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Philippines - New Intellectual Property Code

A new Intellectual Property Code is scheduled to enter into effect in the Philippines on January 1, 1998. In contrast to the old law which was, for historical reasons, in many ways similar to that of the United States, the new law is for the most part in line with what are becoming the international norms for new intellectual property laws. The principal features provided for in the new law are summarized below.

Patents

1) In contrast to the former law, patentable subject matter is now defined in such a way as to exclude methods of treatment by surgery, therapy or diagnosis performed on a human or animal body. Also excluded from patent protection are, inter alia, mathematical methods, rules and methods of performing mental acts, playing games or doing business; programs for computers; plant varieties; animal breeds; essentially biological processes for production of plants or animals; and inventions which are contrary to public order or morality.

2) Novelty is to be judged absolutely on a world-wide basis subject to a one-year grace period for disclosures by the inventor, by those obtaining information from the inventor and in certain patent office publications. Additionally prior applications filed in the Philippines by persons other than the inventor or applicant are to be considered as prior art for all purposes, including consideration of obviousness.

3) The right to a patent between two competing applicants shall be determined on the basis of who was the first to file an application.

4) Pending applications are to be published eighteen months from their filing date or, where claimed, priority date.

5) Examination will only be undertaken if requested. If examination is not requested within six months of publication of the application, the application will be deemed to have been withdrawn.

6) The term of a patent shall be twenty years from the filing date subject to the payment of annual fees.

7) Prior user rights will protect those who had in good faith used the invention or undertaken serious preparations to use the invention in an enterprise or business prior to the filing date of a patent application or its priority date from suit for infringement of a patent granted on that application.

8) The burden of proof is reversed in respect of claims of infringement of process patents if the product of the process is new or there is a substantial likelihood that the product was made by the patented process and the patentee despite using reasonable efforts has been unable to determine the process actually used by the defendant.

9) Patent license agreements do not have to be recorded with the Documentation, Information and Technology Transfer Bureau. They are, however, subject to a number of provisions summarized below.
a) The following provisions are mandatory:

i) the governing law shall be that of the Philippines and the venue be that of the court where the licensee has its principal office; arbitration is permitted if subject to the procedural rules of the Arbitration Law of the Philippines, the UNCITRAL Rules or the International Chamber of Commerce Rules and the location of the arbitration is in the Philippines or a neutral country;

ii) the licensor must provide access to improvements made during the course of the agreement;

iii) all Philippine taxes due must be paid by the Licensor.

b) Several types of clauses are deemed to be prima facie anti-competitive but may be permitted "in exceptional or meritorious cases where substantial benefits will accrue to the economy", if allowed by the Documentation, Information and Technology Transfer Bureau which will evaluate agreements containing such clauses on a case by case basis; such clauses include:

i) most tie-in clauses;

ii) price fixing clauses, including those relaing to resale;

iii) clauses limiting production;

iv) in non-exclusive agreements, prohibitions on using competing technology;

v) full or partial options in favor of the licensor;

vi) free grant back of licensee's improvements to the licensor;

vii) requirements to pay royalties for patents that are not being used by the licensee;

viii) limitations on the licensee's right to export to any country where there is not already an exclusive license to someone else;

ix) restrictions on post-termination use of the licensed technology unless the agreement is terminated early as a result of the fault of the licensee;

x) requirements to pay royalties after termination of the licensed intellectual property;

xi) prohibitions on the licensee from challenging the validity of the licensed patents;

xii) certain inhibitions on research and development or the adaptation of the licensed technology by the licensee;

xiii) provisions exempting the licensor from non-fulfillment of obligations under the agreement "and/or" liability arising from third party suits brought about by use of the licensed product or the licensed technology.


10) Compulsory licensing is possible under terms that are consistent with the Paris Convention.

Utility Models

Most provisions relating to patents also apply to utility models. The main differences are that to secure protection as a utility model an innovation need not involve an inventive step as is required for patents but needs to be merely novel and industrially applicable. The maximum term of protection for a utility model is seven years from the date of filing.

Industrial Designs

Protection as an industrial design is available for:
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 as long as the design is not dictated essentially by technical or functional considerations or those that are contrary to public order, health or morals.


Many of the provisions relating to patents also apply to industrial designs. The main differences are that novelty for a design is determined only on the basis of printed documents and what is available in tangible form. Designs are initially registered for a period of five years and are renewable for two further five-year periods.

Trademarks

1) The definition of a mark has been changed to include any visible sign capable of distinguishing the goods or services of one party from those of another; "visibility" has not been a part of the definition up to now.

2) The term of a registration has been reduced from 20 years to 10 years and registrations are renewable for additional 10-year periods.

3) A single application may be filed in respect of multiple classes of goods and services of the International Classification.

4) Marks will not be considered registrable if they comprise certain shapes (e.g., indicating the nature of the goods) or colors, unless they have become distinctive of the goods for which registration is sought. Use for a continuous period of 5 years is accepted as prima facie evidence of distinctiveness.

5) Under the new law, rights to a mark are acquired by registration (and priority is accorded to the first to apply for registration) , in contrast to the present law which provides that rights to a mark may be acquired by use in commerce.

6) An unregistered mark, which is well-known in the Philippines and internationally, can bar the registration of an identical or confusingly similar mark for identical or similar goods or services.

7) A mark which is identical or similar to an internationally well-known mark that has been registered in the Philippines is barred from registration, even if the goods and services covered thereby are not similar to those of the well-known registered mark, provided use of the junior mark is likely to indicate a connection with the owner of the internationally well known mark and the owner of the internationally well-known mark is likely to be damaged by the use of the junior mark.

8) Applications based on proposed use are allowed.

9) A registration or application may be assigned without the transfer of the business in which the mark is used.

10) An action to cancel a registration must be filed within 5 years of registration, except when the mark has become generic or the mark has not been used for a continuous period of 3 years.

11) Applicants will have the option of amending their applications to conform to the provisions of the new Code or to continue prosecution in accordance with the previous law.

Copyright

1) Protection is for all original intellectual creations in the literary and artistic domain. Changes from the previous law include the deletion of a requirement that certain types of performance must be fixed in order to secure protection and a specific statement that materials for oral delivery are protected irrespective of whether they are reduced to written form. An additional right is given to publishers in respect of the typographical arrangement of the published edition of a work.

2) It is now provided that certain matter is not the subject of copyright, namely: ideas, procedures, systems, methods or operations, concepts, principles, discoveries, "mere data as such", "news of the day", other miscellaneous facts having the character of "mere items of press information" and certain official texts. Compilations may be protected as derivative works if the compilation is "original by reason of the selection or coordination or arrangement of their contents".

3) Rights arising from the existence of copyright are divided into two chapters: the first relating to economic rights and the second to moral rights.

4) The economic rights specifically include rental rights in respect of audiovisual and cinematographic works, computer programs, data compilations and musical works in graphical form. In addition to traditional rights, they also include the right to control first distribution of an original work. Certain additional rights are also provided for performers, producers of sound recordings and broadcasting organizations.

5) Moral rights include: the right of attribution, a right of a creator to control alterations to the creator's work prior to or to withhold the work from publication; to object to various acts relating to the publication of the work "which would be prejudicial to his honor or reputation" and the right to restrain the use of the creator's name with respect to any work that is not his own creation or is a distorted version of his work.

6) Certain acts are excepted from constituting copyright infringements including:

i) once a work is lawfully available to the public, performance of a work privately or free of charge or if done strictly for a charitable or religious institution or society;

ii) certain quotations as long as they are attributed to the correct source;

iii) certain acts of reproduction or communication by the mass media as long as the source is clearly indicated;

iv) certain educational uses.

7) In addition to acts that fall outside the definition of copyright infringement noted above, certain other acts may be excused on the ground of fair use. The test for fair use is similar to that set out in the United States copyright law, but is of interest in making the specific statement that "decompilation, which is understood here to be the reproduction of the code and translation of the forms of the computer program to achieve the interoperability of an independently created computer program with other programs, may also constitute fair use".

8) A droit de suite is created in respect of original paintings, sculptures and manuscripts of writers and composers so that the creators of such works and their heirs shall for a period of up to fifty years from the death of the creator have the right to 5% of the gross proceeds of any sale or lease of the work.

9) The normal term of copyright protection is the life of the author plus fifty years from his death. However shorter terms apply for anonymous or pseudonymous works (fifty years from publication); works of applied art (twenty-five years from the date of making); photographs and audio-visual works (fifty years from publication or, if unpublished, fifty years from making); performances (fifty years from the end of the year in which the performance took place); sound recordings (fifty years from the end of the year in which the recording took place); and broadcasts (twenty years from the date of the broadcast).


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© Copyright 1997 Ladas & Parry - Posted 12/22/97
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