First conviction For Copyright Infringement Under The HK Organized And Serious Crime Ordinance

EarthTime writes that the South China Morning Post has reported about a counterfeiter named Yung Chun-pong, who possessed and sold pirated DVDs to overseas buyers through the eBay online auction site has been jailed for three-and-a-half year in Hong Kong.

Yung, described by the judge as an “intelligent culprit,” used legitimate companies, such as FedEx, to send the pirated discs overseas after packaging them, the South China Morning Post reported.

Read the EarthTime article here.

According to the South China Morning Post it was the first time someone got convicted for copyright infringement under the Organized and Serious Crime Ordinance.

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Nokia-N95 With A Touch Screen, The Original Doesn’t Have One

Counterfeiters are becoming Alpinists in climbing the learning curve of counterfeiting. CH of the excellent French language site Mobimania, reports about a Chinese clone of Nokia N95, called the Nokia-N95 (notice the slash between Nokia and N95). The format has changed from a slider to a candybar, it is not compatible with UMTS, then again it has a touch screen and stylo where the original has not.

Read CH’s article in French here and the article of Just Another Mobile Phone Blog by Maximus in English here.

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Bluetooth Earphones Infringement One of Shenzhen AIC’ Top 10 IP Cases 2006

The Southern Daily of March 13, reports (in Chinese) that the Shenzhen Administration for Industry and Commerce (AIC) announced the top 10 Intellectual Property Protection Cases for the year 2006 in Shenzhen on 12 March 2007. The cases have involved in household appliances, mobile phones, medicines and general daily supplies. One of the top 10 cases concerns the infringement of Bluetooth earphones.

A co-operative effort between Bluetooth SIG Inc., the local authorities and Asia’s Brand Protection Consultancy, I-OnAsia Ltd has led to the arrest of principals of Shenzhen BlueBird Hi-Tech Company for Infringement of the Bluetooth SIG, Inc registered Trademark. This case has now been transferred to the Public Security Bureau for criminal prosecution.

On 17 July last year, the Administration for Industry and Commerce conducted a search on Shenzhen Bluebird Technology Ltd (深圳藍鳥科技有限公司) which was located on the 4/F, Fanen Building, No. 14, YueHua Road, MeiLinYueHua Industrial Park, FuTian Area. (福田區梅林越華工業區越華路14號凡恩大廈4樓) On-the-scene, 2868 pieces of suspected counterfeit “Bluetooth” earphones, 23,000 pieces of labels and 7,460 pieces of packaging material with infringed “Bluetooth” trademark were seized. Due to the fact that the litigant is not authorized and is presumed to have produced counterfeit “Bluetooth” earphones, the behavior has been suspected a crime. The bureau has then transferred this case to the Public Security Bureau for further criminal prosecution. Two suspects have been arrested.

Update: Derek Elmer, founding partner and chief executive officer of I-OnAsia takes a deeper look at the crackdown of counterfeit in this case, read here.

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Hong Kong Customs And The Diminishing Marginal Effectivity of Enforcement Actions

Peter Ollier of Managing IP engaged in participatory journalism by following a team of Hong Kong customs for three days. Ollier’s conclusion is that that the approach of Hong Kong’s customs by ‘frequent and repeated raids’ has been rather succesful.

Ollier: Counterfeits are gradually being driven from open display in the streets into showrooms that are getting progressively smaller.

Ollier writes: Statistics suggest that the enforcement drive is working. In 2006 Hong Kong Customs made 716 arrests for trade mark and trade description offences, 140 more than 2004. But the value of goods they seized fell from HK$42.9 million ($5.5 million) to HK$36.4 million ($4.6 million). Finding more criminals selling fewer counterfeits is a trend that IP owners should be pleased to see.Read Ollier’s article here (subscription needed).

It is good news that the sale of counterfeit products has been driven for the greatest part underground. However, this does not necessarily mean that the total amount of the sale in counterfeit products has decreased. The fact that more criminals were caught selling fewer counterfeits, might point at a the fragmentation of counterfeiting. More criminals operating dispersed around the city, means that the risk of getting caught for each criminal decreases. And by selling fewer counterfeit products each, the counterfeiters decrease the risk of high punishments if they are getting caught. This phenomenon we could call the diminishing marginial effectivity of enforcement actions.

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EU Will Not Support US WTO Piracy Case: Good Cop Approach

The EU is not joining the US in filing formal complaints at the WTO in Geneva against China for inadequate copyright and trademark rights enforcement. Although the EU agrees with the WTO case against China in substance, it is not willing to burn its fingers, anxious for economical retaliations.

Ben Blanchard of the Guardian Unlitited wrote:
Viviane Reding, the EU Information Society and Media Commissioner, said protecting intellectual property rights was a fundamental concern of the block, China’s largest trading partner, but legal action was not the way to go.

Read Blanchard’s article here.

We’ll see whether the good cop bad cop approaches of the EU and US respectively will bear any fruit.

UPDATE
The position of Japan, Switzerland and Australia is unknown. They have 10 days to join the formal complaint of the US as of April 1o. See Managing IP’s article ‘Allies slow to join US WTO case against China’ (which is a bit strange title, because they are undecided and may decide not to join at all) here.

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Cooperation Instead of Conflict Urges James Tunkey of I-OnAsia About the WTO Case

James Tunkey, I-OnAsia‘s COO International, was not amused about the United States’ filing of dispute settlement cases at the WTO involving China’s IPR regime.

Tunkey: Counterfeiting is a global problem whose solution necessitates international cooperation. Counterfeit products are manufactured in many countries. Indeed, the largest and most damaging counterfeit operations are truly global. Funding, technical expertise, access to raw materials as well as supply chain and product distribution management often all come from outside China.”

“The increasing sophistication of these global networks presents a number of enforcement challenges. How do governments and companies muster the necessary resources to combat counterfeiters that operate across multiple borders, aided by the Internet?”

“[I]t is I-OnAsia’s assessment that the answer is cooperation not dispute, and that a shift of the bilateral dialog from conflict to problem resolution is essential.”

Read James Tunkey of I-OnAsia’s comment on the WTO case here.

The software and pharmaceutical industriues in the US that recently booked some progress regarding IP protection are also against a WTO case. See here. They have something too lose, while the film, music and book industries have hardly any serious market access, so they do not have to fear retaliatory actions.

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Draft Judicial Interpretation Several Issues of Criminal Cases

DRAFT
Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues in the Concrete Application of the Law in Handling Criminal Cases of Intellectual Property Infringement

Adopted at the 1422nd Meeting of the Adjudication Commission of the Supreme People’s Court and 75th Meeting of the Supreme People’s Procuratorate April 4, 2007; effective April 5, 2007

To maintain order in the socialist market economy and the punish criminal acts of infringement of intellectual property in accordance with the law, several issues regarding the concrete application of the law in the handling of criminal cases of intellectual property infringement are hereby interpreted as follows in accordance with applicable provisions of the Criminal Code and the Criminal Procedure Code.

Article 1. Where for profit-making purposes and without the permission of the copyright owner there is reproduction and distribution of a literary work, a musical, cinematographic, television, or video recording work, computer software or other works, and the total quantity of reproductions is 500 units or more, this shall constitute “other serious circumstances” pursuant tot Article 217 of the Criminal Code; where the total quantiy of reproductions is 2500 units or more, this shall constitute “other exceptionally serious circumstances” under Article 217 of the Criminal Code.

Article 2. For the purposes of Article 217 of the Criminal Code, the term “reproduction and distribution” means reproduction and/or distribution.

Promotion of infringing products by the holder of the infringing products by means of advertisements, solicitation of subscription, etc., shall constitute “distribution” under Article 217 of the Criminal Code.

If anyone illegally publishes, reproduces and/or distributes another person’s work and such copyright infringement constitutes a crime, that person shall be convicted and punished for the crime of copyright infringement.

Article 3. If an intellectual property crime meets the conditions for suspended sentences as provided under the Criminal Code, the punishment shall be suspended in accordance with the law. In any of the following circumstances, suspended sentences shall generally not be applied:
(1) Where, despite the prior application of a criminal or administrative penalty for intellectual property infringement, another infringement of intellectual property which constitutes a crime takes place;
(2) There is no indication of remorse;
(3) There is refusal to give up the illegal income;
(4) Other circumstances where it is not appropriate to suspend sentences.

Article 4. In determining the fine for intellectual property crimes, the People’s Courts shall comprehensively take into account the illegal income, the illegal turnover, the damage caused to the rights owner, the harm to society and other circumstances of the crime. The amount of the fine shall generally range from one time up to five times the illegal income or 50 percent up to one time the illegal turnover.

Article 5. If the victim has evidence to prove an intellectual property crime and directly files a complaint with the People’s Court, the People’s Court shall accept the case in accordance with the law; where intellectual property crimes poses serious harm to social order and the interests of the nation, the People’s Procuratorate shall file a public prosecution in accordance with the law.

Article 6. If a unit engages in activities that constitute a crime under Articles 213 to 219 of the Criminal Code, it shall be convicted and sentenced in accordance with the corresponding criteria for individual offenders set forth in the Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues in the Concrete Application of the Law in Handling Criminal Cases of Intellectual Property Infringement and this Interpretation.

Article 7. In the event of any conflict between prior judicial interpretations and this Interpretation, this Interpretation shall apply.

DRAFT

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WTO Case Against China: Choose Your Battles Wisely

IP Dragon was away for a few days and the IP in China landscape has dramatically changed.

China came with its Action Plan on IPR Protection 2007.

China’s Supreme People’s Court and Supreme People’s Procuratorate promulgated a new judicial interpretation that lowered the numerical thresholds for criminal IP infringements. See the draft version in English here.

Stan Abrams of China Hearsay, who wrote an informative series about the WTO case against China adds: The General Administration of Customs passed a notice on April 4, 2007. The notice deals with infringing goods that are being auctioned off, and states that if infringing marks cannot be entirely removed, the goods must be destroyed. Moreover, the rights holders must be notified/consulted before the goods are auctioned.

Then US Trade Representative Susan Schwab announced April 9th that the US will request for consultations with China on IPR and certain market access issues for copyright intensive industries, see here. These issues are interrelated. In the research for my thesis about whether China is TRIPs compliant I wrote:

Market access restrictions are a contributory factor to intellectual property infringements[1]. The salient example is the limited number of movies that are annually allowed into the Chinese market[2]. Reasons for this restrictive policy is to protect the fledgling Chinese movie industry, or to protect the security of the state: some foreign movies are banned outright[3] [4], while the arrival of others is delayed by lengthy censorship reviews of Chinese authorities, and sometimes they are subject to blackout viewing periods during national holidays[5].

Notes
[1] “We cannot divorce the concept of market access from the question of piracy. In no case is that more apparent… [than] China”, Bloomberg news agency quoted Pat Schroeder, president of the Association of American Publishers, as saying, InTheNews.co.uk, ‘Chinese copyright piracy faces US threat’, February 16, 2007, available at: http://www.inthenews.co.uk/money/news/finance/chinese-copyright-piracy-faces-us-threat-$1053067.htm.
[2] The number of foreign movies that can be shown in Chinese cinemas is limited to 20 movies per year.
One can argue that this stimulated pirated DVDs to the point that only 7 per cent of the DVD’s on the market are legitimate. Reuters, ‘Market access key to piracy fight’, The Age, December 8, 2006, available at: http://www.theage.com.au/news/World/Market-access-key-to-piracy-fight/2006/12/08/1165081128349.html.
[3] The criteria for censorship are: the state advocates to create excellent films that have both ideological content and artistic quality”. They should “get close to reality, life and the masses”; be of “benefit to the minors’ healthy growth”; and “try to transform backward culture and combat firmly the decadent culture”. And maybe most important no politics can be involved in entertainment, Mary-Anne Toy, ‘Piracy still pays despite party line on what’s fit for Chinese eyes’, Sidney Morning Herald, February 10, 2007, available at: http://www.smh.com.au/news/world/piracy-still-pays-despite-party-line-on-whats-fit-for-chinese-eyes/2007/02/09/1170524304056.html.
[4] Five movies have been banned by censors, available at: http://en.wikipedia.org/wiki/List_of_banned_movies#China_.28People.27s_Republic_of.29
[5] USTR, Trade summary, 2005, pg. 112, available at: http://www.ustr.gov/assets/Document_Library/Reports_Publications/2005/2005_NTE_Report/asset_upload_file469_7460.pdf.

The timing of China’s action plan, judicial interpretation and notice is remarkable. As if to stave off this WTO dispute by patching some formal complaints. To no avail.

The question is whether the 60 day consultation period which advances any Dispute Reolution Body panel that will judge whether China digressed, is initiated by the US government, because it really believes it can proof the non-compliance of China and take advantage of a trade conflict with China, or that is was initiated for domestic consumption, because the Bush administration wants to look tough in the eyes of Congress.

Either way, the grace period of China, 5 years of their accession to the WTO has lapsed.

In my research for my thesis about whether China is TRIPs compliant I wrote:

An eventual formal complaint [1] could be based on the articles 41[2], 46[3] and 61 TRIPs[4]. The key question is whether it would be wise to do so. Peter Yu gives five reasons why the US [5] should not file a formal complaint based on the abovementioned articles. First, there is no clear definition for effective enforcement (41(1) TRIPs). What Yu writes about effective enforcement can also be said about the terms effective deterrent (article 46 TRIPs) and deterrent (article 61 TRIPs). The latter provision is mentioned a lot by industry trade groups, that encourage WTO members to base a case against China alleging its criminal remedies are insufficient to provide a deterrent, caused by alleged high thresholds. If it actually comes to a WTO dispute resolution settlement case, based on article 61 TRIPs, a way for the Dispute Resolution Body panel to measure the degree of sufficiency of deterrence could be to compare the thresholds of other WTO countries, preferably in the same developmental stage[6] and determine whether China’s thresholds are within a certain reasonable range. Second, a complainant country needs to have good evidence. The paradox is that although US companies and trade groups urge the US government to file a formal complaint against China, so that the USTR is asking companies to submit their complaints, only 35 companies have handed in their complaints[7]. The EU has a similar challenge in the preparation of evidence for a WTO case[8]. Companies want the problem of inadequate enforcement solved as long as it does not interfere with their direct personal interests[9]. The information China gives, based on the request of article 63 (3) TRIPs could be used as evidence, too. But if this were the only evidence, it would make the position of the complainant member very dependent on the willingness to share the information of the defendant member. Third, almost all of the existing WTO cases focus on more specific provisions, rather than a lack of general enforcement. Comparable cases were those filed by the US against Greece and one against the EU[10]. Fourth, an adverse WTO ruling should be calculated. Even countries as small as Antigua and Barbuda can prevail against the US if the WTO rules are on their side[11]. In a dispute settlement process it is likely that both parties win some major points. This should be taken into account when a country files a formal complaint against a defendant as formidable as China. Fifth, China needs guidance to help it make the transition to full compliance with WTO rules. Therefore well-conceived challenges before the WTO Dispute Settlement Body are needed to provide guidance during this critical period. WTO challenges will be particularly helpful in areas in which Chinese laws do not comply with more specific TRIPs provisions, as well as those in which the challenges are supported by prior WTO panel decisions.

Notes

[1] In September 2006, the United States, the EU and Canada did request that a dispute settlement panel examine their complaint that Chinese tariffs on imported auto parts were discriminatory, the first time a dispute with China had risen to this level in the WTO. James F. Paradise, ‘China’s Intellectual Property Rights Honeymoon’, available at:
http://www.asiamedia.ucla.edu/article.asp?parentid=57634.
[2] Paraphrasing partly article 41 TRIPs: Members shall ensure that enforcement procedures are available so as to permit effective action against infringement.
[3] Paraphrasing partly article 44 TRIPs: In order to create an effective deterrent to infringement, the judicial authorities shall have the authority to order that infringing goods be, without compensation, be disposed of outside the channels of commerce.
[4] Partial article 61 TRIPs: Remedies available shall include imprisonment and/or monetary fines sufficient to provide a deterrent, consistently with the level of penalties applied for crimes of a corresponding gravity.
[5] These arguments could apply to other countries as well.
[6] China’s developmental stage is difficult to compare, since it is both a developing country and a developed country. Also according to Andy Sun China is not a monolithic society or market: “Anyone who wants to do business, or have anything to do with Chinese markets should not think that way. It is actually a capsule of both time and space”, Andy Sun, ‘China and WTO compliance’, CASRIP Publication Series: Rethinking In’t Intellectual Property, 2000, no. 6., pg. 243, available at: http://www.law.washington.edu/CASRIP/Symposium/Number6/Sun.pdf.
[7] The USTR received only 35 submissions from the industry through the Section 301 submission procedures in 2005, USTR, ‘Out-of-cycle review’ 2005.
[8] One of the recommendations to the Directorate-General for Trade Policy of the European Commission is to sensitise the industry on the importance to provide all required data to support a WTO case, and guaranteeing the confidentiality of the information provided. Paul Ranjard and Benoît Misonne, ‘Study 12: Exploring China’s IP Environment’, Study on the Future Opportunities and Challenges of EU-China Investment Relations, February 15, 2007, pg. 22 and 26, available at: http://trade.ec.europa.eu/doclib/docs/2007/february/tradoc_133314.pdf.
[9] Probably because they fear this will have an averse effect on their ability to do business in China, or they expect trade tensions or retaliations which do their business no good. Guanxi (personal connections) and political capital is important in China. Peter K. Yu, ‘From Pirates to Partners (Episode II): Protecting Intellectual Property in Post-WTO China’, American University Law Review, Vol. 55, 2006, Part III Thinking Outside the IP Box, E. Reinvestment, pg. 127, available at: http://ssrn.com/abstract=578585., pg. 127.
[10] US claimed that Greece in one case and the EU in another violated articles 41 and 61 TRIPs by not providing effective enforcement of IPR. Both cases were eventually settled. Request for Consultations by the US, Greece, Enforcement of Intellectual Property Rights for Motion Pictures and Television Programs, WT/DS125/1, May 7, 1998; Request for Consultations by the US, European Communities, Enforcement of Intellectual Property Rights for Motion Pictures and Television Programs, WT/DS124/1, May 7, 1998.
[11] Panel Report, US, Measures Affecting the Cross-Border Supply and Betting Services, WT/DS285.R, November 10, 2004.

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China About to Publicise ‘Important’ IPR Cases

Xinhua reports via People’s Daily Online that envoys of foreign governments and representatives of international organizations will be allowed to attend IPR trials if they wish, said Jiang Zengwei of the State Office of Intellectual Property Protection (SIPO), quoting an action plan.

More important could be the following:
The country will publicize important trial information through the media, according to the plan released on Monday.

What is important is rather subjective. Transparency would only be served if the ruling with adequate motivations of every single IPR case were made available through the internet, as many countries allready do.

Read the People’s Daily Online article here.

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Counterfeit Cars, Backlogs and Economic Nationalism

The Economist has an article about Counterfeit cars in China.

It writes:
So far, legal action by foreign firms has proved nearly useless. The many writs, threats, injunctions and court cases have become embroiled in slow-grinding legal machinations, been thrown out on technical grounds or failed because foreign firms had not properly registered their designs.

Some of China’s administrative enforcement authorities, such as the Trademark Office and Trademark Review and Adjudication Board, are indeed slow-grinding, because they have a big backlog, reports Peter Ollier for Managing Intellectual Property:

18 and 30 months to register their marks, five years to get a ruling in an opposition hearing, and up to seven years for a decision from the Trademark Review and Adjudication Board (TRAB) in a cancellation action.

Although China’s provisions stipulate provisional measures including injunctions, the delays in deciding trademark oppositions by the Trademark Review and Adjudication Board can have a knock-on effect.

Ollier writes:
In late 2005 the Supreme Court stated that when there is a dispute over registered trade marks, courts should not handle such cases but should wait for the dispute to be dealt by the Trade Mark Office first.

Of course car producers should not forget to register their design rights in China. However, even if they forget their designs should be protected by copyright, which does not need to be registered.

Then the Economist also refers to economic nationalism:
Foreign carmakers are reluctant to make too much of a fuss, lest they be excluded from a fast-growing market or generate unwelcome negative publicity.

Read Ollier’s article here. Read the Economist article here.

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How to protect your software in China?

In China software piracy is one of the big problems. What can be done to protect software?

Copyright

Software is specifically mentioned in article 3 (8) Copyright Law as protectable subject matter.

Although copyrights do not have to be registered, since China is a signatory of the Berne Convention the enjoyment and the exercise of copyrights shall not be subject to any formality, according to article 5 (2) of this treaty, it can be wise to register:

  • A registration certificate issued by the software registration institution, recognised by the copyright administration department of the State Council, is a preliminary proof of the registered items, see article 7 Regulations on Computers Software Protection;
  • Elliot Papageorgiou of Rouse & Co. International gives another argument: Registration and publication of the software and identity of the owner in the copyright bulletin serves as notice to infringers and raises the presumption that the infringer was “knowingly” infringing copyright. If this is the case, the defendent cannot base his claim on article 30 Regulations on Computers Software Protection, that he neither knows nor has reasonable grounds to know that he infringed, in which case the infringer can, after paying reasonable remunaration, continue to use the copies, if the cease or destruction of these would cause heavy losses to him.

Article 29 Regulations on Computers Software Protection gives the limitation that “[t]he development of a piece of software which is similar to a pre-existing one due to a limit of alternative forms of expression does not constitute an infringement of the copyright in the pre-existing one.” In other words, if there is only one technical solution possible, it is not copyrightable. Professor Hugenholtz called this (and I paraphrase) the monopoly of suboptimal technical solutions.

Patent

Article 22 Patent Law states: Any invention or utility model for which patent right may be granted must possess novelty, inventiveness and practical applicability.

  • Novelty means that, before the date of filing, no identical invention or utility model has been publicly disclosed in publications in the country or abroad or has been publicly used or made known to the public by any other means in the country, nor has any other person filed previously with the Patent Administration Department Under the State Council an application which described the identical invention or utility model and was published after the said date of filing.
  • Inventiveness means that, as compared with the technology existing before the date of filing, the invention has prominent substantive features and represents a notable progress and that the utility model has substantive features and represents progress.
  • Practical applicability means that the invention or utility model can be made or used and can produce effective results.

According to Papageorgiou the requirements that a patent needs to be for the purpose of resolving a technical problem and capable of producing a technical result by technical means are analogous to these requirements stated by article 52 (3) European Patent Convention. However, as Wikipedia’s article ‘Software patents under the European Patent Convention‘ makes clear there is a plethora of interpretations. What China’s interpretation is I am not sure yet. To be continued.

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IPR infringements: Glass Is Half Full or Half Empty?

Same facts about statements made at the Global Forum on Intellectual Property Rights Protection and Innovation , diametric contradictory titles.

Kirby Chien’s article for Taiwan’s The China Post: ‘US says China piracy getting worse’.
Read more here.

Jiang Wei and Diao Ying’s article for China Daily: ‘Big progress made in IPR protection‘.
Read more here.

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Media As the Battleground in Case of IPR Infringement

Alistair J. Nicholas, managing director of AC Capital Strategic Public Relations, a China-based corporate communications and public affairs consultancy with offices in Beijing and Shanghai, wrote an article for Business Week. The author has directed the communications strategies of various foreign clients regarding IPR litigation in China.

Nicholas writes:

Historically, foreign companies taking legal action in China have been reticent to engage the local media as they believe, quite rightly, that it will likely take the side of the local company being sued, irrespective of the merits of the case.

The tactic for foreign is to engage China-based foreign media in order to generate international news coverage.

[O]verseas media coverage will be reported back to Beijing via China’s global network of embassies, consulates and internal news reporting organs. For example, Xinhua, apart from running its news wire service, also prepares classified briefing papers and cables for senior government officials.

Read more here.

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Pledging of Intellectual Property Rights in the Property Rights Law

March 16, the National People’s Congress promulgated the controversial Property Rights Law that will be effective October 1, 2007.

Does this law mention intellectual property law at all? Yes, it does:

Article 223 Property Rights Law: The following rights that a debtor or a third party is entitled to dispose of may be pledged:
under V: The rights to exclusive use of trademarks, the property right among patent rights and copyrights which are transferable according to law;

Article 227 Property Rights Law: Where the right to exclusive use of trademarks, the property rights among patent rights and copyrights are pledged, the pledgor and the pledgee shall conclude a contract in writing. The right of pledge shall become effective upon registration with the administrative department in charge of commerce and industry.
If the property rights in the foregoing paragraph are pledged, the pledgor may not transfer or permit the right to be used by another, unless otherwise agreed by the pledgee and the pledgor. The proceeds from the transfer or license of use obtained by the pledgor shall be used to pay in advance the pledgee’s claims secured or be deposited with a third party.

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INSEAD’s Attributes Hijacked By SEIMI

Michael Backman asks in his article for the Australian newspaper The Age the question who is liable for damage of a product of which it is unknown whether it is counterfeited or not. This could be increasingly the case, Backman claims, since the infringers are using better and better manufacturing methods.

On the other hand, the difference between real and fake probably cannot be bigger as between SEIMI and INSEAD. Backman gives the example of a blatant parasitical use of the attributes of the renowned French MBA: [T]he Sino-European International Management Institute (SEIMI), which claims on its website (www.seiedu.org) to be based in Beijing and Fontainebleau, outside Paris. The French address happens to be that for INSEAD, a top European business school. SEIMI’s website provides names and photographs of faculty staff, most of whom are France-based INSEAD lecturers and professors.

This affair is similar to the “cloning” of Steve Dickinson, co-blogger of Dan Harris of China Law Blog and colleague of Harris & Moure by a Mongolian law firm, see here.

Read Backman’s article here.

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China’s New National Strategy On IPR Protection Will Come Out First Half 2007

Luan Shanglin of Xinhua reports: “China’s national strategy on IPR protection will come out in the first half of this year. It is composed of 20 topics and one guideline, covering system building, law enforcement, talents training and public awareness regarding the IPR protection.”

Read more about the two-day Global Forum on Intellectual Property Rights Protection and Innovation which opened in Beijing last Tuesday here.

Good strategy, bad tactics?

Is seems the release of new strategies are getting a much higer frequency. Before, in 1995 and 2006 China’s action plans were released. However, to have a good strategy does not necessarily mean it will be performed well.

Update:

The article ‘Focus of IPR strategy to be broadened’ in the China Daily said:

The government is expected to widen its focus on intellectual property rights (IPR) from protection-only to creation, utilization and protection of innovation, with the release of its long-awaited strategy.

The national strategy on IPR, which aims to safeguard the transition to an innovative nation, has been in the pipeline since January 2005 and has involved 28 agencies within the central government.

State IPRs part of strategy?
Niu Wenyuan, chief scientist on sustainable development with the Chinese Academy of Sciences, proposed to have a national procurement system to buy those innovations, which are critical to the nation, but do not have any immediate commercial returns, as well as build an efficient IPR transfer network.

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Chintellectual Property Foundation: “Paving the European way for Chinese enterprises”

Dutch IP firm Vereenigde has set up the Chintellectual Property Foundation, a non-profit organisation that helps Chinese enterprises find their way around the European intellectual property system.
The foundation is organising and hosting master classes both in China and Europe, primarily intented for government officials, university and company staff and IP practitioners.

See more here.

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Alternative Business Models Emerge In Times of Pessimism About a Solution Against Copyright Piracy in China

That copyright piracy in China is a serious problem is confirmed by the article in China Daily. The General Administration of Press and Publication announced that 120 million audio and video products and 500 million unauthorized books a year were pirated. Read the China Daily here.

Eric Priest a research fellow of the Berkman Center for Internet & Society at Harvard Law School, is pessimistic that a solution to this problem will be found anytime soon. In his 79 page article ‘The Future of Music and Film Piracy in China’ he writes:

The government’s present trajectory in the war on piracy – pursuing a long term plan for improved intellectual property protection through measured reforms, education, and reliance on private parties to enforce their own copyright portfolios – will not solve the piracy problem or bring about significant relief to copyright owners for many years, if ever.

In fact, the Chinese entertainment industry will likely turn to alternative business models that do not rely on copyright law to generate revenue before reliable copyright enforcement becomes a reality in China.

Alternatives of such business models already emerge as one can read in the Shanghai Daily:

Sina Corp, China’s biggest Web portal, sells advertising next to the free music streams of EMI Group Plc, Sony BMG, Warner Music Group Corp, Universal Music Group and Taiwan’s Rock Records, which can’t be downloaded to personal computers. Ad revenue will be shared with the record companies. Read John Liu’s article for Shanghai Daily here.

Priest deems an effective crackdown on piracy in China impossible in the foreseeable future, due to political, institutional, economic and cultural barriers. Read Priest’s article here (79 pages).

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Guangdong Lux Soap Cleansed of Counterfeit Trademark in Guyana

Remember Guyana’s Court that granted an injunction against alleged counterfeit Lux soap from Guangdong? See here. Well the soap continues.

On February 6, Justice B S Roy, sitting in the Commercial Court had granted an injunction against the importer and defendant Mohamed Niazi Khan, of Multi Beverage Company, located at Cornelia Ida or 46-47 Hadfield Street, preventing him from opening and distributing the contents of the container, which was lodged at John Fernandes Wharf. The injunction restrained the defendant or agents of his from infringing the plaintiff’s registered trademark No. 5463A.

On March 9, Unilever was granted the right to remove its trademark from all of the soaps in the container, in an order signed by Justice Roy. Labourers were deployed to remove the registered trademarks of Lux from 1,266 cartons of soap purporting to be goods manufactured by Unilever. Read Nicosia Smith’s excellent article for the Stabroek News, including pictures of the action, here.

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SIPO Deputy Director Does Not Want to Discuss How To Enforce Patent Infringement

SIPO deputy director Zhang Qin was interviewed by Emma Barraclough of Managing Intellectual Property in Geneva.

Zhang said: [T]he counterfeiting and piracy of copyright and trade marks is illegal and should be punished. We have to be trustable. We want a good market order system – that’s the way to develop the economy.

But patents are a bit different, according to Zhang. He gives the argument that developed countries have more money, better education and they start R&D earlier, so they pre-empt this opportunity for developing countries.

In Zhang’s words: “So patent infringement can’t be viewed in the same way as stealing a car. Technology is an objective thing – there is a better way to do something. Once somebody else has applied for a patent, your effort becomes illegal.

Another argument Zhang makes for the distinction between the infringement of trademark rights and copyrights on the one hand and patent rights on the other is that in China some areas of technology, such as business methods, are rejected as unpatentable. So their alleged infringement not relevant.

Zhang wants to balance the rights of foreign companies, Chinese companies and other people in a fair way. He wants to discuss how to balance interests rather than how to enforce patent infringements.

Read Barraclough’s interview about this and Chinese companies preference for utility models and industrial designs instead of invention patents, and the growth in Chinese international patents here.

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New Technology for Old Wines Against Counterfeit Bottles

In China and Vietnam, you find more counterfeit than authentic bottles, Serge Tchekhov said in a phone interview with Elin McCoy of Bloomberg.

In order to fight counterfeit wines winemakers are considering to deploy new technologies such as RFID, now that holograms obviously are replicated too easily by counterfeiters, see Genuine Fake Holograms From China here.

Tchekhov now works with Swiss wine-security company Algoril. Before he was working as wine expert for a commission to fight counterfeiting, set up by France’s offical printing company Imprimerie Nationale, under the Finance Ministry in 2004. Its study showed counterfeits accounted for about 9 percent of the global economy.

Read McCoy’s article about new ways to guarantee the authenticity of wines here.

Unmentioned in the article but even more important, however of a much smaller scale, is the problem of authentic bottles with fake wine. Technology that shows whether a bottle has been opened or not should guarantee this is not the case. Otherwise only a connaisseur might taste the difference.

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China Ranks 45th in International Property Rights Index (which includes IPR)

The 2007 International Property Rights Index (IPRI) is the first international comparative study that measures the significance of both physical and intellectual property rights and their protection for economic well-being. The correlation of the IPRI Rank and GDP per capita is eighty-nine percent and thereby underlines the positive relationship of effective property rights protection and income.

Page 28 of the IPRI has a paragraph about China:

China, which ranks 45th with an IPRI score of 4.4, has a tremendously high level of copyright piracy (scores 0.1), which lowers its intellectual property rights component to 3.5. This is despite the relative mediocre perception of its patent strength and trademark protection (5 and 5.3 respectively). In addition, China does relatively well in managers’ opinion of courts to uphold their property rights (6.9) and business property registration (7.8). However, the reader must consider that most IPRI’s data sources do not cover rural areas, which should play a crucial role in the judgement on countries like China, India and Russia. Overall, next to the high piracy level, the difficulty to access loans, the high level of corruption and the weak existence of judicial independence give China a low overall score on the IPRI.

Read the complete report here.

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Guizhou Province Drafts Regulation to Protect Traditional Knowledge

Pliny Han of Xinhua reports: Legislators in southwest China’s Guizhou Province are mulling a regulation aimed at protecting property rights for traditional knowledge, especially knowledge relating to biological resources, said sources with the provincial bureau of intellectual property right.Read more here.

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Alibaba Sued By Music Companies Over Yahoo! China’s Alleged Copyright Infringements

Li Xinran of the Shanghai Daily reports about Alibaba, operator of Yahoo China (in 2005 Alibaba bought Yahoo! China, then Yahoo! bought 40 percent of Alibaba) , who has been sued by eleven music companies, because Yahoo! China allegedly provided lyrics, mobile phone ring tones based on the songs and enticed users to download or listen to them online.

Reuters quoted Yahoo! China spokesman Porter Erisman writing in an email: Yahoo! China respects intellectual property rights and supports the fight against music piracy. The courts have clearly established the precedent that search engine operators are not liable for content posted on third-party Web sites,” referring to search engine Baidu who was sued by music companies in November.

Reuters quoted IFPI chairman and CEO John Kennedy writing in an email: We are surprised and frustrated that they should take this role in China given that they are our partners in other parts of the world.

The eleven music companies, including Universal Music Group and Warner Music Group Corp, claim that Yahoo! China allowed online users to freely listen to the songs and download 229 Chinese and English songs, whose copyrights belong to the 11 companies, from April 10, 2006. The eleven music companies claim 5.5 million yuan (US$687,500) in total for their economic losses and requested that the court stop the defendant’s copyright infringements.

The Beijing No. 2 Intermediate People’s Court has accepted the lawsuit, according to Xinhua news agency. According to Leong May-seey, IFPI’s regional director for Asia this happened in the beginning of January this year.

Read Li’s article here, and Reuters’ article here.

Read Joe Lewis of WebProNews who alleges that the music industry is in denial here.

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“Videos with ‘copyright challenging character’ most popular”

Netanel Jacobsson is a Swede living in Israel running Maxthon, a company that developes a browser in China (which reached 62 million dollars in one and a half year without marketing).

Jacobsson’s last two blogs are about the Piper Jaffray’s Fourth Annual China Growth Conference in Beijing. In one he points out the way Chinese youth react to censorship, by going online to get it anyway (conclusion might be that market access restrictions stimulate IPR infringement), see ‘A Conversation with Chinese Users’ here.

The other posting is about China’s equivalents of YouTube and that the most popular content is of a ‘copyright challenging character’, see ‘China: The Portal Challengers (Video)’ here.

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Dance Copyright Infringemement Case: Thousand-hand Bodhisattva

September 30, 2006 Coldness Kwan wrote an article for the China Daily about a dance copyright infringement case. The dance is the Thousand-hand Bodhisattva dance, see it on YouTube here.

Mao Difang, 71-year-old retired dance director, filed a lawsuit suing Zhang Jigang£¬head of the Troupe of the General Political Department of the China Liberation Army and China Art Troupe for Disabled Persons for infringement. Mao is asking for one million yuan in compensation.

Mao claims the defendant adopted the same theme and the same costumes for the dancers, who wear long nails and have eyes on their hands. Mao also used photos to support claims of other similarities including music, structure, props and even the male to female ratio of the dancers. However the ‘thousand hand Bodhisattva’ registered for copyright last April, three months after its debut on CCTV, which angered Mao. “Some of those who are in the dance field are rather disrespectful to their mentors,” said Mao. “One is allowed to stand on the shoulders of mentors and climb, but they must admit they are on their mentors’ shoulders.”

The court would hear the case. It is not clear whether a court decision has been given. If you know more, please tell me.

Read the Kwan’s article here.

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Beijing No.2 Intermediate People’s Court’s Illuminating Ruling About Copyrightable Lamps

US based Fine Art Lamps filed a civil lawsuit with the Beijing No. 2 Intermediate Court against both the Zhongshan Great Beam Lighting and the Beijing Great Beam Lighting for infringement of its copyright in its catalogs and lamps in August of 2006, requesting for injunction, compensation of damages, public apology and reasonable investigation cost and attorney fees. The Beijing No. 2 Intermediate Court rendered its decision as the court of first instance on December 19, 2006 in favor of Fine Art Lamps.

Beijing No. 2 Intermediate People’s Court recognised that Fine Art Lamps’ products are artistic works with utilitarian function and therefore are also protected as copyrighted works.

Mr. Yu Jianyang and Mr. Yang Kai of Liu, Shen & Associates, who represented Fine Art Lamps in the litigation, complimented the court by deciding the case within 5 months after receiving it.

Read the article by Messrs. Yu and Yang here.

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“Lax IPR Keeps Chinese Companies Lazy In Terms of R&D”

BusinessWeek runs an article of Associated Press about the ‘Study on the Future Opportunities and Challenges in EU-China Trade and Investment Relations 2006-2010’ prepared by Philip Bartley of the Emerging Markets Group consultancy, for the European Commission.

Bartley said that China would also benefit from opening up its market, mentioning EU and U.S. concerns over copyright and piracy enforcement. “Lax intellectual property rights in may ways keep Chinese companies lazy in terms of their own research and development.”
Read the BusinessWeek article here.

The study is comprised of 11 sectoral issues (Machinery, Chemicals, etc.) and 1 about IPR, exploring China’s IP environment, which was written by Dr. Paul Ranjard of UNIFAB Beijing and Benoît Misonne of the EU-China Trade Project.

See the complete study here and the chapter about IPR in China here.

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Trademark Infringements Illustrated: SQNY, GHANEL, HIKE, AVIVAS etc

Chris Hong of Aspire, Perspire, Attain links to pictures of goods that obivously infringe trademarks, at CRI Online here.

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BCG Report Beyond the Great Wall: Intellectual Property Strategies for Chinese Companies

January 2007, Vladislav Boutenko, David C. Michael and Collins Qian of the Boston Consulting Group published the report: Beyond the Great Wall: Intellectual Property Strategies for Chinese compenies. Head tip to Brian Schwarz’ China Challenges.

The report distinguishes five phases of IP development and compares China’s development with the developmental phases Japan, Taiwan and South Korea have been through.

First phase: Driving growth through export
Second phase: Climbing the value ladder
Third phase: Paying the price
Fourth phase: Getting serious about IP
Fifth phase: Profiting from IP

The report asserts that China’s focus on protecting their inventions only domestically may result in exclusion from international markets, and that they have to pay onerous royalties, or are forced to take on disadvantageous partnerships.

The report gives the example of the DVD player industry in China that had to pay 20 US dollars in royalties for each DVD player they manufactured, so that China in the case of DVD players is not a low-cost location after all.

The Boston Consulting Group famous for its BCG Matrix (remember dog, cow, star and question mark) has come up with the ‘BCG IP Strategy Matrix’: using the symbols of shark, minnow, target and superpower, to show how companies with IPR grow strong and how those without become vulnerable.

Read the BCG 26 pp. report here (pdf).

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TRIPs Council: China Advocates Disclosure Requirement, is Against Making Enforcement A Permanent Agenda Issue

Bridges of ICTSD gives excellent weekly trade news digests about TRIPs etc.

At the 13 February meeting of the TRIPs Council, the group of developing countries — Brazil, China, Colombia, Cuba, India, Pakistan, Peru, Thailand, Tanzania, Ecuador and South Africa — that have tabled a draft article on disclosure (that requires patent applications to include disclosure of the origin of genetic resources and associated traditional knowledge along with evidence of prior informed consent and benefit sharing. IP Dragon) reiterated their call for an amendment. They said they now were ready to proceed with text-based negotiations.

A number of developing countries, led by China, expressed opposition to making the enforcement issue a permanent agenda item for the Council. China noted that there is no mandate in either the TRIPs Agreement or the Doha agenda to pursue such work, and that a discussion on the topic would not be helpful in advancing other agenda items currently under negotiation or review.

“China, Argentina, Brazil, Cuba, India and South Africa reiterated the importance of Members’ freedom to determine the appropriate means of IP enforcement, and the need to consider enforcement issues in conjunction with other TRIPs provisions, such as the non-discrimination obligation and the need to avoid the creation of unnecessary trade barriers. In addition, they cautioned against duplication of work already carried out by the World Customs Organisation and WIPO.

Read ICTSD’s article here.

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Deadline Submissions for Special Provincial Review of IPR in China Approaches

February 26, before 5 pm is the deadline for public comments concerning the locations and issues that should be the focus of a special provincial review of IPR in China.

April 28, 2006 the USTR released its annual Special 301 Report and announced to conduct a special provincial review.

The goal of this review is to spotlight strengths, weaknesses, and inconsistencies, in and among specific jurisdictions, and to inform the Special 301 Review of China as a whole.

Jurisdictions at the provincial level might include in addition to China’s provinces (sheng), the four municipalities (shi) of Beijing, Chongqing, Shanghai, Tianjin, as well as China’s five autonomous regions (zizhiqu).

If the transparency increases at a regional level, countries can treat the regions that protect and enforce IPR adequately in a preferential way.

Read more here.

Richard Brubaker of All Roads Lead to China included the following question, while conducting a 20 city survey on manufacturing: “Are there any specific cases where IPR suits have been filed, and what was the outcome?” Read the results of the survey for Ningbo, Wuhan, Xian, Xiamen, Nanjing and Chendu here.

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Technology Transfers: After the Maglev China Got An Appetite For the Shinkansen Bullet Train

Remember Germany’s consortium Transrapid International who designed and built the Maglev trains in China? See Intellectual Property of German Train Gone with the Wind. China ‘digested’ the technology pretty fast to come up with its own version of this train.

The same technology transfer is happening with the Japanese Shinkansen bullet train. Read an article about it of Murie Dickie for the Financial Times Germany, here.

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Chinese Copyright Pirate created interest in subject of Intellectual Property for Joseph Stiglitz, Nobel Laureate

Joseph Stiglitz, 2001 Nobel laureate in economics and professor at Columbia University delivered the 6th annual Meredith and Kip Frey Lecture in Intellectual Property Friday at the School of Law of Duke University.

Naureen Khan wrote for The Chronicle:

He said his interest in intellectual property began 20 years ago, when a Chinese publisher called to ask if Stiglitz would write a preface to a pirated edition of one of his own textbooks.”As a good academic, I was enthusiastic about the idea,” Stiglitz joked. “My view was that the reason we write these things is not to make money but to influence ideas, to influence the shape of intellectual debate.”

Stiglitz is a known criticaster of TRIPs.

Read Khan’s article here. See the 6th annual Meredith and Kip Frey Lecture in Intellectual Property as video stream here.

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Wragge & Co and Graf von Westphalen Open Up Shop in Hong Kong and Guangzhou

Vanessa Arora of the TheLawyer.com wrote that UK law firm Wragge & Co together with German ally Graf von Westphalen will launch a firm in Hong Kong and in Guangzhou.

Wragge’s IP specialist Gordon Harris will spend its time in the UK and China.
Dr. Walter Scheuerl is Graf von Westphalen’s IP specialist, see here.

Read Arora’s article here.
The announcement of the China offices by Graf von Westphalen you can find here in German.

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Sino-US relationship about IPR enforcement: New Cyclus of Threats and Reassurances

Karan Bhatia, deputy US trade representative said: “Last October, we informed China we would be filing such a case, but then agreed to hold off, with the support of US industry, when China asked for further bilateral discussion. If it becomes clear that negotiations will not be successful, then we will proceed with WTO dispute settlement.”

Read the InTheNews.co.uk article here.

However, as Peter K. Yu has already pointed out a victory in the WTO would not necessarily solve the problem. Yu gives five reasons why the US [1] should not file a formal complaint based on the abovementioned articles.

First, there is no clear definition for effective enforcement (see article 41(1) TRIPs). What Yu writes about effective enforcement can be said too about the terms effective deterrent (see article 46 TRIPs) and deterrent (see article 61 TRIPs). The latter provision is mentioned a lot by industry trade groups, that encourage WTO members to base a case against China alleging its criminal remedies are insufficient to provide a deterrent, caused by alleged high thresholds. If it actually comes to a WTO dispute resolution settlement case, based on article 61 TRIPs, a way for the Dispute Resolution Body panel to measure the degree of sufficiency of deterrence could be to compare the thresholds of other WTO countries, preferably in the same developmental stage [2] and determine whether China’s thresholds are within a certain reasonable range.

Second, a complainant country needs to have good evidence. The paradox is that although US companies and trade groups urge the US government to file a formal complaint against China, so that the USTR is asking companies to submit their complaints, only 35 companies have handed in their complaints [3]. Companies want the problem of inadequate enforcement solved as long as it does not interfere with their direct personal interests [4]. The information China gives, based on the request of article 63 (3) TRIPs could be used as evidence, too. But if this were the only evidence, it would make the position of the complainant member very dependent on the willingness to share the information of the defendant member.

Third, almost all of the existing WTO cases focus on more specific provisions, rather than a lack of general enforcement. Comparable cases were those filed by the US against Greece and one against the EU [5].

Fourth, an adverse WTO ruling should be calculated. Even countries as small as Antigua and Barbuda can prevail against the US if the WTO rules are on their side [6]. In a dispute settlement process it is likely that both parties win some major points. This should be taken into account when a country files a formal complaint against a defendant as formidable as China.

Fifth, China needs guidance to help it make the transition to full compliance with WTO rules. Therefore well-conceived challenges before the WTO Dispute Settlement Body are needed to provide guidance during this critical period. WTO challenges will be particularly helpful in areas in which Chinese laws do not comply with more specific TRIPs provisions, as well as those in which the challenges are supported by prior WTO panel decisions.

Notes:
[1] These arguments could apply to other countries as well.
[2] China’s developmental stage is difficult to compare, since it is both a developing country and a developed country. Also according to Andy Sun China is not a monolithic society or market: “Anyone who wants to do business, or have anything to do with Chinese markets should not think that way. It is actually a capsule of both time and space, ” Andy Sun, China and WTO Compliance, CASRIP Publication Series: Rethinking In’t Intellectual Property, 2000, no. 6., pg. 243, available at: http://www.law.washington.edu/CASRIP/Symposium/Number6/Sun.pdf.
[3] The USTR received only 35 submissions from the industry through the Section 301 submission procedures in 2005 (2005 Out-of-cycle review.
[4] Probably because they fear this will have averse effect on their ability to do business in China, or they expect trade tensions or retaliations which do their business no good. Guanxi (personal connections) and political capital is important in China. Yu, From Pirates to Partners, pg. 127.
[5] US claimed that Greece in one case and the EU in another violated articles 41 and 61 TRIPs by not providing effective enforcement of IPR. Both cases were eventually settled. Request for Consultations by the US, Greece, Enforcement of Intellectual Property Rights for Motion Pictures and Television Programs, WT/DS125/1, May 7, 1998; Request for Consultations by the US, European Communities, Enforcement of Intellectual Property Rights for Motion Pictures and Television Programs, WT/DS124/1, May 7, 1998.
[6] Panel Report, US, Measures Affecting the Cross-Border Supply and Betting Services, WT/DS285.R, November 10, 2004.

Jiang Yu spokeswoman of the ministry of Foreign Affairs said at a regular press briefing that China is in the process of improving its legal system to better deal with violators of intellectual property rights and will crack down harder on “IPR infringement activities so as to protect the intellectual property of all countries’ products in China.”

Read the Shanghai Daily News article here.

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Gong Xi Fa Cai!/Kung Hei Fat Choi!

IP Dragon wishes you an happy and prosperous Chinese New Year!

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Forum Shoppers: Do Not Forget to Forget to Send a Cease and Desist Letter

I found ‘Forum Shopping Comes to China’ one of the clearest articles of China IP Focus 2006 of Managing Intellectual Property. It is written by Benjamin Bai, Tony Chen, Xiang Wang, Peter Wang and research of Lisheng Hao. All, except for Xiang Wang who tranferred to Orrick, see here, work for Jones Day.

The people’s courts of big cities are generally perceived as rather fair and having expertise in the field of IP, instead of some of the courts in smaller cities that may be prone to local protectionism and have a much lower level of expertise in the field of IP.

The Civil Procedure Law gives the infringed party the choice to file a lawsuit against the infringer at the location of the infringer’s residence or at the place where the infringing act took place:

Article 29 Civil Procedure Law: an action initiated for an infringing act shall be under the jurisdiction of the people’s court in the place where the infringing act took place or where the defendant has his or her domicile.

Unless the infringer has residence in a big city where a reputable people’s court is located, the infringed party is trying to find one of his infringed goods for sale in a big city so he can file the lawsuit there.

Now the added value of the above-mentioned article kicks in. Before filing a lawsuit at the people’s court of your choice you should not first send a cease and desist letter.

If you do, the infringer can ask for a declaration of non-infringement at the people’s court of his choice. This will probably be the people’s court of his residence, where he might be able to influence the people’s court. Now, if a party has asked for a declaration of non-infringement, the underlying facts and issues are basically the same as for a determination of infringement. That is why the people’s court that hears the case first will get the jurisdiction over the case, in order to avoid inconsistent rulings.

Suzhou Longbao Bioengineering Industrial Corp. versus Suzhou Langlifu Health Products Co (Supreme People’s Court, July 20, 2002). An opinion of the Supreme People’s Court was asked by the lower court. As a result of this case the Supreme People’s Court recognised declaration of non-infringement as a proper cause of action.

Since this case there have been non-infringement suits in China involving patents, trademarks and copyright.

As a result of Eli Lilly versus Changzhou Huasheng Pharmaceutical Co. Ltd in Qingdao, Shangdong (2003), the Supreme People’s Court laid down the rule that the first court who accepts a case can keep the case.

Honda Technology Research Co. versus Shijiazhuang Double-Circle Motor Co. Ltd., et al. (Supreme People’s Court, June 24, 2004) confirmed this first-to-accept rule.

Bai, Chen, Wang and Wang write that in these three cases the Supreme People’s Court unequivocally established declaration of non-infringement actions, it has yet to provide jurisdictional guidelines for such suits. These could clarify whether a public statement accusing infringement in a general way is sufficient ground for a declaration of non-infringement.

Article 62 draft Rules on Several Issues Relating to Trial of Patent Infringement Cases (Judicial interpretation of Supreme People’s Court, October 2003) probably gives the direction the Supreme People’s Court wants to go with declarations of non-infringement: the party that wants to ask for a declaration of non-infringement at the people’s court has to ask the patent holder first for a declaration of non-infringement, providing the necessary technical information. Only if the patent holder refuses to give a declaration of non-infringement, the requesting party can ask the people’s court.

Bai, Chen, Wang and Wang wrote that a letter soliciting negotiation or a license is unlikely to trigger a declaration of non-infringement. If this does not work, one should, however, directly file a lawsuit, skipping any cease and desist letter.

Read the MIP article here (subscription may be needed)

Read Rouse & Co. International’s publication ‘Requests for declaration of non-infringement of a trademark in China here.

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If it Looks Like a Hummer, Sounds Like a Hummer, Drinks Like a Hummer …

An anonymous writer of Washington Wire of the Wall Street Journal quoted US vice-president Dick Cheney saying:

I remember being over there once, meeting with a group of American businessmen in Shanghai….” the vice president said. And they were telling me about a company that manufactures the Hummer…only it’s not General Motors. It’s a local company over there doing this exact replica that looks exactly like the Hummer. And I asked them, what do they say when you point out the fact that it’s an exact replica of an American product? They said, oh, it’s just a coincidence.

Cheney is very convinced about Treasury Secretary Henry Paulson’s commitment to straighten China’s IP enforcement challenges out. Richard Kuslan, of Asia Business Intelligence and himself an old China hand, is less impressed by Paulson’s decision to appoint Alan Holmer, who will negotiate economic subjects with China, including the enforcement of IP, but who lacks substantial China knowledge and experience.

Read the Washington Wire article here and Kuslan’s article here.

I looked for pictures of this Chinese Hummer. But all I could find were the pictures of the “People’s Hummer” manufactured by Beijing Benz DaimlerChrysler Corporation, see at Autoblog.com, here. So is DaimlerChrysler in China infringing General Motors, the birthplace of the Hummer?

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IP Specialist Xiang Wang Transfers From Jones Day to Orrick

Dr. Xiang Wang, formerly co-head of Jones Day’s Mainland China IP practice, will lead Orrick, Herrington & Sutcliffe LLP’s China IP practice at their Beijing Office.

Read more here.

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Welcome I-OnAsia as Advertiser on IP Dragon

I-OnAsia is a global intelligence, security and risk consultancy, focused on Asia and Asian subjects. I-OnAsia’s corporate office was established in Hong Kong in 2001. I-OnAsia has three regional offices: in the United States, Australia and Jordan for MENA (the Middle East and North Africa). Besides, I-OnAsia has field offices in London, Poland, Japan, Singapore, Malaysia, Beijing, Shanghai, Guangzhou, Shenzhen and Macau.

I-OnAsia offers anti-counterfeit services, integrity programmes, fraud investigations, forensics and recovery, safety and security programmes and commercial investigations.

Read more here.
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Dafen: Famous for its Art Industry, Infamous for its Copyright Infringements

Dafen, a village near Shenzhen is famous for its art industry and infamous for its copyright infringements.

Article 21 Copyright Law states that the term of copyright protection in respect of a work of a citizen shall be the lifetime of the author and fifty years after his death, and expires on 31 December of the fiftieth year after the death of the author.

Evan Osnos wrote together with Lu Jingxian for the Chicago Tribune: “Town leaders and local authorities say Chinese law allows reproductions of artists who have been dead for more than 50 years, though O’Keeffe died in 1986.”

However, recently the Dafen authorities investigate and punish copyright violations. Since January 2007 the Dafen Intellectual Property Working Station has been registering original works and taking photos, though the inspectors concede that piracy remains rampant.

Read Osnos and Lu’s article here.

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Fake Mengniu Milk Found in Beijing Wholesale Markets

During an inspection by the Beijing Municipal Bureau of Industry and Commerce Yanqing Branch, 200 boxes of fake Mengniu milk have been discovered at some wholesale markets in Beijing. Mengniu is the official sponsor of the National Basketball Assocation in China.

Instead of milk the boxes consisted of a mixture of water and chemical substances like sodium cyclamate.
Read the China Corporate Social Responsibility article here.
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Guyana’s Court Granted Injunction Against Alleged Counterfeit Lux Soaps from Guangdong

Stabroek News of Guyana reports in a very detailled way about how Unilever sought and was granted judicial relief via its law firm Cameron & Shepherd against an importer of a container of alleged counterfeit soap marked Lux from a port in Guangdong using the customs enforcement route.

Read this excellent article here.

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LG Electronics Brings Patent Infringement Lawsuit Against Thomson TCL

Korea Newswire reports about LG Electronics who presented a lawsuit against Thomson TCL Electronics (TTE), the French-Chinese TV maker, and its Hong Kong based holding company TCL Multimedia Technology Holdings for the infringement of four of its patents. LG Electronics filed the lawsuit at the US District Court, Eastern District of Texas and demands an injunction and damages. Consultations, since 2005, between LG Electronics and TTE did not resolve the problem.

Read Korea Newswire’s story here.

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Plagiarus Winner of 2007 is Guangzhou Company

This year the Guangzhou based company He Shan Jia Hui Vacuum Flask & Vessel Co., Ltd. has won the mock prize of the golden nosed dwarf: Plagiarus. I would almost say congrats.

Jug „Sophie“
Original: alfi GmbH, Wertheim, Germany
Plagiarism: He Shan Jia Hui Vacuum Flask & Vessel Co., Ltd., Guangzhou, P.R. China

I am not sure whether the design rights were registered in China. Either way, alfi GmbH can base their claim on copyright infringement.

Read and see more here.

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Where to Find Genuine Software in Shenzhen? “Maybe in Shanghai”

Dr John, who wants to stay anonymous for obvious reasons, did an investigation into copyright piracy in Shenzhen for The Inquirer. He and his wife went from the back alleys to the public shops looking for pirated software. Dr John’s story, with pictures made by his wife, is quite disturbing.

The most hilarious lines of this investigative piece of journalism:

I asked the guy running the software shop where I could find a copy of genuine Microsoft Windows. I told him I needed it for something important. He really had no idea. “Maybe Shanghai. You might be able to buy it in Shanghai, but it will be very expensive.”

Read Dr John’s article here.

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Genuine Fake Holograms From China

Marty Graham wrote an article about counterfeited holograms for Wired News.

Graham explains that as the counterfeited products increase in value, the sooner counterfeited holograms are added to fake genuineness of the products. The technology to copy holograms has been diffused around the world. So counterfeiters can either copy it themselves, buy it from hologram counterfeiters or buying the real holograms from the backdoor.

Twenty years ago, the technology to duplicate holograms was carefully guarded where now it’s widely diffused,” says Ed Dietrich, who has worked on hologram security issues for more than 20 years. “There are lots of little companies in China, for example, that make holograms now — not to say that’s good or bad, just that the technology is diffused.

The article questions the raison d’être of holograms, because the consumers cannot tell the difference between fake and genuine holograms. However, scanning machines in the hands of customs could make searching for fakes holograms more effective.

Read Graham’s article here.

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Let Your Protection Start Two Years Sooner: Filing Utility Models Together With Invention Patents

Article 2 Patent Law in China states: In this Law, “inventions-creations” mean inventions, utility models and designs.

Patent Agent in Hong Kong, who blogs about his experiences working for China Intellectual Property (HK) Ltd., explains that if you file for an invention patent in China you can file for a utility model at the same time, so you can gain two years of protection by the utility model, before the protection of the invention patent starts (if it is granted).

Read more here.

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