The Confucius Institute online has already removed the copyrighted content of China Expat that was published unauthorisedly on its site. They want to talk with China Expat in the future to see whether they can start a partnership.
Read the Confucius Institute online’s apology at the site of China Expat here.
Josh Gartner of China Expat asks himself the following questions: Why is the Confucius Institute Online Stealing Content? Referring to the content this institute unauthorisedly copied from China Expat, well documented on the site of China Expat.
The Confucius Institute, set up by the Chinese state to promote a greater understanding of Chinese culture. So is IPR infringement promoting a greater understanding of Chinese culture, asks Gartner again. Read more here.
Head tip to China Law Blog.
In my upcoming thesis I write:
Hong Kong, Taiwan and South Korea, all countries that have not been communist and have cultures that are historically steeped in Confucianism, are evidence that Confucian doctrine does not have to be an impediment to the respect of IPR enforcement.
UPDATE: The Confucius Institute online has apologised and removed China Expat’s copyrighted content from its site, read more here.
Bian Yiwen, creator of TV show ‘Collecting Everything Under Heaven’ whereby the expert tells whether an antiquity is real of fake and will smash the fake one directly, said that there were too many fake submissions to smash them all. It’s symbolism.
The show could raise the respect people for genuine products.
Kitty Bu reports for Reuters, see the video story here.
Thanks for the link CH, of Mobimania, le site de l’informatique mobile.
I got an email from Erica Schlaikjer of Responsible China, which “focuses on environmental sustainability and corporate social responsibility in Greater China.” A great site.
Now what has IP protection to do with the environment?
I wrote it before and write it again: The moral implication of buying counterfeited or pirated goods is not only that they infringe the IPRs of the owners, but that it might be manufactured by children, in bad working conditions, pollute the environment etc. Read more here.
In sum a total lack of accountability.
However, the IP protection challenge are peanuts compared to China’s environmental challenge. Of course it is not only China’s environmental challenge but that of the whole world, since pollution does not recognise borders. And China is trying to hush hush staggering statistics to come out in the open about China’s environment, because of fear of social instability. The World Bank even let itself been censored by China, according to the Financial Times. It was about the shocking number of the amount of people in China that die each year, because of the air pollution: 750.000 people. Read more about it here.
This points at an other parallel between IP infringements and pollution. The lack of transparency by the Chinese authorities regarding the environment and IP protection and enforcement justifying it by saying that otherwise social instabilty will break out is not sustainable.
Both IP protection and the environment problems can only be solved when the culture about these aspects in the whole population has changed. So everybody should be aware of these problems. This demands transparency by the Chinese authorities, not avoidness behaviour.
April 10, the US filed two formal complaints against China at the WTO, one for unsufficient IP and one for lack of market access for copyrighted goods.
In short: We always thought IP protection important, we hounered our WTO commitments, and we have come a long way, TRIPs is saying we can do it our own way, we don’t have to go beyong the TRIPs obligations, especially not as the developing country we are.
Read the Xinhua article via ChinaDaily here.
Joel Martinsen of Danwei has a fine interview with the right holder of the copyright of cartoon hero Sanmao (三毛) which means literally three hairs, characteristic for the cartoon protagonist. The article implicitly illustrates some of the aspects of a copyright:
China Tech News reports about Netfilm.cn, a big copyright holder who filed a lawsuit against 379 netcafes in Guangzhou for alleged infringing of copyrights by downloading online videos.
Netfilm.cn is taking online copyright infringement pretty serious and their approach is quite ambitious:
“[They] sent a team of 26 lawyers and notaries to investigate the films shown in netcafes in Guangzhou and they found out that up to 40% of more than 500 netcafes were using pirated films.”
“The representative says that Guangzhou is their first stop on the rights protection train and they would try to complete the campaign by mid-July when they will start similar actions in other smaller southern Chinese cities.“
Read the China Tech News article here.
“I think it’s extremely important to let the world know, that we have a group of people that gets up early in the morning and goes to bed late at night that are enforcing our intellectual property right laws.” Sounds very deterrent indeed. See a video of Mr. Voinovich saying these darndest things here.
However, Mr. Voinovich did do something more substantive. As a reaction to counterfeit and pirated goods originating from China, senators Georg Voinovich (Republican-Ohio) and Evan Bayh (Democrats-Indiana) have introduced S. 522, the Intellectual Property Rights Enforcement Act, which is designed to expand upon and improve the existing IP coordination and enforcement efforts.
In addition, the bipartisan bill Section 522 initiates an approach to international IP enforcement that would have the United States set standards and partner with like-minded countries (“because they [the countries of the world] also are having their best ideals stolen”, Voinovich probably means the expressions of their ideas, because it is not illegal to copy ideas, unless the idea is a trade secret) resembling the US government’s effort to police money laundering and other black-market crimes.
Shaun Rein of China Market Research Group wrote an interesting article ‘How to Win the China Piracy Battle’ for BusinessWeek, see here.
Mr. Rein asserts: If a company wants to have success in China, in the face of counterfeit and piracy challenges, it has to focus on economics, instead of enforcing IP law and morality.
If a company can do this, great.
Mr. Rein proposes that companies decrease their prices to be more competitive to the pirated products or keep the price unchanged and add more value so they will be irresistable.
If a company can do this, great.
The rationale behind dropping prices for the time being is that when people become richer, companies can sell the product for a higher price. This might not always be the case, since some people with middle class incomes still go for a bargain and the counterfeit products might be as good or even better than the genuine goods (since the counterfeiters don’t have to invest in R&D, design and marketing and can focus only on manufacturing). People might not always fake it ’till they can make it. Another problem is that the raison d’être of some luxury goods is the high price you have to pay for the them in order to be associated with the prestige that you can afford it.
Mr. Rein focuses his article on products sold in China which IP rights are infringed. At the moment the damage from counterfeit and pirated goods that originate from China but are consumed overseas is bigger than the infringed goods that are consumed domestically in China. However, even foreign companies who do not even sell or manufacture their goods in China can get their products counterfeited or pirated in China. They can try to solve their IP problems by exposing this amoral behaviour and enforce their IP rights in China. Another possible venue might be that such a company decides to start selling its products in China, in order to compete with counterfeiters and pirates in China.
In fact I think it’s not an either or question: moral/IP law enforcement complements economic logic.
IP Dragon’s blogroll is updated. See ‘Treaties (in force)’ on your right hand side. Now it includes all IP treaties of WIPO and WTO (and UN’s Vienna Treaty Convention crucial for the interpretation of treaties) which China has acceded to or at least signed. What is remarkable is that China has already signed the WIPO Trademark Law Treaty (TLT) in 1994 but has not ratified it. Is it because the newer treaties have made this one obsolete? If you know why, please tell me (ipdragon at gmail dot com).
For WIPO’s one glance overview of China’s ratifications and signatures, see here.
The World Intellectual Property Organization (WIPO) and the State Administration for Industry and Commerce (SAIC) of the People’s Republic of China in Beijing have organised an international symposium on geographical indictions (GI), from June 26 to 28, 2007.
IP Dragon has updated its blogroll by including relevant IP Law (or rather ordinances) of Hong Kong. See, on your right hand, under treaties.
December 29, 2005 IP Dragon referred to China’s efforts to come up with their own version of 3G telephony to avoid paying royalties to foreign patent right holders, see here.
According to the Economist of June 14th, China has committed itself to the International Olympic Comité (IOC) to have a “third generation” (3G) mobile-phone network available in time for the games. 3G will probably be available in time, although on a limited scale, according to the Economist.
The Economist offers some explanations why China does not choose to issue licences allowing China’s operators to build 3G networks using one of the two international 3G technology standards (UMTS and CDMA2000).
“[..] Chinese bureaucrats have instead been pushing a proprietary Chinese standard, called TD-SCDMA, that could circumvent royalties to Western companies and enhance China’s reputation for innovation. The development of this new technology has taken years and cost a fortune, but it is still not ready. The government does not want to issue the 3G licences until its home-grown technology is ready to compete with foreign standards. But the plan to establish TD-SCDMA as a global 3G standard and sell gear to other countries now seems doomed to fail.“
Read the Economist article ‘Telecoms in China, Olympic Hurdle’ here.
Read more about China’s efforts to come up with proprietary standards for Audio Video Coding, here, multi-channel digital radio coding and decoding, here, and RFID, here.
Jeff Roberts of McGill’s CIPP’s “IP News This Week”, your 5-minute report of the latest IP news from around the world, pointed me again to an interesting article, this time about brandjacking in China.
Read the article ‘Bleach, By Yves St Laurent’ by Lauren Mills for the Mail on Sunday via Industry Watch, here.
Ms. Maya Alexandri wrote an interesting article called ‘Copyright protection for online content’ for Danwei.
Referring to China’s accession and ratification (June 9, 2007) of WIPO’s Copyright Treaty (WCT) and WIPO’s Performances and Phonograms Treaty (WPPT) a report by the Beijing Business Today, Ms Alexandri wrote:
“More typically, China’s stance on intellectual property enforcement includes caveats about China being a developing country or expresses concerns about wholesale adoption of foreign values and methods. For example, China has a “two track” mechanism for enforcing intellectual property that gives both courts and administrative agencies enforcement authority. This system creates inefficiency, a lack of accountability and has rendered intellectual property virtually unprotectable in China. But far from amending its two-pronged approach, China has showcased it, insisting that it yields even greater protection for intellectual property.“
The fact that China has more than one way (in fact three ways) to enforce intellectual property rights, does not necessarily creates inefficiency nor a lack of accountability. In my view there is no causal relationship between plural routes of IP enforcement and a situation whereby IP rights are “virtually unprotectable in China”. In fact, IP enforcement in China is possible, although not always easy. It does not happen automatically; if you want to enforce your infringed IP rights, you have to act. Best thing to do this pro-actively. Since one of the characterisics of industrial property, trademarks, patents (which include design rights in China) is that their scope is national. So if you want to protect and enforce these rights, you have to register in the first place. Copyright (industrial rights + copyrights=intellectual rights) is protected at the moment an original idea has been expressed with the stamp of the author in a figurative way. Copyrights are also national in scope, but since the Berne Convention you don’t need to register it before it becomes effective. Then, if your IP right is infringed there are different routes to enforce in China.
More is not always less
There is an administrative, criminal and civil enforcement route in China. Which all have their advantages and disadvantages, see my paper ‘How to work within China’s IPR enforcement system for trademark and design rights’ here. There is even an overlap between some administrative enforcement authorities, which is not bad, because, given the right incentives, it can bring a certain competition between these authorities (as determined by Mr. Andrew Mertha), increasing the level of quality for all and making enforcement more effective. The distinction between criminal enforcement and civil enforcement is undisputed in most jurisdictions. China is quite unique in that it offers an extra venue of enforcement; the administrative enforcement route. Why would this be a bad thing? Besides, as right holder of infringed IP rights you can always go directly to the People’s courts or to the Public Security Bureau (police). And even if you tried the administrative enforcement route, and are unsatisfied, you can still have a go with litigation.
Then if these different routes are not the problem, what is?
In my paper I suggest the following reasons for China’s inability up to this point in time to effectively enforce IP rights:
[1] Upon accession to WTO China committed itself to share information about new regulations, issue draft laws, establish public comment procedures. China’s size and decentralisation, communist heritage and language, makes for a lot of confusion about IP in China. Not only China can increase the transparency, overseas companies could exchange their experiences.
[2] China’s leadership clearly wants to restrict lower government authorities to the rule of law, however it does not want to self-impose restrictions as long as its very survival is at stake.
[3] The Standing Committee of the National People’s Congress is superior to the Supreme People’s Court: it has the final word when it comes to the interpretation (article 43 Legislation Law) or invalidating (article 90 Legislation Law) of laws by the Supreme People’s Court. The National People’s Congress controls the funding and staffing of the Supreme People’s Court. Similar structures exist at lower levels: where local Party Organisation Department and people’s congresses control key appointments and funding for courts. Randall Peerenboom, ‘China’s Long March Toward Rule of Law’, Cambridge University Press, 2002, pg. 268.
[4] The Legislative Affairs Office, which monitors and addresses non-uniform application of law has much work to do. Therefore it is doubtful if it even get round to dealing with local deviations from WTO standards, such as TRIPs. More might be expected of MOFCOM’s Department of WTO. A concentrated appeals court, would probably have more chances to unify the application of law.
[5] The Transparency International Corruption Perceptions Index has ranked China in 78th position with a score of 3.2, where 10 is highly clean, available at: http://ww1.transparency.org/cpi/2005/cpi2005.sources.en.html.
[6] Localism (local protectionism): When deciding in IP infringement disputes, local courts are inclined to rule in favour of local companies even though they infringe IP. The reason is that the local judge is appointed by the local party and financed by the local government, who in turn is dependent on the tax revenues and management fees paid by the local company. Then the local company’s employer or employees are often friends and relatives of the local party or government. Besides, it is not in the interest of the local government that the infringing company is going out of business, because this will lead to unemployment and social-unrest.
[7] The 2006 Special 301 Report states: “Litigants, according to the US Trade Representative, have found that most judges lack necessary technical training, (..),” pg. 21, available at: http://www.ustr.gov/assets/Document_Library/Reports_Publications/2006/2006_Special_301_Review/asset_upload_file473_9336.pdf.
I agree with Ms. Alexandri relativism about the effectiveness in China of these WIPO internet treaties.
“That said, don’t expect too much in the way of copyright protection for online content. The Internet is where countries with advanced copyright protection and enforcement mechanisms meet their match. In acceding to the WIPO Internet treaties, what China may have done is join the rest of the world in paying lip service to the protection of copyright online.“
I would like to add the following: unlike WTO TRIPs Agreement which has a binding dispute settlement mechanism, WIPO has none. WIPO is teethless.
Read Ms. Alexandri’s article for Danwei here.
Three of the ‘ Top ten cases’ in 2006 elected by the Supreme People’s Court concerns cases won by Baker & McKenzie:
IP Dragon congratulates Mr. Joseph Simone and his colleages at Baker & McKenzie with their victories.
Read more about these cases on the site of Baker & McKenzie here. The China Daily mentions these cases were foreign companies won to assert that “everone’s equal on IPR”, read here.
UPDATE: Top Tens also popular with SAIC and GAC
Not only the Supreme People’s Court has brought together a top ten of IPR cases, so did the State Administration for Industry and Commerce (SAIC): “one case involved two Beijing companies that fraudulently took application fees from firms wanting to be considered as the “most valuable brand names” by the organizing committee of the 2008 Beijing Olympics. Their scam has been listed among the top 10 “typical IPR violation cases” in 2006.“ Read the Xinhua article via People’s Daily Online here.
The ‘Top Ten Cases of IPR Protection by General Administration of Customs (GAC)’ of 2006 were:
Read more about it here.
雅马哈
Shu-Ching Jean Chen wrote for Forbes the article ‘Yamaha Copycat Crashes in Court’.
“The Chinese company, Zhejiang Huatian, registered a shell company in Japan’s remote Ishikawa prefecture in 2000 under the same three characters used by Yamaha to render its name in Chinese. This Japanese shell company then signed a licensing agreement with Zhejiang Huatian, allowing it to market its scooters in China under that name. Zhejiang Huatian went a step further by printing Yamaha’s name in English letters on its scooters. The Supreme People’s Court awarded Yamaha the highest-ever damages for a piracy case in China involving a foreign investor, 8.3 million yuan ($1.1 million).“
Two local distributors, Taizhou Jiaji Motorcycle Distribution and Taizhou Huatian Motorcycle Distribution, were also found liable for their participation in the scheme.
Read Chen’s article here.
The moral implication of buying counterfeited or pirated goods is not only that they infringe the IPRs of the owners, but that it might be manufactured by children, in bad working conditions, pollute the environment etc. There is a total lack of accountability of trademark counterfeiters and copyright pirates. With genuine products this might also be a problem, but then at least the media can give attention to it, and after some naming and shaing the problem can be solved. A good example of this mechanism is the Play Fair 2008 campaign that is now in full swing.
The Play Fair 2008 campaign is an alliance of Oxfams, Global Unions, the Clean Clothes Campaign and their constituent organisations worldwide. The Play Fair 2008 points out that four factories in Southern China that were authorised to make the official souvernirs for the 2008 Olympics allegedly broke national labour laws on child labour, overtime pay and minium wages to make souvernirs.
China Corporate Social Responsiblity (China CSR) reports that Kweichow Moutai, the brewery of China’s national Moutai liquor, will formally initiate its anti-counterfeit system on July 1.
“Kweichow Moutai’s anti-counterfeit ebonite (IP Dragon: a hard nonresilient rubber formed by vulcanizing natural rubber) cap features “3+2+1 Technology”.
Which means a combination of the following:
3: three second-tier anti-counterfeit technologies
2: two top-tier technologies
1: one special code technology.
The cap will enable consumers to identify the product and judge whether the product is genuine.
Kweichow Moutai is the first brewer of liquor in China who initiates this anit-counterfeit system.
Read more here.
Norway, has a problem exporting fish to China. Not because this Nordic country nosedived in the Environmental Performance Index 2006 from the second best ranking in the world in 2005 to 18th position, because of severe overfishing. And not because Norway undermines a ban on whaling. No, the problem is that fish coming from all corners of the earth are labeled Norwegian in China. So what is the point of importing fish from Norway?
Kong Wei, company vice president of Shanghai Dazhong Public Utilites says that is why there is little profit in importing genuine, expensive Norwegian fish.
Kong said that consumers do not manage to tast the difference between real and counterfeit Norwegian fish (consumers in China, allegedly have the same problem with whisky, see here)
To call fish caught by Norwegian fishermen ‘Norwegian Fish’ might in some instances a misnomer, because Norwegian fishermen fish in many seas and oceans outside the territorial waters of Norway.
Read more here.
Whisky is becoming more popular in China for who can afford it. In 2006, China became a world top 10 whisky drinking nation, when total sales hit 58.2 million pounds (115 million dollars), an increase of 27 percent over 2005, according to Edinburgh-based Scotch Whisky Association.
Foreign brands represent less than 10 percent of the spirit market in China.
Mark Ralston wrote an article about it for AFP:
“But like many products that sell well in China, the new trend in drinking is also falling victim to counterfeiting with some fake whiskies capable of passing a taste test, although others are undrinkable.The most common way to counterfeit is for a nightclub manager, smuggler, gang member or anyone else so-inclined to simply take an empty bottle of expensive whisky and refill it with an ordinary one.“
But then again, Ralston writes: “Very few Chinese can taste the difference between a pure malt aged for 18 years and a cheap scotch, according to various industry insiders.“
Well, the day after, if a severe hangover kicks in, might give you an indication about whether the beverages were counterfeit or not: “Cheap spirits, and especially cheap whisky, and cheap champagne are among the worst culprits” (BBC News, Hangovers: The number one festive illness, BBC1 24 Dec, 1998, interview with Dr James Schaefer, a research professor at the department of anthropology at Union College in Schenectady, New York).
Read the AFP article via SAFW News here.
IP Dragon reported before about traditional Chinese spirits that were counterfeited:
Baijiu counterfeiters prey on drunkards
Beijing AIC: Old Wine In New Bags: Scarce Stats, However, Purchasing Advice
Grupo Modelo, the Mexican brewer of Corona beer probably sobered up when it discovered 24 million bottles of Chinese Cerono beer. Jeremy Phillips of IP Kat reports the story here.
I got an email from Cliff Zhao, Patent Examiner of the State Intellectual Property Office (SIPO)who is also a translator.
Mr Zhao set up a Chinese/English blog called Intellectual Property in China 知识产权与中国发展 about intellectual property policy in China. Recently Mr Zhao wrote an article about Intellectual Property Education – In the Law School and Beyond about Philips’ efforts to share knowledge about IPR:
“In recent years, Royal Philips Electronics of the Netherlands has partnered with several leading Chinese law schools strong in IPR field, e.g., Renmin University, Tsinghua University, Fudan University, etc., to set up IP Academy aiming to promote Chinese IPR studies to cope with international competition.”
I am looking forward reading more articles of Mr Zhao. Read Mr Zhao’s article about Philips here.
One of the recommendations of my upcoming thesis called: ‘Paper Tiger or Roaring Dragon? China’s TRIPs Implementations and Enforcement‘ is the need to increase transparency about IP enforcement (and of course it is the raison d’être of IP Dragon). To know whether China’s enforcement progresses or declines I proposed the enforcement/infringement ratio which can be compared to the preceding enforcement/infringement ratio. I got a few emails asking questions about the enforcement/infringement ratio. I hope I answered your questions with the following (if not, please let me know):
Professor Anselm Kamperman Sanders of the Maastricht University, the Netherlands, informed me about The International Intellectual Property Law and Pharmaceuticals conference organised by Dr. Christopher Heath, Member of the Boards of Appeal at the European Patent Office (EPO) and himself. It will be the 8th Annual IP Seminar to be organised at the Instituto de Estudos Europeus de Macau (IEEM) from June 25 through 26 2007.
The agenda of the full programme is:
4th IEEM IP Law School June, 18-22 2007;
8th IEEM IP Seminar June, 25-26, 2007;
4th IEEM IP Master classes June, 27-29, 2007.
About this programme:
“Classes are offered in an intensive Socratic format in the course of one week by experts in the field Dr. Christopher Heath, of the Boards of Appeal of the European Patent Office, Prof. Anselm Kamperman Sanders, of Maastricht University, and local guest speakers who offer a Chinese perspective on Intellectual Property Law.
“This challenging programme also expects students to jointly prepare and argue several moot cases in a friendly, yet competitive atmosphere, providing a unique insight in the way in which participants from various jurisdictions approach international and domestic legal problems.
The IP Law School offers an excellent opportunity to prepare or refresh one’s knowledge before the 8th Annual IP Seminar and the subsequent IP Master Classes.
“IP Master Classes offer the opportunity to learn from an expert in a particular sub-discipline of Intellectual Property Law. Whereas the IP Master Classes follow the same Socratic format of the IP Law School, including the opportunity to argue mock trials, they are much more topical and are taught jointly by the regular IP Law School team and other expert speakers from the IP Seminar. This means that IP Master Classes form a seamless companion programme to the annual Intellectual Property Seminar.“
See more here.
Just before the US made two formal complaints against China at the WTO on April 10, 2007 (the WTO cases are: China – Measures affecting the protection and enforcement of intellectual property rights, Request for Consultations by the United States, WT/DS362/1 and China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products – Request for Consultations by the United States, WT/DS363/1), China came out with the following measures, probably to avert a WTO dispute settlement case:
However, China promulgated another measure IP Dragon had overlooked, hereby meeting those wishes that asked China to amend its ways in respect to infringing products that are often not destroyed in China and find their way back into the channels of commerce, which conflicts with article 46 TRIPs.
Competent authorities shall have the authority to order the destruction or disposal of infringing goods in accordance with the principles as set out in article 46 TRIPs, thus to dispose the infringing goods outside the channels of commerce, without compensation to the infringer. Article 30 (1) Implementation Regulation 2004 states, however, that customs are permitted to donate infringing goods to public welfare organizations or the right holder can purchase the goods. According to article 30 (2) Implementation Regulation 2004 if the goods cannot disposed of in a way they can be used by a public welfare organization, they shall be auctioned after eliminating the infringing character of the goods. The income of the auction goes to the state treasury. Article 30 (3) Implementation Regulation 2004 states that only if donating to a charitable organisation and auctioning is not possible, the infringing products shall be destroyed. The equivalent of article 30 Customs Implementation Regulation 2004 could already be found in article 27 Regulations 2003.
However,
I found the Customs auction notice as published at the site of Managing IP in an article of Emma Barraclough, called The end of the beginning, see here, which gives an overview of the events that lead to the WTO case against China. The customs notice was translated by Baker & McKenzie. I have looked for their translation at their own site but have not found it yet. If you have seen it, please let me know, so I can link to it in the laws & regulations part of my blogroll. To let you see which customs auction notice I mean, here is it, thanks to MIP and Baker & McKenzie.
“Pursuant to Article 27 [Regulations 2003], if confiscated goods that infringe upon intellectual property rights (“infringing goods”) cannot be used for public welfare projects and the holder of the intellectual property rights has no interest in purchasing the same, Customs may auction off the goods in accordance with law after removing their infringing features. In order to regulate the auction of infringing goods by Customs, to increase transparency in law enforcement by Customs and protect the right of intellectual property owners to information, relevant issues are addressed as follows:
Article 1. [Customs auction notice] When the Customs auction confiscated infringing goods, the infringing features of such goods and their packages should be removed completely, including removal of trade marks and other infringing features that infringe upon copyright, patents and other intellectual property rights. Where the infringing features of goods cannot be removed completely, such goods should be destroyed and be prohibited from being auctioned.
Article 2. [Customs auction notice] The opinions of the intellectual property owners should be sought by Customs before auctions.“
All three measures might help improve IP enforcement in China, but they have not averted a WTO dispute settlement case against China.
Shenzhen based journalist and blogger (Shenzhen Zen) Justin Mitchell embedded himself for online publication Asia Sentinel inside a counterfeit watch factory in Shenzhen that sells them under brands such as Rolex, Seiko, Omega, Fossil and Tag Heuer, BMW, Bacardi, Dunhill, and the Beijing Olympics characters.
Mitchell describes the working conditions under which the counterfeit products are manufactured as Dickensian: the chemical fumes incurre long-term brain damage to the teen-aged employees. Pretty disturbing observations. For the culprit in the story, mr. Wong, there may be some hope left that he will go legit:
“Meanwhile, Wong continues well below the radar grinding out his watches, though he is proud to say he also makes “real” goods as his business straddles a line between legitimate and counterfeit.“
Read Mitchell’s interesting article here.
In September a succesful joint operation was carried out by the Shenzhen Public Security Bureau and private security firm I-OnAsia. US$ 25 million worth of counterfeit computer network equipment (sold under international brands such as Nortel, Cisco Systems and Hewlett Packard) was seized and seven people were arrested in 10 raids carried out simultaneously across Shenzhen.
At the time the suspected ringleader, Tony Li Zhendong, got away. May 2 2, he was finally caught, after months of intensive surveillance by I-OnAsia.
A spokesperson for I-OnAsia said:
“After eight’s months tracking on the footprint of him by conducting surveillance and using technology such as GPRS technology, we and ECID [China’s Economic Investigation Department] caught the right time to arrest him on the evening of 22 May 2007 in this new apartment in Shenzhen. He was then brought back to the Police Station and now detained for further enquiries and prosecution.“
In the South China Morning Post of May 26th, Martin Wong and Nick Gentle report about the events. Read their article here.
According to Newlaunces Apple’s iPhone has “inspired” many rip-offs. Read and see an alleged Chinese clone called P168 at Newlaunches here. Until there is more proof one cannot exclude the possibility that the iPhone is a P168 clone.
Update: Sir CH, of the French site Mobimania informed me about a Phonedaily article about the P168, which tells the extras one is getting with this phone: a bundled mah-jong game, dual SIM-card slots so you can use two networks. The SIM-cards are in simplified Chinese, so they are made for the mainland. The stamp inside the Operating System is according to CH very reminiscent of the mainland official stamps. But is it real?
UPDATE II (June 18, 2007): Video of the first iPhone “rip-off”, see it at the site of Newlaunches.com here.
(Picture taken in South Korea by S. Straub)
Xiao Liang, researcher with the Institute of World Economics and
Politics of the Chinese Academy of Social Sciences, urges to balance all interests when dealing with the issue of IPR protection:
“1. The relationship between securing national interests and fulfilling international obligations. This means they should strike a balance between protecting sovereignty and being a responsible stakeholder.
A country’s IPR protection can only be as good as a its economic and social development. The subjects and focus of such protection change in different stages of development. No one should take a country’s economic and social development out of the equation when talking about IPR protection.
2. The relationship between IPR protection (monopoly) and market competition. We should balance the promotion of creativity and competitiveness.
3. The relationship between IPR protection (monopoly) and the public interest. This refers to the need to balance the interests of IPR owners and that of society as a whole. We should oppose both the violation of IPR and violation of the public interest by abusing IPR.“
Read more of Xiao’s article for the China Daily (via People’s Daily Online) about the second round of China-US Strategic Economic Dialogue here.
Protection and enforcement of intellectual property in China is of crucial importance to a growing number of companies worldwide, including those in the Benelux (Belgium, Netherlands and Luxembourg). This fact is acknowledged by the quarterly Benelux Merken- en Modellen Bulletin, a renowned magazine about Trademarks and Design Rights in the Benelux. Their first number of 2007 (33rd year, number 113) is a China special with the theme ‘Trademark Rights in China’.
The contents are:
Counterfeiting: The global challenge for trade mark enforcement & the key role of China
Richard Heath (Unilever PLC London)
Effective intellectual property enforcement in China
Elliot Papageorgiou (Rouse Legal, London; Rouse & Co. International, Beijing, Shanghai & Guangzhou) & Chris Bailey (Rouse & Co. International, Beijing, Shanghai & Guangzhou)
How to work within China’s IPR enforcement system for trade mark and design rights (pdf) Danny Friedmann (editor IP Dragon)
Merkbescherming in China essentieel (Trademark protection in China essential in Dutch)
Marlous Stal-Hilders (Nederlands Octrooibureau; editor BMM Bulletin)
Landlord Liability in China – New strategies for anti-counterfeiting
Joseph Simone (Partner Baker & McKenzie, China)
Jurisprudence about:
Toyota/Geely
Prada/Beijing Market
Beijing Silk street/Louis Vuitton Malletier
Silk Street Fashion Market Co. Ltd. v. Chaoyang Administration for Industry and Commerce
Plus European en Benelux jurisprudence for which Benelux Merken- en Modellenrecht Bulletin is well known.
Remember the BitTorrent uploader in Hong Kong, who knick named himself Big Crook, and was sentenced three months in prison? Read more here. He lost his appeal in December 2006 and now his final appeal.
Peter Ollier of Managing Intellectual Property reports about the Hong Kong Court of final appeal that confirmed the first criminal conviction on May 18th.
Read Ollier’s article (free registration), which includes a link to the 24-page judgement written by Justice PJ Ribeiro, and explanations of what constitutes a copy capable of distribution and what conduct amounts to distribution, here.
The cover story of the Economist (May, 19th-25th) is entitled America’s fear of China, it’s about whether a revaluation of the yuan would do much for the US (not much in the opinion of the Economist). This article is introduced by a leader that gives the essence of a more elaborate article. This time, however, the leader mentions intellectual property in China, while the full article does only mention that in early April the Bush administration filed two complaints at the WTO, one on Chinese pirating of DVDs and CDs, and the other on restrictions on the sale of foreign films and music in China.
In the leader it said:
“China’s intellectual-property violations cost American firms far less than many would have you believe: pirated DVDs may sell for peanuts in the markets of Shanghai, but if Hollywood tried to sell the genuine articles at full price, it would quickly discover that most Chinese could not afford them. Similarly, a stronger yuan would do little to dent America’s trade deficit.” See the leader of the Economist here.
Now, it might be true that IP violations cost American firms far less than many would have you believe, as the Economist asserts, see here. However, the Economist is using a rather arbitrary and suggestive supporting argument: “[I]f Hollywood tried to sell the genuine articles at full price, it would quickly discover that most Chinese could not afford them.” Hollywood has started experimenting with different pricing systems, instead of trying to sell their films at the full price, see here.
The conclusion “Similarly, a stronger yuan would do little to dent America’s trade deficit”, suggests that stronger IPR in China would do little to dent America’s infringed copyrights in China. However, one can argue that even if Hollywood would sell its films at the full price and indeed would quickly discover that most Chinese could not afford them, these firms could profit from the adequate IPR protection and enforcement in China. These firms might anticipate that one day they can serve China’s expanding middle class that might be able and aspire to buy such premium products. To compare the revalution of the yuan with IPR protection is comparing apples to oranges in my view.
The Economist suggests that it is only worth your while to protect and enforce IPR of blockbuster movies, and ignoring changing demographics and the future potential to sell premium products in a dramatically dynamic market.
Joel Martinsen has a great post about search engine Baidu which stimulates others to use Baidu as a verb instead of a name of a brand, but by doing so inadvertently increasing the risk the brand name is used to refer to the generic class of objects, so that eventually the exclusive right to the search engine might be lost.
Mr. Martinsen also gives the historical example of Simmons, an American company in China that specialized in steel and copper spring mattresses and bedding, where this danger manifested itself of dilution of the brand name and genericide of the trademark.
Read Mr. Martinsen’s article here.
John Philips of the Washington Times reports about the news of the Italian domestic intelligence service that Chinese hackers were after the ideas of fashion houses in order to counterfeit them.
Of course, one should make a distinction between ideas (can not be protected using IPRs) and their expressions (can be protected using IPRs). I think the latter is meant in this article, since it is hard to only describe, let’s say a dress, in words, and they probably mean drawings etc of the dress as well.
Read Philips’ article here.
If you want to read much more about IP and fashion, go to the excellent blog Counterfeit Chic of professor Susan Scafidi.
Hong Kong, as any jurisdiction, wrestles with the question of how to adapt to the ever changing demands and challenges of copyright law in the digital era. The Hong Kong government has publised its ‘Consultation on Copyright Protection in the Digital Environment’, see here.
The prolific Peter K. Yu (余家明) responded, commissioned by the Journalism and Media Studies Centre of the University of Hong Kong, with a position paper called ‘Digital Copyright Reform in Hong Kong: Promoting Creativity Without Sacrificing Free Speech, see here.
The position paper deals with: Criminal liability, Notice and takedown procedure, Subpoena mechanism, Statutory damages, Other options, and The internet’s promise for Hong Kong.
Mr. Yu, the Associate Professor of Law and the founding director of the Intellectual Property & Communications Law Program at Michigan State University College of Law, is well versed in US Copyright Law (US Code: Title 17, Copyrights) and encourages the Hong Kong government to take heed of the lessons learned in the US on copyright law and to assess copyright law reforms empirically.
Not in the mood for reading, but you want to get an overview of IP in China? Watch the following Japanese news item with an English voice-over about IP in China here.
Whether ‘creatively challenged counterfeiters’ is a pleonasm or not, one might be able to distinguish different grades of their creativity deficit.
Some will just hustle a little with the word order; Adidas for example becomes: DAIADS; Puma becomes PMUA.
The ones blessed with a little bit more creativity will add letters: All Stars, becomes Ball Stars; or rewrite a word, such as Panasonic, in a way that it more or less sounds the same: PenesamiG.
See Hemmy.com’s great picture gallery of creatively depraved counterfeiters here.
Steve Whitehouse of Thomson Financial reports about an unpublished Organisation for Economic Cooperation and Development (OECD) study which puts trade losses in 2005 at up to 200 billion US dollar, considerably lower than the 600 billion US dollars estimated by the International Chamber of Commerce. Read Whitehouse’s article via Forbes.com here.
US officials estimate the costs for companies [1] around the globe. of China’s counterfeit and piracy exports as between US $ 50 [2] and 60 billion [3] a year.
However, objective statistics about IP in China are a great challenge for scholars. That’s why IP Dragon proposed to use the Enforcement/Infringement ratio, for it does not give absolute figures, but at least gives an indication of whether the situation improves or deteriorates, read more here.
China is not the only one to blame for its lack of transparency. Trade associations and lobby groups have their own agenda. Some argue that Business Software Alliance has misrepresented the facts [4] or that Motion Picture Association of America claims a right to misrepresent the facts [5].
Notes:
[1] This excludes the lost tax revenues for governments, lost employment, and extra costs for health and safety.
[2] “U.S. officials say its exports cost legitimate producers worldwide up to $50 billion a year in lost potential sales,” Associated Press, ‘China’s piracy hurting its own industries’, July 7, 2006, available at: http://www.msnbc.msn.com/id/13617619.
[3] “International companies are losing more than $60 billion a year because of piracy in China, according to the U.S. government,” ‘U.S., EU to Fight Counterfeits From China, Russia’, Bloomberg, June 19, 2006, available at: http://www.bloomberg.com/apps/news?pid=10000100&sid=aTSjqiimKzYc&refer=germany.
[4] “BSA or just BS”, Economist, May 19, 2005, available at: http://www.economist.com/business/displaystory.cfm?story_id=E1_PJJPQNS.
[5] Ryan Singel, “Copyright Groups Continue Fight Against Anti-Lying and Spying Bill-Updated”, Wired Thread Level, April 11, 2007, available at: http://blog.wired.com/27bstroke6/2007/04/copyright_group.html.
Winnie Wang of the Shanghai Daily writes that 50 million Yuan in intellectual property rights were traded in Shanghai last year. Read more here.
abc7.com reports in text and with a video about a counterfeit Jeans ring busted in Orange County, California, USA. In the gated community of Coto de Caza 200 pairs of counterfeit jeans were yielded, that are believed to be made in China. The upmarket jeans labels included: ‘True Religion’ and ‘7 For All Mankind’.
With a layman’s eye it was not possible to distinguish fake from genuine. So an expert was asked, who could determine the jeans were fake because of the lack of hidden threads.
This might be another example of the proposition that counterfeiters have climbed the learning curve of manufacturing and can produce products even better than the real thing.
Read the abc7.com article and see the video, here.
In 2005 the Hong Kong Disneyland Resort was opened. It was build by the Government of Hong Kong and the Walt Disney Company. So far it is the only Disney related amusement park in China. Or so we thought. Japanese bloggers, however, have discovered an unauthorised Disney themepark in China that is state-owned: Beijing’s Shijingshan’s Amusement Park, which uses the slogan: “Disney is too far”
Not only is the park invested by Disney cartoon figures, such as Micky Mouse and Donald Duck but also by Japanese animation figures such as Hello Kitty and Doraemon. James of Japan Probe has the story, pictures and especially check out the videos posted, see here.
This news does not only show that IPR infringment in China is still rampant, but also the development Japan has made. From one of the great IPR infringers, only a few decades ago, to one of the leading innovators/creators and IPR law abiding nations of IPR owners in the world. China will likely follow Japan’s path (probably at an even faster pace).
UPDATE: Why The Mouse Had To Go Out of Beijing Shijingshan Amusement Park
Especially after the US filed formal complaints against China at the WTO in repect to China’s IPR protection and enforcement and China’s market access, April 10th, China wants to show that it is serious about protecting and enforcing IPR. That is probably why it launched the burning of 11 million copies of pirated and illegally published books and magazines. Read Clifford Coonan’s article for Variety here.
Now the destruction of books is a definitive way and prevents the possibility of infringing books getting back into the channels of commerce which conflicts with article 46 TRIPs. However, this author argues that book burnings are not preferable. For one thing it has very bad connotations: Book burnings followed by the burial of scholars appeared in China during the Qin dynasty (3d century BC), read a Wikipedia article about it here, and in the Cultural Revolution (1966-1976) when many books were burned and again authors were murdered, read a Wikipedia article about it here. In this blog I am only referring to China’s book burnings, to avoid to abide by Godwin’s law.
However, what to do in case of pirated books? Most books are made of paper, so instead of seeing the books go up in flames and add to the air pollution, why not let them reincarnate into non-infringing books?
The same can be said, a fortiori, about the 30 million pieces of smuggled and pirated audio and video materials and software that were set on fire. Burning these materials is obviously worse for the environment than paper.
So extinguish the fire and turn on the shredder and give the infringing goods a second life as non-infringing goods.
Disclaimer: this author is a bibliophile.
Remember the story about the counterfeit Nokia, see here, Maximus of Just Another Mobile Phone Blog, has another great story about a mobile that is called not Sony Ericsson, but Suny Ericssun.
Because of the similarity, this is a good example of a violation of article 52 (1) Trademark Law:
Any of the following acts shall be an infringement of the exclusive right to use a registered trademark: (1) to use a trademark that is identical with or similar to a registered trademark in respect of the identical or similar goods without the authorization from the trademark registrant;
And even if Sony Ericsson did not register this name, they can claim that their brand is protected as a well-known mark, see the criteria for a well-known mark in article 14 Trademark Law or that the use of the similar brand is likely to cause confusion for consumers, see article 13 Trademark Law.
Read Maximus’ article and see the pictures here.
It’s that time of the year again. The USTR’s presents its annual Special 301 Report. Which countries have protected and enforced their IPR adequately and effectively and which have not. The risers, the fallers and the usual suspects, such as China and Russia.
This year the USTR airs again the frustrations against China’s alleged lack of IPR protection and enforcement. Given the fact that the US has filed formal complaints against China at the WTO, because of these alleged failures, it is no wonder that the US has the plan to maintain China on the Priority Watch List. No surprises there.
However, the USTR has done an unprecedented review which spotlights strengths, as well as weaknesses and inconsistencies, in and among special jurisdictions of six provinces that were the focus of industry comments and US Governement discussions: Beijing, Fujian, Guangdong, Jiangsu, Shanghai, and Zhejiang. For the purpose of this review, the jurisdictions at the provincial level (sheng) may include the four municipalities (shi) of Beijing, Chongqing, Shanghai, and Tianjin, as well as China’s five autonomous regions (zizhiqu): Guangxi, Inner Mongolia, Ningxia Hui, Xinjiang Uyghur and Tibet.
The executive summary of this Special Provincial Review presents the following:
Strengths:
Weaknesses and inconsistencies:
The complete Special Provinces Review can be found on pages 43 through 53 of the 2007 Special 301 Report, see here.
In April of 2006, China was expected to ratify WIPO’s internet treaties (WIPO Copyright Treaty and WIPO Performances and Phonograms Treaty) in the second half of 2006, read here. However, China acceded only March 9, 2007 and it will ratify both treaties June 9th.
The details of both treaties and China’s reservation can be found below:
Details of WIPO Copyright Treaty (WCT):
“In accordance with the Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China and the Basic Law of the Macao Special Administrative Region of the People’s Republic of China, the Government of the People’s Republic of China has decided that, unless otherwise notified, the Treaty shall not apply to the Hong Kong Special Administrative Region and the Macao Special Administrative Region of the People’s Republic of China.”
Details of WIPO Performances and Phonograms Treaty (WPPT):
“In accordance with the Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China and the Basic Law of the Macao Special Administrative Region of the People’s Republic of China, the Government of the People’s Republic of China has decided that, unless otherwise notified, the Treaty shall not apply to the Hong Kong Special Administrative Region and the Macao Special Administrative Region of the People’s Republic of China.”
China’s reservation:
Pursuant to Article 15(3) of the Treaty, the People’s Republic of China will not apply the provisions of Article 15(1).
Article 15 (3) WPPT: Any Contracting Party may, in a notification deposited with the Director General of WIPO, declare that it will apply the provisions of paragraph 1 only in respect of certain uses, or that it will limit their application in some other way, or that it will not apply these provisions at all.
Article 15 (1) WPPT: (1) Performers and producers of phonograms shall enjoy the right to a single equitable remuneration for the direct or indirect use of phonograms published for commercial purposes for broadcasting or for any communication to the public.
So far three out of the seven American film production companies won in piracy cases in Shanghai, March 7, 2007. The Chinese Law Digest found this story in the Shanghai Youth Daily (Chinese):
“Initiated by the Motion Picture Association of America, seven American film production companies, including Warner Bros. sued Shanghai Leying Audio and Video Production Company for pirating movies, such as “Lord of the Rings I,” and claimed more than 3,430,000 RM in compensation.“
‘On March 6, the Shanghai No.1 Intermediate People’s Court issued a judgment on three cases, requiring that Leying stop selling pirated DVDs and compensate New Line Cinema in the amount of 7,000 RMB, Disney in the amount of 12,000 RMB, and Warner Bros. in the amount of 6,000 RMB. Another court session will hear the four other cases.‘
The China Law Digest is a bilingual, monthly web digest detailing the latest news and developments on contemporary Chinese law and legal scholarship (including sometimes intellectual property law). You can get a free subscription here.
Remember the story about the allegations of copyright infringements (mp3 and ringtones) against Yahoo! China by the International Federation of the Phonographic Industry (IFPI), in March, 2006? Read here.
The case was heard by the Beijing No.2 Intermediate People’s Court on 10th April 2007. The judgement was delivered on 24th April 2007.
IFPI filed 11 separate claims for an injunction and damages against the Chinese internet search engine Yahoo! China on behalf of of EMI Group Hong Kong Limited, EMI Records Limited, EMI Taiwan Limited, Go East Limited, Mercury Records Limited, Sony BMG Music Entertainment (Taiwan) Limited, Sony BMG Music Entertainment , Universal International Music B.V, Universal Music Limited, Warner Music Hong Kong Limited and WEA International Inc.
IFPI’s Chairman and Chief Executive John Kennedy made a statement on the site of IFPI which includes:
“The Beijing Court has confirmed that Yahoo! China has clear responsibility for removing all links to the infringing tracks on its service. Since this is a judgment made under new regulations in China, today’s judgment supersedes the previous decision on Baidu and confirms the responsibility of all similar music search providers in China.“
Read Kennedy’s statement here.
UPDATE:
On request Alex Jacob of IFPI supplied me with the relevant regulations. Thanks a lot Alex.
Art.14, Art.15, Art. 23 of the Regulation on Protection of Dissemination Right through Information Network (July 2006). Therefore, the Defendant is jointly liable for the infringement.
Article 14
Where a right owner considers the works, performances, sound recordings or video recordings with which the service provided by a network service provider who provides information storage space, searching or linking services is concerned infringing his right of communication through information network, or that his electronic right management information on such works has been removed or altered, he may request network service providers, by submitting a written notification, to remove such works, performances, sound recordings or video recordings, or to disable the access to these works, performances, sound recordings or video recordings. The notification shall include the following contents:
(1) the name (appellation), means of contact and address of the right owner;
(2) the title and network address of the infringing works, performances, sound recordings or video recordings which are removed or the access is disabled onnrequest of the right owner; and (3) the primary probative materials for the infringement.
The right owner shall be responsible for the truthfulness of the notification.
Article 15
The network service provider shall, upon receipt of the notification from a right owner, expeditiously remove or disable the access to the works, performances, sound recordings or video recordings that are claimed to be infringing, and at the same time transfer the notification to the subscriber who provides the works, performances, sound recordings or video recordings; where the notification cannot be transferred or the network address is not clear, the network service provider shall make public the content of the notification on the information network.
Article 23
Where a network service provider that provides searching or linking service to its subscribers, disconnect the link from (disable access to) the infringing works, performances, sound recordings or video recordings upon receiving the right owner’s notification according to these Regulations, it does not assume liability for compensation; where it knows or has a reasonable grounds to know that the linked works, performances, sound or video records are infringing other person’s right, it shall assume the liability for joint infringement.
Jack Schofield reports for the Guardian Unlimited about Microsofts offer to Chinese governements and students to buy a stripped down version of Windows XP (Starter Edition) and Office (Home and Student 2007) for 3 US dollar.
Schofield asserts that piracy has been good for Microsoft in the sense that is has cut out a market for them. Microsoft has decided that it is time for them to start harvesting. 3 US dollar is relatively cheap, compared to the 100-500 US dollar users in the West have to pay for normal versions of Windows XP and Office. This volume low margin strategy might work if the legitimate offer satisfies the former users of pirated software, because of the increased safety due to online updates that are possible.
Read Schofields article here.
Microsoft’s other China strategy against piracy is to sell pre-installed software, read more here.
The South China Morning Post, by only offering subscription based articles, has de facto isolated itself from the blogosphere. However, their podcasts are free. So here is the transcription of a remarkable news item related to IPR:
“In City News, Dennis Enright writes about several measures the Travel Industry Council is proposing to shore up HK’s image among mainland’s tourists. In particular the council wants retailers that sell merchandise to tour groups to offer refunds up to six months from the date of purchase. The proposals come after allegations that an HK retailer sold a mainland tourist expensive counterfeit watches. The council has also proposed limiting the ability of a retailer to change its name and subjecting retailers to a more stringent demerit system. The measures will not be in time for the labour day golden week holiday, which begins next month.“
Listen to the SCMP’s podcast here (arount the sixth minute).
