Reptilian reportage

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

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

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

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

Guest post by IP Komodo Dragon

China civil litigation analysis

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

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

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

Guest post by IP Komodo Dragon

Rouse Roundtable: Copyright Today

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

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

RSVP by 30 March 2011.
Please click here.

Guest post by IP Komodo Dragon

China’s global patent docket

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

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

Guest post by IP Komodo Dragon

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

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

Key points in the Guidelines are:

1. Scope of “business resources”

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

2. The recognition of “franchising contracts”

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

3. The validity of “franchising contracts”

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

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

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

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

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

Guest post by IP Komodo Dragon

New rules on Criminal IP infringement released

Photo Danny Friedmann

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

Guest post by IP Komodo Dragon

Online infringement and ISP liability

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

Some interesting online IPR news IP Komodo has spotted:

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

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

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

Guest post by IP Komodo Dragon

Seminar announcement "Management and Commercialisation of Intellectual Property"

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

Photo: Danny Friedmann

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

Beijing's Silk Market

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

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

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

Guest post by IP Komodo Dragon

The Lizard's weekly news roundup

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

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

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

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

Guest post by IP Komodo Dragon

Chinese Car Wars

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

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

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

Guest post by IP Komodo Dragon

Patents in Hong Kong

Hong Kong has for many years had only a deposit-type patent system. Applicants re-register patents covering China or the UK, (including European Patents designating UK) and they are granted without substantive examination. It is a simple and cheap 2 step process.

But there is a growing call for change from Hong Kong business. In the past the government has said HK does not need a full system, citing high cost, lack of patent examiners and current user satisfaction. It is not clear that these are real objections, since cost could be covered by the fees, examination can be outsourced to other countries and current users are mostly MNCs. HK inventors have largely been ignored.

At a seminar to discuss whether HK should have a full patent system last Monday at HK's Science Park, friends of IP Komodo told of the differing views of industry and lawyers. Academics and SMEs have for some time complained that such a basic patent system stifles the ability of local businesses to get proper patent advice. There are lots of solicitors who claim patent expertise. A small number of firms employ patent attorneys who are invariably foreigners. A local patent attorney profession does not exist (although a lot of lawyers spend a lot of time arguing otherwise). Those businesses that have a lot of volume often send their patent drafting and examination work offshore. Ironically this includes many HK government funded bodies (that's HK taxpayer money being paid to attorneys abroad bypassing the struggling local profession).

What the Hong Kong government is missing is that patents are not local. HK businesses are interested in HK patents of course, but in the context of today's globalised world they need a base home patent upon which they can build a global patent family. The lack of a local first filing and substantive examination system means no local expertise can be built up, so all the work must go offshore, perpetuating the cycle.

Thus there was an evident split at the seminar last week, between the solicitors who are comfortable with the status quo and businesses who complained that they need a full patent system. Much as HK hates comparisons with Singapore, this one does bear looking at. A healthy patent system and patent attorney profession exists there 15 years after Singapore launched its full patent system. And Singaporeans file many more US patents than HK nationals, despite being a smaller economy.

The HK government has set innovation as a key policy goal (now it is clear that finance is not a sufficient foundation for an economy). Yet it leaves important components like a full patent system out of the innovation ecosystem. Mark Twain put is thus: "A country without a patent office and good patent laws is just a crab and can't travel any way but sideways and backwards" in A Connecticut Yankee in King Arthur's Court in 1889.

Guest post by IP Komodo Dragon

The lizard's weekly China news roundup

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

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

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

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

Guest post by IP Komodo Dragon

Free webinar, ‘Patent filing strategies in China’

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

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

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

Speakers:

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

Civil IP litigation statistics in China

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

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

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

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

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

Guest post by IP Komodo Dragon

IP Komodo v IP Dragon

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

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

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

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

Guest post by IP Komodo Dragon