Bern 16 January 2017, Diedier Burkhalter (Federal Councillor) and WANG Yi (Minister of Foreign Affairs) signed a Memorandum of Understanding (MoU) between Switzerland and China.
The text of the MoU consists of laudatory calls to cooperate, and only a commitment to “determine the detailed activities”. The most interesting point was that the parties endeavor to exchange of information and views on the latest developments of their respective IP system and the legislation and administrative procedures. With China’s scattered way of promulgating rules and regulations different legal channels, such as the Supreme People’s Court, the State Council, State Administration for Industry and Commerce, State Intellectual Property Office and several provincial courts, to make this more transparent is a daunting task. The results of the meetings, that will be held in both countries, and will be summed up in the minutes, will be especially attractive to peruse. Whether these will be made public is the question.
On the same day, the Chinese Minister of Commerce Gao Hucheng and the Head of Department of Economic Affairs, Education and Research of Switzerland Johann N. Schneider-Ammann signed The Memorandum of Understanding between the Ministry of Commerce of China and the Federal Department of Economic Affairs, Education and Research of Switzerland on the Upgrading of China-Switzerland FTA, announcing that the joint study on China-Switzerland Free Trade Agreement (FTA) upgrading was launched. The China-Switzerland FTA was signed by the same people in July 2013 (after another MoU), and was implemented in July 2014.
In the existent Sino-Swiss FTA IPRs (Chapter 11 (page 60) and Annex IX in connection with Article 11(10) of Chapter 11) the countries committed themselves to protect the level that is prescribed by those international treaties that both have in common. This means that for example even though in Switzerland the copyright duration is 70 years after the death of the author, the protection level between the countries becomes 50 years after the death of the author, because that is the duration of copyright in China. However, besides “lowest denominator” standards some important changes were made:
Protection must be provided for acoustic trademarks as a new category of trademark;
In the field of patents, the patentability of biotechnological inventions is specified in accordance with the European Patent Convention;
Furthermore, the Parties may require in case a patent application is filed and the invention is based on genetic materials or traditional knowledge, such materials and knowledge are indicated;
The confidentiality of test data in relation of marketing approval procedures for pharmaceutical and agro-chemical products must be protected for at least six years;
The level of protection for geographical indications for wines and spirits under Article 23 TRIPS (this means that the anti-usurpation where the true origin of the goods is indicated or the geographical indication is used in translation or accompanied by expressions such as “kind”, “type”, “style”, “imitation” is still prohibited) is extended to all products;
Goods and services must be protected from misleading indications of origin;
Country names, national flags and coats-of-arms of the Parties must be protected from misleading use and registration as company or brand names;
Compared to the UPOV Convention (1978 version, of which China is a signatory) the protection for new varieties of plants is extended to the exportation of such varieties. In the 2016 revision of the national list of protectable varieties China declared that it is prepared to give priority to certain plant varieties which are important to Swiss industry.
Let us see how both countries will upgrade IP protection and especially enforcement to which they will commit themselves in relation to each other. continue reading…
Besides, president Xi Jinping and China’s richest man Wang Jianlin of Dalian Wanda, Jack Ma (马云), Executive Chairman of Alibaba Group visited the World Economic Forum in Davos.
Ma talks IP, will he walk IP?
The Alibaba Group, which includes Taobao, TMall and Alibaba, was identified in the USTR’s Special 301 Report of 2008, 2009, 2010 and 2011 for facilitating the sale of counterfeit goods to consumers and businesses. Some measures and assurances were taken against counterfeit products. For this Taobao
was removed from the List of Notorious Markets in 2012, 2013, 2014 and 2015. However, in 2016 Taobao returned to this list, see here (pages 12-13).
Earlier in the year, Alibaba was kicked out of the International Anti-Counterfeiting Alliance after a membership of one month (13 April 2016 to 13 May 2016). Read Rishiki Sadam, ‘Anti-Counterfeiting group suspends Alibaba’s membership’, Reuters, 13 May 2016, available here. But now Alibaba has started its own alliance: Tom Brennan wrote on 16 January on Alizila (Alibaba’s news site) that Alibaba launches ‘Big Data Anti-Counterfeiting Alliance’, see here.
18 January 2017, Ma was interviewed by NY Times’ Andrew Sorkin at the World Economic Forum in Davos. Sorkin: “One of the critiques is, as you know, and it continues to linger around Alibaba, is the piracy issue. This is an IP issue and it is an issue all over China, but you take the brunt of lot of it.” Ma: “Yeah.” Sorkin: “How much progress have you made in your mind, and how do you think about some of the regulatory bodies including in the U.S. that continue to critisize Alibaba for these issues?”
“This position is located in the U.S. Consulate General Guangzhou, China. The incumbent will serve as an Intellectual Property Attorney-Adviser (IP Attaché) in Guangzhou for the International Trade Administration/Global Markets (ITA/GM) and United States Patent and Trademark Office (USPTO). The position requires a law degree and knowledge of all fields of IPR and international agreements governing IPR, including IPR office operation and administration, IPR training, and adherence to IPR standards of protection and enforcement. As an IP Attaché, the incumbent will act as a resource on intellectual property regimes in Southeastern China including Fujian, Guangdong ,Guangxi, Provinces, and Hainan Islands for U.S. Government agencies and U.S industry. This position reports to the Foreign Commercial Service Senior Commercial Officer and the USPTO IP Attaché Program Director, which directs the incumbent, reviews the incumbent’s performance and ensures consistency with agency and administration priorities. This position must also coordinate with other parts of the U.S. Consulate.”
If you are a qualified U.S. citizen you can apply, see more here.
In my book Trademarks and Social Media, Towards Algorithmic Justice, I describe the progress made in filtering technology which is another reason to advocate strict liability for online service providers. The possibilities of filtering are illustrated in today’s article by Rowan Callick. In The Australian he features Chu Yong’s Super Image Market which is not only a Hong Kong-based platform from where photographers can sell their pictures, but includes a system that can also use filter pirated pictures in China and beyond.
Callick wrote: “His system can search the net, daily — including the sites of retail platforms and other companies and organisations — for any copies of about 10,000 of the three million images that have so far been placed on the SIM platform. The SIM server can compare a client’s image with 50 million other photos in a 10th of a second. But China’s Great Firewall slows internet traffic, doubling the time a search takes inside China.”
Since 2011, China is the world leader in the number of published invention patent applications (also the number of utility model and design patents is rising). China is in the process of doubling its number of patent applications (from more than 1 million patent applications in 2015). Subsidies and further fee reductions strengthen the incentive to apply for patents, thereby putting more pressure on the State Intellectual Property Office (SIPO) to assess patent quality.
According to China IP News, the Ministry of Finance and National Development and Reform Commission issued the Regulations on Reducing Patent Fees (Regulations) that became effective on 1 September 2016. The budget for the fee reduction is planned to be increased to RMb 4.1 billion per year as of 2016. Compare the budget for 2015 of RMB 3.5 billion.
The rationale behind this reduction is to decrease the threshold for inventors and companies to patent their inventions, and one measure to implement the Promotion Plan for the Implementation of the National Intellectual Property Strategy and acceleration of building an IP powerhouse in 2016, see SIPO’s July announcement here.
Article 4 Regulations states that the following groups are eligible for an 85 percent reduction of the patent application fee, excluding announcement printing fee and additional application fee; substantive examination fee for invention patent applications; annual fee for six years from the year the patent is granted; and re-examination fee:
Article 3(1) Regulations: Individuals whose average monthly income was less than RMB 3,500 (RMB 42,000 annually) in the previous year;
Article 3(2) Enterprises, business units, social organizations and non-profit making scientific research institutes whose corporate taxable income was less than RMB 300,000 in the previous year;
In case two or more individuals or units are co-applications or co-owners of a patent, the fees could be reduced to 70 percent (Article 4 Regulations).
Big discounts, big challenges for patent quality
These reductions of patent fees, together with provincial or city subsidies, will lead to an even stronger surge in patent applications and grants, and therefore an even stronger pressure for SIPO to guarantee a sufficient standard of quality.
There probably must be a soft spot between motivating innovators to apply for a patent that without subsidy or fee reductions would never do so, and those patent filers that have claims that are neither novel nor inventive, but try to get a patent anyway. When the SIPO is overwhelmed with patent applications, subpar patents will slip through.
“The generosity of China’s incentives for patent-filing may make it worthwhile… to patent even worthless ideas… Patents are easy to file,… but gems are hard to find in a mountain of junk.”Patents, yes; ideas, maybe The Economist, 14 October 2010.
See earlier IP Dragon articles about the same topic:
China has liberalised its market for theatrical release of foreign films to some degree, which kills two flies with one stone for foreign movie producers. On the one hand when Chinese are able to watch some popular foreign movie in Chinese cinemas, it decreases the incentive for Chinese consumers to download or buy counterfeit DVDs. On the other hand, the growth in movie tickets in the US and Europe have plateaued and China is with its soaring box office sales the promised land for foreign movies. However, importing movies to China is still highly challenging at different dimensions:
– the movie needs to be selected as one out of only 34 foreign movies;
– then the movie needs to be approved by SAPPRFT;
– there is a draft law that requires that two-thirds of the total movie run time consist of Chinese films;
– then there is a ban during Lunar New Year celebration and Summer holiday;
– domestic films are favoured and foreign movies sometimes have to compete against other foreign movies;
– domestic films can get a tax rebate.
Therefore, foreign movies can be screened in China, but many hurdles need to be taken.
The first foreign movie was screened in China in 1994. It was The Fugutive. Now, China’s box office sales have become an important part of the revenues for members of the Motion Picture Association of America’s. According to their 2015 Theatrical Market Statistics, China’s box office increased 49 percent in U.S. dollars to $6.8 billion. After China, the UK was the country where the six major Hollywood studios that comprise the MPAA, had the highest box office sales, but considerably lower: $1.9 billion.
The contours of the near sunrise future for the members of the MPAA became visible in February 2015, when the box office sales in China (US$650 million) surpassed that of the United States (US$640 million) for the first time. USCC p 7. China is already the second biggest market for MPAA members, and is projected to become the biggest market by 2018.
In 2007 the US brought a case to the WTO against China for measures that restrict the trading rights with respect to imported films for theatrical release, and discriminatory distribution rights. The Panel determined that, under China’s Accession Protocol to the WTO, a number of Chinese measures were inconsistent with China’s obligation to grant “trading rights”. About distribution rights, the Panel rejected the claim of the US. Both countries appealed in 2009. And 21 December 2009 the Appellate Body circulated its report in which it upheld the Panel’s determination about trading rights of imported films.
In 2010, China informed the Dispute Settlement Body (DSB) of its intention to implement its recommendations and rulings. Since the dispute involved many important regulations on culture products, China needed a reasonable period of time for implementation. China and the US agreed that this reasonable period of time was 14 months and would expire on 19 March 2011. Six days later, China reported that it had made efforts to implement recommendations and had completed amendments to most measures. However, given the complexity and sensitivity of the dispute, China hoped that Members would understand the difficulty it was facing in the implementation process. China wanted to resolve the matter through joint efforts and mutual co-operation of the relevant parties.
Memorandum of Understanding (MOU)
On 25 April 2012, the ambassadors to the WTO Yi Xiaozhun for China and Michael Punke (also known for his novel The Revenant, that made it into an Oscar winning film and which was screened in China and opened with $33 million in the first three days) for the US sign the MOU in Geneva.
On 9 May 2012, China and the US informed the DSB of key elements relating to films for theatrical release as set forth in the MOU mentioned at the DSB meeting on 22 February 2012.
At the DSB meeting on 24 May 2012, China said that it had taken all necessary steps and had thus complied with the DSB recommendations. The US said that the MOU represented significant progress but not a final resolution.
World Trade Organization, China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, Dispute DS363, available here.
In the MOU China and the US agreed upon the following points:
China confirmed that enhanced format films (such as 3D and IMAX films) are not subject to the 20-film commitment set forth in the Additional Commitments under Sector 2.D. of its GATS Schedule and agreed that China will allow the importation of at least 14 enhanced format revenue-sharing films per calendar year beginning in 2012. Therefore the total number of foreign films of 34.
China agreed that the producer of the imported revenue-sharing film will be allocated 25 percent of gross box office receipts, and the Chinese side shall be responsible for the payment of all taxes, duties and expenses.
In a contract for the distribution of an imported film other than a revenue-sharing film, where the two sides are not both private enterprises, China agreed that the contract will be based on commercial terms, consistent with the terms prevailing in countries whose markets are comparable to China’s market based on annual box office revenue, number of screens, annual admissions and admissions per screen.
China confirmed that any Chinese enterprise is eligible to apply for and be granted a license to distribute imported films and that nothing in China’s laws, regulations or government rules prevents any eligible Chinese enterprise from applying for and receiving a license to distribute, and operating as a distributor of, these films. China further agreed that it will promote reform in the distribution of imported films and will actively encourage more Chinese enterprises, including private enterprises, to obtain licenses and to participate in the distribution of these films.
China agreed that the licensing of distributors would be conducted in a nondiscretionary and non-discriminatory manner, that contracts for the distribution of imported films would reflect standard industry practices, and that other Chinese government policies or practices would not undermine the provisions of the MOU.
After five years, thus in 2017, China and the US will engage in consultations regarding key elements of the MOU and to discuss the matter of China implementing the DSB’s recommendations and rulings with regard to films in DS363.
U.S. State Department, Memorandum of Understanding between the People’s Republic of China and the United States of America Regarding Films for Theatrical Release, February 2012, see here.
In short: foreign movie producers can enter the Chinese market in three ways:
revenue-sharing films (but limited to 34 films; 20 normal and 14 enhanced format films), of which the foreign studio takes 25 percent of the box office receipts (which is double in other parts of the world);
Co-productions (the foreign studio receives about half of ticket sales). Hollywood can bypass quotas and receive about half of ticket sales.
See, Knowledge@Wharton, 17 February 2016, available here.
State Administration of Press, Publication, Radio, Film and Television (SAPPRFT)
Sean O’Connor and Nicholas Armstrong in ‘Directed by Hollywood, Edited by China’, argue that the SAPPRFT does not give clear guidelines about their wishes. It describes that many a foreign studio is practising self-censorship to get the approval of SAPPRFT. See website of SAPPRFT here (Chinese).
In 2014, the SAPPRFT banned screenings involving anybody who had engaged in criminal activity. China’s new film law stresses celebrity ethics, Xinhua (via Shanghai Daily), 29 August 2016, available here.
“According to SAPPRFT regulations, all films exported to China must adhere to the principles of the Chinese Constitution and maintain social morality. Therefore, any films depicting demons or supernaturalism, crime or any other illicit or illegal actions within China’s borders, disparagement of the People’s Liberation Army and police, and anything that could be perceived as anti-China—including merely damaging Chinese sites or monuments—are prohibited.”
See, Sean O’Connor and Nicholas Armstrong, ‘Directed by Hollywood, Edited by China: How China’s Censorship and Influence Affect Films Worldwide, US-China Economic and Security Review Commission, 28 October 2015, Fn 62, available here.
Two-thirds of total movie run time in Chinese cinemas needs to be domestic films
The second draft of a bill, that was originally presented in October 2015, has been just released. Lawmakers are making their second reading of the bill during the bimonthly session of the Standing Committee of the National People’s Congress this week. “The law contains a provision that domestic films should take up at least two-thirds of total movie run time in Chinese cinemas.”
See, Fergus Ryan, ‘Draft Film Law Favors Local Films over Hollywood Imports’, China Film Insider, 30 August 2016, available here.
Duration of screenings
Foreign films are often allowed to be screened for a month. “Studios can request an extension by applying to a branch of the China Film Group, which is directly under the State Administration of Press, Publication, Radio, Film and Television, or SAPPRFT, China’s top film regulator. In a twist, China Film Group is also involved in producing films: Together with Enlight Media, it is one of the studios behind “The Mermaid.””
See, Lilian Lin, with contributions by Laurie Burkitt, Making Waves: In Blow to Foreign Films, China Gives ‘Mermaid’ Three-Month Boost, WSJ, 4 March 2016, available here.
Not helpful for the box office sales is that foreign films are banned during the high season of movie watching: the Lunar New Year celebration and the Summer holiday. USCC p 7.
Therefore, foreign film studios that want to launch their films globally simultaneous or near simultaneous between 30 April and 2 May 2003, 20th Century Fox launched X2: X-men United in 93 countries
Hubert Gatignon, John R. Kimberly, Robert E. Gunther, ‘The INSEAD-Wharton Alliance on Globalizing: Strategies for Building Successful Global Businesses’, Cambridge University Press, 20 Sep 2004, 207-208) might be wise to first get approval for the China launch from SAPPRFT.
Foreign films have to compete with domestic films that are eligible for a tax rebate since April 2016, which seems not conducive for the level playing field that was promised by the WTO.
level playing field?
See, Patrick Brzeski, ‘China to Reward Cinemas for Favoring Local Films Over Hollywood Imports’, The Hollywood Reporter, 27 March 2016, available here.
Conclusion: there is room for improvement. Expect a push for structural change for 2017.
April 8, 2016, President Johann Schneider-Ammann, the Swiss President met with Zhang Dejiang (张德江), Chairman of the Standing Committee of the National People’s Congress in Beijing. According to China’s state-news agency Xinhua, Zhang “called on the two countries’ parliaments to strengthen mutual learning in the legislation of intellectual property protection, innovation and entrepreneurship as well as vocational education.” China can also benefit from Swiss expertise on eco-agriculture, environmental friendliness, branding innovative and quality products.
Of course a Swiss-Chinese Dialogue on IP is going on since at least 2011 and culminated in an informal mechanism for complaints of Swiss companies regarding IPR infringements on the Internet in 2014, see here.
According to the Swiss Customs Administration 71 percent of counterfeit goods originated from China in 2015. See more here.
Price and place of purchase are often good indicators of whether a product is a counterfeit. For example one can expect that the Victorinox Swiss Army Knife ‘Champ’, is a counterfeit if it costs 8 US dollar while it normally costs 99 US dollar, and is available via an online market instead of via a licensed outlet. See the Counterfeit Report.
Are China and Switzerland both dragons? “Suan Long” (Double Dragon) restaurant in Zug, Switzerland. Photo: Danny Friedmann Copyright 2016
Is there any wisdom in these rankings, you might ask yourself. First of all, it is about applications and not about granted patents. Second even if it were about granted patents, the quality of many a patent are bad. However, one could argue that it is an indication of innovation, although this indication might be skewed.
On 24 July 2015, gLAWcal (Global Law Initiatives for Sustainable Development) invited Dr. Lin Xu, Deputy Director of Legal Affairs Division of Trademark Review and Adjudication Board of State Administration for Industry and Commerce, People’s Republic of China provided a lecture on “The Registration, Use and Protection of Trademarks in China”. Professor Paolo Farah (University Institute of European Studies (IUSE) Turin, Italy and gLAWcal gave the introduction.
China Film Insider cites Mr Cheng Wu, VP of Tencent Holdings that the value of IP does not come from transactions but from co-creation. At the UP2016 Tencent Interactive Entertainment 2016 Annual Press Conference, Wu made clear that he does not believe in a competition between content and copyright. “IP’s value comes from the emotional […]
China Daily reports on a car dealer in Binzhou in Shandong province which is offering imitations of well-known trademarked automobiles such as Audi, Jixiangjinma and BMW. These electric knock-offs are priced at 20,000 yuan, are powered by small batteries and can not go faster than 26 km/h. Hat tip to China Lawyer Edward Lehman of Lehman, […]
Last Summer (23 July 2015) gLAWcal, which is the Global Law Initiatives for Sustainable Development based in the UK, invited Judge Dr. Zhang Lingling, Beijing IP Court for Patent Examination and Invalidation and Trademark Enforcement to give a lecture on “China’s Copyright Law and Typical Cases”.
The event was held at Peking University, School of Government, Center for European Studies, in Beijing. Introduced by and comments from Professor Paolo Farah (University Institute of European Studies, IUSE, Turin, Italy and gLAWcal – Global Law Initiatives for Sustainable Development). The event was organized by gLAWcal – in collaboration with University Institute of European Studies (IUSE) in Turin, Italy, Peking University, School of Government, Center for European Studies (China), Tsinghua University, School of Law, Beijing (China) in the framework of the European Union Research Executive Agency IRSES Project “Liberalism in Between Europe And China” (LIBEAC).
Rogier Creemers posted a translated revision draft (undated) of the Internet Domain Name Management Rules of which the Ministry of Industry and Information Technology is seeking opinions.
The rules give a definition of domain name, referring to a “digital indicator that is used on the Internet to distinguish and orient the hierarchical structure of computers, and corresponds to the computer’s Internet protocol (IP) address.” The Top Level Domain names (TLD) are the codes on the right-hand side of the dot. China’s country-code Top Level Domain names (ccTLD) are CN and 中国.
New TLDs can both form an opportunity and a threat for brand and trademark holders, because of the risk of cybersquatters.
The rules make those responsible for the domain name systems (telecommunications management bodies, domain name root server-running bodies, domain name registration management bodies and domain name registration service) also responsible for censorship, just as internet service providers are. See for example Article 4:
All provincial, autonomous region and municipal telecommunications management bureaus are responsible for domain name services supervision and management within their own administrative areas, their main tasks are:
(1) Implementing and enforcing domain name management laws, administrative regulations, rules and policies;
(2) managing domain name registration service bodies within their administrative areas;
(3) assisting the Ministry of Industry and Information Technology in conducting management over domain name root server-running bodies and domain name registration and management bodies within their administrative areas;
(4) being responsible for network and information security management of the domain name system within their administrative area;)
(5) protecting users’ personal information and lawful rights and interests according to the law;
(6) managing domain name resolution services within their administrative areas;
(7) managing other activities concerning domain name services within their administrative areas.
In contrast to internet service providers, it seems that in this draft, the domain name system bureaus are not so much made responsible for the enforcement of copyright and trademark infringements.
click on photo for high resolution picture of the advertisement
27 February 2016, the Hong Kong government placed an advertisement in some Hong Kong newspapers, including the Oriental Daily (東方日報) to advocate the adoption of the Copyright (Amendment) Bill 2014, next week. The Hong Kong government has chosen this surprising method to advocate the passing of the bill, and blaming the Pan-Democrats in the process for the delays. Let us see whether this “government by advertisements” will be effective. My prediction is that the bill will be withdrawn by Friday.
Here is a translation of the text of the advertisement:
“The Government appeals to LegCo (Legislative Council) in the overall interests of Hong Kong, for the timely adoption of the draft amendment of the Copyright Ordinance!
The objective fact is that:
(1.) after 16 months and 24 carefully held meetings on the draft by members of the current LegCo Council Bills Committee which were considered eligible members who support the resumption of the Second Reading of the bill.
(2.) The Legislative Assembly decided to resume the Second Reading of the draft, was to be held in 7 meetings, of which five times they were discontinued.
(3.) In the last more than two months, the Council of the General Assembly spent 75 hours, 55 hours was spent on headcounts requested by Pan-Democratic members or proposed suspensions and adjournments of the debate.
(4.) A draft is provided that is better than the current legislation to protect intellectual property rights and is supported by copyright holders, the Bar Association and the Law Society, Hong Kong’s economic and commercial development is essential.
(5.) The draft of the copyright exemption provides more user protection.
(6.) Due to the Pan-Democrats continued filibustering, the Legislative Council has now a backlog of six government bills and resolutions, while the current legislative session has less than five months to go. The Legislative Assembly shall be expected to handle up to a total of 28 Bills, covering a wide range of social, economic and livelihood issues.
The Government hereby urges the Legislative Council in the overall interest of Hong Kong, to timely adopt the draft amendments to the Copyright Ordinance!
The Legislative Assembly has next week still two days and a half to consider the draft. If the debate will not be completed, the Secretary for Commerce and Economic Development will propose an adjournment motion on March 4, Friday, to withdraw the Bill.
Commerce and Economic Development Bureau.”
Yours truly answered some questions about the bill, that is not as bad as the opponents like us to believe and not as good as the proponents like us to believe, to the press, see here. Also I wrote an opinion piece about it for the South China Morning Post, see here.
21 October 2015, Baroness Neville-Rolfe gave a speech in London about the UK-PRC relationship in regard to IP, see here.
After summing up the achievements in this field by both states, she points to the room for improvements: “Of course, there is more to be done. We must ensure that the lessons learnt from these successes are incorporated into “business-as-usual” on Alibaba websites, including by: streamlining notice-and-takedown procedures; further enhancing pre-emptive filters to prevent criminal scale infringements from happening in the first place; and smoother linking of on- and off-line enforcement.”
Unfortunately, if one reads the IP chapter in the leaked TPP (5 October 2015), it seems that the tide is against a statutory obligation for online service providers to monitor the content of their servers:
“6. Eligibility for the limitations in paragraph 1 may not be conditioned on the Internet Service Provider monitoring its service or affirmatively seeking facts indicating infringing activity.”
Another panel was discussing “Hong Kong’s Response” on patent reform chaired by Mr. Thomas Tsang (photo: left), Assistant Director (Patents), HKIPD. First speaker of that panel was Ms. Charmaine Koo (photo: right), Partner and Co-Head of Deacons IP Department: She put Hong Kong’s lack of an independent patent system in perspective by remarking that Macao S.A.R. has an independent patent system, and that Hong Kong is in the same league as … Fiji and the Seychelles.
Ms Koo realistically sees many problems but, tried her best to provide the best arguments for the implementation of Hong Kong’s OGP. In general a perception by R&D companies that the level of protection and enforcement in Hong Kong is at a high level is important. In particular to OGP: Singapore’s GDP increased after the implementation of their OGP.
Ms Koo argued that if Hong Kong would do the examination and grant OGPs under Hong Kong law, and not under PRC or EU law, this could be beneficial to the needs of Hong Kong. It would be also interesting if SIPO would recognize Hong Kong OGPs in China. This could distinguish Hong Kong OGPs from Chinese patents by a higher standard in quality.
Professor Alice Lee, Associate Dean Faculty of law, University of Hong Kong advocated a culture of innovation which should start at school. This is a sound analysis: innovation cannot start early enough. Therefore, rote learning should make place for liberating education, which can lead to environment what provides room for experimenting and can incubate innovation.
Mr. Kenneth Yip, Vice President, International IP Commercialization Council (IIPCC) was looking into the future, and questioned the wisdom to invest into a new OGP system which might takes years, especially since nobody knows what will happen when the “two systems, one country” period of 50 years will expires, now after 32 years. Mr Yip points to the use of patents not for innovation, but for fundraising purposes and grants for professors and other researchers.
Dr. Yahong Li (photo: middle), Associate Professor, Faculty of Law, University of Hong Kong, demonstrated how innovation has been prioritised in the People’s Republic of China during the years.
– National Medium and Long Term Plan for Science and Technology Development 2006-2020, which declared sanguinely that China will become an innovation-based economy by 2020!
– The State Council “383” reform plan (2013), “Promoting innovation is one of the eight key reform priorities.”
– National Patent Development Strategies (2011-2020), “China will rank among the top two in the world in terms of the annual number of patents for inventions.” The total number of patent applications by 2015: 2 million. “The patent system has not become fully integrated with development of socialist market economy, and its role has not been brought into full play in guiding industrial restructuring and upgrading and promoting China’s innovation capacity.”
– Outlines of National IP Strategies (2008): “improving the capacity to create, utilize, protect and administer IPRs, and making China an innovative country.”
Professor Li’s conclusion that quantity of patents does not necessarily translate into innovation hits the nail on the head. She argued rightly that “national innovation and competitiveness eventually depend on true innovative culture and comprehensive innovation framework including the effective
mechanisms for tech transfer and commercialization.”
Professor Bryan Mercurio (photo), Vice Chancellor’s Outstanding Fellow of Faculty of Law of the Chinese University of Hong Kong discussed “Amending the TRIPS Agreement to Promote Innovation” and posed some interesting What if… questions.
Professor Mercurio went directly to the point:
Since there is no conclusive answer to the question whether IP stifles or stimulates innovation, scholarship gives a mixed results depending on a multitude of factors, he wisely recommends further research on the correlation or causal relationship between IPRs (particularly patents) and innovation, including indirect benefits for innovation which patent protection may provide.
Professor Mercurio recommends to re-evaluate the purpose of the TRIPS Agreement. Is innovation a core part of the Agreement? And one should consider adding more detail to Article 27 (1) so as to ensure that it compliments rather than hampers innovation.
Professor Mercurio poses the question whether the current scope and duration of patent protection is suitable for all industries and sectors or whether some differentiation would benefit innovation. Professor Rader disagreed and tried to illustrate it with an example about fat cells in your chest and that the invention cannot be caught by one technology but moves across technologies. It seems to me that Professor Mercurio’s one size does not fit all, makes more sense. One could for example make the duration dependent to the redemption date of the investment plus some profit.
Another sound proposal of Professor Mercurio is adding a more direct and enforceable mandate in TRIPS in regards to patent protection, competition and innovation.
After Dr. Marcelo Thompson (photo), Deputy Director, HKU Law & Technology Center chaired the panel discussing the Worldwide Patent Law Reform. Mr Timothy Hancock, President of Asian Patent Attorneys Association Hong Kong Group looked back the last three decades, when IP in Hong Kong was not the omnipresent field of law as it is nowadays, when Anton Pillar cases were frequent and when UK design rights automatically applied in Hong Kong. Mr Hancock explained that the use of the professional titles patent agent and attorney were controversial and would probably be regulated.
Mr Hancock’s Asian Patent Attorneys Association Hong Kong Group, the Law Society of Hong Kong;
and the Hong Kong Institute of Trade Mark Practitioners do not see a business case for having an OGP system. In contrast, the Hong Kong Institute of Patent Attorneys and the Hong Kong Institute of Patent Practitioners think it is beneficial for HK.
Dr. Jasemine Chambers (photo: right), Of Counsel, Wilson Sonsini Goodrich & Rosati, P.C., gave an overview of the implementation of the American Invent Act (AIA) which became effective in September 16, 2011 (PL 112-29). Dr. Chambers made clear that the AIA was the most significant patent reform in the U.S. since 1836, or at least the Patent Act of 1952. The AIA transitioned the U.S. from a first-to-invent to a first-to-file country (effective in March 16, 2013), it defines prior art (more broad) and grace period (more narrow). The goal of the AIA is to encourage innovation and create jobs. Dr. Chambers described the difficult creation of the AIA, which took 10 years. See more here: http://www.aipla.org/advocacy/congress/aia/Pages/summary.aspx.
Professor Randall Rader (George Washington University School of Law), former Chief Judge of the United States Court of Appeals for the Federal Circuit, who is now busy working as an arbitrator gave the keynote speech “US Patent System and the Lessons to Hong Kong”.
Professor Rader gave example of the blessings of the patent system by pointing to cancer research. Not only one cannot map the genome of healthy cells but also of cancerous cells. In the latter case there are many anomalies in the cell. Because there are so many, not one single inventor can come up with all medical solutions. Professor Rader argued that the patent system is crucial not only because it is a way for inventors to get a loan at a bank or be rewarded and continue their research, but because of the disclosures intrinsic to the patent system it is the way for other researchers to learn about the research and to collaborate and be linked to other scientists. Therefore the Hong Kong patent system can be a conduit for facilitating this international collaboration.
Most learning, Professor Rader, asserted goes incrementally, little by little. Unlike insights by people like Einstein, who happened to be a patent examiner at the Swiss patent office. Professor Rader pointed out the relation between Einstein’s work to examine the transmission of electric signals and electrical-mechanical synchronization of time, and his thought experiments that led him to his conclusion about the nature of light and the fundamental connection between space and time.
“Maybe the next Einstein was born in Manila or Hong Kong and can be identified by the patent system.”
Professor Rader argued that successful corporations can be identified by their IP. From idle ideas to profit via the patent.
According to Professor Rader Hong Kong is well positioned to a centre for adjudication, since the special administrative region has one foot in common law and one foot in the civil law.
Professor Rader argued that the grant of a patent to the inventor was a fundamental human right: dignity to the inventor for a valuable contribution to society, in many times a life’s endeavour.
For Professor Rader the question whether patents are stimulating or stifling innovation is unequivocally clear: each patent that is granted should by definition be an advance over the prior art. Professor Rader asserted that there is no such thing as the tragedy of the anti-commons in regard to inventions in biomedical research, and, referring to an article by Michael Heller and Rebecca Eisenberg “Can Patents Deter Innovation? The Anticommons in Biomedical Research” Science 280, 698 (1998), https://www.cornellcollege.edu/dimensions/workshops/reading-group-resources/science-280.pdf, said that it could not be proofed. However, I think it was Heller and Eisenberg’s goal to signal potential problems with the patent system. Therefore, one can argue that there is also no conclusive proof that the patent system is only beneficial for the creation of innovation.
After some welcome words of Professor Michael Hor (photo middle), the relatively new Dean of the Faculty of Law of HKU, Professor Paul Cheung (photo: right), Associate Vice President, Director of HKU Tech Transfer Office, talked briefly about the relationship of patents and innovation in China. He argued that the growth in the Chinese patents was indicative of the growth in innovation. (I would like to add to Professor Cheung’s words that the lion’s share of the patents or utility model patents and not invention patents, and that the quality of the patents might be very low since provincial and municipal governments provide subsidies for patents. A better yardstick might be the registration of patents by Chinese persons and companies abroad).
Then Ms Ada Leung (photo), the new Director of Hong Kong Intellectual Property Department (IPD) spoke about the 2011 public consultation on plans for the introduction of an Original Grant Patent (OGP) system in Hong Kong. At the moment the IPD can only re-register patents that were examined and granted by the Office for the Harmonisation of the Internal Market (OHIM), United Kingdom’s Intellectual Property Office (IPO) or China’s State Intellectual Property Office (SIPO). Via the public consultation the IPD is listening to the arguments of scholars, practitioners, interested parties and the public to find out the following: – whether Hong Kong IPD should be able to register OGPs, next to re-registering patents that have been granted by OHIM, IPO or SIPO; – and in case the answer is yes, whether Hong Kong should be able to do the examination themselves, which means acquire the knowledge and experience, or outsource it to a place that has the knowledge and experience. Ms Leung announced that in the first half of 2015 a new bill will be announced, which takes into account the comments of the public consultation. It seems that Hong Kong will choose for an OGP system next to the possibility of re-registration and is willing to build up the expertise in examination from scratch. Ms Leung told that the plan is that SIPO will help IPD with building up the expertise. This is a surprising choice given SIPO’s backlog and the alternatives of places that can help Hong Kong up to speed to set high standards of examination so that quality patents will be granted. See more of the Worldwide Patent Law Reform and Hong Kong’s Response Workshop here: http://www.ipdragon.org/2015/01/17/worldwide-patent-law-reform-and-hong-kongs-response-hku-workshop/.
University of Hong Kong Law & Technology Centre and the Intellectual Property Department of Hong Kong organized the IP Forum 2015 on 16 January 2015 at HKU. The topic was “Patent and Innovation: Worldwide Patent Law Reform and Hong Kong’s Response”. The question that would be raised was, and hopefully answered was: “Can patent promote innovation?” Just as the poster announcing the event promised the forum/workshop brought “international and local patent law scholars and practitioners to explore the patent law reform around the world and Hong Kong’s proposed change to introduce an “original grant patent” system, and to discuss how these changes may be conducive to innovation.”
The Third Amendment to the Trademark Law, which, together with the revised Trademark Regulations, came into effect May 1st, 2014, in combination with the Well-known Trademark Recognition and Protection Regulations stipulated by the State Administration for Industry and Commerce (SAIC), came into effect on May 17, 2014, will clarify among other things:
– The routes to get recognition of one’s trademark as well-known, so that one’s trademark will benefit from the extended protection;
– Well-known trademarks can no longer be used as a promotional tool;
– The threshold for well-knownness.
The preliminary question is why we need well-known trademarks?
The idea of the well-known trademark doctrine can be seen as a correction to the territoriality principle of trademark law. This is especially useful if proprietors have been relying on unregistered marks if they are coming from a first-to-use country, only to find out that in the first-to-file markets, such as China, where they would like to become active, their marks have already been registered. Or if they have never used a trademark in a country (in case of first-to-use countries).
At the 1925 revision of the Paris Convention for the Protection of Industrial Property at The Hague in the Netherlands, it was decided that holders of marks should be protected against registration or use of a trademark for identical or similar goods which constitutes a reproduction, imitation or translation and which can create confusion of a registered or unregistered but used mark that is considered well-known by the competent authority of the country (Art. 6bis(1) Paris Convention).
Article 16(2) TRIPS extended Article 6bis Paris Convention (Stockholm Act of 1967) to services, and according to Art. 16(3) TRIPS to dissimilar goods or services, as long as the mark would indicate a connection between those goods or services and the owner of the registered trademark and provided that the interests of the owner of the registered trademark are likely to be damaged by such use (indicating protection against trademark dilution).
In short, each WTO member should protect:
– Unregistered well-known marks against misrepresentation by an identical or similar trademark for an identical or similar goods or services;
– Registered well-known trademark against misrepresentation or misappropriation by an idential/similar trademark for identical/similar or dissimilar goods or services.
What are China obligations in regard to the protection of well-known trademarks?
China has made it clear in Article 14 Trademark Law 2014 that to the recognition and protection of well-known trademarks should be applied using the passive protection principle, a necessity check and on a case-by-case basis. The passive protection principle means that, although Art. 6bis Paris Convention allows the refusal or cancellation of a trademark “ex officio” (which means that the competent authority, by virtue of the office, can take the initiative) in case of a well-known trademark, but China chooses not to permit this in their legislation. Only the trademark holder can request the protection of a well-known trademark.
The necessity check means that the Trademark Office (TMO), Trademark Review and Adjudication Board (TRAB) or people’s courts first need to look for alternative ways to solve the problem, for example if possible solving the case as a conventional infringement case. Well-known trademark protection should remain a last resort for the Chinese authorities. To deal with well-known trademark protection on a case-by-case basis was already the mode of operation.
Routes to well-knownness: who determines what a well-known trademark is in China?
This depends on the timing of this question:
During the examination phase: the TMO can assess whether the trademark is well-known at the request of the applicant.
During an alleged infringement case: when an AIC is investigating, the TMO can assess whether a trademark is well-known, at the request of the trademark holder.
During opposition/concellation: the TRAB can assess whether a trademark is well-known at the request of the trademark holder.
During litigation: the trademark holder can directly request the court in case of an infringement, or request the court during an administrative appeal to assess whether his/her trademark is well-known .
Be a well-known trademark, but do not shout it of the roofs
Until recently the words “well-known trademark” (驰名商标), in both Chinese and English, could be found on bottles and cans of Qingdao beer (click here). However, times have changed. Apparently there was massive abuse, and therefore the government decided that well-knownness of a trademark cannot be used for promotional purposes. Read the explanation of Wu Qun, vice inspector of TMO under SAIC here.
“Thoroughly known” is a higher threshold than “generally known”. Dropping the seemingly redundant “and enjoys a high reputation in the trademark”, seems to have no influence on the threshold, unless one interprets “high reputation” as a positive connotation, in which case the thresholds can be interpreted also lower, since one no longer has to proof this.
(1) the degree of knowledge or recognition of the mark in the relevant sector of the public;
(2) the duration, extent and geographical area of any use of the mark;
(3) the duration, extent and geographical area of any promotion of the mark, including advertising or publicity and the presentation, at fairs or exhibitions, of the goods and/or services to which the mark applies;
(4) the duration and geographical area of any registrations, and/or any applications for registration, of the mark, to the extent that they reflect use or recognition of the mark;
(5) the record of successful enforcement of rights in the mark, in particular, the extent to which the mark was recognized as well known by competent authorities;
(6) the value associated with the mark.
Leah Chan Grinvald argued in A Tale of Two Theories of Well-Known Marks, that case law in both China (see for example Ferrari vs Jiajian 2007) and the U.S. predominantly apply the Interactional Theory of Consumer Recognition instead of the Passive Perception theory, even though this goes beyond the threshold stated in Art. 16(2) TRIPS and except for Factor (1) of Art. 2(1)(b), Factors (2) to (6) all apply the Passive Perception Theory.
The Passive Perception theory views well-known trademarks as having acquired a unique status. Grinvald referred to Frederick W. Mostert, who argued in Well-Known and Famous Marks: Is Harmony Possible in the Global Village?(86 TRADEMARK REP. 103, 116–17 (1996)) that the evidentiary standard is quite low for internationally well-known trademarks with a presumption in favor of the foreign well-known mark. Instead, the Interactional Theory of Consumer Recognition needs to demonstrate some type of consumer-interaction with the trademark; such as purchases, inquiries, or website activity, according to Grinvald. In light of this distinction the 2014 threshold “thoroughly known” might point to a formalisation of such an interactional theory.
To register one’s trademark in China is preferable over relying on the well-known trademark protection. However, trademark holders should continue to monitor Chinese character versions of the trademark, and register defensively those that are obvious transliterations or phonetic transcriptions.
I will give a course in Transnational Trademark Issues using the Budweiser Conflicts as an illustration, in the China Club Building (9th floor), in Central Hong Kong, this May 17, 2014 between 14.30-17.45.
The Report of the Commission on the Theft of American Intellectual Property which was written in May 2013 by Dennis C. Blair (former Director of National Intelligence and Commander in Chief of the U.S. Pacific Command) and Jon M. Huntsman, Jr (former Ambassador to China, Governor of the state of Utah, and Deputy U.S. Trade Representative) includes the following sentence:
“In China, where many overseas supply chains extend, even ethical multinational companies frequently procure counterfeit items or items whose manufacture benefits from stolen IP, including proprietary business processes, counterfeited machine tools, pirated software, etc.”
One questions how many counterfeits an “ethical” multinational company should procure before it is not considered an ethical multinational company in the eyes of the commission.
The University of Hong Kong organizes the conference ‘Charting the New Frontiers of Intellectual Property Protection of Fashion Brands and Designs’ May 10, 2014. See the programme here. continue reading…
A never ending scholarly debate, put on the agenda by Professor Keith E. Maskus many years ago, about whether intellectual property rights harness or hinder Economic Development including Foreign Direct Investment from North (developed countries) to South (developing countries) has been enriched by Yuan Wang and Huanxing Yang (both Ohio State University, Department of Economics) with some interesting insights.
In their article ‘Foreign Direct Investment Cycles and Intellectual Property Rights in Developing Countries’ Wang and Yang distinguish between short and long run effects of IPR in developing countries.
Their model generates FDI cycles:
“[N]ew FDI, which brings new generations of products, occurs only when the technology gap between the South and the North exactly reaches some threshold. The FDI cycle length captures how frequent new FDI occurs, and in general determines the technology gap between the North and the South. Within this framework, we identify the short run effect and the long run effect of South IPR. In the short run (within each FDI cycle), a stronger IPR tends to discourage imitation and reduce South welfare. However, in the long run (across FDI cycles), a stronger IPR tends to reduce the FDI cycle length (FDI becomes more frequent) and increase South welfare.”
The authorse gave the following example of a FDI cycle in the automotive industry Volkswagen Passat’s production in China (see more here):
“Volkswagen Passat B2 was introduced in Europe in 1981. Its variant Santana has been produced in China since 1986, and another variant Quantum was produced in Brazil from 1985 to 2002. In late 1980s, new generations of Passat, B3 and B4, were introduced in Europe (1988) and North American (1990). But they were never produced in China, and Volkswagen started to produce them in South America only after 1995. However, shortly after the newer generation of Passat, B5, was introduced in 1996 in Europe, Volkswagen started to produce it in China. ”
However, the big improvements in IPR in China came in the run up to WTO membership in 2001 and afterwards, so this example is probably in need of an update.
The conclusion of the study confirms previous findings that developing countries, and especially least-developed countries, each have different IPRs requirements to maximize their welfare.
According to Wang and Yang:
the “North does not always benefit from an increase in the Southern IPR. This is because an increase in the Southern IPR might reduce the equilibrium cycle length. In this case, FDI would occur more frequently, which reduces the expected length of the monopoly of any existing FDI, or the competition among different generations of the Northern FDIs is intensified.”
The Institute for Globalisation and International Regulation (IGIR) of the Maastricht University, led by Professor Anselm Kamperman Sanders, has organized this year a IEEM IP Seminar 2014 on Trade Secrets, Restrictive Covenants and the Knowledge Economy, Macau Cultural Center, May 19-20, 2014.
Then May 21, 2014, the Advanced Professional Update will be held (Programme for the IGIR -IEEM IPKM 2014) in association with the Hong Kong Intellectual Property Department. Read here more. continue reading…
In 2006 Professor Justin Hughes of Cardozo Law School wrote one of the defining articles on Geographical Indications: “Champagne, Feta, and Bourbon: The spirited debate about geographical indications”, you can find here and an excellent presentation here. In his presentation Professor Hughes also mentions the Budweiser cases, starting at 42 minutes see here.
Dr. Christopher Heath of the European Patent Office, wrote a great chapter about “The Budweiser Cases: A Brewing Conflict”, in Christopher Heath and Anselm Kamperman Sanders (eds) Landmark Intellectual Property Cases and Their Legacy, 2011, 181-244, see here.
Inspired by Hughes and Heath this author is teaching on March 8, 2014 a CPD course (3 points) in Hong Kong for The Profectional Company, see here, on these Budweiser cases, since they are a great tool to teach about the following topics:
Rationales of Trademark Law
By the end of this course the participants will know the rationales of trademark law, the essential function of trademark against confusion or a likelihood of confusion: source of origin, quality and product distinctiveness and their derivatives; the doctrines of sponsorship and affiliation confusion, initial-interest confusion, post sale confusion and reverse confusion will be all explained.
Beside the “essential” function, the participants will also learn about the communication, advertisement and investment functions, and the measures against trademark dilution or a likelihood of trademark dilution, which can be crucial for the trademark proprietor. There are two branches of the trademark dilution doctrine, which will be illustrated by relevant case law: trademark dilution by blurring and trademark dilution by tarnishment.
Characteristics of Trademarks
Trademarks will be discussed in regard to different categories, each having very different characteristics: registered/unregistered, inherently distinctive/acquired distinctiveness, well-known/famous/reputable, collective/certification, appellation of origin/geographical indication.
New Challenges for the Trademark
First the history of trademark infringement and trademark dilution will be highlighted in order to better understand the present situation. This course will then elaborate on the challenges of two fundaments of trademark law; territoriality principle in regard to globalisation and the internet, and the specialty principle and the problems related to the Nice Classification. Alternative systems will also be reviewed.
Relevant Treaty Law for Geographical Indications
The course will explicate how collective/certification trademarks, Paris Convention, TRIPS and Lisbon Agreements are relevant for the protection of Geographical Indications, the similarities and differences in the different jurisdictions will be discussed. The participants will understand the relation and conflict between a normal trademark and a Geographical Indication.
European Intellectual Property Law
This course includes a primer on EU IP law; the participants will understand the difference between regulations and directives, and how the National Courts of the EU, the European Court of Justice/Court of Justice of the European Union and the Advocate General of the CJEU and their relationships.
The Budweiser Cases
After comprehending the aforementioned building blocks of the course, the participants will fully appreciate and comprehend the rich case law on the manifold Budweiser legal conflicts which will be reviewed. By the end of this course, the participants will have an up-to-date knowledge of the ECJ/CJEU decisions and even an ECHR (human rights) judgment in regard to the Budweiser cases.
A Team of law students, who are members of the Intellectual Property law Fellowship at the Thomas Jefferson School of Law in San Diego, California, are working on a Research Project directed toward aiding patent attorneys in developing international patent filing strategies for biotechnology and pharmaceutical companies. With the help of IP Dragon readers, the Team is working to amass statistically significant survey data on the countries patent attorneys are filing patents in for their biotechnology and pharmaceutical clients most often, and the factors considered when making the decisions to file.
As China institutes the universal healthcare program and modernizes its economy, the demand for biotech and pharmaceutical products will likely increase. With increased demand, the market competition and incentive for companies to patent their research and products will likely increase as well. Once the results of the survey are published, policy makers will have more information on the factors patent attorneys from different countries consider most important when making their filing decisions. The results will also give Chinese patent attorneys better information as to where in the world they can promote their legal services and partner with foreign law firms for patent applications being filed in China. Responses from Chinese patent attorneys will be particularly valuable to see where the growing life sciences sector in China intends export its new products.
The survey is open to patent attorneys from any country who prosecute patents in the biotechnology of pharmaceutical sectors. The survey can be found by following the hyperlink below. All personally identifiable information will be kept confidential. It should take approximately 15 minutes to complete. As a token of our gratitude for completing the survey, respondents have the voluntary option of entering in their email address to receive the survey results when they are released, and to be considered in a drawing for one of several gifts.
If you would like more information or have any questions about this project please visit: http://www.tjsl.edu/news-media/2013/10478 or email one of the team members directly at: firstname.lastname@example.org. The results of the survey will be released on April 11, 2014, in San Diego, at a public seminar event with panel discussions on the evolving field of international patent law.
Thank you for your time and thank you to IP Dragon for allowing this guest post.
Baidu Inc. and QVOD were each fined 250,000 RMB on December 27, 2013 for copyright infringement by the National Copyright Administration of China (NCA) and had to enjoin their infringing activities. The NCA started the investigation on November 19, 2013 after receiving complaints from Youku Tudou (since the merger in 2012 China’s biggest video website operator), LeTV, Sohu, Tencent, MPA, CODA, Wanda Films and Enlight Media; that Baidu Video, Baidu TV Stick, Baidu Yingyin media player and Baidu Video mobile app had infringed their copyrights. The complaints were also directed against QVOD, another software video player.
The Global Times reported that the 250,000 RMB was the highest fine the NCA could give to Baidu and QVOD. However, this would be only correct if the illegal earnings were no more than 50,000 RMB. If the illegal revenues exceeded 50,000 RMB the maximum is five times the amount of the illegal revenues, and they can also confiscate the equipment such as computers that is mainly used to provide the network service. See Articles 18 and 19 Regulation on the Protection of the Right to Network Dissemination of Information (updated February 25, 2013 by Bridge IP Law).
Wang Fan wrote for the China Daily here about a campaign to deter illegal streaming of unauthorised videos in June, when 20 video website operators had to submit documents to the NCA to demonstrate that they had authorisation to stream 2,374 different films and television programmes.
250,000 RMB? What happened to the claim of 300 million RMB?
The administrative route is a relatively time and costs efficient mode of enforcement in China, but it lacks the remedy of compensation of damages. Therefore it was to be expected that on November 13, 2013, a consortium of video companies announced at a press conference at the Beijing Shangri-La that they were going to file a lawsuit against Baidu and claim 300 million RMB in damages. Paul Bischoff of Tech in Asia reported that Youku Tudou (since the merger in 2012 China’s biggest videosite), LeTV, Sohu, Tencent, CODA, Wanda Films and Enlight Media and other video companies were unified in the “China Online Video Anti-Piracy Alliance”.
According to Eric de Fonenay of MusicDish, Capital Copyright Industry Alliance Capital Protection Division, the China Radio and Television Association of the Television Production Committee, and many Chinese production companies gave acte de présence, see here. The Motion Picture Association of America (MPAA), Sony Pictures Entertainment, Warner Brothers, Disney and Paramount were present too, see here, although, according to Brid-Aine Parnell of The Register, the MPAA did not join the copyright infringement claim, see here. Ms Parnell wrote also that the alliance had tried to negotiate with Baidu, to no avail, because according to her Baidu would not agree to rules on violating copyright unless QVOD did the same.
Baidu argued that it took already four steps towards mitigating piracy: Research and development into an automatic piracy filtration system; Open complaint channels where a 24-hour team reviews reports of pirated content and consequently removes it; recommending high quality genuine content to steer users away from pirated material and Baidu’s web search will stop linking to pirated video sites.
Copyright infringement? Taking unfair advantage?
According to Global Times’ Li Qiaoyi Baidu and QVOD were “identified as the top two violators of copyrighted video content for 2013” by Yu Cike, head of the department of copyright management, of the NCA.
The claim against Baidu and QVOD was that they deeplinked to copyrighted videos without authorisation: in other words that copyrighted content of third parties were directly accessible via Baidu or QVOD video players. This way, the rights holders were deprived of their right to communicate their works, performances or audio-visual recordings to the public (conform Article 8 WIPO Copyright Treaty to which China is a member since 2007, compare the language used in Article 26 Regulation), and internet users never had to visit the third parties’ sites, and devoid of advertisements on those sites. At the same time Baidu and QVOD were taking unfair advantage of the content, storage and bandwidth of the rights holders of the videos.
One can argue that the CJEU rule that “transmission and retransmission of works (even where those [users] streaming the content were legally permitted to view the original broadcast) constitutes a “communication to the public”, can be applied in this case as well. Read Annsley Merelle Ward’s analysis at IP Kat.
China has safe harbour provisions for online (network) service providers against secondary liability in case of copyright liability, comparable to the DMCA in the US (the E-Commerce Directive in the EU works horizontally, and is applicable to trademark infringements too, and is not just applicable to copyright infringement, anti-circumvention and technological adjuncts). Articles 18 (1) and 19(2) Regulation state that the network service provider is liable for copyright infringement if it is providing works, performances, or audio-visual recordings to the public through the information network without permission; and is obtaining economic benefits. The safe harbour provisions are not providing immunity against liability in case of actual or constructed knowledge, see Articles 22 (3-4), 23 Regulation.
Another claim was that Baidu provided access to video sites that host pirated content and do not have official licensing to operate in China. It was also stated that Baidu was profiting from advertising revenue sharing agreements with such sites.
Professor Eric Priest of the University of Oregon School of Law sets out in ‘The Future of Music and Film Piracy in China‘, that the conflicts about piracy of videos (at least for the part that are permitted by the Chinese authorities) could be prevented if China would apply an Alternative Compensation System (ACS) (where for example a percentage of the costs of an internet subscription via a fixed line of mobile will be redistributed to the rights holders in the relation to the usage of their works). The future Professor Priest outlined in his 2006 publication in Berkeley Technology Law Journal, is still worth considering today. The Institute for Information Law (IViR) in Amsterdam is doing a comprehensive study between 2012 and 2015 on ACS under the guidance of principal investigator Professor P. Bernt Hugenholtz, see here. continue reading…
This course will provide an insight into transnational trademark law. The trademark law in Hong Kong will be used as a reference point: to clarify the differences and similarities between the Hong Kong, EU and US systems.
The course will illustrate transnational trademark law in the process via the ongoing legal battles between the US and Czech beer breweries in many jurisdictions all over the world. Rationales of trademark law, trademark categories and new challenges for the trademark are building blocks to comprehend the cases that will be used. The case law, including that of the CJEU, makes clear that beside trademark law, EU regulations about Geographical Indications, the Lisbon Agreement to Protect Appellations of Origin, contract law and bilateral agreements are all relevant factors to the matter.
If you are interested in IPR, CPD points or beer, this course is for you. At a great location: The Chinese Club of Hong Kong in Central. See the curriculum of The Profectional Company course, and participate now here.
China’s increasing economic power keeps on rumbling. While the US and UK seemed like identical twins in regard to foreign policy during the Bush-Blair era, recently the Anglo-American unity in regard a policy towards China seems to be diverging. David Cameron, the UK prime minister and leader of the Conservative Party, has jumped on the seemingly unstoppable train of China’s economic successes (according to Cameron: “Last year China became the world’s largest trading nation. Next year China is set to become the world’s largest importer of goods and later this century it will become the world’s biggest economy.”), while the US and also the other EU countries, seem to be more circumspect.
Cameron’s message to open up the EU for trade with China coincides with the UK’s biggest trade delegation ever to visit China (131 persons). The IP industries are well represented: executives from the automotive industry which is IP intensive (Jaguar Land Rover), Royal Dutch Shell (patents), GlaxoSmithKline (patents), TalkTalk (music copyright) and the football Premier League (copyright and broadcasting rights), TV producer Peter Bazalgette (formats/copyrights), etc., read more here.
See James Chapman’s article ‘China’s an opportunity, not a threat, gushes Cameron: PM uses interview to say nation’s rise is a ‘defining fact’ of our age – even if the West doesn’t like it’ for the Daily Mail, see here.
Chapman wrote: “Mr Cameron is also promising to speed up the process for patents so that businesses concerned about the economic impact of intellectual property infringement in China, estimated to cost from tens of millions to several billion pounds. In 2012, 1 in 4 UK businesses were put off doing business overseas due to concerns around intellectual property theft.”
Gary Locke, the US ambassador to China, articulated a similar concern perceived by US businesses that operate in China. According to Edmond Elococo: “There is still a long road ahead before right holders in China can feel confident that their IPR will be both fully protected under the law and effectively enforced,” Locke told the 2013 U.S. Ambassador’s Intellectual Property Rights Round-table. At the same time, he said China’s enforcement regimes are “clearly moving in the right direction.” Elococo’s article for Bloomberg News here, and he notes that Locke argued that China’s IP lacks transparency and consistency (which is a recurring theme at IP Dragon and in ‘Paper Tiger or Roaring Dragon, China’s TRIPS Implementations‘).
David Cameron, UK Prime Minister
The differences in emphasis might be summarised as follows: The UK sees the status of China as an economic superpower as a fait-accompli or at least a seront accomplies and even though UK businesses perceive that their IP is not adequately protected in China, the UK government does not want to pressure China to improve its IP regime and implicitly seems to encourage the UK businesses to find a way to deal with it. And regardless the effectiveness of China’s IP regime, the UK is advocating an EU free trade agreement with China. Chapman argued that other EU countries feared that this will result in cheap and fake products originating from China flooding the EU market.
The US government is stating more neutrally that China’s IP is transparent nor consistent and that US rights holders do not feel confident that their rights will be effectively protected and enforced, and it seems not to be afraid put pressure on China to further improve its IP system.
Locke’s remarks proved to be sensitive for Foreign Ministry spokesman Qin Gang: “We hope that the U.S. can be more objective and fair in understanding this. We hope that relevant countries can strengthen dialogue and not keep applying pressure and blame.”
In your opinion, what will be the most successful approach to improve IP enforcement in China: more trade or more political pressure? And is it fair that the UK government is not willing to exert pressure, and therefore probably landing lucrative trade deals with China, but if US pressure is successful it benefits from this as well?
Gary Locke (US Ambassador to China, since 2011) and John Locke (English philosopher of the Enlightenment and writer of Two Treatises of Government, which includes Locke’s theory on property, 1689) two advocates of the protection of property, which one can argue includes intellectual property rights. continue reading…
At the HK/EU Expert Conference on cooperation in protecting and developing IP and brands at the beginning of this month, Peter Cheung, director of Intellectual Property Department (IPD) of Hong Kong SAR, is demonstrating that he is a man of all seasons in regard to encouraging smell marks in Hong Kong. Under the name Fragrant Hong Kong, which is a well chosen pleonasm since Hong Kong already means “fragrant harbour”, each season has its own activities to raise awareness about and interest in smell marks, see here, suggesting that a company can provide a good with different smells for different seasons. One of the non-traditional marks Hong Kong allows is the smell mark (Cap. 559 Trade Mark Ordinance of Hong Kong, Section 3(2). Like any trademark it should be distinctive. Applicants cannot just provide a chemical formula, but must also give a description that is clear for members of the public looking at the electronic register exactly what the mark is being applied for.
香 heung/xiang= fragrant
港 gong/gang = harbour
香港= Hong Kong (En), Heung Gong (Cant.), Xiang Gang (Cn)= fragrant harbour
The IPD’s philosophy is that companies can compete using all sensory stimuli in their goods and will organise the Global Sensory Branding Forum in Hong Kong in 2014. continue reading…
During the IP HK-EU Series 2013 Expert Conference, which was entitled “Hong Kong – European Union Cooperation in Protecting and Developing Intellectual Property and Brands: Current Situation and Future Trend”, September 2 at the Hong Kong Baptist University, Albert Ho, Assistant Commissioner, Intelligence and Investigation Branch, Hong Kong Customs and Excise, shared some great ideas that would help right holders worldwide enforce their rights in Hong Kong.
Innovative rights holders can stay one step ahead the producers of counterfeits, but they have to inform the customs of how to distinguish between genuine and counterfeit products. The practice was that a representative of the rights holders goes to the customs and checks whether the products are genuine or not, or gives the customs training to be able to do this by themselves. Hong Kong Customs and Excise has been thinking outside of the box about ways that rights holders outside Kong Kong can help determine Hong Kong Customs what is counterfeit.
Hong Kong Customs and Excise is developing electronic recordation of the goods;
A video-link could be established between Hong Kong Customs and the rights holder, so that the latter can virtually examine whether the goods are counterfeit;
The rights holder can send the design file of their product which includes some indicators that distinguish genuine from counterfeit to Hong Kong Customs, which they subsequently can print out via a 3D printer.
In the wake of a prostitution scandal involving a famous investor (Xue Manzi) and the trial of the former secretary of the Communist Party in Chongqing on the suspicion of corruption (Bo Xilai), the Chinese government via the People’s Daily urged popular Weibo accounts (China’s version of Twitter) that have more than a million followers (also known as 大 V (Big Verified) Weibo users) to take the national interest into account when tweeting. Read Brian Spegele’s article for China Real Time (WSJ) here.
By listening to what the population is tweeting and sometimes to act upon public outcries the Chinese government is experimenting with a selective direct digital democracy. But as the exhortation in the People’s Daily shows it wants to use the Chinese twittersphere not just passively but also actively as an instrument to influence the people.
Read Danny Friedmann, Paradoxes, Google and China – How Censorship Can Harm and Intellectual Property Can Harness Innovation in GOOGLE AND THE LAW: IT AND THE LAW, (Aurelio Lopez-Tarruella, ed., TMC Asser, 2012), here.
Tesla Motors planned to sell its Model S in China as of 2013. It’s already doing so in the U.S. and Europe. However, the sale of the cars, made in California and the Netherlands, have been stalled allegedly partly by a trademark squatter/troll or more politically correct “an entity using the trademark not in a trademark sense”. Reuters wrote that Zhan Baosheng registered the Chinese trademark in 2006 for a logo at Jinda Trademark agency in Guangzhou, that seems identical, apart from the TESLA lettering which is a bit different. The car on the Zhan’s Tesla Motors site is similar to Tesla Model S, is likely to confuse consumers and it seems not too difficult to claim copyright infringement.
Account shall be taken of the following factors in the establishment of the well-known mark:
1. reputation of the mark to the relevant public;
2. time for continued use of the mark;
3. consecutive time, extent and geographic area of advertisement of the mark;
4. records of protection of the mark as a well-known mark, and;
5. any other factors relevant to the reputation of the mark.
The trademark Tesla has been used since 2003. One can argue that at least the last 7 years it has a reputation world wide in the market for electric cars. One can also argue that the defendant by setting up a site with copyright infringing computer renditions of a car similar to Tesla Model S has not really made use of the trademark in the trademark sense (has not made use of the trademark in the course of trade). Article 41 Trademark Law explicates that if a well known mark was registered in bad faith the limitation to dispute the approval of a trademark with the Trademark Review and Adjudication Board (TRAB) does not count.
Read also Reuters’ article written by Norihiko Shirouzu and Samuel Shen here. More about Well known trademarks in China, read Wan Jun’s terse article Well-known Trademark Certification: Practical Thinking of “Dual-track System” in China IP Magazine, here. Or Jing “Brad” Luo & Shubha Ghosh”s scholarly work “Protection and Enforcement of Well-Known Mark Rights in China: History, Theory and Future” in the Northwestern Journal of Technology and Intellectual Property 2009, see here.
UPDATE (August 7, 2014) : The China Daily reports that Tesla’s CEO Elon Musk and Chinese businessman Zhan Baosheng came to a settlement and resolved the trademark dispute, read here.
China and Indonesia just signed a Memorandum of Understanding (MOU) on IPR cooperation, see here. In regard to the necessity of the protection of traditional knowledge and genetic resources China has found an ally in Indonesia.
Peter Leung of Managing IP wrote the blog post Intellectual Property with Chinese characteristics about China’s more assertive stance in regard to international IP standards. That while smaller countries work to comply to international IP standards, “China, while also doing that, has also the clout to change the standard themselves.”
It will be interesting to watch whether cooperation with countries such as Indonesia can help in accomplishing China’s goal of establishing traditional knowledge and genetic resources as an international IPR norm.
Where in China are my intellectual property rights most safe, or where in China can I enforce my IPRs best in case of an infringement or commercial dispute? To answer these questions one should ask first where is intellectual property most developed in China? You mean where in China do they most apply for patents registration, trademark registration or software copyright registrations? Or where these were most granted? Or where they enforce intellectual property infringements the most? But if they enforce intellectual property the most, does that mean that that region has the most infringements? Each question poses new questions. To be able to answer the first question “where is IP most developed in China” will remain complex. One can argue that it has to do for the most part with the experience, education and fairness of the People’s courts; are they prone to corruption or local protectionism (localism), can they make impartial independent non-political decisions?
To reduce the complexity and come up with a workable answer IP Dragon has consistently written that Beijing, Shanghai and Shenzhen have the best People’s courts for IP litigation, based on research and experiments of people in the field. The National Intellectual Property Development and Research Center (国家知识产权发展研究中心) of the State Intellectual Property Office (SIPO) seems to confirm this. It published a report about the intellectual property development in different regions in China in the five years between 2007 and 2012.
Numbers 1 to 7 (except for the capital Beijing) are all located at the east coast of China, and which are most economically developed. There is a clear parallel between the inequality between economic development in the east and west of China (Candelaria, Daly and Hale wrote more about the persistent regional inequality in China here (2013) and the imbalance between the IP development in the east and west of China which can be expressed in IP development indices.
Wages are of course lowest in the regions that are less economically developed. Therefore, the choice for certain activities such as manufacturing at a location with low wages should always be weighed against the concomitant IP risks.
Read the 2012 National Intellectual Property Development Report (2012 年全国知识产权发展状况报告) here in Chinese.
Litigating intellectual property rights, especially patents, requires quite some specialised expertise. For a long time, therefore, patent disputes were dealt with by people’s intermediate or higher courts. But since ever more Chinese companies are patenting their design patents, utility patents and invention patents, in many cases subsidised by the government, the work load of these courts have been growing correspondingly.
To see whether some of the work load, namely the design patent and utility patent cases, that are generally deemed more simple, can be transferred to “grassroots” courts, such as district and municipal courts, a pilot programme was started in 2009 at Haidian District Court in Beijing, Yiwu Municipal People’s Court in Zhejiang Province and Kunshan Municipal People’s Court in Jiangsu Province, which was considered successful, so that now the Supreme People’s Court has announced here (Chinese) to expand the number of grassroots courts that can deal with intellectual property rights cases.
The argument that now the experience with IP is bigger and that many judges have more expertise in this field. But the question remains how the judges of these grassroots courts can have built up expertise with IP cases, unless of course they have worked at a people’s intermediate or higher court before.
In the Chinese language grandmother is pópo (婆婆) and a spicy grandmother is là pópo (辣婆婆). As you would already expect it is a bad idea to fool around with the feelings of a spicy grandmother. Spicy Grandmother, the enterprise name of a chain of restaurants in Beijing, was annexed without permission in the trademark logo of Yu Xiang Spicy Grandmother (Yú xiāng là pópo 渝乡辣婆婆), a competing chain of restaurants in Beijing and Shijiazhuang.
Spicy Grandmother sued but lost the case in first instance. They appealed at Beijing No. 2 Intermediate People’s Court, which will rule on the case.
Christian Nowak, Science and Technology Adviser of BEA (Bureau d’Electronic Appliqué), a Belgian company that manufacturing sensors for especially doors. BEA is active in China since 1996. First only with a representative office. But the smart thing BEA did was they registered their invention patents and design patents and a trademark in China.
In 2002, BEA discovered that their product was copied.
China IPR SME Helpdesk posted a video of Nowak explaining how BEA dealt with the case.
According to Mr Nowak he went to a patent attorney, who advised him to go to the State Administration for Industry and Commerce. “And on Monday Morning we were in Shantou city, north of Hong Kong, ringing the bell of the State Administration of Industry and Commerce and requesting the manager in charge of the patent infringement.”
Mr Nowak must have mistaken the State Administration for Industry and Commerce (which is in charge of trademark infringements) with the State Intellectual Property Office (which is in charge of patent infringements).
The raid by the State Administration for Industry and Commerce, or more likely, the State Intellectual Property Office, was successful.
Mr Nowak is enthusiastic about the administrative enforcement route and says that litigation costs too much time and money. If it is simple straightforward case the administrative enforcement route might be recommendable. The real question is, however, whether the activities at the infringing premise will not be resumed a little bit later somewhere else. To avoid this waterbedding effect, one might want to really strike hard at the infringers, piercing the waterbed so to say. A big advantage of the litigation enforcement route is that damages can be compensated. Then there is the criminal enforcement route, which can put the infringer behind bars, but which of course has higher evidentiary thresholds.
Here are some of the administrations one can go to to enforce one’s intellectual property rights:
– State Administration for Industry and Commerce (SAIC) = trademarks
– Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) = in case of shoddy goods
Dan Prud’homme of the European Chamber of Commerce in China wrote a study called Dulling the cutting edge: How Patent-Related Policies and Practices Hamper Innovation in China. To summarise 226 pages: Prud’homme basically says that China’s patent promotion policy which includes quotas per 10,000 people is not conducive to quality and he asserts that […]
The Supreme People’s Court commemorated the first Trademark Law of the People’s Republic of China in August 1982, see here. Remember 1982? It was the year when Deng Xiaoping was in power at the Zhongnanhai, Reagan in the White House and Brezhnev in the Kremlin. Deng had set out a new course for China in […]