Innovative Enforcement of Trademark and Copyright Infringement by LVMH

What to do when the trademarks and copyrights of your luxury products are infringed by Chinese companies that sell these products online to, for example, U.S. consumers. You can go after the source: using Chinese customs, the administrative, criminal or litigation routes. Another innovative way is to go also after the U.S. company that leases packages of server space, bandwidth and IP addresses to the infringing companies for contributory trademark and copyright infringement.


Global Challenge, Local Solutions

Exactly this is what Louis Vuitton Malletier did and confirms once again that this company is one of the most innovative companies in regard to the protection and enforcement of its intellectual property rights. The company takes it zero-tolerance principle and self-sustained protection/enforcement system serious.

Louis Vuitton versus Akanoc Solutions United States Court of Appeals for the Ninth Circuit, filed September 9, 2011, see here. Louis Vuitton Malletier was the plaintiff, and Managed Solutions Group (MSG), Akanoc Solutions and Steven Chen the defendants (San Jose, California, U.S.).

The Ninth Circuit instructs the District Court to award damages of 10,500,000 US dollar for contributory trademark infringement and 300,000 US dollar for contributory copyright infringement, for which Akanoc and Chen shall be jointly and severally liable.

One can question the validity of the decision by the Ninth Circuit to not instruct the District Court to order Managed Solutions Group to pay damages too, because of an alleged lack of "substantial evidence" to the jury. The Ninth Circuit: "We agree with the district court that no evidence presented at trial showed that MSG operated the servers that hosted the direct infringers’ websites. Even assuming that the direct infringers could be construed as MSG’s customers, Louis Vuitton presented no evidence that MSG had reasonable means to withdraw services to the direct infringers."

However, after Louis Vuitton discovered that the websites were using IP addresses assigned to defendants MSG and Akanoc, I am sure that they both received Notices of Infringements. So both had an actual or constructive knowledge about the infringements. Plus Chen managed both MSG and Akanoc. According to the defendants, MSG leased servers, bandwidth, and some IP addresses to Akanoc. So the means to withdraw seem self-evident, because MSG could simply have severed the bandwidth or stopped the functionality of the server, once it knew what was happening on the severs it was leasing to Akanoc.

Canton Fair Tries To Become More Fair In IPR Protection, Problems Remain

By Michiel Tjoe-Awie

Canton Fair is the biggest show on earth. It shows more kinds of products then one can think off and is also known as “The” China Import and Export Fair. But for many manufacturers the fair comes with a dilemma. “Yes”, they want to sell their products to the world. But in order to sell you first have to show and showing is dangerous in a place that, besides having representatives of all over the world who might be interested in buying your product, is also crowded with honest and less honest competitors. And here is the “No” in the dilemma, it’s not good business to give away your new designs and inventions on a silver platter. It might only take a few clicks with a camera on a phone to start the copying process in a remote factory in the Chinese industrial jungle (read the story Danny Friedmann (2007) posted about it here), most likely not even that far from the fair. This problem is still very real but their some strategic steps has been taken. Over the years the Canton Fair has tried to curb the supply of IPR infringing goods that are offered at the exhibition. The timeline below offers an oversight.

Timeline
1957 – First Canton Fair: Canton Fair was organized for the first time;
2001 – Introduction of an IPR plan: Canton Fair comes up with IPR regulations;
2002 – Introduction of reverse burden of proof: Canton Fair orders companies to provide evidence to prove their innocence if accused of IPR infringements;
2004 – Canton Fair becomes model: the State Council issues an action plan for IPR protection demanding that all other trade fairs should learn from Canton Fair;
2006 - Canton Fair’s regulations are leading: the Canton Fair regulations were used as an example for China's first trade fair IPR regulations (Protection Measures for IPRs during Exhibitions);
2011 – Canton Fair IPR statistics 2011: Canton Fair handled 616 IPR infringement complaints from companies taking part, 800 exhibitors were accused and 465 companies received disciplinary action, which includes in some cases being expelled from the fair.
- Companies that were found to have infringed IPRs were named and shamed during the fair;
- During the fair a Sino-Japanese symposium on IPR protection was held.

Read Zhou Sufen's article for China Daily here.

Tip! Before going to an exhibition don’t forget to register your IPRs in the strategic markets. Contact Danny Friedmann if you want to know more about this.

Text Michiel Tjoe-Awie

Sino-U.S. Investment Vehicle To Bring U.S. Medicines Into Chinese Pharmaceutical Market

In the U.S. the pharmaceutical industry has proprietary technology, but China has enough financial resources and a huge domestic market. Therefore an opportunity presents itself for those who can bridge these two markets.

Michelle Jarboe McFee has an interesting article about a partnership between Newsummit Pharmaceutical Group, a biomedical company in Shanghai and Cleveland Bio Fund, a venture led by Mr A. Eddy Zai.

Newsummit has received 100 US dollar from Chinese investors. That money will be invested via the Cleveland Bio Fund in companies with U.S. medicines that have been approved by the U.S. Food and Drug Administration and are selling them in the U.S. but have no strategy to enter China. The partnership is also filing for Chinese patents for the medicines that have U.S. patents, Mr Zai was quoted saying.

Ms McFee writes: "Zai said the Cleveland Bio Fund is working with advisors including the Jones Day law firm and accounting firm Ernst & Young in China to navigate the regulatory system and avoid intellectual-property theft, a challenge for foreign companies."

Read Ms McFee's article for Cleveland.com here.

Corrupting Our Youth One Sing Contest At A Time, and Time-Travelling Still Possible

Super girl, o boy o boy!

In the year 399 BC, Socrates was sentenced to death by drinking a cup of Hemlock, because he corrupted the youth. In hind sight we hold his contribution to educate the population in high esteem. How will our progeny judge a TV programme such as Super Girl? At least now the creators of this programme are affected by a similar criticism that once hit Socrates: "vulgar, manipulative, poison for our youth". Read more here.

"I don't want to be vulgar ...

"Market access ban is the modern hemlock cup"
The Death of Socrates 
Jacques-Louis David 1787

We can debate about whether the ever o so impressionable youth can spend their time wiser (hurray for programmes about "practical information about house work"). But especially in a stressful hyper competitive society as China's, people also grave for some entertainment after a day chock-full of study or work. I think the more choice the better. Hopefully then the audiences gravitate toward higher quality. State Administration for Radio, Film and Television (SARFT) might not be in the best position to be a media critique. And it might be better if the government sticks to facilitating the preconditions for culture to blossom, which includes providing a varied TV programmes schedule with uplifting but also entertaining programmes. Therefore, and based on China's WTO commitments, China should give market access to foreign TV and film providers. Limiting them market access does not only harm foreign media providers (it does also indirectly, because it creates a huge demand for pirated works). It also harms Chinese audiences that miss out on good programmes and Chinese media providers that are not stimulated to meet high international standards.

... but I support their freedom of being vulgar."

I am quoting my colleague Tan Fugui, who inspired by Voltaire said this to me after reading this article. Tan Fugui adds: "a precondition, people have freedom of being vulgar as long as they dont penetrate other peoples right territory, for example, not involving outsider's privacy etc."

Must be harsh for American Idols producers to see that even their knock-off version is kept off the tube.
Read my 2005! blog post about the American Idols knock-off with Chinese characteristics, here.
Read my 2006 blog post about copyright allegations against Super Girl's producer here.

Time-travelling to Alternate Reality

Do you remember that SARFT forbid time-travelling, read here. Well, last weekend I went to the movies in CoCo Park, Shenzhen. And it seems that time-travelling is still possible ..., at least in the movie Source Code.

Spoiler alert
Via "Source Code" Captain Colter Stevens is in the body of Sean Fentress during the last 8 minutes of his life, just before a train blew up. With Source Code and some alleged quantum mechanics, that creates an alternate reality he is able to visit this last 8 minutes many times (using the memory of someone who is technically dead) in order to find who is behind the terrorist attack, so that this information can prevent future attacks. Stevens find a way to alter at least one parallel universe and is able to save the people on the train and can even contact the people of the control centre at Source Code via SMS.
End spoiler alert


The prohibition of time-travelling is to prevent to mislead or confuse uneducated people. Or is it because the future can be changed by going back in time? Or that future projections of many a science-fiction work (such as George Orwell's Nineteen Eigthy-Four which he wrote in 1949) is a kind of critique of contemporary society? But this could happen in a parallel society such as Avatar (that was blocked in 2-D, not 3-D, read here). But why stop there: one can start to interpret the Smurfs (very popular in China) as social criticism. Maybe Source Code slipped through the censor because it is too far fetched even for the credulous and gullible.

Chinese Trademarks Visible, But Have By Far Not Met Their Potential

In absolute numbers China might be in almost all aspects a giant. But in relative sense this does not need to be the case. Example: China has 5 million registered trademarks. But only one out of 10 market entities owns a registered trademark and the number is 40 percent for companies, Yuan Qi, an official with the Trademark Department of the State Administration for Industry and Commerce (SAIC), was quoted by Zhang Zhao of the China Daily.
Ms Zhang Yumin, an intellectual property (IP) rights researcher with Southwest University of Political Science and Law (Chongqing municipality) said, according to Zhang Zhao, that every company should have a IP management department, directly under the leadership of the decision makers and that the government should encourage companies to register trademarks, internationally and domestically. Read more here.

Then quantity does not say much about quality (although some say quantity has a quality of its own). Where are the strong Chinese brands. Millward Brown has made a list of the Top 50 of Chinese brands:
1. Chinese Mobile;
2. ICBC;
3. Bank of China;
4. China Construction Bank;
5. China Life;
6. Agricultural Bank of China;
7. PetroChina;
8. Tencent;
9. Baidu;
10. PingAn.

Read the other 40 Chinese brands here.

Of these China Mobile (57,326 million US dollar), ICBC (44,440 million US dollar), China Construction Bank (25,524 million US dollar), Baidu (22,555 million US dollar), China Life (19,542 million US dollar), Bank of China (17,530 million US dollar), Agricultural Bank of China (16,909 million US dollar), Tencent (15,131 million US dollar), PetroChina (11,291 million US dollar), PingAn (10,540 million US dollar), China Telecom (9,587 million US dollar), China Merchants Bank (8,668 million US dollar) are within the Top 100 most valuable brands.

UPDATE: China had 2.3 times the trademark filing activity in the second highest country, the United States. Read a compilation of WIPO statistics here.

How To Cure The Distribution Channel of Pharmaceuticals Which Includes Counterfeit Products

Business Research Yearbook, (chief editor Margaret Goralski) 2011 is out. The subtitle is "Balancing Profitability and Sustainability: Shaping the Future of Business". It includes "Problems of Counterfeit International Pharmaceutical Products" by Branko Cavarkapa (Eastern Connecticut State University) and Michael G. Harvey (University of Mississippi & Bond University Australia).

What R&D Is Being Done And Where In China: An Inventorisation Of Science Parks

Richard Jun Lin, Xavier Xie (analysers), Zhuo Zhang, Jerold Wang and Chris Hartshorn (data contributors) have worked on a project to inventorise China's 1,531 provincial and national-level industry parks: 'Seeing the Forest and the Trees: Navigating China’s Industry Park Innovation Engine'. It "reveals the need for a specific focus on 87 university science parks and tough decisions on how broadly efforts should focus geographically." Read more here.

It would be interesting to know what the IP climate is in all of these places. Are there schemes that encourage/subsidise patents and is there attention to the protection and enforcement of IPRs?

Chinese Brands in U.K. and U.S.

According to IPR.gov.cn, the first half year of 2011, the volume of Sino-British bilateral trade grew to $25.5 billion, an increase of 16 percent year-on-year. China's brands active in Britain are part of this success.

CRI's Zhang Ru wrote: "China's Ministry of Commerce chose 190 leading enterprises from various parts of the country to attend this year's Autumn Fair, showcasing nearly one thousand products." Read Zhang's article via Global Times here.

The event called European Showcase for Brands of China was held September 4 -7, 2011 at the Autumn Fair in Birmingham, read more here.

Previous to the U.K. event, at the other side of the Atlantic Ocean, the Chinese Brand Show, with 400 exhibitors, was held from July 31 to August 3, 2011 in Las Vegas. Read more here.

SONY or SONT confusion in Shenzhen

SONT or SONY likelihood of confusion
Photo: Danny friedmann

Shenzhen SongTian Technology Development Co., a company manufacturing tantalum capacitators (used in electronic accessories) changed their logo they came up with SONT. See their old and new logo here. Likelihood of confusion with the brand of a huge Japanese electronics company? Will the average consumer mistake the T for a Y?

Thanks Fugui.

Patent Law: What is the best mode for the best mode disclosure requirement?

Bingbin Lu has an interesting short paper (9 pages only) on the best mode disclosure for patent applications. The author is answering two questions: whether a developing country should implement the best mode disclosure requirement and if so, how to best implement it?

Although the best mode disclosure requirement is optional for WTO member states in article 29 (1) TRIPs, Lu comes to the conclusion that developing countries need it. According to Lu it should be disclosed in the best mode known to the inventor, (which is in my subjective perception quite subjective) and Lu argues that a refusal to disclose this best mode must be a reason to refuse the grant of patent.

China's best mode disclosure requirement is called "preferred/optimally selected or specified mode for use" disclosure requirement in Rule 18 (5) of the Implementing Regulation of the Patent Law.

As Lu asserts Rule 18 is not a part of the Patent Law and therefore it cannot be a reason for refusal of a patent grant. According to Lu the State Intellectual Property Organisation (SIPO) has never enforced a preferred disclosure requirement in invalidation or appeal cases. Then again Lu explored the question whether developing countries should implement the best mode disclosure. The question is whether China can be easily labelled as a developing country or a developed country. China is both. To label China on a province level might be more meaningful.

Read Lu's paper here (pdf).

Does Changsha Windows of the World Infringe Angry Birds' IPRs

The online game Angry Bird is a hit but as China Hearsay's Stan Abram notices not only online. He is asking whether the software developer of Angry Birds, Rovio, should not become well, angry when its IPRs are being infringed in China (most probably also at the Windows of the World Park in Changsha, Hunan province). Read Stan's article here.

Sword Is Going After The Counterfeit Source

"The Way of the Sword is from the beginning difficult to learn.

Like a Dragon or Rainbow it is subtle and mysterious.

Should it be used like a hacking Sabre, 

the immortal Zhang Sanfeng die of laughter."

Photo: Danny Friedmann

Remember the campaign that started in November 2010 and will end until the end of 2011, called Bright Sword (read How bright is Bright Sword here)? Well, the name is made a bit more prosaic: Bright Sword Action and the organisational structure has changed too: "From September 1 to December 31, 2011, nationwide public security organs under the deployment of the Ministry of Public Security will carry out the decisive Sword Action so as to combat IPR infringement and counterfeiting." Read at the site of IPR.gov.cn here.

As of July 2011, the results of the public security organs were according to IPR.gov.cn as follows: 

• The public security organs had solved 17,773 cases valued at 14,050 million yuan;
• arrested 31,392 suspects and identified 4,537 criminals;
• destroyed 13,124 illegal sites;
• dismantled 4,537 criminal gangs.

Although IP Dragon is not a big fan of mass enforcement campaigns that are announced so that the culprits are warned the decision to go after the source is definitely a good development. "In view of the features of counterfeiting, more intensive efforts should be focused on the destruction of the crime source."

Complaining about Taobao's IPR Complaint System and a MOU

When the International Intellectual Property Alliance (IIPA) testified for the USCC Hearing on “China’s Intellectual Property Rights and Indigenous Innovation Policy,” April 25, 2011, it focused on the software and recorded music industry. However, they also wrote a letter about the overall IP record in China, see here.

"Sites such as Alibaba.com, Aliexpress.com, GlobalSources.com, Made-in-China.com, DHgate.com, Taobao.com, and Tradetang.com are among the top online marketplaces selling videogame circumvention devices, as well as being cited by industry as offering other copyright infringing products to consumers and businesses, including scanned copies of commercial bestsellers (trade books) and academic textbooks. Unfortunately, most of these sites are unresponsive to rights holder takedown requests."

Alibaba was the only one "commended for their cooperation with videogame right holders in the removal of infringing items".

Seems that Taobao is open to suggestions that can improve the prevention and cessation of trade of IPR infringing goods.

In Hanzhou, Zhejiang province, the internet task force of the Quality Business Protection Committee (QBPC), "the China association of enterprises with foreign investment", had a roundtable meeting with Taobao. Topic of discussion was the less than perfect Taobao IPR complaint system, read here.

Online shopping site Taobao.com signed a memorandum of understanding (MOU) with the International Publishers Copyright Protection Coalition in Beijing, see here a very brief report by the China Daily.

The golden rule expressed by Scottish sinologist James Legge, advertised at a bus stop,
sponsored by the Shenzhen Universiade 2011
photo: Danny Friedmann

Does Drinking GI Protected Oolong Tea Help The Local Farmers?

What are the economic effects of Geographical Indications (GIs) on developing country producers? Deepthi Elizabeth Kolady (Research collaborator with International Food Policy Research Institute; visiting fellow at Cornell University), William Henri Lesser (Professor at the Dyson School of Applied Economics and Management, Cornell University) and Chunhui Ye (Associate Researcher at the China Academy for Rural Development, School of Management, Zhejiang University) asked themselves this important question and compared Darjeeling and Oolong Teas by doing empirical research to price elasticities in the products.
Law + 
Empirical Research 
The trio comes to the conclusion that GIs can benefit consumers and/or producers of food products. The distribution of benefits is dependent on the relative elasticities with the majority of benefits accruing to the least elastic element.
Read their report in the WIPO Journal (volume 2, number 2), here (p 157-172 = p 17-32 pdf).
 = Science

Landmark in IP (Part I Cases)

Exceptional cases
might not be
exemplary cases
then again:  the
extraordinary
can shine a light
on the ordinary

Messrs Anselm Kamperman Sanders and Christopher Heath, decade long organisers of and contributors to the leading intellectual property (IP) seminar in Macau, have now written a chapter and edited nine other authors of Landmark Intellectual Property Cases And Their Legacy, in which some of the cases, that were dealt with at the seminars in Macau, were revisited.

In Part II, I will elaborate on the seminar in Macau that I attended last May. Now, I will give an overview of the contents of the book per chapter.

Landmark Intellectual Property Cases and Their Legacy

• Chapter 1. André Bertrand (André Bertrand et Associés in Paris) wrote about the French supreme court: copyright, contract and moral rights.
• Chapter 2. Peter K. Yu (professor at Drake University Law School) also dealt with moral rights.
• Chapter 3. Matthias Leistner (professor at the University of Bonn, and former guest professor at Xiamen University and Tonji University in Shanghai) explored the legacy of International New Service versus Associated Press (USA).
• Chapter 4. Anselm Kamperman Sanders (professor at Maastricht University) gives an introductory to the Odol case and its legacy.
• Chapter 5. Matthew Fisher (senior lecturer at Institute of Brand and Innovation Law at University College London) wrote about Darcy versus Allen.
• Chapter 6. Kung-Chung Liu (research fellow at the Institutum Jurisprudentiae, Academica Sinica) about the Taiwanese CD-R cases, abuses of monopolistic position, cartel and compulsory licensing.
• Chapter 7. Alain Strowel (Covington & Burling in Brussels and professor at Saint-Louis, Université de Liège and Katholieke Universiteit Brussel-Leuven) and Vicky Hanley (European Competitive Telecommunications Association) took on the Anton Piller Case.
• Chapter 8. Severin de Wit (Intellectual Property Expert Group Consultancy), shone his light on the eBay versus MercExchange case.
• Chapter 9. Aldo Nicotra (Johnson Winter & Slattery in Australia), Lego cases, which include cases from Hong Kong and China.
• Chapter 10. Christopher Heath (European Patent Office) discusses the comprehensive Budweiser cases (in over 40 jurisdictions).

In their preface Heath and Kamperman Sanders contemplate on what makes a landmark case "tower above" other cases. Extraordinary facts create exceptional cases. And, because of the extraordinary character of the facts, they might not serve as a good example for other cases. Heath and Kamperman Sanders conclude that landmark cases deal with fundamental issues. Therefore these cases will not become lapidary and continue to be relevant. I will definitely read this book.