Closing intellectual property gaps for investment

 BOI Chairman Upul Jayasuriya, Julius & Creasy Law Firm Senior Partner J. M. Swaminathan, Nithya Partners Law Firm Senior Partner Chanaka de Silva, MAS Holdings Group Director 

Legal Rajitha Jayasuriya and Ceylon Tobacco Company Managing Director Michael Koest at the panel discussion

Sri Lanka’s intellectual property regulations need to be expanded and upgraded to keep pace with the rest of the world, as well as to empower local businesses and attract international investment, believes a panel of experts.

The American Chamber of Commerce (AMCHAM) in Sri Lanka hosted a public forum entitled “Combating Counterfeits” last week to address and discuss the detrimental effects of counterfeits on Foreign Direct Investment (FDI), the economy and the corporate sector.

The luncheon was designed to foster greater collaboration and understanding among regulators, entrepreneurs and industry experts to combat this growing threat.

The keynote address was given by Chairman of the Board of Investment of Sri Lanka Upul Jayasuriya PC, highlighting the link between counterfeits and FDI. Thereafter, a panel discussion was conducted with representatives from the public and the private sectors including M.R. Rajmohan – Director of Customs Valuations and Legal Advisor to the Director General of Customs; J.M. Swaminathan – Senior Partner, Julius & Creasy Law Firm and former member of the Intellectual Property Advisory Commission affiliated to NIPO; Michael Koest – Managing Director, Ceylon Tobacco Company PLC and Chairperson of the IPR Committee of AMCHAM; and Rajitha Jayasuriya – Group Director – Legal, MAS Holdings Ltd. The discussion was moderated by Chanaka de Silva, Senior Partner, Nithya Partners Law Firm and former member of the Intellectual Property Advisory Commission.

Potential 

Through this public forum, AMCHAM facilitated an engaging discussion on the effects that counterfeits have in the eyes of potential foreign investors. The forum recognised the potential of a comprehensive Intellectual Property Rights (IPR) regime in transforming virtually every aspect of our nation’s economy and encouraging much needed FDI. The audience also acknowledged the contribution of various government departments in this regard and the role they could play in protecting their intellectual property.

The BOI Chairman, whilst noting that Sri Lanka has a comprehensive legal framework in place, also highlighted ways in which the application and implementation of the relevant laws could be improved. He raised the importance of the role of judiciary in enforcing IP laws in Sri Lanka. In conclusion, he emphasised the importance of a strong and effective IPR framework in improving the ease of doing business in Sri Lanka (noting that Sri Lanka could improve its rating in this regard) and encouraging more Foreign Direct Investment into the country.

Rajmohan from the Customs Department stated that a lot of work is being done at the borders to detect, confiscate, and destroy counterfeit products. He made a request to those attending and the corporate sector to regular inform the Customs Departments of Intellectual Property that they hold so that Customs can work towards ensuring counterfeits are detected easily. He also requested the private sector to actively work with the government to curb this growing menace.

Rajitha Jayasuriya highlighted many of the challenges faced by companies such as MAS Holdings in relation to protecting their copyrights. These include the timelag in registration which is a major concern for foreign companies wishing to file patents in Sri Lanka. She went on to state that those whose rights have been infringed must conduct their own investigations and file cases independently. In relation to FDI, she notes that global brands that she works with only chose to enter the market not as a result of our IP regime/environment but due more to reputation of the local partner, manufacturing excellence, relatively cheap but highly skilled labour, literacy and location. To mitigate risk to the global brands, foreign investors impose very stringent mechanisms for brand protection on SL manufacturers.

Counterfeit vs. smuggling

Koest talked about the global black market in tobacco which involves criminal gangs producing counterfeit cigarettes, cross-border smuggling and large-scale tax evasion cheating governments out of around GBP 30 billion each year in taxes. With weak penalties for criminals, poor border controls, low arrest rates, and tobacco taxes creating disparity between neighbouring countries, it’s a problem that’s set to grow. Sri Lanka has a large illicit tobacco market with over a Rs. 13 billion loss to government revenue this year. He went on to highlight that foreign multinationals are less inclined to invest in Sri Lanka due to the challenges in obtaining and protecting intellectual property in the country.

Swaminathan and de Silva, both former members of the Intellectual Property Advisory Commission, provided in-depth insights into the workings of the National Intellectual Property Office and provided useful and practical advice to the attendees on registration of intellectual property.

Swaminathan discussed future changes that are likely to and should take place soon including accession to and implementation of the Madrid Protocol which is a centralised, global system for registering and maintaining trademarks in foreign countries, administered by the World Intellectual Property Organization (WIPO).In today’s world, any company with a well-known, valuable brand should assume that its brand is already being counterfeited. For instance, garments, designer bags, pharmaceuticals, infant formula, tobacco products, automobile parts, batteries, and electronic products are the subject of frequent counterfeit operations. It is almost inevitable that if a company has not been subject to counterfeits before, it is only a matter of time before they do.

The American Chamber of Commerce in Sri Lanka, a non-profit association founded in 1992, bringing together more than 350 members representing 230 leading Sri Lankan and American companies based in Sri Lanka engaged in trade, business and investment activities between Sri Lanka and the United States of America. As a vocal supporter of issues that affect its members and the Sri Lankan corporate sector at large, they regularly support forums such as these to encourage collaboration and discussion among the private sector and decision makers.

Pix by Lasantha Kumara