South-East Asia IPR SME Helpdesk

Case Study 06 - On-going Partner and Employee Due Diligence (Singapore)

Background                                           

A European craft beer company wishes to open a bar in Singapore.

 

Action taken

The European company decides that it will simply license the Singaporean partner to use its trade marks and sign up to a written one-year exclusive distribution deal. It allows the partner to register a local company which incorporates its business name and trade marks, to register its trade marks in Singapore, and to register a local domain name.

 

Outcome

After one year, the agreement expires and the Singaporean company wishes to renew the agreement. While the European company is content for the bar to continue using its trade mark as the name of the bar, it demands that the Singaporean company’s name is changed to something different, and that the trade marks and domain name are handed over to the European company before an extension can be signed. In reaction to this perceived setback, the manager of the bar leaves and sets up a competing establishment in a busy part of Singapore, taking all of the confidential business information with him, including supplier information and key training manuals. The original bar rapidly loses money and is declared bankrupt within the following year.

 

Lessons Learned

  • Your IP is extremely valuable; it should always remain under your ownership and should only be licensed out under strong written agreements. 
  • The relationship and the written agreement must ensure that there are on-going obligations and mechanisms that guard against employee theft. Management of confidential information is very important. Consider requiring your partner to ensure specific confidentiality clauses are included in employee agreements. Consider getting employees to sign training forms, and upon termination of employment, acknowledgement of IP ownership, to try to reduce the risk of employee theft.
  • Do not be scared of litigating in a foreign jurisdiction. It may be possible for you to recover your business before things fail. It may also be possible to resolve the matter through Alternative Dispute Resolution such as mediation or arbitration, which can be quicker and less costly than litigating in the courts.
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