Writers versus Baidu: Does Baidu “Know” What It Is Doing?

When people outside the field of intellectual property rights strike a conversation with you about something related to IP you know it has caught the public imagination. 50 Chinese writers united in the ‘Publishing World Anti-Baidu Infringement Coalition’ have written an open letter on March 15 in which Baidu was accused of making available via its Wenku site copyrighted works without their prior approval.

百度文库

What is Baidu Wenku?
It’s a document sharing platform launched November 2009 under the name Baidu 百度 Zhidao 知道 which means Baidu “knowledge” or Baidu “knows”. In December 2009 the name was changed into Baidu Wenku 文库 literally collection of documents. Internet users are given an incentive to upload documents, because they are getting point for it. With these points they can “buy” premium documents. According to Steven Chow of China Online Marketing Baidu Wenku has over 200 million documents. Read here.

Baidu said that it already had measures in place: A website were copyright holders can complain http:/tousu.baidu.com/wenku. Baidu says that it deletes infringing content within 48 hours. According to Baidu it has received and deleted tens of thousands of infringing items uploaded by internet users. The question is, according to China’s laws and regulations, when is an online service provider such as Baidu contributorily liable? For this one needs to peruse the Regulation on Protection to Network Dissemination of Information, which was implemented in July 2006 and is still very relevant.

Article 15: “The network service provider, after receiving notification from the owner, shall
immediately delete or disconnect the link to the work, performance, or audio-visual recording suspected of infringing on an other’s right, and meanwhile shall transfer the notification to the service object of the work, performance, or audio-visual recording; if the network address of the service object is not clear and the notification cannot be transferred, the network service provider shall publicize the content of the notification through the information network.”

Article 22: “Under the following circumstances, a network service provider that provides information
storage space to a service object or provides works, performances, or audio-visual recordings to the
public through the information network, shall not be liable for compensation:
1. Having clearly mentioned that the information storage space is provided to the service object, and also having publicized the name, contact information, and web address of the network service provider;
2. Having not altered the work, performance, or audio-visual recording provided to the service object;
3. Having not known and having no justified reason to know that the works, performances, or audio-visual recordings provided by the service object have infringed upon an other’s right;
4. Having not directly obtained economic benefits from the service object’s provision of the work, performance, or audio-visual recording;
5. After receiving the notification from the owner, having deleted the work, performance, or audiovisual
regarded as infringing on the right of the owner according to the provisions of this regulation.”

One could argue that Baidu “altered the work” by categorising it, and should have known that internet users upload pirated works. It even gives an incentive for internet users to upload, regardless of whether the work is pirated or not. Wang Ziqiang/Zhicheng, director of the copyright management department of the National Copyright Administration of China (NCAC) was quoted by Mu Xuequan of Xinhua saying that copyright law enforcement organs will determine whether Baidu has violated relevant laws and regulations after their investigation. Read here.

The People’s Daily reports that Baidu has deleted on March 30th, the pirated works from its Wenku site.
April 11, Baidu will unveil a “copyright DNA identification” technology that should prevent internet users to upload pirated works.

“Industry insiders said that as China’s largest search engine, Baidu’s move of taking down all pirated literary works indicates that free stuff on the Chinese Internet may be gradually disappearing.”
Quite a sweeping statement. Read here.

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Unoriginal trademarks unpopular in Quanzhou. Good news or wishful thinking?

Hao Nan of China Daily wrote about the trade at the Quanzhou Trademark Trade Center in Fujian that almost dried up. Read here. Why did not Adam Smith’s invisible hand work? Was the invisible hand here invisible, to quote Joseph Stiglitz, because it was not really there? Hao writes that the problem was that
sellers had an inflated expectations of the price of their brands.

Ge Yongli, general manager of the Fujian Asia-Pacific Intellectual Property Organization was quoted by Hao Nan as saying: “They quote high prices not because their trademarks have such great value but due to a strong resemblance to some international renowned trademarks.”

Stan Abrams of China Hearsay writes: “That doesn’t sound good at all. Not surprising, though. This is the short-cut mentality that you get with emerging markets, and despite the tremendous numbers of trademark filings in China, the commercialization side is still pretty young.” Read here.

This impasse might be a positive sign. Are the buyers just realistic, that in this time and age they better start with an original name to build up their own reputation? Wishful thinking? At the moment it might be not so nice for the people working for the Quanzhou Trademark Trade Center if they have nothing to do. But I am sure the market will come up with new realistic price, it always does. I hope in this price the possibility of getting sued for trademark infringement is factored in.

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IP Dragon Checks International Clothes Market in Beijing: “Waterbedding” Effect of Trademark Enforcement

Building of the International Clothes Market 

While all eyes are fixed on Silk Market in Beijing, IP Dragon focuses its attention to the International Clothes Market in Beijing to check whether counterfeit apparel and bags were on sale.

Let’s first take a look at the notorious Silk Market. Tim Smith of Rouse Beijing sent his intern Dominic to take a look at Silk Market. He witnessed that the Beijing Administration for Industry and Commerce (AIC) had put a notice on the wall in Chinese that stated that merchants in Silk Street that were caught selling counterfeit items bearing a list of foreign brands, including Prada, Chanel, Burberry, Givenchy, Boss, Hermes, Miu Miu, North Face would be subject to administrative penalties. If the landlord knowingly permitted the sale of any such goods they were held contributorily liable and it was made clear that they be subject to administrative measures and criminal punishment. It was Dominic’s observation that no counterfeit products of the trademarked brands that had filed lawsuits against the landlord, and whose names were mentioned on the notice were on display in Silk Street.

IP Dragon went to the International Clothes Market (金jin 开kai 俐li 德de 国guo 际ji 服fu 装
zhuang 市shi 场chang), which is located near the Beijing Zoo. That it is not hard to find counterfeit products at the second floor of the International Clothes Market is an understatement: counterfeit use of famous foreign brands is omnipresent. From adidas sweaters with hood for 20 RenMinBi (a little over 3 dollar) to North Face jackets for 80 Renminbi. Robe di Kappa, Calvin Klein (but then written as Calvin Kiein), Levi’s, Björn Borg. I am not sure whether the design of the pattern on the adidas sweater was also copied. The counterfeit manufacturers also expand the model and product range of famous brands. For example a non-existent LV bag model and “Louis Vuitton” underwear. Text continues below.

The area was patrolled by a police officer. But it seemed not to be his priority. The landlord liability cases in 2005, 2006 and 2010 have shown that private companies can do something about the counterfeit problems at markets by suing the landlord (owner) of the market and the second-hand landlord (the market management company). Check the excellent presentation of Dr. James Luo, Managing Partner of Beijing’s Xiang Kun Law Firm about the subject, here. The question is whether the problem just moves away from a place where it seems contained to other places, just like a waterbed. Are the counterfeit products of these active brands not sold in Silk Street, but via a plethora of other channels?

“Calvin Kiein”

“North Face” jackets for 80 RMB

“adidas” sweater for 20 RMB

Robe di Kappa
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IP Dragon Regains Blog from IP Komodo Dragon

Photo by Andrew Wilkinson (some rights are reserved)

After one month in which IP Dragon went to Beijing and Hong Kong to do research to the IP scene in these respective cities, he took the Dragon Temple Long Hua line 龙华线 back home to his den. He was a little nervous whether his cousin, the IP Komodo Dragon behaved a little bit while he stayed at his den. Beside some rotting carcases on the ground, the contents of the kitchen plundered and some pets of the neighbours missing, IP Dragon found that in his absence, IP Komodo Dragon revealed himself to be worse than the sorcerer’s apprentice. Instead of frying him on the spot with his breath he sent the slimy scoundrel back to his archipelago, where that kind of behaviour might be tolerated. After cleaning the den IP Dragon found that the Indonesion reptile showed himself to be not only a less than hygienic, but worse, a blogjacking creature. Then again, when he started reading IP Komodo Dragon’s posts in the month of March he could only determine that talent for everything IP runs in the family, and his mood became milder, even enthusiastic. In the end IP Dragon came to the conclusion that he is going to ask his Indonesian counsin to write once per month on IP Dragon. That might straighten him out. In the mean time IP Dragon recommends his audience to regularly check his cousin’s site, although it might not be for the faint of heart: IP Komodo Dragon.

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Reptilian reportage

IP Komodo may have a forked tongue, but he speaks the IP truth! He has trawled this weeks China IP news and the hottest topic appears to be sightings of IP Dragon, with fiery tongue, sighted in the vicinity and very unamused by IP Komodo’s blogjacking. IP Komodo may need to beat a hasty return to Indonesia.

IP Trading a disappointment. Quanzhou Trademark Trade Center in Fujian has more than 5,000 trademarks on its books for sale, but “only 30 deals have been completed, despite the fact that many people have shown interest” Holding out for high prices, most trademark owners are declining offers. The news doesn’t tell us what is for sale.

Dilution difficulties. Swiss watchmaker OMEGA has sought to cancel a local Shenzhen company’s AOMEGA mark for cosmetics on the grounds of similarity, but lost at the Trademark Review and Adjudication Board (TRAB). OMEGA has appealed to the courts. This is one of a constant succession of such well known mark dissimilar goods cases.

China patent stats increase! Domestic applications for invention patents increased 27.9 percent in 2010 from 2009, said a senior patent official here Tuesday. SIPO received more than 391,000 applications for invention patents in 2010, the world’s second most, said He Hua, State Intellectual Property Office deputy director, at a Nanjing meeting of heads of local intellectual property rights offices. 74.9 percent were submitted by domestic applicants, he said.

Guest post by IP Komodo Dragon

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China civil litigation analysis

IP Komodo has been playing with the Rouse litigation analysis tool Ciela.

Over 12,000 IP decisions from China have been put into a database and is available for searching, at no cost. It can be used to search by city, court, year and other variables. Most importantly you can use it to compare two cities to decide where to sue. This is especially useful when there is a choice of forum as is common in China.

Why for example are damages awards for patent infringement on average higher in Guangzhou than Shanghai? See here (One answer appears to be that its all statutory damages awards in Guangzhou). For other more estoteric questions, users can contact Rouse for assistance.

Guest post by IP Komodo Dragon

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Rouse Roundtable: Copyright Today

Sharon Qiao, of Rouse, awarded for being a ‘Top Copyright Practitioner’ by the Beijing Copyright Office, together with Mr Xu Chao, Deputy Director of Copyright Division of NCAC, would like to invite you to attend a case study and roundtable discussion on ‘the frontier developments of copyright in the industrial area today’, with a particular focus on copyright protection for logo design, package and product design.

Canapés and drinks will be served after the event. Places are limited to 30 people.

RSVP by 30 March 2011.
Please click here.

Guest post by IP Komodo Dragon

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China’s global patent docket

The People’s Daily reports that in 2010 China filed 6,552 invention patent applications at the USPTO, 2,049 at the European Patent Office, 1,001 at the Japan Patent Office and 496 at the Korean Intellectual Property Office. IP Komodo had some research done a while back on Asian emerging markets which showed that China was consistently filing over 6,000 PCTs a year now. By comparison, India is around half that – in 2008 Indian inventors filed 2,879 patents. More detailed data on the comparatively much lower SE Asia filings is on my IP Komodo blog here

Is this more evidence that China is blazing a trail towards developed country levels of patent filings and leaving its Asian emerging neighbours far behind? We know there are some poor quality patents China’s global docket – patents filed because government grants paid for them and otherwise disinterested applicants filed them anyway. Or patent thickets created by some of China’s global IT players to find a way into the pools and standards groups. IP Komodo would be interested in seeing how many Chinese triadic patents there are – that is patents filed in the US, EU and Japan. This by virtue of the cost and difficulty reaching grant is a better measure of strong patents and thus innovation at a fundamental level. In 2005 Europe, US and Japan still accounted for 88% of triadic patents, with Korea as a close 4th. Does anyone have any up to date data on whether China is increasing its triadic patent count?

Guest post by IP Komodo Dragon

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Guidelines on Several Issues Regarding the Applicable Law for Hearing Disputes Arising from Franchising Contracts

Almost 4 years after the Regulations for Administration of Commercial Franchising (2007) (“Regulations”) were promulgated, the Guidelines on Several Issues Regarding the Applicable Law for Hearing Disputes arising from Commercial Franchising Contracts (the “Guidelines”) were issued by the Beijing High Court on 24 February 2011. The Guidelines further define the scope of “business resourses”, the character and validity of franchising contracts, the termination of franchising contracts as well as the liabilities of the parties in case of breach. It aims to standardize the hearing of franchising related disputes so as to better regulate franchising in China.

Key points in the Guidelines are:

1. Scope of “business resources”

Article 2 of the Guidelines further defines the scope of “business resources” as: registered trade marks, enterprise logos, patent, trade name, trade secret, distinctive overall operation image and unregistered trade marks which are prior used which have reputation. The above mentioned business resources can be owned by or solely licensed to the franchisor.

2. The recognition of “franchising contracts”

Franchising contracts are those between franchisor and franchise which stipulate the rights and obligation of the parties. Article 3 & 4 of the Guidelines provide how to decide whether a contract is a franchising contract. The recognition of a franchising contract will be based on the content of the contract not the mere title of the contract, the relationship between the parties (e.g. whether the contract is signed between associated companies) and the declarations of the parties (whether the parties deny that it is a franchising contract).

3. The validity of “franchising contracts”

According to the Regulations, a franchising contract should be signed by the parties in writing and be registered with the competent authorities within 15 days of the execution of the contract (Article 8 & 11); the franchisor has to have operated at least 2 direct stores for over 1 year (Article 7); where an approval or special qualification should be obtained prior the franchising occurs, the parties shall comply with this (Article 8).

However, according to Article 6, 7, 8 and 10 of the Guideline, the validity of franchising contracts will not be affected even if: 1) the contract is not executed in writing; 2) the contract is not registered with competent authorities; 3) the franchisor does not have 2 direct stores or has operated less than 1 year; 4) the parties to the franchising did not obtain relevant approval or qualification where necessary at the commencement of the franchising but possess such approval and qualification before the dispute arises.

4. The right of the franchisee to terminate the franchising contract

Article 12 of the Regulation provides that parties to a franchising contract shall include a clause in the franchising contract to allow the franchisee to unilaterally cancel the contract. The Guidelines further stipulate that the franchisee is allowed to cancel the franchising contract within a reasonable period of time even there is no clause in the contract allowing it to do so.

The Guidelines also specifies the liability for the franchisor when the franchisor fails to comply with its obligation to disclose information to the franchisee.

Guest post by IP Komodo Dragon

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New rules on Criminal IP infringement released

Photo Danny Friedmann

New rules on IP infringement in criminal cases have been issued by the Supreme People’s Court, the Supreme People’s Procuratorate and the Ministry of Public Security on 10 January 2011, to clarify a number of areas in criminal cases of IP infringement. They mainly cover counterfeit goods cases. Details can be found here.

Guest post by IP Komodo Dragon

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Online infringement and ISP liability

The IP Dragon hasn’t been seen for 2 weeks now. IP Komodo wonders if his cousin might return soon and is worried about the mess, especially since IP Komodo tends to leave the remains of his lunch lying around…

Some interesting online IPR news IP Komodo has spotted:

Chinese authors accuse Baidu, China’s biggest search engine of copyright violations, by its free online excerpts of unauthorized stories and books. On March 15, World Consumer Rights Day, more than 40 writers said in an open letter that Baidu stole their work and infringed their copyrights. Fang Zhouzi, (well-known for exposing academic fraud), told Xinhua that he could find almost all of his work in Baidu’s online library. A welcome change to the parade of foreign complainants, IP Komodo thinks.

The State Level AIC is about to issue new regulations on internet IPR infringement aimed particularly at at tackling online piracy and counterfeiting. Evidence and jurisdiction will be covered, according to the vice Minister who announced it at the close of the National Peoples Congress session on Monday.

ISP takedown. Taobao.com, China’s leading B2C website, announced on Monday that it will launch a campaign to stop online piracy and counterfeiting. The move comes after the site was labelled by USTR as a “notorious market”. Last year, taobao.com deleted more than 5.7 million products involved in copyright infringement. Taobao will set up a special team responsible for checking for piracy and counterfeiting.

Guest post by IP Komodo Dragon

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Seminar announcement “Management and Commercialisation of Intellectual Property”

The Faculty of Law of University of Hong Kong presents an intensive course given by Professors David Llewelyn and Li Yahong on Management and Commercialisation of Intellectual Property

Photo: Danny Friedmann

Organised by LLM (IT & IPL) Programme
June 14-25, 2011
Venue: HKU Main Campus
More information you can find here.  .

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Beijing’s Silk Market



IP Komodo’s friend Tim Smith of Rouse was curious to know what was happening at the famous Beijing Silk Market. He asked his intern Dominic to take a look and here is what they found. Large public notices appear around the market issued by the Beijing Administration for Industry and Commerce, concerning counterfeit goods. The notices (in Chinese only) state that any merchants in Silk Street caught selling any items bearing any of a finite list of famous foreign brands (Prada, Chanel, Burberry, Givenchy, Boss, Hermes, Miu Miu, North Face etc.) would be subject to administrative penalties, as all such articles would be counterfeit. Further, the management of the Silk Street shopping plaza would, if it was shown to have knowingly permitted the sale of any such goods, be subject to administrative measures and criminal punishment. These are all brands which we believe were involved in civil litigation against the Silk Market management.

There are also large red banners in Chinese and English reading “protect intellectual property rights – be law-abiding vendors” and “embrace national brand – respect intellectual property right”. There were red sign boards displayed above the aisles every few metres or so in English advising customers that if they had any concerns with the merchandise they had purchased they could contact the customer service desk, call a telephone hotline or send the details of their complaint to a dedicated email address.

But a look around revealed many articles from jackets and shirts to belts and watches bearing brands such as D&G, Giorgio Armani, Adidas, Nike, Ralph Lauren and Abercrombie, all on unabashed display. Few of the brands listed in the notice, however, were seen. Coincidentally these all appear to be companies which were plaintiffs in civil court actions against the market in recent years. The result of the cases is that those brands who went to court appear to have succeeded in proving secondary liability against the landlord, so he ensures their products are not sold there. But those who have not litigated do not appear to be in that position. Further pending litigation is seeking to widen the landlord’s liability further.

Guest post by IP Komodo Dragon

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The Lizard’s weekly news roundup

Some of the more interesting news stories IP Komodo has spotted this week:

CNN reports on the growth in counterfeit wine trade in China. Destruction of the bottles is now common practice at the auction houses, for original fine wine bottles are not reused. Label errors are a common giveaway, but recorked fine wines (putting a cheaper 85 Lafite Rothschild into an 82 bottle is a high end way to make fakes). Now HK Customs have seized cheaper wines like Mouton Rothschild and Benfolds (Penfolds fakes) have been seen in China, following the rapid market growth. Read here.

AIC stats Here is a wonderful PRC enforcement statistic from SIPO. During a recent enforcement the campaign, AICs mobilized 1.595 million law enforcement officer/times to examine 3.877 million business owners, and 2,955 illicit dens were banned. Always important to focus on the means not the end…

The USTR report on notorious markets that fingers China’s top search engine, Baidu and e-commerce giant Taobao as “notorious markets” for counterfeit and pirated goods is causing consternation in China. Various commentators have come out in defence of the sites, which are of course legitimate business sites as well as used by infringers, arguing that the US is politicizing the issue as regards China, when Ebay has the same problems.

Guest post by IP Komodo Dragon

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Chinese Car Wars

Carmaker Land Rover (which India’s Tata acquired from Ford) is suing Chinese carmaker Geely of Hangzhou (which acquired Volvo from Ford) for registering its Chinese characters “Lu Hu” in China. Land Rover says it used the characters for its “Land Rover” brand since the early 1990s. In 1999 Geely registered the “Lu Hu” trademark knowing that Land Rover was using it. Having lost at TRAB the case is now being appealed to the Beijing No 1 Intermediate court.

Meanwhile BMW (which sold Land Rover to Ford) has its own (dis)similar problems. Wenzhou Baoma Electric sought to register BMW’s Chinese characters in its class 9 mark on electrical switches. After failing to prove that the marks could be confused by consumers, given the different goods, BMW has also appealed from TRAB to the Beijing No 1 Intermediate court.

The challenges illustrated by these cases include the difficulties of planning Chinese character brands. Secondly the slow pace of TRAB cases can leave disputes unresolved for many years. As in BMW’s case the ongoing problem of proving reputation/fame challenges many IP holders, and this is of course even harder across classes.

Guest post by IP Komodo Dragon

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Patents in Hong Kong

Hong Kong has for many years had only a deposit-type patent system. Applicants re-register patents covering China or the UK, (including European Patents designating UK) and they are granted without substantive examination. It is a simple and cheap 2 step process.
But there is a growing call for change from Hong Kong business. In the past the government has said HK does not need a full system, citing high cost, lack of patent examiners and current user satisfaction. It is not clear that these are real objections, since cost could be covered by the fees, examination can be outsourced to other countries and current users are mostly MNCs. HK inventors have largely been ignored.
At a seminar to discuss whether HK should have a full patent system last Monday at HK’s Science Park, friends of IP Komodo told of the differing views of industry and lawyers. Academics and SMEs have for some time complained that such a basic patent system stifles the ability of local businesses to get proper patent advice. There are lots of solicitors who claim patent expertise. A small number of firms employ patent attorneys who are invariably foreigners. A local patent attorney profession does not exist (although a lot of lawyers spend a lot of time arguing otherwise). Those businesses that have a lot of volume often send their patent drafting and examination work offshore. Ironically this includes many HK government funded bodies (that’s HK taxpayer money being paid to attorneys abroad bypassing the struggling local profession).
What the Hong Kong government is missing is that patents are not local. HK businesses are interested in HK patents of course, but in the context of today’s globalised world they need a base home patent upon which they can build a global patent family. The lack of a local first filing and substantive examination system means no local expertise can be built up, so all the work must go offshore, perpetuating the cycle.
Thus there was an evident split at the seminar last week, between the solicitors who are comfortable with the status quo and businesses who complained that they need a full patent system. Much as HK hates comparisons with Singapore, this one does bear looking at. A healthy patent system and patent attorney profession exists there 15 years after Singapore launched its full patent system. And Singaporeans file many more US patents than HK nationals, despite being a smaller economy.
The HK government has set innovation as a key policy goal (now it is clear that finance is not a sufficient foundation for an economy). Yet it leaves important components like a full patent system out of the innovation ecosystem. Mark Twain put is thus: “A country without a patent office and good patent laws is just a crab and can’t travel any way but sideways and backwards” in A Connecticut Yankee in King Arthur’s Court in 1889.

Guest post by IP Komodo Dragon

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The lizard’s weekly China news roundup

IP Komodo hears righteous indignation expressed by bosses at Beijing’s famous Silk Market on Wednesday at a United States trade report that accuses the mall of being “notorious” for fake goods. A Ms Hu stated to the press “I don’t care about what any other media is saying about (the Silk Market). We’re doing our best to fight against fake goods.” 80 percent of Silk Market patrons are tourists. “The guilt for fake goods is shared between the buyer and the seller,” she added. During a crackdown in October 2009, authorities found copies of Gucci, Coach and Adidas ready available and the raid led to the arrest of the mall’s then-manager Wang Zili, who was charged with allowing the sale of fake goods and taking bribes. IP Komodo would like to hear from anyone who has visited the market in 2011.

Meanwhile in Guangzhou the sale of counterfeit products thrives: China-Africa Commercial Plaza has been required to close after authorities investigated and seized more than 7,600 products, including watches, garments, bags, sneakers, perfumes, cell phones, notebook computers and small household appliances – fake brand names included Rolex, Rado, Citizen, Swatch, LV, Gucci, Hugo Boss, Dior, Polo, Nokia, Sony, Burberry and Apple. Investigators looked into the sales of the counterfeit products on Feb 20 and 21. Fourteen stores in the plaza were believed to have infringed IPRs.

China’s food and drug watchdog Tuesday vowed a “ruthless” crackdown on the production and sales of substandard health foods and cosmetics this year. Bian Zhenjia, deputy director of the State Food and Drug Administration said at a national conference that despite stepped-up supervision on the sector last year, the country’s health food and cosmetics markets still faced many quality problems. IP Komodo notes a similar problem in his home in Indonesia where echoing the problem in China a couple of years back, a tainted milk scandal has Indonesian consumers panicking over food safety.

WIPO will be delighted at this: Chinese lawmakers on Wednesday began reviewing a revised draft law on the country’s intangible cultural heritage (or to give it an acronym ICH). The draft law was submitted to the Standing Committee of the National People’s Congress, China’s top legislature, for its third reading. This is the first attempt by China to enact a law that safeguards heritage of historical, literary, artistic or scientific value. IP Komodo senses endless seminar opportunities.

Guest post by IP Komodo Dragon

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Free webinar, ‘Patent filing strategies in China’

Managing IP, in association with Liu Shen, invites you to a free webinar, ‘Patent filing strategies in China’. It will take place on March 10th at 9.00 am EST / 2.00 pm GMT / 10.00 pm CST.

China is becoming an increasingly important jurisdiction for patent owners around the world. To ensure that they can protect their innovation and enforce their rights, these businesses need to familiarise themselves with how China’s patent system works in practice.

Panellists in this web seminar will discuss topics such as how to comply with China’s secrecy examination for inventions made in China, creating an inventor remuneration policy that will avoid litigation and ways to file the strongest patents possible in this vital emerging market.

Speakers:

  • Peter Ollier, Asia editor, Managing IP (moderator)
  • Robert Hart, Harman International, Inc.
  • Jay Sha, partner, Liu Shen & Associates
  • Allen Tao, partner, Liu Shen & Associates
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Civil IP litigation statistics in China

China is famous for its enthusiastic production of statistics and IP is no exception. Chinese civil court IP cases are often touted as evidence of the growing sophistication of the Chinese IP legal system. Below are some published numbers for civil IP cases:

Year – No. of IP cases
2006 – 16,708
2007 – 20,265
2008 – 28,217
2009 – 36,001

The latest release of data states that civil IPR cases jumped nearly 40% last year; specifically in the first 11 months of 2010, the courts heard 32,748 first instance IP disputes. Go back to the early 2000s and the number was just a few thousand. At that level it is the largest civil IP docket in the world. There are probably more patent trials than in Germany or the US now.

In contrast IP Komodo’s home in Indonesia hears around 100 civil IP cases a year at first instance. The renowned specialist CIPIT court in Thailand published that its 2009 docket was 321 civil IP cases. Why is China for far ahead? Some say it’s the enthusiastic use of the courts by local PRC companies.

But IP Komodo has spotted something which calls into question how to interpret these numbers. In a recent Hangzhou Intermediate People’s Court copyright case Beijing News alleged that Zhejiang Online had copied over 7700 articles without authorization on its website. The court asked the plaintiff Beijing News to separate the matter into individual ‘cases’ based on the number of articles copied. The plaintiff would have to file 7700 separate ‘cases’ for the dispute! It is quite common for some PRC courts to require separation of claims into separate ‘cases’ in court because it involves different rights, whereas in other countries multiple claims and infringing acts can be combined in the same action. And Judges have an incentive to increase the number of ‘cases’ as it is one of the elements in their performance appraisal. Esteemed PRC former Judge Zhang Zhipei was critical of the Hangzhou court’s decision in the news reports. While no doubt China has become one of most IP litigious countries, the calculation of numbers of ‘cases’ may not necessarily match the actual number of disputes.

Guest post by IP Komodo Dragon

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IP Komodo v IP Dragon

The Komodo dragon or varanus komodoensis is the world’s largest lizard and lives on the island of Komodo in Indonesia. One particular Komodo has a keen interest in Intellectual Property (see IP Komodo’s blog at http://ipkomododragon.blogspot.com/). IP Komodo is spending some time prowling around China in March and by dint of being the biggest and scariest lizard on the block, has tossed the IP Dragon out and is occupying his blog.
Other China/Indonesia connections:

– a very substantial Chinese Indonesian population estimated at 3% of the population. Wikpedia says “Broadly speaking, there were three waves of immigration of ethnic Chinese to Southeast Asia in general and Indonesia in particular. The first wave was spurred by trading activities dating back to the time of Zheng He‘s voyage in the early 15th century, the second wave around the time of the Opium War, and the third wave around the first half of the 20th century where the Warlord era, Second Sino-Japanese War and Chinese Civil War took place.” Today Chinese Indonesians are many of the leading businesses in Indonesia, many having built connections back to China.

– in 1293 the Mongol Chinese emperor Kublai Khan sent a massive fleet to invade Indonesia after the Javanese king cut off an emissary’s ear. By the time the fleet arrive the Javanese king had died, and a renegade prince persuaded the Mongol army to fight and depose the king’s successor. The duplicitous renegade prince then turned his own troops on the now exhausted-from-fighting Chinese army and sent them packing back to China, before taking the Javanese crown for himself!

IP Komodo is scouring China for interesting IP news to compare with the other Asian countries where he has devoured animals, people and IP news.

Guest post by IP Komodo Dragon

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Bitter Taste Avoided: South Korean Zhenjiang Vinegar and Costa Rican Confucius Institute Trademarks Rejected

The State Administration for Industry and Commerce (SAIC) is vigorously protecting the trademarks of well-known Chinese companies.
In October 2010 there was an effort to register the trademark Zhenjiang Vinegar in South Korea. Zhenjiang 镇江 is a prefecture-level city located in Jiangsu province. Vinegar producers in that region use the name Zhenjiang. Wang Xin wrote in the China Daily:
-“The case began in June 2010 when the local association heard from a foreign client that a South Korean company had filed an application for the Zhenjiang Vinegar trademark in both Chinese and Korean.
-“The Korean trademark administration accepted the application and published a notice in April asking for objections the notice expired on June 23, just wees after the Chinese association became aware of the filing.
-“Just a day before the expiry date, the association filed an objection with the South Korean administration.” This objection was accepted. Read Wang’s article here.
In November 2010 they tried to register the Confucius Institute in Costa Rica. Read more about the Confucius Institutes, who are promoting the Chinese culture and language around the world, here.
Read Wang Huazhong’s China Daily article about both cases here.
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Turn of the Screw For E-Commerce Platforms: Circular on Regulating Sales Promotion of Online Shopping First Step

Take notice Taobao, Alibaba and all other Chinese e-commerce sites. January 5, 2011, the Ministry of Commerce (MOFCOM) promulgated a Circular on Regulating Sales Promotion of Online Shopping (商商贸发[2011]3号) for the commerce authorities (in all provinces, autonomous regions, municipalities directly under the central government, cities specifically designated in the state plan and the Xinjiang Production and Construction Corps). E-commerce is getting ever more important. However, it brings with it some challenges. Via online platforms counterfeit and pirated goods are sold, “replacing superior products with inferior products.”

Article 5 Circular: “Strengthen the protection of intellectual property rights. In light of the special acts of cracking down aggression of intellectual property rights and manufacturing or sale of fake and shoddy goods, joint supervision shall be launched together with the industry and commerce authorities, quality inspection agencies, etc. and efforts in supervising online shopping platforms and operators shall be strengthened so as to crack down behaviors of infringing on intellectual property rights and manufacturing or selling fake and shoddy goods in promotion activities. Propaganda and education shall be strengthened to guide online shopping platforms and enterprises to perform their social responsibilities, carry out promotion in good faith and regulate business operation, and voluntarily reject illegal activities of infringing on intellectual property rights and manufacturing or selling fake and shoddy goods.

This is a sign of things to come. The e-commerce sites are made responsible what is going on on their platforms. So self-regulatory measures are stimulated. If the problems will not go away quick enough according to the authorities, binding regulation will follow. Decentralized enforcement systems, such as contributory liability is here to stay.
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Your Opinion On Draft Regulations on Patent Agency Please

On March 4, 1991 the State Council promulgated the Regulations on Patent Commissioning, which became effective on April 1, 1991, see here.


In China’s 2006 Action Plan of IPR Protection, it announced its plan to revise the Regulations on Patent “in order to standardize the conduct of patent agents, safeguard the normal order of the patent agency industry, and protect the legitimate rights and interests of interested parties.” The old regulations were after nearly twenty years deemed out of touch with reality.

The State Council has issued the Regulations on Patent Agency (Draft Amendments for Examination), reported by SIPO and solicited opinions “of all walks of life” before September 25, 2010 March 10, 2011.

The regulations state how someone can become a patent agent, what are the educational requirements, how a patent agency should be run and what is not allowed for agents and agencies. It is clear that the self-regulatory industry group All-China Patent Agents Association plays an important role.

The Chinese version you can see here. If someone has an English version let me now.

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Should There Be Trade Barriers For Chinese Companies Buying Core Global Patent Portfolios in New Technology?

Lee Caffin, IP strategist and patent attorney specialist in lifesciences at Think IP Strategy, has an interesting post on China’s National Patent Development Strategy (2011-2010), read here.

After a historical overview from 2006 to 2011, Mr Caffin is posing a question that some protectionist governments might ask:
Should countries institute patent trade barriers or limit the scope of IP rights that may be transferred to a Chinese entity to protect local industry and access to technology?

Chances are that the late Milton Friedman might have agreed with me that this, in the end, is not a good idea. Firstly the officials representing countries are often not in the best position to assess whether a patent portfolio is core, nor whether a new technology area will be promising. Businesses that have to make a profit are necessarily better in tune with the market and one can predict that they do a better job assessing what core patent portfolios are and what new technology areas will be promising.
Secondly the party that is willing to sell the core patent portfolio is not getting the real market value if the government is raising barriers, so as a retaliatory measure against China’s discriminatory indigenous innovation policies it might hurt the one retaliating, and it might lock up resources that could be brought to better use.
I know that after the financial crisis the following words may sound harsh to your ears but this author believes it is best to eliminate the barriers and let the market do its work to avoid misallocation of resources.
Huawei, China’s telecommunication equipment producer, might needs to sell the patents it bought from 3Leaf, because of national security concerns, or …. is it a trade barrier to buy a core patent portfolio? President Barack Obama might grant Huawei the right to keep them. According to people who work at 3Leaf the patents form no danger for national security. But Huawei is considered by some connected to the Chinese military, which it denies. Can American companies sell anything to the Chinese military, let’s say non-military grade shoe laces? Read the Financial Times article by Stephanie Kirchgaessner about it here (free but registration is needed).
US-China Economic and Security Review Commission Staff Report of January 2011 is entitled
‘The National Security Implications of Investments and Products from the People’s Republic of China in the Telecommunications Sector’ and has a wealth of information about deals with Chinese companies such as Huawei and ZTE wanting to do investments and sell their products in the U.S. Read here.
B. Raman of Global Geopolitics and Political Economy wrote a good article focused on security issues of Huawei in India, read here.
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Keep the May Calendar Free For IP events in Hong Kong and Macao

IP Dragon’s friend Anselm Kamerman Sanders of Maastricht University organised this time two interesting events in Hong Kong and Macao.

The events are organised by the Institute for European Studies of Macau and Maastricht University Faculty of Law. For the Hong Kong leg it is co-organised by the Chinese University of Hong Kong.

Annual Professional IP Update, followed by the 12th Annual IEEM IP Seminar, May 21-24

The Annual Professional Update provides an overview of all relevant cases and legislative developments of the past year from all over the world. During one day you will be brought up to speed on the major important legal decisions and developments in intellectual property law and policy.

Location for Saturday 21 May: Graduate Law Center of the Chinese University of Hong Kong

The two-days Annual Intellectual Property Seminar offers a forum for IP professionals wishing to be part of a thought-provoking discussion on cutting-edge developments in intellectual propety law and policy. Distinguished practitioners, judges and academics from all over the world have contributed to this event. The papers they have presented have been published in book form by Kluwer Law International and Hart Publishing.

In 2011 the 12th Annual IP Seminar’s topic will be:

Consumers, Facilitators, and Intermediaries – IP Infringers or Innocent Bystanders?

A group of distinguished speakers has been confirmed to speak on issues such as ISP liability, unwarranted threats to primary and secondary infringers, contributory and secondary liability for patent and copyright infringement, Google ads and trademark infringement, liability for transporters and freighters, time and geo-shifting devices and services, eBay and trademark infringement, and the impact of sporting events legislation on the public sphere.

Location for 23-24 May: Sofitel Macau at Ponte 16, Macao

Speakers include inter alia: Irene Calboli (Marquette University) Christopher Heath (EPO), Byung-Il Kim (Hanyang University), David Llewelyn (White & Case), Jan Nordemann (University of Berlin), Anselm Kamperman Sanders (Maastricht University), Pascale Trefigny (University of Grenoble), Tasuhiro Ueno (University of Tokyo), Bryan Mercurio (Chinese University of Hong Kong). They will be joined by local Hong Kong and Macau practitioners.

For updated information check the site of the Maastricht University here.


But Professor Kamperman Sanders has even more on offer:
The Intellectual Property Law School – 16 until 20 May 2011

The IP Law School is an initiative in Asia offering a taught programme in international Intellectual Property Law and its relevance for global, European and Asian economic development and innovation policy.

The IP Law School is extremely suited for trainee lawyers, Intellectual Property professionals with an economic or policy background, and master students in Intellectual Property wishing to enhance their skills at post-academic level. Starting from the basics of the Paris and Berne conventions, the course covers the development of Intellectual Property Law all the way to the WTO TRIPS Agreement and the WIPO Copyright treaties. Attention is also devoted to regional arrangements, such as the European Patent Convention, and other new international and national initiatives. From a policy perspective free trade agreements and bilateral investment arrangements covering Intellectual Property, as well as ongoing negotiations in the area of protection of traditional knowledge will be covered.”

Classes are offered in an intensive Socratic format in the course of one week by experts in the field.
There are substantial concessions for students wishing to follow the whole week-and-a-half.


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What Is the Superlative of Contributory Liability?… Local State Supervision Liability?

Managing IP magazine, had a link to an interesting China Daily article, see here in which a State Administration for Radio Film and Television (SARFT) official was quoted as saying that it is “working on the establishment of an internet audio-visual programs industry association (..)”. The application has been submitted and it now waiting approval to the Ministry of Civil Affairs.

Also interesting in the article is that the government intensified supervision over major internet enterprises, a precautionary move to stop piracy spreading. “In 2009, the number websites being supervised by local copyright authorities, reached 3,029. They include Taobao.com, Baidu, Sohu and Youku.”
That means that if infringement still took place in that period, it was under local copyright supervision.
Taobao is China’s e-commerce platform. And where eBay is sued by trademark holders in the U.S. (Tiffany), France (Hermès and LVHM) and Belgium (Lancôme), in China Taobao was sued for example by Puma; read Lee, Won Hee Elaine. ‘Online Auction Sites and Inconsistencies: A Case Study of France, China, and the United States.’ American University Intellectual Property Brief, Spring 2010, 50-57, here.
Jesse London (who is the managing editor of Cornell Journal of International Law), wrote an interesting note on China’s Approaches to Intellectual Property Infringement on the Internet for the Internet Journal of Rutgers School of Law, volume 38, 2010-2011, read here. Mr London is comparing the IFPI cases against Baidu and Yahoo China and comes to the conclusion that the degree of good faith of the online service provider is crucial, but so is the degree of reasonableness of the demands of the trademark holder by insisting in the measures against infringement.
Youku (the Chinese equivalent of YouTube) had a lot of pirated Hollywood movies. But I checked a few times and they indeed seem to have cleaned up a lot of copyright piracy.
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Xie Lin Gives Leading Links To IPR in China in Chinese

My colleague and friend, the copyright in China scholar Xie Lin 謝琳, gives us a great overview of websites about IP in China in Chinese:
(1) For unofficial English versions of laws and regulations: Law Info China;
(2) For cases (which are judgments): IPR China Court;
(3) For news and comments: China IPR; the latter one is the website from Dr. Jiang Zhipei;

The Chinese versions are far more comprehensive than the English ones.

Xie Lin is also one of the great bloggers at
https://webmail.cuhk.edu.hk/horde/util/go.php?url=http%3A%2F%2Fblogs.law.harvard.edu%2Fdonnie%2F&Horde=5tm8c30ougloe6mjrrv8l25so5 , a site founded by Donnie, Hao Dong, who now works for Baker & McKenzie;
https://webmail.cuhk.edu.hk/horde/util/go.php?url=http%3A%2F%2Fblog.sina.com.cn%2Fipwangqian&Horde=5tm8c30ougloe6mjrrv8l25so5, professor Wang Qian’s blog;
https://webmail.cuhk.edu.hk/horde/util/go.php?url=http%3A%2F%2Fwww.fengxiaoqingip.com%2Fenglishlaw%2Findex.html&Horde=5tm8c30ougloe6mjrrv8l25so5, professor Feng Xiaoqing’s blog, very
comprehensive.

Of course, the websites from the official government departments:
https://webmail.cuhk.edu.hk/horde/util/go.php?url=http%3A%2F%2Fwww.sipo.gov.cn%2Fsipo_English%2F&Horde=5tm8c30ougloe6mjrrv8l25so5
https://webmail.cuhk.edu.hk/horde/util/go.php?url=http%3A%2F%2F202.108.90.115%2Fenglish%2Findex_e.asp&Horde=5tm8c30ougloe6mjrrv8l25so5
https://webmail.cuhk.edu.hk/horde/util/go.php?url=http%3A%2F%2Fwww.saic.gov.cn%2Fenglish%2Findex.html&Horde=5tm8c30ougloe6mjrrv8l25so5
https://webmail.cuhk.edu.hk/horde/util/go.php?url=http%3A%2F%2Fwww.ncac.gov.cn%2Fcms%2Fhtml%2F205%2Findex.html&Horde=5tm8c30ougloe6mjrrv8l25so5

If you want more informtion, you may refer to this
website https://webmail.cuhk.edu.hk/horde/util/go.php?url=http%3A%2F%2Fwww.fengxiaoqingip.com%2F&Horde=5tm8c30ougloe6mjrrv8l25so5, at the bottom, it recommends good
websites.

Thank you Xie Lin.
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假 Jia and the Schwindlerrepublic China

Kai Strittmatter wrote ‘Gebrauchsanweisung für China’ which means User guide for China in German (2004/2008). Especially the chapter “Jia, Alles gefälscht. Oder: Die Schwindlerrepublik” (pp 175-186) is an interesting chapter about all aspects of “the People’s Republic of Cheats”, which is explanation the Far Eastern Economic Review (a high quality magazine that no longer exists) came up with for the abbreviation of PRC as Strittmatter makes clear.


It includes the following anecdote which I paraphrase here:

A farmer who bought from his last money some seeds. But how long he waited no plant would grow. The seeds were fake. The farmer did not want to live any longer and committed suicide by drinking rat poison. But nothing happened, the rat poison was fake. The whole family of the farmer was very happy and they opened a bottle of good rice wine. The farmer went down, because he fell victim to the lethal fake rice wine.
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Window Is Closing For Pirated Software In China: Qingdao Government Gives Example

Chinese government agencies were well known for using pirated software. By the end of May all illegal software needs to be replaced. The city of Qingdao (province Shandong) will be 10 months ahead of the central government’s ban on pirated copyright. Read more here.

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China Cockpit: Flood the Market With Counterfeits To Fight Inflation

Imagine China Government Airlines, where the Chinese government is trying to pilot its citizens from poverty to wealth in a way that those sitting in different classes (such as the superpremium class with private beds and the class where you have to stand all flight)will stay harmonious. It’s interesting to think what decisions the pilots make in the cockpit.

To make a country the size of China and with such an immense contrast between rich and poor develop in the right direction seems to be a gargantuan challenge. You can say a lot about the Chinese government, but they did lift millions out of poverty during decades of economic growth. How did you they manage this. Western style democracies are marked by sudden changes in policies every time the politic colour changes in cabinet. China’s economic policies are much more long term and have proven to be able to absorb bumps in the road because of the financial crisis.

Are the central and local authorities doing what they need to do? Or is China having a lot of luck? Sometimes I think that the central authority is coordinating the decisions of all the ministries in a way that might be compared to the decisions made in a cockpit.

During president Hu’s visit to the U.S. (January 18-21, 2011) the relative worth of the Renminbi in relation to the U.S. dollar was discussed. But as president Obama pointed out also other issues unrelated to currency “that must make sure that our trading relation is fair and a win-win situation as opposed a win-lose situation.” Obama made a reference to progress in the field of government procurement process, which is getting more open and fair to US businesses according.
Obama: “Some of [the issues unrelated to currency] has to do with intellectual property protection. So we were just in a meeting with business leaders and Steve Balmer of Microsoft pointed out that their estimate is that only one customer in every ten of their products is actually paying for in China. And so can we get better protection? Because that is an area where the U.S. excels: intellectual property and high added value products and services. “And the Chinese government has, to its credit, taken step to better enforce intellectual property We got further agreement as a consequence of his state visit and I think president Hu acknowledges that more needs to be done.”
However, if one peek into China’s cockpit, you might get a different picture. In order to keep China’s plane on course it might loosen up on IPR enforcement: Because China’s currency is not freely convertible, there is no direct link between the money in the country and the value of the currency. The money supply in China is too high, therefore inflation is on the rise. So in order to not make the products more expensive, one can flood the market with very low cost products in high volumes: counterfeit and pirated goods could be candidates for fighting inflation. To stimulate China’s domestic demand, as the U.S. recommends, will only increase China’s inflation.
Around 35 minutes Obama is talking about IPR.
[youtube http://www.youtube.com/watch?v=X-9Cylx3lOI&w=640&h=390]
What do you think?
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Featured Blog of the Week: China Media News

Torsten Weise, who is based in Berlin, translates headlines and news of Chinese media on media into English on this interesting blog called China Media News, which he started in May 2010. Mr Weise gives advice to publishers (Weise Verlagsberatung) that want to be active on the Chinese market. Those interested into media and the protection and enforcement of copyright in China could benefit from reading his blog, next to the always excellent Danwei.com by Jeremy Goldkorn in Beijing and superniche blog about copyright in China site of my friend Rogier Creemer, China Copyright and Media, straight from Maastricht Univerity.

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New Game: Claim To Have Organised A Conference You Did Not, Say Sorry And Pay RMB 1

Howell International Trade Fair Ltd. (Howell) organised events in China such as: China Game Developers Conference and ChinaJoy. Then United Business Media LLC (UBM), who organised the Game Developers Conference in the US, claimed to “have hosted alone or together with IDG the China Game Developers Conference 2007.”
Howell sued UBM in 2009 before the Beijing No. 2 Intermediate People’s Court. Because UBM did not register trademarks in China for Game Developers Conference or GDC, in First Instance the court ruled that UBM’s claims on exclusive rights constitute dissemination of false propaganda. The penalty for dissemination of false propaganda in this case is interesting.
“UBM shall, within thirty days after the judgement becomes effective, publish an announcement in the magazine Computer Information World acknowledging UBM’s anti-competitive business practices so as to eliminate the ill effects thereof and, also, within ten days after the judgement becomes effective, compensate Howell for damages in the nominal amount of RMB 1.”
Sorry and RMB 1 … WTF?
Is such a penalty a deterrent for other conference organizers for claiming events they did not organize? What conference organizers could take away from this judgment is that registering the name of your events as trademarks in the jurisdictions where you want to be active is a good idea.
Read the Sun Herald article here.
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100 Percent Australian made UGG Boots From China


Instead of the near undetectable counterfeit eggs, some counterfeit products are easier to determine. See the video, where counterfeiters made some mistakes, here.

The buyer of the fake boots was lured into buying the booths because it said: “100 percent Australian made”. And the label said “Made in New Zealand” (see picture). That information was wrong, because as the eBay Guide ‘How to tell fake UGG booths‘ tells you real UGG Australia booths are made in China too.
At the UGG Australia site you can fill in a URL at a search bar to see whether UGG Australia can guarantee that the products sold from that place are genuine, see here. That does not solve the problem for parallel import or discounts via other sites.
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You Cannot Buy A Real Egg In China Without Breaking it

“When you start with a portrait and try to find pure form by abstracting more and more, you must end up with an egg.” If we paraphrase Pablo Picasso’s phrase into: When you want to find the purest form of counterfeit product in China by abstracting more and more, you must end up with an egg.
1. it is even done for marginal profits or lucrative (estimated 300-400 percent profit rate for fake detergent, read here);
2. it can be deadly;
3. it is very hard to detect;
4. the authorities grapple with the problem.
Here we are: these problems unfortunately apply to most counterfeit products.
Fake egg school
Sasha Matuszak wrote a great All Voices article last year about a problem that has only increased the year after she wrote it: fake eggs are a widespread problem in China, not only in the less affluent provinces but also in cities as Beijing or Shenzhen. In it she gives the context of the problem of uprooted migrants that have to get by in the big cities, the health risks the fake eggs cause (for example dementia), and that you can find many advertisements where fake egg teachers invite fake egg students. Read here.
Real egg school
What it also shows is that there is a disconnect between the central and local authorities, and that Chinese citizens are sharing information about how to figure about what is real and what not.
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Polo Santa Roberta Shop Closed in Mongkok: Shirts Still On Sale at Ladies Market

No longer is there a Polo Santa Roberta shop in Mong Kok. The Hong Kong police Customs cracked down on it. However, if you walk through the Ladies’ Market ( 女人街) you can easily spot the Polo Santa Roberta shirts. However, I could not detect any traces of the “original” mix of copying the Burberry tartan pattern with the Ralph Lauren logo. Only the old version of the Ralph Lauren brand seems to be copied. The newer versions of Ralph Lauren’s Polo shirts use a larger logo.

Photo taken today at Ladies Market
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Greatest Start of the Year: Global Forum on Intellectual Property 2011 Singapore

The Global Forum on Intellectual Property (GFIP) 2011 in Singapore (6-7 January), a bi-annual event, was greater than ever before. It is clear Singapore is committed to becoming a IP hub. Over 95 professors and practitioners (lawyers, judges, inhouse counsels, business people), bloggers and readers who gave speeches about their reflections on the past, their thoughts about the present, and their forcasts for the future of IP. Theory, practice, strategies and tactics on the protection and enforcement of IP were all evocatively conveyed to an audience that was as learned as the speakers. Professor David Llewelyn, chairman of the GFIP and external director of the IP Academy of Singapore, mastermind behind the whole operation has outdone himself. The theme ‘Turbulant Times: Onwards and Upwards for Intellectual Property?’ was well chosen and during the opening ceremony even Mr K. Shanmugam, minister of home affairs and law gave his acte de présence.

IP rules the world economy


The first keynote address by Professor Peter Williamson (Judge Business School, University of Cambridge and co-author of ‘Dragons at Your Door: How Chinese Cost Innovation is Disrupting lobal Competition‘) was talking about IP and China.

Chinese innovation: using seemingly obsolete technology to gain cost reductions

Professor Williamson asserted that China’s innovation did not fall out of the sky. Rather, it was an evolving innovation after 25 years of simple innovations. Look for example to BYD, the car manufacturer who started as a battery manufacturer. The 1990s had an emphasis on cost cutting, according to Professor Williamson. Now Chinese companies look at technologies that seem obsolete and see whether they can transform it into an innovative product. “Can I use low costs to do innovation? It’s the thrust of Chinese innovation.” Professor Williamson gave the example of the digital direct x-ray equipment. The market for x-ray equipment was first dominated by GE and Philips. The Chinese companies applied their low cost invention to mainstream application. It’s not patentable, but it changes the market. Innovations are fast in China, because the cycles they make are frequent. In the West there are less developments between innovations. These Chinese innovations are on a large scale and made for commercialisaton.

Williamson said that patents in China were quite isolated; not many collaborations were going on. He said that China is going to find its own kind of institutional structure, unlike Japan who copied US institutions. which was not such a great success.
During a judges’ debate which included the retired Chief Justice of the IPR Tribunal of the Supreme People’s Court, Dr Jiang Zhipei, who is now senior advisor to Fangda Partners, a Chinese law firm in the commercial field, the Chief Judge of the U.S. Court of Appeals for the Federal Circuit, Washington D.C., Hon. Randall R. Rader, made an appeal to all judges present: to learn as much as possible from each other and to look at the consequences of their judgments, and if they would not they will be sanctioned by the market.

Judge Rader: “If you [as a judge] will not oversee the consequences of your actions, you will be punished by the market”

Photo panelists from left to right: Justice Andrew Phang (Judge of Appeal, Supreme Court of Singapore), Judge Joachim Bornkamm (Presiding Judge, Federal Supreme Court of Germany), Hon. Randall R. Rader (Chief Judge, U.S. Court of Appeals for the Federal Circuit, Washington D.C.), Professor Llewelyn (moderator), Sir Richard Arnold, Judge of the High Court, Chancery Division, Hon. Robert van Peursem, Vice President, District Court of The Hague, the Netherlands. Dr Jiang Zhipei part of the panel is 0n the next photo.

To facilitate and not only regulate the market. Judge Rader was not only very informative but entertaining as well and he inspired at least two other speakers to give the audience a choice about the topics on which he was willing to speak. Judge Rader’s dramatic descent from the stage to level with the audience was only replicated by Mr Tilman Lueder, head of the unit Copyright and Knowledge-based Economy, Directorate-General Market and Services, who gave attribution to the judge. Judge Rader’s singing was only replicated by himself.

Dr Jiang Zhipei is the author of China IPR Law. He asserted that the patent system in China, that has just been amended in 2008, must be reformed and perfected. He offers 8 suggestions:

Dr Jiang: 8 improvements to China’s patent law

1. China should deepen its reform and opening up policy, and constantly improve the development mechanism;

2. A stronger, more mature, transparent and consistent China is a prerequisite for the litigation process. Litigants should have confidence that China’s litigation process system operates objectively and fairly;

3. Chinese courts should realize uniform and efficient IP judicial protection according to the Compendium of China’s National IP Strategy;

4. The Supreme People’s Court should establish and perfect relevant litigation procedures such as judicial IP authentication, procedures for expert witnesses, technical investigation and pre-trial interim measures;

5. Chinese courts will explore the possibility of establishing specialised IP tribunals accepting civil, administrative and criminal cases together, and to integrate and optimize resources;

6. Enhancing communication between countries is important;

7. To raise the level of enforcement judgments, strengthening of law enforcement cooperation between difference departments;

8. Summarizing the experience in the process is sometimes more important than just continuing.

More postings about the GFIP 2011 event will follow.

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IP Dragon Blogging From Singapore at Global Forum on Intellectual Property

Raffles and Fairmont (Picture Danny Friedmann)

Once every other year the IP Academy of Singapore handpicks IP experts and brings them all together at the Fairmont, opposite the Raffles Hotel at the Global Forum on Intellectual Property 2011.

Professor David Llewelyn made an excellent line up of speakers and IP Dragon is very happy to be give two presentations and launch the TP website. The programme is extremely full of must-see presentations.

For those passionate about IP in China, a lot of very interesting information can be expected.
Tomorrow, January 6th, Professor Peter Williamson (International Management, Judge Business School, University of Cambridge and Co-author of Dragons at Your Door: How Chinese Innovation is disrupting Global Competition is giving the keynote address 1 about IP and China, with the title “Geting Ready to Rumble in the New Asian Decade”.

Then also there will be Special Judges’ Plenary Session about “The Next Ten Years in Intellectual Property”. Moderator will be professor Llewelyn and panelists include:

Dr Jiang Zhipei, Chief Justice of IPR Tribunal, People’s Republic of China Supreme People’s Court (retired) and senior advisor at Fangda Partners law firm.

I am a great fan of Dr Jiang’s famous site China IPR Law on which Dr Jiang explains about IPR in China and answers letters from readers. This site I also heavily used when I was writing my master’s thesis.

Also present are judge Joachim Bornkamm, presiding judge of the Federal Supreme Court of Germany;
Justice Andrew Phang, Judge of Appeal, Supreme Court of Singapore;
Hon. Randall R. Rader, US Court of Appeals for the Federal Circuit, Washington DC;
Sir Richard Arnold, judge of the High Court, Chancery Division;
Hon. Robert van Peursem, vice president, District Court of The Hague, The Netherlands.

At parallel sessions IP in China experts such as Professors Peter K. Yu, Justin Hughes and Sun Haochen will be available. Last but certainly not least Professor Susan Scafidi will tell everything you ever wanted to know about fashion and IP.
More blogs about this event will follow.
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Message from IP Dragon: Happy 2011 from Shenzhen

IP Dragon wishes all his readers a happy, healthy and productive new year. Just moved from Hong Kong to Shenzhen. Only a few kilometers apart but a world of difference. From common law tradition to civil law tradition. From the Special Economic Region to a Special Economic Zone. Although I will still be going to Hong Kong regularly.

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Who Needs Le Louvre If You Can Touch Fake Sculptures in Hong Kong?

From December 10 to February 20, 2011, you can see and feel 18 fake sculptures in the Hong Kong Museum of Art in Tsim Sha Tsui, Kowloon. The real ones will stay safe in Le Louvre in Paris. The invitation to touch in combination with the picture on the advertisement of Venus de Milo (Aphrodite de Milo) is awkward for the prudish Hong Kong government, because she is … well not really dressed. And if you look carefully at the picture you see a giant hand holding the sculpture, not unlike King Kong’s fist, but then shaven. Or, the replica is made on a smaller scale of course. After having had the privilege to see the real sculptures I will pass this time. Even though it is tempting to touch Venus (and she cannot even slap you for it) and her replica colleagues, IP Dragon thinks nothing beats the original sculptures. These bear so much history can you sense it, without touching. I do not know whether this makes me implicitly into a proponent of lugging the invaluable classic sculptures with all risks involved, or whether I advocate for the Hong Kong people to massively fly to Paris and increase their ecological footprint.

For those of you who are tactilely inclined, you can find more information:
http://hk.art.museum (notice the .museum top level domain name)
You can click on the picture (Danny Friedmann) to enlarge.
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Benchmarking China’s IPR Protection and Enforcement

In response to China’s umpteenth pledge to protect intellectual property, Mr Robert Holleyman, president of the Business Software Alliance (BSA) said: “We will know China has made real progress in reducing piracy only when software companies start seeing substantial increases in sales.” Read Sewell Chan’s article here.

Mr Holleyman is doing something very constructive: he is trying to bench mark China’s protection and enforcement of intellectual property rights. However, he is not looking at piracy of software copyrights, but to the income of the sale of genuine software. This might be the result, but is too simple, since the sale of genuine software is dependent on more factors than IPR infringements.
Mr Holleyman should consider using the enforcement/infringement ratio, which is a bit more complex, but gives a more robust answer to the question, is China’s enforcement of IPR going forwards, backwards or unchanged.
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Paradox of Strong Brands in China: Cause And Cure of Counterfeiting

If you have a strong brand, chances are that your trademark will be counterfeited in China. The counterfeiter can simply manufacture unauthorised copies of a popular brand: no developing costs, no marketing costs, and certainty about the demand. Then again chances are very slim that a company with a strong brand will counterfeit your trademark. As I have pointed out earlier in China this is not necessarily good news, since these non-infringing companies can be even more apprehensive competitors. In principle this would lead to fair competition, if only there was fair market access for non-Chinese companies. Nevertheless, IP Dragon was happy to read Laurie Burkitt’s article ‘State of Things: What are China’s Top 50 Brands‘ in the Wall Street Journal (December 15, 2010). It includes a slideshow of China’s Top 10 Brands by Value: 4 banks, 2 insurance companies, 2 internet companies, 1 oil company and 1 telecommunication company are most valuable, see here. Hat tip to China Hearsay.
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Parallel Universe Shenzhen: Where The iPads Run on Android

Androids have landed on Shenzhen’s beach
Photo Danny Friedmann

By Michiel Tjoe-Awie

The market penetration of Google’s Android mobile operating system came second, behind Nokia’s Symbian but was preferred above Apple’s iOS. The iPad is still the most popular “pad”. Wouldn’t it be great if we could have the best of both worlds. I mean that Apple would strike a deal with Google to make a variation of iPad, running on Google’s Android operating system. Unthinkable? Why? Just because it should contradict Apple’s goal to dominate the market for operating systems? Remember you once learned the difference between a consumers (demand) market, and a manufacturers (supply) market? If the consumer dictates the manufacturer what to make we talk about a demand market, a manufacturers market works the other way around. The Chinese plan economy was a typical example of the latter. But thinks has changed. Now it provides only what the market wants. No boundaries. The market has made it’s request and has produced a miraculous new product. Something like a beautiful woman that likes to watch football or a child that likes to listen or a dog that doesn’t smell or an iPad with a Android operating system. What? I said: “an iPad with an Android operating system!”

Copycats are not hindered by the animosity between Steve Jobs and Eric Schmidt (from Google). So the unthinkable has become true in the parallel universe of cloning:

Neo of Shanzhai reports that the second generation iPad inspired device in that parallel universe for clones, copycats and counterfeiters Shenzhen will be manufactured with a Google’s Android 2.2 operating system.
By the way in this case the Apple logo was not used on the clone. Design patents and copyright, and even trademark (for the use of the name iPad or when the form was registered as trademark) might be infringed.
Read the Shanzhai article with pictures of genuine and clone for that parlour game: find the differences here.

Text Michiel Tjoe-Awie

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Just Sue Them! Nike Went After One End User For Ordering Chinese Counterfeit Trainers Via The Internet

Nike International Limited (Bermuda), Nike European Operations Netherlands BV and Nike UK Limited sued Mr E. Bateman for buying counterfeit trainers via the internet, in the England and Wales Patent County Court (served August 26, 2010 and heard October 11, 2010).

“The goods had been shipped from unknown exporters in China and were to be imported into the United Kingdom.” But, the UK Border Agency seized the counterfeit Nike shoes. Nike has registered several relevant trademarks valid in the UK (UK trade mark 135204 for the Nike with “swoosh” device, Community Trade Mark 278028 for the word Nike, and Community Trade Mark 4288486 for the “swoosh” device and Community Trade Mark 277889 for the word Nike with the “swoosh” device).

Nike’s IP enforcement strategy is remarkable:
  • Many companies try to stop counterfeiters from their illegimate activities, to get to the root of the problem. Although the problem can be persistent, since counterfeiters often start at some other place (therefore criminal enforcement is preferred), or other counterfeiters take over their activities.
  • To claim that some players have secondary liability (vicarious or contributory) is also a popular strategy. These players (such as landlords or internet service providers) are easily located, and very important: they have the financial means to compensate for damages.
  • To go after the end users is a very risky strategy. Many end users are not easily identifiable, traceable, and even if you manage to do that, they might have no money. Of course sueing people who are a fan of your brand, might not be the way to gain new customers.
So Nike choose for the third option and brought an action to those who ordered via the internet counterfeit Nike trainers. All cases were settled out of court or went undefended, except for Mr Bateman.

Mr Bateman’s defence: “I ordered training shoes over the internet believing them to be authentic. I had no idea they were counterfeit. I have never received any goods and will not be ordering any more.”

Judge Birss QC’s response: “Whether or not the defendant believed the goods were authentic is irrelevant to the question of trade mark infringement. Whether the goods are infringing goods or counterfeit goods is an objective question. The Defendant’s state of mind does not matter. Equally the Defendant’s state of mind is irrelevant to the question of importation.”

Secton 10 (1) Trade Marks Act 1994:
A person infringes a registered trade mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered.
Section 10 (4) Trade Marks Act 1994
For the purposes of this section a person uses a sign if, in particular he (c) imports or exports goods under the sign.

“It may be questioned whether the sledge hammer of these proceedings is necessary in order to crack this nut of this magnitude”, said Judge Birss QC. But Nike’s representative explained that brand owners in this situation have no realistic alternative to enforcing their rights this way. This was accepted by Judge Birss QC.
I guess the investigations into the channels of commerce were not successful in this case. What were the websites that were used to order the counterfeit trainer shoes, who were the distributors from the manufacturer to the transporter, and of course who manufactured the goods in the first place?

For those of you who have read Brett East Ellis’ book American Psycho or seen the movie, you might be able to substitute Mr E. Bateman with the brand obsessed Patrick Bateman as defendant. If you then combine this association with Judge Birss’ metaphor you might see a manufacturer swinging an ax to a customer because he ordered an infringed product. That it is hard to sell genuine trainer shoes in the future to a deceased, might be a practical problem. On a more serious note, Mr E. Bates could also have settled. I do not know how reasonable Nike’s offer was.
Dubble edged sword
It is good when companies show their teeth in regard to enforceing their IPRs and Nike’s strategy might have some deterrent effect, that prevents future infringements by end users. The deterrent effect, however, is very hard to measure if there is no parallel universe where the end user was not sued. One has to take into account the possibility that it could backfire, and also deters potential customers to buy Nikes. Only destroying the counterfeit goods could have been an alternative punishment that would not have made Mr E. Bates’ case into an example and would not push away some potential customers.
See the Summary Judgement, see here.
Hat tip to Matt Lonsdale who gave an overview of the case on IP Osgood, see here.
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Sex, Lies And The Right of Integrity of the Grimm Brothers’ Heirs

The (Hong Kong ) Standard has an Agence France-Press article ‘Sex-crazed dwarfs get pulled‘ about China Friendship Publishing Company and China Media Time that copied the erotic adaption of the Grimm brothers’ Fairy Tales by the Japanese duo Kiryu Misao.

Three comments to this racy story:
1. The excuse of Yuan, a China Media Time official “We couldn’t find the original German edition of Grimms’ Fairy Tales, so we took Japanese editions as our references and translated those” sounds like a fairy tale. The original German edition of the Fairy Tales by Jacob and Wilhelm Grimm can be found here.
2. The Kiryu Misao adaptation is a copyrighted work that was unauthorisedly copied by China Friendship Publishing Company and China Media Time. The only reason why this comes to the light is that the books were mistakenly put on the children’s bookshelves in some book shop(s).
3. Although the Grimm’s Fairy Tales’ copyright is expired, the work’s moral rights continue eternally. So the Grimm brothers’ heirs could file a lawsuit on this ground. See article 10 (4) Copyright Law: “the right of integrity, that is, the right to protect one’s work against distortion and mutilation”.
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Three Main Problem Categories To Foreign Related IPR Litigation in China

The President Assistant of the Civil Fifth Court, part of the Beijing Municipal Intermediate People’s Court Number 1, Yi Jun gave his view on what are the most important foreign-related IPR ligitation problems. The President Assistant distinguishes three categories of problems:

“1. The status of the person who signs letters of attorney on behalf of foreign companies can not be confirmed;
2. the items to be authorised, delegated authority and the period of validity are stated unclearly;
3. the parties concerned do not fully consider the time on notarisation and authentication procedure and the non-correspondence of the period of appeal and prosecution for foreign parties concerned based on China’s Civil Procedure Law, Administrative Procedure Law and other laws.”
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32 Senators Urge Vice-Premier State Council to Fix IPR and Indigenous Innovation Policy in China

32 U.S. senators have sent an open letter to Wang Qishan, China’s Vice-Premier of the State Council. They urge him to use the U.S.-China Joint Commission on Commerce and Trade (JCCT) to address the problems U.S. companies face in regard to:

  • Intellectual Property Rights in China;
  • China’s policy to favour indigenous innovation and not signing the World Trade Organization’s Government Procurement Agreement.
Evidently the trade organisation that was created to advance the interests of the software industry Business Software Alliance (BSA) was quite successful in putting their case on the agenda:

“The United States has been raising this issue for many years, and China has repeatedly committed to take steps to address U.S. concerns. For example, in 2006, China committed in the JCCT to ensure that Chinese government agencies and state-owned enterprises use only licensed software. But China has failed to implement this commitment. We urge China to implement this commitment on a timely basis, and in a transparent manner that allows IPR holders to verify the legitimacy of the software used by these entities.”

Read the bipartisan letter on the Fair Currency Coalition Blog here.
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Professor T. Ginsburg’s “Eastphalia” Theory Applicable To IPR Law in China?

Yesterday, Professor Tom Ginsburg of University of Chicago Law School was giving a presentation at the University of Hong Kong about his paper ‘Eastphalia As The Perfection Of Westphalia’, which will be published in the Indiana Journal of Global Legal Studies.

In it he is trying to answer whether the following claims are each valid and if so compatible:
1. Globalisation leads to universalism and global constitutionalism (regionalism), so away from sovereignty as made explicit in the treaties of the Peace of Westphalia;
2. Asia will become the dominant power.
Read his paper here.
With “Eastphalia” Professor Ginsburg characterises the possibility that the values of Westphalia will continue in Asia. Nowadays, these “Asian values” of emphasis on sovereignty and non-interference have led to a distinctive sort of foreign trade agreements (FTAs) in China. These FTAs include subjects such as foreign direct investments (FDIs) and often intellectual property rights.
According to Professor Ginsburg, when China is signing these FTAs it is:
  • not interested in exporting its laws to other countries. It could therefore described as less imperial in this sense, less contractually inclined;
  • The FTAs have a framework quality, vague made for an ongoing relationship;
  • not legally enforceable and;
  • less driven by a template.
However, in regard to the legislation of intellectual property rights law, it might be that China is at the brink of exporting its vision on the protection and enforcement of intellectual property rights in international governmental bodies such as WIPO and WTO’s TRIPs.
To be continued later.
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Botanical DNA To Authenticate Mobile Phones, Laptops, Electronica

In the battle against ever more inventive counterfeiters ever more inventive authentication systems are needed. Applied DNA Sciences and Nissha Printing will collaborate on DNA authentication solutions for mobile phones, laptops and electronics. Read the press release by Applied DNA Sciences here.
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U.S. Senator Snaps Over Counterfeit Guitar Strings from China

Long Island, New York City guitar string company D’Addario’s is facing online counterfeit challenges which originate from China.
U.S. senator Charles E. Schumer urges the Homeland Department of Security to investigate and take all needed enforcement measures. “that the government confiscate the name of the website if they are deliberately selling counterfeit products”, and that the US Trade Representative shuts down the plant in China.
I guess Senator Schumer touches the right snare with D’Addario.
Read to Associated Press and listen to 1010WINS reporter Sonia Rincon here via CBS New York.
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Confucius Peace Prize: Did China Just Counterfeit the Nobel Peace Prize?

What has been China’s reaction to institutions it does not have any grip on? Come up with new substitutes. When the Holy Seat in Rome would not listen to Beijing it came up with its own version of this church, under the auspices of the Roman Patriotic Catholic Association. China even did not mind to intervene in the reincarnation cycle of dalai lamas by selecting a parallel dalai lama, read more here. Now the Chinese government does not agree with the Norwegian Nobel Committee to award the prize to Liu Xiaobo, see here. Therefore it comes with its own Confucius Peace Prize and awarded it to Lien Chan. Read more here.
Richard Kuslan of Aziabizblog has a nice article about it, see here.
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