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Anti-Counterfeiting Campaigns: Strategies for Thailand

Copyright 2001 Edward J. Kelly, Esq.
David Lyman Esq.
Tilleke & Gibbins International Ltd.

I. Introduction: Thai Legal Remedies for Trademark Infringement

Thailand's government and police authorities are consistently under heavy pressure from multi-national companies owning registered trademarks because of a perceived lax attitude toward adequate protection of Intellectual Property Rights (IPRs). While the problem of trade in counterfeit goods is not unique only to Thailand, trademark owners are justified in their assessment that counterfeiting of trademarked products is indeed rampant in the jurisdiction.

The continued presence of a glut of counterfeit goods manufactured and sold in Thailand is especially remarkable because it is seen despite the promulgation of one of the most aggressive legislative schemes to facilitate enforcement efforts of any country in Southeast Asia.

The Thai Department of Intellectual Property (DIP) has in recent years sponsored well-publicized public education initiatives designed to educate its population that trade in counterfeit goods has damaged Thailand's ability to migrate from a primarily agrarian economy to an industrialized economy that can compete in the globalized marketplace. Of special concern to the DIP is the United States Trade Representative (USTR) Special 301Watch List, which has an obvious impact on Thailand's export oriented economy. Increasingly, counterfeiting activity is no longer seen as an "innocent" vice conducted by small-time traders. There is a recognition that counterfeiting of manufactured goods is just one part of the diversified portfolio of immense and well-organized criminal organizations also responsible for trade in drugs, weapons, and human smuggling.

Despite the recent efforts of the DIP to "crack down" on the infringement of trademarks, the laws of economics act in juxtaposition to the laws protecting IPRs. Supply is readily available because of the downturn of the economy, the increase in unemployment (approximately 1 million workers unemployed as of September 2001) and cheap labor costs. Moreover, Thai workers' renowned skill in traditional handiwork is easily transferable to the manufacture of high quality imitations that are often quite difficult to detect without specialized training. Demand is also ever-present because of the constant flow of indiscriminate tourists and vacationers eager to obtain a bargain for their yen, dollar, euro or pound sterling.

As a timely example, the recent visit of Manchester United's football team to this soccer-infatuated nation was accompanied by an enormous output of fake Man U apparel that cost one-tenth the price of an original. Our intelligence was that up to twenty factories immediately began to manufacture fake shirts to meet domestic and foreign demand. We were disappointed to see very little action taken by the trademark owner to enforce its valuable mark.

The legal framework for the protection of marks in Thailand is set out in the Trademark Act, B.E. 2534 (A.D. 1991), as amended by the Trademark Act (No.2) B.E. 2543 (A.D. 2000, the Penal Code and the Civil and Commercial Codes. Under this framework, there are essentially two alternatives to proceed to take legal action against an infringer: a criminal action and/or a civil action.

II. Criminal Action

The most cost-effective remedy available to the owner of a trademark that is registered in Thailand is found in the Thai Trademark Act. Section 44 of the Act provides that when a trademark is registered, the person registered as the proprietor of that trademark shall have the exclusive right to its use for the goods in respect of which registration has been granted.

Penalties for forgery of a trademark registered in Thailand can include fines up to 400,000 Baht (approximately 9,000 USD) and prison sentences up to four years (usually reduced or suspended for first time offenders). A trademark owner may bring criminal charges against an infringer by either submitting a complaint directly to the Court, or more commonly, lodging a complaint with police authorities. Penalties for imitation of a mark registered in Thailand are similar but less severe. The key point to remember is that the mark must be registered in Thailand in order to have the full range of protections provided in the Trademark Act. Infringement of foreign registered marks can also lead to criminal sanctions, but the fines are dramatically less and provide little deterrent effect.

Significantly, unlike the Copyright Act, which provides for allocation of fines imposed against copyright infringers, all fines imposed under a criminal trademark action escheat to the government. Moreover, a trademark owner may not "settle" with the offender after a complaint is filed and a raid is taken. The action must be pursued by the responsible Public Prosecutor to judgment. Accordingly, in a clear cut case of infringement involving an established Thai business with assets and responsible Managing Directors (as opposed to a blatant counterfeiting operation), one might consider first reaching out to the infringer with a "Cease and Desist" or "Request for Cooperation" letter in order to achieve any objective short of full criminal prosecution.

Another complementary remedy may be found in the Thai Penal Code Title VIII "Offences Relating to Trade." For example, Section 272 of the Code states, as translated: "Whoever (1) uses a name, figure, artificial mark or any wording in the carrying on trade of the other person, or causes the same to appear on goods packings, coverings, advertisements, price lists, business letters, or the like in order to make the public believe that it is the goods or trade of such other person . . .shall be punished with imprisonment not exceeding one year or fine not exceeding two thousand baht, or both. The offence under this section is a compoundable offence."

Section 274 of the Code states that "Whoever imitates the registered trademark of the other person, whether it be registered within or outside of the Kingdom in order to make the public believe that it is the registered trademark of such other person shall be punished with imprisonment not exceeding one year or fine not exceeding two thousand baht, or both."

As stated in the Code, this remedy is available to owners of marks not registered within the Kingdom, but given the paltry amount of the fine, this is not seen to be an effective deterrent.

III. Civil Action

In addition to Section 44 of the Thai Trademark Act quoted above, civil action for "passing off" may be taken pursuant to Section 420 of the Civil and Commercial Code, "CCC", states that "A person who, willfully or negligently, unlawfully injures the life, body, health, liberty, property or any right of another person, is said to commit a wrongful act and is bound to make compensation therefor."

Therefore, under Thai commercial law, a trademark owner is entitled to take civil action against an infringer for use of its mark without authorization. In a civil suit, an owner could request a permanent injunction against the offender and/or recover any actual proven damages. However, in practice, most trademark owners prefer to proceed under criminal law because of the uncertainty of outcome, costs, delays and difficulty in collection of judgment assets associated with civil litigation against infringers in Thailand.

Worth noting is that there is no dedicated statute specifically promulgating unfair competition laws other than the Penal Code "Offences Relating to Trade" described above. As a general matter, trade dress protection doctrines are also not recognized under Thai law.

IV. Traditional Suppression Efforts

Traditionally, trademark owners have directed their anti-counterfeiting efforts to investigations to identify manufacturers or exporter/importers of counterfeit products or components, as well as street hawkers and retail sale operator stores and their suppliers. Police raids were arranged, with the offending goods being seized for later disposal, all under the authority of the Thai Trademark Act. These efforts by many trademark owners over the last decade has had some measurable impact on the production, trade and export of a wide variety of counterfeit products. However, there is a great deal of room for improvement.

In the present environment, it easy to recognize that even countries with very stringent anti-counterfeiting laws have not been successful in stopping the production and trade of fake products. It is as easy, for example, to buy a fake Rolex watch on the streets of any major metropolitan area in the U.S. or Europe as it is on the streets of Bangkok.

Part 2