With fraud becoming pandemic around the world and rising cyber crime a tidal wave that is about to hit all types of SMEs, you may find yourself needing legal advice for situations ranging from Intellectual Property protection to simple theft. A recent study in the UK on unaddressed legal issues found 23% of SME businesses reported significant loss of income, 12% reported increased costs, 9% reported damage to their reputation, and 6% reported that employees had to be shed and/or the business closed down. Overall, 46% of SMEs said that unaddressed legal issues had a tangible adverse impact on their business, with the average financial cost per issue being £13,812. It follows that SMEs need to devise strategies for avoiding or minimizing the costs of formal legal advice. Below are two strategies on legal issues for SME owners in SE Asia.
Strategy 1: Avoid altogether
The smart SME owner will make their business water tight to legal issues as early as possible with the proper industry protection. The Top Three Intellectual Property Rights (IPR) mistakes for SMEs in SE Asia are; late registration of trade marks, failing to register copyrights and giving away trade secrets.
Registration of Trade Marks
When should you register a trade mark? As soon as a company considers there is substantial market potential for their goods or services, even if they are not completely set on market entry yet. A key point is that trade mark regimes in South-East Asia generally use a ‘first-to-file’ system, meaning the first person to file a trade mark application in a particular South-East Asian country will own that right in the country once the registration is granted. If an owner does not apply for protection on time, others may do so first. Free-riding on the reputation of another’s brand or registering a trade mark in ‘bad-faith’ in order to sell it back to the rightful owner. Additionally, a business should consider how their trade mark can be translated into local languages. If a local equivalent is not chosen consumers will almost certainly do so on their own, and if it is not registered there is the risk of another company freely copying, or worse, registering it themselves.
Failing to register copyrights
Failing to register any or all types of IP is a common mistake for many foreign SMEs, however particular attention should be paid to the extra provisions available to copyright owners in most South-East Asian countries. In this region, as in Europe, copyrights are granted at the point of creation for creative works such as artistic designs, books, and computer software. Additionally though, it is possible to register copyright (apart from in Brunei, Myanmar, and Singapore), and in most cases it is inexpensive to do so (less than $50). In an enforcement action a copyright registration can be used as presumptive evidence of ownership, so that the owner does not need to produce an original work, with a name and creation date, or relevant contracts as proof. Furthermore, a registered copyright can be a useful back-up to other IPR in enforcement cases. For instance, a business can usually protect a logo under both copyright and trade mark law, or protect an innovative packaging design via a design patent and copyright.
Giving away trade secrets
The main problem with trade secrets is that many SMEs do not realise what should constitute one and therefore are not prepared to protect them. A trade secret can be any confidential business information, such as a distribution method, consumer profiles, an advertising strategy, or a client list, that has considerable commercial value. Generally in law, a trade secret must not be known to the public, give some economic benefit to the holder, and be subject to reasonable efforts by the owner to keep it secret. SMEs may not be familiar with using formal Non-Disclosure Agreements (NDA), but it is worthwhile considering using such documents before entering into talks with a partner, particularly where specific IP or confidential information that will be disclosed during the course of discussions can be identified. Such agreements are concise, clear, and generally of standard form and easy to draft, though it is best to have a different NDA for each South-East Asian country, as each has different laws and legal systems. Obtaining one by no means provides a ‘watertight’ case, but it certainly assists in protecting trade secrets, not only when it comes to enforcement but also as a signal to potential infringers of the steps a company is prepared to take.
Strategy 2: Free advice
Some people may tell you that they have a friend who is a lawyer and some people may not. It may be worth your while as an SME owner to befriend a local lawyer and simply ask them for advice about a situation you are facing
Studies have shown that in response to a legal need, SMEs are as likely to ignore the issue or to take non-legal advice as they are to take legal advice, and twice as likely to take no advice at all. In the 30% of cases where SMEs do take legal advice in response to a legal issue, only 30% of them choose to consult a solicitor, with the balance consulting accountants, unions, HR advisers, and barristers. SMEs don’t want to instruct law firms. “They perceive formal legal advice as ‘expensive, serious and last resort’”, said one analyst. Even if you have crossed all the legal T’s and dotted all the legal I’s and it is still not enough then you may have to initiate legal proceedings against some kind of infringement. One analyst said, “Once firms recognise that they have a legal issue their first port of call is generally to talk to friends and family (particularly if they are solicitors) for free legal help. Increasingly businesses are also using the internet to look for legal help, both alongside other informal help and also before approaching formal legal services.” Here is a useful example: www.ipr-hub.eu
If all else fails, why not try a free consultation with a lawyer, it may save you time and money by allaying your fears or putting things straight without having to actually pay for legal advice.