HK Government has recruited youth as informers in the battle against internet piracy, read here. HK Customs and Excise Department will jointly launch the ‘Youth ambassador against internet piracy scheme’ together with the Intellectual Property Department.

Why is the Excise Department involved?

More then 200.ooo members of 11 local Youth Uniform Societies take part. There will be “Youth Ambassador” website and teachning material.

They ambassadors can “report to the customs, and delivers information on relevant suspect infringements to the related Intellectual Property organs which join the scheme.“ Is this the way forward? Is an awareness campaign not enough? To use youth as informers may be a cost-efficient way to get information about possible IPR infringements, but isn’t it just the work of the police?

“Five pirated Windows XP copies were found with the package saying they were copied from legal copies used in Shanghai government bureaus.”

A senior official at the IT industry commission said that this was out of the question:
““They are definitely not copied from government-used copies and the sellers just make use of people’s trust of the government”, said Guo Zhongchao, a senior official at the IT industry commission.“

Why would the possibility be excluded that some public servant treated the software not careful or even copied it? It does not sound so outrageous to me. Public servants are human beings after all. Instead of complaining that the infringements ‘harm the image of the city and even ‘the nation’ they should investigate the matter and take precautions, such as pre-installing software to prevent it happen again.

Read the Xinhua article here.

Honda has announced it will sue SIPO for its decision to invalidate the exterior design patent application for Honda’s new version of the CR-V, see here. In the eyes of SIPO the new design was too similar to the original version, thus likely to confuse buyers.

Now Mainici Daily News reports that Honda is actually suing SIPO for its decision not to recognise its design patent of the CR-V sport-utility vehicle. In China patents can protect inventions, utility models and designs, see here.

“In November 2003, Honda sued Shuanghuan Auto and another Chinese firm for alleged illegal copying of the design of the CR-V sport-utility vehicle, demanding 100 million yuan in damages.“ These two other firms are: Shijiazhuang Shuanghuan Automobile Co and Hebei Xinkai Automobile Manufacturing Co.

Shanghuan Automobile Co. in North China’s Hebei Province, insists its Laibao SR-V did not infringe the design patent of Honda’s CR-V and went to SIPO to invalidate Honda’s design patent application. In March SIPO invalidated the application. Honda has asked a Chinese court to nullify SIPO’s decision. If Honda is not getting a design patent for the new CR-V, the Laibao SR-V is not infringing.

The design of SIPO’s logo has become clearer, what about its decisions?

Read Mainichi’s article here.

“Have you heard about the Chinese tourist that went on holiday to France?” this question has been asked over and over in China. The answers, however, became more and more interesting/dubious every time. A phenomenon well recorded in psychological science.

Lin Jun wrote a great article about how a story of a Chinese tourist whose fake Adidas bag was confiscated by French customs turned into a horror story, whereby some media even contended that Chinese tourists could be fined 300.000 euros, and even can be sentenced to a three year prison term.

Notice that both the scope of penalties and territory became broader. This nightmarish, but unverified news, probably have triggered the China National Tourism Association into telling the Chinese travel agencies they are responsible if their travellers wear counterfeit clothes, see here.

The urban legend/rumour had at least a deterrent effect on potential wearers of counterfeit clothing. Do you think IPR owners should try to spread this kind of rumours at will?

Read Lin Jun’s article here.

The Chinese stores of French supermarket chain Carrefour have bounced fake Adidas Teamgeist balls, the official FIFA 2006 World Cup ball. They allegedly were provided by Sudiman Industrial and Trade Co. Ltd, a company in the nearby city of Hangzhou, Zhejiang province.

Carrefour recalled the 42 balls that it sold across China.
“Carrefour was allowing purchasers to return them at double the initial purchase price of about 60 yuan (US$6;euro5), the report said. Authentic Adidas World Cup balls retail in China from 200-990 yuan (US$25-US$123;euro20-euro98).“

Carrefour seems to let the counterfeiter off the hook pretty easy. What is Adidas going to do about it?

Read more here on IPR.gov.cn and the article ‘Counterfeit balls pulled’ of Yuan Qi for Shanghai Daily here.

Liu Li of China Daily covered 13 IPR violators that were sentenced to jail terms ranging from 1 to 7 year.

Beijing Daxing District People’s Court:
Lin Rongzhou, who bought 29,800 pirated optical disks and sold 5,300 of them for profit last August, was sentenced to a two-year jail term and a 60,000 yuan (US$7,400) fine. Lin sold disks worth in total 59,500 yuan (US$7,300).

Shanghai Hongkou District People’s Court:
Zhao Weixin, former chairman of a Taiwan-based company, along with two accomplices, stood accused of producing fake Toyota, Nissan, Mazda and Mitsubishi motor fittings since 2001.
Court sources said that the three produced over 2 million car spare parts worth 15.2 million yuan (US$1.9 million), and had recorded sales of 14.8 million yuan (US$1.8 million).
Zhao Weixin was sentenced to four years imprisonment and a fine of 400,000 yuan (US$49,000). The two accomplices, both also surnamed Zhao, were sentenced to two-year and three-year jail terms, as well as fines of 200,000 yuan (US$25,000) and 300,000 yuan (US$37,000) respectively.

Zhongshan Municipal Intermediate People’s Court (Guangdong Province):
Lai Shouqiang, who produced and sold fake imported alcohol with Hennessy and Chivas brand names, on grounds that he produced and sold 4,000 bottles of imported wine worth 240,000 yuan (US$30,000) from 2004 to 2005, was sentenced to seven-years imprisonment and a
fine of 400,000 yuan (US$49,000).

Seven other people were sentenced to imprisonment of one to three years.

Suqian ‘local court’ (Jiangsu Province):
Zhang Qinghe was found guilty of producing and selling fake registered trademark symbols.
He was sentenced to three years imprisonment and fined 5,000 yuan (US$620).
He produced over 114,000 fake brand symbols and sold 14,000.

The 2004 Judicial Interpretation of Threshold for Criminal Liability lowered the financial threshold after which a violator may be punished. When a business brings in a minimum of 50,000 yuan (US$6,200) in revenue or 30,000 yuan (US$3,700) in illegal gains from selling counterfeit goods or infringing on copyright, it will be eligible for criminal punishment.
The previous standards were 100,000 yuan (US$12,300) and 200,000 yuan (US$25,000) respectively. This threshold has raised some criticism: “China uses the value of the infringing products, rather than the value of the genuine goods. According tot the US Trade Representative this method highly undervalues the infringing goods and effectively provides a “safe harbor” to infringers.“ See USTR, 2006 Special 301 Report (April 28, 2006 (pdf), pg. 4.

“The USTR Office is stepping up consideration of WTO dispute settlement options against China with regard to IPR issues. One such an issue are China’s laws that require certain thresholds to be met before intellectual property rights violators can be hit with criminal penalties. Informed sources have said since March that USTR is looking at a case that attacks these thresholds, and industry sources this week agreed that the new Special 301 report offically declares that these thresholds are a serious problem.“
USTR Hints at WTO Case Against China on IPR Criminal Thresholds, Inside US-China Trade (May3, 2006).
Source: USCC Hearing on China’s Enforcement of IPR, Statement of Terence P. Steward, Esq., June 8, 2006 (pdf). pg. 18.

The official name of the interpretation is: Interpretation by the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues of Concrete Application of Laws in Handling Criminal Cases of Infringing Intellectual Property (December 22, 2004).
Read about the impact of the Interpretations on the Application of Relevant Laws on Criminal Cases of IP Infringement (including criminal thresholds) by August Zhang of Rouse & Co. here and another article about the thresholds by trademark attorney Fu Haiying of King & Wood here.

Read the China Daily article here.

Last Saturday it was China’s National Cultural Heritage Day. A tangible reminder of some intangible treasures worth protecting.

In August 2004, China joined the UNESCO Convention for the Safeguarding of the Intangible Cultural Heritage after ratification of the Standing Committee of National People’s Congress.

To implement the treaty, the Standing Committee adopted the Law of the People’s Republic of China on the Protection of Intangible Cultural Heritage.

China began listing forms of cultural heritage with Chinese characteristics at the State, provincial, city and county levels, that are worth protecting.

Spring Festival, Peking Opera, acupuncture, The Legend of Madame White Snake and Shaolin Kungfu are the first batch of intangible cultural heritage with Chinese characteristics that are recognised by the State Council.

Read about Shaolin Monks protecting themselves against intellectual property rights infringement here.

Read more about Chinese intangible cultural heritage here. A primer on the subject you can find here.

Remember Wednesday, (see here) when a Memory Of Understanding between 23 luxury brands and Beijing landlords of markets was signed? (including the notorious Xiushui Haosen Clothing Company, that was convicted in September to pay compensation to 5 luxury brands, see here). Only three days later Chemise Lacoste sued landlord Xiushui Haosen (who owns Silk Street Plaza (the successor of Silk Street Market, see here) and 5 tenants because of trademark infringements.

Lacoste is seeking 100,000 yuan ($12,476) in compensation from the landlord and each of five retailers in the Silk Market, according to Paul Ranjard, partner at law firm Adamas in Beijing.

According to ‘sources near the case’: “Xiushui Haosen not only failed to stop these tenants from selling counterfeited Lacoste products but also tried to connive with them by providing business premise and other convenience, according to the indictment brought in by the French name brand. Lacoste claims that a number of tenants have been found selling cheap but fake Lacoste T-shirts with crocodile logos since the Silk Market Plaza was open to business in 2005 and asks the company and each of these tenants to pay a compensation of 100,000yuan. Lacoste said that it had sent a letter to Xiushui Haosen in January, requiring the company to clean out all Lacoste counterfeits and make a written apology, but got no reply.“

Lacoste was not included in the protocol between the 23 European brands that signed the protocol with the Beijing landlords. Should it? Is this the way forward to enforce intellectual property? An unnamed European offical ventilated some justified criticism, see here.

The Hong Kong Standard run an Associated Press story about American, European and Canadian steps toward WTO cases against China’s protectionism. The article included this paragraph:

“Assistant Trade Representative Tim Stratford told the US-China Economic and Security Review Commission (USCC) that Bush administration discussions on a case against China for copyright piracy were at a very advanced stage.
“If the particular concerns we are raising with the Chinese are not resolved, I think it’s very possible” the United States could take action at the WTO in coming months, he said.”

Read the article here.

You can find the ‘Hearing on China’s Enforcement of Intellectual Property Rights and the dangers of the Movement of Counterfeited and Pirated Goods into the United States’ of the USCC that have been held June 7 and 8 here and a summary by Washington File staff writer Susan Krause here.

The two-strike policy (first suspension, then cancellation) based on a ‘trailblazing’ protocol, see here, was hailed by Peter Mandelson, EU Commissioner on June 7. Joseph Simone of Baker & McKenzie, representing the 23 international brands, was also enthousiastic. The Financial Times of June 8 quoted him saying: “It’s a very good sign of progress”. However an unidentified European official called the MOU, that carries no legal force, a truce, rather than a promise of active cooperation.

Peter Mandelson (EU trade commissioner) spoke with Bo Xilai (China’s commerce minister) in Beijing about trade and IPR. Audra Ang wrote an article about it for AP News, that was run by BusinessWeek.
According Mandelson Bo had proposed to establish IPR claim centers in major Chinese cities. A plan that was ventilated before. These centers would “help to SMEs (small and medium-sized enterprises) who sometimes have found the process of accessing the criminal justice system to enforce their IP rights difficult, expensive and frustrating,” Mandelson said.”

These service centers were announced already in April and will be in about 50 cities.

“Mandelson also hailed as “trailblazing” an agreement signed Wednesday between luxury brand companies and Beijing landlords of notorious counterfeit markets to evict tenants who repeatedly sell copied goods. “This is a protocol with teeth,” he said shortly after the signing of the deal.“

In April Bo Xilai promised to fight copyright see video here.

Read Ang’s article here.

Erik Dahl wrote for Interfax-China about this protocol. Under the memorandum of understanding (MOU), if a vendor is found selling counterfeit goods, their operations will be suspended for a certain period. If they are caught a second time, their lease will be terminated and ejected from the market.

Silk Market was one of the signatories of the MOU.

“Action against landlords is part of a global ‘contributory liability’ campaign targeting facilitators the trade, such as transporteurs, financiers and internet service providers, Nathalie Moulle-Berteaux, Intellectual property Director for LVMH Fashion Group, said at a Trademark and Copyright Protection seminar in Beijing on Wednesday.“

Read Dahl’s article here.

Hamel Manufacturing is a family business in Waterloo, Nebraska that manufactures car wash fixtures. “The company spent the last two years fighting a firm that uses a Chinese outsourcing company to produce a knockoff version of its flex wand. Although their brand is trademarked, they could not afford to go to court because of the hight costs of intellectual property litigation.
To combat the competition, the company developed a lower-cost version of the wand that could compete with the price of the knock-off.” Besides, they got support from loyal customers. Read more here.
It seems to me that these mom and pop companies should organise so that they will have the financial means to fight an intellectual property infringer collectively.

Remember the Silk Alley Market case? (refresh your mind here). On what law was this very important decision based? According to the China Law Digest, a bilingual monthly web digest, the “Assistant Director of the Center for Intellectual Property Rights of the China Academy of Social Sciences, Li Shunde, said that the statute the Beijing High Court used was not a new regulation but has never been truly implemented in the past.“

I take it that this quote is referring to the Silk Alley Market case and not to the Louis Vuitton versus Beijing Chaowaimen Shopping Mall Limited Company case that was also mentioned in the article. I would really like to know more about the aforementioned statute, that supposedly was never been truly implemented in the past. Anybody?

Read the China Law Digest article here (free subscription). And why doesn’t the China Law Digest use links?

After focusing on children, read here, the HK government’s Intellectual Property Department (IPD) and IFPI HK are focusing on parents to educate them about intellectual property online. IFPI and IPD made a guide called Young People, Music and the Internet. But is a guide enough to catch up with their children that outsurf their parents by a big margin? When the parents have time to read the guide, if at all, the children will already have learned a few new tricks. Read more here.

The Business Software Alliance (BSA) said China dropped four points between 2004 and 2005 from 90 to 86 percent.

“This year marks the second year in a row where there has been a decrease in the PC software piracy rate in China. This is particularly significant, considering the vast PC growth taking place in the Chinese IT market,” said (BSA president and CEO) Holleyman.” Read more here.

Eric Pfanner of the IHT nuanced the disadvantages of software piracy in Step in the ‘right direction’ on piracy because of the network advantages. Bill Gates said in 1998:

“As long as they’re going to steal it, we want them to steal ours,” he said of Chinese users, according to Fortune magazine. “They’ll get sort of addicted, and then we’ll somehow figure out how to collect sometime in the next decade.“

In the mean time that decade is almost over. However, Gates is beginning to find innovative ways to collect revenues. See here.

Read Pfanner’s IHT article here.

‘Microsoft and Lenovo Team Up on New ‘Pay As You Go’ PCs for Emerging Markets; Companies to Launch Market Trials in China and India Using Microsoft FlexGo (TM) Technology’ wrote
TMCnet.

“Consumers will be able to purchase a Lenovo desktop PC by paying about half of its street price up-front, and paying the balance over time through the purchase of prepaid cards from Lenovo.“

Microsoft and Lenovo collaborate “on the Lenovo Innovation Centers in the U.S., China and India; the ThinkPad X41 Tablet PC; and the Genuine Windows (R) Experience Program to combat counterfeiting and piracy in China.“

Genuine Windows is an online upgrade to an existing software program that checks if the software is genuine. If it is not, it will start warning the user untill he changes the pirated software for a genuine version. Microsoft collaborates also with Founder on this. See here.

Read TMCnet article here. Stan Beer of Australian iTWire wrote about it too here. Eric Bangeman of Ars Technica here.

April 25th, IP Dragon posted an article about a Chinese girl Ma Yan who made a diary that was given to Pierre Haski by her mother to edit it. Haski made it into a book, which was made into a Chinese propaganda movie according to Haski, who is trying to stop foreign film festivals to show it, because it does not represent the book. At the end of the blog IP Dragon wrote: However, since Ma Yan’s mother is not the author of the work, the preliminary question should be: Did Ma Yan gave authorisation to publish the work in the first place? Read the article and relevant provisions of Chinese personal rights here.

Pierre Haski answered this question by commenting to the IP Dragon blog:

“My name is Pierre Haski and as I’m involved in the topic you are discussing, here is the answer to the last question you ask : Ma Yan did not authorize her mother to give me her diary, but this gesture saved her and her family. However, Ma Yan authorized the publication of her diary as a book, she signed a contract and receives royalties as a co-author. She is giving back 25% of her rights to a foundation helping other poor kids to go to school : 1200 of them helped this school year in Southern Ningxia. All things that the authors and producers of the film refused to do : they would not pay a cent, let alone to the authors, but just to help the effort that was born out of the diary, to help poor kids access education. That’s all this is about.Best regards. And thanks for your interest for this story.” PH pierre haski 05.15.06 – 6:27 pm

Thank you Pierre for answering the question.

Dutch author Henk Schulte Nordholt wrote the book De Chinacode ontcijferd, which means The China Code Deciphered, about the rise of China. I flash read this title, let’s say inspired by the Da Vinci Code, to see if anything was mentioned about intellectual property in China. I found an anecdote. However, without any real names, dates or more specific facts. I’ll try to paraphrase it anyway:

In the mid nineties, a Dutch producer of devices went to an exhibition in Beijing. One of the panels of the apperatus was bend during voyage to the exhibition. It could not be fixed, so the producer exhibited the device like that. The next year at the exhibition the Dutch producer found out that a competitor was showing an exact copy of his device, including the bend panel. When asked by the Dutch producer why one of the panels was bend the competitor could not explain its function and said that it’s just the state of the art.

This anecdote may well be true, but if you cannot mention the facts it might as well be an urban legend. Missed opportunity for Schulte Nordholt. On the other hand it could serve as an example that is would not hurt to insert some errors in exhibition models and blue prints.

Dan Harris of China Law Blog has an interesting post about a survey about IP protection, or rather the lack of it in China by the American Chamber of Commerce in China. See here.

Andreas Cremer of Bloomberg wrote about Angela Merkel’s trip to China. The German chancellor talked about the MAGLEV, in the story nothing was mentioned about any IP controversy. Read more about it here.

On top of the complaints of the German business community about continuing infringements of their IPRs, Germany’s DIHK industry and trade chambers, which represent more than 3 million companies in Germany, announced that last year 46 percent of pirated goods seized by German customs came from China and HK.
Read Cremer’s article here.

Hao Xin wrote for Science Magazine the article Scientific Misconduct:Invention of China’s Homegrown DSP Chip Dismissed as a Hoax.

To its embarassment Shanghai Jiao Tong University (SJTU) found out serious “falsification and deception in the research and development of the Hanxin series of chips led by Chen Jin,” the dean of SJTU.

The Shanghai government named Chen Jin CEO of Shanghai Silicon Intellectual Property Exchange, a platform established in 2003 with $3.75 million in municipal funds for trading semiconductor rights.

Read more here. About IP blogged about it here and here.

At the “Think Smart R&D and Innovation Roundtable” held in Shanghai on Wednesday the results of a survey about the allocation of investments in R&D conducted by Economist Intelligence Unit for ThomsonScientific were revealed:
48.15% of companies stated they will spend the biggest share of its R&D spend in China, ahead of India (24.07%), US (21.69%) and Europe (20.99%). Up to 40% of respondents cited the Chinese Government’s active support for R&D as China’s greatest asset. The survey polled 165 senior executives in Asia-Pacific (including 37% from China) and was conducted inApril-May 2006. Read more here.

Scientific Thomson last month announced a sponsorship with SIPO, read more here.
Together with SIPO’s China Intellectual Property News (CIPN) they launched an IP Knowledge Contest. “Questions vary from piracy restrictions to time limits for the protection of an invention, with results due later in 2006.”
Read more here.

After China appointed a panchen lama in 1995, it recently ordained two bishops, unauthorised by the respective religious leaders; the dalai lama and the pope, or so to say, the right holders. If for example the religious figure of a bishop could be protected by some intellectual property law, what kind of intellectual property law would apply? Even if you consider the post of bishop as original and with the stamp of the creator, its copyright would already long time be expired. If you think the bishop is a catholic invention and you want to patent it, it would not work; the novelty requirement would prevent it, as the invention would already have been prior art for centuries. However, you might regard a bishop as a brand, that could be protected by trademark and be renewed for eternity. The reason why the atheist Chinese Communist Party is de facto placing itself on the holy see to ordain as they please is the same reason why the Vatican wants to have this exclusive right: to keep fully centralised control. The advice for CCP and Vatican would be the same; get a trademark. On second thought, these brands are probably well-known brands by now. And China, why stop there? Why not appoint ambassadors to China of every country? They could all live in Windows of the World in Shenzhen. Its slogan: “give me a day and we will show you a splendid world.”

Three Hong Kong movie companies; Hero China International Ltd, One Hundred Years of Film Co. and Applause Pictures Ltd., demanded that the internet service providers Hong Kong Broadband Network Ltd., i-Cable Webserve Ltd., PCCW IMS Ltd. and Hutchison Global Communications Ltd give the names of users who download movies online using file-sharing technology. After the movie companies’ victory in court the ISP’s have been given three weeks to comply.

A 16-year- old student was arrested by the Anti-Internet Piracy Team (which was formed in 2000 and it has since solved nine Internet piracy cases, which has led to the arrest of 13 people), because he operated a personal website that offered 600 pirated songs for free download.

Read Jack Myers’ Earth Times article here.

People’s Daily Online quoted Yan Xiaohong, deputy chief of the National Copyright Administration saying that China will not make any discount on the principles and goals on its IPR Protection and that it will be a long and arduous process.

Representatives of the computer industry gave their opinion on the Pre-installed Authorized Operating System, issued by Ministery of Information Industry, National Copyrights Administration and Ministry of Commerce on April 6, read more here.

“Hailong Company suggests that Microsoft should slash the price of its software according to China’s situation. He said If Microsoft’s Windows system could be reduced to 100 to 15 yuan, more than 50 percent of Chinese consumers would like to buy the copyrighted ones.“ This may be not so strange since Microsoft’s profit margin is about 95 percent on software. And it might be a good idea, because to price elasticity. Warner Bros. is trying this strategy, read here.

Read the People’s Daily Online article here.

Monday the Shaoxing Intermediate People’s Court in Zhejiang province sentenced Wang Weiping to 10 years imprisonment and a fine of 2 million yuan (US$250,000) in a first ruling, because of the production of fake Viagra and Cialis (both anti-impotence drugs).

Yang Zhonghua of Xinhua wrote:
“A total of 381,000 fake Viagra pills and 1.4 million counterfeit Cialis tablets, worth a combined total of 241 million yuan (US$29 million) on the market, were also seized from workshops at Kangdeli Health Care, according to a release from the court.“

Wang established another manufacturing base at Guannan in Jiangsu Province.

Read Yang’s Xinhua article here. Hat tip to Jeremy Goldkorn of Danwei.

The Japan Electronics and Information Technology Industries Association (JEITA) and the China Electronic Chamber of Commerce (CECE) have announced they will do a joint investigation in Beijing’s Zhongguancun district, China’s Silicon Valley. They will target a certain building with about 500 electronics appliance stores. The groups will investigate three to six items, such as batteries and USB memory storage devices. However, the question is how effective the research will be because they will notify stores in advance of target items.

Read the JiJi News story published on Mainichi Daily News here.

“Hebei Education Press (HBEP) recently sued Shanghai-based English learning product provider OZing and its distributors San Cai Digital and OZing Beijing in Beijing No.2 Intermediary People’s Court for copyright infringement, Beijing Star Daily reports.“
Source Pacific Epoch.

HBEP is accusing OZing of plagiarizing its English textbooks and tapes in its English learning machines. The alleged infringer, OZing is endorsed by Canadian Mark Rowswell, who is well known in China as Da Shan (大山). HBEP demands that OZing publishes an apology in China Book Business Report and China Xinwen Chuban Bao and pay 11.09 million Yuan in compensation.

One thing is it to infringe on someone’s copyright, but what about infringing on someone’s personality? This seems to be a fact of life for Da Shan a.k.a. Mark Rowswell. Read here how ordinary non-Chinese pass of as Da Shan and seem to get away with it.
Read DD of Talk Talk China here.

This coming autumn there will be a EU-China summit. EU’s trade commissioner Peter Mandelson will be presenting a Communication on trade and investment in China which will analyse the impact of China on the global economy, and how the Union should respond.
Mandelson: “It will focus, in particular, on key challenges such as intellectual property, market access issues and investment opportunities. Europe must get China right – as a threat, an opportunity and prospective partner. I hope our Communication will spark a lively debate, both within the EU and with China.“
Read Mandelson’s speech here.

Read here.

Dror Poleg of Danwei has a nice post about the bilingual brand names of Ikea and Aika.
Read it here.

In February IP Dragon posted about Baijiu counterfeiters that prey on drunkards, read more here. Now China CSR has a story about Beijing wine stores that sell counterfeit wines.

The Beijing Administration for Industry and Commerce (AIC) conducted a check in 400 shops, before the May break. It is too bad that the article didn’t supply more statistics, such as the percentage of counterfeit wines. It only gave the absolut number of confiscated 3937 bottles of best-selling brands in China.

Whether or not the Beijing Administration for Industry and Commerce supplied statistics, it at least advised the Beijing citizens where to buy a genuine bottle of wine:

“A representative from Beijing Administration for Industry and Commerce suggests customers buy wines at big shopping malls and franchise supermarkets to better mitigate the chances of purchasing fake goods.“

Read more here.

Wang Tiancheng, a Chinese dissident, of all people, persuaded a Beijing court to accept his lawsuit against Prof. Zhou Yezhong of Wuhan University. Geoffrey York wrote an article about plagiarism in Chinese academics for the Globe & Mail.

Wang alleges that Prof. Zhou plagiarized 46 paragraphs in his latest law book, copying more than 6,000 Chinese characters. Law professor He Weifang of Beijing University wanted to expose prof. Zhou, but the China Youth Daily didn’t want to run his story. Prof. He conducted a study and found out that Prof. Zhou has plagiarised at five least six scholars in his recent book.

“Academic corruption has become “a social tumour that has permeated many parts of the academic world in China,” the Shanghai Daily commented. “The fundamental problem with China’s academics is that few people value professionalism and many worship quick wealth.”“

How big is the problem? In a survey by the Chinese Science Ministery of 180 doctorates, around 60 percent admitted copying the work of others.

Read York’s article Copycats running wild in China’s universities, Plagiarism by professors and students a sign of growing academic corruption here.

Read more about China’s academic culture of plagiarism:
China’s Academics plagued by Plagiarism here
On Chinese Patchwriting here.

The Trade Act of 1974 (as amended by the Omnibus Trade and Competitiveness Act of 1988 and the Uruguay Round Agreement Act enacted in 1994) instructed the Office of the U.S. Trade Representative to identify annually those countries that deny adequate and effective protection for IPR or deny fair and equitable market access for persons that rely on intellectual property protection. Section 182 of the Trade Act of 1974 (Title 19 USC 2242) is commonly referred to as the “‘Special 301” provision of the Trade Act, while Section 301, (Title 19 USC 2411) refers to the actions of the USTR.
Countries are placed into a hierarchy of categories, with the ranking of Priority Foreign Country reserved for the worst situations:

1. Priority Foreign Countries: those countries that USTR believes have the most onerous or egregious policies with the greatest adverse impact on U.S. right holders or products. These countries are subject to accelerated investigations and possible sanctions.

2. Priority Watch List: those countries which do not to provide adequate IP protection and enforcement or market access for U.S. persons relying on intellectual property protection.

3. Watch List: those countries USTR believes merit bilateral attention to address the underlying IPR problems.

Section 306 Monitoring: Being placed under Section 306 Monitoring means that the USTR can movedirectly to the application of trade sanctions against China if monitoring shows a slippage in China’s enforcement of bilateral intellectual propertyrights agreements. The legal basis for section 306 monitoring is of course section 306 (Title 19, USC 2416).

Out-of-cycle Review: those countries that require further monitoring in addition to the annual review cycle.

China is climbing down the steps of vice

In 1994 China was designated a Priority Foreign Country, and remained subject to monitoring under Section 306 of the US Trade Act. Section 306 Monitoring happened because the US have bilateral agreements with China to address specific problems raised in earlier reports.

In 2005, China has been upgraded from Priority Foreign Country to Priority Watch List as a result of the Out-of-Cycle Review as it caused serious concerns about its compliance with its obligations under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and its JCCT commitments. . Being placed under “Section 306” monitoring means that the USTR can move directly to the application of trade sanctions against China if monitoring shows a slippage in China’s enforcement of bilateral intellectual property rights agreements. Infringement levels remain unacceptable high, according to USTR, so China remains in the top priority watch list category.

This year the Section 301 Report introduced monitoring virtual and physical markets: Baidu.com was mentioned as the target of infringement actions and the example was given that the search engine company was ordered by the People’s Court of Haidian District in Beijing to pay RMB 68,000 (8,400 US dollar) to a music company for unauthorized downloads. Baidu appealed. Read more here and here.

Xiangyang Market of Shanghai: the Shanghai Municipal Governement said it would close on ground of rampant sale of counterfeit fashion and apparal products. See more here.

According to the USTR Beijing’s Silk Street Market was cited as “perhaps the signle biggest symbol of China’s IP enforcement problems.” Read more here.

Yiwu Wholesale Market. Yiwu Wholesale Market reportedly sells approximately 410,000 different items, mostly consisting of bulk sales of small consumer goods. Market officials recently estimated receiving approximately 400 complaints of IPR violations from buyers in 2005. Read more here and here.

The report also examined four Chinese ‘hot spots’ that require increased attention and resources: Guangdong Province (counterfeit and pirate manufacturing: from low cost consumer goods, household items, clothing and optical media, to high-technology products), Beijing City (retail counterfeit and pirated goods), Zhejiang Province (distribution centre for infringing goods. City of Yiwu draw attention for distributing suspected counterfeit lighter fluid and yellow wristbands suspected of infringing the LIVESTRONG trademark of the Lance Armstrong Foundation. Other problem localities include: Ningbo, Cixi, Taizhou, and Wenzhou) and Fujian Province (large scale manufacturing, including athletic footwear companies in Jinjiang and Putian that have been the target of infringement allegations in long-running legal actions by U.S. trademark owners New Balance, Reebok, and Nike. More problem localities include Quanzhou.

Read the 2006 Section 301 Report here.

Are there any fakes sold at the Beijing Silk Street Market, only a month after the ruling of the appeal case of the same name? Daniel Schearf made a reportage called Fakes Flourish in China Despite Government Promises to Halt Piracy.

Baker & McKenzie lawyer Joseph Simone said:“If China can’t prove that its existing system works, the foreign governments, not just the U.S. but Japan, Europe and other countries, they’re expecting the police to dramatically increase police resources,” said Simone. “And, if China doesn’t, we might be looking at a WTO [World Trade Organization] dispute in a year or two.“

One or two years would be great timing. China is in the world’s spotlight because of the Olympic Summer Games and certainly doesn’t want to lose face.

“The head of the U.S. Chamber of Commerce recently noted that counterfeit items with the Chinese Olympic mascots and logo are rare – making it clear that China can curtail piracy when it imposes stiff penalties. China issued very specific regulations to prevent piracy of its logo and mascot symbols for the 2008 Summer Games. The penalties include a maximum fine of $6,200. Chinese media reports that since 2002, nearly 2,300 violations have been taken to court and resulting in $100,000 in fines. The government also has destroyed nearly 2.5 million pieces of fake Olympic goods.“

You can listen (recommended) to or read the reportage here.

Deutsche Welle wrote China Masters German Train Technology, Will Cut Costs.
Transrapid International, a German consortium between ThyssenKrupp and Siemens, had designed and built the magnetic levitation (maglev) trains.

“China operates the world’s only commercial MAGLEV line, which runs 30 kilometers from Shanghai’s airport to the financial center in the Pudong district.“ See, here.

Transrapid has already signed a deal to be involved in the new maglev line from Shanghai to Hangzhou. According to the China Daily Zhang Xiaqiang, vice minister of the National Development and Reform Commission, said that costs were expected to fall now that China mastered the German technology. Implied is that Transrapid’s role is to be scaled back.

“The China Daily said the State Council, China’s cabinet, was encouraging engineers to “learn and absorb foreign advanced technologies while making further innovations.”“

After learning and absorbing, the China Aviation Industry Corporation has said it will build a new Chinese Zhui Feng (Hunt the Wind) magnetic train.

Hunt the Wind

The reaction of the Bavarian premier Edmund Stoiber was:
“What’s happening in China smells suspiciously like technology theft.” Stoiber has suggested putting the issue of Chinese development and intellectual property protections on the agenda of the next G8 meeting.

The head of ThyssenKrupp, Ekkehard Schulz said:
“It appears that some Chinese patents overlap quite a bit with our own.“

Manik Mehta wrote in Der Spiegel article Technologie-Klau in China: Kampf den Kopisten that the Chinese minister of foreign affairs Li Zhaoxing had assured his German counterpart Frank-Walter Steinmeier that no patents of Transrapid were infringed. Steinmeier reacted that they the intellectual property rights and its protection deviate. Read more here (in German).

The China Aviation Industry Corporation is denying that Zhui Feng’s technology is dependent on foreign technology. “It is much lighter than the Transrapid product and features a much more advanced design.“

Airbus take heed

Chinese Aviation Industry Corporation’s strategy seems to be: Learn and absorb, cut costs and improve, and after technology transfer it’s time for good bye. Aircraft manufacturer Airbus, just like Transrapid International a consortium, is already manufacturing big part of planes in Asia. Airbus, in cut-throat competition with Boeing, will start to manufacture complete aircrafts in China as of 2008. But China has already announced it will launch its own version of jumbo sized airplane. So Airbus is already warned for any future IPR infringments.

Read the DW article here.

Recently, China sent a counterfeit golf club distributor and a retailer to jail for 3.5 years and half a year respectively, read more here.

If the case below is representative the sanctions in the US may be comparable to those in China:
Two Chinese nationals, Shao and Fu, were convicted by US District judge Paul Huck in Miami for:
– importing from China counterfeit merchandise, such as Gucci handbags, Rolex watches, Nike baseball caps and other merchandise and selling it to vendors at the Opa-Locka Flea Market and directly to consumers;
– selling fake electrical cords, that were filled with rubber to make them appear thicker and may cause safety hazards;
– authorities seized more than $3 million worth of counterfeit goods at Port Everglades.

Time line:
-december 2005 the two were arrrested;
-februari 10, each pleaded guilty to one count of conspiracy and one count of trafficking in counterfeit goods;
-two weeks later they with draw the withdraw their pleas because they said they could not understand the translator.

Sentences:
Lizhou Shao to just over three years in prison;
Li Fen Fu to two and a half years, but because she is pregnant, her sentence will be delayed.

Read Vanessa Blum’s article for the Sun-Sentinel here.

What about criminal sanctions in the EU? That’s another story, see more about the EU directive on criminal enforcement of IP infringement here.

Louis Vuitton rejected mediation against Carrefour in a the first high profile dispute between two Western companies in China, read more here.

Ben Moshinsky wrote in the article for The Lawyer named Carrefour Fined in China Piracy Case that a Shanghai court has fined Carrefour £25,000 for selling fake Louis Vuitton handbags.

Douglas Clark, Lovells IP partner in Shanghai, made clear that Carrefour is not an exception: “A large number of foreign retailers in China, such as B&Q and WalMart, are all running the risk of purchasing counterfeits unintentionally and then selling them if they don’t put in supplier integrity checks.“

Read Moshinsky’s article here.

The International Federation of Phonogram and Videogram Producers (IFPI), a lobby group of the recording industry that fights piracy, chose Leong May-Seey as regional director for Asia.

“May-Seey will co-ordinate IFPI’s priorities across Asia, ranging from legal policy and government affairs to helping develop the digital music business and unlocking the music market of mainland China. She oversees the activities of ten national groups in the region as well as IFPI’s representative office in Beijing.

May-Seey has played a leading role in IFPI’s operations in Asia in recent years, in particular setting up national collecting societies for performance royalties and more recently preparing a robust industry strategy to tackle Internet piracy in China.“

Read IFPI’s press message here.

Wikipedia’s description of IFPI here.

People’s Daily Online runs a Xinhua story with the title More than 5,000 companies pay for “background music” in China.

According to Qu Jingming, secretary-general of the Chinese Music Copyright Protection Association (CMCP) it is required by standard international practice that public venues obtain permission and pay royalties for background music: “It is also clearly defined in our national law.”

Qu is referring to article 8 of the Amended Copyright Law of the PRC 2001:
The copyright owners and copyright-related right holders may authorize an organization for collective administration of copyright to exercise the copyright or any copyright-related right. After authorization, the organization for collective administration of copyright may, in its own name, claim the right for the copyright owners and copyright-related right holders, and participate, as an interested party, in litigation or arbitration relating to the copyright or copyright-related right. The organization for collective administration of copyright is a non-profit organization. Provisions for the mode of its establishment, rights and obligations, collection and distribution of the royalties of copyright licensing, and supervision and administration thereof shall be separately established by the State Council.

The Music Copyright Society of China (MCSC) is such an organisation for collective administration of copyright, also called a collecting society. MCSC, established in December 17, 1992, is a non profit-making social organization with the status of a legal person in whose name the Chinese music copyright owners exercise their rights by way of collective administration. MCSC is subject to the vocational guidance and supervision and management of the Press and Publication of China (National Copyright Administration of China, NCAC ), Musician Association of China and the Ministry of Civil Affairs.

In 2001, only 63 companies in China paid for background music, read here. Compared to the size of the country and the number of shops and restaurants that play background music the number “over 5,000 companies” in 2006 is still extremely low. That is, if the word “over” does not mean a few honderd thousand companies.

Read the People’s Daily Online here.

Liu Weifeng wrote for China Daily the article US law firm joins fight against IPR violations about US law firm Baker & McKensey that announced a year-long campaign to fight against the production and trade of fake products on behalf 21 brands, including Adidas, Puma, Luis Vuitton, Calvin Klein, Chanel, Gucci.

“It would take one year to inspect the markets in Beijing, Shanghai, Guangzhou and Shenzhen in efforts to detect the fake products before launching the legal process.“

What Liu probably means is that Baker & McKenzie will inspect these markets for one year.

Luo Zhenghong, senior consultant of Baker & McKenzie is making efforts to call for the improvement of the contract between retailers and markets: “A sales ban for fake products should be added to the rental contract before any booth is rented or purchased by the retailers,” he said.“

So the opportunity for counterfeit trade at famous markets in China is deterioriating:

• Next to the permanent watchdog of the AIC in Beijing, read more here;
• you are getting investigators send by Baker & McKensey;
• the retailer is bound by contract to refrain from selling counterfeit products;
• if all goes wrong, the landlord is liable, read more here.

Read Liu’s article here.

David Lague wrote The Next Step in Pirating: Faking a Brand for the International Herald Tribune. It’s a fascinating account of a well organised hijack of a whole company, NEC in this case. The learning curve of counterfeit producers is peaking to new hights. A company’s worst night mare.

“… the pirates copied NEC products, and went as far as developing their own range of consumer electronic products – everything from home entertainment centers to MP3 players. They also coordinated manufacturing and distribution, collecting all the proceeds.“

Only after two years and thousands of hours investigation in conjunction with the law enforcement authorities of China, Taiwan and Japan the scheme was discovered.

“Evidence seized in raids on 18 factories and warehouses in China and Taiwan over the past year showed that the counterfeiters had set up what amounted to a parallel NEC brand with links to a network of more than 50 electronics factories in China, Hong Kong and Taiwan.“

Because the counterfeiters’ approach to profit from the brand by using a parallel company was so well organised, they even carried NEC business cards, it’s not so wonder that many a factory owner was duped into beliefing he was producing legitimately for NEC.

Read Lague’s article here.

About Shadow companies that register in Hong Kong a name of an already known company to exploit that name in China in bad faith and the rigid interpretation of the companies ordinance that makes it possible, read here.

“The Shanghai No. 1 Intermediate People’s Court accepted an intellectual property case involving the largest amount of compensation in the city, the court said yesterday. China Aomei Network Co Ltd filed a lawsuit against Shanghai Holdfast Online Information Technology Co Ltd for violating its copyright on five online games. Aomei is seeking 120 million yuan (US$14.8 million) in compensation and a public apology.“

Source: Shanghai Daily

After the court decision in the Beijing Silk Market Appeal Case, read here, the Chinese authorities seem to take intellectual property infringement very seriously. Now they even have opened a permanent office to watch for any counterfeit product.

The office, a local administration of industry and commerce (AIC), “is staffed by eight officials equipped with digital cameras who will patrol the alley throughout opening hours from 9 am to 9 pm, the Beijing News said.“

The Beijing AIC should beware of the waterbed principle. If you try to solve a problem at one place, it can reappear somewhere else. Before and after opening hours of Silk Market the risk may return or it may pop up at another market. Some expect the pirated goods sellers to try to sell via the internet.

Read the AFX article published by Forbes here.

Lu Hui of Xinhui wrote that the General Administration of Press and Publication (GAPP) on the quality of dictionaries and reference books issued by eligible publishing houses came into effect on Monday.

“Once shoddy products or copyright infringement cases such as plagiarism were spotted, dictionary publication business of relevant publishing house will be “suspended for two years” or even “revoked”, according to the regulation.“

Read Lu Hui’s article here.

In Xinhua’s article IPR protection faces enforcement conundrum it is written that despite the statistics about fighting IP infringements you can still buy counterfeit DVD’s throughout Beijing.

“Typical is a DVD shop set up in a main-floor suite of an apartment complex which even has a flashing neon DVD sign in the window. Standing in front of a rack of the latest U.S. blockbusters the owner is ready and willing to convert to selling the real thing. “We don’t want to keep on selling ‘daoban’ (‘outlaw’ copies). We’ll be happy to sell the legal copies and charge whatever they want.” he says.“

To fight intellectual property infringement Mark Cohen, intellectual property attache of the U.S. Embassy to Beijing is also looking at the opposite end of enforcement. Cohen is advocating non-enforcement measures such as opening the market, speeding up market access and developing markets with legitimate goods, so people don’t have to buy counterfeit goods. Like the price cut strategy of Warner Bros. and getting more people in cinemas, read more here.

Read Xinhua’s article here.

The Magazine Managing Intellectual Property (MIP) published its fourth annual IP in China special which comprises a full range of highly relevant articles (16) plus an editorial.
You can find them here.

Within a day after this post the lay-out of China Blawg has changed; no similarities with Harris & Moure’s site are left. Compliments for all parties involved. The cosmic order has been restored.

EU Commission’s vice-president Franco Frattini uses a photograph of a ‘Chinese Ferrari’ to get support for his proposal for a new criminal IP enforcement directive :

“During a recent hearing Mr Frattini surprised his Commission colleagues by holding aloft a photograph of a replica Ferrari P4 Berlinetta sports car taken in China; only six originals were ever built and none are believed to be in China. Mr Frattini was citing the car as an example of the plundering of Europe’s innovative ideas and most sophisticated products in loosely regulated markets.“

Read more here.

US Golf Manufacturers Anti-Counterfeiting Working Group (comprised of Acushnet Company, Callaway Golf, Cleveland Golf, Nike, PING and TaylorMade Golf Company) has won another case against two counterfeit golf club sellers. Loo Shih Yann, a principal with the international law firm of Baker and McKenzie coordinated efforts on behalf of the working group. Read more about the first criminal conviction of counterfeit golf club sellers here.

• Now the Shanghai Zhabei District Court sentenced golf club distributor Chen Hui to imprisonment for 3.5 years and a fine of approximately $3,700 USD (RMB30,000).
• The golf club retailer, Ms. Bai Hong, was sentenced to imprisonment for 6 months jail, one year of probation and a fine of approximately $2,500 (RMB20,000) after Bai provided assistance to law enforcement that helped lead to the arrest and conviction of Chen Hui.

“Some sales records were also found at Chen’s apartment. Chen was immediately arrested and put into a detention house. Shanghai Zhabei District Court tried the case in early March 2006 and ruled that the defendant’s sales records alone were sufficient to prove prior sales of counterfeit golf products. This documentary evidence provided a legal basis for establishing the crime of selling goods with a counterfeit registered trademark. In many cases a court would require testimony from witnesses to prove prior sales, however in this case the court found that Chen had sold counterfeit golf clubs valued at more than $75,000 USD (RMB600,000)…”

According to section 7 (articles 213-220) of the Criminal Law of the PRC (March 14, 1997, which came into effect on October 1, 1997) that addresses infringement of intellectual property the court ruled that the threshold of ‘larger sales volume’ were reached.

See article 214:
Knowingly selling merchandise under a faked trademark with a relatively large sales volume shall be punished with imprisonment or criminal detention of less than three years, or a seperately imposed fine; in cases involving a larger sales volume , with imprisonment of more than three years but less than seven years, and with a fine.

Read the comprehensive Yahoo Finance article here.