Merchandising rights in China: judicial protection for commercial interests

 Authored by Mr. He Jing ( and Ms. Lyu Pei ( at Anjie Law Firm

Precis: Ground-breaking decisions have made merchandising rights a useful tool in the battle against bad-faith trademarks

Many rights holders have had frustrating experiences when it comes to fighting bad-faith trademark squatters in China. However, several recent cases have made use of a highly effective new weapon: the merchandising right. 

In a trademark opposition case involving the famous film *Kung Fu Panda* (*Gao Xing (Zhi) Zhong* No 1969 (2015) 高行 (知) 终字第1969号), the Beijing High People’s Court confirmed in its final judgment that DreamWorks Animation SKG, Inc. (“DreamWorks”) enjoyed prior merchandising rights over KUNG FU PANDA and rejected an attempt by a third party to register this mark.  

The case sparked extensive debate because merchandising rights are not explicitly set out in Chinese law. A number of people have expressed serious concerns that the judges in these cases are making laws rather than interpreting them. 

However, despite this controversy, the judgment has been hailed as an innovative attempt to secure more comprehensive protection for rights holders. In a broader context, innovation has been heavily promoted in China at all levels as a driver for economic, political and cultural development. The judicial support for merchandising rights seems to echo this policy. Given this, a discussion on merchandising rights is timely not only because they are so relevant to the ongoing battle against bad-faith trademarks, but also because they offer a cutting-edge perspective on ongoing legal reforms in China.

Third-Party Funding in Arbitration Favoured by UK Court


In a judgment handed down on 15 September 2016, the Honourable Judge Waksman QC, sitting in the High Court in London, ruled that arbitration courts could award third-party financing costs as “other costs” collectible under the Arbitration Act of 1996. The full circumstances and facts surrounding the opinion are currently unavailable, as we await release of a detailed and final decision.

Here is what we do know. The case involved a contract dispute concerning operation of an offshore drilling platform. The two parties were Norscot Rig Management and Essar Oilfield Services. Norscot applied for third-party financing to fund its action against Essar. The arbitration Tribunal awarded Norscot at least part of its third-party financing costs. 

Prior decisions in other common law jurisdictions have approved the existence and validity of third-party funding generally in the context of litigation. In Bayens v Kinross Gold Corporation, 2013 ONSC 4974, the trustee plaintiffs, acting on behalf of the Musician’s Pension Fund of Canada, moved for approval of an underlying litigation funding agreement designed primarily to protect the class counsel from the risk of an indemnity where the Defendant won an award on adverse costs. The Ontario Superior Court approved the legality of the agreement, specifying that in litigation all such arrangements would need to be disclosed and receive court approval. The recent London High Court ruling took the matter a step further, awarding some portion of the applicant’s costs for the expense of the third-party funding arrangement itself. 

As we await the final published decision, we anticipate Judge Waksman’s reasoning might in some way addresses one of the following three questions.


1) Since the United Kingdom is a leading ‘costs-follows-the-event’ jurisdiction, would that make its High Court justices more likely to acknowledge the reasonableness of recovery of third-party funding costs? Will higher courts from ‘bear-your-own-costs’ jurisdictions (such as the United States) wind up approaching third-party funding costs more skeptically?

2) Are third-party costs presumptively unreasonable, but only available in specific cases where the facts especially merit their recovery? Or will third-party funding costs be seen as an increasing reality in a world where transactional financing costs are already prevalent and recoverable?

3) Should a Tribunal’s award of third-party funding costs be explicitly subject to appeal, such that a party awarded third-party funding fees must know that this award will become a roadblock to immediate enforcement? And if so, should courts of the seat of the arbitration bifurcate enforcement of the ‘normal’ and special ‘third-party funding’ costs awards, and allow enforcement of the rest of the award while the third-party funding portion of the award awaits and undergoes the lengthy. and also perhaps expensive process of judicial review?

4) Will Chinese courts actively support third-party funding schemes? Third-party financing arrangements have already made an appearance, particularly in off-shore arbitrations where the fees are relatively high. Will courts view it as beneficial to resolve more commercial disputes? Or, will courts believe it would encourage more litigation/arbitration or perhaps discourage settlement?


New Review System Milestone for Fair Market Competition

 Authored by Michael Gu ( and Sun Sihui ( at AnJie Law Firm


On June 1 2016 the State Council published its Opinions on Establishing a Fair Competition Review System in the Development of the Market Regime, signalling the formal establishment of China's fair competition review system. The fair competition review system is a major initiative to ensure fair play among participants in the Chinese market. It is also a significant instrument for promoting the development of China's socialist market economy and the reform of its economic system from the top down.

The opinions represent a key step towards establishing the competition policy and implementing the State Council's measures to streamline administration and delegate more power to lower-level governments. The opinions will also:

• have a profound influence on the supervision and regulation of government activity;

• promote market-oriented policy development;

• stimulate creativity and vitality among market players; and

• foster fair market competition.


China Intensifies Antitrust Enforcement in the Pharmaceutical Industry: NDRC Issues Ruling in its First Concerted Practice Case

 Authored by Michael Gu ( at AnJie Law Firm


Since the implementation of the Anti-Monopoly Law (the “AML”) in August 2008, those industries particularly affecting the populous’ quality of life have been the major focus of the antitrust authorities’ enforcement agenda. Targeted industries include those such as automobile, consumer goods, insurance, construction materials, tourism, tobacco, telecoms and public utilities, etc. In particular, the National Development and Reform Commission (the “NDRC”) has launched several rounds of “antitrust storms” upon the auto industry, which attracted wide attention in recent years. In the meantime, enforcement upon the pharmaceutical industry has been relatively light, even though it is a critical sector affecting quality of life. In spite of some discussion and various rumors, neither the NDRC nor the State Administration for Industry and Commerce of the PRC (the “SAIC”) had penalized any pharmaceutical enterprises over the past few years. However, during a single month period in the beginning of 2016, both the SAIC and the NDRC respectively published penalty decisions against pharmaceutical companies, i.e. the Chongqing Qingyang Pharmaceutical Monopoly case  and the Allopurinol Drug Cartel case . The nearly parallel actions evidence an accelerated enforcement targeting the pharmaceutical industry.


Concurrences Review Event on Multinationals Deals in a World of Non-Convergence

Concurrences Review, in partnership with George Washington University Law School, will hold the 4th edition of their annual joint conference “120 Merger Regimes: Multinationals Deals in a World of Non-Convergence: US, EU, Brazil, China... on Monday, September 19, from 14:00 to 18:30, at George Washington University School of Law, 2000 H Street, NW, Washington, DC. 

Speakers include:
  • William E. Kovoacic, Professor, George Washington University Law School
  • Sir Philip Lowe, Senior Advisor, FTI Consulting
  • George Rozanski, Partner, Bates White
  • Michael Keeley, Partner, Axinn, Veltrop & Harkrider
  • Rosie Lipscomb, Senior Competition Counsel, Google
  • Yong Huang, Director, Competition Law Center, Uni. of Int'l Business & Econ
  • John Harkrider, Partner, Axinn, Veltrop & Harkrider
  • Aviv Nevo, Senior Advisor, Cornerstone Research
  • Carles Esteva-Mosso, Deputy Director General, DG COMP
  • Elaine Ewing, Partner, Cleary Gottlieb Steen & Hamilton
  • Michael Ray, Executive Vice President, Western Digital Corporation
  • George Cary, Partner, Cleary Gottlieb Steen & Hamilton
  • Jonathan Orszag, Senior Managing Director, Compass Lexecon
  • Ian Simmons, Partner, O’Melveny & Myers
  • Sharis Pozen, VP, Global Competition and Antitrust, General Electric
  • Richard Parker, Partner, O'Melveny & Myers
  • Randolph W. Tritell, Director, Office of International Affairs, US Federal Trade Commission
There will be three panels:
  • Lack of Consistency: Navigating an Unharmonized World of Merger Regimes
  • A Call for Harmonization: Towards Regional Regulators or Comity?
  • Does the Bureaucratic Model Work? Advocacy Before the Agencies and the Courts
You can find the detailed program on the dedicated website:

Supreme Court Reforms Patent Lawsuit Rules

Authored by Mr. He Jing ( and Mr. Liu Liangyong ( at Anjie Law Firm

The Supreme Court of China released a new set of judicial interpretations governing the patent infringement lawsuits in March, which has entered into force on April 1 2016. The new judicial interpretation is intended to further enhance and clarify the way patent infringement lawsuits are done in China. Before going into the details, it may helpful to note that the Supreme Court is taking active steps to ensure the courts are playing dominant roles in handling patent disputes, as the State Intellectual Property Office is openly calling for more powers to enforce patents through administrative routes. The dual-track enforcement system in China, which was never given too much attention the past, is somehow a topic in today’s China patent world. Some aspects of the new rules clearly give the courts a bigger say in driving the patent litigation proceedings. 

The new rules made by the Supreme Court addresses a wide scope of issues, such as claim construction, impact of validity proceeding, design patent protection, determination of damages, standard essential patents.

The Magic of China IP Misuse Guidelines

Authored by Mr. He Jing ( and Mr. Hou Lei ( at Anjie Law Firm

The drafting process of various China IP misuse guidelines, circulated by National Development and Reform Commission (NDRC) and State Administration for Industry and Commerce (SAIC), have taken up lots of attention in recent months.  The multiple editions of the drafts, which are all made public to local and global legal community, attracted rounds of discussions and submissions among professional groups and government agencies.  At the same time, the access to the other two draft IP misuse guidelines, being drafted by State Intellectual Property Office (SIPO) and Ministry of Commerce (MOFCOM), is restrictive.  Now, it is believed that all the work drafts of the IP Misuse Guidelines have been sent, if not, will soon be sent to the State Council Anti-monopoly Commission for review and consolidation.  We may anticipate something for public comments later this year.  

The intensive drafting work has contrasted with somewhat less aggressive antitrust enforcement activities involving IP in China.  People may wonder whether China intends to make some adjustment through such rule-making process, or this is simply silence before next storm.  

This article is intended to examine the motivations, the history and current status of the China IP Misuse Guidelines that are being made by multiple regulatory authorities.  In particular, we will compare the two key drafts that are drafted by NDRC and SAIC in order to reveal something that signals what may come into being in the future.  One interesting finding is that SAIC somehow regains attention and comes out as an equally important force, in formulating the IP misuse guidelines.  All the attention that were given to NDRC, partly due to its enforcement decisions, may prove to be not so justifiable.    

Authority Scrutiny of SEP and FRAND Issues in China

Authored by Dr. Zhan Hao ( and Mr. He Jing ( at AnJie Law Firm

Antitrust enforcement relating to standard essential patents (SEPs) and fair, reasonable and non-discriminatory (FRAND) licensing in China has been a focal point for industry and the international legal community for the past few years. In this regard, the National Development and Reform Commission’s (NDRC) investigation into Qualcomm Corporation was typical of what a licensing company may encounter in China. This report highlights the relevant legal basis for SEP and FRAND-related antitrust enforcement in China, as well as key developments. Standard related IP policies, FRAND royalty rates, refusal to license, patent pools and injunction relief for SEPs have been hotly debated among policy makers, judges, practitioners and industry players. Some Chinese court cases have arguably been among the earliest decisions worldwide in this field, and future enforcement activities and the outcome of private antitrust lawsuits in China will likely continue to affect global trends.

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Draft Amendment to Anti-Unfair Competition Law

 Authored by Mr. He Jing ( and Ms. Dong Xue ( at Anjie Law Firm

The Draft Amendment to Anti-Unfair Competition Law (AUCL) has long been awaited and discussion on its proposed  revisions is now heating up. Drafted by the State Administration of Industry and Commerce (SAIC) and released by State Council for public opinion  until March  25 2016,  this Draft Amendment has substantially revised 30 of the 33 provisions and touched  on a wide range of issues, including commercial bribery, trade dress, trade secrets, antitrust, administrative enforcement and compensation thresholds.

AUCL has always been a crucial weapon for intellectual property rights owners to stop infringement and freeriding activities, and this Draft Amendment would also have material impact on IP enforcement. Historically, trade secret cases are among the most difficult battles to win, due to too high criminal thresholds, inconvenient transfer from administrative to criminal proceedings and insufficient safeguard measures for trade secrets disclosed in enforcement proceedings among various other reasons.

The Function and Regulation of Credit Insurance in China

    Authored by Dr. Zhan Hao ( and Liang Bing ( at AnJie Law Firm

Since the issuance of Several Opinions of the State Council on Accelerating the Development of the Modern Insurance Service Industry on August 10, 2014, credit insurance has been increasingly applied in insurance practice. However, “credit insurance ” is different from “warranty” in Chinese Guarantee Law,and there is a heated discussion on the nature of a credit insurance.  

In the Chinese P2P or the other transactions, credit insurance is often used to protect creditors’ benefits. In this paper, we are going to discuss the points creditors need to be aware of.

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