Guidance: IP enforcement in Philippines

1. Introduction

IP enforcement remains a source of business concern in the Philippines. Insufficient IP enforcement information and a resulting lack of transparency is a barrier for foreign investors. One of the projects under the FSIP Programme aims to address the lack of adequate IP enforcement information through an IP enforcement Manual. This Manual on IP enforcement in the Philippines has been developed for businesses operating in or planning to expand into the Philippines. It is published in cooperation with the British Chamber of Commerce, Philippines and aims to provide foreign businesses with a picture of how the IP enforcement system works in the Philippines. It includes details of the laws and regulations as well as the IP enforcement procedures.

The Manual uses a definition of enforcement that parallels the World Trade Organisation’s Trade Related Aspects of Intellectual Property (TRIPS) Agreement. This means it focuses on trademark and copyright enforcement procedures – which in common parlance means trademark counterfeiting and copyright piracy. The types of enforcement systems used to deal with these two issues are most commonly criminal, administrative (including Customs), as well as the civil court system. Other forms of IP exist (e.g., patents, designs) but their enforcement is usually appropriate for civil court or administrative systems.

The Manual is up to date as of 30 April 2020. The Manual is for informational purposes only so users of this Manual should take local legal advice on specific IP cases.

2. Overview of the Philippines legal and IP system

IP rights are important assets for all businesses. It is crucial to ensure these rights are properly protected in a modern economy. It is also a key business goal to be able to make effective use of them commercially as well as to enforce those rights against infringement when necessary.

Recognition and protection of IP rights usually means registering trademarks, designs and patents at the government IP office or providing protection for unregistered rights like copyrights and trade secrets under international treaties. The Philippines has relatively well-established systems to do this. But mere registration of IP is not a business goal. What matters is how businesses can commercially make use of their IP and whether a country provides a system for IP protection and enforcement and how effective that system is.

IP enforcement systems are a subset of a country’s legal system. Businesses including foreign investors need to engage with a country’s legal systems for many reasons. It is therefore, necessary to understand the strength and independence of a legal system before looking at how well the IP enforcement procedures operate. This requires simple judicial procedures, efficient enforcement systems and clear and effective legal remedies. It is especially challenging for foreign businesses to engage with complex and unfamiliar foreign legal systems. The protection of IP is a particularly challenging and technical area. It usually requires a blend of civil courts (e.g., to claim damages), criminal procedures (e.g., to stop counterfeiting), and administrative remedies (e.g., Customs IP border protection systems).

The legal system in the Philippines is a mixture of old indigenous society rules, together with the colonial inputs of Spain and the United States and a modern overlay. It is a civil law country wherein all rules must be embodied in laws or statutes. On the other hand, the courts interpret the law and Supreme Court decisions become judicial precedents.

The judicial system comprises of the Supreme Court and the lower courts. The Rules of Court of the Philippines and the rules and regulations issued by the Supreme Court define the procedures in the courts. For many foreign businesses, the court procedures will appear quite familiar, given the use of English and American legal terms like ‘Motions’.

Lawyers, or attorneys as they are more commonly referred, can be engaged to handle legal issues and the profession is governed by the Code of Professional Responsibility and the Integrated Bar of the Philippines.

The Philippines like many developing countries faces various challenges in its legal system. The World Justice Project Rule of Law index ranks the Philippines 90/120 countries, a decline from the ranking of 51/102 of the Philippines back in in 2015. The Philippines ranks 95/190 in the Ease of Doing Business index by the World Bank Group; and 152/190 for enforcing contracts. Transparency International places the Philippines at 113/180 countries in its corruption perceptions index, which is another drop from its previous ranking of 99/180.

IP system

IP is a technical area of law. While many general lawyers do practice IP law, in many countries there is a separate IP profession or, as is the case in the Philippines, a separate area of IP law, which is practiced by specialist IP lawyers. The Intellectual Property Association of the Philippines is the IP law profession’s industry body.

In recent years the IP system has undergone a number of improvements. This is driven by the successes of the Intellectual Property Office of the Philippines (IPOPHL), which has the unique characteristic of operating under the Office of the President, enabling a level of influence and reach not achieved in other countries.

IP is governed by the Republic Act No. 8293 or the Intellectual Property Code of the Philippines (“IP Code”). At the time of writing there are proposals to amend this Act with a New IP Code. IP systems can be broken into three components:

• registration and protection system. This refers to the registration system operated by IPOPHL for trademarks, designs and patents as well as all the related functions that IPOPHL operates
• commercialisation of IP. This typically means IP contracts such as licenses, assignments, and other commercial agreements involving IP
• enforcement through the civil and criminal courts and administrative routes. The administrative enforcement route option is through the IP Enforcement Office (IEO) of the IPOPHL. Upon the filing of a formal complaint with the IEO, IP owners and businesses may coordinate with IEO in taking appropriate action to enforce IP rights

The technical nature of IP and the issues that arise in the registration and protection, the deployment of IP assets through contracts as well as the enforcement of IP, make the IP area complex for the novice. Typically, specialist external IP attorneys assist business in all aspects. Many larger corporations have specialist in house IP attorneys.

Due to the many changes in recent years, spearheaded by IPOPHL, the IP system in the Philippines is increasingly recognised as relatively good within the South East Asian region. For example, the establishment of the National Committee on IP Rights (NCIPR) led to more IP enforcement cases taking place and more procedural efficiencies.

The EU Commission’s Report on the protection and enforcement of IP in third countries 2020 removed the Philippines from its priority list. (It states that the Philippines is among a group of countries that need to be closely monitored, as the Philippines remained a country of origin of counterfeits destined for EU). The Philippines also maintained its position off the US Government’s Priority Watch List in 2020. However, the 2020 United States Trade Representative (USTR) Special 301 Report cites the Organisation for Economic Co-operation and Development (OECD) finding that the Philippines is among the leading sources of counterfeit medicines distributed globally. The OECD, in a publication with the European Union Intellectual Property Office, also identified the Philippines as a likely source of fake medicines, footwear, leather goods and bags.

The principal concerns with the Philippine IP regime, at least as far as trademarks and copyrights are concerned, are as follows:

• counterfeit and pirated goods in the market
• the current regulatory framework does not provide practical and immediate remedies to aid IP owners in dealing with digital IP infringement
• court procedures are lengthy and complex
• there is a need for consistent IP border protection to ensure seizure of counterfeit and pirated goods at the border

IP Laws and Regulations – WTO TRIPS Compliance

The Philippines first enacted IP laws in 1947. The 1987 Constitution of the Philippines specifically recognizes and protects IP. In 1997, about two years after Philippines joined the World Trade Organization (WTO), the IP Code was enacted as a single IP law.

This was followed by various efforts to develop IP protection in the Philippines as IPOPHL focused on modernising its functions. The Bureau of Legal Affairs which was established pursuant to the IP Code provided an alternative remedy against IP violations. In 2003, Republic Act 9239 or the Optical Media Act of 2003 was enacted to establish the Optical Media Board (OMB), an agency regulating the production, use and distribution of optical media and instrumental in enforcement against the distribution and sale of pirated CDs/DVDs. In 2008, through Executive Order No. 736, the coordinating body, NCIPR was established to bring relevant enforcement agencies together to improve IP protection and enforcement. In 2010, Republic Act No. 10088 or the “Anti-Camcording Act of 2010” was enacted to address the then prevalent film piracy and sale of pirated CDs/DVDs : Through the amendments to the IP Code in 2012 (Republic Act No. 10372), the IPOPHL established the IEO so that IPOPHL can actively participate in IP enforcement cases.

The Philippines is regarded as one of the leaders at IP coordination in South East Asia because of the successful enforcement work done by the NCIPR The most significant cited outcome of the NCIPR’s efforts is the removal of the Philippines from the USTR Special 301 Priority Watch List, a specific recognition of the improvements made by the NCIPR. IPOPHL reported that the NCIPR seized Php13.73 Billion worth of counterfeit and pirated goods from January to July 2019.

IP enforcement reform

The last amendment to the IP Code was in 2013. Since 2017, the IPOPHL has been seeking comments from stakeholders for proposed amendments to the IP Code. The latest draft of the proposed legislation, or the New IP Act, was published for comments by the IPOPHL in November 2019. The proposed amendments include: (1) creation of the National Council on Intellectual Property Rights, which iterates the establishment and function of the NCIPR, but through a legislative pronouncement instead of an executive order; (2) establishment of the Sub-Committee on Enforcement Intellectual Property Rights in the Digital Environment to address the need for digital IP enforcement; and (3) provision of landlord liability and contributory liability in case of trademark infringement, among others.

The IPOPHL also published the National IP Strategy (NIPS) in December 2019, which outlines the goals and strategies of the IPOPHL as an agency leading IP rights protection and supporting Philippine innovation and creativity. The NIPS publication came after the two innovation bills were signed into law in April 2019.

3. IP enforcement manual

3.1 The IP Enforcement System and the WTO TRIPS Regime

The Philippines is primarily a civil law country. All the rules and procedures for IP enforcement are set out in laws and regulations. As a WTO TRIPS member, the Philippines commits to providing enforcement measures. These comprise:

• civil and administrative remedies, including judicial procedures, evidence rules, injunctions, damages, other remedies, information to rights holder and right of indemnifications to defendants, as well as provisional measures (preliminary injunctions and search and seizure orders;
• criminal remedies; and
• customs interceptions of infringements

This Manual sets out how these apply to counterfeiting (trademark infringements) and piracy (copyright infringements).

3.2 Trademark and Copyright Protection

Trademarks must be registered with the Intellectual Property Office of the Philippines (IPOPHL) in order to be granted protection under IP Code, as amended. Under the Madrid Protocol, the Philippines accepts applications under the international registration system.

Copyright protects a wide range of creative works under the IP Code. It confers the exclusive economic right to conduct and control activities in relation to the author or owner’s works as well as moral rights. A work is protected from the moment of creation, without need of registration. There is a voluntary recordal system for copyright at the National Library and IPOPHL. The copyright recordal serves as prima facie evidence of ownership of the copyright but is not required for enforcement.

The IP Code is generally TRIPS compliant. Nevertheless, businesses must watch-out for the following:

• a first-to-file rule is observed in the Philippines. Bad-faith trademark applications/trademark squatters should be monitored. Registration of a trademark is a vital first step to protect rights against bad-faith third parties
• well-known trademarks are recognized, but there is no registry system. The declaration of a trademark as well-known may be through an express recognition by the IPOPHL director General provided in a decision/case
• in order to maintain the registration of a mark in the Philippines, a Declaration of Actual Use (DAU) of the mark is required to be submitted to the IPOPHL. Ensure compliance with this requirement to avoid losing protection of the registered mark

3.3 Criminal IP Enforcement

IP criminal disputes such as criminal actions for trademark or copyright infringement are under the jurisdiction of the Regional Trial Courts (RTCs) designated as Special Commercial Courts (SCCs). SCCs are RTCs that have been designated as such by the Supreme Court to handle matters concerning bankruptcies, intra-corporate disputes and intellectual property.

3.3.1 Criminal acts defined in the IP Code for Trademarks

Trademark infringement carries criminal penalties and occurs when an infringer does any of the acts defined in Section 155 of the IP Code, i.e., use a registered mark in commerce without authority of the owner of the registered mark, which use is likely to cause confusion to the public. The elements of trademark infringement are as follows:

• the trademark is reproduced, counterfeited, copied, or colourably imitated by the infringer;
• the infringing mark is used in connection with the sale, offering or sale, or advertising of any goods, business or services, or the infringing mark is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business or services;
• the use or application of the infringing mark is likely to cause confusion or mistake or to deceive purchases or others as to goods or services themselves or as to the source or origin of such goods or services or the identity of such business; and
• the use of the mark is without authority of the owner of the registered mark

3.3.2 Criminal procedure for trademark infringement

The Rules of Procedure for Intellectual Property Rights Cases (A.M. No. 10-3-10-SC, 18 October 2011) (“Rules of Procedure for Intellectual Property Rights (IPR) Cases”) outlines the procedure in pursuing a criminal complaint or action for IP violations. Rule 12, Section 1 of the Rules of Procedure for IPR Cases states that the criminal complaint should be filed with the Department of Justice or office of the prosecutor that has jurisdiction over the offense.

3.3.2.1 Philippine National Police and the National Bureau of Investigation

The Philippine National Police (PNP) and the National Bureau of Investigation (NBI) are the two main enforcement agencies that investigate crimes, including criminal acts under the IP Code such as trademark infringement. Section 24 of Republic Act No. 6975 provides the following relevant powers and functions of the PNP:

• enforce all laws and ordinances relative to the protection of lives and properties;
• maintain peace and order and take all necessary steps to ensure public safety;
• investigate and prevent crimes, effect the arrest of criminal offenders, bring offenders to justice and assist in their prosecution;
• exercise the general powers to make arrest, search and seizure in accordance with the Constitution and pertinent laws;
• detain an arrested person for a period allowed by law, informing the person detained of rights under the Constitution; and
• perform such other duties and exercise all other functions as may be provided by law

Under Republic Act No. 10867, also known as the National Bureau of Investigation Reorganization and Modernization Act, among the powers and functions of the NBI is to undertake investigation and detection of crimes and offenses including violations of commercial, economic, and financial or white- collar crimes such as violations of the IP Code, among others.

The agents of the NBI have the following powers and functions:

• undertake investigations pursuant to the mandate of the NBI;
• conduct searches, arrests, and seizures in accordance with existing laws, rules and regulations;
• take and require sworn statements of any person or persons so summoned in relation to cases under investigation;
• administer oaths in cases under investigation; and
• such other functions as may be assigned by the NBI Director

The results of the investigation of the NBI or the PNP may then be used to support the filing of a criminal complaint before the public prosecutor or the Department of Justice to commence the preliminary investigation.

3.3.2.2 Criminal prosecution of trademark infringement

The Revised Rules of Criminal Procedure of the Rules of Court is the general rule applicable in prosecuting criminal case. For IP cases, the Rules of Procedure for IPR Cases shall govern, as it is the special rule. However, when the court determines that the criminal action involves complex issues, the Rules of Court shall apply.

The steps in prosecuting criminal cases are as follows:

• identify the venue for the filing of the complaint, which is the place where the infringement or some of its essential elements were committed
• file the complaint with the office of the prosecutor in that venue for the purpose of conducting preliminary investigation
• the complaint is in the form of sworn written statement charging a person of an offense, such as trademark infringement, and subscribed by the offended party (the IP owner – this is mandatory in an IP criminal complaint) or a public officer charged with the enforcement of the law violated (NBI or police)
• filing of criminal information by the prosecutor with the court after determining during preliminary investigation that there is sufficient ground to hold the respondent for trial The criminal action shall be prosecuted under the direction and control of the public prosecutor. If the IP owner wishes to prosecute the criminal case, a private counsel may be appointed to do so but only upon prior authority of the office of the prosecutor and with all processes still being under the direction and control of the public prosecutor

3.3.2.3 Criminal penalties for trademark infringement

Section 170 of the IP Code provides criminal penalties of imprisonment and fine on any person violating Section 155 of the IP Code or committing trademark infringement. The court may impose the following penalties on any person found guilty of trademark infringement:

• imprisonment of two (2) years to five (5) years; and
• fine ranging from Php50,000.00 to Php200,000.00

3.3.2.4 Defences to trademark infringement

The following are limitations to an action for trademark infringement and may thus be raised as defense:

• a person who in good faith, before the filing or priority date of the registered trademark, was using the mark for the purposes of his business or enterprise (Section 159.1 of the IP Code);
• the innocent infringer who is engaged solely in the business of printing the mark or other infringing materials for others (Section 159.2 of the IP Code); and
• the infringement complained of is contained in or is part of paid advertisement in a newspaper, magazine, periodical or electronic communication (Section 159.3 of the IP Code)

3.3.3 Criminal acts defined in the IP Code for Copyrights

Infringement of copyright or related rights are laid down under Section 216 of the IP Code, as amended by Republic Act No. 10372, i.e., any person who infringes any of the rights of a copyright owner or any person that exercise the rights of a copyright owner without the latter’s authority, is criminally liable for copyright infringement. These are separated into three categories, as discussed below.

Direct infringement

Section 216(a) of the IP Code states that infringement is committed by a person who directly commits an infringement.

Secondary liability or Landlord liability

Section 216(b) of the IP Code states that infringement is also committed by a person who:

• benefits from the infringing activity of another person who commits an infringement;
• the person benefitting has been given notice of the infringing activity; and
• the person benefitting has the right and ability to control the activities of the other person

3.3.3.3 Contributory liability

Section 216(c) of the IP Code states that infringement is also committed by a person who with knowledge of the infringing activity, induces, causes or materially contributes to infringing conduct of another.

3.3.4 Criminal procedure for copyright infringement

The Rules of Procedure for IPR Cases shall likewise govern in the prosecution of infringement of copyright and related rights.

3.3.5 Philippines National Police (PNP) and NBI

The powers and functions of the PNP and the NBI in relation to copyright infringement are the same as to trademark infringement – please refer to Section 3.3.2.1 above.

3.3.6 Criminal Prosecution of copyright infringement

Criminal prosecution for copyright is the same as trademarks – please refer to section 3.3.2.2 above.

3.3.7 Criminal Penalties for copyright infringement

The Court may impose the following penalties on any person found guilty of copyright infringement:

• first offense: Imprisonment of one (1) to three (3) years and fine ranging from Php50,000.00 to Php150,000.00 – (a)
• second offense: Imprisonment of three (3) years and one (1) day to six (6) years and fine ranging from Php150,000.00 to Php500,000.00 –(b)
• third and subsequent offenses: Imprisonment of six (6) years and one (1) day to nine (9) years and find ranging from Php500,000.00 to Php1,500,000.00 –(c)
• subsidiary imprisonment in case of insolvency

The respective maximum penalties in (a), (b) and (c) shall be imposed when the infringement is committed by:

• the circumvention of effective technological measures;
• the removal or alteration of any electronic rights management information from a copy of a work, sound recording, or fixation of a performance, by a person, knowingly and without authority; or
• the distribution, importation for distribution, broadcast, or communication to the public of works or copies of works, by a person without authority, knowing that electronic rights management information has been removed or altered without authority

3.3.8 Defences/exceptions: acts not considered as copyright infringement

Section 184 of the IP Code enumerates acts that are not considered as copyright infringement:

• the recitation or performance of a work, once it has been lawfully made accessible to the public, if done privately and free of charge or if made strictly for a charitable or religious institution or society;
• the making of quotations from a published work if they are compatible with fair use and only to the extent justified for the purpose, including quotations from newspaper articles and periodicals in the form of press summaries: Provided, that the source and the name of the author, if appearing on the work, are mentioned;
• the reproduction or communication to the public by mass media of articles on current political, social, economic, scientific or religious topic, lectures, addresses and other works of the same nature, which are delivered in public if such use is for information purposes and has not been expressly reserved: Provided, that the source is clearly indicated;
• the reproduction and communication to the public of literary, scientific or artistic works as part of reports of current events by means of photography, cinematography or broadcasting to the extent necessary for the purpose;
• the inclusion of a work in a publication, broadcast, or other communication to the public, sound recording or film, if such inclusion is made by way of illustration for teaching purposes and is compatible with fair use: Provided, that the source and of the name of the author, if appearing in the work, are mentioned;
• the recording made in schools, universities, or educational institutions of a work included in a broadcast for the use of such schools, universities or educational institutions: Provided, That such recording must be deleted within a reasonable period after they were first broadcast: Provided, further, That such recording may not be made from audiovisual works which are part of the general cinema repertoire of feature films except for brief excerpts of the work;
• the making of ephemeral recordings by a broadcasting organization by means of its own facilities and for use in its own broadcast;
• the use made of a work by or under the direction or control of the government, by the National Library or by educational, scientific or professional institutions where such use is in the public interest and is compatible with fair use;
• the public performance or the communication to the public of a work, in a place where no admission fee is charged in respect of such public performance or communication, by a club or institution for charitable or educational purpose only, whose aim is not profit making, subject to such other limitations as may be provided in the regulations;
• public display of the original or a copy of the work not made by means of a film, slide, television image or otherwise on screen or by means of any other device or process: Provided, That either the work has been published, or, that the original or the copy displayed has been sold, given away or otherwise transferred to another person by the author or his successor in title;
• any use made of a work for the purpose of any judicial proceedings or for the giving of professional advice by a legal practitioner; and
• the reproduction or distribution of published articles or materials in a specialized format exclusively for the use of the blind, visually- and reading-impaired persons: Provided, That such copies and distribution shall be made on a non-profit basis and shall indicate the copyright owner and the date of the original publication

Further, under Section 185 of the IP Code, the fair use of a copyrighted work for criticism, comment, news reporting, teaching including multiple copies for classroom use, scholarship, research, and similar purposes is not an infringement of copyright. In determining whether the use falls under the fair use exemption, the following factors are considered:

• the purpose and character of the use, including whether such use is of commercial nature or is for non-profit educational purposes;
• the nature of the copyrighted work;
• the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
• the effect of the use upon the potential market for or value of the copyrighted work

The criminal procedure for trademark and copyright infringement is shown in Annex 1 of this Chapter.

3.4 Civil IP Enforcement

IP civil disputes such as civil actions for trademark or copyright infringement are also under the jurisdiction of the Regional Trial Courts (RTCs) designated as Special Commercial Courts (SCCs).

3.4.1.1 Trademark and copyright civil case rules

Rules for civil IP cases

Four legal text set out the rules to apply in civil cases:

• The IP Code – sets out the remedies available to the complainant;
• The Civil Code of the Philippines – provides other damages that may be claimed;
• The Rules of Procedure for IPR Cases; and
• The Rules of Court apply in supplementary character to the Rules of Procedure for IPR Cases

3.4.2 Trademark infringement

On top of criminal penalties, trademark infringement also carries civil liabilities.

3.4.2.1 Registered trademark infringement

In case of infringement of a trademark, the owner of the registered trademark is entitled to the following:

• recover damages from any person who infringes the registered trademark rights (Section 156 of the IP Code);
• seek injunction (Section 156 of the IP Code); and
• seek the court to order the infringing materials to be destroyed (Section 157 of the IP Code). Trademark infringement complaints may be resolved by arbitration or alternative dispute resolution. In any event all complaints must undergo mediation proceedings

3.4.2.1 Well-known trademark infringement

Only registered trademarks may be subject to trademark infringement cases. However, owners of unregistered trademarks, including well-known trademarks, may sue for unfair competition.

3.4.3 Copyright infringement

On top of criminal penalties, copyright infringement also carries civil liabilities. Copyright disputes can be filed with the SCC by the copyright owner. The basis for copyright civil court cases includes:

• infringement of copyright and related rights; and
• moral rights violations; Copyright infringement complaints may be resolved through alternative dispute resolution or arbitration. In any event, civil cases for copyright infringement must undergo mediation proceedings. Section 216.1 of the IP Code entitles the copyright holder to claim damages against the infringer. Further, the amount of damages to be awarded shall be doubled against a person who:
• circumvents effective technological measures; or having reasonable grounds to know that it will induce, enable, facilitate or conceal the infringement, remove or alter any electronic rights management information from a copy of a work, sound recording, or fixation of a performance, or distribute, import for distribution, broadcast, or communicate to the public works or copies of works without authority, knowing that electronic rights management information has been removed or altered without authority

3.4.4 Civil IP remedies in trademark and copyright cases

This section covers specific IP remedies required by the TRIPs agreement. It is beyond the scope of this IP enforcement Manual to cover every kind of civil law procedure that might be possible in an IP case.

3.4.5 Injunctions and preliminary injunctions

IP owners may seek an injunction before the court to restrain or prevent further infringement. This is expressly provided in the IP Code in case of copyright infringement and trademark infringement.

Preliminary injunction is a provisional remedy available to the parties in IP disputes. The requirements are laid out in the Rule 58 of the Rules of Court, which have been summarized by jurisprudence as follows:

• the applicant must have a clear and unmistakable right to be protected;
• there is material and substantial invasion of such right;
• there is an urgent need to enjoin the action to prevent irreparable injury to the applicant; and
• no other ordinary, speedy and adequate remedy exists to prevent the infliction of irreparable injury

3.4.6 Damages

The IP Code provides for recovery of damages to the complainant. In case of copyright infringement, the copyright owner may recover:

• actual damages including:
• legal costs;
• expenses incurred due to the infringement; and
• profits the infringer may have made due to such infringement;
• in lieu of actual damages and profits, such damages which the court deem just and which shall not be regarded as a penalty; or
• statutory damages in a sum equivalent to the filing fee but not less than Php 50,000.00; in case the infringer is not aware and had no reason to believe that his acts constitute copyright infringement, the damages shall not be more than Php10,000.00

The amount of damages shall be doubled against a person who circumvents effective technological measures or violates electronic rights management information.

3.4.7 Other remedies

Other remedies provided by the IP Code are:

• disposal of the infringing goods outside the channels of commerce; and
• seizure of tools and materials to create the infringing goods

3.4.8 Right of Information

This refers to judicial orders that the infringer disclose the identity of third persons involved in the production and distribution of infringing goods. The IP Code, however, does not provide for this specific remedy.

3.4.9 Indemnification of Defendant

This refers to protecting defendants from abuse by excessively aggressive complainants.

The IP Code does not expressly provide such right to indemnification, but the Civil Code of the Philippines gives the defendant the option to seek damages against the complainant for the latter’s abuse of exercise of right.

3.4.10 Provisional measures

Preliminary injunctions are discussed in section 3.4.5 above. However, other provisional orders can be made.

The complainant may also ask the court to attach the properties of the defendant as security for the satisfaction of any judgement that may be recovered.

3.5 Digital IP Infringement for Trademarks and Copyrights

Digital Intellectual Property (IP) infringement is a growing business concern in the Philippines. E- commerce, while still representing less than 1% of all sales in the Philippines, is expected to grow in the coming years. The expanding reach and facility offered by e-commerce may also consequently expand and facilitate the sale of counterfeit goods (e.g., apparel, household products, foods and medicines) and pirated materials (e.g., music, software, films) to consumers.

This section sets out the possible violations that relate to traders online, as well as online intermediaries (such as ISPs, e-commerce platforms etc.) at a civil or criminal level.

3.5.1 Trademark violations

The IP Code does not have a specific provision on e-commerce digital infringement. Online trademark infringement cases by traders may follow the regular criminal or civil provisions. There is no specific liability for intermediaries.

3.5.2 Copyright violations

Similarly, as the IP Code does not have a specific provision on e-commerce digital infringement, online copyright infringement cases by traders may follow the regular criminal or civil provisions. There is a specific liability though that may apply to intermediaries such as through landlord liability or contributory liability. Please see 3.3.3.2 and 3.3.3.3 above.

3.5.3 Internet law violations by intermediaries

There is no separate internet or e-commerce law regime which provides a notice and takedown procedure, but Section 30 of Republic Act No. 8792 also known as the Electronic Commerce Act of 2000 provides for safe harbour protection for ISPs.

3.6 IP Enforcement by Customs Authorities at the Border

A customs recordal system is in place in the Philippines. Seizures and alert orders by the Bureau of Customs are also available.

3.6.1 Recordal process for trademarks and/or copyright

The recordal system for trademarks and copyrights before the Bureau of Customs (BOC) is provided under Customs Administrative Order No. 6-2002. The following have to be submitted in support of the recordal:

• trademark certificates or copyright information
• photos or samples of the genuine goods; and
• information about the supplier, importer and distributor of the genuine goods

Recordals are valid for two (2) years and are renewable for two-year periods.

3.6.2 Restraint/Seizure of Goods

Section 118(f) of Republic Act No. 10863 or the Customs Modernization and Tariff Act (CMTA) prohibits the importation and exportation of infringing goods. Section 216 gives the customs the power to seize the infringing goods, which are subject to forfeiture by the government.

3.6.3 Detention order

Section 117 of the CMTA Law provides the authority of the District Collector to issue a warrant of seizure of the goods upon determination of probable cause, which may include certification by the IP owner that the goods seized by the customs are indeed infringing goods.

3.6.4 Examination of detained goods

The BOC issues a Warrant of Seizure and Detention (WSD) to formally direct a customs officer to seize any goods when the goods involved are subject to forfeiture such as smuggled goods or prohibited importation of infringing goods. Upon issuance of WSD, the seizure and forfeiture proceedings will follow where the claimant of the seized/detained goods will have the opportunity to be heard, including contesting the seizure or detention of goods if upon issuance of WSD and upon examination of the detained goods, the IP owner or its representative has not provided proof that the seized or detained goods are infringing goods.

3.6.5 Legal action/settlement

Section 1135 of the CMTA Law provides that the BOC, with the assistance of the Department of Justice, has the authority to institute civil and criminal actions and proceedings against persons found violating the CMTA Law.

Settlement of seizure case is provided in Section 1124] of the CMTA Law, which may be allowed by the BOC upon payment of fine, provided there is no fraud involved or when the discrepancy in duties and taxes to be paid between what is determined and what is declared exceeds 30%. Redemption of forfeited goods, however, is not allowed where importation is prohibited or when release of the goods is contrary to law such as in the case of infringing goods.

The Recordal process for trademarks and/or copyright is shown in Annex 2 of this Chapter.

3.7 Administrative IP Enforcement

Administrative remedies are available in the Philippines through the Bureau of Legal Affairs (BLA) of the IPOPHL. The BLA exercises original jurisdiction in administrative complaints for violations of laws involving intellectual property rights where the total damages claimed are not less than Two Hundred Thousand Pesos (Php 200,000). It also has the power to hold and punish for contempt all those who disregard orders or writs issued in the course of the proceedings.

The IPOPHL Intellectual Property Rights Enforcement Office (IEO), which was established to function as the enforcement arm of IPOPHL, can also receive complaints involving outright counterfeiting and piracy.

3.7.1 Trademark and copyright administrative case rules

Administrative cases are governed by the following rules:

• The IP Code – sets out the remedies available to the complainant;
• Rules and Regulations on Administrative Complaints for Violation of Law Involving IP Rights (IPV Rules), as amended;
• The Rules of Procedure for IPR Cases, which apply in supplementary character to the IPV Rules; and
• The Rules of Court, which also apply in supplementary character to the IPV Rules. For cases filed with the IEO, the Rules and Regulations on Enforcement of IPOPHL applies

3.7.2 Trademark infringement

Under the IP Code and the IPV Rules, the owner of a registered trademark whose rights have been infringed is entitled to the following:

• cease and desist order against the respondent (Sec. 10.2 (b) (i), IP Code)
• recover damages from any person who infringes the registered trademark rights (Section 156 of the IP Code);
• seek injunction (Section 156 of the IP Code);
• seek the condemnation or seizure of the products subject of the offense, which may be disposed in a manner deemed appropriate by the Director of the Bureau of Legal Affairs of the IPOPHL (Rule 12, Section 1(c) of the IPV Rules);
• forfeiture of paraphernalia and properties used in the commission of the offense (Rule 12, Section 1(d) of the IPV Rules);
• imposition of administrative fines of Php5,000.00 to Php150,000.00 and additional fine of not
• more than Php1,000.00 for each day of continuing violation (Rule 12, Section 1(e) of the IPV Rules);
• cancellation of any permit, license, authority or registration granted by the IPOPHL (Rule 12, Section 1(f) of the IPV Rules);
• withholding of any permit, license, authority or registration pending with the IPOPHL (Rule 12, Section 1(g) of the IPV Rules);
• seek issuance of preliminary attachment as security for the satisfaction of any judgement (Rule of the IPV Rules)

Administrative complaints for trademark infringement may be resolved through alternative dispute resolution or arbitration. The IPOPHL under its Alternative Dispute Resolution (ADR) Services offers mediation proceedings and arbitration. Referral to mediation is mandatory in all administrative cases for violations of IPR filed with the IPOPHL except when there is application for TRO and/or injunction.

3.7.2.1 Well-known trademark infringement

Owners of registered well-known trademarks may file an administrative action for trademark infringement. However, owners of unregistered trademarks, including well-known trademarks, may sue for unfair competition.

3.7.2.2 Copyright infringement

Copyright disputes can be filed with the BLA of the IPOPHL on the grounds of:

• infringement of copyright and related rights; and
• moral rights violations

Administrative complaints for copyright infringement may be resolved by alternative dispute resolution or arbitration. As a rule, all administrative cases filed with the BLA are mandatorily referred to ADR services for mediation proceedings except when there is an application for issuance of a TRO and/or preliminary injunction.

Section 216.1 of the IP Code entitles the copyright holder to claim damages against the infringer. Further, the amount of damages to be awarded shall be doubled against a person who:

• circumvents effective technological measures; or
• having reasonable grounds to know that it will induce, enable, facilitate or conceal the infringement, remove or alter any electronic rights management information from a copy of a work, sound recording, or fixation of a performance, or distribute, import for distribution, broadcast, or communicate to the public works or copies of works without authority, knowing that electronic rights management information has been removed or altered without authority

3.7.3 Administrative IP remedies in trademark and copyright cases

3.7.3.1 Rules for administrative cases

Please see discussion in 3.7.1.

3.7.3.2 Injunctions and preliminary injunctions

The IPV Rules provide that parties in IPV cases may apply for an injunction. Please also see discussion in 3.4.5.

3.7.3.3 Damages

The IP Code provides recovery of damages to the complainant. In case of copyright infringement, the copyright owner may recover actual damages including:

• legal costs;
• expenses incurred due to the infringement; and
• profits the infringer may have made due to such infringement

In lieu of actual damages and profits, such damages which the court deem just and which shall not be regarded as a penalty.

The amount of damages shall be doubled against a person who circumvents effective technological measures or violates electronic rights management information.

3.7.4 Other remedies

Other remedies provided under the IP Code are:

• disposal of infringing goods outside the channels of commerce; and
• seizure of tools and materials to create infringing goods

Right holders may also avail of the visitorial power of the IPOPHL by filing a complaint with the IEO. If the complaint is found sufficient and there is basis that a party is engaged in counterfeiting or piracy, the IEO can issue a warning order, visitorial order and/or compliance order.

3.7.4.1 Right of Information

This refers to judicial orders that the infringer disclose the identity of third persons involved in the production and distribution of infringing goods. The IP Code does not provide for this specific remedy.

3.7.4.2 Indemnification of Defendant

This refers to protecting defendants from abuse by excessively aggressive complainants.

The IP Code does not have an express provision on this. However, the defendant may, under the Civil Code, recover damages in a civil action against the complainant on the ground of the latter’s abuse of exercise of right.

3.7.4.3 Provisional measures

Preliminary injunctions are described in section 3.4.5 above. However, other provisional orders can be made.

The complainant may ask the BLA to attach the properties of the defendant as security for the satisfaction of any judgment that may be recovered.

3.8 Other Enforcement Issues

3.8.1 Alternative Dispute Resolutions

Civil and criminal trademark infringement disputes may be settled through alternative dispute resolutions. The Special Rules of Procedure for IPR Cases specifically requires the parties to go through mediation proceedings after pre-trial, for civil cases, and after arraignment but before pre-trial in criminal cases.

The IPOPHL also provides mediation cases for IP-related disputes. Administrative complaints for violation of IP rights such as trademark infringement and copyright infringement are required to undergo mediation proceedings. Further, the IPOPHL, through Memorandum Circular No. 2019-006, series of 2019, now accepts mediation outside of litigation, which contemplates seeking mediation before the filing of a case.

3.8.2 Warning letters and settlements

Many IP disputes are resolved by issuing a warning letter, and the IP owner and the alleged infringer resolve the dispute. Settlement Agreements and Undertakings can be used to reach a resolution

4. Annex1: Process for criminal procedure for trademark and copyright Philippines

Stage 1

a. Rights holder file complaint to Police/NBI
b. Police/NBI will conduct an investigation will decided whether to proceed with criminal raid action depending on evidence

Stage 2

a. Application for search warrant requested.
b. If search warranted granted, criminal raid action conducted
c. Submission of return of search warrant and inventory of seized items
d. File criminal compliant with Office of Prosecutor and/or Department of Justice

Stage 3

a. Filing of criminal information to commence criminal court action
b. Destruction of seized items

5. Annex 2: Process for customs enforcement for trademarks and copyrights Philippines

1. IP owner to submit application for recordation to customs
2. Customs issue circular confirming the recordal
3. Restraint of suspected goods by customs and notify IP owner
4. Examination of goods
5. If goods are confirmed as infringing goods after examination
   a. Warrant of seizure/detention to importer/consignee to seized goods
   b. The importer/consignee may contests the seizure/detention. If this
   contest is successful the shipment will be released.
   c. If the importer/consignee does not contest and/or the contest is not successful, the shipment will be forfeited.

6. Annex 3: Contact details of intellectual property enforcement bodies in the Philippines

Director General of Intellectual Property Office of the Philippines

Intellectual Property Rights Division of the Bureau of Customs

Intellectual Property Rights Division of the National Bureau of Investigation

Criminal Investigation and Detection Group of the Philippine National Police
Email: [email protected]

Optical Media Board

Department of Justice

Food and Drug Administration

Department of Trade and Industry