Telecommunication: MIIT Seeks Public Comments on Revised Administrative Measures for the Licensing of Telecommunication Business Operation

Recently the revised version of the Administrative Measures for the Licensing of Telecommunication Business Operation (Draft) (“the Draft”) was published by the Ministry of Industry and Information Technology (“MIIT”) for public comments.

Article 3 is new in the Draft, which provides that China will establish an integrated management platform for the telecommunication industry, to promote the online license application, approval and management, and the publication, inquiry and sharing of related information.

The Draft added a new provision in Article 5 and 6, providing that to apply for telecommunication business license “the company and its main management personnel are not on the List of Dishonest Telecommunication Business" (“the List”), which aims to strengthen the binding effect and guiding function of the industry credit mechanism encouraging business operators to be honest and value credibility. In accordance with this provision, companies will not be allowed to apply for telecommunication business license if it is on the List.

The Draft made significant modification to Article 36 and 37, which have replaced the Annual Inspection System by the Annual Report and Publication System. In the first quarter of each year, the telecommunication business operators shall report to the authority their whole-year operation performance, special matters, and how their network and information security mechanism was executed in the previous year.

Cryptography Law: OSCCA Seeks Public Comments on the Cryptography Law

Recently the Office of State Commercial Cryptography Administration (OSCCA) released the Cryptography Law of the People’s Republic of China (Draft for Public Comments) (“the Draft”). Highlights of the Draft are as follows:

  • Article 11 sets forth that commercial encryption products that are sold or used in business activities, as well as the provision of commercial encryption services are subject to approval of competent authority in accordance with relevant catalogues.
  • Article 12 provides that Critical information infrastructure shall be protected by the use of encryption according to the provisions of laws and regulations as well as the mandatory requirements of encryption-related national standards.
  • Article 15 provides that the government will strengthen the encryption security system, improve the encryption security management regulations, and consolidate the encryption security protection capabilities.
  • Article 17 provides that the government will fortify the encryption monitoring and authentication systems, and will work out encryption monitoring and authentication rules. Article 18 provides that the government will conduct categorized and hierarchical evaluation of the encryption security in critical information infrastructure.
  • Article 22 provides for government support to scientific and technological research on encryption, academic exchanges and the development of the encryption industry. The government will provide legal protection to encryption intellectual property rights to stimulate innovation of encryption technology.
  • Article 23, 24, 25, and 26 provide for regulations on the encryption industry from the perspective of standardization system, awards for encryption technology, development of encryption talent teams and encryption education and popularization.

Opinions Sought from Private Sector on Partial Design Protection

 In the Draft Fourth Amendments to the Chinese Patent Law released for public comment in end of 2015, SIPO proposes in Art. 2(4) that China should allow partial design to be patentable, which expands the scope of design patent from merely design of a product to partial design of a product. And according to the State Council’s 2017 Legislative Work Plan, revising the Draft Fourth Amendments to the Patent Law is a project to be completed within the year.

It came to our attention that an unofficial survey (at https://sojump.com/m/13469141.aspx?from=singlemessage&isappinstalled=0) was released on April 18, 2017 seeking opinions from private sector regarding protection of partial design and patent evaluation report. This survey is trying to see how introducing partial design to China will affect private businesses in protecting their micro innovation, and whether scope of eligible applicant and timing for applying for patent evaluation report should be changed from private perspective.

We will monitor the development closely and once the Fourth Amendments to the Patent Law is passed, we will be expecting more detailed rules regarding application requirements and scope of protection for partial design in implementation rules and examination guidelines.

Data Industry: 2017 Big Data Industry Summit held on March 28

China Academy of Information and Communications Technology (CAICT) and China Communications Standardization Association (CCSA) held 2017 Big Data Industry Summit on March 28 and 29 instructed by the Ministry of Industry and Information Technology of PRC.

During the summit experts reported on big data sharing, open and protection and other issues. “Big Data Industry Development Plan (2016-2020)” was expounded by the summit. Meanwhile, CAICT announced the results of data flow testing, trusted application store evaluation, big data product evaluation. China Telecom Co., Ltd. cloud computing branch (中国电信股份有限公司云计算分公司) and other six companies become the first batch companies which have passed the data flow testing. Other six companies’ products such as “360 mobile assistant “were awarded a trusted application store certificate.

Here are some highlights conveyed in the summit:

  1. Big data industry in China is currently based on the Cyber Security Law for the management requirements. There are no specific regulatory guidelines at present.
  2. CAICT has proposed a cross-border data flow assessment policy, covering elements such as size of the data, type of data, legal protection level in the receiving countries, and bilateral relations with such receiving countries.
  3. Data for key industries can be regularly assessed by the government to determine whether cross-border or conditional cross-border transfer is allowed.
  4. The principle of authorization includes the user's direct consent or indirect consent, and it is recommended that different assignments be classified and the authorization process should be clearly defined.
  5. It is recommended to provide clearer guidance in order to achieve the true data desensitization through a standard for data output patterns and data desensitization requirements. It is advisable to have an ex post supervision (instead of a pre-approval system) or third party evaluations and improve the corresponding standard mechanism. Meanwhile, it is recommended that there should be a corresponding emergency mechanism and a reasonable risk compensation mechanism.

 

Data and Information: Personal Information Protection Written in China's Civil Code

China’s NPC passed the General Provisions of the Civil Code on March. Highlights are as follows:

  • Article on personal information protection: There is a new article in the draft which provides legal protection on personal information stating that any organization or individual shall ensure that the collection of personal information should be in accordance with the law, and the personal information shall not be used, processed or transmitted, sold, offered or disclosed illegally. Violators should bear the compensation for losses and other civil liabilities.
  • An official recognition of privacy in the civil code again shows the emphasis on legislature in this area. This will build some foundation for private companies to use civil lawsuits to protect their privacy. Corporations need to be more vigilant about legal risks of personal information disclosure and related controversies, including in trading with third-party companies. In the Sina vs Maimai(脉脉) lawsuit, the Beijing Intellectual Property Court made a final verdict that Maimai should compensate Sina for obtaining Sina users’ personal information without Sina’s authorization. Sina was not sued by any of its users, but there remains such legal risk.

IP Enforcement: Premier Li Keqiang Stresses IP Administrative Reform Pilot

In his Government Work Report presented at the NPC in early March, Premier Li Keqiang stated that China is to initiate a comprehensive intellectual property administrative reform pilot to improve the existing mechanism for IP creation, protection and usage.

A guideline proposing IP administrative reform was released by the State Council in January this year. According to the guideline, a one-year pilot reform of IP rights protection will be carried out in regions jointly selected by the State Intellectual Property Office (SIPO), the State Administration for Industry and Commerce (SAIC) and the National Copyright Administration (NCA).

Under the current system, multiple government departments including SIPO, SAIC and NCA are involved in IP regulation, while at the local law enforcement level the responsibilities are also dispersed in different local agencies. Such mechanism has been proved inefficient and not strong enough to protect IP rights. To address this problem, the guideline introduces an integrated enforcement mechanism under the pilot program.

E-Commerce:SAIC Requires Consumer Complaint Hotline to Cover E-Commerce

The new measure shows greater importance attached by the Chinese government to consumer protection, which is a good news to the business operation of name brands.

Recently, SAIC issued a new Opinion to push forward “12315”(the consumer complaint and enquiry hotline) related actions in order to further protect consumers’ rights and interests, with the key measures listed as below:

  • Improve the telephone and web platform of the hotline;
  • Effectively analyze and use the data collected through the hotline in market regulation and in the policy making process;
  • Extend the coverage of the hotline to third party E-Commerce platforms and TV shopping, etc.;
  • Encourage the establishment of an efficient consumer complaint settlement mechanism featuring “advance compensation payment” by business operators like e-commerce platforms, TV shopping channels, and big shopping malls.

Read the text
 

 

E-Commerce: Alibaba Takes Action Against "Malicious" Complaints over IPR

Before handing over power-of-attorney to third party brand protection agencies, brand owners need to carry out effective due diligence. It is also worthwhile for them to guard against the tendency of weakening IPR protection by Alibaba and other platforms at the excuse of “malicious” complaints.

In early February, Alibaba announced that it would no longer process IP violation complaints from an IP agency called Hangzhou Wangwei Technology. According to Alibaba, Wangwei has filed thousands of complaints, of which more than 60% since 2015 have ended up being withdrawn after counter-appeals from merchants.

The blocking of Hangzhou Wangwei is part of a wider campaign of Alibaba against the so-called malicious complaints. Alibaba has accused several IP agencies for filing false accusations about the sale of fake goods and intellectual property violations on its online shopping platform, calling for merchants to boycott those agencies. Alibaba claims that 24% of all complaints it receives are deemed “malicious” and “a drain on the group’s efforts to stamp out counterfeits”.


Although these warnings are not aimed at brand owners, which shall not be regarded as a setback in Alibaba’s IPR protection efforts, the action against the “malicious’ agencies may divert the attention of the platforms from IPR protection.

Read the text

 

Cybersecurity: China Draft Security Review Measures for Network Products and Services

As the first implementing rules for the Cybersecurity Law, the Draft Measures define the framework for the Chinese cybersecurity review system, which may impose significant influence on entities' digital assets and future IT solutions. Related entities are suggested to closely monitor its development.

On Saturday, February 4, the Cybersecurity Administration of China (CAC, also translated as China Internet Information Office) released the Security Review Measures for Network Products and Services (Draft) (“Draft Security Review Measures”). Please see attached the courtesy translation by AnJie and the CAC website (http://www.cac.gov.cn/2017-02/04/c_1120407082.htm). Public comments are due March 4, 2017.

Preliminary Analysis:

The Draft Security Review Measures appear to implement elements of the National Security Law and Cybersecurity Law. The 16 articles address some of the most challenging concepts and issues in the cybersecurity review mechanism stipulated in the Cybersecurity Law.

Highlights include:

1. The purpose of the Draft Security Review Measures is to enhance “securable and controllable level of the network products and services”, ensure the safety of the supply chain and implement the National Security Law and Cybersecurity Law. (Art. 1)

2. Art. 2 and Art. 11 deal with the scope of application. Art. 2 generally stipulates that “important” network products and services concerning the “national security and public interest” should be subject to security review. Art. 11 further specifies that the network products and services purchased by Critical Information Infrastructure (CII) operators should go through security review as long as “it may impact national security.” (Art. 2, 11)

Comment: Art. 35 of Cybersecurity Law only requires security review for CII related products and services. However, Art. 59 of the National Security Law requires security review for “foreign investment…that affect or may affect national security, construction projects that involve national security matters, and other major matters and activities to effectively prevent and resolve national security risks.”

There may be a legal question as to whether the Draft Security Review Measures are effectively expanding the scope of the security review beyond the law.

3. The security review is to focus on four kinds of risks endangering “security and controllability,” including (1) instability, (2) threat to supply chain integrity, (3) illegal data retention, and (4) abuse of user dependency (the risk that providers may conduct unfair competition and harm users “by taking advantage of dependency of the users”). (Art. 4)

Comment: Some of these “risks” may exceed the scope of cybersecurity.

4. The CAC will align with other government departments to establish a Network Security Review Office and engage experts. Third parties certified by the CAC will undertake particular reviews. (Art. 5, 6, 7, 8, 12, 13)

Comment: This may raise concerns regarding the competency and neutrality of third parties conducting security review activities.

5. The finance, telecom, and energy sector regulators will conduct security reviews separately, while security reviews in other sectors are to be organized by CAC. (Art. 9)

6. The party and government agencies, as well as “key industries” should place a priority on procuring network products and services which have passed security review and should not procure products and services that have failed to pass security review. (Art. 10)

Comment: The scope of “key industries” is unclear.

7. The Network Security Review Office will have the authority to issue a security evaluation report on the security level of relevant providers on an ad hoc basis. (Art. 14)

Comment: It may be worth considering whether such reports may expose providers’ trade secrets or other legitimate interests.

CAC Requires Recordation of App Stores

We believe this new initiative will have a bigger impact on foreign app stores, which will face more stringent censorship. Foreign entities may need to pay attention to the developments to ensure smooth distribution and operation of its apps.

On January 13, 2017, the Cyberspace Administration of China (CAC) issued the Notice on Initiating Recordation of Internet App Stores (“Notice”). As of January 16, 2017, all app stores must file for recordation with the provincial-level cyberspace authority according to the Notice, a measure to implement the Regulations on the Administration of Mobile Internet App Information Services (“Regulation on APP”) issued by CAC in mid 2016.

According to the CAC spokesperson, the initiative aims to identify and crack down such violations as distributing illegal information, infringing online users’ rights and endangering public security on apps.
All app stores must record for start of operation, modification of recorded items and termination of operation. App stores refusing recordation, providing false information, or having severe violations in operation will be penalized according to law.

Read the text

E-Commerce Law:The First Draft Opens for Public Opinions

The proposed legislation remains staying at high level rules, without imposing real enforcement effects on the platforms such as Alibaba. Nonetheless, there are some encouraging articles entities may leverage on, such as those concerning IPR protection, which, though, are not strong enough in our opinion. Running on-line stores, entities may also need to pay attention to the articles providing personal information protection obligations for Platforms.

The draft E-Commerce Law (the “Draft”) is open for public comments till January 26, 2017. The law aims to regulate the e-commerce market, and protect the legitimate rights and benefits of various parties in the e-commerce transactions.

The Draft is not changed much from the version submitted to the NPC for review. One notable difference is that financial products and services as well as audio-video programs and internet publishing are excluded from the law.

The key highlights of the Draft are summarized as follows:

The Scope and Definition

E-commerce is widely defined as “business activities involving products or services transactions through information networks such as the Internet”, which means e-commerce transactions taking place through mobile Internet are included as well. Additionally, products refer to both tangible and intangible products. The law applies to e-commerce activities within the territory of China and cross-border as well.

E-Commerce Operators and Third-Party Platform

The Draft expressly states the distinction between E-Commerce Vendor (“Vendor”) and E-Commerce Third-Party Platform (“Platform”) and stipulates their respective obligations.

For vendors, the Draft Law clearly provides obligations they should undertake. For example they must show their business licenses in visible places on their homepages. They are not allowed to charge consumers an express logistics service fee higher than what is offered by the professional express logistics service providers, or to restrict consumers from choosing their preferred express logistics service providers.

For Platforms, the Draft expressly mandates that Platforms should be obliged to review the Vendors on their platforms, and provide them with stable and safe services. Platforms are also required to formulate open and transparent transaction rules, make public important information, and record transaction logs.

E-commerce Transaction Safeguard

  • Intellectual property rights protection: Not only Vendors but also Platforms are obliged to protect intellectual property rights. Platforms must take necessary measures in accordance with laws and regulations upon intellectual property rights holder’s notice. These positive elements are then weakened by such provisions that rights holder must shoulder civil liabilities of wrongful accusations IP infringement. And once the accused Vendor submits a statement to the platform guaranteeing that no infringement has taken place, the platform should terminate the measures in a timely manner and inform the rights holder so it can seek remedies through administrative or judicial ways. Although the most severe penalty for Platforms fail to fulfill their IPR protection obligations could be the suspension of business license, the penalty is generally not sufficiently biting as there are no corresponding enforcement measures provided in the Draft.
  • Personal information protection: The Draft provides that e-commerce business entities can collect personal information of the consumers only against lawful, justifiable and necessary need, and with the consent of the consumers. Platforms must set up a mechanism to guard against leakage, loss, damage or destruction of consumers’ personal information.
  • Protection of fair competition: Acts of unfair competition are expressly prohibited by the Draft, including domain name abuse, fake and misleading links, attacks or invasions to other company’s network, unauthorized use of electronic signs to mislead people, and inappropriate restricting transactions.
  • Prohibition of illegal credit rating: the Draft clearly prohibits acts disrupting e-commerce credit rating including enhancing one’s reputations through fictitious transaction, deleting adverse evaluations, making compensations or other conditions in exchange for favorable evaluations, forcing the other party to the transaction to make, modify, and delete evaluations against its wills, and publishing untruthful credit rating information.
  • Consumer protection: the Draft emphasizes the protection of consumer rights by such requirements as authenticity of product information, product and service quality guarantee, transaction rules, standard rules, consumer rights protection deposits, as well as online dispute settlement mechanism.

Cross-border e-commerce

The Draft encourages cross-border e-commerce by claiming to set up a supervising and regulatory mechanism adaptable to e-commerce with electronic customs clearance, duty collection, commodity inspection and quarantine.

Read the text

SPC Issued the Long-awaited Trademark Interpretations, Addressing Challenging Issues in Trademark Registration and Enforcement

The long-awaited Supreme Court’s trademark judicial interpretation -“Provisions of the SPC on Certain Issues Related to Trials of Administrative Cases Involving the Grant and Confirmation of Trademark Rights” (“Provisions”) - has been just published in January 2017 and will enter into force on March 1st , 2017. The new Provisions address the outstanding challenges and issues in relation to trademark registration and enforcement, including bad faith trademark registration, well-known mark, and mechanizing rights. The Provisions contain some articles favorable to trademark owners’ future enforcement actions.

The highlights include:

Ex officio review of defects in TRAB’s decisions by the court:

  • Art. 2 of the Provisions clarify that in principle, the court should only review the claims raised by the plaintiff. But if there are obvious defects in a TRAB decision, the court may adjudicate on the issues ex officio, after hearing the opinions from both parties.

Criteria for the distinctiveness of 3-D trademarks:

  • The threshold for registering 3-D trademark seems to be raised a bit higher. Art. 9 of the Provisions stipulates that “Even the shape of the 3-D trademark is originally designed or first used, it does not necessarily create inherent distinctness.” The long-lasting and broad use seem to be a must for registering the shape of the products as a 3-D trademark. The wording is consistent with our understanding of the current rules.

Extended scope of prohibiting trademark agents and representatives from hijacking trademarks

  • Art. 15 and 16 of the Provisions offer broader applications of Article 15(2) of the Trademark Law, e.g., listing 5 types of situations which fall into the definitions of “agents and representatives”. If the applicants are relatives of the agents and representatives, bad faith would be presumed.

Presumption of the ownership of copyright

  • Article 19 of the Provisions provides practical means of proving the ownership of copyright. The design drafts, manuscripts, consignment contracts etc. could be used for presuming the existence of existing copyright. The prior trademark gazette or certificates could also be seen as initial evidence.

Protection of titles of copyright works as well as names and images of fictional characters

  • Article 22 of the draft Provisions offers protection to the titles of copyright works as well as names and images of fictional characters, under the condition of “notoriety” and likelihood of association. The rules may contribute to clarification of the scope of “mechanizing rights” protection.

Protection of personal names

  • Article 20 of the Provisions defines the conditions for protecting personal names, which requires the stable “association” between the person and the names. This is consistent with SPC’s opinion reflected in the “Jordan” case. Also, the Provision extends the protection of personal names to nicknames, pen names, translated name and the like.

Criteria for defining “bad faith” of well-known trademarks

  • Article 25 of the Provisions further defines the conditions to identify “bad faith registration” of well-known trademarks.

Procedural issues are also touched upon in the Provisions.

Read the text

 

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Alibaba Launches "Big Data Anti-Counterfeiting Alliance"

Alibaba is trying to prove its continuing efforts in fighting counterfeits, as it has been put back to the Notorious Market List. Brand owners may evaluate the effectiveness of the “Big Data Anti-Counterfeiting Alliance” and see if it benefits their online enforcement programs.

On 16th January, Alibaba Group announced the establishment of “Big Data Anti-Counterfeiting Alliance” with 20 international brands including Louis Vuitton, Huawei, Samsung, and Mars. The Alliance aims to leverage big data technologies to strengthen the global fight against counterfeits.

From September 2015 to August 2016, the law enforcement agencies in China have shut down 675 counterfeit manufacturing and sales spots thanks to the Alibaba Big data technologies, which identify suspected fake merchandise sold online by evaluating unit price and purchase frequency. Alibaba work with the brands to verify the authenticity, and report counterfeit information to the police to locate the infringers.

According to Jessie Zheng, Alibaba Chief Platform Governance Officer, Alibaba will prioritize technical support to alliance members and involve them in the rulemaking process, as well as implementation and evaluation of the anti-fake campaigns. Through the Alliance, member companies can also coordinate directly with the police, the quality inspection, and industry and commerce authorities.

Read the text  

Merchandising rights in China: judicial protection for commercial interests

 Authored by Mr. He Jing (hejing@anjielaw.com) and Ms. Lyu Pei (lvpei@anjielaw.com) 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.

Supreme Court Reforms Patent Lawsuit Rules

Authored by Mr. He Jing (hejing@anjielaw.com) and Mr. Liu Liangyong (liuliangyong@anjielaw.com) 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 (hejing@anjielaw.com) and Mr. Hou Lei (houlei@anjielaw.com) 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.    

Draft Amendment to Anti-Unfair Competition Law

 Authored by Mr. He Jing (hejing@anjielaw.com) and Ms. Dong Xue (dongxue@anjielaw.com) 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.
 

OEM Liability Decision Protects against Bad-faith Trademarks, but Leaves Border Protection Questions Unanswered

 Authored by Mr. He Jing (hejing@anjielaw.com), Mr. Zhao Kefeng (zhaokefeng@anjielaw.com) and Ms. Anita Chen at Anjie Law Firm

China's Supreme People's Court (SPC) recently held that an original equipment manufacturer (OEM) may not be held liable for trademark infringement for exporting products bearing a trademark that is registered outside China.  The SPC ruled that the trademarks used on exported OEM products are not intended to serve as an indication of origin to Chinese consumers; therefore, there is no likelihood of confusion and such use does not constitute trademark use under the Trademark Law.

The decision is the latest in a series of court rulings on OEM-related trademark issues.  Back in 2004, Nike prevailed in a case in which the Shenzhen court confirmed that the export of goods bearing unauthorized marks constitutes infringement. But in recent years, courts in various locations have decided in favour of OEMs, especially  in the context of border protection seizures.  Chinese courts and Customs have discussed these issues regularly with industry players,  but no consensus has been reached.

This case was being closely watched by the trademark community because of the potential implications. The issues were whether the defendant's manufacturing infringed the plaintiff’s exclusive trademark rights and constituted trademark use under the Trademark Law.

The suit was filed by Chinese company Focker Security Products International Limited, owner of the China- registered trademark PRETUL and device mark.   Defendant Zhejiang Pujiang Yahuan Locks Co, Ltd. was an OEM which exported goods to Mexican company TRUPER SA, which owned a registration for the PRETUL trademark and device mark in Mexico. 

Focker was said to have been a distributor for the Mexican company for some time previously.

Focker sued Yahuan for trademark infringement in the Zhejiang Ningbo Intermediate People's Court, which ruled in favour of the plaintiff, awarding damages of Rmb50, 000. Both parties appealed to the Zhejiang High People's Court, which affirmed the decision and increased the damages to Rmb80, 000. Yahuan applied for a retrial to the SPC as the last resort.

The SPC stated that under the Trademark Law, 'trademark use' refers to the use of a trademark on goods, packaging or containers and similar, or in advertisements, exhibitions  and other commercial activities, in order to indicate the origin of the products.  The SPC further explained that as in this case the products were all exported to Mexico and would not be sold on the Chinese market, the mark did not serve to distinguish their origin in China, as a trademark normally does. The relevant public in China thus would not confuse these products with those of the plaintiff.

The SPC further observed that as the mark did not serve as an indication of origin,   it was not necessary to compare the similarity of the marks at issue and the respective goods they covered. The SPC overturned the entire decision.

Brand owners may have ambivalent feelings about this result. To some extent, the exemption for OEMs - at least in certain circumstances - helps companies which have fallen victim to bad-faith registrations in China, allowing their OEM partners to export their products without hindrance.  This may be particularly helpful for medium-sized brand owners that primarily source their goods from China, but have somehow failed to register their marks in China.  The SPC decision allows these companies to continue their activities.

But many brand owners are also concerned that a broad reading of the SPC ruling could open up a big loophole for counterfeiters. What if counterfeiters or infringers managed to register a well-known trademark somewhere in the world and then came to China to order OEM'  goods? At a deeper level, the decision even undermines the legal foundations of the IP border protection regime.  Chinese Customs has been stopping significant numbers of exports of counterfeit goods. If the court really means that export-only goods are not infringing, exporters will be able to challenge every customs seizure order in the courts.  Predictably the Supreme Court may have to either figure out a way to deal with these problems or clarify the scope of the decision in some form in the near future.

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Will China Welcome Amicus Briefs in Patent Cases?

 Authored by Mr. He Jing (hejing@anjielaw.com) at Anjie Law Firm

The Beijing IP Court  published a notice on its website in October 2015 entitled Collection and Publication of Opinions Regarding Law Application on Issues Related to Article 19.4 of the Trademark Law. This notice looks like irrelevant to the patent world, but actually the implication goes well beyond trade marks. Arguably, this court notice started something similar to the amicus brief sys- tem for Chinese IP cases. The issue in this case is related to whether or not Chinese trade mark agent firms are entitled to register trade marks under their own names except for their own trade names.
What is significant is that the panel adjudicating this case went out to associations and IP law centres in several law schools for opinions. The notice cited above published five law professors’ opinions in full text. We do not know how the Beijing IP Court informed the law professors about the background of the case. But it is very interesting that the Court conducted such an experiment. Imagine what becomes possible if the same court issues a similar request in an injunction case involving standard essential patents?
 
The notice itself includes several interesting details:
 
First, it is the court panel that was as- signed to this particular case that sought the opinion from the Universities, associations and research centers. The court said it sent out “survey forms” to such entities. The notice was signed by the three judges’ names.
 
Second, the reason the panel sought the opinion is that the relevant legal provision is new and the very issue is of importance to the trade mark filing practice and growth of the trade mark agency sector.
 
Third, the notice states that the panel published five opinions it received, for the purpose of “impartiality” and “transparency”. The panel did not say how many opinions it received in total.
 
The implications of this notice could be far-reaching in terms of improvement of the judiciary transparency and quality of adjudication. A system similar to amicus briefs will allow the courts to hear from those interested parties on some very complex legal issues that may have significant social impact. The involvement of key stakeholders and thought leaders, including those from the international legal community, will assist the courts to in- crease the depth of thinking. China now uses “guiding cases” or leading cases to improve the consistency of judgments and to guide local courts to deal with controversial issues. Amicus brief will certainly benefit the courts to decide what should be those “guiding cases”.
 
The court notice issued on October 13 is clearly another sign of commitment to a better IP system in China. The Beijing IP Court is the first IP court to be established in China. The judges appointed to this court have been considered among the best in China. Hopefully, the first experiment in trade mark cases will soon expand over to the patent world.
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Beijing Higher People's Court Recognises "Merchandising Rights" as Tool to Fight Bad-faith Applications

Authored by Mr. Zhao Kefeng (zhaokefeng@anjielaw.com) and Mr. Han Jinwen (hanjinwen@anjielaw.com) at Anjie Law Firm

In a recent trademark opposition case involving the famous film Kung Fu Panda , the Beijing  Higher  People's Court  has confirmed that DreamWorks Animation SKG Inc had prior "merchandising rights"  in the name  of the film and refused to register  the trademark KUNG  FU PANDA.  DreamWorks' success highlighted the possibility of using merchandising rights to block bad-faith trademark applications in China.
 
This case is a typical example of pirated trademarks and the facts were simple. A Chinese individual applied for the registration of the trademark KUNG FU PANDA for "car steering wheel covers" in Class 12. DreamWorks filed an opposition against the application as producer of the film Kung Fu Panda. The main ground for the opposition was that the trademark infringed its prior "merchandising rights".
 
DreamWorks' success did not come easily. In the opposition and following appeals, the China Trademark Office, the Trademark Review and Adjudication Board and the Beijing Number 1 Intermediate People's Court all decided that "merchandising rights" were not among the "Iegitimate rights" pursuant to the Chinese laws and did not uphold the opposition.
 
However the Beijing Higher People's Court disagreed. The court held that the name of a movie or movie character with a high reputation shall benefit from "merchandising rights" if the following conditions are met:
 
1. the relevant public identifies the name of the movie or character with a particular business entity;  and
2.   the business entity may derive  additional commercial value  or business opportunities from such identification/affiliation.
 
The judgment also specified essential factors when determining the scope of protection of Merchandising rights: fame and the likelihood of confusion. It was suggested that the courts should evaluate whether the registration and use of the pirated trademark on the designated goods  or services may cause damage  to the real rights owner by taking away trading opportunities.
 
The judgment is significant as it is the first time that "merchandising rights" have officially been recognised as a type of "prior rights" that can be used to block bad-faith trademark applications. Article 32 of China's Trademark Law stipulates that a trademark should not infringe any prior rights owned by a third party. The current practice recognises that "prior rights" include trade names copyright, design patents and the names of famous persons, but merchandising rights had never been  included - until now.
 
In fact, the Kung Fu Panda case is not the first case in which an IP rights owner has fought for the recognition of merchandising rights.  In an earlier similar opposition case against the trademark驯龙高手 ('how to train your dragon' in Chinese) the Beijing Number 1 Intermediate People' s Court  upheld the opposition by confirming that DreamWorks had "Iegal interests" in the movie  name, but insisted that "merchandising rights" were not "prior rights" for the purpose of Article  32. In 2011, in a cancellation action against the trademark CRAYON SHIN-CHAN, the Beijing Higher People's Court confirmed the cancellation of the mark on the grounds of bad faith, without any comments on merchandising rights.  In other earlier cases, the Chinese courts had ruled against infringers who had copied the name of a movie or movie character on the grounds of "unfair competition".
 
There is no doubt that the present case is a welcome development in the battle against pirated trademarks. The judgment means that rights owners have an additional weapon to crack down on trademarks that copy or imitate the names of famous movies, characters, actors or songs.
 
What is interesting, though, is that the case itself is still being debated in China.  After the judgment was published, some scholars questioned whether judges were in fact "making" the law, because "merchandising rights" have not been  recognised by the Chinese  laws. The debate is likely to continue for a while, and IP owners should  keep monitoring the issue.
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SIPO Shifts on Data Disclosure Requirement

Authored by Mr. He Jing (hejing@anjielaw.com) and Mr. Mr. Wu Li(wuli@anjielaw.com at Anjie Law Firm

Article 26.3 of the Chinese Patent Law specifies a sufficient disclosure requirement: “the description shall set forth the invention or utility model in a manner sufficiently clear and complete so as to enable a person skilled in the relevant field of technology to carry it out.” How- ever, there was a great deal of controversy in Chinese patent practices concerning whether or not the State Intellectual Property Office (SIPO) had correctly interpreted this provision for medical inventions, especially the so-called “compound invention”, which is an invention simply directed to a compound itself, not to the potential pharmaceutical usage of the compound.

SIPO had been heavily criticized for insisting that, for all medical inventions including compound inventions, some rather specific experimental data demonstrating the pharmaceutical usage of the invention must be included in the specification, and that no post-filing data is allowed to address the sufficient disclosure rejection under this circumstance. Given the difficulties in selecting the right pharmaceutical compound(s) among thousands of potential candidates during the early R&D stage, and the unavoidable delay in obtaining experimental data on the biological effects of the selected com- pounds, such a unique experimental data requirement substantially impeded applicants  in the pharmaceutical  industry from timely filing new applications.

According to the criticisms, this unique data requirement of SIPO for medical inventions, especially for compound inventions, is not in line with the patent practices in other major jurisdictions. Several comparative studies, including studies made from the pharmaceutical industry association INTERPAT, were conducted and showed that, for many compound inventions, national stage applications derived from the same PCT. application can be granted in all other major jurisdictions but China, with the rejection merely based on this exact ground – lack of specific experimental data in the specification to demonstrate the pharmaceutical use of the claimed compound.

Although SIPO had long taken a defensive position to address these criticisms, recently there are clear signs that SIPO started to soften its attitude in this regard. On December 4 2013, SIPO held a short news briefing to clarify its official examination standard on disclosure issue, assuring that its examination of disclosure on medical inventions would not simply be based on whether or not the specification contains any experimental data and that post-filing data would not be flatly rejected under this circumstance. More than one and half years have passed and, according to our observation, SIPO’s practices indeed have undergone certain changes.

For example, we recently conducted an empirical study based on the published re-examination decisions after January 1, 2014, and found out that, to our surprise, for all those cases concerning pharmaceutical compounds that were rejected under Article 26.3 for allegedly lacking experimental data, the Patent Re-examination Board reversed the rejections and resumed the prosecution procedures in over 90% of the cases, as opposed to a mere 20% reversal rate we observed be- fore 2014.

This is certainly a very promising move, although further concerns also arise. For example, many practitioners have observed that, for medical inventions, rejections based on the inventiveness issue (under Article 22.3 of the Chinese Patent Law) now become outstanding. Some start to worry whether or not this shift on rejection grounds may merely indicate a strategy change in making rejections by SIPO: the application formerly rejected on one ground is now to be rejected on another ground, and the applicant does not really get benefit in protecting his/her invention.

Ironically, under the Chinese Patent Law, an applicant has to fight hard to show that his/her invention is obvious to the skilled artisan during the Article 26.3 battle (for disclosure issue) so as to convince the examiner that certain experimental data should not be required; now, at this battlefield concerning Article 22.3 (for inventiveness issue), those arguments the applicant has so diligently made during the Article 26.3 battle can be handily turned over to use against the applicant himself/herself. This then make the following question even more prominent: will the inventiveness standard be upheld correctly? For the pharmaceutical industry, this kind of doubt better be clarified

What In-House Counsels Should Know About China's Anti-Monopoly Law in the Intellectual Property Sector

Authored by Mr. He Jing (hejing@anjielaw.com) at Anjie Law Firm

Introduction 

The IP-related antitrust enforcement in China has been a focal point among the industries and the international antitrust legal community for the last couple of years.The Qualcomm investigation by the National Development and Reform Commission (“NDRC”) is symbolic of what a large licensing company may encounter in China.  
 

This brief will highlight the key events and the most relevant legal basis in the IPrelated antitrust fields in China.  Some of our readers may be surprised to realize the breadth and depth of the legal and business issues that have been addressed by the Chinese courts.Standards-related IP policies, FRAND royalty rates, refusal to license, patent pools, and injunction relief for standard essential patents are among the issues that have been heatedly debated among policy makers, judges, practitioners and industries.Some Chinese court cases are arguably among the very early decisions worldwide.The future enforcement activities and outcome of private antitrust lawsuits in China may likely continue impacting the trends.  

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China's Patent Office Inviting Public Comments on New Amendments of the Patent Law

 Authored by Mr He Jing (hejing@anjielaw.comand Mr Li Binxin (libinxin@anjielaw.comat Anjie Law Firm

The State Intellectual Property Office (“SIPO”) is reviving its effort to amend the patent law.  A new version of the proposed amendment was released for public comments with a deadline of the end of April 2014.  
 
The earlier draft as released in 2013 attracted some criticism because of the administrative enforcement powers related to patent infringement cases. People were worried about the creation of a separate patent adjudication system.  The new version still retains the administrative enforcement powers and also addresses delicate issues such as standard essential patents. Predictably, the new draft will lead to new rounds of heated debates.  
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China's Patent Office Inviting Public Comments on New Amendments of the Patent Law

 Authored by He Jing (heijing@anjielaw.comand Ms. Lyu Pei(lvpei@anjielaw.comat Anjie Law Firm

The State Intellectual Property Office (“SIPO”) is reviving its effort to amend the patent law.  A new version of the proposed amendment was released for public comments with a deadline of the end of April 2014.  

The earlier draft as released in 2013 attracted some criticism because of the administrative enforcement powers related to patent infringement cases. People were worried about the creation of a separate patent adjudication system.  The new version still retains the administrative enforcement powers and also addresses delicate issues such as standard essential patents. Predictably, the new draft will lead to new rounds of heated debates.

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Chinese Judge Gives Special Consideration to Internet in Wechat Trademark Decision

Authored by He Jing (heijing@anjielaw.comand Ms. Lyu Pei(lvpei@anjielaw.comat Anjie Law Firm

A recent Beijing IP Court decision on “weixin” (the Chinese name of WeChat) trademark has attracted wide discussion and debate in China. On March 11, the Beijing IP Court issued its first instance judgment on the dispute, affirming Trademark Review and Adjudication Board (TRAB)’s refusal to register the “weixin” trademark applied by Trunkbow Asia Pacific (Shandong) Co., Ltd. (“Trunkbow”). The court cited Art. 10.1.8 to rule that Trunkbow’s “weixin” mark, which has no bad faith intent, would have such “unhealthy influence” or “ill effect” as to the existing and stable market order and potentially lead to false recognition among the public.  What is particularly noted by the trademark community is that the court believes that allowing the earlier-filed mark to be registered would harm the public interest.  

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SAIC IPR Abuse Rules (AnJie Translation)

Translated by Anjie Law Firm

 

Measures of the State Administrations for Industry and Commerce on the Prohibition of Abuse of Intellectual Property Rights for the Purpose of Eliminating or Restricting Competition.

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China Intends to Improve Rules on Injunctions

 Authored by He Jing (hejing@anjielaw.com) and Cao Hui (caohui@anjielaw.com) at AnJie Law Firm 

Introduction

The Supreme People’s Court of the People’s Republic of China (“the SPC”) issued the Draft Judicial Interpretation on Application of Laws in Trial of Behavior Preservation Cases Involving Intellectual Property and Competition Disputes (“Draft JI”) on February 26, 2015 and is open for public comment until March 30.

Behavior preservation is a term used by the newly amended civil procedure law in China.  Its essence is identical to temporary order, preliminary injunction or interlocutory injunctions in common law system.  Remedies such as the behavior preservation, or preliminary injunctions, are already regulated in several laws and judicial interpretations in China, such as Civil Procedural Law, General Principles of the Civil Law, Patent Law, Trademark Law, Judicial Interpretation of the SPC on Preliminary Injunction against Trademark Infringement, and Judicial Interpretation of the SPC on Preliminary Injunction against Patent Infringement etc., this is the first time for the SPC to unify and specify behavior preservation regulations for IP and competition disputes.

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The Draft Supreme Court Patent Trial Judicial Interpretation Expected to Streamline the Patent Litigation Procedures

Authored by He Jing (hejing@anjielaw.com) at AnJie Law Firm

In August 2014, China Supreme People’s Court (“SPC”) released its proposal for public comments titled “Interpretations of the Supreme People's Court on Certain Issues Concerning the Application of Law in the Trial of Patent Infringement Cases II” (“Part II”).  It is a further development of SPC’s judicial interpretation on the trial of patent infringement cases. The first part of the interpretation has been implemented since January 1st 2010, and has been an important source of authority for lower courts to deal with patent infringement cases.  This second part covers more aspects of the patent litigations and would likely produce significant impacts on patent litigation practice. 

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A Significant Step Made by the Supreme People's Court Through the Draft Trademark Law Judicial Interpretation

Authored by He Jing (hejing@anjielaw.com) at AnJie Law Firm

On October 14th, the Supreme People’s Court (SPC) issued a draft judicial interpretation (JI) for public comment regarding judiciary review of decisions related to trademark examination and invalidation procedures.  The deadline for submitting comments is November 15th.

The draft JI will be a fundamental piece to the new China trademark system as the new trademark law has been in effect as of May 2014.  The draft JI intends to provide consistent standards of conducting judiciary reviews of decisions made by the China Trademark Office (CTMO) and the Trademark Review and Adjudication Board (TRAB) on trademark examination, invalidation, cancellation and other review procedures.  The Beijing courts and CTMO/TRAB often have different opinions on some key trademark issues, such as how to deal with bad faith trademarks.  Even the courts themselves are often seen to come up self-contradicting decisions.

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The Launch of Specialized IP Court Indicates Significant Progress in IPR Enforcement

Authored by He Jing (hejing@anjielaw.com) at AnJie Law Firm

The Beijing court authorities published 18 judge candidates for the newly established Beijing IP Court.  This indicates a significant step towards the official launch of the new court.  A week ago, the names of the president and two vice presidents of the new court were also published.  People widely believe a strong judge leadership is in place for the Beijing specialized IP court.

After an expedited legislative process over the last nine months, China’s legislature passed a bill on August 31 announcing that three specialised IP courts are to open in Beijing, Shanghai and Guangzhou.  The new courts are scheduled to open by the end of 2014.  Now with the appointment of the new judges, Beijing IP Court will officially take cases as early as November 6, 2014.

 

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Supreme People's Court issues rules on online infringement of personal rights

Authored by He Jing (hejing@anjielaw.com) at AnJie Law FIrm

On October 9, 2014, China’s Supreme People's Court issued a new judicial interpretation regarding online infringement of personal rights. This judicial interpretation is intended to deal with the increasing problem of online defamation and unfair competition activities in China. The wide use of social media, such as microblogs and WeChat, has dramatically increased the risks of, and damages caused by, defamatory statements and illegal disclosures of privacy.

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Analysis of the New Specialized Courts in China

Authored by He Jing (hejing@anjielaw.com) at AnJie Law Firm

After an expedited legislative process over the last 9 months, China’s legislature passed a bill on August 31 announcing that three specialized IP courts will open up in Beijing, Shanghai and Guangzhou.  Supreme People’s Court is in charge of the actual operational details and has vowed to have these courts up and running by the end of 2014.  All the three specialized IP courts will be intermediate-level courts, meaning that they will handle many cases as the court of first instance and the decisions may be appealed to provincial-level higher people’s courts. 

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Abuse of Dominance in Relation to Intellectual Property: From China's Perspective

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com) and Li Xiang at AnJie Law Firm

Introduction

There is a joke in reference to the relationship between antitrust and intellectual property and the conflicts between them, which goes, “It is not easy to marry the innovation bride and the competition groom and some have argued that such a marriage will unavoidably lead to divorce.” Nowadays it is not a problem if there is an intrinsic conflict between them. In China, the principle that both of the two legal regimes serve the common purpose of promoting innovation and enhancing consumer welfare is broadly acknowledged.

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Abuse of Dominance in Relation to Intellectual Property: From China's Perspective

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com) and Li Xiang at AnJie Law Firm

Introduction

There is a joke in reference to the relationship between antitrust and intellectual property and the conflicts between them, which goes, “It is not easy to marry the innovation bride and the competition groom and some have argued that such a marriage will unavoidably lead to divorce.” Nowadays it is not a problem if there is an intrinsic conflict between them. In China, the principle that both of the two legal regimes serve the common purpose of promoting innovation and enhancing consumer welfare is broadly acknowledged.

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SAIC Moves Closer to Antitrust Rules for IP

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com) from AnJie Law Firm

On June 11, 2014, China’s State Administration for Industry and Commerce (SAIC) released the latest draft [1] of regulations designed to implement the Anti-Monopoly Law (AML) with respect to intellectual property rights—Rules of the Administration of Industry and Commerce on the Prohibition of Abuses of Intellectual Property Rights for the Purposes of Eliminating or Restricting Competition (Rules), to solicit public opinions. The Rules describe the authority’s enforcement policies, criteria of proof, and types of acceptable evidence in its analysis of suspected anti-competitive conduct involving IPR. The period of calling for public opinions will expire on July 10, 2014.

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Excessive pricing and standard-essential patents

Authored by He Jing (hejing@anjielaw.com) and Dong Xue from AnJie Law Firm

On May 22 2014, China’s National Development and Reform Commission (NDRC) announced the suspension of the investigation against Inter Digital Communications (IDC), a US wireless technology developer, as the company had submitted detailed  measures to address the regulator’s concerns. What is interesting is the differences in the IDC measures between the press release of NDRC and that of IDC. NDRC states that:

1) IDC will not charge Chinese enter- prises discriminatory and excessive patent licensing fees.

2) IDC will not bundle standard-essential patents (SEPs) with non-SEPs in the patent licence.

3) IDC will not require a Chinese manufacturer to agree to a royalty-free, reciprocal cross-licence.

4) IDC will not force Chinese enterprises to accept unreasonable licence conditions through direct legal action.

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Is an Infringement Claim within the Scope of Arbitration Clause under Laws of PRC?

Authored by Arthur X. Dong (dongxiao@anjielaw.com) & Li Meng from AnJie Law Firm

For the last ten years, whether an arbitration clause such as “any disputes arising from, or in connection with, the execution of this agreement shall be resolved by arbitration” may be applied to an infringement claim has been a topic of heated discussion among the legal practitioners in China.  This is a matter of great concern to arbitration practitioners in China because the case history of Supreme People’s Court has failed to clarify whether the courts or the arbitration tribunal should have jurisdiction over the infringement claims. 

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Chinese courts ratchet up damages awards for wilful infringement

Authored by He Jing, AnJie Law Firm and Jerry Xia, Honeywell China

While some feel that damages awards in China are still insufficient, recent cases show that the courts are becoming much more sophisticated in calculating damages and awards are increasing – especially in cases of wilful infringement

China’s newly amended Trademark Law is due to come into effect on May 1 2014.  One of the most significant changes for many brand owners and trademark professionals will be the increase in damages in trademark infringement cases. The law will raise the amount of statutory damages to Rmb3 million – almost six times the previous limit. It will also recognise punitive damages and ease the burden of proof for brand owners in establishing damages.

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2013 China IP Review

Authored by Cheng Bing (chengbing@anjielaw.com)

2013 was a milestone year for the development of China Intellectual Property Rights.  During 2013, copyright, patent and trademark legislation were all revised.  The judicial practice picked up speed as well, with cutting-edge precedents that established protections in trade secrets and other IPR fields. In summary, the Chinese IPR regime enjoyed a rapid growth in 2013. 

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Supreme People's Court Attempting to Reinvigorate China IP Enforcement

Authored by He Jing (hejing@anjielaw.com)

On October 22, 2013, the Supreme People’s Court (SPC) held a press conference in Beijing to announce 8 leading intellectual property (IP) court decisions.  The cases are all made by local courts in different cities and involved the granting of preliminary injunctive orders, reduction of the burden of proof on IP owners and an increase in the amount of compensation in civil cases, and intensified criminal penalties.  Almost all the claimed progress in the announcements relates to what has been asked for by foreign business communities. 

While it is worthwhile to remind that China is not a case law country, it is encouraging to see the new progress made in IP enforcement, which could be used as good precedents for IPR owners to push for more courts to follow.

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Judicial Remedies from Bad-faith Registrations of Trademarks

Interview with Cheng Bing (chengbing@anjielaw.com), He Jing (hejing@anjielaw.com)

Q: What is bad-faith registration of a trademark?

A: The term “bad faith registration of a trademark” means the act of using improper means to preemptively register the trademark of another that is already being used and has a significant influence in the relevant sector, for the purpose of profiting from it.

Article 31 of the Trademark Law specifies that, “An application for the registration of a trademark may not prejudice the existing prior right of any third party nor may improper means be used to preemptively register a third party’s trademark which is already in use and which has a certain degree of influence”

Q: What judicial remedies are available once the bad-faith registration of a trademark has occurred?

A: Pursuant to the current Trademark Law and related regulations, the main means of judicial remedies available to the rights holder are as follows:

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Proposed Amendment to China Trademark Law Complicates Squatting Issues

Authored by He Jing (hejing@anjielaw.com)

China's National People's Congress (NPC) has released the latest version of the proposed amendment to its Trademark Law for public comments until January 31, 2013. This window may present the last opportunity for the international business community to make requests for reforms to the Law.

The latest draft proposes changes to about 40 provisions. Some of the changes are well anticipated and may prove beneficial for all brand owners. For example, the expansion of trademark formats to include sounds and single colours which may be sufficient to distinguish the subject goods. Also, the provisions allowing trademark applications to cover goods in multiple classes, which will alleviate some of the burden of applicants who wish to file in multiple classes.

However, on one of the most compelling issues -- bad faith trademark filings or trademark squatting -- the proposed changes could have some unintended consequences, which may arguably create a more complicated situation.

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Latest Draft of Revised Trademark Law Released for Public Comment

Authored by He Jing (hejing@anjielaw.com)

China is in the midst of uploading its Trademark Law. After two years of research and consultation, the State Council recently approved the latest draft amendment, and officially submitted the draft to the National People’s Congress for a first reading in mid-December 2012. The latest version was released for public comment by the National People’s Congress on January 4, 2013. The period for submitting comments ends on January 31, 2013. Therefore, the amendment may be finally ratified in the first half of this year.

The latest draft proposes to amend approximately 40 provisions. While some of the changes were anticipated, others had not been previously reported. An early review of the proposed changes suggests that trademark applications and enforcement work in China may undergo some substantial changes- assuming that all the changes go through.

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