceptable worldwide industry standards and practices for
licensing technology in the relevant sectors.
Source: A Primer on Doing Business in the Philippines. [Link]
content/themes/divinalaw-cms/dist/images/pdf/DivinaLaw_Primer-Doing-Business-
[Link]