Beijing News Victorious Over iPad app Developer Minesage, But What About The Limitations on Rights?

Beijing Haidian District People's Court ruled that software developer Minesage, who offered an iPad application to read newspapers, must stop these activities and pay 100,000 Renminbi (around 10,000 Euro).
Hao Nan of the China Daily reports here that the Beijing News sued Minesage Co. Ltd, because it used without authorisation the content and layout of the newspaper for the iPad. Beijing News has its own iPad app now, see here.

Hao Nan wrote: "Minesage argued in court that it showed readers the content copyright belonged to the original media." This would have been only relevant if Beijing News gave licensees or via Creative Commons other people permission to take over the content and/or layout under certain conditions (for example not commercial use, giving attribution to the author and making no changes to the content/layout). The author has the right to decide how its content and copyrighted layout is going to be distributed. It does not really matter if the format shifts from internet to iPad.

What is interesting is that in China all news is state news. And because of this there are some provisions in the Copyright Law of China. 

Section 4 Limitations on Rights 

Article 22 In the following cases, a work may be exploited without permission from, and without payment of remuneration to, the copyright owner, provided that the name of the author and the title of the work shall be mentioned and the other rights enjoyed by the copyright owner by virtue of this Law shall not be prejudiced:

(4) reprinting by newspapers or periodicals, or rebroadcasting by radio stations, television stations, or any other media, of Articles on current issues relating to politics, economics or religion published by other newspapers, periodicals, or broadcast by other radio stations, television stations or any other media except where the author has declared that the reprinting and rebroadcasting is not permitted; 

(5) publication in newspapers or periodicals, or broadcasting by radio stations, television stations or any other media, of a speech delivered at a public gathering, except where the author has declared that the publication or broadcasting is not permitted;

So I think Minesage could republish from other media (including Beijing News) news about politics, economics or religion, speeches delivered at public gatherings, except when the author explicitly declared that is was not permitted. 

However, for as far the layout was copyrighted, Minesage could not use it without the authorisation of the copyright owner.

Lessons From WikiLeaks About Apple's Intellectual Property Enforcement in China

Mark Milan of CNN has read the Wikileaks cable from the U.S. Beijing embassy on Apple, read here, see original text here.

WikiLeaks cored Apple in China

The Wikileaks suggest that Apple, in regard to the enforcement of intellectual property in China dealt with the following challenges:

• It seems that Apple realised there was a serious problem quite late and only in 2008 it formed a security team, experienced in the protection of Pfizer, that took action; Lesson: assess the markets, have a budget and a team to enforce ready before you do business.
• Like many companies it does not want to start high profile raids; Lesson: It can be an effective deterrent to potential counterfeiters if you are known as an aggressive enforcer. 
• Like many companies enforcing their intellectual property rights in China, Apple experienced that its product categories are no priority for Beijing (unlike medicines); Lesson: it takes time, effort and money to lobby via U.S. government or EU politicians with Beijing for your particular industry to be noticed. 
• Apple like many other companies tried to scare consumers away from buying counterfeit products (don't know whether batteries really blew up. Then again I personally have come across phony phones with high level of radiation that gives you a headache after a mere two minutes if your skull is less than 1 inch thick); Lesson: transparency about health and safety issues can work. 
• That it can be hard to close down factories which manufacture infringing goods, because this could lead to unemployment, which on its turn could have a negative influence on the local economy, which increases the possibility of social instability. Typical example of local protectionism; Lesson: become part of local communities and economies to really have some influence. Choose your battles wisely: do forum shopping to sue infringers in those courts that you trust.  
• That to close down shops in malls can be difficult because the authorities do not want to disturb the shopping in the mall. Another example of local protectionism (sometimes called localism). Lesson: be innovative. Use for example contractual solutions, such as the landlord liability schemes.

UPDATE August 31, 2011:

Philip Elmer-DeWitt published for Forbes the full text of the U.S. Beijing embassy cable here.

UPDATE September 1, 2011:
Chenfei Zhang of Newsy, pointed me to their "multisource video news analysis" about the subject. Thanks Chenfei.

Taiwan Shining Intellectual Property Blueprint For China Or Wishful Thinking?

What works for Taiwan, 
does (not)
necessarily works for China,
and vice versa.

During the press conference for the "Piracy Out, Competitiveness Up" campaign in Taipei (Taiwan) the chief secretary of the Ministry of Economic Affairs, Hung Shu-min said that Taiwan could be a model worth modelling for China in regard to bringing down business software piracy levels. Read Stacey Wu and Deborah Kuo's article for Focus Taiwan here.

In the Eighth Annual BSA Global Piracy Study (released last May, 2011) Taiwan scored third best in Asia. Taiwan's business software piracy rate 37 percent (2010), four percentage points lower than in 2006. Only Japan scored better (20 percent) and Singapore (34 percent) in 2010. Taiwan scored better than Hong Kong (45 percent). Taiwan's relative low piracy has probably enhanced foreign investments in research and development. China still has still a serious business computer piracy issue 78 percent in 2010.

However, between 2006 and 2010 China also reduced its business software piracy rate with four percentage points (from 82 percent in 2006 to 78 percent in 2010). So relatively China reduced business software piracy as much as Taiwan.

China's Three Experimental Gardens
But I agree that the People's Republic of China is in a unique situation where it has the opportunity to look at  a variety of Chinese communities with very different systems, and pick and choose the best from each system. I am sure Beijing is already keeping a good eye on Hong Kong, Macau and Taiwan.

The question is whether the measures that worked in Taiwan will work on the Mainland too. To name one huge difference: size. If your territory is not as humongous as China's, like Taiwan's modest size (or much smaller Singapore) each problem is easier to fix. On the island of Taiwan the local and national nearly coincide. One can argue that in China all problems are getting aggravated because the tension between the local and national interests. Taiwan's legal system, and policy is very different from that of China. But learning from each other's successes and mistakes seems a good way to make a shortcut to progress.

Do you think China can emulate Taiwan's anti-piracy system? Or do you think each system is well tuned to its unique situation and to transplant a different legal system and policies are not recommended?

Ronald Yu, lecturer University of Hong Kong wrote on personal title, via email:
"I remember that when I first went to Taiwan you could buy lots of fake goods - fake shoes, pirated recordings, etc. but it has since cleaned up a lot. I have thought, for some time, that Taiwan could act as a barometer for China's future, and if my assumption holds, perhaps China shall soon have a very clean, effective IP regime."

Guest Column: Eddie Tao's Reflections on Working for Apple, Steve Jobs, Inspiration, Innovation and Intellectual Property

Eddie Tao: "Co-design is not
how Apple likes to work."

Dear readers of IP Dragon,

IP Dragon (aka Danny), a long time friend of mine asked me to consider writing some notes about the latest news about Apple's CEO, Steve Jobs. Danny and I met at Chinese school in Amsterdam, NL. While Danny worked his way through the Cantonese curriculum and was very interested to get the right pronunciation in Cantonese. So, we met a few times where I gave him some advice on pronunciation. I'm an ex-Apple employee (outside of my control) and an Apple fan (since 1990). So reality distortion factor affects me a lot. I used to work there as quality engineer, and currently work for HP's IPG division in a similar job. I'm not used to write blogs; so, be prepared for tangents and incoherent notes.

Today, 25 August 2011, I found out that Steve Jobs announced his resignation as CEO and wishes to continue as Director and Apple employee. And that Tim Cook will succeed him. Having worked for Apple for almost a decade, and being an Apple fan, the news was shocking, despite this is one of the possible scenarios based on the info about his condition. Many mixed feelings and questions popped up: is Apple going to make it, is Steve doing OK, how will this affect the Apple shareholders, feelings of sadness (as if one loses a beloved one), and what's Tim going to be like, to name a few.

Like myself, many others show concern about whether Apple is able to continue to be as successful and innovative without Steve as CEO/leader. When I checked the stock market today, the Apple stock traded on the Frankfurt exchange dropped about 4.5% in the early trade (-1.75% on NASDAQ at 10.45 PST), and then slowly climbed up to -2%. Related partner companies such as Foxconn/Hon Hai traded almost 5 to 10% lower after the news. As many know already, Foxconn is a large and important Apple partner for product manufacturing such as laptops, desktop PCs and hand held devices. Unlike HP and other PC manufacturers, Apple retains the control over the design and only requires Foxconn and other partners to manufacture their design without further input. Co-design is not how Apple likes to work. (Note: "Designed by Apple in California" and "Assembled in XXX", where XXX is the country of assembly, is found on the Apple label). It is interesting to see how outsourced partners are affected when you look at their stock value. In a way I'm amazed how big Apple's influence/importance is to us. Apple clearly has a plan and executing it step by step - though Apple doesn't like to share its strategy. Steve has shown several glimpses about how he views Apple and about changing the world to provide a better experience. There are numerous examples of his quotes and statements available, which he made in the last three decades.

Back then, when I was part of the Apple family, listening to the keynotes (internal or external) they boosted the connection with the company and Steve. There was this sense of being there together to create an excellent customer experience. Steve would highlight how the products and solutions would market itself through their design and functionality and how they would help the customer do things simpler and easier. (Various books, observations and opinions about this passion for simplicity for the user are available.) At the end of those sessions one would feel amazed and energised to put in an extra few kilometers (or miles) to make it happen. Time spent for Apple is not an issue at all - there are many examples out there - and it was no exception for me to put in 60 (reality) to 80 (ego) hours. One could say, it's the love for the company, the product designs and its charismatic leader that made it worthwhile. To reach the end goal that Steve has envisioned is what matters. I perceived my tasks as to support the magic of Apple and to help change the world a bit. That is unbelievably energising. The feeling that the effort that's put in really matters. (Maybe my ego speaks now.) In my role as Supplier Quality Engineer I was to work with fellow SQEs all over the globe to ensure the products reach the required quality levels that the Apple customer deserves. Few simple examples (but statistically unsound, if I am honest) would be: my Mac Portable still hums happily, as does my PowerBook G3 of 1999, next to the newer iMac 27" of 2008. (I cannot reveal failure rates, but they are impressive in a positive sense.) I dealt with the outsourcing and service partners and basically my job was to remind them what quality levels Apple is expecting, and worked with several: Foxconn, Inventec, Samsung and LG, to name a few. Great people and teams to work with - many of those I encountered with became my friends. Most of them were half a world away from me. But despite the distance we understood our mission - it was to help make happen Steve's vision, his dream as I perceived it. Again, it's this magic that we understood without saying a word. We could read it by looking in each other's eyes. With other employers, there's passion to make things happen, but not as strong as Apple - at least very different.

When it comes to IP (Intellectual Property), Danny's expertise, I can only say that Apple is very sensitive to that. Apple has guarded IP and related info as important to maintain the (competitive) edge. I myself value knowledge and creativity a lot. I remember one or more occasions where my manager informed me that he's been asked to justify why I had been accessing unreleased product information. Consider this similar to a situation where a security breach has been discovered. However, in my role as SQE, getting prepared for a product launch, it is handy to know the info about service parts used in that product, and getting suppliers ready to service them on time so any customer who have an issue with the new product can be supported/helped. The info is needed to set up the reverse logistics supply chain. It's a relative boring and hidden supply chain (of broken products - with negative vibes), but very important in my opinion. Boring as: not so sexy as the Finished Goods (= what consumers buy) supply chain. As the FG is considered making the revenue and thus more important. In my opinion, reverse logistics is even cooler to work with. As there are numbers out there that 1:9 will voice their issue and the rest remain silent. That one customer is able to get a nice service experience and tell like 9 to 11 others about the good service they've gotten from the company. So in my perception, I liked it a lot to get feedback about broken parts/products. To me, it's another way to "talk" to the customer to show what's the value-add of our Service team. Those were customers who think it is valuable to provide feedback, so they can help improve the product. I think if you can show good service to the customer, it's going to change the perception a lot, and customers become more loyal (and hopefully purchase again). Through my job, I was able to "talk" to my customer. And that, in a sense, was carrying out the passion for the customer. To make the customer experience, as Steve envisioned, as nice as possible. I as a nerdy perfectionist, I loved this attitude that drives perfectionism. I'd rather say, it's knowing what is needed to reach customer satisfaction. Others would call it perfectionism of Steve and the team. Maybe because they do not know how to respond otherwise, and use perfectionism with a negative connotation.

Being so passionate about a company such as Apple and its products, makes it hard to have an objective view. I've worked for various companies, but cannot say I've had the same passion before for a company like Apple. It's like working for a team and you know that their mission is the ONE. It's good on the scale of good and evil. It's going to make a change - a change what appears to be for the better. I think all of us have been to a situation while making a decision helps us feel great about it because it's 100% the right one. No doubt about it, not even the devil's advocate can make a difference. Steve's reality distortion force is strong - very strong. He's without question nor doubt, very good at it. And I think it's his level of thinking that makes him put these concepts into the words that he's using. (Note the various quotes from him that are out there). As if from a different dimension. Think of a 3D world. How do you explain in words in such a way that a 2D world (lines) understands the concept of volume. That's how I viewed Steve's messages and his drive for innovation. He's got this idea of how it should be in the future, and uses phrases to help us at Apple to understand (not saying the rest at Apple were not able to understand, but you get my idea). At the same time it's very empowering to know the little things you do, are making a significant change for the Apple customer. (In my case that was for the Europe region).

So, on a more personal note; to me Steve is Apple, and Apple is Steve. I find it hard to imagine an Apple without Steve in charge. It happened before, though. Steve had to leave Apple and came back few years later. While away from Apple he tried to innovate via NeXT. It was OK and Apple came out better (just look at the revenue Year over Year). There's various teams behind the scene that do magical stuff. During some keynotes they're highlighted, but that's just a fraction of the teams. Now, with Steve no longer being CEO, it makes me concerned. But having mingled with the teams responsible for product design manufacturing and the outsourced partners, Apple will do just fine and continue to show their creativity and innovation. Silently, I keep hoping that Steve will become healthy enough to influence Apple as he used to have. For now, I am looking forward to see how Tim leads Apple to the next level. Will miss you, Steve - thanks for the great experience and magic, and good luck Tim. Hoping to see more of Apple in the future.

Eddie Tao

Free Seminar Shanghai: Intellectual Property in China That Protects Clean Technologies

The British Chamber of Commerce Shanghai announces an afternoon seminar

Clean air, 
clean technology
 and clean IPR also needed in Shenzhen
this afternoon
Photo: Danny Friedmann

'Protecting Clean Technologies: Intellectual Property in China' organised by China IPR SME Helpdesk.

Peter Corne, chair of the Energy Working Group of the European Chamber in Shanghai and partner of law firm Dorsey & Whitney in Shanghai is giving a presentation.

Date: 6 September 2011, starting at 4 o'clock

Location: Hotel Indigo Shanghai on the Bund, 

585 Zhongshan Dong Er Lu

let the rsvp-china@chinaiprhelpdesk.eu know that you are coming.

China's Exports Moved Up the Value Ladder, EIU Report Underlines Dragons at the Door Thesis

Exports no longer only from coastal provinces
Photo:  Danny Friedmann

'Heavy duty, China's next wave of exports', is a insightful concise report (17 pages) from the Economist Intelligence Unit. It sheds light how the Chinese equipment manufacturing industry is climbing the value ladder. The first waves of exports were dominated by textiles and electronics and took place in the coastal provinces. The manufacturing for this coming export wave takes place in China's hinterland (for example Sany, Zoomlion, Sunward from Changsha, Hunan province, before Xugong from Xuzhou, the coastal province Jiangsu was most prominent in construction-equipment manufacturing), and as of 2012 it will not be driven by foreign direct investment but by domestic companies. Whether this shift in export activity from the coast to the hinterland is enough to bridge the gap in income inequality remains to be seen. The majority of the exports go to developing countries, or so called non-members of the Organisation for Economic Co-operation and Development (OECD) in 2012.

The report reads like the empirical support of professors Williamson and Ming's great book Dragons at your door, see IP Dragon's Book Review. Because although the report makes clear that the developing countries  mostly prefer low technological solutions, it also tells that it gives the Chinese manufacturers, that use innovation to produce at lower costs and offer more variety, the economies of scale so that the Chinese companies can offer higher technological solutions to more developed markets later on and become formidable competitors of companies such as Caterpillar. In other words the companies in the OECD can expect some enormous competition in a not too far future, and they should ask themselves some strategic questions, such as:

• Can we afford to stay out of these emerging markets that will make giants of our Chinese competitiors?
• Should we try to be more innovative by making a more sophisticated product or should we try to be more innovative by making the product in a more sophisticated way and by doing so, make the product cheaper and in more varieties?
• How can we harness these innovations in patents?

Read the EIU report here (after registration free pdf)

List of 100 Western Songs Must Be Removed By September 15, 2011

Tania Branigan reports about newly banned list of 100 Western songs that are not approved by the Ministry of Culture. All links to these songs must be removed by music websites in China by September 15th, 2011. The reason: because they allegedly have never been submitted for approval.

According to Ms Braningan the list is based on the 2009 directive to tackle poor taste and vulgar content. Not sure whether she means the Some Opinions Concerning Stimulating Our Country's Audiovisual Industry's Healthy and Orderly Growth published by the General Administration for the Press and Publication (GAPP) on July 20, 2009 and translated by my scholarly friend Rogier Creemers of China Copyright and Media. In the opinions the GAPP makes clear that it abhors "audiovisual products with vulgar and even sexual content  drifting into the market".

Lady Gaga leads the blacklisted one hundred, since she was mentioned six times in the list. Also banned are songs from Katy Perry, Britney Spears.Interestingly enough also relatively old songs were on the list, including the 1998 song "I want it that way", from the Backstreet Boys. Read Ms Branigan's article for The Guardian here.

John Marshall Law School Launches Chinese IP Resource Center in Chicago

A new wind from China 
has arrived in the windy city
Photo: Danny Friedmann

John Marshall Law School located in Chicago, US, has launched a Chinese Intellectual Property Resource Center, see here. Since 2007 the law school also has a China IP summer programme.

Both intellectual property rights and China and its combination can rejoice in an increasing popularity and perceived importance by scholars, students, business people and the public at large. And rightly so. It's great that one of the key US universities realised this and committed themselves to the research of this burgeoning field. IP Dragon wishes the John Marshall Law School's China IP resource center much success.

Read a Xinhua article via Shanghai Daily about the center here.

The grand opening was August 23, 2011, see here. The ribbon cutting ceremony by the following people got it all officially started:
Leonard Amari, president of The John Marshall Law School Board of Trustees; 

Dorothy In-Wang Li, director of the Asian Alliance Program; 

Dean John E. Corkery; 

Lu Kun, the deputy consul general of the Chinese Consulate in Chicago; 

Gan Shaoning, the deputy commissioner of China’s State Intellectual Property Office (SIPO); 

Ma Hao, of the Patent and Trademark Law Office in Beijing and representative of the China Council for Promotion of International Trade; 

Yufeng (Ethan) Ma, a board member at McAndrews Held & Malloy Ltd., the United States law firm that donated to the Center. 

See here.

Bright Food Takes Over Manassen Foods: Bright Future for Food Safety?

Many roads, but some are superior in the long run
Photo: Danny Friedmann

Many Chinese consumers prefer foreign goods, because they are perceived as safe. Notwithstanding that foreign brands are often victim of being counterfeited.

Now there are at least the following options Chinese foods manufacturers can choose from:

Option 1. Improve the food safety and quality in all the companies of the group, so that the trust of Chinese and overseas consumers will be gained. The good reputation of the brands is in the long term the most valuable asset of a firm.
Option 2. Improve the image of the product by more advertising and product placements in movies so that in the short term consumers will be lured into buying the products;
Option 3. Take-over a foreign brand and sell the same Chinese products under the foreign brands as if they are made abroad. This is penny wise and pound foolish. You might safe some money with a quality fade out or worse, beside the ethical problems the backlash can be huge and irreversible.

However, Bright Food of Shanghai that took over 75 percent of the Australian Manassen Foods, manufacturer of biscuits, fruits and dairy has the ambition to sell Chinese dairy to the Australian market. If they want to have any chance to succeed they might want to pursue option 1,  If they do, I would say to them jia1 you2!/ga1 yau2!/加油!/add oil! (but please not in a literal way).

Read Peter Smith and Patti Waldmeier's article for the Financial Times here.

Must Read Monday: China Should Change Its Perspective From Engineer To Marketeer

From an engineer's to
a marketeer's perspective,
one bridge too far?
Photo: Danny Friedmann

Malcolm Moore wrote a great article for The Telegraph about China's challenges to transform its industries from the world's manufacturers to the world's innovators, and how this good be a boon for some British companies. Read here.

Mr Moore wrote about the challenge suppliers to foreign companies, such as Foxconn, face:

"These Chinese companies are more confident, but they are led by engineers," said Geoff McCormick, the head of Alloy, a design firm that has been active in China for decades. "These firms are now being asked to be brands and not just engineering-led. But they have no track record at creation.They are happy to spend money, but only if they think there will be a return. So these are very difficult decisions for Chinese chief executives to make," he said."

And of course foreign companies will not be amused when their supplier starts to make their own competitive products under their own trademark. In some law firms there is the phenomenon of applying so called Chinese walls (information barriers), to separate one part of the firm which is representing one party from another part of the firm which is representing another party with contrary interests. It is highly doubtful whether Chinese walls can effectively be applied during the manufacturing process of a supplier/competitor.

For all foreign companies that complain about bad intellectual property in China. As long as Chinese companies copy the products of foreign companies, their problems are quite limited and can be solved or mitigated by using the enforcement routes effectively. The real challenge starts when they offer a better designed product under a more attractive brand. Legitimate competition is the real challenge.

Honey Laundering, Or How Chinese Lead And Indian Antibiotics Become Indian "Honey"

IP Dragon Weekend Edition

蜜蜂 (Mandarin mi4 feng1 Cantonese mat6 fung1) 

= honey bee  

蜂蜜 (Mandarin feng1 mi4 Cantonese fung1 mat6) 

= bee honey 

Two time Pulitzer-prize winning reporter for investigative journalism, Andrew Schneider wrote an interesting article about Chinese honey that is imported to the U.S. via India, Vietnam, Malaysia, Australia (and for some time Russia) that contains dangerous antibiotics and/or lead. The Chinese honey is imported via other countries into the U.S., since 2001. That was the year that the U.S Commerce Department imposed a tariff to prevent Chinese companies to dump cheap products on the American market.

Schneider: "Almost 60 percent of what was imported - 123 million pounds - came from Asian countries - traditional laundering points for Chinese honey. This included 45 million pounds from India alone." And India does not even have the capacity (the amount of bees) to produce 45 million pounds of honey.

Antibiotics

The only Indian part in the "honey" might be the dangerous Indian antibiotics. Chinese beekeepers fought an epidemic of foulbrood disease with antibiotics, which includes chloramphenicol from India, which can damage DNA and be carcinogenic, and can lead in about one out of 30,000 people to a fatal reaction. 

Lead

Some honey vendors use lead-soldered drums to collect and store the honey before it is collected by the brokers for processing. This can lead to lead contamination.

Sometimes no trace of honey

Schneider writes: "Another favorite con among Chinese brokers was to mix sugar water, malt sweeteners, corn or rice syrup, jaggery, barley malt sweetener or other additives with a bit of actual honey. In recent years, many shippers have eliminated the honey completely and just use thickened, colored, natural or chemical sweeteners labeled as honey." 

Read Schneider's article that reads like a Crime Scene Investigation. He writes that the Food and Drug Administration is unable to effectively the origin of the honey and its safety, about two institutions that can test the pollen, about the cat-and-mouse game of testing and ultra-filtration that removes or conceals floral fingerprints (pollen) and sweeteners or contaminants, and the lack of a definition of what honey is. Read Schneider's article for Food Safety News here.

Characters explained:

蜂 left part of character means "insect", right part means "meets in groups", 

as bees tend to do.

蜜 top part is "roof", middle part is "necessary", lower part is "insect". The top part and middle part combined is "silence". Not sure whether bees are silent or whether they keep buzzing in their hive. 

Trademarks That "Innovate and Beautify Life": China Trademark Festival, Chengdu

"Dreaming of innovative
 and beautifying trademarks"
Photo: Danny Friedmann

                 To avoid confusion:

                 - the cat's name is Puma not IP Kat

                 - he has no relation with a German
                   sportswear company.

                 

                  

As most Western eyes are focused on the Eastern coastal provinces of China Western China, including Sichuan Province, is switching to a higher gear. September 5 to 8, 2011, the 4th Session of China Trademark Festival (第四届中国商标节) will be held in Chengdu, Sichuan Province. The conference is organised by the China Trademark Association and Chengdu People’s Government. Venue: New International Convention & Exhibition Center, Chengdu, Sichuan Province. 

China Trademark Festival is a biennial event, which started in 2005 in Shenzhen, then 2007 in Changsha, 2009 Qingdao and now 2011 in Chengdu. 

This year's theme is both poetic and optimistic: 商标引领发展，创新美化生活", which means "a trademark that must lead to the development of an innovative and beautifying life".

Read more here (Chinese). Ms Grace Wang of Lehman, Lee & Xu can provide more information. You can send here an email: trademark@lehmanlaw.com.

Rouse: IP China Express 340

" IP in China, dusk or dawn?"
Photo: Danny Friedmann

In the 340th IP China Express Rouse, the international IP business selected the following news items:

- Rubber products manufacturer Freudenberg victorious in a trademark conflict that has been going on since 2002. Finally the Trademark Appeal Board rejected the Chinese firm that wanted to register the same Freudenberg trademark.
-  Liu Binjie, head of the General Administration of Press and Publication, part of the National Copyright Administration, " with the rapid development and wide application of high technology (especially digital technology and network technology), the system of Copyright Law has faced formidable challenges" , therefore July 13, 2011, China has started to prepare its third amendment of its copyright law.
- Beijing First Intermediate People’s Court decided that Procter & Gamble's use ‘飘柔’ (Rejoice) in the Founder Qian typeface did not infringe Founder's copyright. Selling the software to Procter & Gamble implied consent that they could use it.
- Although Beijing-Shanghai High Speed ​​Rail was using technology imported from both the East Japan Railway Co. Ltd. and Kawasaki, the technology that it was seeking to patent was innovative. Therefore since 2009, China North Vehicle Group and China Academy of Railway Sciences have begun applying for patents abroad.
- Rouse also gives a summary of the 2006-2010 White Paper on Intellectual Property cases involving foreign parties published by Shanghai Second Intermediate People’s Court. Read IP Dragon's May 17, 2011 article about it here.

Read the Rouse's IP China Express here.

EU, U.S. Perception: "China Is Discriminating". What Are We Going To Do Against It?

US: We have so many
stars, we deserve 
to be treated
accordingly in China

U.S. Vice President Joe Biden is visiting China to try to smooth the Sino-Chinese relations (one can argue that the U.S. is borrowing money from China to import from China) and meet with his Chinese counterpart Xi Jinping (习近平) who is expected to succeed President Hu Jintao (胡锦涛) in 2013. With the election coming up in November 2012 their is pressure on the Biden and Obama to show that they can create new jobs to get the U.S. economy going. 

Perception

Biden is going to talk also with U.S. and Chinese business leaders. Kate Andersen Brower and Michael Forsythe point out in their Bloomberg article that U.S. business leaders are more worried about the level playing field in China, which includes intellectual property protection and enforcement, than the alleged overvalued Renminbi that makes export to China more expensive. 

""Our members do not think currency is the top issue in our relationship," said Erin Ennis, vice president of the U.S.- China Business Council. Bigger concerns are "level-playing field issues," like opening up the Chinese market to U.S. exports and protecting intellectual property."

Tony Su, corporate vice president and president of DuPont Greater China was quoted saying: "We have a rising concern about IP protection," Su said, adding that it is an especially important consideration for his company, the biggest U.S. chemicals maker by market value and second-biggest seed producer in the world. "The government can be an example to industry that stealing technology will be punished by law."

We have some stars,
please consider
us as stars  in China

Surveys in both the EU and U.S. confirm the concern about discrimination of foreign firms in China. When EU business leaders were asked " will the Chinese government have policies in place that discriminate against foreign companies?"in a survey by the European Union Chamber of Commerce in China, 46 percent (36 percent in 2010) answered "Yes, in the next two years."
And when the American Chamber of Commerce (AmCham) asked whether China is discriminating against foreign companies with its licensing process, 71 percent answered yes.

It is also interesting to watch the foreign politics strategies play out in regard to China. Is the U.S. strategy, which is arguably more assertive but also more confrontational more effective than the EU strategy that is more constructive but also more passive. I think if the U.S. and EU would coordinate their efforts and come up with a combined good cop bad cop approach, they can attain better results than if they would operate on their own. What do yo think?

Read the Bloomberg article via SF Gate, here

Now That We  Some EU and US business leaders Found Perceive Love Discrimination, What Are We Going To Do With Against It?

We are talking about perception. Now what are we going to do against it? Like each year the European Chamber of Commerce has formulated some interesting suggestions in their 'European Business in China 2011/2012 Position Paper' that will be launched on September 8, 2011 in Beijing and Shanghai. The following subjects, that are all related to intellectual property rights, will be covered:

1. The positive role European companies can play in helping China reach the goals of its 12th Five-Year Plan:
-Developing the service sector
-Enhancing environmentally-friendly and advanced technologies
-Encouraging Innovation
2. An overview of the key themes of recommendations to Chinese policymakers:
-Increasing Market Access
-Enhancing Transparency & Predictability in Legislation
-Improving Regulatory Efficiency
-Encouraging Innovation through Intellectual Property Rights Protection
3. Recommendations to both European and Chinese governments on EU-China commercial relations and the prospects for a bilateral investment treaty.

The Beijing launch of the paper will be held at Kempinski Hotel at 4 o'clock (free for members, 400 Renminbi for non-members) Dirk Moens, secretary general of the Chamber and Davide Cucino president of the Chamber will give a presention, see here. The Shanghai launch will be held at The Westin Bund Centre Shanghai at noon (free for members, 300 Renminbi for non-members) and Piter de Jong, vice president of the Chamber will give a presentation, see here.

Piter de Jong explains in a Squawk Box CNBC interview how the EU companies are missing out on a trillion dollar procurement, he also elaborates on the business confidentiality survey 2011 by the EU Chamber of Commerce in China, see here.

Ernst & Young Report: The Benefits of software IPR protection in China

Unlicensed software should be cleaned up
Photo: Danny Friedmann

Not only the Business Software Association writes interesting reports about intellectual property in China in relation to software. Ernst & Young who are in the assurance, tax, transactions and advisory business, just published a report worth reading called:

 The Benefits of software IPR protection in China (28 pages pdf).

The report includes a nice timeline, and the explorations on the following issues:

• Internet unlicensed usage leads software IPR infringement
• Drivers for unlicensed software usage
• Issues of insufficient software IPR protection
• Economic benefits of IPR protection
• Intangible gains of IPR protection
• Transition to a knowledge economy

Is China Copying Black Hawk Helicopter Technology That Crashed Into Bin Laden's Backyard?

"Why are you flying above me?""
"Keep flying, you are my stealth technology."

Isn't it the dream of each intelligence service that the state, military and trade secrets literally fly and crash upon your territory? This dream came true for the intelligence services in Pakistan when a US stealth helicopter Black Hawk crashed into the backyard of Bin Laden's hide-out in Pakistan.

A stealth helicopter has technology to conceal its presence, and avoids being detected by radar, sonor, infrared or any other detection method. However, if a stealth helicopter crashes and then is  detonated the "low observable technology" on its remaining parts is quite observable. And once the remaining parts of the stealth helicopter are not so stealthy anymore they are vulnerable to be copied.

Daniel Goure, vice president of the Lexington Institute said for ABC News that what really stood out was the little disk over the rotor which is really designed to both baffle the sound and to deny radar signature, read more here. Herman Lai reports for M.I.C. about whether China is trying to knock-off the US stealth helicopter that crashed in Bin Laden's backyard in Pakistan as a New York Times report suggests. Read here.

The intelligence forces of Pakistan deny this and the Chinese Ministry of Defense unsurprisingly replied: “This report is totally unfounded and extremely absurd.”

However Mark Mazzetti of the NYT wrote: "One person with knowledge of the intelligence assessments said that the American case was based mostly on intercepted conversations in which Pakistani officials discussed inviting the Chinese to the crash site. He characterized intelligence officials as being “certain” that Chinese engineers were able to photograph the helicopter and even walk away with samples of the wreckage. The tail has been shipped back to the United States, according to American officials." Read Mazzetti's NYT article here.

It might not be that absurd that Pakistan is willing to share its information on the helicopter with China, since Pakistan considers China as its best friend, read here.

The Global Post published a photo on which Pakistani boys collect the debris, see here.

How To Transform The Image of Chinese Brands? Hint ... It's Not Product Placements

Product Placements 

Some movies have become a series of commercials with a story line. Thanks to the lucrative business of product placements. Transformers (变形金刚) 3 which opened in cinemas in China on July 21, 2011 shows an abundance of Chinese brands:

• Yili: Shuhua Milk
• Meters/bonwe: M-Tee
• Lenovo: Ideacentre A series
• TCL (The Creative Life): HDTV range

Yili milk is trying to transform its image with the product placement after the melamine induced total recall in 2008, see here. 

Read Daniel Gilroy's Advertising China Smack article about it here.

However, companies that really want to build a great reputation globally and domestically should focus even more on quality programmes, in order to make the quality of their products consistent, and they should be able to guarantee the safety of the complete supply chain, coupled to superior service that informs their customers about quality, the supply chain and the points of sale.  

IPO Candidate Tudou Is Building Its Patent Portfolio For Future Growth, Promoting Chinese Creativity

With 90.1 million registered users, 

Tudou 土豆, which means potato, 

is no small potato. 

The site for investors 'Seeking Alpha' gives an analysis of the Chinese online video site Tudou.com 土豆网 (for which they use the symbol TUDO) in relation to its competitors, before it is going for an Initial Public Offering (IPO) at NASDAQ Stock Exchange in the US. The IPO was planned last November, but because of a quarrel between the founder and his ex-wife it was delayed. 

For the valuation of what a company is worth, and to valuate the price per share, one should take into account the IP portfolio of a firm. In case of technology firms such as this online video company patents play an extremely important role. They can be used for defensive or offensive purposes. Seeking Alpha took a  look at the intellectual property of the IPO candidate: "INTELLECTUAL PROPERTY -- TUDO owns one utility model patent in China relating to a unique search engine system, and is in the process of applying for 32 additional patents to protect core technologies with respect to online video distribution and search."

Read the analysis here.

Effective measure against copyright infringement: create copyrighted works
Huang Ying has an interesting China Daily article about how Tudou is supporting the creation of Chinese films and TV drama, read it here.

UPDATE: August 19, 2011 Can NASDAQ Fund Chinese Piracy?

Tom Cheredar of Venture Beat gives the update on the Tudou IPO: they raised 174 million US dollar at the NASDAQ, read more here.
Greg Pilarowski wrote on July 27, 2011 also for Venture Beat about how a possible Xunlei IPO could lead that Chinese piracy would be funded via NASDAQ, read here.

Fry Phone: Fry Your Brain With Phoney Phone (HiPhone5)

By Michiel Tjoe-Awie


Fake phone

Yang Xi reports for China.org.cn about the Chinese copycat of the Apple iPhone5 that hits the market. Of course it can do what the leaked iPhone5 can do, but it is served with a free dessert: fried brains. Fried brains are cheap. The HiPhone5 is sold for a price that ranges from only 200 Renminbi (31 US dollar) to 1,000 Renminbi (156 US dollar), while you probably have to pay around 7,800 Rmb (1,210 dollar) for the genuine thing (with approved levels of radiation).

Yang writes: "Testing by the Chinese government labs found the fake phones had quality problems, including high electromagnetic radiation levels, said He Guili, a professor at the Chinese Academy of Telecommunication Research."

The makers of the HiPhone5 seem not to have cared too much for the long term health risks that threatens the users. Therefore one is wise to take a risk-avers course of action and don’t exchange “change” for “brains” in case of unapproved counterfeit/copycat phones.

Read Yang's article here.

Even officially approved phones might have damaging long term effects to our health, read here.

Fake site
Josh Smith of GottaBeMobile breaks the news of a very smooth but fake iPhone5 site. To be more precise, the site is real but it pretends to be representing a firm that it's not.
Put on your detective’s head, get out your magnifying glass and do Sherlock Holmes: check the video and figure out what makes the site fake. Hint: think Steve Jobs' legendary eye for detail.

Read Mr Smith's article here.

Read also the Daily Mail article 'The 'hiPhone 5': Fake Chinese version of latest Apple device on sale MONTHS before the real thing is unveiled' here. Thanks Nick Redfearn.


Text Michiel Tjoe-Awie

Must Read Monday: Kan Zu On The Art Of Patent Enforcement

Medium shifting from Sun Tzu to Kan Zu:
patents instead of arms,
LED screen instead of bamboo

Sun Tzu wrote about the Art of War. Competition between companies is a kind of war, whereby the only potential fatality is the bankruptcy of a company. The offensive and defensive weaponry are patents. Kan Zu, attorney at Unitalen, wrote as a modern day Sun Tzu a highly interesting treatise on patents: 'The Influence of New Patent Law and Interpretation on Patent Enforcement in China'. It deals with double patenting, design patents, claim construction and interpretation, doctrine of equivalents and file wrapper estoppel, means-plus-function claims, prior art defenses, declaratory judgments and remedies.


Prepare for battle, read Kan Zu's article here.

Tourists Duped By Soviet Union Memorabilia Made in China

Lenin pin
made in USSR or
made in China?

"I said export world revolution 
not revolutionary 
cheap pins to the world"

What happens when a nominal communist state is making communist memorabilia of a former communist state? Yes, the communist memorabilia market run by artisans in the former communist state collides. Exactly what is happening in Russia where Chinese "Soviet Union"-era products are flooding the souvenir market. Tourists think they buy something authentic buy a fake low cost product from China.

Read Khristina Narizhnaya's 'Made in the U.S.S.R. is now made in China' article for The Moscow Times here.

Sober Advice To Stop Counterfeit Wine As Lafite Bubble in China Attracts More Counterfeiters

China counterfeiters produce more "Lafite" 

then you can ever find in the 

Château Lafite Rothschild cellars in France

Photo: Wikipedia about Château Lafite Rothschild 

No, Lafite is not a kind of Champagne. It has no bubbles inside. But the market for Lafite could definitely be called a bubble. One can find more "Château Lafite Rothschild" wine bottles in China than they are exported from this reputable French wine house to China. Therefore, Lucas Botebol of Zhongguo Wine estimated in October 2010 that 70 percent of the Château Lafite Rothschild in China is fake, read here. Because of the increase in counterfeit Lafite supply the prices have not dropped a Renminbi. A fortiori, prices for a bottle of Lafite 2000 have risen 574 percent between 2001 and 2010. So demand must be growing very strongly. And this probably attracts even more counterfeiters.


Some sober advice
You do not need to be an oenologist to realise that until you are a connoisseur, you might want to drink some lower cost wine that can be très agréable. And even if you are a connoisseur it could not be excluded that your taste palate is better attuned to some other wines. To cash in on the bubble is nice for the wine house, but to lose control of your product on the China market is very risky. Fortunately it is in the counterfeiters interest that they make the counterfeit Lafite not too bad. Drinkers should not become ill or worse. If some drinker of counterfeit Lafite would die, for example, than the counterfeit Lafite market will be dead too. To prevent counterfeiters with a more short term mind from bottling dangerous concoctions, the brand should try to regain control over the complete chain of supply.

Start a breaking the glass ceremony
If I were a wealthy wine lover I would like to be able to verify via my phone whether the bottle that is served in the restaurant is the genuine product. Also there should be a "waterproof" cork system that is very hard to counterfeit. And as a kind of grande finale, after finishing the bottle, the bottle should be destroyed with a hammer as a kind of luck bringing ceremony and preventing future counterfeiters from giving the bottle a second life. If the restaurant is not doing it by themselves, one should insist on it.

Hat tip to Sophie Pilgrim of France24, see here.

Terroir is a near-mystical French term for soil, micro-climat, direction of wind. It is an important term used sometimes to justify Geographical Indications, see the video below:

Sunday Local Selection: 95.6 mln RMB question, Hebei good/bad/ugly, new BMW product?, Taiwan Straits IP Centre, Nanning achievements, Starve Cancer to Death Medicine

Some local news items of China Intellectual Property 中國知識產權, Xinhuanet.com, Hebei.gov.cn, CNR.cn, Stats.gov.cn and China Quality Daily were presented in one article by China Daily about the following locations: Beijing, Hebei, Fujian, Guangxi, Guangdong.

The 95.6 million Renminbi question
The first item is about subsidies given to 600 companies in Beijing's technology hub Zhongguancun in the last four years. For every patent granted high tech companies received 5,000 Renminbi. The total amount of the subsidies in the last four years was 95.6 million Renminbi. The 95.6 million Renminbi question is of course, were the subsidies WTO compliant?

The good, the bad and the ugly in Hebei
The good: an eco-friendly farmer-entrepreneur who is considered a model inventor.
The bad: "Former wine deputy manager Wang Chunping was sentenced to life imprisonment and forfeited all personal property after he was convicted of making and selling fake wine in Qinhuangdao, capital of the northern province." However, Qinhuangdao (2.8 million + people) is a port city but not the capital. Shijiazhuang (10 million+ people) is the capital of Hebei province. Five of Wang's associates were sentenced to prison terms ranging from seven to 15 years.
The ugly: From 1998 onwards Wang and his employees added ingredients including water, sugar, alcohol and yeast to pulp and grape skin left over from the actual winemaking process. Wang was doing a quality fade out on his own product.

BMW new eco-friendly product?
The Fujian item was that the Xiamen (why spelled as Xiaman?) customs has seized 3,716 pairs of counterfeited shoes carried 19 well-known brands, including Nike, Adidas, Li-Ning, Dior, BMW. Did BMW really branch-out into this eco-friendly and safe mode of transport, or did they co-brand just like Ferrari with Puma? Please let me know if you know more about Beamster shoes.

A centre for cross-Taiwan Straits intellectual property exchanges was inaugurated at Xiamen University and will be part of the Fujian Intellectual Property Office (part of SIPO). 

Exhibition of IP achievements in Nanning

Nanning (capital of the Guangxi Zhuang Autonomous Region) "Law enforcement officers said the copycat products were seized in Nanning's wholesale market, ready to be shipped and sold in small shops in the countryside."

Starve cancer to death injection  

The Zhongshan University, in Guangzhou, (capital of Guangdong province) has developed a medicine that "cut[s] off the nutrient supply and metabolic channels of cancer cells to kill tumors," according to Professor Huang Wenlin, leader of the project. The new anticancer drugs injection of recombinant human endostatin adenovirus, recently completed phase II clinical trials in 11 hospitals. The medicine is protected by independent intellectual property rights in China. 

Besides, surgery, chemotherapy and radiotherapy cancer treatment this new approach is described as low-cost and its efficacy promising.

Read here. 

8th Asia-Pacific IP Forum in Hong Kong

Thursday 29 September, the eight Asia-Pacific IP Forum will be held at the Kowloon Shangri-La in Hong Kong. It is a fully packed day organised by Managing Intellectual Property magazine, free for in-house counsels.

The following speakers will talk about the following subjects:

• Chew Kherk Ying, partner, Wong & Partners, Malaysia, Celeste Ang, partner, Baker & McKenzie,Wong & Leow, Singapore, Adolf Panggabean, partner, Hadiputranto, Hadinoto & Partners, Indonesia will speak about enforceability and enforcement strategies in Southeast Asia.
• Then Joe Thymian, director sales & marketing – Asia Pacific, Melbourne IT Digital Brand Services will unveil the secrets of the new gTLDs – risks and opportunities for your brand.
• Elliot Papageorgiou, partner, Rouse, He Fang, partner, Rouse and Oliver Lutze, head of IPR, Bayer (China) Limited will navigate the changing patent litigation scene in China.
• Ada Leung from the Hong Kong Intellectual Property Department and Albert Ho from Hong Kong Customs will give the key note speeches. 
• Anuradha Salhotra, managing partner, Lall Lahiri & Salhotra and Doyel Sengupta, partner, Lall Lahiri & Salhotra will initiate you into the wondrous world of criminal and civil enforcement strategies in India.
• And last but not least Benjamin Choi, partner, Mayer Brown JSM will explain how to maximise your trade mark portfolio.

More information about the event and updates you can find here.

Open Letter to the UN Special Rapporteur: Nothing Wrong With Graduated Response

Dear Mr Frank La Rue,

With interest I have read your report (May 16, 2011) for the Human Rights Council on the promotion and protection of the right to freedom of opinion and expression, and the concern you have for the graduated response. I was unpleasantly surprised by the uncritical reception of the document in the media. Why an open letter on IP Dragon? This blog is dedicated to intellectual property in the People's Republic of China. The Hong Kong Special Administrative Region, which is part of China, but has its own legislation, just rejected the graduated response in its Copyright (Amended) Bill 2011. Therefore I take this opportunity to respond to your sincere but unnecessary concerns about the graduated response in relation to human rights, so that it does not give ammunition to people less charmed by the graduated response on the wrong grounds.

In your report you refer to yourself in Paragraph 49: "[H]e is alarmed by proposals to disconnect users from Internet access if they violate intellectual property rights. This also includes legislation based on the concept of “graduated response”, which imposes a series of penalties on copyright infringers that could lead to suspension of Internet service, such as the so-called “three strikes-law” in France34 and the Digital Economy Act 2010 of the United Kingdom.35"
34 Decision 2009-580, Act furthering the diffusion and protection of creation on the Internet, (original: Loi favorisant la diffusion et la protection de la création sur internet), Conseil Constitutionnel, 10 June 2010. Available from: http://www.conseil-constitutionnel.fr/conseilconstitutionnel/root/bank_mm/anglais/2009_580dc.pdf.
35 Digital Economy Act 2010, sections 3-16.

The graduated response is a generic term for a batch of measures that can work as a deterrent and as an effective countermeasure against peer-to-peer (P2P) file-sharing that infringes copyrighted works. In his paper The Graduated Response Peter Yu included the following non-exhaustive catalogue of actions: suspension and termination of service, capping of bandwidth, blocking of sites, portals and protocols. As you give the examples of the "three strikes-law" in France and the UK, I will focus on these first.

France
On May 12, 2009 the French National Assembly (parliament) passed the Act furthering the diffusion and protection of creation on the Internet requiring internet service providers to undertake a "graduated response" in case internet users illegally exchange copyrighted material without prior agreement from the copyright holders. Or to be more precise: article L336-3 Intellectual Property Code: "A person who has subscribed to internet access to online public communication services is under a duty to ensure that said access is not used for reproducing, showing, making available or communicating to the public works or property protected by copyright or a related right without the authorization of the copyright holders provided for in Books I and II when such authorization is required".

A day later also the Senate voted in favour of the Act. However, on May 19, 2009, some members of the National Assembly contested the constitutionality of the bill and referred it to the Constitutional Council for review. On June 10, 2009, the Constitutional Council held that the bill was partly unconstitutional, read here (English). It said that it violated the Declaration of the Rights of Man and of the Citizen (1789) and the presumption of innocence, separation of powers and freedom of speech. The bill was revised and approved by the Constitutional Council on October 22, 2009.

In paragraph 38 the Constitutional Council wrote in their review of June 10, 2009: "When enabling copyright holders or holders of related rights, together with persons authorised to represent the same for the defence of their rights, to petition the Tribunal de grande instance to order, after a full hearing of all parties, the taking of measures necessary to prevent or put an end to such infringement of their rights, Parliament has not failed to respect freedom of expression and communication. It will be incumbent upon the court called upon to hear such petitions to order solely those measures strictly necessary to preserve the rights involved. Subject to this qualification, section 10 is not unconstitutional." 

So the biggest revision was that Haute Autorité pour la diffusion des œuvres et la protection des droits sur internet (HADOPI), the independent administrative authority that should administer the Act furthering the diffusion and protection of creation on the Internet, needed to do a judicial review before revoking a person's internet access. The implementation of the Act furthering the diffusion and protection of creation on the Internet went not smooth, but to build an institution such as HADOPI costs time. I agree with the French Constitutional Council that there is nothing fundamentally wrong with the revised bill.

Rights and duties
My question to you Mr La Rue is why are you "alarmed" by proposals to disconnect users from internet access if they violate intellectual property rights. I am sure you have not forgotten that property rights are human rights too, article 17 Universal Declaration of Human Rights. Do copyright holders have the right to stop people infringe their rights online? This indeed is a rhetorical question. Nobody would be "alarmed" if someone who has copied complete books of the library and distributed the copies to all his friends was warned twice by his library and when he is caught the third time, that his library card will be revoked directly after a judicial review. And nobody would be concerned if such a person, after being warned twice and given a judicial review, will have no access to any library in the country for a certain period of time.
There are human rights, but these are coupled to human duties. In fact, all internet service providers already let their clients sign a contract in which they agree with the duty to not infringe copyrights and which clarifies possible consequences, including disconnecting access.

You focus only on the copyright infringers' right to freedom of opinion and expression. From a moral point of view one can argue that if they value this human right they should also value other people's human rights including to enjoy its property. Copyright infringers infringe precisely because they might be too creatively challenged to have any opinion and expression of their own. However this does not justify to safeguard them from effective copyright enforcement. What can be justified, but is oftentimes neglected, is that when copyrights are infringed the right to freedom of expression and opinion of professional creators or people who invest in creative products is undermined. If you do not support effective measures such as a graduated response that can protect creative efforts via copyright you take away the very oxygen of creativity.

UK
The 2010 Digital Economy Act also introduces a graduated response. The internet service providers have an obligation to notify subscribers of reported infringements (article 124A). There is the obligation to keep infringement lists to the copyright holders (article 124B). And there are obligations to limit internet access (articles 124 G and 124 H). However as these articles demonstrate the Secretary of State needs to elaborate on measures that limit internet access, followed by approval by the parliament.

Other countries
The graduated response mechanism in South Korea is different from the French and UK version. Here the Ministry of Culture, Sports and Tourism can hand down an order to suspend internet access. But it affects only the account the infringer has with a particular online service provider. So the infringer can switch, making the measure significantly less effective. Before the Ministry can order the disconnection, an examination by the internal committee of the Korea Copyright Commission and a hearing of the online service provider will take place. See Major Amendments to Korean Copyright Act, April 2009. Similar graduate response mechanisms one can find in Taiwan, New Zealand and Chile.

Quid pro quo
The US, Australia, Singapore and since the Copyright (Amendment) Bill 2010 also in Hong Kong, there is a quid pro quo for online service providers. If the online service providers in these countries apply a kind of anti-piracy measures they will be offered a statutory limitation of liability. However in Hong Kong, the online service providers get the safe harbour even without having to implement measures to disconnect copyright infringers. In short: they get a safe harbour without graduated response. They only have to implement "notice to notice" (sending of the notice to the claimed infringer on the receipt of a notice from the copyright holder) and "notice and takedown" (taking down or disabling access to the claimed infringing materials on the receipt of a notice from the copyright holder). Read Connie Carnabuci of Freshfield Bruckhaus Deringer's article 'Strengthening protection of digital copyright in Hong Kong' from January 2010 about it here.

Hong Kong does not address non-hosted piracy caused by peer-to-peer (P2P) exchange of copyrighted material without prior permission of the copyright holder, as IFPI points out. "Meaningful measures at the network level, as well as a ‘graduated response’procedure for dealing with repeat infringement, could reduce P2P piracy and provide effective deterrence. They could also reduce the need to bring litigation to stop online infringement." Read the comments of May Seey Leong, Benjamin Ng and Gadi Oron of IFPI here.

Promising survey
According to a survey (1,000 internet users) conducted by the Hong Kong Transition Project of the Hong Kong Baptist University between October 17 and 19, 2009, and sponsored by the International Federation Against Copyright Theft – Greater China (IFACT-GC), 60 percent of the surveyed internet users in Hong Kong admitted to illegally download content. The good news, however, was that:

• 57.1% of the respondents were supportive of the implementation of a graduated response programme in Hong Kong;
• 81.8% of the respondents said they would likely stop or may stop after the implementation a graduated response programme in Hong Kong. 

So this sounds promising. Read more about the survey here.

I am looking forward to your next report in which I hope to read about human rights which include property, and that the other side of rights are also mentioned "duties", and last but not least: that creators right to freedom of expression and opinions is linked to an effective copyright enforcement, the oxygen of creativity.

Yours sincerely,


Danny Friedmann

Free Trade Agreement Between Costa Rica and China

Professor Aurelio López-Tarruella Martinez of the University of Alicante makes us aware via IP Tango that on August 1, 2011, two Free Trade Agreements (FTAs) entered into force: between Peru and Korea and between Costa Rica and China. Let's focus on the latter.

Professor López-Tarruella Martinez writes: "The FTA between Costa Rica and China includes specific provisions on generic resources, traditional knowledge and folklore and on geographical indications apart from general obligations to comply with TRIPS and Doha Declaration on Public Health, and on technical cooperation. There is a provision on border measures as well." You can find them in articles 109-117 of Chapter 10 Intellectual Property. Read the IP Tango article here.

So now China has the following three FTAs in the Western Hemisphere:
Costa Rica (2011)
Peru (2009), see here
Chile (2005), see here.

Synchronicity in Trademark Applications in China: from a first-to-file to a first-to-use to a divination system

"Let's not look at the timekeeping equipment, let's draw lots"

There is a theory of synchronicity of cultural artifacts. For example pyramids being build both in Egypt and in Middle and South America around the same time, or the simultaneous creation of the cartoon figure Dennis the Menace in the US and Dennis the Menace in the UK. As if certain ideas are floating in the air at certain times. Synchronicity can happen when two people independently want to register the same trademark for use of the same or similar good or service in China and apply on the same day. So in order not to confuse the public the Chinese trademark law allows only one to register. Although China has a first-to-file system, they devised a system whereby each trademark applicant have thirty days to come up with evidence of first use. If they start using the mark on the same day or have not started using it, they have 30 days to consult each other and come with a solution by themselves. If that does not work, the Trademark Office will demand that the trademark applicants draw lots. If a trademark applicant does not participate in the drawing of a lot, he will be deemed to have abandoned his trademark application, so that there is only one applicant left. Waterproof solution. But wait, is on the same day not a very crude way to register the time of arrival? Why not put a stamp with the exact time of arrival, including seconds, of the trademark application? Then in all probability, the consultation and drawing lots fanfare will not be necessary.

Shi Xinzhang analyses for China Intellectual Property 中國知識產權 the current system and recommends to separate the requirement and examination procedures. Shi does not seem to mind the doctrinal awkwardness of a first-to-file system that turns to first-to-use, let alone drawing lots. Read here. 

Must Read Monday: Bye Bye Shanzhai, Hello Mainstream Smartphones

Photo: Close Encounters
To Migrate or not. A wildebeest's dilemma:
"Starvation if I stay,
or risk of being eaten by a crocodile if I go"

Shen Jingting wrote an excellent article for China Daily about the epic migration taking place within the Shenzhen mobile phone industry.

Shen is distinguishing three phases: 

• Production of Shanzhai phones and focus on emerging markets, such as India and Nigeria and delivering to the domestic market.
• Transform into a legitimate supplier with good relationships with operators in emerging markets, also because when a Shanzhai producer is acquiring a high profile it will be vulnerable for IP lawsuits (as happened to "G'Five International Ltd, a Shenzhen-based handset supplier that mainly sells phones in Asian and African countries, and was sued by Nokia in India for alleged infringement of intellectual property rights."). Or working for international brands such as Motorola or Samsung. 
• Follow the Taiwan-based HTC Corp. strategy, that has succeeded in entering profitable markets in Europe and North America. 

There is enough ambition to reach the third phase. Huawei even expects to be a top five global mobile phone supplier by 2014. And ZTE wants to become one of the world's top three mobile phone vendors by 2015.

Read Shen's article here.