Mr László Kovács: "Customs in 2008, a real test for EU-China trade relations"

Mr Lászlo Kovács, European Commissioner for Taxation and Customs Union wrote an interesting article to commemorate the 40th anniversary of the Customs Union. Is there something to celebrate you might ask yourself?

Well at least the Commissioner is belligerent to fight counterfeit and pirated products:

"The growing trend in counterfeiting in some health-threatening sectors like foodstuffs, pharmaceuticals or spare parts is worrying. The EU is a target market of fake products, and China the main source of production, with almost 80 % of all articles seized by EU customs coming from there. Chinese people and companies are equally affected by this illegal industry. But we can do something about this. The EU is committed to strengthen customs cooperation with China in the fight against counterfeiting and the enforcement of IPR. We want to see concerete results in the shape of less counterfeited products on our markets. I am confident that this year, the EU and China can agree on an ambitious strategy to effectively reduce trade in counterfeit goods."

If the EU wants to see concrete results, a plaudible goal, it should consider applying the enforcement/infringement ratio, as IP Dragon suggested here and in its thesis, see here.

Read Mr Kovács article he wrote for the China Daily here.

EU Internal Market Commissioner: Anti-counterfeiting and -piracy Solutions To Be Found In Public-private Cooperation

On a 13 May commission-sponsored high level conference, the Internal Market Commissioner Mr Charlie McCreevy stressed that regulation is not the only answer to fight counterfeiting and piracy, but that the private sector itself is best placed to lead the battle against the fakes. Tomorrow exactly two years ago, when Mr McGreevy visited China to advance the international regulatory agenda, he probably had higher hopes for regulation, read here (pdf).

Marc-Antoine Jamet, president of l’Union des Fabricants, whose members include Pfizer, Lacoste, Microsoft and Disney, said:

"There is qualitative change as activities become global, and diversification into goods and products such as wine, car parts, clothing, and toys, he said. Counterfeiting is increasingly carried out by organised crime, and industrialisation means tourists no longer have to travel to Thailand to buy fakes from China but can find them anywhere, including online [..]".

Read Dugie Standeford's article for Intellectual Property Watch here.

China and EU Customs Unveiled Plans to Share Information

The EU and China unveiled plans for an intelligence network to share information among ports to crackdown on counterfeiting. Source WIPO Magazine (February 2008, no.1).

"Despite the increased efforts of the Chinese authorities to crackdown on counterfeiting, EU Customs Commissioner Laszlo Kovacs said that China is currently the main source of counterfeit goods seized in European ports. The intelligence network will help to tighten enforcement, resulting in greater controls in both European and Chinese ports."

Professor Susan Scafidi on Li-Ning on Nike

李宁versus 耐克

Even if you are not a victim of fashion Counterfeit Chic is the weblog to regularly frequent. Ms Susan Scafidi, visiting professor of Fordham Law School, blogged about Li-Ning versus Nike in her own funny tongue in cheek style.

Don't miss it, read here.

Olympic Torch Tanzania Brings Protests Against ... Chinese Counterfeit Products

BBC News has every day the news 'In Pictures'. Today picture six of this item showed the Olympic Torch "in peaceful Tanzania relay". There were protests, however not against human rights violations in T 1b ET, but against counterfeit and substandard products from China, no less. If the protest messages give any clue the protest might be organised by the Tanzania Consumer Advocacy Society.

Netac versus PNY settled out of court

Remember the Netac versus PNY case, read here? After two years of litigation, the patent infringement conflict between Shenzhen-based Netac Technology Co Ltd and Texas PNY Technologies was settled out of court. The Netac versus PNY case is seen as a milestone, because it could highlight a trend of Chinese companies suing overseas companies for the infringements of their intellectual property rights overseas.

Read the article by Jiang Jingjing of the China Daily here and .

Which Event Is 2007 China Top Ten IPR Event?

China's Intellectual Property Protection in China (IPR in China) started with democracy of some kind. Although 30 nominations of the events were already given, netizens can vote untill 12 o'clock of April 8. However, then IPR in China will decide 15 final candidate events according to the results of the vote and then the experts appraisal committee will determine the Top Ten Events. It gives a good overview of the events China deems important and is proud about.

The following the 30 candidate events are nominated:
1. Chinese century-long food brand “Wangzhihe” wins lawsuit against German company
2. NCA, MPS and MII jointly combat Internet piracy
3. Notice on time-honored brand ICH released
4. MOA releases plan for protection and development of new varieties of agricultural plants
5. SPC promulgates opinions on strengthening IPR trial
6. SIPO: revised Patent Law submitted to the State Council for examination
7. MOFCOM releases trial measures on brand appraisement and protection
8. No. 1 Document: strengthen IP protection in agriculture
9. China signs Singapore treaty on law of trademarks
10. SAIC promulgates measures on symbols of GI products
11. SPC hears Yamaha trademark infringement case
12. Chinese government releases China's Action Plan on IPR Protection 2007
13. New Interpretation issued to enhance criminal protection of IP
14. U.S. petitions WTO for China's IPR issues
15. Shanghai seizes illegal audio-video product hideouts
16. China, U.S. customs sign memorandum on IPR law enforcement
17. China announces selected intangible cultural heritage inheritors
18. WCT and WPPT comes into force from June 9
19. China Customs awarded for anti-counterfeit, piracy efforts
20. China's first IPR-related case of online game in 2007: Zhengtu Private Server Case
21. China, U.S jointly launch "summer solstice" action
22. Proceedings against Japanese TV station launched
23. SAIC to combat misleading brands
24. SASAC convenes first IP conference of central enterprises
25. Implementation of IP Strategy clearly indicated in Hu Jintao’s speech
26. China ratifies protocol amending WTO's TRIPS agreement
27. Installation of genuine software in enterprises achieve remarkable results
28. China patent applications reach 4 million 29. China trademark registration hits 3 million
30. Amount of fake cigarette cases investigated by Fuzhou Customs ranks first

Read more and vote here.

How Should China Spend Its Extra Yuan On IPR Enforcement?

Mr Stan Abrams of China Hearsay has another interesting article. He is criticising yet another public awareness campaign by the Chinese Ministry of Culture (MOC).
Mr Abrams writes: "Advertising, seminars and training courses arranged by MOC will have limited effect. Public education only goes so far." He suggests that it might be better to hire more cops to enforce IPR. I concur.

Public awareness campaigns, if done in a smart way, (that means something else than "a special day for the destruction of illegal audiovisual products", which will be on April 26, exactly one month from today, I cannot wait, my o my) could bring down the level of IPR infringements in the long run. But then again it is only logical that IPR enforcement will become better in the long run, because when IPR is becoming more important to Chinese companies if they develop more innovative products, that will be the point when there will be an internal pressure to the Chinese government to enforce IPR more stringently. For this we only have to be patient.

In the mean time the IPR infringements level is much too high, and the PBS (police) and other administrative enforcement authorities, in particular the National Copyright Administration of China which has only 300 (!) persons for the enforcement of copyright in the whole of China, surely need a boost (which is still an understatement).

Read Mr Abram's article here.

WorkTools: "We Won the Judgement But it Did No Good" Part II

Yesterday, Mr Mike Marks, inventor and co-founder of WorkTools explained in Part I how is it possible that although they won at court in Taiwan it really did no good. In Part II below you will find a more detailed explanation by Mr Brad I Golstein, partner of WorkTools who manages their IP.

Mr Brad I Golstein wrote:
"In this particular instance in Taiwan, the case dragged on so long that the applicable law changed before it was decided, so the court threw out the case as being moot (irrelevant) in light of the changed law. It is the strong suspicion of many that Taiwan laws are designed more to protect home industry than to protect intellectual property rights. In general, the "proof" requirements are much greater and the penalties for infringement are much less than in the United States. What is often recommended to achieve success is that the foreign company have a Taiwanese partner who is the actual party to the lawsuit (such as the company that has the official rights to manufacture the product in Taiwan)--that makes it a case of Taiwan company vs Taiwan company rather than Taiwan company vs Foreign company. Larger Taiwan companies are probably more likely to respect IP rights, and less likely to simply close up the offending shop and just open anew down the street (although this is still possible)."

"Success" in stopping Asian knock-offs is a relative term--many times that means driving the infringer underground rather than being able to> eliminate them entirely. Many times it means getting major retailers to agree to not stock the offending product rather than actually stopping the manufacture of it. And while some degree of success> might be achieved in North America and Western Europe, it is much harder in less regulated parts of the globe, such as Africa, the Middle East, Eastern Europe, etc. Heck, even mega-corporations such as Disney, Levi's, Microsoft, etc. have their hands full and cannot stop all the infringers. "

"As a bit of an elaboration, the penalties for infringement in Taiwan in the matter we were pursuing before it was dismissed were quiteminor--something like putting a notice in the local paper and a fine of$4,000 (which the government would keep, it would not go to us tocompensate for our losses!)."
Brad I Golstein WorkTools, Inc.

WorkTools: "We Won the Judgement But it Did No Good" Part I

Yesterday I blogged about an interview on WorkTools' patent challenges in Taiwan and China, read here.

I was like Mr Stan Abrams of China Hearsay, who came up with some interesting suggestions here, very interested to know the real answer. So I asked Mr Mike Marks by email who came up with some very interesting and elaborate answers and is also referring the answer to his partner Brad Golstein, who manages WorkTools' IP for more detail:

1. How is it possible that although you won at court in Taiwan it really did no good whatsoever? Was it the enforcement of the judgement that did not work? Or did Taiwanese infringers continue under a different name?
2. Why don't you publish your Chinese and Taiwanese patents online?

Mr Mike Marks' answer:
"My recollection is that we won our case in Taiwan but the penalty was so minor that it was meaningless. We should publish ALL of our patents online, both US and International, including Taiwan and China. Thanks for the push. I have some updating to do on the website!"

"On another note, one thing we've seen from Taiwan and China are companies that pursue and receive patents on top of our patents. Example: Company-1 has a patent on a pneumatic tire. Company-2 gets a patent on a pneumatic tire that's filled with a mixture of 1/3 helium and 2/3 nitrogen. Company-2 can't use its patent without violating the patent of Company-1, but Company-2 can claim "patented". Company-2 presents its claim to retailers to make them feel comfortable buying Company-2's tire. Now Company 1 must educate retailers that Company-2 is selling a patent-infringing pneumatic tire, that the patented "improvement" does not give Company-2 any meaningful rights. In short: Company-1 can prevent Company-2 from making and selling ANY pneumatic tire. Company-2 can prevent Company-1 from making a version of pmeumatic tire."

Mike Marks
http://worktools.com/
http://inventioncity.com/

See Part II where Mr Brad Golstein, who manages WorkTools' IP, gives a more detailed explanation here.

WorkTools Inventor's Experience With Taiwanese and Chinese Patents

Mr John Eastman of Black and White interviewed Mr Mike Marks, inventor and co-founder of WorkTools about patent infringements. WorkTools specializes in the development and licensing of patented mechanical products for consumers. The company invents products and enhances products brought to it by others.

According to Mr Marks American companies in general try to work around patent claims,
"[w]hereas companies in Asia, whether by request from a foreign company or on their own, have on occasion knocked us off very explicitly, imitating our tool to a tee."

"I don’t think that a lot of companies even bothered looking at the patent at all, they just saw the product and said oh, this is an item that is being sold and we’re going to just copy it explicitly. Maybe they were unaware of intellectual property laws. I don’t think companies are quite that bad about it today, but 10 or 12 years ago that was definitely the case.
Even though we have enforceable Taiwanese and Chinese patents issued, we have had no success in stopping any Asian companies. We even won at court in Taiwan, and it really did no good whatsoever. Perhaps it would be a little different for us if we were a Taiwanese company."

Read Mr Eastman's interview here

WorkTools is showing their US issued patents on their website, and inform that they can be
contracted to evaluate international and pending patents, see here. That is probably a good decision, transparent and can function as a deterrent. It is also good that you can see that Mr Paul Y. Feng is their outside patent council, partner of Fulwider Patton, which can have an deterrent effect.
The question is, however, why WorkTools doesn't put its Chinese and Taiwanese patents online? Mr Marks said that a lot of companies don't even bother to read patents, but I don't understand why he at least put WorkTools' Chinese and Taiwanese patents online. One can argue whether it works as a deterrent, but at least it would not harm them.

UPDATE:
Mr Mike Marks gives the answer to the question why it does not help to have won a judgement in Taiwan here.

China Most Designated As Country in International Trademark Applications

WIPO has a press release about the number of applications using the Madrid System for the Registration of Marks.

Over 2007 China ranks number 8 in international trademark applications:

• 2003 472
• 2004 1,015
• 2005 1,334
• 2006 1,328
• 2007 1,444

China's international trademark applications were 3.6% of the the applications by all countries; China's number of applications grew by 8.7%.

China ranks number 1 as country that was most designated in new registrations and subsequent designations.

• 2004 7,106
• 2005 9,265
• 2006 13,575
• 2006 15,801
• 2007 16,676

China's share of international trademark applications was 4.5 percent and the amount of China's applications grew by 5.5 percent.

Top filers of China were:

• Zhejiang Elegant Prosper Garment
• Shanghai Vanwa Industrial
• Ningbo South Electronical Appliance Co.
• Beijing Posh Furniture Co.
• Jiangsu Sunshine Garment Co.
• Guangzhou Panyu South Star Co.
• China Tea Co.
• Shandong Jinyu Tyre Co.

One Minute Film Contest to Promote IPR in China

The movie industry uses professional producers and movie stars such as Jacky Chan to promote that youngsters abide by the IPR laws, read here. Now, during the 15th Beijing Student Film Festival, the China Film Copyright Protection Association (CFCPA) and the Motion Picture of America Association (MPAA) launced a one minute film contest (in the categories of digital video, cartoons and mobile phone films) to let the group that might be most susceptible to copyright piracy to promote respect for IPR. Read Du Guodong's article for the China View here.

This encouraged (by the governement and interest group) grass-roots movement might be better perceived by the target group than a top-down approach.

Last date to hand in a film is March 15th, 2008.

PCT International Applications: China Ranks Number 7, Huawei Ranks Number 4

A WIPO press release stated the following statistics:

Again China is part of the top 10 countries that had the most PCT (Patent Convention Treaty) international applications.

• 2003 1,295
• 2004 1,706
• 2005 2,503
• 2006 3,952
• 2007 5,456

In 2007 China's PCT International applications were 3.5 percent of all PCT international applications; between 2006 and 2007 the amount of PCT international applications grew by 38.1 percent.

Huawei ranks number 4 PCT applicants

Huawei Technologies Co., Ltd. ranked number 4 in the top 50 of PCT applicants. Like a shooting star this Chinese telecommunication device producer rised 9 places. Huawei's PCT applications published in 2007 were 1365, this is 790 applications more than in 2006.

Head tip to the prolific Mr Jeremy Phillips of IP Kat.

China's Third Patent Amendment: Curb Your Enthousiasm

China's upcoming third amendment of its patent law has moved a lot of pens, or rather vingers, to write critiques and analyses.

Mr Timonthy J. Maier partner of Maier & Maier PLLC, a law firm in Alexandria Virginia (US) and blogger of Post-Grant gives a good overview of the most controversial paragraphs of the draft. These include articles 49, 50 and 74, read Mr Maier's article here.

Mr Thomas T. Moga of law firm Butzel Long, which is a member of the China Alliance (which includes two other US law firms: Armstrong Teasdale LLP, Michael Best & Friedrich LLP, and Canadian Blake, Cassels & Graydon LLP and is combining its resources to support their clients in China), is looking whether the draft is compliant to the Agreement on Trade-related Aspects of Intellectual Property rights (TRIPs), read here.

Read the draft and the comments upon it by the International Chamber of Commerce the World Business Organization (ICC) here. The comments of the Intellectual Property Owners Association (IPO) can be found here.

The Fédération Internationale Des Conseils En Intellectuele Propriété (FIDCI) has an elaborate power point presentation about the subject here.

Pirated DVD Brands and Brand Awareness

Dan of Mission: Don't get Shanghaied wrote 'Better than a casino', about the differences in the quality of pirated DVDs. Dan of Mission: Don't get Shanghaied can give us an insight into the mind of the consumer of pirated products.

"The funniest part is, there are pirated DVD brands. On the box there will sometimes be a sticker or a mark of some kind, denoting who produced this illegal copy. The quality of the DVDs with ‘the smiley face’ and’ the McDonalds logo’ have been so overwhelmingly superior, I struggle to imagine why I won’t buy them exclusively in the future."

This, let's call him a participatory journalist, shows us the value of brands. So now we only have to wait for counterfeit pirated brands.

Read more here

Angela Sun explores the world of fakes

Although this great video of Ms Angela Sun is from September 19, 2005, it is worth watching, because things have probably not changed much, or rather at all, if one reads the story above. Ms Sun "explores the world of fake Louis Vuitton, Versace and DVDs in China--the counterfeiting center of the world." See her Current video from Shanghai here.

Supreme People's Court Orders Full-compensation Principle in All IPR Cases

"Courts should fully apply logical reasoning and everyday life experiences, and comprehensively and objectively examine the evidence for calculating the amount of compensation," SPC vice-president Cao Jianming told a national work conference on IPR trials in Jinan on February 20, 2008, according to the China Daily.

I don't know if the order or encourgagement to reason logically can have meaningful results. I think this has to be taught during law school and afterwards during the education permanente necessary for every lawyer and judge. But it is clear that the Supreme People's Court wants the judges to take everything into account and be not too formalistic.

The compensation calculated in the case Yamaha versus Zhejiang Huatian is described as a model. Read more about the Yamaha case of last year here.

Read the article 'New rules on payouts in IPR cases' of the China Daily via China.org.cn, read here. Head tip to Mr Jeff Roberts of CIPP's "IP News This Week", your 5-minute report of the latest IP news from around the world, read here.

UPDATE: Mr Thomas Chow of China Esquire wrote about and referred to a case that was decided by the Hangzhou Intermediate People’s Court and described by Mr Brad Luo of China Business Law Blog called 'G2000 v. 2000: Is 20 Million Yuan Enough for Trademark Infringement?', read here

.ASIA Landrush Ends March 12, 2008

Law firm Foley & Lardner LLP warns firms that the landrush for .ASIA domain names ends March 12, 2008 (Hong Kong time). Read more here.

.Asia is a sTLD (sponsored top-level domain name). According to ICANN: "[g]enerally speaking, an unsponsored TLD operates under policies established by the global Internet community directly through the ICANN process, while a sponsored TLD is a specialized TLD that has a sponsor representing the narrower community that is most affected by the TLD. The sponsor thus carries out delegated policy-formulation responsibilities over many matters concerning the TLD." Read more here.

Survey: HK Government Enthousiast About Youth Ambassadors Against Internet Piracy

Survey

Two years ago the HK Government started recruiting youths to fight online piracy. Now it has hailed them and said that their efforts have been very effective, read here.

Now IP Dragon starts with a survey and is very interested in your opinion.
Should the HK Government use youths to combat IP infringements?

• Yes, getting young people involved is effective and cost efficient;
• No, it is only the HK Government's responsibility and task;
• I don't know.

On the bottom of the blogroll on your right hand side you can find the survey. Please use your right to vote.

What Does The New Chinese Patent Law Have In Store?

Mr Charles C. Liu, Partner and Director of US Practice, Unitalen Attorneys at Law and Ms Jeanne J. Liu wrote a series of four installments (originally published in China Intellectual Property, 20:44-51, 2007) about the amendment of the Chinese patent law that will probably be ready in 2008.

Read here Mr Liu and Ms Liu's 'Waves of Changes in Chinese Patent Law and Regulations',
Part I here;
Part II here;
Part III here;
Part IV here.

Head tip to Philip Brook of Philip Brooks' Patent Infringement Updates whose blog has been chosen by the new Patent Law Center of LexisNexis as a Top Blog. IP Dragon, Patent Docs, Patent Troll Tracker, Patently-O, Peter Zura's 217 Patent Blog, Generic Pharmaceuticals and IP and IPKat were also selected as Top Blogs, as can be seen at the bottom on the right of the page of the Patent Law Center, see here.

Counterfeit iPhones Smuggled Outside China; Genuine iPhone Smuggled Back Into China

Stop the press! Although also iClones (fake iPhones) exit China to Europe and the US, read here, also genuine iPods manufactured in China for/by Apple are exported abroad. There is a lack of the real thing in China, so the price people want to pay for it rises. Enter smugglers of genuine iPhones, that bring these products back to China.

Mr David Barboza wrote the interesting article: "After China Ships Out iPhones, Smugglers Make It a Return Trip" for the New York Times about counterfeits, genuine products and the so called grey market of parallel import, although one would mention parallel import most of the time in case of cheaper products entering a market. Read Mr Barboza's story here.

Paul Midler of The China Game, has an elaborate two part series about Apple in China. Part 1 is "Apple takes an unfair beating on iPhone", read here.

Tony, who commented on China Law Blog on the misconceptions about China's IP enforcement Catherine Sun debunked in a video presentation, see here, pointed to an article of Mr Patrick Mannion on EETimes about iClones that are better than iPhones, read 'Under the Hood-Video: iPhone clones surpassing original' here.

Catherine Sun Debunks Misconceptions About Chinese IP Protection

Foley & Lardner LLM Partner Ms Catherine Sun discusses the three biggest misconceptions about Chinese IP protection:

• The belief that IP is not enforceable in China;
• keeping brands and technology within the U.S. will keep them safe;
• and counterfeiting products are of poor quality.

See Ms Sun's video presentation here. IP Dragon fully agrees with her explanations.

Possibly 50,000 Counterfeit Train Tickets (Guangzhou-Hengyang) Sold During Spring Festival

The People's Daily Online runs with the story of Xinhua that three people were arrested after they allegedly sold 50,000 counterfeit train tickets during Spring Festival.

Read more here.

Origin Fake Malaria Medicine Traced By Scientific Effort

Every year about 500 million people become ill of malaria. Every year 1 million people die, because of one version of malaria called Plasmodium falciparum. One major problem is that not all malaria medicines are genuine and some have only a low dose of the active ingredient, so that the malaria parasite becomes resistent. Jeremy Laurance of The Independent wrote the article entitled 'Scientists trace fake anti-malaria pills to dealer in southern China', read here.

The Public Library of Science (PLoS) Medicine gives the full report about this extraordinary scientific effort:

"Since 1998 the serious public health problem in South East Asia of counterfeit artesunate, containing no or subtherapeutic amounts of the active antimalarial ingredient, has led to deaths from untreated malaria, reduced confidence in this vital drug, large economic losses for the legitimate manufacturers, and concerns that artemisinin resistance might be engendered."
The methods were taking samples, assessing physical appearance, chemical and biological investigations and intelligence.

"The results were crucial in helping the authorities establish the origin of the fake artesunate. For example, the authors identified two regional clusters where the counterfeit tablets appeared to be coming from, thus flagging a potential manufacturing site or distribution network. The presence of wrong active pharmaceutical ingredients (such as the older antimalarial drugs) suggested the counterfeiters had access to a variety of active pharmaceutical ingredients. The presence of safrole, a precursor to the illicit drug ecstasy, suggested the counterfeits may be coming from factories that manufacture ecstasy. And the identification of minerals indigenous to certain regions also helped identify the counterfeits' origin. The researchers concluded that at least some of the counterfeit artesunate was coming from southern China. The Secretary General of INTERPOL presented the findings to the Chinese government, which then carried out a criminal investigation and arrested individuals alleged to have produced and distributed the counterfeit artesunate."

Read about this impressive WHO-Interpol project here.

Kung si fa chai! 恭喜发财

Happy Chinese new year to you!

恭喜发财

My new year's resolution for the year 4706 is to increase the frequency and relevancy of my postings.

Cheers,

IP Dragon

Does China's Copyright Law Has A Sense Of Humour?

Tavis Coburn created in 2007 "Mao Jordon", using Mao holding a Nike Air in his hand and wearing a hair band with swoosh, a registered trademark of Nike. The artist provokes a lot of questions with a limited edition of 100 prints.



Besides whether Mr Coburn's work would be censored in China, would it be protected under China's author's right?

Article 1 Copyright Law: This Law is enacted, in accordance with the Constitution, for the purposes of protecting the copyright of authors in their literary, artistic and scientific works and the copyright-related rights and interests, of encouraging the creation and dissemination of works which would contribute to the construction of socialist spiritual and material civilization, and of promoting the development and prosperity of the socialist culture and science.

Does Mao advertising Nike on a reproduction of a painting contribute to the construction of socialist and material civilazation?

Article 46 Copyright Law: Anyone who commits any of the following acts of infringement shall bear civil liability for such remedies as ceasing the infringing act, eliminating the effects of the act, making an apology or paying compensation for damages, depending on the circumstances: (4) distorting or mutilating a work created by another;

The original maker of the Mao portrait could claim this personal right was breached.

I think that the artist by using parody makes a statement that refers to China's effort to combine socialism and capitalism into a hybrid. However, parady is at the moment in China not protected under the Copyright Law.


Head tip to Susan Scafidi of Counterfeit Chic. Read her excellent Knockoff News Edition 76 here

Zhongyi Electronics to Microsoft: "See you in Court"

According to MarketWatch (head tip to China Economic Review) Microsoft is sued by Zhongyi Electronics for alleged copyright infringement for its Chinese character input method editor that Microsoft applies in Windows 95, Windows 98, Windows 2000 and Windows XP operating systems. The case will te held before the Beijing’s No.1 Intermediate People’s Court. Microsoft has denied any copyright infringement and said that is has written license agreements.

Read the article from MarketWatch here.

UPDATE: Stan Abrams of China Hearsay raises some good questions about the case here.

Africa Preferred Route Chinese Counterfeits To Europe

Thailand is the preferred route into Asia for counterfeit and pirated goods originating from China, read here. Now IP Dragon learned from Jeremy Phillips, known from the renowned IP Kat, but also contributor to the new blog Afro-IP who is quoting Christophe Zimmermanna, head of the Brussels-based World Customs Organisation's counterfeiting and piracy unit, that the African continent is the favourite transit route to Europe for goods infringing IP coming from China.

Read more on Afro-IP here and its source Reuters here.

Patent Challenge in China: What's the State of the Art?

The last quarterly newsletter of the European Patent Office (EPO) has an interesting article about the difficulty for foreign patent applicants to determine prior art (state of the art) in China, because all prior art in China is in Chinese. To determine prior art is crucial, because the patent can only be granted to an invention that is both new and inventive. So what is already known and what is new in China if you cannot search in and read Chinese? Machine tranlations are expected to be possible in three years time.Mr. Ruud Peters, CEO of Philips Intellectual Property and Standards, who spoke at the EPO Patent Information Conference in Riga criticised "missing out the increasingly large collection of Chinese prior art". The translations of only the claims from Chinese into English is estimated to be 15 million euro per year. The EPO would like the funding to be done in a way that allows that the translations are published for free online, Commercial companies such as Thomson Scientific, East Linden and Beijing Zhongxian Tuofang Co. Ltd. of course want to earn money for their translations. Mr. Peters had some harsh words about the patent system in relation to China: "stifling" instead of "stimulating innovation". Then again, an amendment of the Chinese patent law is coming up, so maybe all is not so bleak.
Read the EPO article here.

Service Of Process in China... eeh People's Republic of China

In case you want to sue an IP infringer that has residence in China from your own country, you can make use of the Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters, The Hague, November 15, 1965. Although China is a convention member state, it deals in a very strict way with service requests from abroad.

Geert Theuws, an attorney-at-law, found out that the legal translation company translated People's Republic of China into China, which meant return to sender, because this country name is not deemed correct in they eyes of the Chinese authorities. So make sure you got all the formalities right, including the right address on the letter and envelope; street, street number, zip code, city, province and last but not least the People's Republic of China (中华人民共和国) in stead of just China.

Thanks Geert.

Message from IP Dragon

Happy new year!

Today, I started working for Howrey LLP, an international law firm that is specialised in intellectual property, litigation and antitrust.

Cheers,

IP Dragon

IPR Officials Say The Darndest Things: Progress in Collecting Karaoke Copyright Royalties

Yan Liang of Xinhua News reports that "nearly half of the Chinese provinces have taken initiatives to collect karaoke copyright royalties by the end of 2007 in an effort to protect intellectual property rights (IPR) in audio and video sectors."

"An official with the country's IPR protection group echoed Liu, saying that the move marked new progress in property protection." One could describe 15 out of a total of 22 provinces, where initiatives to collect karaoke copyright royalties took place, as a meagre result. Then again, from 0 to something is progress.

Internet Copyright Law 2006 Difference Between Winning (Baidu) And Losing (Yahoo China)?

Although both Baidu.com and Yahoo China basically provided deep links to pirated mp3's, Baidu won in court, while Yahoo China lost. What are the differences?

7 (minus EMI) IFPI members versus Baidu.com

Wang Hongjiang of Xinhua reports about a group of record companies who lost again a lawsuit against Baidu.com (a Chinese search engine and the first Chinese company that became a component of the NASDAQ-100, read here), because of alleged copyright infringements.

• In 2005 the group, represented by IFPI, consists of EMI, SONY BMG, Warner Music, Universal Music, Cinepoly, Go East and Gold Label, "accused Baidu.com of engaging in illegal downloading and playing 137 pieces of music (195 sound recordings, according to IFPI, read here IP Dragon) owned by the record companies online without their permission." The demands by the group were a public apology from Baidu, the suspension of its download service and compensation of 1.67 million yuan (226,000 U.S. dollars);
• November 2007, Beijing's First Intermediate Court ruled "that Baidu's service, which provides web links to the music, does not constitute an infringement as all the music is downloaded from web servers of third parties."
• December 30, 2007, the People's High Court of Beijing agreed with Beijing's First Intermediate Court and ruled that Baidu's service does not constitute an infringement.

Read Wang Hongjiang's article here.

If you cannot beat them join them

John Liu and Jannet Ong reported for Bloomberg News via IHT that EMI dropped the appeal and joined Baidu, read here.

7 IFPI members versus Yahoo China

• April 2006, IFPI, on behalf of the 7 members asked Yahoo China to take the necessary stepts to stop the copyright infringement. Negotiations between Yahoo China and IFPI took place, but Yahoo China, according to IFPI, walked away from those talks;
• January 2007, IFPI filed a lawsuite at the Beijing No. 2 Intermediate People's Court against Yahoo China; Eleven separate claims were brought against Yahoo China by local and international record companies, who presented evidence of widespread infringement of their copyrights. The claims filed concerned infringement of tracks by international artists such as U2 and Destiny’s Child, as well as local repertoire performed by singers such as Penny Tai and Kelly Chen;
• April 2007, Beijing No. 2 Intermediate People's Court ruled Yahoo China was found liable for facilitating copyright infringement; Yahoo China appealed to the Beijing Higher People's Court;
• December 20, 2007, the Beijing Higher People’s Court, upheld the verdict.

Mr John Kennedy, Chairman and CEO of IFPI said:

“We are disappointed that the court did not find Baidu liable, but that judgment was about Baidu’s actions in the past under an old law that is no longer in force. The judgment is irrelevant since it has effectively been superseded by the Yahoo China ruling. Baidu should now prepare to have its actions judged under the new law. We are confident a court would hold Baidu liable as it has Yahoo China." Read the IFPI press release here.

China is no Common Law country and the final court, in this case the Beijing Higher People's Court, is not bound by precedent. Music 2.0, which is "exploring chaos in digital music" doubts whether Mr Kennedy's "old law" is no longer in force. Music 2.0 quotes Chinese lawyer Yu Guo Fu who said on Sina:

“Even though the Provisions of Copyright Protection regarding Transmissions through Digital Networks (Internet Copyright Law 2006) was introduced in July 2006, it is not the underlying reason for the different results in both the Yahoo and Baidu cases. Fundamentally, the higher level Copyright Law and also the General Principles of the Civil Law were unchanged throughout both cases and that has been the basis for both rulings”. Read Music 2.0's article here.

Other factors that could explain the differences between the outcomes is whether there was sufficient evidence for direct and/or contributory infringement.

Data Key On Road To IPR Transparency

The MailTribune runs an LA Times article called 'Writing their own tickets, Knockoffs still a thriving business in China' by Mr Don Lee. The article draws a picture of Wengang, a city in Jiangxin province famous for its pens/infamous for its counterfeit pens. That the enforcement of IPR is very difficult in this city, thanks to local protectionism, becomes clear in the article.

Mr Lee writes the following passages:

"In a survey in 2007 by the Quality Brands Protection Committee, an industry group made up of 164 multinational companies operating [the organisation has currently 181 members IP Dragon] in China, 70 percent said the situation was worse than or the same as before.

Chinese scholars and government officials contend that there's been a lot more progress in protecting intellectual property rights than that survey would suggest. Nationwide, in 2006, Chinese courts took on nearly 20,000 civil and criminal cases related to such protection, up from about 13,000 two years earlier.

"This shows that IPR awareness in China is getting much stronger," said Tao Xinliang, dean of Shanghai University's Intellectual Property School. Yet lack of enforcement, and even collusion, on the part of local authorities remains a major barrier. And few places may be as tough to crack as Wengang."

When the Chinese courts took on more civil and criminal cases related to IPR protection in comparison to a year before, this does not necessarily mean that IPR protection/enforcement is better. Because even if the enforcement actions have gone up, it is possible that the infringements have also gone up. In this light the outcome of the survey of the Quality Brands Protection Committee saying the situation was stable or had deteriorated is not strange at all.

The problem is, of course, that China is not willing or able to measure the total IPR infringements.

Read Mr Lee's article here.

Mr Will Lewis run into the same kind of problems, when he tried to interpet the IP litigation data he received. Mr Lewis writes:

"This data is all cases selected for publication by the courts in each jurisdiction through January 2007. The data collector said that this is only a small number of the cases that were actually decided which raises one gigantic question: what criteria did the courts use in deciding what cases to publish? There may have been bias in the cases selected, and these cases might not be representative of the actual win/loss rates in IP litigation. Also, the low number of cases published involving foreign parties means that there might be large variation in outcomes as more cases are decided."

In other words the data might not be objective. That is why I proposed in my thesis 'Paper Tiger or Roaring Dragon, China's TRIPs Implementations and Enforcement' (page 64) to use the Enforcement/Infringement Ratio which uses data that can be gathered independently from China.

Given the data, which can be critisised, I agree with Mr Lewis' interpretations. His second interpretation is: "Trade secret is the most difficult IPR to protect." This will be even more so when the new Labour Contract Law will go into effect, January 1, 2008, so that the scope of non-compete agreements will be restricted. Read more about what the Labour Contract Law has to do with IPR here.

Mr Dan Harris of China Law Blog was surprised by the frequency of victory by the IP holder: "I expected such numbers in trademark cases, but the numbers in patent cases are better than I expected and in copyright cases much better than I expected." Read Mr Harris' article here.

Read Mr Lewis' IP litigation data interpretations here.