Luan Shanglin wrote for Xinhua Sino-German Memorandum on Strengthening the IPR Protection Cooperation Inked.

Luan wrote: “China and Germany have agreed upon a Memorandum on Strengthening the Cooperation of Intellectual Property Rights. Jiang Zengwei, vice minister of commerce and Hartmut Schauerte, parliamentary state secretary in the German Ministry of Economics and Technology, held talks at Sino-German IPR protection workshop and came to the consensus that effective IPR protection is significant to the healthy bilateral economic and trade growth.“

Do you think bilateralism is the way forward for the development of international intellectual property? Read Peter Drahos’ 2001 paper Bilateralism in Intellectual Property here. Or Ruth L. Okediji’s 2003 paper Back to Bilateralism? Pendumlum Swings Back in International Intellectual Property Protection here.

Chinese Tech News wrote:

“A Hangzhou court has accepted and heard a lawsuit filed by Guangdong Zhongkai Culture Development Company against Chinese search service provider Zhongsou.com.
Zhongkai, which claims to be the sole owner of the online version of the film “The Promise”, accuses Zhongsou.com of violating its copyright by allowing users to download the film without its permission and asks the search engine company to pay RMB1.2 million in compensation.”

Read more here.

Who’s Who Legal recognised Edward Lehman, of Lehman, Lee & Xu, Beijing, as a top trademark lawyer in China. Congratulations. Also recognised is Spring YC Chang of Chang Tsi & Partners, Beijing. Xu Yiping of the Shanghai Patent & Trademark Law Office LLC is also mentioned as top trademark lawyer.

Read more about it on PR Leap here.

The explanation for the copyright issue between the copyright owner of Harris & Moure’s blog design Fokadan/3dots.ru and Lehman, Lee & Xu is still hanging in the air, read more here. At least three parties are involved. Who’s to blame? IP Dragon will keep you informed.

Update: copyright problem solved, see here.

Super Girl’s producer is accused of IPR infringement, writes the China Daily using Xinhua as a source. Besides, having doubts about the originality of the Super Girls format (very similar to American Idol), read more here, the highly successful voice competition TV program chose, according to Ma Jichao, director of the Legal Department of the Chinese Association of Music Intellectual Property Rights, a large number of famous Chinese and English songs without applying for the rights to use them.”

“Ma said that Tianyu Entertainment Media Co., producer of the contest used the songs for commercial purpose. Winners from the contest are still using the songs on a nationwide promotion tour, which seriously infringed the copyrights of the songs.“

If Hunan Satellite Television is not responding within this month, Ma will lodge a law suit and claim 500,000-yuan (62,500 US dollars) compensation. Read more here.

Cover of supergirl’s first album challenged
“Super Voice Girl 2005 champion Li Yuchun’s first album cannot be published due to copyright problems with the album cover, Beijing Times reports. According to the accuser Mr. Long, he once shot several photos of Li Yuchun and uploaded the photos to the Sichuan Travel BBS. However, Long found those photos being used on the cover for Li¡¯s first album. The court confirmed the allegation and ordered Guangxi Culture Audio & Video Publishing House delete all pirated content before releasing the album.“

Source: Pacific Epoch

Li Yichun’s iconisation is covered by Time Magazine, here.

UPDATE September 21, 2011: SARFT “Super Girl is corrupting China’s youth“.

Yesterday and the day before the Asia Technology Roundtable Exhibition, organised by magazine Red Herring was held in Beijing, see here. Clendenin covered the story for EETimes.

Although Microsoft has signed deals worth more than 1.5 million US dollar, IDC came up with an report regarding the extent of software piracy in China, which was 90 percent.

The countries with the highest software piracy rates:
Vietnam 92 percent;
Ukraine 91 percent;
China 90 percent;
Zimbabwe 90 percent;
Indonesia 87 percent.
Source: IDC, see here.

However Nigel Burton, general manager of Greater China for Microsoft was discussing his optimistic outlook for China. Alex Vieux, publisher of Red Herring challenged him, wrote Clendenin tha Burton was challenged for being an apologist for China by making excuses for a double standard.

““I am shocked that a Microsoft official would tell me that what is not OK in France, or in England or America is OK in China. You feel good that only 90 percent of your market here gets stolen, and you would not feel good about that in France,” Vieux said, interrupting Burton’s speech.“

Read the EETimes article here

The Xinhua article Only 10% of Chinese films attract audiences by Yan Zhonghua is analysing the reasons for failure of films in China to reach an audience.

• inadequate supply of cinemas and screens are blamed;
• many Chinese filmmakers lack money to promote their films afterproduction;
• many Chinese simply prefer to stay at home and watch television.

However, in my opinion, an important reason was left out:

The abundant supply of pirated movies that are very cheap. You are able to watch brand new movies (sometimes before the are played in the cinemas) for less then 1.50 US dollar at home. Besides, now you can even buy legal movies for 1.50 US dollar: read about Time Warner Bros’ new price strategy here.

Read the Xinhua article here.

Today is World Intellectual Property Day, an initiative of WIPO and an excuse for celebration.
What are the events China has organised to celebrate this day?

At the list of states that organised events in observance of World Intellectual Property Day, China is not one of them. According to the WIPO archive China did not organise anything for this day in 2005, 2004, 2003. However, they organised a lot of things in 2002, see here. That may be because it was the 20th Anniversary of China’s Trademark Law. In 2001 was the first time the day was celebrated.

China’s lack of World IP day events probably has to do with the fact that the April 26th falls on a Tuesday this year. So most people are working. Last Sunday, at least the Hong Kong Intellectual Property Department and the Hong Kong Scout Association organised a ‘fun fair’ at Kowloon Park Piazza to raise awareness for IPR’s. In Hong Kong scouts are recruted to promote respect for IPR:
“23 scout leaders who were the first group of qualified Scout “Respect for Intellectual Property Rights” Instructors.“ Read Xinhua’s articly by Mo Hong’e here. Read more about recruting youth to inform the Hong Kong governement about IP infringements here.

Read about China’s focus on books instead of copyright during World Book and Copyright Day here.

Dan Harris of China Law Blog, has a corporate site too, see here. The design of the site seems to have been copied by Blawg of China, powered by Lehman, Lee & Xu, of all firms, see here.

You wouldn’t expect such a copyright infringement associated with a lawfirm such as Lehman, Lee & Xu and you would’t expect it today. Happy World Intellectual Property Day.

Update: site has been changed, copyright issue solved, see here.

Lonnie B. Hodge of OneManBandWidth, an American professor in China (Guangzhou), is optimistic about Warner Bros’ latest strategy against piracy, namely reducing the movies to 1.5 US dollar per piece. Even though the price of the legal movies is still higher than the piracy movies, Hodge wrote: “but many of my friends have indicated they would support the effort because it is legal and the quality would be assured. That means no more “PROPERTY OF…” or “FOR ACADEMY VIEWING PURPOSES ONLY” scrolling across the screen in the middle of a great shot.“

Read more here

In the People’s Daily Online you can read:
“China has bought more than 4,000 copyrights from the United States in recent years while the US has imported only 16 from China.”

Read the article here.

Ben Blanchard wrote an Reuters’ article called US not ruled out WTO complaint over China piracy. Chris Israel, US Coordinator International Intellectual Property Enforcement was quoted saying that the Chinese leadership had given him some cause for optimism but:
“We remain consistent and clear in our policies that we consider all trade tools open and available.”

Read the article here.

“A court case, which is scheduled on Thursday, will address for the first time in China the issue of blog copyright. Qin Tao, a Shanghai-based blogger, sued Sohu one of China’s portal websites, for its unauthorized reprint of her logs. Her action was soon echoed by three other bloggers, claiming copyright infringement.“

Read the China Daily’s article on People’s Daily Online here.

Guy Dixon, aided by Jan Wong, wrote an article called ‘The diary of a young girl, a film and a festival fight’ for the Globe & Mail. It’s about Pierre Haski, a Frenchman, who helped edit a book called The Diary of Ma Yan, written by Ma Yan, a little girl from Ningxia province in northwest China.

Now Haski’s work was adapted, without his authorisation, into a movie: The Story of Xiao-yan. Haski resents that Ma Yan and his work were made into a propaganda movie.

The amendment of the copyright law of the People’s Republic of China adopted at the 24th Session of the Standing Committee of the Nineth National People’s Congress on 27 October 2001 states:
Article 10 The term “copyright” shall include the following personality rights and property rights:
(3) the right of alteration, that is, the right to alter or authorize others to alter one’s work;
(4) the right of integrity, that is, the right to protect one’s work against distortion and mutilation;

Given these property and personality rights Haski could have sued the movie maker for copyright infringement. But he didn’t because of the movie was made with the Chinese government’s assistence.

Now he is trying to avoid that the movie is played at film festivals around the world.

When you read the editor’s review of Barbara Scotto, Michael Driscoll School, Brookline, MA at Amazon it starts like this:
“Grade 5-8–In 2001, while a French journalist was visiting remote Ningxia province in northwest China, a Muslim woman wearing the white headscarf of the Hui people thrust the diaries of her daughter into his hands.”

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?
Article 10(1) the right of publication, that is, the right to decide whether to make a work available to the public.

Read Dixon’s article here.

Since the Silk Market Appeal Case we know that the landlord is liable in case he is warned that his tenants infringe trademarks and he doesn’t do anything about it. But is a travel agency responsible for tourists that wear counterfeit clothes abroad, even if the travel agency knows that the tourists do wear fake brands?

The China National Tourism Administration (CNTA) says that Chinese travel agencies should be responsible when their tourists are punished abroad for wearing counterfeit clothes. ‘Should be responsible’ is a phrase not so clear. Does the responsibility entails liability too?

“A representative from CNTA says that travel agencies have the responsibility to remind tourists not to wear fake brand clothes before they depart for outbound travel.”

You could argue that the travel agencies have a responsibility to inform their travellers about the law and mores of the land, but if the travellers then still transgress that law it’s their own responsiblity and you cannot make the travel agency responsible nor liable.

However, since it concerns Chinese travel agencies, chances are these are state companies. Only if these companies are competent to enforce, you could make these state travel agencies liable. Or you could make travel agencies (state owned or not) liable if they didn’t warn their travellers, although Chinese citizens should know these things already, since they are not allowed to buy these counterfeit clothes in China in the first place.

What’s your take on this matter?

Read the China Corporate Social Responsibility article here.

Update: Debunking The Chinese Tourist in Europe Story here.

“The Chinese Ministry of Agriculture (MOA) announced in Beijing on Sunday that China has ascended to fourth position in the world in applications for protecting new agricultural plant varieties.”

China launched the Regulations on protecting new plant varieties (pdf) in 1997 and it took effect in 1999. On April 23, 1999, China acceded to the International Convention for the Protection of New Varieties of Plants and became the 39th member of the International Union for the Protection of New Varieties of Plants (UPOV). In december MOA issued decrees nr. 13 and nr. 3 in 2000.

“More than 800 violation cases have been investigated by the judicial departments, with 460 cases having been taken to courts.” Read the Xinhua article published by CRIEnglish.com here. Read the 2005 China Daily article ‘Protection of plants bears fruit’ here.

Danwei, an interesting site about Chinese media, advertising and urban life, has every now and then posts about intellectual property law in China. Now it has an article about the alleged plagiarism of Beijing band Shuimu Nianhua that made a song called Forever young that resemblances Liquid, a song by the American band Jars of Clay. Joel Martinsen of Danwei put the beginnings of both songs on an mp3-file for the reader to decide for himself.
Read and listen here.

In Plagiarism in Chinese Music is blooming or whithering? you can decide if The Flowers, a Chinese band ripped off Puffi AmiYumi’s song K2G with a similar song called Xi Shua Shua? Read and listen here.

The Economist reviewed ‘China Shakes the World: The Rise of a Hungry Nation,’ by James Kynge on the ocassion of Chinese president Hu in America. Here is a fragment:

“At Yiwu (city in Zhejiang province, IP Dragon), the world’s largest whole-sale market, prices are a tenth of what they would be in the cheapest discount store in the West. One reason is blatant piracy. Mr Kynge spots four shops in a row sporting names like “Crocodile of the Yangtze” and “Croc Croc”, each one selling fake Lacoste goods. One shop assistant claims that “the French and the Chinese crocodile are the same brand. They have merged.“ Read the full Economist review here.

Hong Kong
The shop assistant’s wish may be the father of the thought. However, there has been crocodile war in Hong Kong, between Crocodile Garments Ltd. and La Chemise Lacoste over trademark infringement. For a long time you could see two big bill boards hanging side by side, one with a crocodile looking to the right next to a similar crocodile looking to the left. The period that the two mirror crocodiles could eye each other has ended March 31st, 2006. Crocodile Garments Ltd. (the crocodile looking to the left) has changed its trademark considerably. Read the People’s Daily about the settlement (Thursday, October 23, 2003) between La Chemise Lacoste and Crocodile Garments Ltd. here. Andrew Brown wrote for CNN an article which includes the old and new trademarks of Crocodile Garments Ltd., see here.

Zhejiang
Yin Pin of China Daily wrote: “Lacoste has reached an agreement (17 november 2005, IP Dragon) with Zhejiang Crocodile Garment Co Ltd, which is based in East China’s Zheijiang Province, that recognizes the European manufacturer’s exclusive rights to the crocodilian trademark in China. The Chinese company will stop using its similar logo within three years (17 november 2008, IP Dragon).“ The deal requires Zhejiang Crocodile to seek approval from Lacoste before deciding on a new brand. Read more here.

Singapore
“A third dispute with Singapore-based Crocodile International Private Ltd is now the only unresolved issue. The companies have been in court for over five years.
In March 2004 a Shanghai court ordered Lacoste to stop infringing on the Singaporean company’s logo, which the French manufacturer rejected. It shifted its focus to distributors, and filed a lawsuit against two department stores that were selling the Singaporean company’s products in Central China’s Hunan Province. It won both cases.“ Read Yin Ping’s article here.

The similarity between the trademarks of Hong Kong’s Crocodile Garments, Zhejiang Crocodile and Singapore’s Crocodile International is remarkable.
Singapore’s Crocodile International, the alleged infringer (in the case against Lacoste) had also to enforce its trademark in Bangladesh, China, Malaysia, India and Taiwan, see here.

United Nations Educational Scientific and Cultural Organization (UNESCO) celebrated World Book and Copyright Day. See here. The site has a collection of the world’s national copyright laws, including China’s, see here. In China, however only the book reading aspect of the day seems to have been celebrated. Read a Xinhua article about it here. Did they forget that is was copyright day too?

Teng Fei, senior researcher at the China International Tech & Economy Institute, Development Research Center for the State Council, China, writes that the Sino-US IPR dispute reflects different attitutes toward international conventions (in short: China is doing it’s best, US let’s national interests prevail), a clash of different standards because of different stages in development. Teng is arguing that because of global crime and foreign companies it is hard for China to enforce IPR. But these factors are not exclusive for China.
Read Teng’s apologetic article here.

Yesterday, Louis Vuitton sued Shanghai Lianjia Supermarket Co, Carrefour’s joint venture partner in Shanghai, because it sold counterfeit Louis Vuitton bags for 6 US dollar each. Read more here. Carrefour has admitted it sold the counterfeit bags, but unintentially. Louis Vuitton wants 600.000 Yuan compensation.

Yesterday, Louis Vuitton won a victory in the Silk Market Appeal case, read more here.

Andrew Pasek wrote for Forbes:
“Louis Vuitton rejected mediation in the case against Shanghai Lianjia Supermarket Co, Carrefour’s joint venture partner in Shanghai, and a hearing was held on Monday in the Shanghai No 2 Intermediate People’s Court, the report said.“ Read more here.

China trained 13 Asian countries, including Vietnam, Bangladesh, Mongolia, Kazakstan about preliminary examinations of patents, substantive examination procedures, patent documentation, the patent search system, the application and examination mechanism of the Patent Cooperation Treaty, and innovation and patents. The 5 day seminar was organised by SIPO. Good initiative.

Read Xinhua’s article here.

Book Review China CEO
D. Murali of the Hindu Business Line reviewed ‘CHINA CEO: Voices of Experience From 20 International Business Leaders’ by Juan Antonio Fernandez and Laurie Underwood. The book is based on interviews with 20 executives heading up the China operations of Bayer, British Petroleum, Coca-Cola, General Electric, General Motors, Philips, Microsoft, Siemens, Sony and Unilever and eight consultants based in China at Boston Consulting Group, Korn/Ferry International, McKinsey & Company and others.

The chapter on `battling intellectual property rights infringers’ is, according to Murali, an important read:

“Ekkehard Rathgeber, President, Bertelsmann Direct Group Asia, laments about DVDs and VCDs anywhere, everywhere. “You can buy them by the hundreds and thousands.” The book informs how the company had relatively little success selling its licensed CDs of US jazz saxophonist Kenny G in China despite the musician’s widespread popularity. “While Bertelsmann has sold roughly 50,000 copies of his works, as of 2003 the company believes millions of illegal copies have been sold.”“

Read Murali’s book review here.

In the Silk Market Appeal Case the fundamental question to be ruled upon was:
Is the landlord liable in case he is warned that his tenants infringe trademarks, or is the state responsible for preventing further trademark infringement? Read more about it here.

Beijing High People’s Court upheld the ruling by Beijing No 2 Intermediate People’s Court. However, the ruling requires Silk Street Market to compensate only 20,000 yuan (US$2,500) to each Prada, Chanel, Louis Vuitton, Gucci and Burberry. Peanuts of course compared to the 500,000 yuan (US$62,000) claimed by of each of the companies.

But the ruling can still be seen as a great victory in the education of landlords, and possibly an indication that the Chinese authorities will prosecute in-active landlords who are informed about trademark infringing tenants. Read Liu Mo’s article for the China Daily here and Chris Noon’s article for Forbes more focused on Louis Vuitton here.

If you are going to attend the Conference on Protecting Your Intellectual Property Rights in China and the Global Marketplace, set for Chicago, Illinois May 4-5, please let IP Dragon know the high lights. Read more about the conference here.

Microsoft and Lenovo decided to forge a strategic co-operation. After Lenovo had already announced it will pre-install legal Microsoft operating software on its computer, read here, it will now buy for US $ 1.2 billion in Microsoft licenses for the next 12 months. Lenovo chairman Yang Yuanqing even called the deal “the largest intellectual property agreement,” whatever that may mean. Lenovo and Microsoft will promote the use, and benefits, of bona fide Microsoft software products in China, as well as in some 65 countries and regions around the world.

To add lustre to the activities Vice-Premier Wu Yi wrote: “I believe that better IPR protection in China will create more favourable conditions for China-US co-operation in the software area.”

Read Li Xing’s article for the China Daily here.

“China is the world’s second-largest buyer of personal computers, but only the 25th-largest buyer of software,” according to the MercuryNews. Yesterday Chinese premier Hu Jintao visited Bill Gates in Seatlle and asked him to have confidence in the measures the Chinese government is taking to close the gap and protect IPRs.

Should Gates keep the faith? What has Beijing done for Gates in order to protect Microsoft’s IPRs so far and deserve his trust?

Beijing says it has got rid of pirated software in all government offices. This operation cost 150 million yuan ($17.47 million) according to Wang Ziqiang, spokesman for the National Copyright Administration (中文）.
Now Beijing is about to get rid of pirated software in other state-owned companies.

Preceding Hu’s visit is was announced that Tsingha Tong, the third Chinese PC producer, after Lenovo and Founder, will pre-install legal versions of Microsoft’s operating software. So combined they agreed to buy about $420 million in Windows licenses over the next three years.
Besides, some other concrete measures were announced before the Bush-Hu meeting, read here. The editorial of the Mercury News thinks this is the result of soft diplomacy, read here.

But, if Gates would walk around Beijing’s Zhongguancun computer shops and stalls, like Chris Buckley did for Reuters, he probably would be little bit less happy. Read Buckley’s experience here.

Update: Lenovo signed a 1.2 billion US dollar deal to use Microsoft software, read here.

“Foreign TV Footage Needs to be Free”

Richard Kuslan of Asia Business Intelligence had a very interesting post about a State Administration for Radio, Film and Television regulation, that allows Chinese TV stations using exclusively pictures of foreign TV stations that are broadcast by CCTV or CRI.

Kusland quoted a complaint by Han Jijun, Chief Editor of the Evening News of Shenzhen TV Station: “This is harmful in two ways. Firstly and economically, TV stations need not pay for the pictures they get from programs of foreign TV stations…” Source Interfax-China published on Mainichi Daily News. Mr. Han’s complaint may be representative for the Chinese media.

Read Kuslan’s article here.

Previous TGIF Next

Research in Motion (RIM) settled it’s patent dispute with NTP by agreeing to pay US$ 612.5 million, read more here. So RIM needs to earn some money and it was just about to embark on the Chinese market, only to find out that China Unicom has started to offer a push email service called Redberry.

Arik Hessendahl with Bruce Einhorn wrote an article about it for BusinessWeek. Hessendahl:
“China Unicom’s service is not only patterned after the BlackBerry, but its name is inspired by the BlackBerry as well.“
Hessendahl noticed that China Unicom wrote the following statement:
“China Unicom’s Redberry brand not only continues the already familiar ‘BlackBerry’ image and name, it also fully reflects the symbolic meaning of China Unicom’s new red corporate logo.”
The original statement here in Chinese.

RIM gives no comment if it will sue China Unicom for trademark infringement. In the article Jim Fang of Davis Wright Tremaine is quoted:
“The key to asserting a trademark in China is whetheror not the trademark you’re asserting is famous. If your trademark is famous you’re on stronger ground, even if your trademark isn’t registerd.“

Read more about the foreign famous mark/well-known trademark here and below:

Since China’s accession to the WTO it has to compy to the TRIPs Agreement to. Article 16 (3) TRIPs in conjunction with article 6bis (1) of the Paris Convention, well known trademarks enjoy considerably broader protection than those without such a reputation.

“If a well-known trademark similar to or identical to the well-known trademark cannot be registerd for the same or similar goods, and an existing registration will be cancelled or its use prohibited for the same or similar goods. If the well-known trademark is registerd, the protection is even broader: a similar or identical trademark is not even to be registered for goods that are not identical or simialr, an existing registration is to be cancelled and its use forbidden for such goods if the public concerned could confuse other products with the trademark products provided that the interests fo the owner of the trademark are likely to be damaged by such use.”

Source: Katrin Blasek, University of Freiburg Institute for Business law, Germany, published in the International Review of Intellectual Property and Competition Law, nr. 3, 2005, pp. 279-388, “The Protection of Well-Known Trademarks Following China’s Accession to the WTO”

Update: Excellent intro to well-known trademarks here.

Read Hessendahl’s article here.

Marty Swimmer of Trademark Blog questioned ‘What should BlackBerry do about Redberry in China? He asked Spring Chang at Chang Tsi what RIM should do?’ Spring Chang’s answer you can find here.

China is expected to ratify WIPO’s internet treaties in the second half of this year. These treaties are:

• WIPO Copyright Treaty (WCT);
• WIPO Performances and Phonograms Treaty (WPPT).

These treaties update (the traditional right of reproduction continues to apply in the digital environement, including to the storage of material in digital form in an electronic medium, and they clarify that owners of rights can control whether and how their creations are made available online) and improve the protection of the copyright and related rights treaties and link the various national laws by ensuring that at least a minimum level of rights will be granted to creators under each national law. The treaties grant certain rights specified on a nondiscriminatory basis. The treaties use two technological adjuncts to rights: anti-circumvention and rights management information (the information which accompanies any protected material available online and identifies the work/creator/performer/owner and the terms and conditions for its use).

“Liu Binjie, Vice-Director of the State Press and Publication Administration, said in Beijing on April 11 that the government had completed drafting the Protection of the Right of Communication through Network, the prerequisite for accession to WIPO treaties.
The draft, which is aimed at better protecting copyrights, had been submitted to the State Council, the cabinet, which is expected to approve and publish it in the first half of this year, said Liu.“

Read the Xinhua article here.

Yesterday the U.S.-China Joint Commission on Commerce and Trade (JCCT) talks seems to have been pretty fruitful and some concrete measures were announced:

• China will open offices in 50 cities to handle piracy complaints and to raise awareness about intellectual property;
• China pledged to close Chinese optical disk plants that are producing pirated CDs and DVDs (China has committed to conducting seven special enforcement operations against IP pirates, read here.

Commerce Minister Bo Xilai says the government is working hard to fight piracy and rejects suggestions that China’s copyright infringements were causing a growing trade surplus. Bo says he thinks it is more likely that US restrictions on high-technology exports, rather than intellectual property infringement, influenced the trade surplus.”

Read Daniel Schearf’s article for Voice of America here.

Good news for software producers
“New regulations state Chinese computer makers must install legally licensed operating software on machines before they leave the factory.“ The measure was announced by China’s Ministry of Information Industry (MII), the State Copyright Bureau and the Ministry of Commerce. Read the BBC News article here.

Berkeley
Yesterday, also the University of California, Berkeley and a Chinese delegation announced they will start a joint education programme about intellectual property rights.
“…20 Chinese will attend classes at Berkeley and get hands-on training as interns’ at Bay Area law firms and U.S. courts. Preliminary plans call for instructors from UC-Berkeley to conduct larger training seminars in China in 2007.“

Read K. Oanh Ha’s article for Mercury News here.

Number 272 of Rouse & Co. International’s China IP Express newsletter is all about sport:

“With the coming Beijing Olympics in 2008 and all the other international events in China, combined with the fact that David Beckham is the most recognised foreigner in China, the sports industry is booming. But of course with all this development comes an increased awareness of the value and therefore a corresponding increase in IP infringements! This issue covers infringement of an athlete’s image right (gold medal in the 100 metre hurles Liu Xiange), civil action for selling counterfeit Nike shoes following a criminal sentence (by former professional soccer player Zhuang Zhihao), action taken after expiry of a licence to manufacture Olympic merchandise and fast action for use of the Olympic Mascots without authorisation.“

See more here.
Subscribe here.

Today, the Chinese iron lady Vice Premier Wu Yi and US Trade Representative Rob Portman and US Commerce Secretary Carlos Gutierrez discuss US-China trade and IPR, seeking to ease tensions before President Hu Jintao’s visit to the US next week and preventing a WTO complaint by the US. China may agree to extend a crackdown on makers of pirated movies and enforce a ban on use of illegal software. However it probably will be made official when Hu visits Washington. Read Mark Drajem’s story for Bloomberg about it here.

As a WTO member since 2001, China has to comply with WTO requirements, including the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). Since WTO’s Agreement on TRIPs the absoluteness of property in Intellectual property is under pressure. The advantage of TRIPs is that is builds on WIPO’s Paris Convention for the Protection of Industrial Property and that is gives it teeth, because of the binding character of WTO’s Dispute Resolution Body. However, the disadvantage is that it mixes trade with intellectual property, so that if one state is infringing IPRs, it can be sanctioned with trade measures and vice versa, so instead of direct enforcement of IPRs. Or in other words, a state can compensate IPR infringement instead of fixing it.

Now what will happen if the US WTO lawsuit against China cannot be averted? First US officials wanted to base a suit on data showing the volume of illegal merchandise. However, the data has proven difficult to obtain. To base a complaint on allegations that China fails to fulfill WTO standards (read TRIPs) requiring criminal prosecutions and transparency of rules seems more succesfull. Read Mark Drajem’s Bloomberg story about it here.

You could argue the Silk Market Ruling of December 19th, by the Beijing No 2 Intermediate People’s Court ruling is one of the most important jurisprudence. It could be a precedent of the landlord’s liability in case of trade mark infringing tenants.

For an article about this Emma Barraclough of MIP interviewed among others Paul Ranjard, Chairman IP Working Group EU Chamber of Commerce in China, who doubts if this ruling will get a following: “Obviously the Court got the principles right when it accepted [the landlord] as jointly liable. The appeal might be tricky, though, for lack of very strong legal basis. It will be necessary to define exactly under what circumstances a landlord would be considered jointly liable.”

The landlord appealed the ruling to the Beijing Higher People’s Court on January 4 and it is expected the case to be decided upon before May. Zhang Weifeng, Ocean Law Firm, that advised the landlord said that law enforcement duties should be performed by the government instead of the private sector

Joe Simone of Baker & McKenzie who advised luxury goods companies Burberry, Chanel, Gucci, Louis Vuitton and Prada, and lobbyist in the anti-piracy Quality Brands Protection Committee (QBPC), thinks the ruling is going to stimulate the Chinese authorities to prosectute landlords who were aiding and abetting trade mark infringement by their tenants. Simone contents that the definition of knowledge is somewhat stretched, and that evidence of intent is needed.

Emma Barraclough wrote: “The brand owners sued Xiushui Haosen under the Trade Mark Law, which said that by knowingly renting space to counterfeiters, landlords are “providing convenient conditions”, effectively aiding and abetting the offence.“
Read MIP’s article here.

Due to technical problems there were no blogs Friday.
So instead of saying OHIMA (not to be confused with OHIM) I am looking forward to this week which has a lot to offer in respect to IP in China. Think about the Hu-Bush summit and everything that preceded it: to get the Americans in a good mood, corporate China went on a buying spree and Tshingha Tong, the third Chinese PC producer, after Lenovo and Founder, announced it will pre-install legal versions of Microsoft’s software.

In the Jamaica Observer Charmain N. Clarke wrote about The Coffee Mill’s opening of the first Jamaican wholly owned foreign enterprise in China, read here. The Jamaican ambassador to China, Wayne McCook, left behind the Jamaican patented relaxedness and said: “First shot across the bow at those who want to attempt to undermine Blue Mountain Coffee.” In 2004 the Blue Mountain Coffee was protected under the Geographical Indicators Act, read here.

Guiseppe de Filippo, associate principal with McKinsey’s Shanghai office, and Chris Ip principal in the Hong Kong office, wrote for CIOthe article ‘Leaks in the Great Wall’ Now that India is becoming more expensive, software developers turn ot China. What are the risks?

Productivity and entertainment software is off limits (it’s too easy to copy), but according to the writers there is not much IP theft when Chinese developers were involved. One of the reasons is that the work is done for the Japanese market, “which splits the source-code development across many vendors so that no one vendor has access to the complete code.”
But software that is customized is difficult to replicate too.

Why does the bad perception comes from?
McKinsey China Software Industry Survey, which surveyed the top 100 software companies in China, showed that 60 percent of the executives interviewed were sympathetic toward local customers’ propensity to use pirated software developed by foreign companies. China tends to deal more harshly with stolen software sold to foreign entities than with software sold domestically.

How to prevent copyright theft?
One multinational with a development centre in Hangzhou uses diskless computers on a closed network with no external connection and no printers. Access to the centre is strictly controlled, and programmers may only download or upload data or code from the central server under strict supervision.

For more advice read the article here.

“To steal a book is an elegant offense”
Chinese proverb.

William P. Alford, professor of law and director of East Asian Legal Studies Program, Harvard Univerity, used it in the title of his book on IP in China: “To steal a book is an elegant offense: Intellectual Property Law in Chinese Civilization.” Read a book review by Guy Yonay about it here.

Andrew Ellson wrote that Xingguo Fu, the director of WTO affairs at the Chinese Ministry of Commerce, quoted the proverb because the dissemination of knowledge is for the good. Read more here.

Cars, Shoelaces and the Nibelung’s Ring

In the archive of the Rouse & Co. International China IP Express newsletter you can find this amazing post:

“Audi Face Action Over Copyright Infringement
Volkswagen Germany, Volkswagen China, Shanghai LINSHI Advertising Co., Ltd. and a well-known media company in Beijing are being sued for copyright infringement by a Mr Wu. Mr Wu has alleged that advertisements for Audi automobiles include a device consisting of four joint rings, Audi’s logo, which is similar to his design of a figure consisting of four shoelaces in his own advertisement drafts called Chang Nei Pian. Mr Wu claims the defendants’ advertisement has simply changed the shoelaces to rings and he is suing for copyright infringement. Mr Wu’s action is asking for immediate cessation of the infringing act, for a public apology and for the defendants to pay damages of RMB 10,000 (US$1,204).” Source here.

Never mind that Audi started using the rings in 1932: “On 29th June 1932, the four Saxon motor-vehicle brands Audi, DKW, Horch and Wanderer joined forces to create Auto Union AG,…”Read more here.

The right opera for Mr Wu might be Der Ring des Nibelungen, a series of four epic operas of Wagner (who was already on the wrong side before World War II even had started). A Nibelung in German mythology is any of the race of dwarfs who possessed a treasure hoard that was stolen by Siegfried, see source. So Mr Wu can imagine that his treasure was stolen by Audi. There was no happy ending for Siegfried, however Audi is still selling cars with the four interlinked circles in China. I don’t know if this means that my assumption that Mr Wu made his shoelaced circles after 1932 is right or that he created them before and the case is still pending. Either way, not to worry, Mr Wu, you can always sue the International Olympic Committee for copyright infringement.

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WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) made Intellectual property forever inseparable from international trade. 29th March, Raphael Minder and James Mackintosh wrote an interesting article about these aspects in the automotive industry for Financial Times. It is called: ‘EU urged to put pressure on China over car parts tariffs’. The Chinese argue that they use a tariff system on car parts becase this will prevent foreign carmakers from importing whole cars as spare parts in order to avoid the higher tariffs on fully constructed vehicles.

This article included the passage:

“Intellectual propety rights have been frequently been trampled in China, with VW suffering the copying of one of its models by a local competitor and a Chinese version of a Rolls-Royce being
exhibited at last year’s Shanghai motor show.“

So what was the story on this Chinese R-R? At the forum of AutoWeek you can find the shocked reactions of car enthousiasts, see here. The car is made by First Automative Works and is called 紅旗 (Hong2 Qi2) which means Red Flag. It is now in the concept phase and will be available in two years.

About the Chinese characteristics of this R-R look-alike (judge for yourself here) CarDesignNews wrote”…Hong Qi was designed to be their flagship vehicle, thus the treatment of the grill is very important. Shaped like a building with the typical ornate roof tops in China, the grill also sports a red flag graphic that flows into the hood of the car. Read more here.

C.Peter Theut is a shareholder practicing in Butzel Long’s Detroit office, that focuses on the automotive industry. Theut is chairman of the firm’s Global Trade and Transactions Practice and heads the Butzel Long China Initiative.

Butzel Long has joined forces with Armstrong Teasdale LLP, Michael Best & Friedrich LLP of the U.S., and Blake, Cassels & Graydon LLP of Canada to collaborate in the development of their respective China practices in an arrangement called China-Alliance, which have now an office in Beijing and Shanghai.

At the site of GlobalAutoIndustry there is a streaming video interview with Peter Theut. Watch it here. Here is a summary of the parts that might be relevant for IP in China.

When doing business in China, you should, according to Theut, use a multicultural management team, know where you want to be in and last but not least do due dilligence. Theut says that in China there is no sanctity of contract and no way to enforce it, but the Chinese culture is such that what you put into writing is binding, even if you put on the letter not binding. You always should think of an exit strategy. When deciding what kind of business entity to take in China, Theut says that you should consider that a representative of office, is limited, since you cannot conduct business in China, you will quickly outgrow this listening post. The good thing of the joint-venture, is also the bad thing: a Chinese partner. He can help you to get to know the market, but can have different interests. Wholly Owned Foreign Enterprise (WOFE), are teh best solution according to Theut. They can be owned by an offshore company, give a good exit-strategy that is governed by the law of the offshore company, can repatriate dividends. You can own it for 100 percent, so you can better monitor and protect your Intellectual Property.
Theut heeds companies to get an arbitrage clause in contracts.

Best ways to protect your technology and secrets
“Any automotive company or any manufacturing company for that matter should definitely fear sharing any kind of technology with the Chinese.” The Chinese are much more proficient and the Chinese culture is more adept at reversed engineering, according to Theut.

“About 10 percent of your products will traditionally go out the back door. Some of that is pirated and some of it goes to the black market. But I can guarantee you that on some point in this year and age you will to confront the fact that the Chinese or someone associated with them is going to be pirating your technology. What are do you do about it?”

The laws in China, seem great and like any other country. However Theut thinks the problem is that there is little or no enforcement of those laws and little monitoring and policing. Theut estimates that it will take 6 to 8 10 years before the law is effectively enforced.

In the mean time what to do? Theut: “The best way is planning, I mean you really have to take a look at your patent portfolio very carefully, use the assistant of a patent lawyer, who can tell you what kind of technology you should you take over there, if you have choice, for example if you have a formula in it and you can remove a portion of it so that what they manufacture in China and it’s 80 to 90 percent of the product, that’s a good thing to do.”

Obsolette technology
Theut has an interesting solution to get something out of the piracing situataion. To take over technology that is about to become obsolete. Then you will be in a great position when you catch them stealing it, and chances are you can enter into a license with them. Because they want to save face. But the Chinese, more recently, don’t fall for that anymore, according to Theut.

“The other thing is monitoring. There are now agencies in China that will very faithfully work with you that monitor. Who is messing with your technology.” In order to solve a problem, you have to know what it is.

Live and let live?
About these agencies Luke Minford and Connie Carnabuci at the IPR in China Conference in London made an remark. These so called Chinese spawned enforcement can have conflicting interests. Minford, who can speak fluently Mandarin, told the anecdote of such an agency that he overheard. The manager of the agency was asking somebody else why Minford cared so much about effective enforcement of infringements. If the manager’s agency could monitor and give the infringed company a signal that his IPR were infringed and give a warning that the infringer should decrease his activities, the company is happy, the infringer is happy and we are happy. In other words, the problem stays, but it is livable.

Theut says finally that you need to be prepared to enforce you rights. “Even if the court may not give you an injunction, if you send the right kind of letters from a Chinese lawyer, threatening action it often can shut down the problem.”

Law professor, author of ‘Who Owns Culture’ and ‘fashion victim’, Susan Scafidi of Counterfeit Chic, has another great post:

This time about “The Jack Spade “Chinatown Collection,” which debuted in February during New York Fashion Week, takes cheap plastic “made in China” tote bags and rebrands them with a real Jack Spade label.“ Read more here.

Mark Kitto, who founded three English language magazines called That’s Shanghai, That’s Beijing and That’s Guangzhou, “to get the most out of life” in those respective cities, wrote about building up his “mini media empire” (as FT coined it), power struggle with the Chinese authorities, and trademark dispute. Great read, here.

Dan Harris of Chinese Law Blog blogged extensively about it:
‘That’s China And It Ain’t Always Pretty’, here;
But Travis Hodgkin of Asia Business Law was not satisfied with the explanations for Kitto’s apt cultural responses in times of adversity and delfed deeper. NTC’s Dictionary of China’s Cultural Code Words and the I Ching (no less) helped Travis on his quest for answers, read ‘That’s China and The Necessary Cultural Acumen’, here.

Vice premier Wu Yi, China’s iron lady, will talk IP with US commerce secretary Carlos Gutierrez and US trade representative Rob Portman on April 11 meeting. This must set the stage for talks when US president George W. Bush hosts President Hu Jintao at the White House on April 20.

“Gutierrez said widespread counterfeiting posed a threat to China’s own long-term development, citing the example of lost tax revenues. “Ironically, it is China that is most affected by violations of intellectual property rights,” the Commerce Secretary noted. He said the failure to curb piracy could thwart China’s efforts to create firms able to compete globally.“

Read Edward Lanfranco’s article for United Press published at World Peace Herald here or Jason Subler’s story for Reuters here.

Luke Minford, country manager of Rouse & Co. International in Beijing, gave a presentation about the options available other than litigation. Minford started with saying that the cause of the counterfeit problem in China is as much about corporate failure as it is about Chinese institutional failure:

“There are many rights owners, both here and abroad, who take the view that China is largely at fault for the rampant problem of IPR infringement. Granted, many of these problems stem from a combination of factors such as cheap labour supply, uneducated workforce, huge market potential and a people that have only recently (since 1982) been introduced to the concept of private intellectual property rights ownership. However, it is equally important to understand the corporate strategies of the early to mid nineties, and the impact that these strategies had on their intellectual property rights.” Read what the corporate world did wrong here.

Before a company even start thinking about doing business in China it should analyse its particular situation. So investing in quality information before they respond is important. Then, in order to select the appropriate enforcement option, they should first understand the nature and scale of the problem.

Nature of the problem
Minford recommends companies to question themselves if they are dealing with counterfeit or look-alike; sophisticated or low grade copie; if they use expensive moulding and if special technology is required? Are there consumer safety issues involved? Does the company want to serve overseas markets or the local market?

Scale of the problem
To understand the scale of the problem they should ask themselves:
Has a factory and/or market survey been done?
What is the source of the information?
What kind of distribution? Mass market distribution or via a specialist distribution channel?

According to Minford it can take about 3-4 weeks from the time your product first enters the market, for the counterfeit equivalent to reach the market. However, if we compare it to 1,000 pairs of counterfeit Nike shoes in 10 days for US$ 4 a pair that time frame is quiet conservative, read more here.

When you have a clue about the nature and scale of the problem you can start selecting the appropriate enforcement option.

Administrative enforcement
Advantages: Simple, quick, cheap

Investigation to gather evidence of infringement
(1-2 days)
Submission made to relevant authority
(1-2 days)
Authority conducts inspection (raid)
(1-4 months)
Authority issues punishment & destroys goods

Disadvantages:
Low deterrent value
Resources “stretched”

Local protectionism is an issue in some area’s; AIC’s have a conflict of interest, on the one hand they are rewarded for economic growth, on the other, they have to enforce against infringement; the administrative review process has reduced the willingness of authorities to act in borderline cases; in some cases administrative enforcement is an overused and anticipated remedy.

Administrative remedies are appropriate when the objective is to keep a lid on infringement at market & distribution level or when the objective is to operate as a pre-trial remedy. Administrative decisions can be used as evidence in litigation, as Connie Carnabuci already has mentioned.

Mediation
Complex, easily misconstructed;
Tactics are key;
AIC involvement possible;
Allows for creative solutions.
Mediation is often unsophisticated, but this route is growing for trademark disputes;
AIC can play a key rolel
With growing scale of more sophisticated passing off actions, mediation will be required.

Border control
Good organization vital;
Random results;
Can have huge deterrent impact;
Training essential;
Trans national needed.
Read more about customs as an inexpensive and effective alternative to litigation here.

Holistic approach
Minford advocates a holistic strategy, whereby you know your way in different jurisdictions. If a counterfeit product is just out of the factory it’s value is marginal, but when it has been packaged and distributed over great distances it can substantially increase in value. Minford argues it’s better to wait to seize counterfeit products when they have added value to such an extent that it will really hurt the counterfeit producer and distributor.

Criminal prosecution
Complex & expensive;
Evidence value high;
Usually very strong deterrent;
Need business support;
The burden is on the rights owner to investigate and satisfy that the thresholds will be met.
Strengthening of case transfer procedures (public prosecution), but private prosecution more common;
Intense pressure on Public Security Bureau resources means lobbying often required—consider involving embassy; If there is an official request of the embassy, the police has to do something;
Criminal prosecution difficult to control initiated, so properly brief PR/business;
Be sure that the counterfeiter or accomplice is not your own employee.

Civil and Criminal enforcement can be used as a strategic tool for protection of key IP, market, location etc.

Cease and desist letters can be effective, but industry and location play a key role
Various ‘add ons’that can make warnings effective e.g. copying AIC, attaching local decisions, threat of media.

IPR in China Conference, London Part I
IPR in China Conference, London Part II

Derek Jiang of Xinhua Finance wrote for Forbes about Honda that has announced it will file a lawsuit against the State Intellectual Property Office. SIPO recently ruled that the exterior design patent application for Honda’s new version of the CR-V model is invalid. In the eyes of SIPO the new design was too similar to the original version, thus likely to confuse buyers.

Honda filed lawsuits against At the end of 2004, the Japanese carmaker filed lawsuits against Shijiazhuang Shuanghuan Automobile Co and Hebei Xinkai Automobile Manufacturing Co, at the end of 2004, alleging that they copied the exterior design of the Honda CR-V model. Currently no judgement has been made on the lawsuits.

Read more here.

BusinessWeek published a story of Maria Bissinger, Yang Wang and Tatiana Kordyukova , analysts for Standard and Poor’s about emerging markets, such as China, beckoning the automotive industry. Here are the relevant IPR passages:

“A further risk factor associated with investing in China is the legal uncertainty, including the chance of intellectual property violation. Several examples illustrate how difficult it is to protect proprietary technology, design, and trademarks in this legal environment. Take Toyota, which went to court over the wrongful use of its logo, but eventually lost the case. Honda has also been involved in lawsuits against two domestic motorcycle companies over trademark violations.

The problem is even more pronounced for spare parts, the technology and design of which are harder to protect. VW, for example, is reported to have discovered that local suppliers copied parts used at SAIC’s then affiliate Chery Automotive. A strategy that was popular among foreign auto manufacturers in the early days of investing in China—using old technology and offering models from the previous season to protect proprietary technology—is now considered impossible to sustain, as a result of increasing competitive pressures.”

In this article SAIC stands for the Shanghai Automotive Industry Corp and is not to be confused with the State Administration for Industry and Commerce.

Read more here.

The Guardian run an Associated Press article that run a South China Morning Post article about an unemployed single father of four for allegedly illegally sharing music on the internet. Seven record firms, including Universal Music and Warner Music Hong Kong sued him.
Read more here.

Silk Alley Shopkeepers Donate to Young Students, PR Stunt?

Silk Alley Shopkeepers, infamous for selling counterfeit products, have donated RMB 600.000 to the Beijing Youth Development Fund. Are they sincerely concerned about the education of 1000 rural girls or is it just a PR ploy to shed their counterfeit image?
Read here China CSR story here.

Silk Alley (Xiushuijie) in Beijing will close down because of security reasons. Xiangyang market in Shanghai will close down aswell, read here.

The New Silk Alley market, next door, is near completion. Read here.

Will New Silk Alley market be a fresh start free from counterfeit products?

Read more about Silk Alley market here.

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Ben Goodger, partner of Willoughby & Partner laid out an IP asset management system which included doing your homework (legal and factual due diligence), using good contracts, preventative measures, early warning of problems and swift & effective enforcement, to get a good IP position.

Location, location, location
Goodger warned that location is a crucial aspect when preventing IPR infringement. If your proposed partner’s factories are in clusters/hotbeds of counterfeiting, you probably will be the next victim. He gave some examples:
Yongkang, Zhejiang Province) is infamous for their infringements of industrial and electrical tools;
Wenzhou (Zhejiang Province) for infringing electrical products and consumer goods;
Shunde (Guangdong Province) for household appliances and Dongguan (Guangdong Province) for textiles, etc.
Goodger gave plausible reasons for these concentrations of infringement:
Authorities protect their sources of income (i.e. these infringing companies). Beside, there is critical mass of factories, which lead to benefits of ‘economies of scale’: a raided factory can rely on neighbouring factories to fulfil their orders.

Beware of long arm provision
Are you buying key expertise? Note the employment law issues in the rules for implementation of the patent law. A patent belongs to the employer if made by an employee in execution of tasks of entity to which he belongs. But also includes invention made within 1 year of employee’s departure where it ‘relates’ to employee’s duties or other tasks entrusted to him by employer:
Rules for Implementation of the Patent Law, article 11 says:
In Article 6 of the Patent Law, employee’s invention made by an employee in the execution of the task of his unit means:
(3) The invention made within one year after his resignation, retirement or job change, but is related to his normal duties of his unit or a task assigned to him by his unit.
Therefore watch out for ‘claw back’ by previous employer, if taking key person/team.
Example: nickel foam JV.

Contracts
Use good IP License terms. Goodger: “Enforcement is trying to cure a problem, while contracts try to prevent problem from happening in the first place.” Contracts offer a whole parallel regime of protectionm, i.e. tort beside IP rights. Contracts can have deterrent value and can be seen as a relationship manual. Make clear that your mould, tooling, drawings and software is your’s. Make sure there is no sub contracting, sub licensing or sharing moulds with third parties and no night shifts making pirated goods. Don’t loose control of the use of IP in materials such as labels. Record all licensing.

Practical Steps
These steps seem obvious, but are regularly neglected: Don’t leave drawings/prototypes behind, before the deal is closed. Goodger gave the example of a Canadian architect who was bidding for the development of a mall. He left his drawings for just 4 minutes. The result was that his designs were rejected, only to see that his own creation was made by other architects. Do not reveal everything, use Black box, consider lay out of factory, process ‘secure/restricted areas’ swipe cards, use copy protection devices. Consider not bringing key ingredients/components to China, or assemble the final product somewhere else.
After termination of the contract, get your moulds back. Take back or destroy everything. Goodger gave the example of a Chinese garage signage. After termination of the contract the customers of the garage didn’t know that they were dealing with an unlicensed dealer.

So in short take IP asset management seriously when doing business in China. Goodger: “Do cheap business in China, but don’t do business in China on the cheap.”

IPR in China Conference, London Part I
IPR in China Conference, London Part III