"S K Chou"

Apr 99: Kee Leng, inspired by Dr Heinz Goddar, then President of the Licensing Executives Society International (LESI), decided to make an attempt to form a licensing society in Singapore. At the end of a licensing seminar in which Dr Goddar and Mr Rodney De Boos, Immediate Past President of LESI, were guest speakers, Kee Leng made an appeal for like minded people to indicate their interest to form a licensing society.

At the same time, Trade Development Board (TDB) recognized that as Singapore transits to a knowledge-based economy, licensing will increasingly be an important means for Singapore companies to "trade" technologies and intellectual properties globally. TDB wanted to support the formation of a licensing society in Singapore to provide a platform for networking among like-minded people to enhance the knowledge and practices of licensing. Oon Tong, who was in charge of promoting licensing in TDB at that time, met with Kee Leng at the seminar.

Both of them got to work quickly, contacting various people in the public and private sectors. Through the introduction of Prof CC Hang of NUS, Oon Tong contacted SK Chou who readily agreed to chair the pro-tem committee.

Jul 99: Together with Suresh, Alban and several others, a pro-tem committee of 10 persons was formed. The pro-tem committee immediately sat down to draft the constitution.

Sep 99: Application to form the Licensing Society Singapore (LSS) was submitted to the Registry of Societies.

Nov 99: Our fast work was rewarded by the efficient and quick action of the Registry of Societies which gave the approval in hardly two months. The society was officially launched at Licensing Asia 1999 Conference on 6 Nov 99. This was the first major conference jointly organized by the society, TDB and Singapore Exhibition Services. Since its launch, membership increased steadily to 36 within a few months.

Encouraged by the good response, the committee decided to embark on gaining membership into the Licensing Executives Society International (LESI). As part of the international network of licensing professionals, our members would have access to the LESI web-site and publication materials, and enjoy special rates for LESI conferences. The application was officially submitted to the membership committee of the LESI in early part of 2000.

The society’s membership was recommended and accepted unanimously at the LESI delegates meeting in May 2000 in Amsterdam. Kee Leng and Suresh Sachi represented LSS at the delegates meeting. LES (Australia and New Zealand) was appointed as our mentor to aid us as we take our first steps as an LESI chapter.

Within less than a year of its formation, the society successfully became Licensing Executives Society (Singapore) (LES(S)), a chapter of the international network of more than almost 30 societies covering more than 50 countries with around 10,000 members world-wide. SK and Kee Leng received the LES(S) flag on behalf of the society at the LESI Delegates and Committee Meetings in Toronto in Sep 2000.

LES(S) had its first Annual General Meeting on 28 Jul 2000 and elected its Executive Committee (Ex-co) for the year 2000/2001 as follows:

Membership continued to grow from 36 in May 2000 to more than 60 towards the end of the year. As at Jun 2001, membership soared past 80, the profile being about 56% legal professionals, 29% from industry and 15% from academic, research and government institutions.

Future Directions

For the next few years, LES(S) will focus on the following areas:

a) Raising industry awareness on licensing

b) Training/education in licensing

c) Regional/international linkages to promote licensing

The Ex-co look forward to the support and co-operation of all members as we continue to build up the society. Member’s support for LES(S) programme and activities will be a source of encouragement to the Ex-co and all fellow members.

True to its role as educators, LES(S) has been active in organizing conferences and seminars. A talk on "Digital Versatile Disc: Licensing issues for Licensors & Manufacturers" was given by Ms Neoh Sue Lynn of Philips Electronics Asia Pacific Pte Ltd in conjunction with the Extraordinary General Meeting on 22 Aug 2000.

The Second Licensing Asia 2000 conference held from the 18-19th September 2000 addressed questions that are frequently asked about licensing :

The Second Licensing Asia 2000 conference offered an important learning platform for professional and service providers in the field, as well as individuals representing their companies. Topics covered at the conference included Technology licensing; branding in Asia; Internet, eCommerce and licensing issues; valuation of IP assets, and the relationship between life sciences and licensing. Market leaders were invited to present as to how their companies optimized their returns of their intellectual property through licensing. The speakers came from companies involved in electronics, consumer products and software.

An interactive workshop on "the Essential of Licensing" was also held in conjunction with the conference. The same was conducted by Mr. Suresh Sachi, Tan Rajah & Cheah and Mr. Prithipal Singh, KL Tan & Associates. The workshop highlighted the do's and don'ts in structuring the licensing contract as well as the advantages of taking the licensing route.

The conference was well attended by individuals from SMEs, high-tech start up companies, R & D institutes, technology licensing professionals, institutional investors and consultants.

A joint seminar between LES(S) and the Institute of Engineers Singapore Technopreuneurship Development Committee was held on 1 December 2000.

The objective was to provide opportunities for participants to learn the necessary skills and knowledge to become technopreuneurs. Ms Audrey Yap, Yu Sarn Audrey & Partners presented on the legal aspects of "Technology and the Entrepreneur" whilst Mr. Alex Koo from iPropertyNet Pte Ltd shared his experience of starting up his company and problems faced in venturing forth.

In conjunction with the second AGM of the LES(S), two speakers were invited to share their experience with members and non-members from the public. Ms Virginia Chia, Executive Vice President from Cybercity Holdings Ltd spoke on IP Awareness in the operations of an entrepreneurial Technology company whilst Ms Jean De Souza, Partner of Tax Services from Ernst & Young gave a presentation on tax issues on licensing.

The second AGM of the LES(S) took place on 25 May 2001. The outgoing president Professional Chou Siaw Kiang began with a speech updating members of all activities that have taken place and of the events to come. Two major events the Ex-co are planning for include the licensing conference in 2001 and the Patents Fair.

The elections of office bearers took place after the passing of minutes of the last AGM, the Secretary and Treasurer's reports.

The following are the Ex-co members for the year 2001/2002:

Audrey Yap
Treasurer, LES(S)

(Editor’s Note: Extracted from an article entitled "The new law of registered designs in Singapore - a brief survey" by Mr Tan Tee Jim, SC, of Allen & Gledhill. Parts 2 and 3 will be published in subsequent issues.)

The major legislative change in the IP field in Singapore in the year 2000 is the coming into force of the Registered Designs Act 2000 ("the Act"). The Act, which came into force on 13 November 2000, establishes a regime in which the newly-created Registry of Designs operates the system of registration of designs in Singapore. Previously, a design had to be registered in the United Kingdom in order to be protected in Singapore.

The principal features of the Act are as follows.

To be registrable, a design must be a feature of "shape, configuration, pattern or ornament applied to an article by any industrial process, but does not include –

It is noticeable that there is no requirement for eye appeal, unlike in the United Kingdom.

Shape and configuration have been regarded as synonymous. They signify something solid and in three dimensions. A typical example would be a vase or a china. It has also been said that pattern and ornament can in many cases be considered to be synonymous. They signify something which is printed, engraved or embossed onto an article and in two dimensions. A typical example would be pattern on a wallpaper or a scarf.

An application to register a design must clearly identify the feature or features of the design for which protection is sought. This is done by filing a Statement of Novelty with the application. The Statement draws attention to the novel feature or features which the applicant wishes to stress as the focus of his creation. But it does not mean that those feature or features to which attention is not drawn is to be disregarded in ascertaining the novelty of the design. The whole design is to be considered.

To be registrable, a design must have reference to some specific article to which it is to be applied. There cannot be registration of a design as such. If the design is to be applied on a number of articles, a separate application for registration must be filed in respect of each of the articles.

The design is to be applied to an article by an industrial process (e.g. printing and engraving). If it is to be applied by hand (e.g. painting the design on a vase), it is not a registrable design.

The word "article" is defined in the Act as any article of manufacture and includes any part of an article if that part is made and sold separately and any set of articles . The article must thus be the result of a manufacturing process. A design on a natural article (e.g. clay) is not registrable. Further, it is registrable if the article on which it is applied is "made and sold separately". This means that it must "have an independent life as an article of commerce and not be merely an adjunct of some larger article of which it forms part". Such an article includes a door handle and car steering wheel.

Under the Registered Designs Rules, the following articles are specifically excluded from protection:

The exclusion of a method or principle of construction serves to emphasise the fact that the Act is concerned with the appearance of an article and not the process by which the appearance is arrived at. It excludes any design which illustrates the process or operation by which a shape, configuration, pattern or ornament is produced.

This exception is restricted to features of shape or configuration. Whether a design falls within this exception depends on whether its features are "attributable to or caused or prompted by" the function which the article in that design has to perform. If a design is adopted solely based on functional ends or to make the article work and not to appeal, it is not registrable. If the design is partly functional and partly to appeal, it is registrable. The fact that there are other designs which can meet the same ends is irrelevant. This was the mistake made by the trial judge in the recent Singapore High Court case of Hunter Manufacturing Pte Ltd v Soundtex Switchgear & Engineering Pte Ltd which concerned the design of an electrical meter box. In concluding that the shape of the box was not dictated solely by the function which the box had to perform, one of the reasons he cited was that there could be any number of designs that could perform the same functions. The Court of Appeal disagreed, stating that it did not follow that because alternatives to the registered design existed, the design was not dictated solely by the function which the box had to perform.

The purpose of this exception is to prevent the manufacturer of an article from monopolising the supply of the article’s spare parts. The exception is also restricted to features of shape and configuration. If the design of the part consists entirely of features which "are dependent upon the appearance" of the article to which it is intended to form an integral part, it is not registrable. If it consists partly of features which are so dependent and features which are not so dependent, the registration would be limited to the design comprising the latter features.

The purpose of this exception is also to prevent monopolies in the spare parts market. To fall within the exception (which is also limited to features of shape or configuration), the design must have two elements:

Thus, a new design for a car exhaust system which follows and must fit the contours of the car’s chassis is likely to be unregistrable.

Tan Tee Jim, SC
Allen & Gledhill

While an increasing number of countries are considering the introduction of franchise-specific legislation, only a handful of such legislation is present which regulate franchising. Due to the complexity of the relationship between franchisor and franchisee, and the great number of areas of law involved in a franchise relationship, especially, one that is international in nature, the existing legislation are aimed at disclosure rather than regulating relationships between the franchisor and the franchisee. Malaysia however, has made a brave attempt into the relatively virgin territory of regulation of franchises through legislation.

The Malaysian Franchise Act 1998 was enacted on 24 December 1998 and came into force on 8 October 1999. The Act deals not only with the registration and disclosure of franchises but also with the regulation of the relationship between the franchisor and the franchisee.

A franchise is defined under Section 4 of the Act as an agreement, whether express of implied, oral or written between 2 or more persons involving the following 6 factors:

The definition of a franchise as above is such that if any of the 6 factors are not present in any relationship/business arrangement, then it is not a franchise under the Act and may fall outside the ambit of the Act.

The Act makes it compulsory for franchises to be registered with the Registry of Franchise before an offer to sell the franchise in Malaysia is made. As part and parcel of the registration and compliance process, disclosure is required to be made of related franchise documents and information. The ambit of the disclosure requirement is very wide and include documents such as the franchise agreement, operations and training manuals, audited accounts of the franchisee, financial statements and any other relevant documents or information which the Registrar may require. Subsequent to registration, the franchisor is also obliged to file annual reports containing the disclosure documents as updated.

It is also important to note that the Registrar may in his discretion allow public inspection of the disclosure documents filed with the Registrar unless in his opinion such inspection is harmful to the parties or is against public interest.

Non-registration of a franchise is a criminal offence punishable with a fine. Furthermore, the Registrar of Franchise may also declare the franchise agreement to be null and void, order the refund of monies paid by the franchisee, and prohibit the offending franchisor from granting new franchises.

For franchises involving foreign franchisors, the Act requires the Registrar’s approval before the sale of the franchise to a Malaysian franchisee. Such approval is not required where the foreign franchisor has prior to the coming in force of the Act already sold franchises in Malaysia. Where approval is required, the process for application of approval is much simpler than that for a local franchisor. The foreign franchisor may simply apply for approval by way of a letter. A local franchisee to whom the franchise is sold will however have to submit a formal registration form accompanied by the usual franchise disclosure documents to the Registrar.

Where a local franchisor desires to sell a franchise to a foreign franchisee, the local franchisor will have to obtain the prior approval of the Registrar. The sale shall also be subject to such conditions as the Registrar may impose. This clause, in particular gives the Registrar substantial control over the sale of and terms applicable to franchises involving foreign franchisees.

A person who wishes to act as a franchise broker in Malaysia will also have to be registered.

The Malaysian Act goes one step further than most existing franchise-specific legislation by seeking to govern many aspects of the agreement/relationship between a franchisor and a franchisee.

The Act specifically provides for a list of matters which must be addressed in the franchise agreement, including obligations of the parties, fees payable, type and particulars of assistance, term and renewal, effect of termination etc.. The absence of any of the compulsory matters will render the franchise agreement null and void. It is also not possible for either party to waive compliance with the Act or contract out of the provisions in the same. Such waivers or contract to avoid any provision of the Act are void.

The franchise agreement and disclosure documents must be given to the franchisee at least 10 days before the franchisee signs the contract. The franchisee is also entitled to a cooling off period of at least 7 working days during which he has the option to opt out of the franchise agreement and recover all monies paid by him less the franchisor’s reasonable expenses.

The franchise agreement cannot be for a term of less than 5 years. At the end of the term, the franchisor cannot, in the absence of breach by the franchisee, refuse to renew the same without paying compensation to the franchisee. To so refuse will be an offence. Earlier termination of a franchise agreement is however possible if both parties agree to the same or by order of a court of law. Where a franchise agreement is extended, the terms and conditions of the same cannot be less favourable than that contained in the previous agreement.

A franchisor is also required to register his trade marks relevant to his franchise if they are registrable trade marks. He application for registration must be made before the registration of the franchise under the Act.

While the rational and drive behind the Franchise Act 1998 is commendable, the requirements contained therein may give pause to franchise players who may be used to a more open and liberal manner of negotiating agreements. Certainly, many franchisors may have to adapt their standard franchise agreements and practice to ensure compliance with the Act. The Act is also silent as to whether the compulsory terms in the Act governing the relationship and agreement between the parties will also apply to franchises which existed before the Act but which are renewed after the same came into force.

The consequences of non-compliance may be harsh in some circumstances. Franchise players, whether old or new, will be well advised to seek advice on and have a close look again into the adequacy of their contract. While there are certainly no prohibitions against a simply drafted or `home-drawn’ contract, the onus is on the parties to ensure that all requirements of the Act are complied with in the contract, or they may have to face the consequence of non-compliance. As the saying goes, ignorance of the law is not a defence.

15 - 18 September 2001

LES Pan European Conference
St Petersburg, Russia

28 October - 1 November 2001

LES(USA & Canada) 2001 Annual Meeting
Palm Springs, California, USA
Register Online

Programme may be subject to change.  Details of local events will be circulated later to members.