In 2019, the Intellectual Property Court of the Supreme People’s Court was founded. Each year the IP Court of the SPC provides an annual report.
“In 2022, 457 new cases involving foreign parties, or Hong Kong, Macao, and Taiwan parties were received, accounting for 10.4% of the newcases, representing a year-on-year increase of 4.6%.”
You can read my article Algorithmic Dissuasion here or watch the presentation video, here; as well as Prof LIU Xiaochun’s here, followed by the Q&A for us both, held at the Workshop on China’s Algorithmic Recommendation Regulation (25-26 March 2023 at Peking University School of Transnational Law in Shenzhen) organized by my colleague Professor Gilad Abiri of PKU STL.
ABSTRACT
This article focuses on platforms operating in the algorithmic twilight zone between presenting search results and blocking them. To avoid risks or to optimize at the copyright holders’ request, platforms directly or in a time-phased way de-rank unauthorized but possibly legal content into relative oblivion. This midway manipulation of traffic to suspected content is opaque to the uploader of content, and the general user, lacks any redress mechanism, and possibly chills the freedom to share transformed content that includes copyrighted works. One can argue that the fundamental rights preempt license conditions which are incompatible with it.
The latest China Trademark website shows that the trademark applications of “马好帅 (Ma Haoshuai, or “the handsome horse” if translated by its meaning) “, “牛稳稳 (Niu Wenwen, or “the stable cow” if translated by its meaning)”, and “鸡冉冉 (Ji Ranran, or “the sounding chicken” if translated by its meaning)” submitted by Tencent Technology (Shenzhen) Co., Ltd. (“Tencent”) have been approved by the authority for registration. By pronouncing these trademarks, it is not hard to find that they are expressing a lovely meaning while having fluent tongs when pronouncing them. In other words, these animal trademarks are easy for people to remember.
In the rough statistic, Tencent has more than 40,000 trademarks, many of which are animal-related, especially the iconic penguin. Penguin trademarks applied by Tencent cover the registration categories from transportation, storage, and website services to fitness equipment, with names as “功夫企鹅 (Kung Fu Penguin)”, “企鹅娘 (Penguin Sister) “, “超级企鹅 (Super Penguin)” etc. Longer trademarks such as “企鹅不走 (Penguins Do Not Leave)”, “企鹅成长 (Penguin Growth)” and “企鹅健身 (Penguin Fitness)” are also waiting for substantive review by trademark authorities.
(Photo from the annual report of Tencent for the financial year of 2021 www.newtonghua.com)
What’s interesting is, correspondent to its widely-known nickname of “penguin factory”, it seems like Tencent would like to find a home for these penguins, as it is applying for the trademark of “企鹅岛 (Penguin Island)” recently. Meanwhile, other animals like dogs and cats are also in the application sequence of Tencent. “全民狗狗 (National Puppy)”, “支付猫 (Payment Cat)”, “支付小猫 (Payment Kitten)” have been successfully registered.
So, maybe what Tencent want to do, is to build an animal universe (lol). What do you think of this?
For hotpot fans, qianye tofu (千页豆腐, also translated as “thousand-page tofu”) should be a familiar dish. Benefit from its special preparation method, the taste of qianye tofu is more elastic than traditional tofu.
(Photo from the Netease News)
In 2014, a food company in Suzhou (“Suzhou Company”) successfully registered “Qianye” (千页) as its trademark (“Qianye”), and the registered type is tofu products. With the development of the food industry including the hot pot industry, qianye tofu was more and more well-known by the public and widely used to refer to the specific tofu mentioned above. Therefore, in 2016, a food enterprise in Shanghai (“Shanghai Company”) insisted that Qianye has become a commodity name in the field of bean products, which can no longer be distinguished from its sources. In the argument of the Shanghai Company, qianye tofu has lost the significant basis for the use of the trademark, and thus applied to the authority for the cancellation of the registration of Qianye.
On November 13, 2020, the State Intellectual Property Office (“IP Office”) made a decision (商评字[2020]第291437号) to maintain the registration of Qianye. The Shanghai Company refused to accept this decision and filed an administrative lawsuit in Beijing Intellectual Property Court (“Beijing IP Court”) against the IP Office. However, the Beijing IP Court rejected Shanghai Company’s claim. In this regard, the Shanghai Company appealed to Beijing Municipal High People’s Court (“Beijing High Court”), and was finally supported by Beijing High Court in April 2022 by ordering the IP Office to make a new decision.
(Photo from www.newtonghua.com)
What’s interest is, in this case, the Beijing High Court held that for the degradation of a trademark (from a trademark to a general name of the goods it registered to use), factors such as the time standard, the subject standard, the regional standard, the commodity standard and the standard of proof shall be taken into consideration comprehensively and shall not take the subjective fault of the trademark owner as a premise. In other words, even if registrants have no fault or malice, trademarks can still be regarded as degenerated into a common name for objective reasons. In this case, even when the Suzhou Company has no intentional fault, the Qianye trademark could still be found as degenerated into a common name following the change of the industries.
Congratulations to the manufacturers of qianye tofu, and please produce more delicious and healthy tofu to us.
Welcome to IP Dragon’s Monthly Roar, your roundup of IP news in China. Written by IP Dragon’s brand new reporter “IP Lion”. In this IP Dragon’s Roar, Dragon Nest prevails over Shadow of Dragon in an “iconic” case, streaming hijacking at the Olympics, and Luckin Coffee’s trademark registration to connect to Generation Z.
Mind your archers and mages: Shanghai IP Court found copyright infringement by comparing the characters of game icons [IP Lion]
The Shanghai Intellectual Property Court (“Shanghai IP Court”) ruled in a recent judgment that materials from the mobile phone game 龙之影 (Shadow of the Dragon) constitute copyright infringements on another game named龙之谷 (Dragon Nest).
The Shanghai IP Court held that game icons have originality and artistic value and are able to constitute artworks in the sense of copyright law and thus should be protected. The icon of龙之影claimed by the infringed party is composed of red and blue colors, and the left and right are spliced by two face images with the same look, together with different colors and different visual effects. The court found that this icon has high originality and artistic value and can be protected as an artwork under copyright law.
Apart from above, Shanghai IP Court also found that the copyrights of “warrior”, “priest” and “archer” of 龙之谷 were also infringed by龙之影.
In its reasoning, Shanghai IP Court compared two “warrior” characters against one another, a “priest” against a “mage”, and an “archer” against an “elf” that is contained in the icon, and found that compared with the icons of 龙之谷, the icons of龙之影are composed of similar human faces, similar color matching of the left and right scenes, and the contour, hairstyle, and expression of the faces contained are also similar to the icon of龙之谷. Pursuant to this, the court found the copyright of龙之谷is infringed.
So, what kind of character you prefer to play in a MMORPG game?
News sources (in Chinese): http://www.foridom.com/index.php/Index/article/id/915 Court judgment (in Chinese): https://wenshu.court.gov.cn/website/wenshu/181107ANFZ0BXSK4/index.html?docId=2090a034b3024879b9d6ae1a00e77e15
China’s first litigation injunction on unauthorized broadcasting of Winter Olympic Games [IP Lion]
To maximize the profit from the 2022 Beijing Winter Olympic Games (“Winter Olympic Games”), China’s webcast giants have invested a great effort in the preparation of broadcasting this world-class event, including legal preparations.
Sohu.com photo.
A recent-disclosed injunction from the Court of Tianjin Pilot Free Trade Zone (“the Court”) shows that Tencent applied for a pre-litigation injunction against the illegal broadcasting of Winter Olympic Games programs and was supported by the court.
The Court confirmed that Tencent (the applicant) invested a huge amount of cost to obtain the authorization of broadcasting the Winter Olympic Games on its video platforms, which built its advantage in market competition. In view of the Court, the operator of the “TV Home” app (the respondent of Tencent’s application) provided broadcasting service of the Winter Olympic Games without permission from Tencent and further used such service as an advertising point to attract users to download the “TV Home” app. The Court found such conduct from the TV home is disobeying of good faith and business ethics, which resulted in the loss of Tencent video users and disturbing the market competition order (together with the social interests behind the orderly broadcasting of the Olympic Games), and thus could constitute unfair competition. Accordingly, the Court injuncted the respondent to immediately stop providing relevant contents of the Winter Olympic Games in its app.
What’s interesting about this injunction is that it relates to the bigger picture behind streaming hijack, user loss, and unfair competition: the rapid growth of online social platforms on mobile devices in the past decade. Namely, when we compare this injunction to the 2008 Beijing Summer Olympic Games, it is not so hard to find that, back then, Tencent was not as huge as it is nowadays, and the broadcasting activities were only limited to TVs and PC webs/apps, no smartphones and no relevant apps on mobile devices. Back then, the famous anti-trust and anti-unfair-competition case “Tencent vs. 360” in China’s Supreme People’s Court did not exist, and netizens in China were living in a peaceful world that would not be bothered by fragmented information from mobile devices. Will you miss the days a decade ago?
News sources (in Chinese): https://mp.weixin.qq.com/s/e3oSivUangJ6RsYaXaosqw Court judgment (in Chinese): https://wenshu.court.gov.cn/website/wenshu/181107ANFZ0BXSK4/index.html?docId=bfb9799918b64a60808eae5e000937c6
Aiming at Generation Z? Luckin Coffee’s “歪歪滴艾斯” trademark registration is pending [IP Lion]
Apart from the talked about netizens in China above, recently, Luckin Coffee successfully registered the trademark of “歪歪滴艾斯”, a symbol of the Chinese generation Z. The relevant trademark was applied in May 2021, which is classified as advertising sales and convenience food. However, on the official website of China’s trademark department, the “歪歪滴艾斯” is now in pending, more specifically, it is in the process of the appeal of refusal.
What’s interesting is, 歪歪滴艾斯[Wāi wāi dī ài sī] is a direct transliteration of the internet trendy word “YYDS” in Mandarin for recent years. As an abbreviation, it means the full name of “Yong yuan de Shen”, that is, “eternal God” in Mandarin. This catchphrase comes from the live stream of the League of Legends (“LoL”) game and has been used by the netizens of Post-00 and post-90 generations on various occasions. Now this YYDS is registered as a trademark by Luckin coffee, which also reveals the importance attaches to the young people’s market from the view of Luckin coffee.
In fact, YYDS originated from a live stream of a Chinese celebrity, who is a fan of professional a LoL player named “UZI”. He shouted many times during the live stream that “Uzi, eternal God.” Later, it was regarded as an exclamation and used by netizens to show their highest praise to almost everything. Some reports show that the use of YYDS even spreads outside of the mainland and is used by young people in regions such as Taiwan, Hong Kong, Macau, and also by the young Chinese in countries like Singapore, Malaysia, and Australia.
In fact, to get closer to young people, Luckin Coffee [in Chinese:瑞幸咖啡(Ruìxìng Kāfēi)] launched the advertising film “Luckin YYDS” in May 2021, ahead of its competitors. In the same period, “#Luckin coffee applied to register the YYDS trademark#” had quickly become a trendy search topic on China’s largest microblog platform, Weibo (a platform that could be regarded as the Chinese version of Twitter).
As one of the generation Z (or above), are you into this way of marketing?
News sources (in Chinese): https://mp.weixin.qq.com/s/obksCN8g5mIlbID5pOct0A Court judgment (in Chinese): http://wcjs.sbj.cnipa.gov.cn/txnDetail.do?b9La8sqW=LQLS4AlqEHNqrfDXW.thu1JTe9RM_kzi4herwUzT3ikGQZH8UEGzQEGvz7dZSooJci_y34Tj_yPkx8ig3jgrVDoFxo39zjDBSpvLCIAKdwb53UBNOD558aOykQyvWM9txbwKN.evGhKwAzKS1.eUmH5gFuUIcJnL1yYguxkBHgvZ6mgFgr4ox5FdRRTCTZaBMi2sD2jBHsa
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Welcome to IP Dragon’s Monthly Roar, your roundup of IP news in China. Written by IP Dragon’s brand new reporter “IP Lion”. In this IP Dragon’s Roar, Tsuburaya prevails in Shanghai IP Court, Green Sichuan Pepper was held generic, minors used as boosters of King of Glory, the Supreme People’s Court decided in the protracted The Legend case.
Good News for Animation Fans: Shanghai IP Court Verdict In Favor of The Japanese Producer’s Claim to Protect Its Ultraman Images With a Remedy of RMB2.5 million[IP Lion]
(Photo from Ultraman Wiki)
The IP disputes between the producer of the famous Japanese animation “Ultraman” series, Tsuburaya Production Co., Ltd. (the plaintiff, “Tsuburaya”), and a group of Chinese companies (the “defendants”) was dropped in the end after an appellate decision by the Shanghai Intellectual Property Court in January 2022. The court found that the abovementioned defendants had previously inserted in their commercial an animation which included the “Ultraman” and “Ultraman Jack” characters of Tsuburaya, which resulted in a profit for the defendants. The court thus identified the insertion by the defendants as constituting copyright infringement, and decided that the defendants had to jointly publish a statement for 10 consecutive days on Youku (www.youku.com) and Tudou (www.tudou. Com) with the intention of eliminating the adverse effects caused to the Tsuburaya by their torts, while placing a statement of the same content on their corresponding Sina Weibo and Wechat accounts, for 30 consecutive days respectively, with RMB2 million compensation to Tsuburaya.
Japanese animation is one of the collective memories of the generation born after 1980, but compared with US cartoon characters (like those of Disney and Marvel, etc.), Japanese animation characters have lagged in claiming their IP rights in China, and therefore, the abovementioned court decision involving Ultraman marks the success of renowned Japanese animation characters gaining domestic protection of intellectual property in China. With this incentive, will more Japanese animation characters claim their IP rights in China?
Spicy food enthusiasts shall not miss this news: the eye-catching dispute of trademark infringement of “green Sichuan pepper” has ended by an appellate decision of the Sichuan High Court in January 2022. According to Sichuan High Court, the “green Sichuan pepper (青花椒)” identification used on the brand of hotpot shops did not constitute an infringement of trademarks. The Sichuan High Court held that green Sichuan pepper, the generic name used to refer to the condiments, has a long culinary history in the Sichuan region, while the natural association and delicate boundaries between catering services and dish seasoning products have greatly reduced the significance of this vocabulary. The use of “green Sichuan pepper” on the brand of hotpot shops is not yet able to significantly differentiate the word from the green Sichuan pepper usage in general awareness, and at the same time consumers do not misrecognize and confuse the defendant who operated in Sichuan and the plaintiff who operated primarily in Shanghai, and therefore the plaintiff’s use does not constitute an infringement of trademarks.
The aforementioned series of “green Sichuan pepper” trademark rights protection cases initiated by the plaintiff were filed as early as 2017, and most of them were litigated in 2021, with defendants involved from all over China and most of them were in Sichuan. As a company with principal business places in Shanghai, the plaintiff’s actions aroused the anger and disagreements of many Sichuan food lovers. In their eyes, the decision from the Sichuan High Court becomes the interesting ingredient of this spicy litigation dish.
A Stumbling Block For The Trendiest Mobile Game? A Shanghai District Court Verdict An Immediate Cessation on Apps’ Function of Allowing Minors to Be A “Booster” of The Game “King of Glory” (“王者荣耀”)[IP Lion]
“Boosters” are those people that conduct the upgrading, practice, acquisition of equipment, and other services in online games for the game account holder who pays them with a commission for their services. Because it involves the risk of theft of the game account and disobeys the account management policy of game companies, the boosters mainly work on third-party platforms outside the game reach service with customers on these platforms.
In China at the moment, the trendiest mobile online game is “王者荣耀” (King of Glory), a multiplayer online battle arena (MOBA) game produced by Tencent. Without a doubt, this trendiest MOBA game is targeted by massive booster platforms, where they even allow minors to be a booster.
However, the Pudong District Court of Shanghai made a pre-filed decision in January 2022 on behavioral preservation, ordered the “Power Levelling Help” (“代练帮”) app operated by the Beisheng Company to immediately stop the recruiting and using minor boosters for the game “King of Glory” (“the involved game”), and the “2345 Company” immediately stopped providing the Power Levelling Help app at its “2345 mobile phone assistant” until Beisheng Company stopped the minor’s booster service.
In this case, applicant Tencent claims that it is the copyright holder of the involved game and exclusively operates the game. According to China’s requirements for protecting minors, Tencent applied a system of real name and anti-addiction measures in the involved game, minors are only able to play between 20:00 to 21:00 on Fridays, Saturdays, Sundays, and legal holidays. Apart from these measures, the game service agreement of the involved game also defines that the game user must not provide their game account number to others to do booster-like activities of a commercial nature.
Beisheng Company operates the Power Levelling Help app in the form of “billing cash” and setting up a special category for the involved game to solicit and encourage minors to use their platform to do booster business commercially and thus the minors could avoid the regulation of the anti-addiction system.
This appeal was supported by the court. The court held that the Power Levelling Help app also made it possible for users to bypass the real name and anti-addiction measures, which resulted in compromising the game experience, legitimate interests of other players, and the public interest of protecting minors.
Good News For The First Generation of PC Online Game Player in China: Supreme People’s Court’s Verdict Ended The Protracted IP Disputes of “The Legend” [IP Lion]
(Photo from Sina Games)
As one of the collective memories of China’s first generation of online enthusiasts, the large multi-person online role play game the Legend of Mir 2 (“The Legend”), profoundly influenced the development of the game industry in the two decades.
The Korean-based Actoz Soft and WeMade Entertainment originally developed independently as two shared copyright holders of The Legend. But starting from 2016, WeMade successively and independently authorized The Legend to a series of enterprises and established an IP company of The Legend.
Besides that, WeMade also took litigation actions against Actoz Soft. On 30 June 2017, Actoz Soft extended the software license agreement of The Legend to 28 September 2023. WeMade contended that the extension infringed its rights and therefore filed a suit in Shanghai requesting that this extension was ineffective and claimed reimbursement of RMB 1 million. Later, on 23 January 2018, the Shanghai International Arbitration Center determined that Actoz Soft’s extending agreement was effective. WeMade, however, still insisted on the grounds of the agreement’s violation of its rights, bringing proceedings at multiple Chinese courts.
Eventually, in January 2022, the Supreme People’s Court rendered a final decision that the Actoz Soft’s extending agreement was non-tortious and that the conduct of WeMade (using the notice to instead of negotiation, hiding the information of transaction parties and promoting new license holder independently, etc.) infringed Actoz Soft’s legal interests.
WeMade’s behavior (even when arbitration and low-level litigation had already ruled that its behavior was infringing, still filed lawsuits in many Chinese courts to try to proof the other party’s infringement) has many followers in the market. However, pursuing the trial principle of “same case and same judgment” in today’s China, the Supreme People’s Court’s precedent has put a lid on this kind of behavior in the game industry.
Guest post by OUYANG Yini, JD and JM candidate at PKU STL.
On December 30, 2020, Shanghai No. 2 Intermediate People’s Court announced its judgment on Michael Jeffrey Jordan v. Qiaodan Sports Co., Ltd., including four parts: (1) the defendant shall make public apology to the plaintiff in the newspapers and on the Internet, clarifying there is no relationship between Qiaodan Sports and Michael Jordan; (2) the defendant shall stop using “Qiaodan” as its trade name; (3) the defendant shall stop using trademarks involving “Qiaodan,” and for those that have become incontestable, the defendant shall use reasonable methods to remind the public of the irrelevancy between the two parties; (4) the defendant shall compensate the plaintiff for mental damages and reasonable costs, respectively 300,000 and 50,000 yuan.
Picture copyright Tsang Yan Tung
If nothing else, this is going to be the end with regard to the series of “Qiaodan” trademark disputes which have lasted for more than 9 years. Although this is just the first trial decision and Qiaodan Sports theoretically could appeal the ruling, it has little chance to change the ultimate outcome according to the judgment made by the Supreme People’s Court in Michael Jeffrey Jordan v. Trademark Review and Adjudication Board. In fact, Qiaodan Sports clearly understands that it is the losing party, therefore it chose to quickly comply with the judgment and changed its company name to Zhongqiao Sports on January 12, 2021.
“Zhongqiao” implies that it is an abbreviation of “Zhongguo Qiaodan,” meaning Chinese Jordan, and many consumers are annoyed at such slippery behavior. Directly speaking, it is just the most economic way for the company to act in compliance with the court’s order. If the company adopts a brand new name that has nothing to do with the former one, it needs to make huge investments in advertisement and promotion to rebuild its goodwill and reputation. Adopting “Zhongqiao” as the new name, at least the company could reduce some costs even though a part of consumers might look down on its attempt to associate with “Qiaodan.” “成也萧何，败也萧何,” one famous sentence in China, meaning either success or failure boils down to the same person, appropriately describes the sports company’s developing history. Qiaodan Sports made its achievements partly relying on Michael Jordan’s fame in China, but ultimately lost a large portion of its goodwill due to the series of trademark lawsuits brought by Michael Jordan. It does not work anymore to run a business by capitalizing on other’s reputation, and the correct way is to create and maintain an entity’s own trademark.
This is part of a series that show what the 18 judicial interpretations on IP look like after their 2020 amendments that make them Civil Code-ready. See the first of the series here and the amendment on the other patent law judicial interpretation here.
Below is the amendment to the Supreme People’s Court’s Interpretation on Several Issues Concerning the Application of Law in the Trial of Patent Infringement Cases (2). See the old version of the Judicial Interpretation on the site of CCPIT here and the amendment on the site of Justra here (hat tip to Susan Finder). You can find the changes in the introduction and Articles 2, 6 and 21.
Please note that bold is an addition and a strike-out is, indeed, a removal.
SPC’s Interpretation on Several Issues Concerning the Application of Law in the Trial of Patent Infringement Cases (2)
In order to correctly hear patent infringement disputes, it is based on the Civil Code of the PRC, Patent Law of the PRC, Civil Procedure Law of the PRC and other relevant legal provisions, combined with trial practice.
Civil Code of the PRC, adopted on 28 May 2020 and became effective on 1 January 2021.
Article 1
Where the claims of a patent contain two or more claims, the right holder shall specify in the complaint the claims based on which the accused infringer is being sued for patent infringement. Where such claims are not specified or not clearly stated in the complaint, the people’s court shall require the right holder to specify the claims; where the right holder refuses to do so upon requirement of the people’s court, the latter may rule to dismiss the lawsuit.
Article 2
Where the claims of a patent on the basis of which the right holder asserted patent infringement in a lawsuit are declared invalid by the Patent Administration Department of the State CouncilPatent Re-examination Board, the people’s court trying the patent infringement dispute may render a ruling to dismiss the lawsuit filed by the right holder on the basis of the invalid claims.
The right holder may file a lawsuit separately if there is evidence showing that the decision to declare the claims invalid is revoked by a binding administrative judgment.
If the patentee files a lawsuit separately, the period for limitation of action shall be calculated from the date of service of the administrative judgment mentioned in Paragraph 2 of this Article.
Article 3
Where, as a result of obvious violation of paragraph 3 or paragraph 4 of Article 26 the Patent Law, the description cannot be used to explain the claims, which does not fall within the circumstances specified in Article 4 hereof and based on which a request is made for declaring the patent invalid, the people’s court trying the patent infringement dispute shall in general rule to suspend the lawsuit; if the patent is not announced invalid within a reasonable period of time, the people’s court may determine the protection scope according to the claims.
Article 4
In spite that the claims, description or its accompanied drawings are ambiguous to a person of ordinary skill in the art in terms of grammars, wordings, punctuations, graphics, symbols, etc., where said person of ordinary skill in the art can clearly arrive at only one unique understanding by reading the claims, description and drawings, the people’s court shall make determination according to said unique understanding.
Article 5
When a people’s court determines the protection scope of a patent, the technical features defined in the preamble and the characterizing portions of an independent claim, and the technical features defined in the reference and the characterizing portions of a dependent claim shall all be considered.
Article 6
The people’s court may construe the claims of the patent concerned by referring to another patent that has a “divisional application” relation with the patent concerned, the file wrappers of said another patent and any binding judgments/rulings in relation to its allowability or validity.
Said file wrappers include the written materials submitted by applicants or patentees during the process of patent examination, re-examination and invalidation, as well as office actions, meeting minutes, oral hearing records, binding patent re-examination decisions, patent invalidation decisions etc. issued by the patent administrative department of the State Council or the Patent Reexamination Board.
Article 7
As regards a close-ended claim for a composition, if an accused technical solution contains technical features in addition to all the technical features of the claim, the people’s court shall determine that the accused technical solution does not fall within the protection scope of the patent, except that the additional technical features are unavoidable impurities in normal quantity.
Said close-ended claim for a composition referred to in the preceding paragraph shall generally not include the claim of a traditional Chinese medicine composition.
Article 8
A functional feature is a technical feature defining the structure, composition, step, condition or their relations by its function or effect in the relevant invention-creation, unless a person of ordinary skill in the art is able to directly and clearly determine the specific embodiment for achieving such function or effect by reading purely the claim.
Where, as compared to the technical feature in the description and its accompanied drawings essential for achieving aforesaid function or effect, the corresponding technical feature of the accused technical solution performs the same function by substantially the same way to achieve the same result, and can be contemplated without creative work by a person of ordinary skill in the art at the time of the accused infringement, the people’s court shall determine that such corresponding technical feature is identical with or equivalent to the functional feature.
Article 9
Where the accused technical solution cannot be applied to the use environment defined by the use environment features of a claim, the people’s court shall determine that the accused technical solution does not fall within the protection scope of the patent.
Article 10
Where the manufacturing process of the accused product is neither identical with nor equivalent to the manufacturing process recited in a claim that includes said manufacturing process to define certain technical features of the relevant product, the people’s court shall determine that the accused technical solution does not fall within the protection scope of the patent.
Article 11
Where the sequence of technical steps is not specified in a process claim but a person of ordinary skill in the art can directly and clearly learn that such technical steps shall be exploited according to specific sequence upon reading the claims, description and drawings, the people’s court shall decide that such sequence of steps is a limitation to the protection scope of the patent.
Article 12
Where phrases such as “at least” or “not more than” are used in a claim to define numerical features, and a person of ordinary skill in the art can learn that the patented technical solution places special emphasis on the roles of such phrases to limit the respective technical features, upon reading the claims, description and drawings, the people’s court shall not side with the right holder if the later alleges that the technical features different from the numerical features are equivalent features.
Article 13
Where the right holder proves that any amendments or statements made by the patent applicant or the patentee to limit the claims, description or drawings during the patent prosecution or patent invalidation proceedings are definitely denied, the people’s court shall determine that said amendments or statements do not lead to waiver of a technical solution.
Article 14
When determining the level of knowledge and discriminability of an ordinary consumer to a design, the people’s court shall normally consider the design space of the products in the same or similar category as the patented design at the time of infringement. Where the design space is relatively large, the people’s court may determine that it is usually unlikely for an ordinary consumer to notice the minor differences between the compared designs; where the design space is relatively small, the people’s court may determine that it is usually more likely for an ordinary consumer to notice the minor differences between two compared designs.
Article 15
For a patent for designs of products in set, where the accused design is identical with or similar to one of the designs, the people’s court shall determine that the accused design falls within the protection scope of the patent.
Article 16
For a patent for design of a component product with a unique assembly relation among the individual components, where the accused design is identical with or similar to the design of the component product in its assembled sate, the people’s court shall determine that the accused design falls within the protection scope of the patent.
For a patent for design of a component product with no assembly relation or with no unique assembly relation among the individual components, where the accused design is identical with or similar to the designs of all the individual components of the component product, the people’s court shall determine that the accused design falls within the protection scope of the patent; where the accused design lacks the design of one individual component of the component product or is neither identical with nor similar to the design of one individual component, the people’s court shall determine that the accused design doesn’t fall within the protection scope of the patent.
Article 17
For a patent for design of a product with variant states, where the accused design is identical with or similar to the design in all its use states as shown in the relevant views, the people’s court shall determine that the accused design falls within the protection scope of the patent; where the accused design lacks the design in one of its use states or is neither identical with nor similar to the design in one of its use states, the people’s court shall determine that the accused design doesn’t fall within the protection scope of the patent.
Article 18
Where a right holder files a lawsuit to request an entity or individual to pay appropriate fees for exploiting its, his or her invention during the period from the date of publication of the invention patent application to the date of announcement of grant of the invention patent in accordance with Article 13 Patent Law, the people’s court may determine the fees reasonably by referring to relevant royalties of the patent.
Where the protection scope claimed by the applicant upon the publication of the invention patent application is inconsistent with the protection scope of the patent upon the announcement of grant of the invention patent, and the accused technical solution falls within both of the foregoing two protection scopes, the people’s court shall determine that the defendant exploited the relevant invention during the period stated in the preceding paragraph; where the accused technical solution falls within only one of the two protection scopes, the people’s court shall determine that the defendant didn’t exploit the invention during the period stated in the preceding paragraph.
Where a party, without consent of the patentee and for the business purposes, uses, offers to sell, or sells the products that were manufactured, sold or imported by another party during the period stated in Paragraph 1 of this Article after the date of announcement of grant of the invention patent, and such another party has paid or promised in writing to pay appropriate fees prescribed in Article 13 Patent Law, the people’s court shall not side with the right holder asserting that the aforesaid act of use, offer to sell and sell has infringed the patent.
Article 19
Where a sales contract of products is concluded in accordance with laws, the people’s court shall determine that the sale as prescribed by Article 11 Patent Law have been constituted.
Article 20
As regards the re-processing or re-treatment of a follow-up product obtained from the further processing or treatment of a product directly obtained from a patented process, the people’s court shall determine that such re-processing or re-treatment does not belong to “use of a product directly obtained according to the patented process” as prescribed in Article 11 Patent Law.
Article 21
Where a party, knowing that certain products are the materials, equipment, parts and components or intermediate items, etc. specifically for the exploitation of a patent, without consent of the patentee and for business purposes, provides such products to another party committing patent infringement, the people’s court shall side with the right holder claiming that the party’s provision of such products is an act of contributory infringement as prescribed by Article 9 of the Tort Liability LawArticle 1169 Civil Code.
Where a party, knowing that a product or process has been granted patent, without consent of the patentee and for business purposes, induces positively another party to commit patent infringement, the people’s court shall side with the right holder claiming that the inducement of the party is an act of inducing another party to commit infringement as prescribed by Article 9 of the Tort Liability LawArticle 1169 Civil Code.
[Mark Cohen of China IPR posted an unofficial translation of the general provisions part of the Civil Code, see here. Article 1169 Civil Code: A person who aids or abets an actor in the commission of a tortious act shall assume joint and several liability with the actor. A person who aids or abets an actor with no or limited capacity for performing performing civil juristic acts in the commission of a tortious act shall assume tort liability. The guardian of the actor with no or limited capacity for performing civil juristic acts shall assume corresponding liability where he fails to fulfill the duties of a guardian.]
Article 22
Where an accused infringer defends on the basis of prior arts or prior designs, the people’s court shall define the prior arts or prior designs pursuant to the Patent Law effective on the filing date of the patent.
Article 23
Where the accused technical solution or design falls within the protection scope of the asserted prior patent, the people’s court shall not side with the accused infringer defending that its technical solution or design has been granted patent and thus does not infringe the asserted patent.
Article 24
Where a recommended national, industrial or local standard clearly indicates the essential patent-related information, the people’s court shall in general not side with the accused infringer defending that the exploitation of such standard does not need consent of the patentee and thus does not infringe the patent.
Where a recommended national, industrial or local standard clearly indicates the essential patent-related information and the patentee intentionally violates the obligation for licensing on fair, reasonable and non-discriminatory terms as committed in formulating the standard in consultation with the accused infringer on the conditions for the exploitation and licensing of such patent, resulting in failure to conclude a patent licensing contract, the people’s court shall, in general, not side with the right holder claiming stopping the exploitation of the standard by the accused infringer, if the accused infringer has no obvious fault in the consultation.
The conditions for the exploitation and licensing of a patent as mentioned in Paragraph 2 of this Article shall be determined upon consultation by the patentee and the accused infringer. Where no agreement is reached upon careful consultation, the parties may request the people’s court to determine such conditions, in which case the people’s court shall, on fair, reasonable and non-discriminatory terms, take into comprehensive consideration the degree of innovation of the patent, the role of the patent in the standard, the technical field to which the standard belongs, the nature and scope of application of the standard, the relevant licensing conditions and other factors to determine such exploitation and licensing conditions.
The provisions on the exploitation of a patent involved in a standard as otherwise prescribed by laws and administrative regulations shall prevail.
Article 25
Where a party, using, offering to sell, or selling patent-infringing products for business purposes without the knowledge that such products are manufactured and sold without consent of the patentee, proffers evidence showing the legitimate sources of such products, the people’s court shall side with the right holder claiming that the aforesaid using, offering to sell, or selling shall be stopped, except that the user of the accused products proffers evidence to prove that it has paid reasonable quid pro quo for such products.
For the purpose of Paragraph 1 of this Article, “without the knowledge” shall mean the circumstance where a party has no actual knowledge and ought not to have knowledge.
For the purpose of Paragraph 1 of this Article, “legitimate sources” shall mean acquire products through regular business methods such as lawful sales channels or usual sale and purchase contracts. The party who engages in use, offering to sell or selling shall proffer relevant evidence consistent with trading habits to prove said legitimate sources.
Article 26
Where the defendant is found to commit patent infringement, the people’s court shall side with the right holder claiming that the defendant shall be ordered to stop infringement; however, the people’s court may, instead of ordering the defendant to stop the accused act, order the defendant to pay reasonable fees in consideration of the interests of the state or the public interest.
Article 27
Where it is difficult to determine the actual loss suffered by a right holder, the people’s court shall require the right holder to proffer evidence to prove the gains obtained by the infringer from the infringement in accordance with Paragraph 1 of Article 65 Patent Law. Where the right holder has proffered the prima facie evidence in relation to the gains obtained by the infringer but the account books and materials related to the acts of patent infringement are mainly under the control of the infringer, the people’s court may order the infringer to submit such account books and materials; where the infringer refuses to provide such account books and materials without justification or submits false account books and materials, the people’s court may determine the gains obtained by the infringer from the infringement based on the claims of the right holder and the evidence proffered thereby.
Article 28
Where a right holder and the infringer have legally agreed on the amount of damages for patent infringement or the methods for calculating the amount of damages, and one of them claims during a patent infringement lawsuit that the amount of damages shall be determined in accordance with such an agreement, the people’s court shall uphold such a claim.
Article 29
Where a party legally applies for retrial based on a decision declaring the patent invalid to request for vocation of the judgment or mediation statement on patent infringement that is rendered by the people’s court before the patent is declared invalid but is not enforced, the people’s court may render a ruling to suspend the examination in retrial and suspend the enforcement of the original judgment or mediation statement.
If the patentee provides sufficient and effective guarantee to the people’s court to request that the enforcement of the judgment or mediation statement mentioned in the preceding paragraph be continued, the people’s court shall continue the enforcement; if the infringer provides sufficient and effective counter-guarantee to the people’s court to request that the enforcement be suspended, the people’s court shall approve such request. Where the decision declaring the patent invalid is not revoked by a binding ruling/judgment of the people’s court, the patentee shall make compensation for the loss suffered by the other party concerned due to the continuation of the enforcement; where the decision declaring the patent invalid is revoked by a binding ruling/judgment of the people’s court, the people’s court may directly enforce the property under the above counter-guarantee based on the judgment or mediation statement mentioned in the preceding paragraph provided that the patent is still valid.
Article 30
If a lawsuit is not filed against a decision declaring the patent invalid with the people’s court within the statutory time limit or the decision is not revoked by a binding ruling/judgment made after filing of a lawsuit, the people’s court shall conduct retrial if one party legally applies for retrial based on such decision requesting that the judgment or mediation statement on patent infringement that has been rendered before the announcement of the invalidity of the patent and is not yet enforced be revoked. If the party, based on such decision, legally applies for termination of the enforcement of the judgment or mediation statement on patent infringement that has been rendered before the declaration of the invalidity of patent and is not yet enforced, the people’s court shall rule to terminate the enforcement.
Article 31
This Interpretation is implemented as of 1 April 2016. In case the relevant judicial interpretations previously published by the SPC are not consistent with this interpretation, this interpretation shall prevail.
Guest post by OUYANG Yini, JD and JM candidate at PKU STL.
Recently, one of the most remarkable hot news, occurred in the IP field in China: the latest amendment of the Copyright Law. This Third Amendment to the Copyright Law was adopted on 11 November 2020 and will become effective on 1 June 2021. The legislature makes many changes in the new version of the Copyright Law, which may lead to vigorous debates among the legal profession. The purpose of this blog is to give a brief introduction to some of the most significant modifications in this new reform of China’s Copyright Law.
I. The range of protectable works is largely expanded
Previously, eight protectable forms of works were rigidly enumerated in the old Article 3, with the catch-all provision providing that “other works as provided in laws and administrative regulations” could also be protected. However, the catch-all provision has not been triggered so far, therefore when courts confront an emerging form of work sought to be protected under Copyright Law, the judges must interpret the emerging work into one of the eight categories, otherwise such work is not copyrightable unless the laws or administrative regulations have had been developed to cover it.
The situation is different now: the new Article 3(9) gives an open-ended definition that “works … shall refer to ingenious intellectual achievements in the fields of literature, art and science that can be presented in a certain form,” reflecting two fundamental elements globally recognized for copyright law protection, namely originality and expression. Accordingly, the revised catch-all provision is now reading “other intellectual achievements that meet the characteristics of works,” which gives judges much more discretion to determine whether or not an emerging type of work is copyrightable.
Photo Tsang Yan Tung Five fingers, five highlights
II. Audiovisual work is introduced into the Copyright Law
Another eye-catching change is that “cinematographic works and works created by a process analogous to cinematography,” an explicitly enumerated category, is replaced by “audiovisual works”. This replacement is able to expand the scope of protection to include works created in a way different from cinematography, including online game graphics, short videos, etc. The remaining questions are that the new version of the Copyright Law does not clearly define what constitutes audiovisual works, and the relationship between audiovisual work and video recording is confusing since video recording is protected by neighboring rights in Chapter 4 of the Copyright Law. A further interpretation is necessary.
III. Right of broadcast is broadened
The right of broadcast is redefined to incorporate cable broadcasts, no longer emphasizing that the initial dissemination of works must be in a wireless form. Before this amendment, only wireless broadcasts were protected. Hence, many behaviors during live webcast may infringe the right of broadcast, such as covering songs without permission.
IV. Regulation of collective work is added
The Second Amendment of the Copyright Law only states that a co-author enjoys copyright in his own contribution if the collective work is separable, but does not mention what to do if the collective work is not separable. The new added clause provides that a co-author of an inseparable work could enforce copyright regarding the whole work, except for transferring, exclusively licensing and pledging, but the profits shall be shared with the other co-authors. Such regulation promotes the dissemination of works to the public, otherwise many great works would not even be created because the co-authors could not agree on the exploitation conditions and works that are finished would be kept from the public because the co-authors have different opinions concerning exploitation.
V. Punitive damages are incorporated
As both Trademark Law and Patent Law have incorporated punitive damages clauses, it is not surprising that punitive damages will also be included in the Copyright Law, and it marks that the system of punitive damages is established in the IP field in China. The plaintiff has to prove that the defendant’s conduct was in bad faith and the infringement serious.
My colleague Susan Finder provides a great overview on Supreme People’s Court Monitor of how the SPC delivered its first batches of documents designed to ensure a seamless transition to the Civil Code, see here. One batch of documents are 18 judicial interpretations on the respective IP laws to make sure that they are in accordance with the Civil Code, see here. Therefore, it is no wonder that the term “民法典” (Civil Code) occurs 84 times in these judicial interpretations.
The Decision of the SPC on Amending 18 IP Judicial Interpretations including the Interpretation of the SPC on Several Issues Concerning the Application of Laws in the Trial of Patent Infringement Disputes (II) was approved by the SPC on 23 December 2020. It was adopted at the 1823th meeting of the Judicial Committee of the SPC and came into force on 1 January 2021.
The following judicial interpretations went into force: 2 on patent law; 7 on trademark law; 1 on copyright law; 1 on internet intermediary; 2 on new plant variety law; 1 on unfair competition and 1 on monopoly acts; 1 on domain names; 1 on technology contracts; and one on IP courts.
3. Interpretation of the SPC on Issues Concerning Jurisdiction and the Scope of Application of Law in Trial of Trademark Cases.
4. Interpretation of the SPC on Several Issues Concerning the Application of Law of Civil Dispute Cases of Trademarks.
5. Provisions of the SPC on Several Issues Concerning the Trial of Civil Disputes Involving Conflicts between Registered Trademarks, Enterprise Names and Prior Rights.
6. Interpretation of the SPC on Several Issues concerning the Application of Law in the Trial of Civil Dispute Cases Involving the Protection of Well-Known Trademarks.
7. Interpretation of the SPC on the Jurisdiction of Trademark Cases and the Application of Law.
8. Provisions of the SPC on Several Issues Concerning the Trial of Administrative Cases Concerning Trademark Authorization and Confirmation.
9. Interpretation of the SPC on the People’s Court Property Preservation of Registered Trademark Rights.
10. Interpretation of the SPC on Several Issues Concerning the Application of Law in the Trial of Copyright Civil Dispute Cases.
11. Provisions of the SPC on Several Issues Concerning the Application of Law in the Trial of Civil Disputes Concerning the Infringement of Information Network Dissemination Rights.
12. Interpretation of the SPC on Several Issues Concerning the Trial of New Plant Variety Disputes.
13. Several Provisions of the SPC on the Specific Application of Legal Issues in the Trial of Disputes over Infringement of the Rights of New Plant Varieties.
14. Interpretation of the SPC on Several Issues Concerning the Application of Law in the Trial of Civil Cases of Unfair Competition.
15. Provisions of the SPC on Several Issues Concerning the Application of Law in the Trial of Civil Disputes Caused by Monopoly Acts.
16. Interpretation of the SPC on Several Issues Concerning the Application of Law in the Trial of Civil Disputes Involving Computer Network Domain Names.
17. Interpretation of the SPC on Several Issues Concerning the Application of Law in the Trial of Technical Contract Disputes.
18. Provisions of the SPC on the Jurisdiction of Beijing, Shanghai and Guangzhou Intellectual Property Courts.
These 18 judicial interpretations will be dealt with in subsequent posts. See here.
Even though the texts of the EU-China Comprehensive Agreement on Investment is not distributed yet and should be read in the context of the 14th Five Year Plan, which is not officially revealed, the contours of both documents are becoming increasingly clear.
After 7 years of negotiations the EU-China Comprehensive Agreement on Investment (CAI) has been finally concluded on 30 December of 2020. The fully text has not been distributed yet, but some interesting articles have been written about it. A factsheet provided by the European Commission makes clear that technology transfer was discussed and ended up in the text: there will be a clear prohibition of investment requirements that compel transfer of technology; no interference in contractual freedom in technology licensing; protection of confidential business information. The question is, of course, whether there will be some kind of enforcement mechanism. The Global Times provided a very terse factsheet on the BIT without any mention of technology transfer, see here.
It would be interesting to see what differences there are in regard to the technology transfer chapter of the US-China Economic and Trade Agreement (Phase 1). Although it seems that the language in the FTA is predominantly hortatory and does not add much in regard to previous commitments. Mark Cohen of China IPR wrote: “China committed to not conditioning foreign investment on technology transfer long before this trade war when it joined the WTO (2001).” He also points to the American Chamber of Commerce in China which characterized forced technology transfer as an operational instead of a legal challenge, and makes clear it is not the top priority in regard to IP challenges in China. Dan Prud’homme, in his presentation to the OECD questions the “forced” character of technology transfer: “With exception of “no choice” policies, MNCs in fact do have a choice (of sorts, although it’s always met with consequences) to comply to them.”
Photo VCG
Max J. Zenglein, Chief Economist of Merics makes clear that CAI needs to be interpreted in the context of China’s broader policy which is partly contradicting China’s future opening up, as exemplified by new regulations of the National Development and Reform Commission (NDRC), see here. The same can be said for the 14th Five Year Plan, which promotes tech self-sufficiency. Even though the full text of the 14th Five Year Plan will be released in March 2021, if you read the communique of the Fifth Plenum of the CCP held in October 2020, the CCP’s recommendations to the Plan and President’s Xi’s explanation of the Plan, the contours of the 14th Five Year Plan (2021-2025) become visible: progress while maintaining stability. Keywords are innovation, coordination, greenness, openness, and sharing. The emphasis is put on endogenous and green innovation, high-quality production, strengthening the patent standards. These goals will be further driven by President Xi announcement that China’s peak carbon emissions should be reached by 2030 and that should become carbon neutral by 2060. China is aiming for leadership in the following R&D fields: artificial intelligence, quantum information, integrated circuits, life and health science, neural science, biological breeding, and aerospace technology. Dorca Wong wrote a good overview of the possible implications of the 14th Five Year Plan in English for China Briefing, see here. The arrival of CAI will lead geopolitically to challenges for the US and EU to align there interests in regard to China, wrote Mikko Huotari, Director of Merics: “It would require shrewdness and a lot of political capital in Brussels and capitals to credibly pursue this dual-track approach of greater transatlantic coordination and a privileged relationship with China,” see here. Wendy Cutler and James Green also expect differences in regards to the ambition level in regard to forced technology transfer, subsidies and state-owned enterprises, see here. These are key issues that have been subject to trilateral work between the U.S., EU, and Japan in recent years.
During the penultimate day of 2020, the Shanghai Second Intermediate People’s Court decided the first instance case between the plaintiff basketball legend Michael Jeffrey Jordan and two defendants Qiaodan Sports Co. Ltd. of Jinjiang, Fujian province, and Shanghai Bairen Trading Co., Ltd. See a guest post by Ouyang Yini revisiting the previous Michael Jordan cases, here. While the earlier cases primarily focused on the use of the transliteration of Jordan in pinyin “Qiaodan”, this case focused on the use of the trade name “乔丹” which are the Chinese characters used for the name “Jordan”. Presiding Judge Jiang Xiaoyan, Judge Ji Lei and People’s Assessor Wang Chengqi asked themselves the following 5 questions. See also Qingjia’s article here (Chinese).
1. Whether Michael Jeffrey Jordan, as a foreigner, can claim the right of name in accordance with the General Principles of Civil Law and the Tort Liability Law? Since Michael Jeffrey Jordan is a US citizen, it is a civil case involving foreigners and the question is which law should be applied. The right of name is part of the right of personality, included in protection scope of the Tort Liability Law. Article 2 Tort Liability Law: “Infringement of civil rights and interests shall bear tort liability in accordance with this law. The civil rights referred to in this law include the right to life, health, name, reputation, honor, portrait, privacy, marital autonomy, guardianship, ownership, usufructuary rights, security rights, copyrights, and patent rights. Personal and property rights such as trademark exclusive rights, discovery rights, equity, inheritance rights, etc.” Article 44 Law on the Application of Laws in Foreign-related Civil Relations: “Tortious liability is governed by the law of the place of tortious act. Where the parties have common habitual residence, the law of their common habitual residence shall be applied. Where the parties have chosen by agreement an applicable law after the tortious act occurs, the agreement shall be followed.” In this case both parties chose to apply China’s laws including the General Principles of Civil Law and Tort Liability Law. The court granted permission to do so. The provisions of Article 8(2) General Principles of Civil Law: “The stipulations of this Law as regards citizens shall apply to foreigners and stateless persons within the People’s Republic of China, except as otherwise stipulated by law.”
2. If there can be a connection between Michael Jeffrey Jordan and “乔丹”? The court held that through their long-term connection with natural persons, names become important symbols of personality, and are identifiable and distinctive. According to many corresponding facts in this case, the use of “乔丹” in the commercial activities of Qiaodan Sports Company has been used to refer to the plaintiff. The name protected by law is not only limited to the name recorded on an ID card or passport of a natural person, but also includes the translated/transliterated name (including the simplified version, pen names and screen names) familiar to the public. If the latter is used by other parties than the natural person, it can cause confusion. “乔丹” has long been used as the simplified translation/transliteration of the plaintiff’s full name, as is demonstrated by the large number of media reports quoted in this judgment. Whether a natural person can claim name rights to a specific name depends on whether the name has a stable relationship with the specific natural person. “Jordan” can be recognized as a common English and American surname from language translation, and there are indeed other natural persons with this surname in the UK and US. But defendant did not use the name because it is a common name. Although the scope of protection of a name right is not limited to a specific field, it is an important consideration in the assessment of infringement that the defendant uses the name referring to Michael Jordan in regard to basketball and baseball; the sports in which he was active; the use of No. 23, the jersey he wore; and the use of the names “Marcus” and “Jeffrey”, which are the names of his sons. Article 99(1) General Principles of the Civil Law: “Citizens shall enjoy the right of personal name and shall be entitled to determine, use or change their personal names in accordance with relevant provisions. Interference with, usurpation of and false representation of personal names shall be prohibited.” According to this stipulation, “use” is one of the rights enjoyed by the name right holder, Therefore, Bairen Trading Company’s argument that the plaintiff’s name rights can only be obtained through legal procedures is not accepted by this court.
Photo VSG
3. Does Jordan Sports Company’s use of “乔丹” in its commercial activities infringe Jordan’s right in its name? Anyone who interferes or misappropriates another’s name, or deliberately causes confusion, becomes liable for infringement of the right of another’s name. At the same time, in accordance with Article 120 General Principles of the Civil Law, where the name right is infringed, you can claim compensation for the loss. Article 120 General Principles of the Civil Law: “If a citizen’s right of personal name, portrait, reputation or honour is infringed upon, he shall have the right to demand that the infringement be stopped, his reputation be rehabilitated, the ill effects be eliminated and an apology be made; he may also demand compensation for losses. The above paragraph shall also apply to infringements upon a legal person’s right of name, reputation or honor.” The court held that the name right holder has an influence in a specific field due to his efforts, and his name can contain great economic benefits. If the name is deliberately used in commercial activities in this field by another, without the permission of the right holder, then the name is used to mislead the public and to obtain unjustified economic benefits, which constitutes an infringement of the name rights of others. Qiaodan Sports proposes a contrived explanation for its use of Qiaodan, which according to this company does not refer to Michael Jordan. Instead, it is inspired by and refers to a combination of two characters. One from the fourth chapter of the Shang Shu Da Chuan Juan (尚书大传卷) book which tells about the “Qiao” tree (macrophanerophytes), combined with one of the five elements of Chinese philosophy, fire, which has a color called “Dan”. The court was not convinced. Qiaodan Sports Company also argued that the “乔丹” trademark is legally registered, so its trademarks using this word should not constitute infringement. The court believed that name rights belong to personality rights, while trademark rights are property rights. Although name rights are in the category of personality rights and less exclusive, this does not mean that intentional confusion using the same name and surname is allowed. The court held that when personality rights conflict with property rights, the high-level value and protection priority of personality rights should be established. The court appreciated that some of the Qiaodan Sports Company’s trademarks with “乔丹” have become irrevocable after a five-year period in which they could have been opposed. However, the exercise of these irrevocable trademark rights should be limited to not infringing upon the plaintiff’s personality rights, in order to be exempted from civil tort liability.
4. Did the defendant Bairen Trading Company’s sale of Qiaodan Sports’ products infringe upon the plaintiff’s right to name? The court held that the products sold by Bairen Trading Company via legal commercial channels. It could not be proved that the Bairen Trading Company had the intention to infringe upon the plaintiff’s name rights jointly with Qiaodan Sports Company, nor could it be proved that its sales activities in “乔丹” continued, therefore Bairen Trading Company was not held a joint infringer.
5. Is there a legal basis for the plaintiff to request the defendant to stop using the plaintiff’s name in this case in order to stop the infringement? In accordance with Article 120 General Principles of Civil Law, if a civil subject’s right to name has been infringed, it has the right to request the cessation of the infringement, restoration of reputation, elimination of the impact, an apology, and compensation for losses. According to Article 15 Tort Liability Law, the ways to bear tort liability also include cessation of the infringement, making an apology, and eliminating the impact. Article 15 Tort Liability Law: “The methods of assuming tort liabilities shall include: 1. cessation of infringement; 2. removal of obstruction; 3. elimination of danger; 4. return of property; 5. restoration to the original status; 6. compensation for losses; 7. apology; and 8. elimination of consequences and restoration of reputation. The above methods of assuming the tort liability may be adopted individually or jointly.” Therefore, under the premise that this court finds that Qiaodan Sports Company has infringed the plaintiff’s name right, it should stop the infringement of the plaintiff’s name right. However, when determining the specific way to bear the responsibility for stopping the infringement, the relevant provisions of the Tort Liability Law and the Trademark Law in our legal system should be comprehensively considered. Therefore, this court must not only consider whether the plaintiff’s rights are sufficient for relief, but also the legal effect of irrevocable trademarks that have been registered in accordance with legal procedures, that is, the legislative purpose of the five-year opposition period for registered trademarks in the Trademark Law. Those “乔丹” trademarks which are still in the five-year opposition period, Qiaodan Sports Company should stop using them since they are infringing the plaintiff’s name right. As for the “乔丹” trademarks beyond the five-year dispute period, the legislator has fully considered the balance of interests between the prior rights holder and the trademark owner when setting the time limit. This time limit can urge right holders and interested parties to claim their rights in a timely manner, and prevent the legal effect of the disputed trademark from remaining in a disputed state for too long after the registration is approved, thereby affecting the promotion and use of the disputed trademark by the trademark owner. The Supreme People’s Court in its administrative ruling (2015) Zhixingzi No. 291 and other administrative rulings held that the trademarks were not harmful for socialist morals or had any other adverse effects or used deceptive means. Nor were there other improper means used to obtain registration. Therefore, Michael Jeffrey Jordan’s request for reexamination of these trademarks was rejected. However, in regard to its irrevocable trademarks, the Qiaodan Sports Company should adopt certain reasonable methods to communicate to the public that it is not related to the plaintiff and by de-specifying, de-identifying, and de-referring to Michael Jordan. And thus there is also no need to use the full name of the plaintiff Michael Jeffrey Jordan. According to the Provisions on the Administration of Enterprise Name Registration, the enterprise name must not contain content or words that may cause deception or misunderstanding to the public. Article 9 Provisions on the Administration of Enterprise Name Registration: “The name of an enterprise shall not contain the following contents and words: (1) It is harmful to the public interest of the country and society; (2) It may cause deception or misunderstanding to the public; (3) Names of foreign countries (regions) and international organizations; (4) The name of the political party, the name of the party, government and military agency, the name of the mass organization, the name of the social organization, and the number of the unit; (5) Chinese pinyin letters (except those used in foreign names), numbers; (6) Those prohibited by other laws and administrative regulations.” The Implementation Measures for the Administration of Enterprise Name Registration further stipulates that if the registered enterprise name causes deception or misunderstanding to the public in use, or damages the legitimate rights and interests of others, it shall be deemed as inappropriate and be corrected. Article 44 Implementation Measures for the Administration of Enterprise Name Registration: Failure to use an enterprise name according to the registration in other ways, which causes deception or misunderstanding with the public or damages lawful rights and interests of others shall be dealt with according to Article 26 Provisions on Administration of Enterprise Name Registration. Unlike registered trademarks, there is no provision regarding the opposition period for registered company names. Therefore, the court determined that Qiaodan Sports Company’s use of “乔丹” as a trade name and trademark can cause misunderstandings to the public. In order to avoid market confusion and misleading the public, effectively safeguard the legitimate rights and interests of rights holders and consumers, optimize the business environment, and promote the establishment of a social credit system, Qiaodan Sports Company should stop using “乔丹” as its business name. Article 20 Tort Liability Law holds that the infringement of the personal rights and interests of others causes property losses which the victim can seek relief of through litigation. Article 20 Tort Liability Law: “Where any harm caused by a tort to a personal right or interest of another person gives rise to any loss to the property of the victim of the tort, the tortfeasor shall make compensation as per the loss sustained by the victim as the result of the tort. If the loss sustained by the victim is hard to be determined and the tortfeasor obtains any benefit from the tort, the tortfeasor shall make compensation as per the benefit obtained by it. If the benefit obtained by the tortfeasor from the tort is hard to be determined, the victim and the tortfeasor disagree to the amount of compensation after consultation, and an action is brought to a people’s court, the people’s court shall determine the amount of compensation based on the actual situations.” However, the court noted that the claim for compensation made by the plaintiff in this case was limited to the actual expenditures in the litigation such as mental distress, investigation fees, and notary fees, so the judgment in this case will be limited to the scope of the plaintiff’s request. In regard to the compensation for the infliction of mental distress, it is sufficient to determine that Qiaodan Sports Company has carried out a series of actions to cause the relevant public to misunderstand which lasted for more than 20 years and was profitable for Qiaodan Sports Company. The court determined that Qiaodan Sports Company should compensate the plaintiff with RMB 300,000 for mental distress. For investigation fees, notarization fees, and other expenses spent by the plaintiff in the litigation for the investigation and collection of evidence, should fall into the category of actual losses.
6. Has the statute of limitations for the plaintiff’s claims in this case exceeded? The court held that the right of name belongs to the right of personality. According to the facts in the case, Qiaodan Sports’ infringement has continued throughout. Therefore, the defendant’s statute of limitations defense could not be established and the court did not accept it.
Verdict
The defendant Qiaodan Sports Co., Ltd. shall publish it on the China Market Supervision News, Sports Weekly, and the homepage of Sina website (www.sina.com.cn) within 30 days from the effective date of this judgment for three consecutive days, a statement to clarify the relationship with the plaintiff Michael Jeffrey Jordan and publicly apologize (the form and content need to be reviewed by this court);
The defendant Qiaodan Sports Co., Ltd. shall stop using the “乔丹” business name in its corporate name within 30 days from the effective date of this judgment;
The defendant Qiaodan Sports Co., Ltd. shall stop using trademarks involving “乔丹” within 30 days from the effective date of this judgment. However, for trademarks involving “乔丹” that exceed the five-year opposition period, it shall include distinctive signs. In a reasonable way, including, to indicate that it is not related to Michael Jordan, a former American basketball player, in order to eliminate the connection, show the difference, and stop the infringement (the form and content need to be reviewed by this court);
The defendant Qiaodan Sports Co., Ltd. shall, within 30 days from the effective date of this judgment, compensate the plaintiff, Michael Jeffrey Jordan for mental damage relief of RMB 300,000;
The defendant Qiaodan Sports Co., Ltd. shall, within 30 days from the effective date of this judgment, compensate the plaintiff, Michael Jeffrey Jordan, for the reasonable expenses of RMB 50,000 for the litigation in this case.
The other claims of the plaintiff, Michael Jeffrey Jordan, were dismissed. If the obligation to pay money is not fulfilled within the period specified in this judgment, the interest on the debt during the delayed performance period shall be doubled in accordance with Article 253 Civil Procedure Law. The case acceptance fee in this case was RMB 256,026.29, the plaintiff Michael Jeffrey Jordan was responsible for RMB 126,026.29, and the defendant Qiaodan Sports Co., Ltd. was responsible for RMB 130,000.
It would be interesting to see whether or not one of the parties will appeal to the High People’s Court.
Guest post by Ouyang Yini, who is doing the unique combination of U.S. J.D. and China J.M. legal education at PKU STL in Shenzhen.
Michael Jeffrey Jordan, one of the greatest NBA basketball players in the United States, is also popular in China in the name of Qiaodan, which is the Chinese translation/transliteration of his surname Jordan. In 2012, Michael Jordan asked the China Trademark Review and Adjudication Board (TRAB) to cancel the “Qiaodan” trademark owned by Qiaodan Sports Co., Ltd. (Qiaodan Sports) mainly for the reason that the accused “Qiaodan” trademark violated Trademark Law, Article 31, that “anyone applying for trademark registration may not damage the existing rights of others obtained by priority.” The “Qiaodan” trademark was approved for use in category 28 of the Nice Classification, including equipment for various sports and games. Michael Jordan argued that the “Qiaodan” trademark infringed his right of name, which should be protected by the Article 31. However, TRAB refused to cancel the “Qiaodan” trademark for two reasons:
(1) Qiaodan is only one part of Michael Jordan’s Chinese name, and he never uses Qiaodan to call himself;
(2) Jordan is an ordinary surname in the United States, and unique relationship has not been established between Michael Jordan and Jordan in the sense of a surname.
Michael Jordan was unhappy with the result, so he filed a lawsuit against TRAB asking the court to order TRAB cancelling the “Qiaodan” trademark. Unfortunately, both the trial court and the appellate court were on the TRAB’s side and affirmed the decision. Michael Jordan petitioned for a retrial and the Supreme People’s Court granted his petition. The Supreme People’s Court started with confirming that the right of name is one of “existing rights” that Article 31 aims to protect, since a trademark might mislead the public to believe there are some special connections between the trademark and a celebrity, such as endorsement or license. The issue left to be resolved was whether the right of name could extend to the surname, even to the translation of such surname. The Supreme People’s Court pointed out that a specific name could be protected by the right of name if the following three conditions are satisfied:
(1) such specific name is well-known to the relevant public in China;
(2) the relevant public usually uses that name referring to an individual;
(3) the specific name has established a stable relationship with the individual.
Actually, the Supreme People’s Court rejected TRAB’s “unique relationship” test, which is to say that Qiaodan can only refer to Michael Jordan, but only required that people in China will at first think of Michael Jordan when they hear Qiaodan. And the standard is what the relevant public think of, not whether Michael Jordan uses Qiaodan to refer to himself.
The Supreme People’s Court held that according to the present evidence, all above three conditions were satisfied and Michael Jordan was entitled to the right of name of Qiaodan. First, a large number of articles, published on newspapers, periodicals and websites, used Qiaodan to refer to Michael Jordan, as well as some books, which proved that in China, the media generally called Michael Jordan by the name of Qiaodan. Second, in the trial transcript, Qiaodan Sports admitted that Qiaodan was somehow relevant to Michael Jordan, but such connection is not sole or unique. Third, Qiaodan Sports in its prospectus reminded the public not to misunderstand its products having any relevancy with Michael Jordan, and this demonstrates that Qiaodan Sports actually realized the existence of likelihood of confusion. Last, there were two surveys revealed that respectively 85%, 63.8% respondents would answer Michael Jordan when they were asked “what might first occur to you when you hear about Qiaodan”, and only 14.5%, 24% would answer Qiaodan Sports. Therefore, the Supreme People’s Court concluded that there was sufficient evidence to establish stable connection between Michael Jordan and Qiaodan.
Qiaodan Sports contended the “Qiaodan” trademark’s registration should not be deemed illegal anymore due to the company’s continuous contributions for more than a decade and huge business success. The court rejected this contention saying that although consumers could identify Qiaodan Sports as the source of products for its endeavor in advertising and promotion, it did not mean that consumers would not misunderstand that there was some relationship between Qiaodan Sports and Michael Jordan. We cannot say because the entity acquires huge success through free riding, then its action of free riding is not wrong. Such behavior is prohibited under trademark law no matter how successful the business is. Finally, the Supreme People’s Court ordered TRAB to reevaluate the accused trademark in consistence with the holding, which led to cancellation of the “Qiaodan” trademark.
The “Qiaodan” trademark is only one of the series of trademarks registered by Qiaodan Sports that is more or less related to Michael Jordan. Still many trademarks containing a “Qiaodan” element are valid because the five-year period regulated by Article 41 Section 2 has passed and the trademarks become incontestable. But Qiaodan Sports’ public image might be damaged if it continued to use these trademarks with the purpose of free riding because consumers would not be fooled again. This case shows our country’s resolution to protect intellectual property right and deter further free riding. Chinese business entities should make efforts to establish their own trademarks and then goodwill, only in this way can they become strong enough to compete on the international “battle field.”
Guest post by Dr Peter GANEA, Sino-German International Economic Law Institute, Tongji University Law School in Shanghai
The Corona pandemic has impacted and continues to impact on global trade and investment, with likely repercussions on post crisis intellectual property in China and the rest of the world. Long-lasting social distancing in most countries effected a further relocation of human interaction to the internet, beyond the already ubiquitous messenger services and social networks. It is well conceivable that even after the virus has lost its horror, society and business will have acquired a taste for online video conferencing and distance learning, at the expense of air and railways passenger transportation. Growing demand for more reliable and more comfortable real-time online interaction would, in turn, intensify innovation in the software and IT sectors. Moreover, the recent US initiative to permanently bring back the manufacturing of essential goods from China may entail less demand for transportation of goods in addition to the lowered passenger traffic, especially if it acts as a precedent for other countries. In addition to a general slump in licensing and transfer activities, such trend may go at the expense of China’s prestigious “Belt and Road” initiative and affect innovation in the areas of maritime and railway transportation, the latter a domain in which China has attained a leading position. Climate activists should not prematurely erupt in cheers over reduced travel and transportation, however. Large parts of the formerly saturated Western societies may henceforth perceive global warming as a comparatively minor problem after having experienced the threat of a new, not fully explored viral disease and existential fears due to long-lasting lockdowns. Also, the imminent global debt crisis may deprive many national governments of the financial resources to further subsidize green industries, with possible repercussions on innovative activity in the sectors of alternative fuels and the like. It should also be considered that if the US, the EU and other parts of the First World really opt for deglobalization by bringing manufacturing back home, such a trend, albeit contributing a reduction of worldwide emissions due to less global transportation, would inevitably increase carbon dioxide levels in those countries in which governments have thus far been most responsive to the climate movement.
A crisis like the current one could open up new path dependencies that will determine the direction of future innovative and entrepreneurial efforts, at the expense of previously booming industries, with corresponding impacts on intellectual property regimes worldwide and in China. The shift of human encounters to the internet through increasingly sophisticated online services, as well as the call for more precise and powerful solutions in the areas of artificial intelligence and Big Data in light of the present inaccuracies of epidemic predictions, may prompt legislatures in China and elsewhere to once again rethink the requirement that a patentable solution must be “technical”. On 31 December 2019, shortly before the pandemic fully impacted on China, the national intellectual property administration CNIPA already amended the Patent Examination Guidelines to substantively facilitate the patenting of software and business method-related inventions.
Also, the increased danger of being drawn into copyright litigation due to the unauthorized use of copyrighted material in the course of online teaching, etc., may become another justification for more flexible copyright limitations. During the past summer term, many of my German colleagues in China, most of them language instructors, were for the first time confronted with copyright issues, here of converting their printed teaching materials into online readable form so as to keep regular lecturing running while being stuck in their home offices.
Moreover, if an effective Covid-19 medicine or even a vaccine will hopefully be invented in the near future, uneven supply in all parts of the world with life-saving medicines may, once again, spark the debate about pharmaceutical patents and non-voluntary licensing. The pandemic also most likely effected the addition of another reason for the grant of a grace period to the latest draft of a fourth amendment to the Chinese Patent law of July 2020. Accordingly, inventors of life-saving medicines, etc., who publish their invention within six months before the patent application for the sake of the public interest during a national emergency or other exceptional circumstances would no longer have to fear that such prior publication will destroy the novelty of their invention.
In post-Coronal times, the experiences made during the crisis may also inspire managers and engineers in other branches with new ideas. The pandemic has, for instance, demonstrated the usefulness of being able to easily readjust manufacturing lines originally intended for the assembly of cars or household electronics to make respiratory masks, lung ventilators and other medical equipment. In the long run, such newly arisen demand may boost innovation in the area of flexible manufacturing systems, which, in turn, may motivate legislatures in China and elsewhere to further refine their method patent and know-how protection as the volume of filings and disputes in this area increases. Increased demand for flexible production technologies may also entail more innovation in the area of 3D printing, initially within the manufacturing technology sector, later on permeating to the consumer goods sector, with ever more powerful and reasonably priced printing devices for household use. The assumption that such development will entail a massive increase in patent, design and copyright litigation is certainly not too far-fetched.
Of course, all of this is highly speculative and may overvalue certain emerging trends while neglecting others. One thing is hardly imaginable, however, namely that the pandemic will have no impact on intellectual property at all.
Professor Mark Cohen, director and senior fellow at the Berkeley Center for Law and Technology and author of the great China IPR blog, discusses IPR and the Made in China 2025 policy that IPR initially was at the core of the Section 301 investigation, which led to trade sanctions, etc. etc. Professor Cohen moderates the discussion which featured Yabo LIN, partner, Sidley Austin LLP; and Damon Matteo, CEO of Fulcrum Strategy.
CPC and State Council’s Word Choice in the Opinion
On 24 November 2019, for the first time, the Central Committee of the Communist Party of China and the State Council have jointly issued an opinion (here in Chinese) on the strengthening of IPR protection. They defined and set two concrete and ambitious goals for 2022 and 2025:
By 2022, China shall be able to effectively curb IPR infringement, and evidently overcome the difficulties met by right holders when enforcing their rights, namely limited access to discovery, burden of proof, protracted period of litigation, high costs, low damages.
By 2025, public satisfaction with IPR protection in China shall reach a high level and remain at that level, protection capacity and system will be further improved, business environment of appreciating the value of knowledge will be optimized and the role of IPR system to encourage innovation will be fully played.
Since IPR is of course indispensable in China’s development from imitator to innovator, the CPC and State Council take it very serious: “Comprehensively strengthen the party’s leadership over IP protection. All relevant parties should study specific policies and measures in accordance with the division of functions and work together to promote the construction of an IP protection system. CNIPA shall, in conjunction with relevant departments, continuously improve the working mechanism, strengthen coordination and guidance and supervise inspections to ensure the effective implementation of various work requirements, and timely report major issues to the Party Central Committee and the State Council in accordance with procedures.”
“Local party committees and governments at all levels must fully implement the decision-making arrangements of the Party Central Committee and the State Council, implement territorial responsibility for the protection of IPRs, regularly hold special meetings of party committees or governments, study IP protection work, strengthen institutional mechanisms, formulate supporting measures, and implement personnel funding. IPR protection work should be included in the important agenda of local party committees and governments, and regular evaluations should be conducted to ensure that various measures are put in place.”
Also interesting is that the opinions aim to unify evidence standards in different channels such as judicial and administrative law enforcement, arbitration, and mediation.
On 28 June 2019, president XI Jinping attended the G20 summit. Here he said the following which becomes germane in 2020:
We will implement a new foreign investment legal system on 1 January 2020, introduce a system of punitive damages for infringement, strengthen civil judicial protection and criminal protection, and improve the level of IP protection.
Read more here (Chinese). Find the Foreign Investment Law here. Here are some background stories of this law by CGTN here, CNBC here, and China-Briefing here.
From 21 to 24 March 2019, President XI Jinping visited Italy and met President Matarella. The two countries issued a Joint Communiqué on strengthening the comprehensive strategic partnership. In the China-Italy Joint Communique: to ensure a level playing field and promote comprehensive protection of IPRs.
2019 was the 15th anniversary of the establishment of a comprehensive strategic partnership between China and Italy and the 50th anniversary of the establishment of diplomatic relations between these countries in 2020. The two sides emphasized their support for the practical progress of the negotiation of the China-EU Geographical Indications Cooperation and Protection Agreement.
Both sides also expressed satisfaction with the progress made in the “Sino-Italian Strategic Plan for Cooperation in Science and Technology for 2020”, especially the 9th China-Italy Innovation Cooperation Week successfully held in Milan, Rome and Cagliari in December 2018, and the 16th China-Italy Science and Technology Cooperation The Joint Commission was also successfully held in Rome in March 2019.
The China-Italy Science and Technology Cooperation Implementation Plan was signed by the Ministry of Science and Technology of the PRC and the Ministry of Foreign Affairs and International Cooperation of the Republic of Italy, and the China-Italy Technology Transfer Center’s positive role in cooperation.
Both countries are willing to continue to strengthen the dialogue on innovation policies in accordance with the principle of protecting IPRs, carry out mutually beneficial cooperation in joint laboratories and large-scale research facilities, and strengthen scientific researchers, high-end talents and exchanges and cooperation among start-ups, and consider signing related agreements.
The English version of CNIPA has an interesting column about China IP news in foreign media. Unfortunately it is very fragmentary, often without the date and the exact source. See here.
On 14 November 2019, Mr WANG Yi, State Councilor and Minister for Foreign Affairs of the People’s Republic of China has nominated Ms WANG Binying as candidate for Director General of the World Intellectual Property Organization (WIPO). It is expected that on 5 and 6 March 2020, the new DG will be elected. Read more about the procedure of the elections and the candidates here. Will it be Ms WANG Binying? Read her CV here.
One can argue that the most industrial rights are registered in China, and that the most IP disputes take place between Chinese companies. Moreover, China, starting in 1982 with the launch of a Trademark Law, has set up a comprehensive and advanced IP system in an enormous rapid pace. An impressive feat. There are still serious IP related problems. However, it is clear that the Chinese government takes IP very seriously and envisions the effective enforcement of IP rights as essential for China’s move from a world class manufacturer towards a world class innovator of the world.
Read Colum Lynch’s ‘China Bids to Lead World Agency Protecting Intellectual Property’ in Foreign Policy 29 November 2019, here. However, it seems that bipartisan lawmakers have urged Trump to oppose any Chinese nominee to lead WIPO. Read Chris Mills Rodrigo’s article about it in The Hill, here.
Despite this opposition, Ms WANG has a good chance to be elected. Alternatively, I think Singapore’s Daren TANG also makes a good chance. The new DG will be appointed on 7 or 8 March 2020.
On 23 September 2019, China’s National Intellectual Property Administration (CNIPA) launched the 2019 amended Patent Examination Guidelines (Chinese), which became effective on 1 November 2019. In comparison to the draft amendments of 4 April 2019, things have not much changed. An example are the rules on human embryonic stem cells (hESCs).
An exclusion to the “use of Embryo for industrial or commercial purposes” is added into
Section 3.1.2, Chapter 1 of Part II of the Patent Examination Guidelines 2010 (English), clarifies that inventions-creations that are contrary to social morality shall be excluded from patent registration.
“Social morality” refers to ethical or moral norms and rules generally recognized as justifiable and accepted by the public.”
a design with drawings or photographs of violence, murder or obscenity;
an artificial sexual organ or its substitute not for medical use;
or a method of mating a human-being with an animal;
a process for modifying the germ line genetic identity of human beings or a human being thus modified [this is where He Jiankui went too far. He was sentenced to three years in prison and fined RMB 3 million for illegally carrying out the human embryo gene-editing experiments, in which three genetically edited babies were born, thus modifying their genetic identity (see article by Zhang Yangfei for China Daily on 30 December 2019, here)];
a process for cloning human beings or a cloned human being;
use of human embryos for industrial or commercial purposes;
and a process for modifying the genetic identity of animals which is likely to cause them suffering without any substantial medical benefit to human-beings or animals.
The 2019 draft amendments (Chinese) and the 2019 final amendments (Chinese) provide an exception to the prohibition to grant patent rights to the use of human embryos for industrial or commercual purposes. If a stem cell is isolated or obtained from a human embryo within 14 days of fertilization that has not undergone in vivo development, an invention made by using such a stem cell will be excluded from being an unpatentable subject matter.
Where the 2010 guidelines state in Section 9.1.1.1 of Chapter 10 Part II that embryonic stem cell of human beings and a preparing method thereof shall not be granted the patent right in accordance with the provisions of Article 5.1 Patent Law 2008 (English) the 2019 amended guidelines clarify that human embryonic stem cells (hESCs) do not belong to human bodies at various stages of formation and development, and are therefore eligible for patent registration.
With internet courts in first Hangzhou, then Beijing and Guangzhou, the trend is set also for the specialized IP courts in China to deal remotely with the review application, evidence, cross-examination, and verdict. The objective of this remote trial system is to reduce the litigation burden of the parties and improve the efficiency of the trademark review process.
On 17 December 2018, the Beijing Intellectual Property Court dealt remotely with the hearing on the TRAB’s refusal of the registration of the mark of the London-based fashion house “JW ANDERSON”: plaintiffs and defendants could conduct the process remotely via the internet.
In addition to audio-visual interactivity, the court applied artificial intelligence technology such as face recognition and intelligent voice transfer (for example speech to text, speaker identification).
Source: online version of the People’s Daily, see here.
So, what happened to the JW ANDERSON case?
The court held that the goods between the cited mark and applicant mark are similar; clothing and wedding products respectively, and the marks have the same composition and share a similar logo. If the two trademarks coexist in the same market (the applicant mark was used on Taobao and Jing Dong (JD.com) websites), this leads to a likelihood of confusion as to the source of the goods.
The evidence submitted by the applicant is not sufficient to prove that the applied trademark has obtained distinctive features that can be distinguished from the cited trademark by its use. Therefore, the application for registration of the trademark was rejected.
Intellectual Property Singapore Office (IPOS) reports that on 20 September 2018, “China’s Vice Premier Han Zheng and Singapore’s Deputy Prime Minister Teo Chee Hean, IPOS’ enterprise engagement arm – IP ValueLab – signed a MOU (see Annex A: areas of cooperation) with the Administrative Committee (KCAC) and Sino-Singapore Guangzhou Knowledge City Investment and Development Co. Ltd (GKC Co) to set up the “International Intellectual Property Innovation Service Centre” in the Sino-Singapore Guangzhou Knowledge City (SSGKC).
The MOU will link the innovation ecosystems of both countries more closely to support the translation of ideas and IP into products and services for the region, and provide a platform to connect IP expertise within the government and private sectors from both countries, tapping on Singapore’s experience in building IP skills to set up an IP college in Guangzhou. The Centre will also enable China’s enterprises to gain access to ASEAN and other key overseas markets through Singapore by taking advantage of established platforms for expedited IP application processes into the region.”
U.S. president Donald Trump has accused China of causing a trade deficit and engaging in several unfair practices related to the acquisition of American intellectual property and technology. The latter part was corroborated by the USTR Report of 22 March 2018, see here. It was alleged that China forced foreign companies to transfer IP in order to achieve its “Made in China 2025” (中国制造2025) project to dominate the following industries domestically and compete internationally:
Advanced Information technology
Robotics
Aerospace equipment
High-tech ships
Railway equipment
Energy saving
New materials
Medical devices
Agricultural machinery
Power equipment
Now, the State Intellectual Property Office (SIPO) puts China’s IP trade position into perspective. In the first half 0f 2018 China was a net importer of IP and pays 19.268 billion US dollar in royalties to foreign companies (up 52.5 percent year-on-year) for research and development. It received 2.737 billion US dollars in IP royalties (up 62.1 percent year-on-year) especially for the export of computer software license fees. Statistics of the State Administration of Foreign Exchange.
On 1 June 2018, the EU requested consultations with China concerning certain measures imposed by China pertaining to the transfer of foreign technology into China, see here. On 23 March 2018, the US requested consultations with China concerning certain measures pertaining to the protection of intellectual property rights (China accpted the requests of the EU and Japan to join the consultations), see here.
IP controls the rights over technology and innovation, therefore these rights have become a priority for governments all around the world. In particular the US and China have vowed to dominate key technologies such as AI and biotech, and recognize that the great power competition will be won or lost over IPRs.
The General Office of the Central Committee of the Communist Party of China and the General Office of the State Council have promulgated the Opinions on Several Issues Concerning the Reform and Innovation in the Field of Strengthening the Trial of IP Cases on 27 February 2018, see here. Also a circular was issued that calls on localities and departments to conscientiously carry out these guidelines in light of actual conditions.
Since most of the guidelines are based on Xi Jinping’s theories, and after the constitutional amendment chances that Xi will continue to rule as president after his second 5 year term are very high, these theories have gained significant influence for the foreseeable future.
According to the guidelines:
IP protection is basic means to stimulate innovation, and core element of international competitiveness. Thus IP trial by the People’s Court, is important for economic, social and cultural development.
China is clearly a competitor (probably the most ambitious) in the great power competition and understands very well the link between IP and innovation:
“It is of great significance to the building of a powerful IP country and a world leader in science and technology.”
“In order to thoroughly implement the innovation-driven development strategy and national IP strategy, strengthen the creation, protection and application of IPRs, and crack down on institutional obstacles that restrict the development of IP trials, give full play to the incentive and protection innovation of IP trials, and promote the progress of science and technology and social development.”
People’s Republic of China’s guiding ideology in regard to IPR trials is based on the following:
and coordinate and promote the “four comprehensives” (Comprehensively build a moderately prosperous society, comprehensively deepen reform, comprehensively govern the nation according to law, comprehensively strictly govern the Party) strategic layout in an integrated manner;
uphold the principle of justice for the people and fair administration of justice;
deepen the reform in the field of IP trial;
give full play to the leading role of judicial protection of IP and establish that the protection of IP is the concept of protecting innovation, optimizing the legal environment for science and technology innovation, promoting the implementation of innovation-driven development strategy;
and providing strong judicial guarantees for the realization of the “two centennial struggles” (the first one hundred years started when the CPC was founded in 1921 and thus will end in 2021 the goal is to make China into a well-off country; the second hundred years started when the PRC was founded in 1949 and thus will end in 2049 and should by then have built China into a prosperous and strong modern and democratic socialist country with a beautiful and harmonious democracy) goal;
and the building of a powerful IP country and the world’s scientific and technological power.
According to Memoranda of Understanding between China’s State Intellectual Property Office (SIPO) and the Industrial Property Institute of Chile (INAPI), and SIPO and the Industrial Property Office of the Czech Republic (IPO-CZ), both combinations will start a Patent Prosecution Highway (PPH) pilot on 1 January 2018. The Sino-Chilean pilot will end on 31 December 2020 and the Sino-Czech pilot on 31 December 2019.
A PPH can speed up the patent examination process, because the affiliated countries do not have to do the search, examination etc twice. The Japanese have a nice term for a sense of regret concerning waste if a resourc is not property utilized: MOTTAINAI. So MOTTAINAI can be avoided with a PPH.
See the announcement on the SIPO site here (Chinese), and on how applicants can make a PPH request, electronically at the Patent Office reception desk, here.
TaggedINAPI, IPO-CZ, patent law, PPH, SIPO|Comments Off on Avoiding Waste: Patent Prosecution Highway pilots between China and Chile, and China and Czech Republic
In 2017, I focused on patent law, trademark law and geographical indications and internet intermediary liability. Click on the following pictures below:
IP Protection of Preventive TCM and Precision Medicine in China, Harnessing Holistic Research from Man to Mankind
Clash of the Old and the New World of Wine in China | A Case Study of Competition, Innovation and Prosecco
TPP’s Coup de Grâce: How the Trademark System Prevailed as Geographical Indication System
Sacrificing the Patentability Standard of Novelty and Industrial Application on the Altar of Incremental Biotech Innovation in Hong Kong
Oscillating from Safe Harbor to Liability: China’s IP Regulation and Omniscient Intermediaries
Book Review: the Access Regime
Protection against abuse of trademark law in Greater China
The Patent Cooperation Treaty Yearly Review 2017, The International Patent System, was just published by the World Intellectual Property Organization, see here.
Here are some interesting nudgets about China:
“Applicants based in the U.S. filed the largest number of Patent Convention Treaty (PCT) applications in 2016 with 56,595, followed by applicants from Japan (45,239), China (43,168), Germany (18,315) and the Republic of Korea (15,560) (figure 11). China has posted double-digit annual growth rates in applications since 2002 and, if the current trend continues, it will overtake the U.S. within the next two years to become the largest user of the PCT System.”
The top-50 of published PTC applications in 2016 had five champions in the field of telecommunications, networking, display and e-commerce. For the first time ZTE takes over the top position from Huawei.
– ZTE (telecommunications equipment and systems) set a new record for the largest number of filings by an applicant in a single year with 4,123 published applications in 2016.
– Huawei Technologies C0., Ltd. (networking and telecommunications equipment), ranked no. 2, with 3,692 published applications.
– BOE Technology Co., Ltd. (supplier of display products and solutions), ranked no. 8, with 1,673 published applications.
– Shenzhen China Star Optoelectronics Technology Co., Ltd. (designs and manufactures liquid crystal display screens), ranked no. 16, with 1,163 published applications.
-Alibaba Group Holding Ltd. (e-commerce company), ranked no. 34, with 448 published applications.
One of the Venice Film Festival finalists in the newly created Virtual Reality (VR) section, the 12-minutes film The Dream Collector 拾梦老人 (literally “pick up the dream old man”), was featured in China Film Insider (a must follow for the film buffs) by Timmy Shen.
VR movies are made to watch with a VR headset, in Beijing there is already a VR cinema. Since at this moment in time VR headsets are just beginning to be picked up in the market, the maker of the movie, Pinta Studios, realises the importance of IP commercialization. The protaganists of the movie, are a man and a dog. The cuteness of the VR canine is especially suitable to be IP mined via merchandising. Therefore Pinta Studios negotiating IP licenses with manufacturers that sell their products via Taobao (which is also infamous for its counterfeit products).
New Balance Trade (China) Co., Ltd. v Shenzhen New Balance Sporting Goods Co., Ltd.
18 August, 2017, the Suzhou Intermediary People’s Court in the first instance decided that three defendants (Zheng Chaozhong, Xin Ping Heng Sporting Goods Ltd Co, Bo Si Da Ke Trading Ltd), who manufactured sporting shoes under the name New Boom infringed the trademark logo N and relied on the “malice of free-riding”, “confused a large number of consumers”, “seized market share from New Balance” and “drastically damaged the business reputation of New Balance”, and that the defendants have to pay RMB 10 million (around US$ 1.5 million) in damages and legal costs, according to the NY Times that said it had received a copy of the court decision, see here.
Drawing Michiel Tjoe-Awie
The timing, shortly after President Trump ordered an investigation into China’s IP protection and enforcement, might have influenced the court outcome. Then again, in a trademark dispute between a Chinese plaintiff Meichao Group and Chinese defendant Beijing Xiujie Xinxing Building Materials, the Beijing IP Court had already awarded a damage award of RMB 10 million, see here. The reason was that, conform Article 63 Trademark Law, after the plaintiff had made reasonable efforts to prove the amount of the actual damages, the burden shifts to the defendant. In Meichao Group v Beijing Xiujie Xinxing Building Materials, the defendant refused to provide the required evidence.
On September 13, 2016, in New Balance Trade (China) Co., Ltd. v Shenzhen New Balance Sporting Goods Co., Ltd., the Suzhou Intermediate People’s Court trial, confirmed that the defendant’s use of the N on both sides of footwear identifying it as New Balance shoes, is a violation of the plaintiff’s well-known trademark logo, and the court provided an injunction to the defendant to immediately production and sales of shoes with on both sides the use of N to identify the brand of the footwear. See Li Disen’s article for China IP here (Chinese).
Despite the court’s injunction, the defendants refused to abide by the ban. This has resulted in the relatively generous damage award and compensation of the legal costs.
In other words, after a complaint by the plaintiff, process behaviour of the defendants which has an adverse influence on the plaintiff seems particularly relevant for the height of the damage award the court is willing to assign to the plaintiff.
In regard to statutory damages, the statistics show at the Beijing IP Court that the average compensation granted has grown from RMB 80,000 before 2014 to RMB 450,000 in 2015, see here.
Traditional Knowledge (TK), Genetical Resources (GR), Traditional Cultural Expressions (TCE), are sometimes seen as spare change between the countries with a high and those of a low GDP per capita (the terminology of developed and developing countries is flawed as Professor Neuwirth of the University of Macau convincingly argues in Global Governance and the Creative Economy: The Developing versus Developed Country Dichotomy Revisited.) Simply put, the rich countries demand high IP standards from the poor countries and the poor countries get compensations for TK, GR and TCE back from the rich countries.
Traditional Knowledge is often used as the overarching term, which includes GR and TCE. Despite countless discussions at the TRIPS Council (WTO) and WIPO fora, no concrete results have been achieved. What is striking is China’s position as champion of TK, especially in regard to Traditional Chinese Medicine.
I wrote a blog for the Peace Palace Library in The Hague on the topic, see here.
A highly relevant development for intellectual property litigation is going on in the PRC: To improve transparency, a uniform application of law, and thus legal predictability towards a commercial rule of law, the Supreme People’s Court (SPC) has promulgated an opinion on 12 April 2017 that courts in the People’s Republic of China (China) have to take similar cases into account before making a decision. Read further here:
Bern 16 January 2017, Diedier Burkhalter (Federal Councillor) and WANG Yi (Minister of Foreign Affairs) signed a Memorandum of Understanding (MoU) between Switzerland and China.
The text of the MoU consists of laudatory calls to cooperate, and only a commitment to “determine the detailed activities”. The most interesting point was that the parties endeavor to exchange of information and views on the latest developments of their respective IP system and the legislation and administrative procedures. With China’s scattered way of promulgating rules and regulations different legal channels, such as the Supreme People’s Court, the State Council, State Administration for Industry and Commerce, State Intellectual Property Office and several provincial courts, to make this more transparent is a daunting task. The results of the meetings, that will be held in both countries, and will be summed up in the minutes, will be especially attractive to peruse. Whether these will be made public is the question.
On the same day, the Chinese Minister of Commerce Gao Hucheng and the Head of Department of Economic Affairs, Education and Research of Switzerland Johann N. Schneider-Ammann signed The Memorandum of Understanding between the Ministry of Commerce of China and the Federal Department of Economic Affairs, Education and Research of Switzerland on the Upgrading of China-Switzerland FTA, announcing that the joint study on China-Switzerland Free Trade Agreement (FTA) upgrading was launched. The China-Switzerland FTA was signed by the same people in July 2013 (after another MoU), and was implemented in July 2014.
In the existent Sino-Swiss FTA IPRs (Chapter 11 (page 60) and Annex IX in connection with Article 11(10) of Chapter 11) the countries committed themselves to protect the level that is prescribed by those international treaties that both have in common. This means that for example even though in Switzerland the copyright duration is 70 years after the death of the author, the protection level between the countries becomes 50 years after the death of the author, because that is the duration of copyright in China. However, besides “lowest denominator” standards some important changes were made:
Protection must be provided for acoustic trademarks as a new category of trademark;
In the field of patents, the patentability of biotechnological inventions is specified in accordance with the European Patent Convention;
Furthermore, the Parties may require in case a patent application is filed and the invention is based on genetic materials or traditional knowledge, such materials and knowledge are indicated;
The confidentiality of test data in relation of marketing approval procedures for pharmaceutical and agro-chemical products must be protected for at least six years;
The level of protection for geographical indications for wines and spirits under Article 23 TRIPS (this means that the anti-usurpation where the true origin of the goods is indicated or the geographical indication is used in translation or accompanied by expressions such as “kind”, “type”, “style”, “imitation” is still prohibited) is extended to all products;
Goods and services must be protected from misleading indications of origin;
Country names, national flags and coats-of-arms of the Parties must be protected from misleading use and registration as company or brand names;
Compared to the UPOV Convention (1978 version, of which China is a signatory) the protection for new varieties of plants is extended to the exportation of such varieties. In the 2016 revision of the national list of protectable varieties China declared that it is prepared to give priority to certain plant varieties which are important to Swiss industry.
Let us see how both countries will upgrade IP protection and especially enforcement to which they will commit themselves in relation to each other. Continue reading →
Besides, president Xi Jinping and China’s richest man Wang Jianlin of Dalian Wanda, Jack Ma (马云), Executive Chairman of Alibaba Group visited the World Economic Forum in Davos.
Ma talks IP, will he walk IP?
The Alibaba Group, which includes Taobao, TMall and Alibaba, was identified in the USTR’s Special 301 Report of 2008, 2009, 2010 and 2011 for facilitating the sale of counterfeit goods to consumers and businesses. Some measures and assurances were taken against counterfeit products. For this Taobao
was removed from the List of Notorious Markets in 2012, 2013, 2014 and 2015. However, in 2016 Taobao returned to this list, see here (pages 12-13).
Earlier in the year, Alibaba was kicked out of the International Anti-Counterfeiting Alliance after a membership of one month (13 April 2016 to 13 May 2016). Read Rishiki Sadam, ‘Anti-Counterfeiting group suspends Alibaba’s membership’, Reuters, 13 May 2016, available here. But now Alibaba has started its own alliance: Tom Brennan wrote on 16 January on Alizila (Alibaba’s news site) that Alibaba launches ‘Big Data Anti-Counterfeiting Alliance’, see here.
18 January 2017, Ma was interviewed by NY Times’ Andrew Sorkin at the World Economic Forum in Davos. Sorkin: “One of the critiques is, as you know, and it continues to linger around Alibaba, is the piracy issue. This is an IP issue and it is an issue all over China, but you take the brunt of lot of it.” Ma: “Yeah.” Sorkin: “How much progress have you made in your mind, and how do you think about some of the regulatory bodies including in the U.S. that continue to critisize Alibaba for these issues?”
“This position is located in the U.S. Consulate General Guangzhou, China. The incumbent will serve as an Intellectual Property Attorney-Adviser (IP Attaché) in Guangzhou for the International Trade Administration/Global Markets (ITA/GM) and United States Patent and Trademark Office (USPTO). The position requires a law degree and knowledge of all fields of IPR and international agreements governing IPR, including IPR office operation and administration, IPR training, and adherence to IPR standards of protection and enforcement. As an IP Attaché, the incumbent will act as a resource on intellectual property regimes in Southeastern China including Fujian, Guangdong ,Guangxi, Provinces, and Hainan Islands for U.S. Government agencies and U.S industry. This position reports to the Foreign Commercial Service Senior Commercial Officer and the USPTO IP Attaché Program Director, which directs the incumbent, reviews the incumbent’s performance and ensures consistency with agency and administration priorities. This position must also coordinate with other parts of the U.S. Consulate.”
If you are a qualified U.S. citizen you can apply, see more here.
In my book Trademarks and Social Media, Towards Algorithmic Justice, I describe the progress made in filtering technology which is another reason to advocate strict liability for online service providers. The possibilities of filtering are illustrated in today’s article by Rowan Callick. In The Australian he features Chu Yong’s Super Image Market which is not only a Hong Kong-based platform from where photographers can sell their pictures, but includes a system that can also use filter pirated pictures in China and beyond.
Callick wrote: “His system can search the net, daily — including the sites of retail platforms and other companies and organisations — for any copies of about 10,000 of the three million images that have so far been placed on the SIM platform. The SIM server can compare a client’s image with 50 million other photos in a 10th of a second. But China’s Great Firewall slows internet traffic, doubling the time a search takes inside China.”
Since 2011, China is the world leader in the number of published invention patent applications (also the number of utility model and design patents is rising). China is in the process of doubling its number of patent applications (from more than 1 million patent applications in 2015). Subsidies and further fee reductions strengthen the incentive to apply for patents, thereby putting more pressure on the State Intellectual Property Office (SIPO) to assess patent quality.
According to China IP News, the Ministry of Finance and National Development and Reform Commission issued the Regulations on Reducing Patent Fees (Regulations) that became effective on 1 September 2016. The budget for the fee reduction is planned to be increased to RMb 4.1 billion per year as of 2016. Compare the budget for 2015 of RMB 3.5 billion.
The rationale behind this reduction is to decrease the threshold for inventors and companies to patent their inventions, and one measure to implement the Promotion Plan for the Implementation of the National Intellectual Property Strategy and acceleration of building an IP powerhouse in 2016, see SIPO’s July announcement here.
Article 4 Regulations states that the following groups are eligible for an 85 percent reduction of the patent application fee, excluding announcement printing fee and additional application fee; substantive examination fee for invention patent applications; annual fee for six years from the year the patent is granted; and re-examination fee:
Article 3(1) Regulations: Individuals whose average monthly income was less than RMB 3,500 (RMB 42,000 annually) in the previous year;
Article 3(2) Enterprises, business units, social organizations and non-profit making scientific research institutes whose corporate taxable income was less than RMB 300,000 in the previous year;
In case two or more individuals or units are co-applications or co-owners of a patent, the fees could be reduced to 70 percent (Article 4 Regulations).
Big discounts, big challenges for patent quality
These reductions of patent fees, together with provincial or city subsidies, will lead to an even stronger surge in patent applications and grants, and therefore an even stronger pressure for SIPO to guarantee a sufficient standard of quality.
There probably must be a soft spot between motivating innovators to apply for a patent that without subsidy or fee reductions would never do so, and those patent filers that have claims that are neither novel nor inventive, but try to get a patent anyway. When the SIPO is overwhelmed with patent applications, subpar patents will slip through.
“The generosity of China’s incentives for patent-filing may make it worthwhile… to patent even worthless ideas… Patents are easy to file,… but gems are hard to find in a mountain of junk.”Patents, yes; ideas, maybe The Economist, 14 October 2010.
See earlier IP Dragon articles about the same topic:
China has liberalised its market for theatrical release of foreign films to some degree, which kills two flies with one stone for foreign movie producers. On the one hand when Chinese are able to watch some popular foreign movie in Chinese cinemas, it decreases the incentive for Chinese consumers to download or buy counterfeit DVDs. On the other hand, the growth in movie tickets in the US and Europe have plateaued and China is with its soaring box office sales the promised land for foreign movies. However, importing movies to China is still highly challenging at different dimensions:
– the movie needs to be selected as one out of only 34 foreign movies;
– then the movie needs to be approved by SAPPRFT;
– there is a draft law that requires that two-thirds of the total movie run time consist of Chinese films;
– then there is a ban during Lunar New Year celebration and Summer holiday;
– domestic films are favoured and foreign movies sometimes have to compete against other foreign movies;
– domestic films can get a tax rebate.
Therefore, foreign movies can be screened in China, but many hurdles need to be taken.
34
The first foreign movie was screened in China in 1994. It was The Fugutive. Now, China’s box office sales have become an important part of the revenues for members of the Motion Picture Association of America’s. According to their 2015 Theatrical Market Statistics, China’s box office increased 49 percent in U.S. dollars to $6.8 billion. After China, the UK was the country where the six major Hollywood studios that comprise the MPAA, had the highest box office sales, but considerably lower: $1.9 billion.
The contours of the near sunrise future for the members of the MPAA became visible in February 2015, when the box office sales in China (US$650 million) surpassed that of the United States (US$640 million) for the first time. USCC p 7. China is already the second biggest market for MPAA members, and is projected to become the biggest market by 2018.
In 2007 the US brought a case to the WTO against China for measures that restrict the trading rights with respect to imported films for theatrical release, and discriminatory distribution rights. The Panel determined that, under China’s Accession Protocol to the WTO, a number of Chinese measures were inconsistent with China’s obligation to grant “trading rights”. About distribution rights, the Panel rejected the claim of the US. Both countries appealed in 2009. And 21 December 2009 the Appellate Body circulated its report in which it upheld the Panel’s determination about trading rights of imported films.
In 2010, China informed the Dispute Settlement Body (DSB) of its intention to implement its recommendations and rulings. Since the dispute involved many important regulations on culture products, China needed a reasonable period of time for implementation. China and the US agreed that this reasonable period of time was 14 months and would expire on 19 March 2011. Six days later, China reported that it had made efforts to implement recommendations and had completed amendments to most measures. However, given the complexity and sensitivity of the dispute, China hoped that Members would understand the difficulty it was facing in the implementation process. China wanted to resolve the matter through joint efforts and mutual co-operation of the relevant parties.
Memorandum of Understanding (MOU)
On 25 April 2012, the ambassadors to the WTO Yi Xiaozhun for China and Michael Punke (also known for his novel The Revenant, that made it into an Oscar winning film and which was screened in China and opened with $33 million in the first three days) for the US sign the MOU in Geneva.
On 9 May 2012, China and the US informed the DSB of key elements relating to films for theatrical release as set forth in the MOU mentioned at the DSB meeting on 22 February 2012.
At the DSB meeting on 24 May 2012, China said that it had taken all necessary steps and had thus complied with the DSB recommendations. The US said that the MOU represented significant progress but not a final resolution.
World Trade Organization, China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, Dispute DS363, available here.
In the MOU China and the US agreed upon the following points:
China confirmed that enhanced format films (such as 3D and IMAX films) are not subject to the 20-film commitment set forth in the Additional Commitments under Sector 2.D. of its GATS Schedule and agreed that China will allow the importation of at least 14 enhanced format revenue-sharing films per calendar year beginning in 2012. Therefore the total number of foreign films of 34.
China agreed that the producer of the imported revenue-sharing film will be allocated 25 percent of gross box office receipts, and the Chinese side shall be responsible for the payment of all taxes, duties and expenses.
In a contract for the distribution of an imported film other than a revenue-sharing film, where the two sides are not both private enterprises, China agreed that the contract will be based on commercial terms, consistent with the terms prevailing in countries whose markets are comparable to China’s market based on annual box office revenue, number of screens, annual admissions and admissions per screen.
China confirmed that any Chinese enterprise is eligible to apply for and be granted a license to distribute imported films and that nothing in China’s laws, regulations or government rules prevents any eligible Chinese enterprise from applying for and receiving a license to distribute, and operating as a distributor of, these films. China further agreed that it will promote reform in the distribution of imported films and will actively encourage more Chinese enterprises, including private enterprises, to obtain licenses and to participate in the distribution of these films.
China agreed that the licensing of distributors would be conducted in a nondiscretionary and non-discriminatory manner, that contracts for the distribution of imported films would reflect standard industry practices, and that other Chinese government policies or practices would not undermine the provisions of the MOU.
After five years, thus in 2017, China and the US will engage in consultations regarding key elements of the MOU and to discuss the matter of China implementing the DSB’s recommendations and rulings with regard to films in DS363.
U.S. State Department, Memorandum of Understanding between the People’s Republic of China and the United States of America Regarding Films for Theatrical Release, February 2012, see here.
In short: foreign movie producers can enter the Chinese market in three ways:
revenue-sharing films (but limited to 34 films; 20 normal and 14 enhanced format films), of which the foreign studio takes 25 percent of the box office receipts (which is double in other parts of the world);
flat-fee movies;
Co-productions (the foreign studio receives about half of ticket sales). Hollywood can bypass quotas and receive about half of ticket sales.
See, Knowledge@Wharton, 17 February 2016, available here.
State Administration of Press, Publication, Radio, Film and Television (SAPPRFT)
Sean O’Connor and Nicholas Armstrong in ‘Directed by Hollywood, Edited by China’, argue that the SAPPRFT does not give clear guidelines about their wishes. It describes that many a foreign studio is practising self-censorship to get the approval of SAPPRFT. See website of SAPPRFT here (Chinese).
In 2014, the SAPPRFT banned screenings involving anybody who had engaged in criminal activity. China’s new film law stresses celebrity ethics, Xinhua (via Shanghai Daily), 29 August 2016, available here.
“According to SAPPRFT regulations, all films exported to China must adhere to the principles of the Chinese Constitution and maintain social morality. Therefore, any films depicting demons or supernaturalism, crime or any other illicit or illegal actions within China’s borders, disparagement of the People’s Liberation Army and police, and anything that could be perceived as anti-China—including merely damaging Chinese sites or monuments—are prohibited.”
See, Sean O’Connor and Nicholas Armstrong, ‘Directed by Hollywood, Edited by China: How China’s Censorship and Influence Affect Films Worldwide, US-China Economic and Security Review Commission, 28 October 2015, Fn 62, available here.
Two-thirds of total movie run time in Chinese cinemas needs to be domestic films
The second draft of a bill, that was originally presented in October 2015, has been just released. Lawmakers are making their second reading of the bill during the bimonthly session of the Standing Committee of the National People’s Congress this week. “The law contains a provision that domestic films should take up at least two-thirds of total movie run time in Chinese cinemas.”
See, Fergus Ryan, ‘Draft Film Law Favors Local Films over Hollywood Imports’, China Film Insider, 30 August 2016, available here.
Duration of screenings
Foreign films are often allowed to be screened for a month. “Studios can request an extension by applying to a branch of the China Film Group, which is directly under the State Administration of Press, Publication, Radio, Film and Television, or SAPPRFT, China’s top film regulator. In a twist, China Film Group is also involved in producing films: Together with Enlight Media, it is one of the studios behind “The Mermaid.””
See, Lilian Lin, with contributions by Laurie Burkitt, Making Waves: In Blow to Foreign Films, China Gives ‘Mermaid’ Three-Month Boost, WSJ, 4 March 2016, available here.
Not helpful for the box office sales is that foreign films are banned during the high season of movie watching: the Lunar New Year celebration and the Summer holiday. USCC p 7.
Therefore, foreign film studios that want to launch their films globally simultaneous or near simultaneous between 30 April and 2 May 2003, 20th Century Fox launched X2: X-men United in 93 countries
Hubert Gatignon, John R. Kimberly, Robert E. Gunther, ‘The INSEAD-Wharton Alliance on Globalizing: Strategies for Building Successful Global Businesses’, Cambridge University Press, 20 Sep 2004, 207-208) might be wise to first get approval for the China launch from SAPPRFT.
Tax rebate
Foreign films have to compete with domestic films that are eligible for a tax rebate since April 2016, which seems not conducive for the level playing field that was promised by the WTO.
level playing field?
See, Patrick Brzeski, ‘China to Reward Cinemas for Favoring Local Films Over Hollywood Imports’, The Hollywood Reporter, 27 March 2016, available here.
Conclusion: there is room for improvement. Expect a push for structural change for 2017.
Singapore opened its first overseas IP Office of Singapore (IPOS) in Sino-Singapore Guangzhou Knowledge City (SSGKC) to help Chinese companies internationalize. Read more here. Continue reading →
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April 8, 2016, President Johann Schneider-Ammann, the Swiss President met with Zhang Dejiang (张德江), Chairman of the Standing Committee of the National People’s Congress in Beijing. According to China’s state-news agency Xinhua, Zhang “called on the two countries’ parliaments to strengthen mutual learning in the legislation of intellectual property protection, innovation and entrepreneurship as well as vocational education.” China can also benefit from Swiss expertise on eco-agriculture, environmental friendliness, branding innovative and quality products.
Of course a Swiss-Chinese Dialogue on IP is going on since at least 2011 and culminated in an informal mechanism for complaints of Swiss companies regarding IPR infringements on the Internet in 2014, see here.
According to the Swiss Customs Administration 71 percent of counterfeit goods originated from China in 2015. See more here.
Price and place of purchase are often good indicators of whether a product is a counterfeit. For example one can expect that the Victorinox Swiss Army Knife ‘Champ’, is a counterfeit if it costs 8 US dollar while it normally costs 99 US dollar, and is available via an online market instead of via a licensed outlet. See the Counterfeit Report.
Are China and Switzerland both dragons? “Suan Long” (Double Dragon) restaurant in Zug, Switzerland. Photo: Danny Friedmann Copyright 2016
Is there any wisdom in these rankings, you might ask yourself. First of all, it is about applications and not about granted patents. Second even if it were about granted patents, the quality of many a patent are bad. However, one could argue that it is an indication of innovation, although this indication might be skewed.
On 24 July 2015, gLAWcal (Global Law Initiatives for Sustainable Development) invited Dr. Lin Xu, Deputy Director of Legal Affairs Division of Trademark Review and Adjudication Board of State Administration for Industry and Commerce, People’s Republic of China provided a lecture on “The Registration, Use and Protection of Trademarks in China”. Professor Paolo Farah (University Institute of European Studies (IUSE) Turin, Italy and gLAWcal gave the introduction.
China Film Insider cites Mr Cheng Wu, VP of Tencent Holdings that the value of IP does not come from transactions but from co-creation. At the UP2016 Tencent Interactive Entertainment 2016 Annual Press Conference, Wu made clear that he does not believe in a competition between content and copyright.
“IP’s value comes from the emotional co-creation and co-imagining between the source material and its fans, and not from materialistic transactions.”
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China Daily reports on a car dealer in Binzhou in Shandong province which is offering imitations of well-known trademarked automobiles such as Audi, Jixiangjinma and BMW. These electric knock-offs are priced at 20,000 yuan, are powered by small batteries and can not go faster than 26 km/h.
Hat tip to China Lawyer Edward Lehman of Lehman, Lee & Xu.
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Last Summer (23 July 2015) gLAWcal, which is the Global Law Initiatives for Sustainable Development based in the UK, invited Judge Dr. Zhang Lingling, Beijing IP Court for Patent Examination and Invalidation and Trademark Enforcement to give a lecture on “China’s Copyright Law and Typical Cases”.
The event was held at Peking University, School of Government, Center for European Studies, in Beijing. Introduced by and comments from Professor Paolo Farah (University Institute of European Studies, IUSE, Turin, Italy and gLAWcal – Global Law Initiatives for Sustainable Development). The event was organized by gLAWcal – in collaboration with University Institute of European Studies (IUSE) in Turin, Italy, Peking University, School of Government, Center for European Studies (China), Tsinghua University, School of Law, Beijing (China) in the framework of the European Union Research Executive Agency IRSES Project “Liberalism in Between Europe And China” (LIBEAC).
Rogier Creemers posted a translated revision draft (undated) of the Internet Domain Name Management Rules of which the Ministry of Industry and Information Technology is seeking opinions.
The rules give a definition of domain name, referring to a “digital indicator that is used on the Internet to distinguish and orient the hierarchical structure of computers, and corresponds to the computer’s Internet protocol (IP) address.” The Top Level Domain names (TLD) are the codes on the right-hand side of the dot. China’s country-code Top Level Domain names (ccTLD) are CN and 中国.
New TLDs can both form an opportunity and a threat for brand and trademark holders, because of the risk of cybersquatters.
The rules make those responsible for the domain name systems (telecommunications management bodies, domain name root server-running bodies, domain name registration management bodies and domain name registration service) also responsible for censorship, just as internet service providers are. See for example Article 4:
All provincial, autonomous region and municipal telecommunications management bureaus are responsible for domain name services supervision and management within their own administrative areas, their main tasks are:
(1) Implementing and enforcing domain name management laws, administrative regulations, rules and policies;
(2) managing domain name registration service bodies within their administrative areas;
(3) assisting the Ministry of Industry and Information Technology in conducting management over domain name root server-running bodies and domain name registration and management bodies within their administrative areas;
(4) being responsible for network and information security management of the domain name system within their administrative area;)
(5) protecting users’ personal information and lawful rights and interests according to the law;
(6) managing domain name resolution services within their administrative areas;
(7) managing other activities concerning domain name services within their administrative areas.
In contrast to internet service providers, it seems that in this draft, the domain name system bureaus are not so much made responsible for the enforcement of copyright and trademark infringements.
click on photo for high resolution picture of the advertisement
27 February 2016, the Hong Kong government placed an advertisement in some Hong Kong newspapers, including the Oriental Daily (東方日報) to advocate the adoption of the Copyright (Amendment) Bill 2014, next week. The Hong Kong government has chosen this surprising method to advocate the passing of the bill, and blaming the Pan-Democrats in the process for the delays. Let us see whether this “government by advertisements” will be effective. My prediction is that the bill will be withdrawn by Friday.
Here is a translation of the text of the advertisement:
“The Government appeals to LegCo (Legislative Council) in the overall interests of Hong Kong, for the timely adoption of the draft amendment of the Copyright Ordinance!
The objective fact is that:
(1.) after 16 months and 24 carefully held meetings on the draft by members of the current LegCo Council Bills Committee which were considered eligible members who support the resumption of the Second Reading of the bill.
(2.) The Legislative Assembly decided to resume the Second Reading of the draft, was to be held in 7 meetings, of which five times they were discontinued.
(3.) In the last more than two months, the Council of the General Assembly spent 75 hours, 55 hours was spent on headcounts requested by Pan-Democratic members or proposed suspensions and adjournments of the debate.
(4.) A draft is provided that is better than the current legislation to protect intellectual property rights and is supported by copyright holders, the Bar Association and the Law Society, Hong Kong’s economic and commercial development is essential.
(5.) The draft of the copyright exemption provides more user protection.
(6.) Due to the Pan-Democrats continued filibustering, the Legislative Council has now a backlog of six government bills and resolutions, while the current legislative session has less than five months to go. The Legislative Assembly shall be expected to handle up to a total of 28 Bills, covering a wide range of social, economic and livelihood issues.
The Government hereby urges the Legislative Council in the overall interest of Hong Kong, to timely adopt the draft amendments to the Copyright Ordinance!
The Legislative Assembly has next week still two days and a half to consider the draft. If the debate will not be completed, the Secretary for Commerce and Economic Development will propose an adjournment motion on March 4, Friday, to withdraw the Bill.
Commerce and Economic Development Bureau.”
Yours truly answered some questions about the bill, that is not as bad as the opponents like us to believe and not as good as the proponents like us to believe, to the press, see here. Also I wrote an opinion piece about it for the South China Morning Post, see here.
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(Photo from the annual report of Tencent for the financial year of 2021 www.newtonghua.com)
