IP owners advised to take precautions as new class action legislation is approved

Thailand has recently adopted new legislation on class action lawsuits. The Act on Amendments to the Civil Procedure Code No 26 was approved by the National Legislative Assembly and published in the Royal Gazette on April 8 2015. This new legislation will come into force in December 2015.

A class action lawsuit is a lawsuit that allows a large number of people with a common interest in a matter to sue as a group. The class action originated in the United States and is still predominantly a US phenomenon, but several European countries with civil law have made changes in recent years to allow groups of people or organisations to bring class actions before the courts. The class action concept has also appeared in several Asian countries, including China in 1991 and Indonesia in 2002.      

The Thai version of the class action contains mainly the same concepts as those found in other countries, including the 'typicality rule' and 'adequacy of representation rule', whereby the plaintiff must present sufficient evidence and information to seek the court’s approval to litigate on behalf of a group of similarly-situated persons. The new law also provides the court with more proactive tools through an 'inquisitorial system', whereby the court can seek additional evidence and information, including additional testimonies from expert witnesses. The new legislation also provides for a contingency fee or award for the plaintiffs’ lawyer, who is entitled to receive a significant fee from the defendant in accordance with the court’s order in any amount - however, this should not exceed 30% of the total amount of damages to be paid to the plaintiffs.

Despite class actions coming under a lot of criticism, it is generally accepted that a class action can increase the efficiency of the legal process and lower the costs of litigation. A class action may also overcome the fact that small recoveries awarded by the court in one case do not provide an incentive for any individual to bring a solo action prosecuting his or her rights. On the other hand, as class action proceedings can be applied in a wide range of cases (eg, labour, environment, securities, contracts, wrongful acts (torts), including consumer protection and product liability), it is necessary for businesses and investors that have significant operations and sales in Thailand to be well prepared for this new legislation. 

From the perspective of an IP owner who may be manufacturing, selling, importing or licensing technologies, inventions or trademarks, the essential point that must be kept in mind is the relevance of this new legislation in light of the Product Liability Act, which was enacted in Thailand in 2009. The Product Liability Act imposes strict liability on business operators involved in the manufacture and sale of defective products which cause harm to users. The 'operator' is defined as any person using a trade name, trademark, logo, wording or sign by any means in a manner that causes users to understand that he or she is a producer, outsourcer or importer. Therefore, an IP owner could potentially face liability, should a product contain a defect (ie, a manufacturing, design or warning defect, or a failure to warn). In contrast to general claims for damages for wrongful acts (tort) under the Civil and Commercial Code, claimable damages under the Product Liability Act also extend to punitive damages and compensation for mental damages.              

With the existing Product Liability Act and the implementation of the class action legislation in Thailand late this year, IP owners are advised to take necessary precautions to prepare for such implementation, as well as to protect themselves against potential product liability claims which may lead to a class action under the new legislation.   

Nuttaphol Arammuang, ZICOlaw (Thailand) Ltd, Bangkok