Monday, 20th of March, the IP in China conference was held in London. This one-day-programme was packed with presentations on Chinese IPR Law and instructions for companies on how to protect their IPRs in China.

Most of the speakers said that China was doing a lot to improve IPR in China. And that many non-Chinese Small to Medium sized companies did not do their homework enough, sometimes even didn’t file any IPR. Beside this, however, there are still problems that need to get addressed.

Below you’ll find the first installment of a series on this event:

Connie Carnabuci, partner of Freshfield Bruckhaus Deringer in Hong Kong, started with a presentation about how to develop an effective IPR strategy. She said that doing business in China entails not only the problem of expatriating profits from China but also IPR challenges. What is China doing to fix this problem? China uses a two pronged approach:

• Propaganda (general public IPR awareness campaigns);
• Let domestic companies drive up the value chain by using IPR. The Chinese government came up with a IP plan that is focusing on protecting IPR in domestic companies.

Carnabuci:“Domestic need for stronger IPR protection is the driving force , not just an incentive to attract foreign investment.”

An action plan is announced IPR Protection for 2006. It exists out of:

• Draft, formulate and revise 17 rules and measures;
• Draft, improve and revise 6 judicial interpretations, including the IPR aspects of unfair competition law;
• 7 dedicated campaigns on IPR law enforcement; There will be a white paper about a dedicated IPR campaign published on 20th of April.

Carnabuci gave a lot of statistics which showed the phenomenal growth of IPRs in China. Beside, she gave some handy aspects of Chinese IPR law such as the hierarchy of laws:

The hierarchy of objective law in China is:

National People’s Congress = laws;
State Council = implementing regulations;
Supreme People’s Court = Interpretations, Provisions;
High People’s Courts = Opinions, Guidelines;
Government Agencies eg Patent Office = Notices, Implementing rules;
Government Ministries = Rules;
Administrative Authorities (national, regional & local)= Regulations, Provisions.

Litigation

Carnabuci gave an overview of which People’s Courts deal with IPR:
Supreme People’s Court (1) (Third Civil Division IP);
High People’s Court (31) (Third Civil Chamber IP);
Intermediate People’s Courts (346) Third Civil Chamber);
Primary People’s Court (3135);
People’s Tribunals (20.000).

Administrative enforcement
And if you don’t choose for litigation you can choose for the administrative route. Carnabuci summed up all Administrative Authorities. In case of Patents these are the:

• State Intellectual Property Office (SIPO);
• Provincial Intellectual Property Office;
• Local Intellectual Property Office.

In case of Trade Marks these are the:

• State Administration for Industry & Commerce (SAIC);
• Provincial AIC;
• Local AIC.

For Copyright the Administrative Authorities are the:

• National Copyright Authority of China (NCAC);
• Provincial Copyright Administration;
• Local Copyright Administration.

Unfair competition is dealt with by the:

• Fair Trade Bureau under SAIC.

Trading standards are dealt with by the:

• Quality Standards Supervision Bureau.

And for Import/Export the administrative authories are:

• Customs Authorities.

Features of different IPRs in China:

Copyright registration is not needed, according to the ‘no formalities provision’ of the Berne Convention to which China is a signatory, but it can be helpful to establish prima face evidence, for example ownership.

Trade Marks in China do not protect sounds nor smells.

Well known marks are only recognised in 2001, but they were only well known marks if they are well known in China. This is changing in the last 12-18 months.

You can use a non-Chinese name, but it will not be recognised in China. Hopefully 2006 will bring an amendment that will change this. Bi-langual strategy was first adopted by Goldman Sachs. Its often recommendable to pre-empt the market and register defensively.
Nowadays .com.cn and .cn can be registered by an offshore company

Criminal enforcement

Carnabuci used a rhetorical quesion to answer if China was using the criminal enforcement route enough: how much criminal enforcement was used in the jurisdications of the conference attendees when it concerned IPRs?

Carnabuci talked about multiple layers of IPR protection measures. You can distinguish product-, process- and legal protection mechanisms:

Product protection mechanism: Microsoft learned the hard way that the hologram that was developed especially to protect software against copying was copied itself;
Process protection mechanism: no one person has all the keys, part of the product is produced offshore, close circuit tv, properly enumerating employees/let them study abroad to develop loyalty, psychological screening, visibility of IPR by senior management.

An unorthodox way to deal with infringement is to buy the defendant’s factory. Carnabuci has seen it happening twice.

Legal protection: think IP filings and non-disclosure agreements

Forum shopping
Choice of forum can be of crical importance in China. As a plaintiff you choose between the:

• Place of infringement; place of manufacture; distribution chain (sue distributor as first defendant and bring the case to favourable forum); Advertiser.
• Defendant’s domicile; Search defendant’s subsidiaries/branches.

If you want an interlocutory injunction you’d better not go to Beijing, because the court did not once allowed one. Interlocutory injunctions are often given in the places of infringements.

Interim relief
There can be a preliminary injunction in the case of irreparable harm/urgency or;
Security required or;
Timing of court’s ruling: 48 hours.
No appeal is possible. You can request for a review, which, however, has never been overturned.

Civil remedies
In China the plaintiff can ask for an injunction and for damages.
Damages:
-loss suffered from infringement
-profits (based on period of trading, pricing, production capacity)
-multiple of licensing fee
-statutory damages, ceiling RMB 500,000, US$ 60.000
Destruction
Apology in public

Which Routes?
This depends on the complexity of the IPR dispute and the scope of the license. It can be too difficult for administrative law, because many judges have had military or government trainings, but have not studied law. This, however, is changing.

If a company has multiple IPRs than it is ending up at different agencies. In this case litigation can be more handy. If you choose for the administrative route, evidence accepted by the administrative authorities can be used in case of litigation.

IPR in China Conference, London Part II

IPR in China Conference, London Part III

Message of IP Dragon

IP Dragon is packing its bags and will attend the IPR in China Conference next Monday in London.

So expect a summary of the events next Wednesday. Untill that day IP Dragon is away. Ta ta for now.

previous TGIF next

Republican Representative for the State of Michigan, Joe Knollenberg’s proposed a bill to strengthen the anti-counterfeiting statute of the US. This ‘Stop Counterfeiting in Manufactured Goods Act’ was signed into law on March, 15th:

• it provides for the mandatory destruction of the machinery, tooling and supplies used to produce counterfeit goods. This provision would be similar to those afforded to copyright owners and would prevent counterfeiters from retaining capital equipment for further use.
• it amends current law to prohibit trafficking in counterfeit labels, patches, and medallions that are unattached to any goods. Sophisticated counterfeiters have often sold counterfeit versions of the trademark themselves in the form of patch sets or medallions that can later be attached to generic merchandises and given the appearance of a genuine product. Again trademark owners would be given the same protection now afforded to copyright owners.

According to Knollenberg, the revised law can provide the basis for the United States to request other countries, particularly China, to enact similar changes in their law.

Read more on the site of the US National Association of Manufacturers here.

Winnie Wang wrote an article for the Shanghai Daily about the end of Xiangyang market, Shanghai’s hotbed of counterfeit goods, where inspection was as inauthentic as many of the goods there, despite the banner that was put above the market. The reason for closing the market down is quite prosaic; to make way for the city’s traffic construction plans. The question is where will the salesmen of counterfeit goods set up shop after June 30th, when their pirates’ nest is destroyed?

Read Wang’s story here.

According to Epson (Epson Portland Inc., Epson America Inc., and Seiko Epson Corp.) at least nine of its patents are infringed by 24 companies (13 from the US, five from Hong Kong, three from China, and one each from Macao, Germany and South Korea; see which companies here) that manufacture, import, or distribute aftermarket ink cartridges for resale in the United States. Read more at PR Newswire here.

That’s why Epson:

• has filed a lawsuit at the US District Court of Portland, Oregon against the same companies seeking damages for alleged intellectual property infringements as well as a permanent injunction against such patent infringemenst. It’s not clear if Epson will settle some of the cases as they have done in the past, see here;
• has filed a complaint with the US International Trade Commission (USITC) to conduct a Section 337 (of the Tariffs Act of 1930) investigation pursuant to 19 U.S.C. § 1337 and the Administrative Procedure Act, see here.

The primary remedy available in Section 337 investigations is an exclusion order that directs Customs to stop infringing imports from entering the United States. In addition, the Commission may issue cease and desist orders against named importers and other persons engaged in unfair acts that violate Section 337. Expedited relief in the form of temporary exclusion orders and temporary cease and desist orders may also be available in certain exceptional circumstances.

Section 337 specifically declares the infringement of the following statutory rights to be unlawful import practices: a U.S. patent or a U.S. copyright registered under Title 17, a registered trademark, a mask work registered under chapter 9 of Title 17, or a boat hull design protected under chapter 13 of Title 17. 19 U.S.C. paragraph 1337 (a)(1)(B)-(E). In cases involving infringement rights, there is no injury requirement. (source).

Section 337 of the Tariff Act of 1930 is classified to section 1337 of this title, see here or here (pdf).

Section 337 investigations seem pretty effective:

“Last year Chinese enterprises, from floor makers to television makers, were accused of infringing US enterprises’ intellectual property rights in eight separate cases. Most completed investigations have resulted in the allegations being proved. Chinese DVD player manufacturers have been involved in intellectual property right infringements, and have started to pay patent fees to a number of well-known foreign companies, including Toshiba, Panasonic, JVC and Matsushita.“

Read Jiang Wei’s article for the China Daily here.

Jordan Green wrote for Yes! Weekly an article about Russell Peck, composer in the tradition of Bach, Beethoven and Mozart:

“Peck has also developed a following in China and other parts of the Far East, with orchestras performing his work in Beijing, Shanghai, Hong Kong and Singapore. Orchestras in the classical heartland of Europe — countries like Sweden, the Netherlands and Germany — have paid the composer handsomely for the privilege of performing his music, so he doesn’t seem inclined to sweat the fact that Chinese orchestras don’t pay much heed to copyright.
“People over there earn in a year what I make in one performance,” he says. “The money is just not there. [To answer] the question of if you’re going to get paid, you’re not.”“

Read more here.

Hollywood movies took a tumble in 2005, by 9 percent. Dan Glickman, Motion Picture Association of America (MPAA)’s Chief executive wants theatre owners join the battle against movie piracy. Glickman is focusing at the root of the problem and wants to stop the cinema-goers with a camcorder (supposedly 90 percent of the problem) shooting the whole movie and putting it on the internet or selling illegal bootlegs via DVDs in places as far as China. Read Dave West’s article for Digital Spy here.

MPAA has set up http://www.FightFilmTheft.org, which includes a programme to reward theater owners for completing a training (US$ 300) and reporting illegal recording activity (US$500 per incident). Read Greg Kilday’s story for Reuters/Hollywood Reporter here.

Chinese premier Wen Jiabiao presented the report on the work of his government at the Fourth Session of the Tenth National People’s Congress on March 5, 2006. I this speech he mentioned intellectual property five times and trademarks one time.

After a review of past year, Wen was looking ahead in ‘II. Major Tasks for This Year’. So fast forward to the relevant passages:

In the 3. Intensifying efforts to restructure industries, conserve resources and protect the environment
(…) The key to improving the technology used in industries lies in comprehensively improving our capacity for independent innovation. We need to promptly develop core technologies and improve systems integration in some important industries and create technologies, products and standards for which we own intellectual property rights.

The main measures we will adopt are: We will strengthen the role of enterprises to make them the main source of independent innovation and build a market-oriented system for technological innovation that integrates the efforts of enterprises, universities and research institutes. We will energetically pursue a name brand strategy by encouraging development of famous brands for which we hold intellectual property rights. We will strengthen the system for protecting intellectual property rights and intensify law enforcement in this area. (…)

6. Pressing ahead with reform and opening up
(…) We will severely punish, in accordance with the law, parties who engage in production and sale of counterfeit goods, commercial fraud, smuggling and selling of smuggled goods, tax evasion and tax fraud, financial and securities crimes, and violations of intellectual property rights.
(…)
We will support the export of service products and high value-added products with Chinese intellectual property rights and trademarks and continue to control the export of highly polluting products, resource products and products that consume excessive quantities of energy.
(…)

Despite all the applause Wen got from his fellow deputies for voicing lofty goals, he did not mention concrete measures to achieve those goals.

You can find the report at the site of Eastday here.

Markenbusiness News, a magazine for brandname owners, with daily news about names, trademarks, brands and legal issues, wrote that French Customs at Le Havre had confiscated 61, 4 percent more imitations than the previous year. The trends in counterfeit goods from China, Hong Kong, Thailand and Taiwan were:

• more than half of the seized goods were cigarettes. Almost three million packets fell into the hands of the customs, the ‘Marlboro’ brand being an especially common find;
• copies of replacement parts for automobiles, from 2,946 items in 2004 to 44,824 in 2005;
• reduction in the quantity of textiles seized, from 16% in 2004 and 25% in 2003 to 11% in 2005. However, counterfeits of street wear, sportswear and casual wear brands are still as much in favor;
• growth in the number of falsified belt buckles from upmarket labels: 178,437 were confiscated in 2005 against just 48,000 in 2004;
• In the general area of drugs, the number of uncovered imitations sank in comparison with 2004. But Pfizer’s Viagra still remains as one of the most commonly imitated medications.

Read the article of Markenbusiness News here.

The boutique shops of Jade Palace Hotel in Beijing were raided by Beijing’s Haidian District Department of Industry and Commerce. It found more than 56 pieces of counterfeit brand clothing, Boss and Dunhill, in the hotel’s boutique shops.

Read the article at China Corporate Social Responsability (CSR) here.

Xu Fang of the Shanghai Daily portrayed Yan Jiaming, a civilian who has brought a series of lawsuits against local retailers including Foxtown, Lotus and Auchan for selling fakes or commodities that have passed their shelf life. However, some courts are refusing to deal with Yan’s claims.

““We found Yan isn’t a common consumer who turns to the court for help when he is cheated by stores. So he won’t be protected by the consumer protection law,” said Hu Hairong, a judge with the Yangpu court.”

Maybe Yan is a common consumer, maybe he is not. If he is a professional, he should even get more compensation for his knowledge and experience.

Read Xu’s article in the Shanghai Daily here.

According to the People’s Daily the Chinese people were angered by application of the trademark ‘Not made in China’ to the EU Office for Harmonization of Internal Market.

The Chinese arguments stated on a petition forwarde by the Beijing Trademark and Patent Agency against the application are:
it makes a serious confusion with ‘Made in China’;

• conveys severely misleading value to European consumers;
• causes great damage to the image and benefits of Made in China’ products;
• injures the Chinese people’s feeling deeply and violates the market rules,” says the petition put forward by the Beijing Trademark and Patent Agency.

According to the People’s Daily “Trade marks like ‘Not Made in China’ is an evident discriminative rhetoric against ‘Made in China’.

There were a lot of signatures; the Beijing Trademark and Patent Agency recorded 3,000 signatures, www.cnstock.com recorded 115 and Netease recorded 10,097 signatures and 357 messages. Then again the numbers are not that spectaculars on a population of 1,3 billion people.

These hurt feelings will be temporary. Remember when Japan was generally seen as a copycat. At the time the perception of a product with the ‘Made in Japan’ label was that the product must be a bad quality imitation. But Japanese industry moved very fast to the next levels; emulation, making the same product as good as the original and then improving on in; creation. Now the perception of ‘Made in Japan’ is that of quality and creativity. China should only copy Japan’s development…and then improve on it.

Read People’s Daily Online article here.

Ong Boon Kiat is writing for Security TechPlanet that China is pushing for its own Radio Frequency Identification (RFID) standard.

China is developing new standards (such as for digital audio and video files too, see here), to own intellectual property and have their own royalty-free standard. Read Ong’s story here.

Chris Israel, coordinator for international intellectual property enforcement at the U.S. Department of Commerce has a strategy how to deal with China. He testified his plan before the Senate Commerce, Science, and Transportation subcommittee:

• Engagement through the bilateral consultative mechanism of the U.S.-China Joint Commission on Commerce and Trade (JCCT), a high-level forum for resolving trade concerns and promoting commercial opportunities;
• Effective use of trade tools, such as the USTR’s annual “top to bottom” review assessing U.S.-China trade, the Special 301 review process for effectiveness of IPR enforcement and the dispute-resolution process of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS);
• Expanded law enforcement cooperation built on the existing U.S.-China Joint Liaison Group, which facilitates bilateral cooperation on criminal justice matters;
• Cooperation with the private sector, which serves as the “eyes and ears” for government enforcement efforts.

Read Susan Krause, the Washington File Staff Writer, here.

CRI republished Xinhua’s article about IPR courses given at primary schools. The example of young Liang Jinchao advising his father Liang Zhikai about the advantages of registering the name of his store as a trademark sounds more sympathetic than the measure of the HK governement that recruited youth as informers in the battle against internet piracy, more here.

The ‘pilot project’in Nanhai was so succesful it was copied in other places such as Beijing, Shanghai, Tianjin and Jiangsu too.

“Jiangsu Province, also an economic powerhouse in East China, for instance, has incorporated IPR protection into the educational plan of the province’s primary and middle schools during the 2006-2010 period and has decided to train more than 100,000 IPR protection professionals during the same period.”

Read more here

“The Legislation Protecting Intellectual Property Rights and its Enforcement in the European Union and the People’s Republic of China: A Comparative Study” is commissioned by the joint EU-China Trade Project (EUCTP). It’s written by Paul Ranjard, Huang Hui and Benoît Misonne.

“The study analyses common IPR practices (civil, administrative and crimi procedures as well as the role of customs) in China and four selected EU member states (France, Germany, the UK and the Czech Republic). It identifies and compares, from the point of view of an IP holder, the specific procedures available for handling IPR-related cases (Patents, Designs, Trademarks and Copyrights), how they are applied and their overall effectiveness. Where the
systems diverge, the study seeks to highlight the differences in a descriptive and factual manner. It is the largest and most in-depth EU-China comparative study on IPR’s that has been ever conducted (..).“ Read more here or download the study here directly.

Thank you Professor Hugenholtz of IViR for pointing out the study.

China Daily’s In Brief is briefing about the latest developments in intellectual property in China. The subjects are:

• Trademark applications, China the global leader in trademark registration applications;
• IPR Exhibition in Beijing;
• Pearson’s Longman Case;
• .cn domain increase;Counterfeit chocolate: Ferrero Rocher versus Montresor (Zhangjiagang) Food, more here;
• ‘Not made in China’ trademark, more here.

Read more here.

Joseph Pratt, media specialist at ICMD, is ranting about Starbucks in China for Daily India.

About the Starbucks (Xingbake) court case Pratt wrote:
“I wonder if the local coffee merchant thought he had a chance? Did the Chinese judge think long and hard about the various merits each side had? Were economic ministers in Beijing curious as to how this case would turn? There was no drama. An accomplished CEO like Schultz wouldn’t publicly refer to such lofty goals to succeed in countries like China without knowing he could reach it beforehand. Somebody in Beijing likes them, or again, likes the revenue they generate.“

Pratt supposes Starbucks is getting a red carpet treatment in China “not because they think the CEO is a nice guy, but because their product, its distribution channels and everything can’t be copied.“ Read more here.

In the Financial Express there is an article about Sri Lankan producers that urge the government to take up their case with WIPO to protect natural cinnamon.

China, India and Indonesia sell cassia as cinnamon.
“The problem has to be addressed,” agrees DM Karunaratne, director-general of the Sri Lankan Intellectual Property Rights office, the government ministry which protects brand names.

However, various countries treat cinnamon and cassia differently. The United States, for instance, allows the term cinnamon to be applied to cassia while in Britain cinnamon has to be the product of cinnamomum zeylanicum.” Read more here.

What Sri Lankan cinnamon planters need is a geographical indication for cinnamon, “a sign used on goods that have a specific geographical origin and possess qualities or a reputation that are due to that place of origin.” Read more on WIPO’s geographical indication here.

Nanjing Automobile Corp, owner of the MG and Austin IPR’s, is giving these British brand a second life. And Shanghai Automobile Industry Corp acquired the designs and intellectual property rights of the Rover 75, Rover 25 and related engines. Read Jin Jing’s story in the Shanghai Daily here.

“Qinghua (Tsinghua IP Dragon) University professor Huang Yanfu sued Founder (600601.SH) in Beijing Haidian People’s Court in late February for copyright infringement, reports China Legal News. According to Huang, Founder published an electronic version of a book he published in 2000 on the company’s Apabi Digital Library platform without his permission. Huang said he had never signed any agreement with Founder to license the book. The book covers Qinghua University’s campus culture in the 1920s and 1930s.”
Source Pacific Epoch.

Hai Xuan wrote that Tsinghua University received the highest number of honors among China’s colleges and universities at the awards ceremony for the 9th Biennial Chinese Patent Prizes, given by the State Intellectual Property Office. Read more here.

US Golf Manufacturers Anti-Counterfeiting Working Group has won a case against Xie Fu Ping, a golf retailer of Shanghai. Shanghai’s 2nd Intermediate People’s Court sentenced Xie to a 1-year term of imprisonment, suspended for 1 year, and ordered him to pay a fine.

Loo Shih Yann of Baker and McKenzie co-ordinated the efforts on behalf of US Golf Manufacturers Anti-Counterfeiting Working Group said that this was the first criminal conviction against a counterfeit golf retailer in China.

The members of the Working Group include companies and brands such as Acushnet Company – Titleist, FootJoy and Cobra Golf; Callaway Golf – Odyssey, Top-Flite and Ben Hogan; Cleveland Golf-Never Compromise; Nike; PING; and TaylorMade-adidas Golf and Maxfli.

Read the article at Golf365.com here.

Spokane-based Lee & Hayes PLLC, an intellectual property law firm is considering opening offices in China soon.

Read more in the Spokane Journal of Business here.

Sun Huapu, the Chief Judge of the Supervisory Tribunal of the Supreme People’s Court made public that China’s supreme court has named a Judicial Court of Intellectual Property to handle such cases nationwide.

The idea is that such a judicial court would be established in Beijing. Emma Barraclough of MIP wrote:
“But there is still no consensus about what form an IP court should take. One possibility is that it would just hear patent cases, while another is that it would accept all appeals from civil, administrative and criminal cases dealing with intellectual property. Officials are studying systems used in other countries.“ Read more here.

Blaming and shaming
The Supreme People’s Court has launched a web site to publicize product piracy cases, to blame and shame and discourage pirates.

Much ado about nothing?
Jiang Zhipei, a supreme court judge who handles product piracy cases, was surprised that foreign governments make strong complaints about piracy:
“Some 95 percent of product piracy cases involve violations against Chinese companies, with only about 5 percent stemming from complaints from foreign companies, Jiang said.
“So it’s a strange phenomenon that foreign governments, and some U.S. congressmen, have made very strong complaints about this,” he said.”“

Read Dean Visser’s Associated Press story on Chron.com where you can watch a telling picture of pirated DVD’s (already including Ang Lee’s Oscar winning Brokeback Mountain) on sale today on a sidewalk in Beijing for 5 Yuan (US$60 cents).

SIPO Poetry

Tian LiPu, SIPO’s commissioner is looking back and forward (“the year 2006 is the very first year of the ” eleventh five – year plan””) and becomes poetic in the process:

“In the last five years, the idea of IP “flied into common civilian’s house”, ending the period of ” being hidden in an unknown place”.“

Read ‘Grasp the New Opportunity, Create the Great Expectation’ here.

previous TGIF next

Randy Conat of ABC12.com wrote an article about counterfeit auto parts in the US. MEMA says about 80 percent are coming from China. According to the US Federal Trade Commission, counterfeiting costs the global automotive parts industry $12 billion a year; $3 billion of that total is in the United States. More facts here.

Read Conat’s story here or see the video here

China announced it will draft or revise 17 laws, regulations, and measures relating to trademark, copyright, patent and customs protection, and clarify six judicial interpretations. In order to raise the general public’s awareness of intellectual property rights protection, 21 training programmes will be organized this year.

Read the article in the People’s Daily here and WTOP here.

Jørgen M. Clausen, CEO of Danfoss, a Danish manufacturer of valves, compressors etc. was interviewed about this company’s strategy to make China their second home market. Of cource, William E. Hoover Jr., the interviewer, asked Clausen how he protected Danfoss’ intellectual property.

Jørgen Clausen said that may Chinese companies copy their products, but that Danfoss has adopted a policy of going after them systematically, especially the ones that export the copies from China to other countries. (..) “We managed to locate the Chinese company manufacturing the copies, documented our case well, and then went to the police. The police raided the company, confiscated the goods, and the owner was sent to jail.”

After that the PR agent of Danfoss encouraged Chinese newspapers to cover the events and praise the police and judge.


Read The Quarterly interview with Clausen here (free registration).

Too high an esteem of authoritative sources could backfire, if people don’t dare to express original thoughts. Wu Jiayin looked for the ShanghaiDaily into the world of academia and found students that copy too much and even aTshinghua University associate professor who invented 7 essays to get the job.

Read Wu Jiayin’s article for the ShanghaiDaily here.

On Chinese patchwriting here.

Meg Utterback, attorney at Thelen Reid & Priest, wrote an illuminating article about enforcement of IPR in China.

Administrative enforcement
Trademark infringement: apply in writing to SAIC or one of its local bureaus.
“If the application is rejected, the applicant will be notified within fifteen days. If accepted, SAIC may investigate the allegations, inspect the goods, and obtain relevant documents. Based on that review, SAIC may issue an order or decision enjoining the infringement. Before the decision, the parties are notified and given an opportunity to be heard. A party may appeal the decision to the People’s Court.”

Copyright infringement: apply to the NCA (中文）.
“The application, if accepted, will trigger an investigation. If rejected, the applicant will be notified within 15 days. Post-investigation, NCA will generate an “Opinion on Administrative Penalties for Copyright Infringement.” Before the decision, the parties are notified and have an opportunity to be heard on the proposed decision. A party may appeal the decision to the People’s Court within three months of issuance.”

Patent infringement: apply in writing to the SIPO. The process here is similar to that for other infringements, in that an investigation is followed by an order against the infringer, with an opportunity to be heard. The order may be appealed to the People’s Court.
However, more commonly the subject of civil court proceedings and are usually not submitted to administrative proceedings. Parties can seek injunctive relief as well as damages for patent infringement. One difference in patent infringement cases is that there is often a conciliation process before the administrative proceeding commences.

Civil court proceedings: Go Forum shopping
Utterback gives an overview of where the courts reside that rule about IPR cases. These are, e intermediate courts and special intellectual property courts in Beijing, Shanghai, Tianjin, Chongqing, Qingdao, Dalian, Yantai, Wenzhou, Fushan, Shenzhen, Zhuhai, Shantou and Xiamen.
In the district courts of Shanghai; Pudong and Huangpu and Beijing; Chaoyang and Haidian they have jurisdiction for trademark, copyright and unfair competition, but normally not patent.
“Beijing courts seem to see more complicated patent cases, while Shanghai courts have traditionally seen more trademark and unfair competition cases. Factors in deciding jurisdiction include place of business, situs of performance of contract, and situs of infringing activity. If jurisdiction is improper, cases are usually transferred, not dismissed. Thus, forum shopping is quite common and jurisdiction should be carefully considered before suit.”

Utterback’s conclusion:

“Each process has its attributes.

• Administrative procedures in China are swift and less expensive. They also serve to improve relations with the government agency and educate the relevant government authorities about products and the need for protection of intellectual property.
• Civil remedies offer the benefit of both injunctive relief and damages.
• Finally, criminal prosecution can stop the infringer, who might otherwise covertly move and rename the operations in response to a cease and desist order.

Before embarking on any recourse, the foreign company must define its objectives, liaise with appropriate members of the PRC Government and then weigh the options in conjunction with the company’s overall China business plan.“

Read Utterback’s article on TR & P’s site here or Mondaq here.

Cedric Lam, attorney at Dorsey & Whitney LLP, wrote an overview of last year’s IP in China developments.

Among other things Lam summarised the thresholds for criminal enforcements:

Trademark counterfeiting

Maximum punishment of three years’ imprisonment and/or a fine:

• For individual counterfeiters: illegal turnover exceeding having US$6,200 or US$3,700 if two or more registered trademarks are involved;
• For manufacturers/vendors: dealing with more than 20,000 copies of counterfeit trademark representations or 10,000 copies if two or more registered trademarks are involved.

Maximum punishment of seven years’ imprisonment and a fine:

• If illegal turnover exceeds US$31,000 or US$18,500 if two or more registered trademarks are involved, or where more than 100,000 copies of counterfeit trademark representations or 50,000 copies if two or more registered trademarks are involved.

Copyright piracy

Maximum punishment of three years’ imprisonment and/or a fine:

• For individual counterfeiters: who engage in copyright infringement for the purposes of gain and have an illegal turnover exceeding US$6,200, have an illegal income exceeding US$3,700 or reproduce more than 1,000 unauthorised copies of copyrighted works;
• For indiviual resellers who engage in copyright infringement for the purposes of gain and have an illegal income exceeding US$12,400.

Maximum punishment of seven years’ imprisonment and a fine:

• If illegal turnover exceeds US$31,000, the illegal income exceeds US$18,500 or where more than 5,000 unauthorised copies of copyrighted works are involved.

Passing off patents
Maximum punishment of three years’ imprisonment:

Patent infringement is not a criminal offence in China. However, passing off the patent of another (eg, by reproducing a patent number without the authorisation of the patent owner) can incur criminal sanctions and carries a maximum and/or a fine where the illegal turnover exceeds US$24,800 or US$12,400 if two or more patents are involved, the illegal income exceeds US$12,400 or US$6,200 if two or more patents are involved or the losses caused to the patent owner exceed US$62,000.

Lam: “However, the distinction between individual and corporate IP wrongdoers that is made under the original law remains. Nonetheless, the judicial interpretation makes it easier to hold corporate counterfeiters criminally responsible. The thresholds for corporate counterfeiters have now been reduced from five times to three times those applicable to an individual. Notably, the former rule that made it easier to bring criminal prosecution against repeat offenders has been removed. The judicial interpretation clarifies the meaning of certain terms (eg, ‘knowingly’) that are used in defining the IP crimes above. Furthermore, it stipulates that persons who knowingly assist counterfeiters (eg, by providing funding, premises or transportation) can be criminally charged as accomplices.“

Read more of Lam’s overview on the site of Dorsey here (pdf) or on Mondaq here .

Attorneys Sebastian Hughes, Barbara W.K. Mok and Iain C.L. Seow at Jones Day and Adelaide Yu of Yu and Partners, member of Rouse & Co International, advocate a broader interpretation of the Hong Kong Companies Ordinance provisions to prevent ‘shadow companies’ registering in the Companies Registry.

Hughes c.s.:
“These bogus companies are incorporated by mainland Chinese shareholders under Hong Kong’s liberal company registration procedure, using names that mimic well-known trademarks. They are then used to create sham licences or letters of authorisation purporting to authorise use of the trademarks in China.“

Emma Barraclough quoted Anne Choi of Wilkinson & Grist about these shadow companies for the magazine Managing IP: “We have seen cases where factories in China that have made products that infringe another company’s trade mark have been sent an authorization letter from one of these companies to use the infringing logo. We have to tell the Chinese authorities that are conducting a raid that this is not the same company that owns the trade mark,” said Choi. “[Making fakes is] the whole point of registering these company names and that’s why the problem is so rampant.“

The Hong Kong Companies Registry is interpreting the Companies Ordinance restrictive so it cannot take effective measures in the case a well-known brand owner wants these shadow companies. Only when the company name in question is virtually identical to an existing registered company name.

Relevant provisions of the Hong Kong Companies Ordinance include:

Hong Kong’s Companies Ordinance Chapter 32, Section 22(2):

Where a company has been registered by a name which-
(a) is the same as or, in the opinion of the Registrar, too like a name appearing at the time of the registration in the Registrar’s index of company names;(b) is the same as or, in the opinion of the Registrar, too like a name which should have appeared in that index at that time; or(c) is the same as or, in the opinion of the Registrar, too like the name of a body corporate incorporated or established under any Ordinance at the time of the registration,
the Registrar may within 12 months of that time, in writing, direct the company to change its name within such period as he may specify.(Replaced 60 of 1990 s. 5)[cf. 1985 c. 6 s. 28 U.K.]

Section 22(2):
which enables the Registry to direct a company to change its name if, in the opinion of the Registry, it is “the same as” or “too like” an existing registered company name, provided an application is made to the Registry within 12 months of the date of registration of the company.

So the Registrar of Companies is empowered to direct a company to change its company name if it is the same as or “too like” the name of a company that has already been registered, however the Registrar of Companies interprets “too like” in a narrow way. If the new company name indicates it is involved in a different kind of business, it is probably not considered as “too like” by the Registrar.

Section 22A:
which enables the Registry to direct a company to change its name if, in the opinion of the Registry, “the name by which a company is registered gives so misleading an indication of the nature of its activities as to be likely to cause harm to the public.” There is no time limit for an application under Section 22A.

1) If in the opinion of the Registrar the name by which a company is registered gives so misleading an indication of the nature of its activities as to be likely to cause harm to the public, he may direct it to change its name. (2) A direction given under this section to a company shall, if not duly made the subject of an application under subsection (3) to the court, be complied with within a period of 6 weeks from the date of the direction or such longer period as the Registrar may think fit to allow.(3) A company to which a direction is given under this section may, within a period of 3 weeks from the date of the direction, apply to the court to set the direction aside, and the court may set it aside or confirm it; and if it confirms it, it shall specify a period within which it shall be complied with.(4) If a company makes default in complying with a direction under this section, it shall be liable to a fine and, for continued default, to a daily default fine. (Amended 7 of 1990 s. 2)(5) Subsections (4) and (5) of section 22 shall apply in relation to a change of name under this section as they apply in relation to a change of name under that section. (Added 6 of 1984 s.13)[cf. 1967 c.81 s.46 U.K.]

Section 291 is also relevant. It empowers the Registry to strike off a company. However, before the Registrar of Companies will invoke Section 291, it must be satisfied that the company is not carrying on business or in operation. The section requires the Registrar of Companies to first send a letter to the company that is the subject of a complaint inquiring whether the company is carrying on business or in operation. As long as the company replies simply saying that it is carrying on business the Registrar cannot proceed to strike off the company under the Section 291 provisions. The company is not required to prove whether such statement is true or not.

According to Adelaide Yu, partner of Yu & Partners, a member of the Rouse & Co International Group, in Hong Kong, these companies are just a sample of the companies whose trade marks have been included in the names of unrelated companies registered in Hong Kong:

• Audio Panasonic (HK) Electronics Limited;
• Panasonic Air Conditioner Industry (HK) International Limited;
• HK Toshiba Appliances Limited;
• Japan Toshiba Electricity (HK) Co Limited;
• HK Universe Sanyo Appliance Int’l Group Limited;
• HK Int’l Sanyo Group Share Limited;
• Japan Shiseido (HK) Cosmetics Limited;
• Japan Shiseido (Hong Kong) International Cosmetics Group Limited;
• USA Adidas (Int’l) Industry Development Group Ltd;
• USA Adidas (Int’l) Sports Goods Co Ltd;
• Hong Kong Philips Lighting Electric Limited;
• Philip Electric (HK) Group Ltd.

Yu is pointing out that it’s very easy to register a company and trademark in Hong Kong. “Since 2004, companies have only needed to have one director and one shareholder. This has made it even easier for counterfeiters in China to incorporate shadow companies. And it has become quicker and easier to register a trade mark in Hong Kong since a new trade mark law came into force in April 2003. The new law says that so long as the mark being applied for is inherently distinctive, the Hong Kong Trade Marks Registry will accept it. “

Read Yu’s article for Managing IP here and Hughes’ article for the Financial Times here and the Jones Day article here.

“Asia Pacific regional office of the International Federation of the Phonographic Industry (IFPI), the music business’ main lobbying arm, sent Yahoo China cease-and-desist warnings on behalf of the four major international labels in December.“ Like Baidu.com before, Yahoo.cn is deep-linking to unlicensed mp3-files and ringtones (via http://www.3721.com, with the Y! brand) , and unlike Baidu.com before, to unlicensensed streaming music.

Read Tim Culpan’s article for Reuters here.

Chief Justice of the IPR Tribunal of the Supreme People’s Court Jiang Zhipei is claiming a bigger role for China in drafting international rules on IPR. Read CRI’s article here.

After the victory of trademark holders against the landlord of Silk Alley market, Philip Lin, a columnist of Pacific Epoch wrote that fakes are now being concealed. Now Ann Mah wrote for the International Herald Tribune that there is still a strong market for ‘quality’ fakes. She is interviewing victims of fashion that distinguish 3 levels of fakes, A, B and C. Read Mah’s article ‘Fakes still have their niche in China’ here.

A&L Goodbody, AB Tetra Pak, Albihns Malmo, Arnold & Porter, AstraZeneca, Bawden & Associates, Boult Wade Tennant, British Sky Broadcasting, De La Rue Identity Systems, DLA Piper Rudnick Gray Cary, Dow Corning Corporation, DSM Patents & Trademarks, Dyson, ElkemFirmenich, France Telecom R&D, FSC Grindeks, Gramm Lins & Partner, Huntleigh Technology, Huntsman Polyurethanes, Imperial Chemical Industries, InfineumJT International, Marks & Clerk, MCPS PRS Alliance, MIE Hungarian IP Association, Murgitroyd & Company, Nokia, Novartis International, Nycomed, OHIM, Philips Intellectual Property & Sta, Procter & Gamble Services, Richemont International, Sandvik Intellectual Property, Shoosmiths, Syngenta Crop Protection, Virgin Enterprises, WAGO Kontakttechnik, Wragge & Co and Zacco Denmark.

Are you joining these companies at the IPR in China Conference, Monday, March 20th, at The Café Royal in London? IP Dragon is.

ChinaDaily briefs about some IPR related subjects:

Walt Disney versus Mickeyle (no not Mickey), a Shenzhen based children’s clothing manufacturer in a trade mark infringement law suit before the Shenzhen Medium People’s Court on February 20. “Walt Disney asked Mickeyle to stop using its trademark and demanded reparations of 600,000 yuan (US$74,600). “

In March 2003, the Chengdu Administration of Industry and Commerce found that a local information technology company had installed 55 pirated copies of Adobe software in 22 of its computers for commercial purposes.” Adobe Systems filed a lawsuit against the company in the Chengdu Intermediate People’s Court and after two years it received 300,000 yuan (US$37,300) in reparations. The fourth time Adobe had won in China in an IPR case and the first such victory for an international software company in western China.

Criminal enforcement of IPR: “The People’s Court at Ouhai in Wenzhou, East China’s Zhejiang Province, recently sentenced ZIPPO lighter counterfeiter Zhen Shengfen to prison for one and a half years and fined him 100,000 yuan (US$12,400). In March 2005, the Wenzhou Ouhai Administration of Industry and Commerce searched a department in a routine check and found 32,980 counterfeit ZIPPO lighters and 6,000 fake lighter shells. All the lighters and shells were labelled “ZIPPO” and “MADE IN USA”. The administration immediately informed US authorities of the situation. Zhen was quickly arrested. The counterfeit lighters had an estimated average market price of 6.2 million yuan (US$770,000).”

Wu Yi, the Chinese Vice-Premier and also the head of the State IPR Protection Working Group, has urged domestic businesses to shoulder greater social responsibility for the protection of IPR. during a conference on February 23 in Beijing on IPR protection and independent innovation. Conference participants, including China Construction Bank, China Telecom, Lenovo, and Siemens China, signed a written proposal appealing to businesses to use only legal software. Wu pledged that the Chinese Government will continue to push IPR protection in the years to come, and promised to set up reporting centres in 50 major cities throughout the country.

Besides a new case of preregistering in Hong Kong well-known Chinese trademarks in order to ransom them, is covered. IP Dragon will elaborate on this practise. And according to ChinaDaily Changhong’s chip and Hisense’s Hiview chip developed last year are seen as evidence of Chinese TV companies’ shifting focus from TV assembly to technological research and development.

Read the ChinaDaily brief here.

17-year old Fake Shoes from China Importer Faces 9 Months Prison

Oniya, also known as “The Hussleman”, is a 17-year old boy who will have to serve nine months in prison, because he imported fake shoes and other products from China.

You would think there must be better sentences for such young entrepreneurial types.

“Fort Bend County prosecutors call this one of the largest counterfeit sales operations they have ever come across. “

Read Kevin Quinn’s story for ABC13.com here.

previous TGIF next

Watchers of the US-China IP conflict are starting to yawn, because the president’s trade policy agenda 2006 written by Robert J. Portman, US Trade representative, March 1st, provided nothing new about the conflict between the US over intellectual property protection in China.

“Intellectual property theft, counterfeiting, and copyright infringement in China continue to be a source of serious concern for the Administration. Chinese officials have made some progress to protect intellectual property, but the United States will continue to work with the Chinese government to demonstrate more reliable and consistent progress in this area.“

No targets, no deadlines, no nothing.

Read here the document.

And the relevant passage in the Trade report itself is a good overview of the last four years, but it does not reveal anything new:

“Intellectual Property
China has undertaken substantial efforts to implement its commitment to overhaul its legal regime to ensure the protection of intellectual property rights in accordance with the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement). While the United States continues to work with China in some problem areas, China has done a relatively good job of overhauling its legal regime. However, China has been much less succesful in enforcing its laws and regulations and ensuring the effective IPR enforcement required by the TRIPS Agreement. With most in U.S. industry reporting no significant reduction in IPR infringement levels in 2005, IPR enforcement remains problematic. Counterfeiting and piracy in China remains at epidemic levels and cause serious economic harm to U.S. businesses in virtually every sector of the economy.

The Administration places the highest priority on imporving IPR enforcement in China. Building on its engagement with China at the April 2004 JCCT meeting, the United States took several aggressive steps in 2005 in an effort to obtain meaningful progress. First, the United States conducted an out-of-cycle review under the Special 301 provisions of U.S. trade law, which involved a systematic evaluation of China’s entire IPR enforcement regime, supported by submissions from U.S. manufacturers and businesses to document IPR infringement to the extent possible. At the conclusion of this review in April 2005, the Administration elevated China to the Special 301 “Priority Watch”list and set forth a comprehensive strategy for addressing China’s ineffective IPR enforcement regime, which included the possible use of WTO mechanisms, as appropriate. The United States immediately began to pursue this strategy during the period prior to the July 2005 JCCT meeting, as the United States sought to strengthen the commitments that China had made at the April 2004 JCCT meeting and to obtain China’s commitment for greater involvement of ifts police authorities in IPR enforcement matters.

China subsequently agreed to take a series of specific actions designed to increase criminial prosecutions of IPR violators, improve enforcement at the border, counter piracy of movies, audio-visual products and software, address Internet-related piracy and assist small- and medium-sized U.S. companies experiencing China-related IPR problems, among other things. Becuase lack of transparancy on IPR infringement levels and enforcement activities in China has hampered the United States’ability to assess the effectiveness of China’s efforts to improve IPR enforcement since the April 2004 JCCT meeting, the United States also submitted a request to Chinaunder Article 63.3 of the TRIPS Agreement in October 2005. The United States’ request, made in conjunction with similar requests by Japan and Switzerland, seeks detailed information from China on its IPR enforcement efforts over the last four years. China’s response to these requests, anticipated in early 2006, will help the United States to further evaluate whether China is taking all necessary steps to address the rampant IPR infringement found throughout China.

The United States is committed to working constructively with China to significantly reduce IPR infringement levels in China and continues to devote extra staff and resources, both in Washington and in Beijing, to address the many aspects of this problem. At the same time, the United States remains prepared to take whatever action is necessary and appropriate to ensure that China develops and implements an effective system of IPR enforcement, as required by the TRIPS Agreement.“

Read the report pages 173 and174 here.

China reacted March, 2nd: “Should there be disputes or problems in the economic and trade area, or in the area of intellectual property right protection, we hope to appropriately solve them through an attitude of equality, development and cooperation,” Chinese Foreign Ministry spokesman Qin Gang said at a regular press briefing stressing not to politize the bilateral trade issues with the US. Read the TMCNet article here.

with a here

National Copyright Administration (NCA) official, Long Xinmin said that 95 percent of the local governments in China have used genuine software. This comes as a surprise just a week after US Commerce Secretary Carlos Gutierrez Gutierrez has made pirated government software a top priority, see here.

Long wants to push large-size enterprises to use genuine software this year, while ensuring that all government offices will use genuine software. Besides the NCA targets online piracy and disk copying piracy.

“Long said that the copyright authority will also strengthen its cooperation with international partners in the field, and prepare for the implementation of the World Intellectual Property Organization’s WCT and WPPT treaties.”

CRI has the story here and Pacific Epoch has a summary here.

During exhibitions rights holders want to steal the show with prototypes of their new products, but instead, oftentimes their intellectual property got stolen by pirates.

A new regulation issued by the Ministry of Commerce, SAIC, NCA and SIPO must decrease the risk that exhibitions become cesspools of vice, so that IPR’s are better protected.

exhibition organizers have to strengthen the protection and auditing of IPR protection of exhibits.

Exhibitions that will be held for over three days should established an office to handle complaints about IPR infringement. Corresponding departments are to accept and hear cases involving IPR infringement.
Exhibition organizers and participants that have infringed IPR may be prohibited from holding or joining exhibitions again.

The regulation can be seen as a result from a declaration of the Chinese exhibition industry:
“In January this year, about 1,000 organizations in China’s exhibition industry jointly signed a declaration, promising to rule out any IPR infringement in their exhibitions.”

Xinhua reports the story here.

I’ll be back on Friday, March, 3rd.

“Not made in China” trademark

Gibraltar based Alvito Holdings has applied to register the text mark ‘Not made in China’ and two graphical marks at the EU’s Office for Harmonisation in the Internal Market (OHIM). OHIM has already published the application here.

In the US Alvito Holdings tried to register the same marks but a woman named Teresita Pastoriza, applied sooner.

Emma Barraclough wrote for MIP:
“But Dennis Bi, a trade mark attorney with BTA Trademark and Patent Law Office in Beijing said that allowing someone to register the phrase as a trade mark was “not good for China”.
He added: “It violates the dignity of China and hurts the feelings of the whole Chinese people.
We have already told the IP firm that we work with in the US that as soon as the mark is published in the US Patent and Trademark Office Gazette then we will oppose it….We hope that the Chinese Trade Mark Association and the authorities concerned will assist us to submit the case to the local trade mark authorities through diplomatic channels and let them refuse the applications.“

However OHIM’s decision to accept the “Not made in China” mark contrasts with a ruling made by the USPTO‘s appeal body, the Trademark Trial and Appeal Board, in 2004. The Appeal Board backed an examiner’s decision rejecting an application in 2003 to register “Not made in France” for clothing.

IP Kat‘s Ilanah Simon is asking: “is a mark which tells consumers about the qualities that goods do not have descriptive?”

Read more about it in the MIP here, in the People’s Daily here or in The Hindu here.

Just see this

The above mentioned Beijing Trademark & Patent Agency wants to protect your IPR but instead has an interesting moving banner on top: Just …. See here (read carefully).

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Martin Crutsinger of the Associated Press wrote that US Commerce Secretary Carlos Gutierrez, the former Kellogg’s (cereals) CEO, has first hand IP in China related experience (he lost a court case in 1996:

“The Chinese court ruled that Kellogg’s did not have the right to keep competitors from using the famous rooster on rival corn flakes boxes.“

Before the rooster crows twice, thou shalt deny me thrice.
But Gutierrez has come back to deal with the problem in his new function:

“…the Chinese government’s use of counterfeit software would be one of the top issues the Bush administration would raise in a series of mid-April meetings with the Chinese including the visit of Chinese President Hu Jintao to Washington on April 24. “

Read more here.

Lately, the world has seen that parody can be a dangerous affair. Instead of shouting murder or burning some buildings, Chen Kaige has denounced an online parody of his latest movie The Promise as immoral and instructed his lawyer to look into the matter. That’s civilisation.
Read Sohu.com’s story here.

Nick Farell wrote for The Inquirer that, Audio Video Coding Standard (AVS), a Chinese audio/video codec, is on the verge of becoming a national standard. According to the Electronic Times it will even take over from MPEG-4 and WMV-9.

“The Chinese are keen to resolve a problem that the government has had with having to rely on foreign Intellectual Property and developing its own standards does solve this.”

Read more here and here.

China is developing its own RFID standard too, read more here.

Philip Brooks’ Patent Infringement Updates (which is worth a recommendation) has another interesting post about Human Resources at two law firms in China to strengthen their intellectual property practice in China. Read here.

According to Consumers International (CI) China protects copyright holders a bit too much. Say what? CI has written a report about China’s protection of copyrighted educational material, that is hampering students’ access to knowledge, even when the Berne Convention and TRIPS don’t demand it to such an extent.

On page 50 of CI’s report you can find CI’s opinion on how China’s use of the Berne Convention and TRIPS is too restrictive and is “pricing consumers out of knowledge.” CI is not only pinpointing a problem, but is also giving China free advice on how to fix it. Read more here: CI’s report.

Donald C. Clarke, professor of Law at George Washington University Law School, blogs at Chinese Law Prof Blog. He has a post about two IP-related job opportunities at the US Embassy in Beijing open to US and Chinese citizens.

Read more here