IP Dragon 知識產權龍

Must Read of the Month: Subject of the Emperor Filed Enhanced Nutcracker Patent in U.S. and Canada

2012-01-15T00:26:00.002+08:00

Mark Cohen, IP in China expert, who is now a visiting professor at Fordham Law School, has a great blog called ChinaIPR.com. He recently posted the most fascinating article post of the year: China's First Overseas Patent Filer written by Scott Seligman, who was assisted by Mr Cohen on patent law. Read Mr Seligman's book Three Tough Chinamen will be published in the Fall of 2012. In this book the colourful Dr. Jin Fuey Moy, and his two brothers, will return.

Jin Kee Jin Mun Jin Fuey

Toyota on a Chain: Creatively Challenged Art or Parody?

2012-01-13T19:55:00.003+08:00

Last year's Hong Kong International Art Fair at the Hong Kong Convention and Exhibition Centre included the "Toyota Chain", by Thomas Hirschhorn, which, was exactly that. Mr Hirschhorn, a Swiss artist, made the piece in 2002, and so far, nobody wants to buy it.

To magnify an existent trademarked logo, without authorisation by the trademark holder, and put it on a chain seems quite stale as a piece of art. But is it legal? In Hong Kong there is no such thing as parody in the Trade Marks Ordinance (and not even in the Copyright Ordinance, so that excludes an analogous application, although it is being considered, see here). And even if there was, I think it is doubtful that this piece of cardboard, adhesive tape, aluminium and red spray falls within the scope of parody. Mr Hirschhorn uses the name recognition and reputation of the Japanese car brand to exploit commercially. In Hong Kong Mr Hirschhorn was definitely diluting Toyota's trademarked logo and name and possibly in jurisdictions with a parody provision as well.

Hirschhorn's "Toyota chain" at the 2011 Hong Kong International Art Fair
Photo: Danny Friedmann

Microsoft Applies Doctrine of Landlord Liability To Software Piracy

2012-01-13T10:21:00.000+08:00

Peter Ollier has an interesting article for Managing Copyright about Microsoft's alleged first landlord liability case to tackle rampant software piracy.

Microsoft is suing Beijing Chaoyang Buynow because two of retailers, Beijing Hongguang Century Trading and Beijing Zhuojue Elements Trading were selling computers with pre-installed counterfeit Microsoft Windows and Office.

The other case, whereby Microsoft is suing retailer Shanghai Gome at Shanghai Huangpu District People's Court seems to be a traditional case (at least when Shanghai Gome is a subsidiary of Gome Electrical Appliances Holding Limited)

Read Mr Ollier's article here.

Landlord liability in tort law

Article 2 Tort Law 2010: Those who infringe upon civil rights and interests shall be subject to the tort liability according to this Law. “Civil rights and interests” used in this Law shall include the right to life, the right to health, the right to name, the right to reputation, the right to honor, right to self image, right of privacy, marital autonomy, guardianship, ownership, usufruct, security interest, copyright, patent right, exclusive right to use a trademark, right to discovery, equities, right of succession, and other personal and property rights and interests.

Article 9 Tort Law 2010: One who abets or assists another person in committing a tort shall be liable jointly and severally with the tortfeasor. One who abets or assists a person who does not have civil conduct capacity or only has limited civil conduct capacity in committing a tort shall assume the tort liability; the guardian of such a person without civil conduct capacity or with limited civil conduct capacity shall assume the relevant liability if failing to fulfill his guardian duties.

Sanrio Brand Licensor Says The Darndest Things, Or Maybe Not

2012-01-13T00:28:00.000+08:00

TGIF

Peter Ollier wrote an article about how Disney and Sanrio are licensing some of their brands in China.

Licensable "cuteness" popular among Hong Kong population
Lanham Place, Mong Kok
Photo: Danny Friedmann

Roberto Lanzi, president of Sanrio Consumer Products for Europe, Middle East and Africa, was speaking at a panel called "Licensing and the flourishing region: Asia", at a conference during the 10th annual Hong Kong International Licensing Show. Mr Lanzi said that he was the only speaker on the panel that did not hate counterfeits.

He claimed to feel relieved when he once saw fake Hello Kitty products being sold in Hong Kong's Ladies Market:

"When Hello Kitty disappears from there we might be dead."

However, the Ladies Market in Mongkok, has been removed by the USTR from the list of Special 301 Out-of-Cycle Review of Notorious Markets, on December 20, 2011, see here.
Maybe that is the reason why Mr Lanzi is president for Europe, Middle East and Africa, and not Asia.

UPDATE: In a reaction (still have to verify the identity of commenter) Roberto Lanzi wrote: "I never mentioned Lady's market, I spoke about Temple Street and I was just jocking. Best regards Roberto"

Rethinking Intellectual Property Protection in Hong Kong

2012-01-12T21:00:00.000+08:00

After the welcome remarks by professor Douglas Arner (head Department of Law, HKU) and the opening speech by Peter Cheung, (director IPD, HKSAR Government) see here, the first panel presentation of the Round Table event organised by Law & Technology Centre of HKU and IP Law Center at Drake University started, moderated by assistant professor Haochen Sun, of the Faculty of Law, HKU.

Assistent Professor HKU Haochen Sun is moderator
Photo: Danny Friedmann

Professor Alice Lee, Associate Dean, Faculty of Law HKU gave a presentation entitled: "Reflections on Intellectual Property Reform in Hong Kong"

Professor Lee explained that the Hong Kong Copyright, Trade Marks and Registered Design Ordinances of 1997 did not change dramatically the substantive rights, in contrast to the patent reforms. Hong Kong amended its Patent Ordinance, June 27, 1997 and on February 22, 2008. The Patent Ordinance probably will be amended again after the government have considered all responses to its consultation paper (consultation period ended December 31, 2011). Given the limited time, Professor Lee focused on possible reform of small-term patents, instead of on possible reforms of standard patents, (read more about Hong Kong's need for an Original Grant Patent in combination with reciprocity and Hong Kong's potential as regional legal hub here), nor on whether there should be regulations for patent agents in Hong Kong.

Hong Kong is in need for a balanced approach for the short-term patent, which is relatively cheap and easy to get, since there is no substantive examination for a protection of 8 years. However, Professor Lee is concerned that the short-term patent might be prone to abuse. She illustrated this with the Octopus Card Limited v ODD.HK Limited case.

The conflict was about the validity of two short-term patents registered in the name of ODD.HK Limited. A judgment delivered on March 17, 2009, by Deputy High Judge Chen Jiangyao (陳江耀), whereby Madam Fung Wai Mun Polly was unrepresented, HCMP104/2007, ordered the revocation of the two patents with costs to the petitioner, because both patents lack novelty and creativeness (兩項發明都不是新穎和沒有創造性). Madam Fung Wai Mun Polly of ODD.HK Limited simply removed the chips from the Octopus Card (with which you can pay to use the MTR, buses, mini-buses and at many shops in Hong Kong) and put them in plush toys, and after she got the short-term patents sued Octopus Card Limited for patent infringement. Read the case here in Chinese.

Professor Alice Lee, HKU
Photo: Danny Friedmann

The Octopus Card case was mentioned in the April 19, 2010 Environmental Systems Product Holdings Inc. v DPC Technology Ltd., case HCMP1465/2008. And the Windsurfing test (Windsurfing International Inc. v Tabur Marine (Great Britain) Ltd [1985] RPC 59 (at 73) was mentioned to see whether the patent is obvious or not. In the same Environmental Systems Product Holding case, the counsel for the applicant, Mr Felix Pao, "described the short-term patent application systemunder Part XV of the PO as an “honour system” as it depends heavily on theintegrity and honesty of an applicant in that an applicant would not make anyapplication in respect of a claimed invention known to be not patentable forwhatever reasons." The Recorder Rimsky Yuen, SC in Chambers, Court of First Instance, High Court, agreed.

Professor Lee questioned who is going to pay for the abuse? Her question is very relevant. The strength of the short-term patent (not expensive and easily granted) might be its weakness as well. Therefore it might be considered to increase the fee to get a short-term patent, so that bad faith applicants will be deterred, or use a part of the fee to compensate the abused party in the legal costs.

Then moderator Haochen Sun introduced Mr Mayank Vaid, IP Director, Louis Vuitton, Hong Kong, as the IP director of the most popular luxury brand. Mr Vaid's presentation was called "Corporate Decision Making in IPR Protection and Enforcement"

Mr Vaid is responsible for protecting the intellectual property rights of LVMH Fashion Group, which includes iconic brands such as LV, Marc Jacobs, LOEWE, CELINE, KENZO, Emilio Pucci and Berluti. Therefore, the company has made the IP perspective part of its overall business strategy. Mr Vaid said that from a commercial sense IP is crucial to guarantee the customer experience. LV's promise of exclusivity is per definition incompatible with counterfeit goods, that confuse customers and dilute the distinctiveness of the brand, and damage its reputation. Therefore Louis Vuitton takes full control over its production process (no production is done in Asia) and supply chain (no distribution to Hong Kong via the internet) to protect its brand value very seriously. Louis Vuitton has now around 80 stores in Asia, excluding China and Japan.

Mr Vaid explains that a transformation has taken place in the economy, from one that was based for 80 percent on the value of goods and services and for 20 percent on the value of the underlying intellectual property rights, to an economy where this ratio has been reversed.

Bernard Arnault, CEO of LVMH, and Yves Carcelle, CEO of Louis Vuitton stand in Louis Vuitton's tradition of proactively and assertively protecting and enforcing the IP of its brands. This tradition dates from 1908 when LV fought its first IP battle. Louis Vuitton has a zero-tolerance policy against counterfeiters, (which IP Dragon thinks, deserves emulation). Why do not more companies protect and enforce their intellectual property rights as assertive as Louis Vuitton? According to Mr Vaid, some might take the view that marketing is more important, or some might be afraid to annoy the local government, or they have not reserved enough budget to enforce their intellectual property rights.

Mr Vaid summed up product categories in which Louis Vuitton is not active, but where people use the trademarked logo unauthorisedly: fake nails, rikshaws, tiles, a Romanian LV themed restaurant, bedsheets, iPhone caps, and condoms, see here. Especially in Korea one can find bags with similar monograms, such as LX, LJ etc, which leads to confusion and/or dilute the trademark, and Louis Vuitton is tirelessly filing lawsuits against those manufacturers, distributors and sellers.

It is getting increasingly more challenging for LV to protect and enforce its intellectual property rights, since the reaction time of the counterfeiters is getting faster. It takes LV about halve a year to launch a new product (from design, production and distribution to sales). Before, the counterfeiters needed to send someone to a fashion show in Paris or Milan, but now they only have to watch the fashion shows via Facebook and three months later one can find counterfeit designs in places such as Dubai. The challenge to fight counterfeiters is not just for companies such as Louis Vuitton, but for society in general: since counterfeiting has been linked to organized crime, child labour, degradation of the environment, violation of safety laws, money laundering, etc.

Louis Vuitton has not only a reputation thanks to its exclusive products, but also because of its proactive intellectual property protection and enforcement. It is well known that Louis Vuitton did not only trademark the name Louis Vuitton, and the monogram LV but also the Monogram Canvas, and each of its constituting parts: the fourpointed stars, four-pointed stars inset in curved diamonds (flower quatrefoil diamond), and four-pointed flowers inset (flower quatrefoil). These marks are enforced too, read here. Read Paul-Gerard Pasol's Evolution of the Monogram Design here. In City Chain Stores (S) Pte, Ltd. vs Louis Vuitton Malletier, the Court of Appeal of Singapore overturned the trial court which enjoined City Chain Stores of using Louis Vuitton's flower quatrefoil, and flower quatrefoil diamond designs, because it deemed that City Chain Stores used the designs in a random pattern and non-uniform way and therefore not in a origin-related use but for embellishment and decorative purposes. Although sections 27(1) and (2) of the Singapore Trade Marks Act (1998) are based on article 5 (1) a-b, EU Trade Marks Directive (Directive 89/104/EEC, December 21, 1988), the Court of Appeal chose to interpret the requirement of trademark use stricter than the European interpretation (which is to look whether the defendant's use is liable to affect the functions of the trademark). Reason was that the answer by the European Court of Justice (Arsenal Football Club plc vs Matthew Reed) on whether non-origin-related use could constitute trademark infringement, was considered uncertain and controversial by UK professors Lionel Bently and Brad Sherman. Also, the Max Planck Study on the Overall Functioning of the European Trade Mark System of February 2011, stated that current European Court of Justice jurisprudence on the issue was "neither consistent nor satisfactory" (see paragraph 2.178 here). However, the anti-dilution provision of section 53 (3) (b) seems to be able to protect the communication, investment and advertising functions of a trademark. Read Ng-Loy Wee Loon's article about it here.

Louis Vuitton is using some innovative ways to prevent counterfeiting and new protection and enforcement routes. These include pioneering landlord liability (read Joseph Simone's article for WIPO Magazine here and Daniel Plane's Law Journal of INTA article here), cooperating with Thai monks to raise the awareness that trademark infringement is a sin, and is looking whether the principles of Sharia law can be construed in a way to provide support for such a protection, see here.

Mr Mayank Vaid, IP Director, Louis Vuitton, Hong Kong
Photo: Danny Friedmann

Peter Cheung, director Intellectual Property Department HKSAR Government, asked Mr Vaid about the Chewy Vuiton case (Louis Vuitton Malletier S.A., Plaintiff, v. Haute Diggity Dog, LLC, Victoria D.N. Dauernheim, and Woofies, LLC, Defendants. 464 F.Supp. 2d 495, US District Court For The Eastern District Of Virginia, Alexandria Division, November 3, 2006, uploaded by Susan Scafidi of Counterfeit Chic here, and the appellate decision of Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 4th Cir. November 13, 2007, Ms Scafidi uploaded here).

The district court did not apply the statutory factors for dilution, and simply reasoned that because Haute Diggity Dog’s product was a parody it meant that "there can be no association with the famous mark as a matter of law." The 4th Circuit recognises that a claim of parody does not preclude liability for dilution. But by checking the statutory factors for dilution the 4th Circuit came to the same solution. However, IP Dragon agrees with appellant Louis Vuitton Malletier and the Amicus International Trademark Association (INTA). To use a name such as Chewy Vuiton in combination with the monogram of the letters C and V constitutes dilution by blurring. Dogs chewing on products that are purposively been associated with Louis Vuitton brand, can be seen as tarnishing to a luxury brand. The same can be said if a vulgar snack bar is purposively associating itself in the mind of the public with a 5 start hotel chain via a similar sign as the mark. The similarity between the sign and the mark is not controversial to both courts: "similarity is an essential part of a parody, as the similar marks and trade dress must "convey two simultaneous-and contradictory-messages: that it is the original, but also that it is not the original and is instead a parody."" The 4th Circuit stated: "The satire is unmistakable. The dog toy is a comment on the rich and famous, on the Louis Vuitton name and related marks, and on conspicuous consumption in general." This statement is subjective. Even if it really is parody, it can be argued that Haute Diggity Dog rides on the coat tail of a famous brand and misappropriates Louis Vuitton's substantial investments in labour, skill, effort and capital.
Hong Kong does not have a parody exception in its Trade Marks Ordinance. If they would have such a provision, it would be in Chapter 559, Section 19 'Exceptions to infringements', see here.

Louis Vuitton filed a lawsuit for trademark dilution, false designation of origin and unfair competition against Warner Brothers over the use of a fake LV bag in the movie The Hangover 2, and wants that all DVDs will be pulled. Watchful Louis Vuitton employees found out that the bag used in the movie was made by Diophy, a company that Louis Vuitton is suing, see here.

Over the years Louis Vuitton has organized art exhibitions and supported many artists as a kind of modern maecenas. Mr Vaid is clear about when Louis Vuitton will file lawsuits: when one of its trademarks is used for commercial exploitation. The trademarked logo LV has been abused by a Belgian "artist" in a not so kosher nor halal way: he tattooed pigs with the LV trademark without the permission of Louis Vuitton, and then killed them and sold their skins. Besides the blatant trademark infringement, the lack of animal welfare caused a controversy. The tattooed pigs were banned from the Shanghai Art Fair in 2008, see here.

"Rethinking IP" Round Table HKU - Drake University

2012-01-09T15:42:00.003+08:00

Knowles Building, at HKU
Photo: Danny Friedmann

Last Saturday morning, lawyers, academics and students from Hong Kong, Macau, Singapore, Australia, Japan and the U.S., all passionate about intellectual property rights, gathered at the University of Hong Kong for a round table discussion on intellectual property and policy. It was organised by the Law & Technology Centre of the University of Hong Kong (HKU) and the Intellectual Property Law Center at Drake University Law School located in Des Moines, Iowa. The 10th floor of the Knowles building with its great wooden concentric structure accommodated the participants for this purpose.

The programme consisted of four panel presentations (will be separate blog postings) that urge us to rethink:
Panel I: IP Protection in Hong kong;
Panel II: IP Protection in the Digital Age;
Panel III: IP Protection in Mainland China;
Panel IV: IP Protection globally.

After the opening remarks by professor Douglas Arner, head of the Department of Law of HKU, who welcomed everybody and told that Law & Technology Centre of HKU has already existed for a decade.

Professor Douglas Arner, head of Department of Law, HKU
Photo: Danny Friedmann

The opening speech was given by Peter Cheung, director of the Intellectual Property Department (IPD) of the HKSAR government.

Left professor Peter K. Yu, Drake University and the right Peter Cheung, director IPD, HKSAR Government
Photo: Danny Friedmann

"Trading Intellectual Property in Hong Kong"

Mr Cheung recalled that he was invited by the Motion Picture Association of America (MPAA) to come to Hollywood. There, he familiarised himself with the Three-Act Structure, which is a success formula to make a blockbuster movie. But, as Mr Cheung explained, it can be applied to reach his goal, namely to use IP trade to drive stakeholders' economic development. In Act I the context is given, Act II the challenge, and Act III the resolution. I am sure that the Hong Kong movie scene uses a similar scheme to keep the audiences captivated. Those Chinese from the Mainland, versed in Marxism, might recall the different acts as Hegel's thesis, anti-thesis, synthesis, respectively. So if Act I is the setting whereby Hong Kong is introduced as a Special Administrative Region with the ambition to become a regional knowledge hub, Act II is the challenge of how to get there? In other words, how to apply IP, how to monetise these intangible assets? Mr Cheung was inspired by a Japanese car manufacturer who was not interested in cars, but in the money that you can make with cars. This same approach should be followed with IP. (IP Dragon wonders whether it is really possible to exploit IP, without really loving it?). MBAs teach you many interesting things but not about the role of intangibles, Mr Cheung said. Therefore, we need to map out our niche, and make an inventory of what is already available, predict change, seize opportunity and collaborate to innovate, and execute these processes in parallel. Because, we live in an IP economy, Mr Cheung told. The significance becomes clear when one looks at the most valuable brand in the world: Coca-Cola (71,861 million U.S. dollar, according to Interbrand in October 2011). If all tangibles are destroyed, Coca-Cola could resurrect itself because of the worth of its intangibles. IP can be lucrative, even though it is sometimes tiny. For example Mr Cheung knows the composer of the two second jingles.
If one accepts that one person in a million goes to the best university and has the change to become really innovative, then Mainland China wins (with 1,340 people), Europe will be in second place (833 person ) and the US (312 person) third place. Hong Kong gets only 8 of these talented people. Hong Kong should become a platform where demand and supply come together. According to Mr Cheung Hong Kong can bring together IP owners that want to sell some of their IP, via IP intermediaries (for this Hong Kong needs officials, professionals, scientists and financiers) so that investors can buy IP. Now only goods and services are traded. There should be transformation to IP.
Hong Kong can have a first-mover advantage in IP trade. Hong Kong has a rule of law, attractive tax system, with a bilingual work force, and is not a gate-to-China, but is part of China. Hong Kong has to take the initiative and make it blaze its own trail. Shenzhen already has a trade platform, but just a website and they seem not very active, they do not have an international nor a holistic approach to the trade platform. China each province has its own platform. In Hong Kong there are more professionals.
The HKSAR government seems to have a lot of attention to niches such as Islamic banking. In the audience there was some concern about whether Mr Cheung is getting enough support from the government. Mr Cheung is well positioned to convince the HKSAR government for his case.

Key IP Question Before Considering Joint-Venture: Am I Educating My Future Competitor Or Building A Long-Term Partnership?

2012-01-06T15:39:00.003+08:00

Colin Davies, managing director of Accenture Software, wrote a column for China Daily European Weekly (always asking whether the content is not usable for the Chinese edition) about ways that will make a better cooperation between Chinese and Western software companies possible: "The West will need greater assurances that the regulatory environment is friendly and conducive to building strong business relationships in ways that both sides can view as credible and mutually beneficial." Who can disagree with this.

Mr Davies also tries to answer the question of how a Western software developer can give a client in China a jump-start asset and let them customize it, while at the same time protecting their intellectual property?

"Although Chinese laws do exist to protect intellectual property (IP), the question is whether anyone is prepared to enforce them. IP protection will need to be adequately addressed before Western software developers are prepared to dive aggressively into the Chinese market."

Then he sketches the situation of a Sino-Western joint-venture, in a bit too optimistic light, in my view:

"Meanwhile, the prospect of a joint venture is attractive because Western companies, rather than investing resources to establish a foothold in a new and very different environment, have the advantage of leveraging the know-how of a local organization already well entrenched in China. This affords them the immediate benefit of a partner that has trust and recognition in the marketplace, knows the local players, and is more likely to defend the IP fiercely for the simple reason that it is also part of theirs."

When simple might be more complex
Some Western companies have been lured (or pushed) a bit too easily in "sharing" their intellectual property without rock-hard agreements that guarantee that the Western company is getting the intellectual property back once the joint venture dissolves. In other words, your joint venture partner can be a significant intellectual property challenge too. Also each company has to think carefully about how much of its knowledge it is willing to transfer in order to get market access. To sum up: Each potential Western company has to ask itself this question: Am I educating a future competitor or building a long-term partnership? Although Mr Davies is not asking the question, he is answering them: "Trust is vital." Read his article here.

China's NCA: Authorized Copyrighted Works on Video Sharing Sites Average 76 Percent

2012-01-06T14:47:00.001+08:00

"China's National Copyright Administration (NCA) recently announced that on average, only 76 percent of the movies and TV series on the country's 18 major video-sharingwebsites are authorized copyrighted works", wrote Lu Yanxia of Beijing Daily, edited and translated by Yao Chun of People's Daily Online here.

The top 5 most popular video sites in China are, according to Alexa:

1. Youku

2. Tudou

3. Ku6.com

4. 56.com

5. Joy.cn

Video sharing sites Xunlei, VeryCD, and Baidu video have not submitted the list of copyrighted movies and tv series they share to NCA. So the percentage might go up or down.

I think this percentage is too low. This problem is not limited to China. I think the enforcement system for online copyrighted works is in need for a systemic overhaul. I will publish a paper on the subject soon.

Fast Moving Counterfeit Goods From China Found in India

2012-01-04T17:26:00.001+08:00

For a long time FMCG was the abbreviation for Fast Moving Consumer Goods, also in India. But you might take the C to mean counterfeit, because an increasing amount of counterfeit healthcare, skin cremes, shampoos, toothpaste and cigarettes of famous Indian companies such as ITC (India's second biggest FMCG) and Dabur (India's fourth biggest FMCG) and are sold in India and some African countries. India's motto "Truth Alone Triumphs" hopefully provides solace.

Read The Economic Times article about fake Indian products made in China here.

There is something fundamentally wrong
when the label Made in India is
Made in China.

Golden Combination: Chow Tai Fook and Disney

2012-01-03T11:57:00.001+08:00

"You can't stay in your corner of the Forest waiting for others to come to you. You have to go to them sometimes," said Winnie the Pooh.

Winnie the Pooh: "All this gold makes me crave for ... honey."
Exhibition at Yitian Holiday Plaza,
Windows of the World, Shenzhen
Photo Danny Friedmann

Now Winnie is talking the talk and walking the walk, since Disney joined forces with Hong Kong jewelry chain store Chow Tai Fook Jewellery Group Ltd., that just was listed to the Hang Seng Stock Exchange (and as of today is part of the Hong Kong Global Composite Index and Hong Kong Composite Index, see here).

Chow Tai Fook raised 2 billion U.S. dollars in its Initial Public Offering to get enough funds to realise its plan to expand its points of sale in China, Hong Kong and Macau to 2,000 stores by 2016. Now, Chow Tai Fook has around 1,500 stores, mostly in China. In Macau it has about 80 stores. Chow Tai Fook also has stores in Taiwan, Singapore and Malaysia.

Chow Tai Fook was awarded Disney's product licence, see here, to take advantage from the recognition of Disney's iconic bear (which, according to girls and even grown up women has a high "cuteness" factor) and combine it with the jewelry retail expertise of Chow Tai Fook in China, Hong Kong and Macau.

Do you consider to engage in co-branding and you want to know more information about the legal implications, contact ipdragon at gmail.

Smartphone Patent War 2012: Chinese Alliance vs International Brands

2012-01-02T13:42:00.000+08:00

The battlefield of patents are more and more the place where competitors are vying for market share. China has become the world's largest market for smart phones in the third quarter of 2011, according to Strategy Analytics. Some Chinese smartphone makers, including Lenovo, ZTE, TCL, Coolpad and Konka joined forces to protect themselves against the rising number of claims of patent infringement by international smartphone manufacturers, such as Apple, Nokia and Microsoft, and to dominate China's domestic market.
Huawei has around 65,000 patents and also ZTE has a substantial number of patents for wireless communication technologies. According to Erica Yen and Steve Shen of Digitimes many Chinese smart phone makers develop localized interfaces and even operation systems, see here.

Chinese smartphone manufacturers also launch their products via China-based telecom carriers and social networking websites operators, via dual branding. HTC and Sony Ericsson grew rapidly because their Android models were popular in major cities of east and south China, according to Linda Sui of Strategy Analytics. If China Telecom will launch the CDMA iPhone 4S early next year, Ms Sui expects Apple's market share to peak. Globally Nokia is still number one, closely followed by Samsung and Apple.

Hong Kong's Original Grant Patent, Reciprocity And Hong Kong's Future As Legal Hub

2011-12-31T01:17:00.000+08:00

On the last day one can send his or her opinion on the patent registration system in Hong Kong to the government, you will find an overview of what we can expect and what we can hope for. The patent system of Hong Kong, largely influenced by the re-registration patent system it inherited as a dependent territory of the United Kingdom, will be history soon. The Hong Kong government acknowledges that there is room for improvement. Reading the consultation paper makes clear that it is safe to say that Hong Kong will take this opportunity to set up a full fledged patent system, which will include original grant patent (OGP) and that the possibility to re-register existent patents of SIPO, UKPO and EPO will be maintained or extended.

In this article:

I will first give a view of the old system;
followed by the expected new system;
then this author will make a case for reciprocity; namely that patents granted by Hong Kong will be mutually recognised, and thus re-registrable by China, the UK and the other members of the European Patent Convention.
Hong Kong's new patent system could be an important building block to realise the position of legal hub for inter-Chinese and Sino-International commercial conflicts.

The Old System
Before June 27, 1997, Hong Kong re-registered and enforced patents obtained in the United Kingdom (UKPO) and the European Patent Office (EPO) designating the United Kingdom. After the sovereignty change on July 1, 1997 Hong Kong started to re-register patents obtained in China (SIPO) next to patents obtained at UKPO and the EPO designating the United Kingdom. Hong Kong has accepted patents from SIPO, UKPO, EPO, but because Hong Kong does not grant any standard patents on its own there could be no reciprocity in this respect, so far.

Currently, you can get two kinds of Hong Kong patents:
- Standard patent. You can apply for a standard patent if you have already a patent granted by SIPO, UKPO or EPO, within six months of publication of a patent application in one of the before-mentioned designating patent offices (POs). The Hong Kong's Registrar needs to record the application and publish the request to record in the Hong Kong's Gazette. After both the publication of the request to record the application and the patent was granted in one of the before-mentioned POs, the request for registration of the designated patent and grant of a Hong Kong standard patent can be filed. Then, the Hong Kong Registrar will register the designated patent, grant a Hong Kong standard patent, issue a certificate of the Hong Kong standard patent and publish the specification in the Hong Kong's Gazette. Hong Kong's standard patent has a term of 20 years.
Please note that the substantive examination (novel=not belonging to the prior art, non-obvious and useful) is not done in Hong Kong but in one of the before-mentioned designating POs.
- Short-term patent. There are two routes to apply for a Hong Kong short-term patent.
If you have done an international application or via one of the designating POs for a utility model patent designating China, once that application entered its national phase you have six months to apply for a Hong Kong short-term patent. If you use these route you can use the search report of the international application.
The other route is to file the application with a specification with a description, one or more claims but only one independent claim, an abstract and a search report (prior art search by prescribed searching authority; Austria, Australia, Japan, Russia, Sweden, U.S. and EPO) to Hong Kong Registrar. The Hong Kong Registrar is only going to do a formal but no substantive examination.
A Hong Kong short-term patent has a term of 8 years. If you want more information on the current patent system in Hong Kong, I recommend you to read Professors Michael Pendleton and Alice Lee's authoritative book called 'Intellectual Property in Hong Kong' (published 2008 by LexisNexis).

New System
October 4, 2011, the Hong Kong government invited the public and stakeholders to give their view (until December 31, 2011) on how Hong Kong's patent system can be improved. See the consultation paper here. Three questions were posed:

1A. Should Hong Kong be able to grant its own patents (OGP)? 1B If so should Hong Kong outsource search and substantive examination? IC. If Hong Kong gets OGP, whether it should still re-register patents granted by other POs, and if so which POs?
2. What should happen to the short-term patent?
3. Should the profession of patent agents be regulated?

Questions 2 and 3 are easier to answered:

2. Hong Kong's short-term patent should be more aligned with China's utility-patent and the EPO's and conform this patent the term should be extended to 10 years.

3. The lower the barriers to enter this profession the better. The market is well-equipped to come up with some self-regulation.

1A It is important for Hong Kong as a regional innovation and technology hub that Hong Kong can grant its own patents. This will improve the investment climate for R&D activities. Now companies and universities that want to protect their inventions have to first get a patent from SIPO or UKPO or EPO before they can get a patent to protect and enforce their patents in Hong Kong.

1B The consultation paper is less neutral than one would expect. "For an economy like Hong Kong where the size of the local market is a relatively small part of the global market, going straight to route (a) in paragraph 1.45 above [i.e. in-house substantive examination] is probably out of the question, as it may well result in disproportionately high registration fees up-front." According to the writers of the consultation paper, which are the Commerce and Economic Development Bureau and Intellectual Property Department, it is more viable that on the short to medium term the substantive examination is outsourced (just as in Macao and Singapore) and on the long term, when Hong Kong has gained expertise is this area, to do the substantive examination. I agree with that. Hong Kong will not get any expertise if they do not start. Hong Kong should establish a HKPO and sent some of the HKPO employees to other Patent Offices around the world, to get experience and recruit some experienced Patent Office people from other countries. Search and substantive examination could not only be done in Hong Kong for the HKPO, but for other POs as well. If Denmark, with a population of only 5.5 million can do that for Singapore, then Hong Kong might be able to do it for other countries, if they got some expertise in this field. If Hong Kong is doing in-house search and substantive examination, a whole knowledge intensive industry will be created, which includes professionals that can establish and search databases for the state of the art in all kinds of technologies, and draft, examine and grant patents. In such a climate more R&D would flourish.

1C Next to the possibility of getting an OGP, the re-registration route of patents from SIPO, UKPO or EPO should continue to be possible. However, this possibility of re-registration should be based on the principle of reciprocity. So if other POs are willing to re-register Hong Kong's OGP then Hong Kong will be willing to re-register the patents they granted.

Reciprocity
The willingness of other countries to accept patent's granted by Hong Kong depends on the quality of Hong Kong's patents but foremost on politics. Since Hong Kong has re-registered patents from SIPO, UKPO and EPO without any reciprocity. Therefore Hong Kong seems to be in an excellent situation to start with these POs to strike deals. Now the good news is that there have been discussions between the Mainland and Hong Kong during the 16th Working Meeting of the Hong Kong/Guangdong Co-operation Joint Conference held February 28, 2011 in Guangzhou, see here. Possibilities of fostering mutual recognition of patent system between the two places under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA). It is thought that "if the Mainland enterprises could apply for internationally recognized standard patents for the products in Hong Kong, it would help them tap the overseas market, thus creating huge business opportunities for the patent industry in Hong Kong.

Legal hub
For Hong Kong the Mainland is the opportunity and threat. When the Renminbi will be convertible somewhere in the future (expected within 5 to 10 years), Hong Kong's position as a financial hub will be outflanked by Shanghai. Hong Kong aspires to become a regional innovation and technology hub. I think Hong Kong is well positioned here. But there are many Mainland cities, such as sistercity Shenzhen, that compete for the same kind of position in the region or a little further away but a formidable competitor: Singapore. But Hong Kong is much nearer the Mainland than Singapore, and Hong Kong has something the Mainland does not have yet. A lot of experience with the rule of law. This is Hong Kong's biggest asset, potentially much more valuable then trading reclaimed land. The rule of law is a crucial condition for sustained economic growth (read professor Randall Peerenboom's paper about it here). For economic growth innovation is a necessity. And innovation is harnessed by patents. In other words: patents can be important for economic growth. And Hong Kong's rule of law creates the right precondition for a effective patent system.
Another strength of Hong Kong is that it is still a trait-d'union between China and the rest of the world. The great universities of Hong Kong prepare skilled professionals that speak English, Chinese and Cantonese. All litigation in Hong Kong can be done in either English or Chinese. This makes it the natural place to bring legal cases, which include Chinese and overseas businesses. Hong Kong could become a legal hub, for litigation, arbitration and mediation where Mainland, Hong Kong and international businesses can solve their legal conflicts.

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Bizarre Chinese Brand Approved By Pro-Life and Pro-Choice

2011-12-12T14:11:00.001+08:00

Sometimes it is better to avoid literal translations. This might be an example:

金 jīn 胚 pēi 玉 yù 米 mǐ 油 yóu = gold embryo corn oil. The association with embryos, even if they are golden, and corn oil, is probably not the most conducive to whet one's appetite.

Photos are shot in a lift in Fu Tian Ti Yu Gong Yuan, Shenzhen
Photos: Danny Friedmann

TGIF: Vacuum Cleaner Inventor Says The Darndest Things

2011-12-09T08:30:00.001+08:00

Thank goodness it is Friday

Sir James Dyson was quoted by Dan Milmo in the Guardian, here, saying:

"They are running the risk of being expelled from the WTO. They are creating an unlevel playing field by taking our technology and selling it all over the world."

With "they" Mr Dyson means China. I understand Mr Dyson's frustration, but the quote is grotesque. China cannot be simply pulled out of the World Trade Organization (WTO) equation. China is one of its key players. The idea about the WTO is to resolve the issues via a binding dispute resolution system. When Mr Dyson would have said that a dispute resolution procedure could be started against China's lack of IP enforcement or non-compliance of the national treatment principle (treating foreign companies at least as good as domestic ones), it would have made more sense.

Police in Shenzhen. Aren't we ... visible?
Photo: Danny Friedmann

In the piece Mr Dyson, who invented the bagless vacuum cleaner and the bladeless electronic fan, makes the following clueless allegations to China:

- "China benefits from strictly monitored IP regimes outside its own border, but has failed to crack down on domestic offenders as it pursues rapid economic growth." Does China benefit much from strictly monitored IP regimes, if their alleged infringed products cannot enter into other countries? Did China fail to crack down on domestic offenders? One can argue that China failed to crack down on domestic offenders inadequately or insufficiently. But to assert that China failed to crack down on domestic offenders is simply not true (think about all the campaigns with the fancy names, see here 2010 and here 2011).
Mr Dyson backs up his claim with anecdotal, evidence: a patent infringement case he won, but where the infringers did not pay the fine nor stop their infringing activities.
- "China's reputation among foreign investors is being diminished by the flouting of product copyrights and a two-speed patent system that appears to discriminate against non-Chinese applications."

With "product copyrights" probably intellectual property protection is meant, which includes invention-patents, utility-patents, design-patents, trademarks, copyrights and trade secrets. To make such sweeping statements is not useful unless they are backed up by research that gives the status on how the intellectual property rights of British industries or European industries are protected. Until now Chinese foreign direct investments did not correlate much with China's level of intellectual property enforcement level. It seems more to correspond to China's economic growth. And I have not come across evidence that foreign patents on average are examined slower. Very broadly speaking a utility and design patent takes about half a year and an invention patent can take up to two years time.

Dyson, the company, is spending 10 million UK pounds per year on legal costs (according to an article by James Hurley in the Telegraph, see here) and is also inventive to bring the intellectual property in China challenges under the attention of people in British government, such as David Cameron (prime minister) and Baroness Wilcox (IP minister).

Inconvenient truth about intellectual property infringement

A Dyson bagless vacuum cleaner costs about 4,000 Yuan in China. Factory workers in Shenzhen make about 1,200 Renminbi per month and middle class earnings are about 4,000 Renminbi per month. The inconvenient truth is that the more a company has spent on research and development (as is the case with Dyson) or marketing and advertising (as is the case with luxury brands) the bigger the incentive for infringers to ride on the coat tails of some other companies' economic activities.

Will the iPad Trademark Be Apple's Forbidden Fruit?

2011-12-08T16:13:00.001+08:00

Must Apple resellers in Dongmen, Shenzhen stop selling iPads?
Photo: Danny Friedmann

Kathrin Hille wrote for the Financial Times (FT) that (mother company) Proview Electronics of Taiwan agreed to sell Apple the “global trademark” for the iPad name for 35,000 UK pounds, according to Proview. "[B]ut the two companies have subsequently disagreed about whether that deal included China", read Ms Hill's FT article here.

Of course there is no such thing as a global trademark, that is why Ms Hill put it between quotation marks. Trademarks are rather territorial creatures. It is beyond my imagination that the lawyers of Apple did not check whether the trademarks for the iPad in China were included. If I would buy something for 35,000 UK pounds, I would check and double check.

When Apple applied for the iPad trademark in China, it was rejected by the trademark office, because Proview Technology already owned the trademark. And Apple sought a declaration of invalidity at the Shenzhen Intermediate People’s Court. The FT reports that the court rejected this request by Apple earlier this week. Apple can, and I am certain, they will appeal.

In the short term Apple has more problems, now that Proview Technology (Shenzhen) has started suing Apple resllers at the Shenzhen Futian District Court (December 30, 2011) and Huizhou Intermediate People's Court (January 7, 2012).

Guangdong Guanghe land Grandall were the law firms that assisted Proview. Not sure what law firm(s) work(s) for Apple in China.

Chongqing Chaotianmen Different From Singapore Marina Sands Bay Architecture

2011-12-08T12:56:00.001+08:00

In Chongqing, at Chaotianmen, at the Jiefangbei peninsula where the Yangtze and Jialing rivers come together, the complex designed by architect Moshe Safdie will be build. It is "an almost literal copy of their Marina Sands Bay scheme in Singapore", according to Daan Roggeveen, a Dutch architect quoted by Bert van Dijk, see here.

Overall impression in Singapore will be completely
different from the one in Chongqing
Photo: Danny Friedmann

Here you see the "card" like supports of the platform in Singapore.
Photo: Danny Friedmann

I do not concur, because it does not do justice to the creative work of Mr Safdie. I have been to the Marina Sands Bay in Singapore and you can see that Mr Safdie was inspired by a deck of cards, see here. The towers that support the platform are like three inverted V shaped cards. Mr Safdie makes clear that for the Chongqing Chaotianmen complex he was inspired by the sails of a ship. And the towers indeed look like curved sails, all to one side.

Mr Safdie is certainly not a lazy architect copying his own work (self-plagiarizing) as alleged by Maurits Elen in Shanghaiist here. Yes, both designs have a platform on top of the towers. Mr Safdie is the one who made that building structure famous and it seems to have become his "trademark". But nobody would say to an architect that is doing another tower, but in a different style, that he is copying himself because he is doing another tower.

China Wants Legally-Binding Climate Agreement, But Has Many Demands

2011-12-05T18:26:00.001+08:00

The degradation of the environment is China's biggest challenge. Remember March of this year (2011), when the Chinese government released its 12th Five-Year Plan it emphasised sustainable economic growth and came up with policy objectives and quantitative targets that foster green technology. It also announced that there must be a 16 percent cut in energy consumption per unit of GDP by 2015, see here. 600 billion dollar is projected to, among other sectors green energy, environmental protection and innovation, read here. Great, so the Chinese government finally seems to take the environment serious? Not so fast. Let us see what China's role will be within the Conference of the Parties (COP 17). This United Nations Framework Convention on Climate Change is taking place from 28 November to 9 December 2011 in Durban, South Africa, to discuss how to stop global warming.

China might be willing to sign a climate deal...
Do not hold your breath.
On second thought,
you'd better hold your breath.
Photo: Danny Friedmann

The economic troubles in Europe and the U.S. are probably not conducive to get an extension of the non-binding Kyoto commitments. India and South Africa are repeating the argument that developing countries are exempt from obligations to cut carbon dioxide, because they cannot afford to jeopardise economic growth for more environmentally responsible production. However, China seems open for a legally binding agreement for the period starting in 2020, according Marlow Hood's Agence France Presse article, under certain conditions:

- China wants the Kyoto commitments to become enforceable.

- European Union and "other countries" sign on to a new round of enforceable pledges under Kyoto.

- Countries need to invest in a 30 billion U.S. dollar "Fast start" climate fund for poorer countries for the period 2010-2012.

- Countries need to invest in a 100 billion U.S. dollar per year Green Climate Fund by 2020.

- The process started during the 2009 Copenhagen summit and continued in Cancun, Mexico must move forward. So, deals must be made about technology transfer, adaptation, helping vulnerable nations cope with impacts, and new rules for verifying that carbon-cutting promises are kept.

- The effects of China's carbon-cutting measures can be reviewed as of 2013. And to keep some diplomatic wiggle room China expects that "established principles in which historical responsibility for creating the problem of climate change, and the respective capacity of countries to fight it, are respected."

That is quite a wish list. And making your commitment or obligation contingent on the fulfillment of all these conditions is a recipe for failure. However, each condition seems reasonable. But the real question of course is what China is willing to agree upon. Mr Xie did not say anything about that. From a diplomatic point of view that is probably wise. We will see what kind of results will pan out of this conference.

Follow the conference live, here.

Green Innovation Should Be Patent Free Zone?

Since the environment is such a big problem, should not green technology be free of patents to that technology transfer and absorption goes fastest. I have not read any studies on this particular topic, but it probably will hold back investments of some companies in new green innovation. Patents can stifle innovation when licenses are too expensive (and then there are compulsory licenses, which have never been used in China, yet), but they can also be an incentive for other companies to invent around it, so that newer and sometimes better technology will be invented.

Think IP Strategy Workshop 23 November 2011 Shanghai

2011-11-29T18:38:00.001+08:00

By Mathijs van Basten Batenburg

On this early morning (November 23, 2011) I visited a workshop that the consultancy “Think IP Strategy” (TIS) was so kind to provide in Shanghai. The audience consisted mainly of IP counsels of larger corporations and before the presentations we enjoyed ourselves with exchanging war stories ranging from local competitors copying hotels to ex-employees starting factories next door, coincidentally making the same products. Chinese reality is always a great source for IP stories that get the laughing muscles warmed-up in the morning.

Seated behind a complimentary piece of paper and a familiar red and black Staedtler design pencil (made by Cheunghwa) I listened to our host of the day – Mr Duncan Bucknell- who introduced us to TIS and the way they aim to help their clients. He stressed the importance of a broad approach towards a company’s IP strategy and illustrated the importance of information gathering by a story about Alexander the Great who defeated a larger Persian army just by getting his intelligence right.

The key point Duncan made was that since business is getting ever more international, this means that the way a company will have to manage its IPR will increasingly call for an international perspective. Given the wide array of possible IPR, and the ways to utilize these, it therefore stands to reason that these days an effective approach towards IPR management can not simply be limited to claiming and enforcing IPR on a case to case basis. Companies will ever more often have to formulate a comprehensive strategy to successfully handle their IPR protection, taking into account their business strategy –such as the markets relevant to them- and preferred ways to use IPR to defend their positions. Obviously TIS’s focus is on advising on these issues. Law firms generally have a deep knowledge of their own jurisdiction but might miss the international and business perspectives. TIS aims to bridge this gap.

From Persian elephants that got routed by Greek archers we moved to the ancient game of “围棋”, known in English as “Go”. Apeng Shang listed many aspects that were good to bear in mind when working out your IP strategy. Quite a few sounded more like good business practise to me, such as improving the communication between legal and other departments, or working from a strategy instead of ad-hoc. However, although a lot of these points might sound like “common sense”, I have to admit that also in large multinational companies these bases are not always covered.

The third part was a nice horror story about a Chinese company that had a bright (patentable) idea, but missed out because they didn’t play their cards right. Step by step the company sunk deeper in a quagmire of issues, being out manoeuvred by competitors and abandoned by its business partners. Some lessons we should learn from this are: be pro-active regarding IP strategy and be practical (don’t only look at the legal points). As for being practical: it might help that Duncan also qualified as veterinarian; I imagine this profession teaches people to be more practical than law school does. In general it was an interesting pitch and TIS convinced me of having a refreshing and valuable approach towards dealing with a company’s IP.

Text Mathijs van Basten Batenburg

Outsmart the Outlaw

2011-11-29T01:05:00.001+08:00

“The Art of Strategy”
By Michiel Tjoe-Awie

For today (November 24) Danny Friedmann has asked me to attend a workshop in Beijing that focuses on protecting patents. The presentation is hold by Duncan Bucknell (CEO) and Shang A Peng from "Think IP Strategy".

Mr. Bucknell started more than 10 years ago as a Australian attorney in Melbourne. Now he has offices in 10 countries. On his business card it says: ”IP Strategist, Lawyer & Patent Attorney”. Today’s presentation is one long argument to support the order in which he presents himself: the Strategist comes first.

For long Bucknell has many clients, operating or with a wish to operate in China, asking questions about how to protect their IP from Chinese competitors or potential perpetrators. Nowadays these old clients have to share his attention with many Chinese companies who came knocking on his door about how to protect themselves from home competitors or how to survive IP-wise in foreign markets.

This new diversity is reflected in today’s attendees. They represent pharmaceuticals, high-tech companies, lawyers and consultants. Both Chinese and Foreign. Law, health and technology, add education and you have the stardust countries are made off. Thus worth protecting one might say.

Let me start with introducing some of the challenges the Chinese judicial systems entails. China lacks a case law system which often results in comparable cases that are differently judged in different provinces and even in different cities. Adding to this: outside well developed provinces like Beijing, Shanghai, Jiangsu and Guangdong the probable outcome of cases is further mystified by judges who are not properly equipped to deal with the highly specialized character of patent law. A two years old proposal to follow the American example in creating a central court system to trial all patent cases, died a silent death. It’s whispered that the Chinese supreme court had other priorities. But one might speculate that local judges fearing erosion from their power also played a role in blocking this proposal. Last but not least: in China a party committee can overthrow a courts decision if this decision contradicts with party policy.

The last concern seems to decrease in importance now the Chinese party has declared and actively proven to be pro IP. The government, in it’s hope that incentives will spur innovation in China, subsidizes many Chinese companies as long as they are filing a minimum amount of patents. But sometimes the effect contradicts the purpose. A lot of “empty patents” or patents with weak innovative power are filed just to meet the subsidy guidelines. Other companies collects patents with only one purpose: to dazzle their competitors by repeating over and over again, with over with out ground: “That’s my idea it’s already patented, you are infringing!”. For newcomers it might not be worth the risk of proving that what might be a real innovative idea is not an infringement of one of the patents from existing companies. Afraid of the legal misery that might awaits them they back off.

A diffuse landscape to operate in, it seems. However comparing India, Russia and China the Australian strategist concludes that China in many cases has the best environment to protect company patents and role out an effective IP-strategy.

Bucknell and with him all attendees I have spoken to, agree that the legal environment to pursue IP rights has, in accordance with the party line, indeed improved in recent years. But a more important reason for Bucknell to state his claim is that although China’s system might not seem logical or even just in the eyes of many Western legal scholars, a more practical man might be able to look through this and to discover a system.

Understanding the machinations of this system is key in advising a company on protecting it’s IP-interests. This is why Bucknell calls himself a strategist rather than a lawyer. He proposes a holistic solution. Therefore the first question meeting a new client is not: show me a list of your patents but what do you want to achieve as a company or more precise: what is your business plan?

Sometimes it is wise to discourage a client to enter a market because it seems impossible to protect a patent, often the solution lays in buying or working closely together with other parties, preferable local Chinese companies. Bucknell calls this process getting to know the IP-landscape and act accordingly.

To be of good assistant to his clients Bucknell’s “international war-team” is a combination of Australian straight forwardness, knowledge of old and new Chinese culture and the way this effects the behavior of officials and local competitors and American military accuracy in locking the back door[1].

By combining these powers Bucknell tries to detect more or less predictable behavior of stakeholders including officials and courts to wrap his strategy around this behavior.

The difference between a lawyer and a strategist? A lawyer will bill you for the hours he makes filing and protecting or trying to protect patents, a strategist is focused on increasing profits instead of winning or losing cases. Some of the key advices that were discussed during the workshop are:

- The best IP-strategy relies on a business strategy. What can you do to protect your interests outside the help of the law?;
- Know your market (the IP-landscape) and act accordingly;
- Look for local partners to help you find your way (you even might find that it is sometimes more effective to buy a company than to fight this company);
- Be aware that aggressive behavior (being over protective, a strategy that focuses more on fighting than on working together) might not be the most beneficial behavior. Clients, manufacturers and competitors often have overlapping interests;
- (Nevertheless) establish an appropriate reputation for enforcement;
- (And) built your relationships selectively;
- Technological superiority might not be what the market wants most. Thus, build your IP-strategy around the products that are in a market where the competition is fiercest (don’t be blinded by your idealism and the possible technological superior future of your product and forget to protect your current cash cows);
- Shelf companies can veil the name of the owner company and thereby distract competitors who are closely watching you filing your patents.

By building a proper IP-strategy you outsmart your competition or potential perpetrators rather than fighting them in court. Doing so is in line with an ancient Chinese health system that reimbursed its doctors according to the amount of citizens they were supposed to keep healthy rather than to reimburse them according to the illnesses treated. This led to a system in which sickness was prevented and health was flourishing. “Think IP Strategy” aims in a similar way on helping companies to avoid frustrating and expensive court time by building the best prevention system possible.

The Dutch say:” Trust in God but lock your door.” Today’s message goes further: ”don’t rely on the law, rely on strategy and a little bit on Sunzi!”

After the meeting Mr. Bucknell asked me what I think. I tell him that for a non patent specialist there is a lot to process. He comfortingly replies: “Don’t worry we will send everybody sheets…”, to add,”… of course digitally copy and print protected.”

Text Michiel L. Tjoe-Awie

[1] Robert Cantrell has a prominent voice within the Think IP strategy-team, he is ex-American military and wrote a book in which he advices to look back to important Chinese philosophers like Sunzi (Art of War) and Laozi for advice how to create an effective IP-strategy . (Outpacing the Competition: Patent-Based Business Strategy, Robert Cantrell: Wiley 2009)

Patents, Trade and Innovation in China, December 13, 2011 George Washington Law School

2011-11-21T22:51:00.001+08:00

George Washington University Law School and Fordham Law School have organised a public discussion on “Patents, Trade and Innovation in China." The goal is conveying practical Strategies for engaging China.

When: December 13, 2011

Where: George Washington Law School.

Who are your discussion partners? The "lineup" is experienced and knowledgeable:

David Kappos, director USPTO;
Chief Judge Rader, Court of Appeals for the Federal Circuit;
Professor Mark Cohen (Fordham), who worked as director international IPR at Microsoft and before that, did a lot of negotiating with the Chinese government as senior IPR attache for the U.S. government;
Professor Carl Minzner (Fordham), who wrote an interesting article called 'China's Turn Against Law' about China's policy to de-emphasis formal law and court adjudication. I think this also applied to intellectual property conflicts for a long time, but since the last few years I have noticed things are changing.

If you are interested in participating in the discussion RSVP to iplaw@law.gwu.edu with the subject line: “China Conf.”

Shenzhen Intellectual Property Index Starts Before Hong Kong's

2011-11-21T16:19:00.001+08:00

Race has only just begun, everything is still possible...

Congratulations to Shenzhen with its own IP Index. There is a fierce competition going on between Asian cities to become the IP hub of Asia. And have your own IP index is conducive to attain this goal. For Hong Kong, with its peculiar patent system, read here, the competition seems difficult, but who knows, the race has just started.

Read Anita Lam's SCMP article here. Hat tip to Ron Yu.

Hu in Honolulu: Reform into Open Green Innovative Economy

2011-11-13T15:10:00.001+08:00

During the CEO summit of the Asia-Pacific Economic Cooperation (APEC) in Honolulu on November 12, China's president Hu Jintao announced 4 points to continue economic growth. All points are relevant to intellectual property rights.

deepen economic structural reform;
grow a green economy;
China will step up protection of intellectual property rights and make itself a country driven by innovation;
open wider to the outside world.

Read the short Xinhua article by An here, or the longer Xinhua article by Mo Hong'e here.

Is American Superconductor Fighting Chinese Windmills?

2011-11-13T14:04:00.001+08:00

Don Quixote: "Do you see over yonder, friend Sancho,

thirty or forty hulking giants?"

Sancho Panza: "What giants?"

In Don Quixote, Miguel de Cervantes' masterpiece (1605 part I, 1615 part II) Cervantes wrote that Quixote was tilting at windmills, because he thought they were ferocious giants. This lead to the English expression: "tilting at windmills", which means: "attacking imaginary enemies" or "fighting unwinnable or futile battles".

American Superconductor is suing its former largest customer Sinovel Wind Group Co. of Beijing in several law suits in China for alleged trade secret theft and "copyright" (I think it might be patent and copyright) infringements.American Superconductor is seeking 1.2 billion dollar in damages.

Is American Superconductor the 21st century version of Don Quixote?

In June 2011, American Superconductor discovered an imperfect replica of its software in a Sinovel wind turbine. Then they found the possible leak, an engineer at a subsidiary in Austria, who was sentenced to a year in prison.

American Superconductor chief exectuvie Daniel McGahn was quotes saying that they had strong evindence against Sinovel and that hundreds of emails between senior Sinovel staff members and our now incarcerated former employee were found. That these messages give a detailed account of the timetable of the crime and show that certain senior level Sinovel employees knew that these intellectual property rights were illegally obtained.

To find trade secret thiefs can be elusive. Unless your company have the right safety procedures in place so that trade secret theft can be avoided or at least traced, courts will think you are fighting an imaginary enemy, just like Don Quixote was doing. So protect your company so that your battles will be neither unwinnable nor futile.

Read Erin Ailworth's article for the Boston Globe here.

Think IP Strategy Has A Free Seminar in Shanghai and Beijing

2011-11-10T16:20:00.000+08:00

Think IP Strategy has two promising events:

November 23 in Shanghai
November 24 in Beijing

Three topics will be dealt with:
- Building a first class IP Strategy for a Product;
- Establishing Global IP Freedom of Action to Compete on the World Stage;
- 6 Ways to Improve your IP Strategy.

Speakers will be:

Duncan Bucknell, founder and CEO of Think IP Strategy, which exists out of a team of eleven experts in the field of IP. In his free time Duncan authored the book Pharmaceutical, Biotechnology and Chemical Inventions World Protection and Exploitation, which is full of invaluable information, and is not expensive if you divide the 2,536 pages through the price. Duncan thinks and breathes intellectual property. He is the initiator of IP Think Tank, which provides weekly all-inclusive overviews of the IP related news, see here.
Apeng Shang, Consultant and China Specialist of Think IP Strategy with a decade of experience.

Find more information the events here.

Crazy Copyright Infringement Or Ga Ga Transformative use?

2011-11-09T18:47:00.000+08:00

In the category OMG: Shanghaiist has another interesting post. See here.

Hat tip to Ron Yu.

Star-struck and Creatively Challenged Movie Poster

2011-11-06T00:04:00.001+08:00

A U.S. movie and Taiwanese movie poster both use the sky of Starry Night by Vincent van Gogh. Independently created? I have seen both movies, and beside the poster, they have nothing in common.

Woody Allen's Midnight in Paris
September 2011

Tom Lin's 星空 (Starry Starry Night), Taiwan
November 2011

Starry Night also inspired Starry Starry Night by Don McLean's, listen to it here.

Chinese Trade Secret Cases via Internet Might Be Tip of The Iceberg

2011-11-05T23:11:00.000+08:00

Foreign Spies Stealing US Secrets In Cyberspace, Report to Congress on Foreign Economic Collection and Industrial Espionage 2009-2011 is published this October, see here.

In the report both China and Russia were named as the most important culprits in the area of misappropriation of intellectual property and stealing trade secrets. The reports confirms that data on the internet are, indeed, vulnerable to cyber attacks. And that corporate victims are, indeed, not very eager to share to the world that they there information has been stolen because they do not want to expose the vulnerabilities in their system to their world.

The most interesting of the report is that only so little corporate trade secret thieves were caught. Based on the sheer number of inhabitants in China these cases below must have been the tip of the iceberg:

"In a February 2011 study, McAfee attributed an intrusion set they labeled “Night Dragon” to an IP address located in China and indicated the intruders had exfiltrated data from the computer systems of global oil, energy, and petrochemical companies. Starting in November 2009, employees of targeted companies were subjected to social engineering, spear-phishing e-mails, and network exploitation. The goal of the intrusions was to obtain information on sensitive competitive proprietary operations and on financing of oil and gas field bids and operations." (p. 5)
"In January 2010, VeriSign iDefense identified the Chinese Government as the sponsor of intrusions into Google’s networks. Google subsequently made accusations that its source code had been taken—a charge that Beijing continues to deny." (p.5)
"Mandiant reported in 2010 that information was pilfered from the corporate networks of a US Fortune 500 manufacturing company during business negotiations in which that company was looking to acquire a Chinese firm. Mandiant’s report indicated that the US manufacturing company lost sensitive data on a weekly basis and that this may have helped the Chinese firm attain a better negotiating and pricing position." (p. 5)
"Participants at an ONCIX [Office of the National Counterintelligence Executive] conference in November 2010 from a range of US private sector industries reported that client lists, merger and acquisition data, company information on pricing, and financial data were being extracted from company networks—especially those doing business with China." (p.5)

Then the report is naming and shaming the thieves of corporate trade secrets.

"Dongfan Chung was an engineer with Rockwell and Boeing who worked on the B-1 bomber, space shuttle, and other projects and was sentenced in early 2010 to 15 years in prison for economic espionage on behalf of the Chinese aviation industry. At the time of his arrest, 250,000 pages of sensitive documents were found in his house." (p. 2) Read the Bloomberg article Ex-Boeing Engineer Chung Guilty of Stealing Secrets by Edvard Pettersson, here.

With the following convicts the photos are included. I have my doubts about whether this deterrent is effective or justified for convicts that are already serving time in prison.

"David Yen Lee ... chemist with Valspar Corporations ... between late 2008 and early 2009 used access to internal computer network to download about 160 secret formulas for paints and coatings to his own storage media ... intended to take his proprietary information to a new job with Nippon Paint in Shanghai, China ... arrested March 2009 ... pleaded guilty to one count of theft of trade secrets; sentenced in December 2010 to 15 months in prison." (p. 4) Read the article Trade Secrets: They're Not Just for Civil Actions Anymore. New Justice Department Task Force Takes Aim At Prosecuting Trade Secret Theft by Robert Silverman of Foley and Lardner, here.
"Men Hong ... DuPont Corporation research chemist ... in mid-2009 downloaded proprietary information on organic light-emitting diodes (OLED) to personal e-mail account and thumb drive ... intended to transfer this information to Peking University, where he had accepted a faculty position; sought Chinese government fundting to commercialize OLED research ... arrested October 2009 ... pleaded guilty to one count of theft of trade secrets; sentenced in October 2010 to 14 months in prison." (p. 4) Read the Computerworld article DuPont sues Chinese scientist for trade-secret theft by Jaikumar Vijayan here.
"Yu Xiang Dong (aka Mike Yu) ... product engineer with Ford Motor Company who in December 2006 accepted a job at Ford's China branch ... copied approximately 4,000 Ford documents onto an external hard drive to help obtain a job with a Chinese automotive company ... arrested in October 2009 ... pleaded guilty to two counts of theft of trade secrets; sentenced in April 2011 to 70 months in prison." (p. 4) Read the WSJ article China Singled Out for Cyberspying by Siobhan Gorman here.

The Nissan That Became a Lamborghini Not Confiscated For Likelihood of Confusion

2011-11-05T17:06:00.003+08:00

This Summer Bertel Smitt reported for the Truth About Cars about a Kunming barber who changed exterior of his Nissan Bluebird into a Lamborghini Aventador.

The police confiscated the car. But not because of intellectual property rights infringements (based on trademark, copyright or design-patent rights) Smitt wrote:

"When a car is registered in China, a picture is taken of the car. If the car doesn’t resemble the picture, you have a problem. An insidious punishment was handed down: The barber was ordered to restore the car to its original documented shape."

So the basis for the confiscation is not the likelihood of confusion (when you hear the race monster's modest motor this might become obvious) but the inability for the police to identify the car. Read here. Compare with the original Lamborghini Aventador here.

Taiwan Dead Serious About Copyright On Funeral Music

2011-11-01T17:02:00.000+08:00

Ralph Jennings reported for the Voice of America about two lawsuits of Taiwanese studios against funeral houses in Taichung. Mr Jennings writes: "Taiwanese funeral homes play pre-recorded music at traditional ceremonies, some of which also involve live bands and street parades to honor the dead." Read more here.

Lin Shu-hui previously wrote for the Taipei Times: "Music and Buddhist chants during funerals are usually provided by the funeral homes, mostly using a gadget called the Electric Buddhism Sutra Player or music CDs." Read more here.

A life band playing during a traditional ceremony can be seen as a public performance.
Article 7bis Taiwan's Copyright Law 2008: A performance by a performer of a pre-existing work or folklore shall be protected as an independent work. Protection of a performance shall not affect the copyright in the pre-existing work.
And relating to the CDs: according to article 5 (8) Taiwan's Copyright Law 2008, sound recordings are copyrighted works.

What about Buddhist chants that are played via a CD or an Electric Buddhism Sutra Player, which is a device that plays a sutra (teaching of the Buddha) continuously by going in a loop, and is often given away for free at Buddhist temples. Even thought the music and lyrics are not copyrighted (read more about Buddhism in relation to IP in Zen and the Art of Intellectual Property), the performance of the work is (article 7bis Taiwan's Copyright Law 2008).

According to Wang Mei-hua, director general of the Taiwan government’s Intellectual Property Office these conflicts between studios and funeral companies signal that it is difficult to find a right compensation. She also pointed out that to collect copyright fees at the popular Karaoke bars is complex in Taiwan, because the island has five (I count 6) copyright collecting societies:

Music Copyright Association of Taiwan (MCAT);
Music Copyright Intermediary Society of Chinese Taipei (MUST);
Music Copyright Intermediary Society of Taiwan (TMCS);
Audiovisual Music Copyright Owner Association (AMCO);
Association of Recording Copyright Owners of ROC (ARCO);
Recording Copyright & Publications Administrative Society of Chinese Taipei (RPAT).

This list I found in the interesting article that Professor Kung-Chung Liu wrote how the music CD business in Taiwan withered away and the online music industry in Taiwan flourished, and the rise and fall of P2P file-sharing services and how the copyright legislation responded to these developments. Read here.

Professor Kung-Chung Liu, who last year gave a speech at HKU on Cross-Strait Cooperation Agreement on Intellectual Property Rights (IPR) Protection, see here, is also a co-author of the excellent book called Intellectual Property Law in Taiwan which is edited by Christopher Heath, and part of the Max Planck Series on Asian Intellectual Property Law published by Kluwer Law International.

You Want To See The Arc de Triomphe? Come To Huaxi Village

2011-10-12T13:17:00.000+08:00

If you are Chinese it is not so easy to get a visa to travel to some countries around the world. I suggest that the U.S. and the countries within the European Union might want to revise their policy, since most Chinese understand that they have more chances finding economic opportunities in China then in recession stricken U.S. or Europe.

China's richest village, Huaxi village (华西村), located in Jiangyin city in Jiangsu province, came up with a kind of solution:
You want to see the Arc de Triomphe, come to Huaxi village.
You want to see the White House, come to Huaxi village,
You want to see the Sydney Opera House, come to Huaxi village, see here.

The village copied some wonders of the world, including the Tiananmen gate, and the Great Wall.
Wen Renbao, made the Huaxi village into the richest village of China, by taking the local multi-industry (mostly textiles and steel) company, named Jiangsu West China Group Co., Ltd. (Huaxi Group) to Shenzhen Stock Exchange. Huaxi calls itself a model socialist village. Everybody works seven days per week! The free market combined with the socialist work ethos resulted in a high living standard for each villager. Each family gets a free car, a single family house to European standards worth more than 150,000 euro, free health care and education and cooking oil from the village committee.

When the originals were built no copyright law existed, and the copyright on those works of architecture that were created in the copyright era has expired already. Huaxi village made their investment for the replicas on the assumption that they can lure many Chinese visitors, making their plans to go abroad superfluous. Or since many villagers already went abroad they want to share the world with their fellow Chinese (or as they say in the mini video documentary that since everybody is working seven days per week, there is no time to see the world, so the world must come to Huaxi). Either way, if they are right, the villagers of Huaxi become even more rich.

Hat tip to Cecilia.

Independent Creation Valid Defense Against Copyright Infringement

2011-10-11T16:47:00.000+08:00

Jonathan Mak, design student at Hong Kong Polytechnic University School of Design said that he did not rip-off the idea for the Apple tribute in which you can distinguish the silhouette of the late Apple co-founder Steve Jobs.

Invisible Gold in Asia Facebook Page (set up by author of the book with the same name Professor David Llewelyn) explains that both parties (or theoretically even more parties) can come up with the same copyrighted work: "Although that will be harder to prove so make sure you keep records."

If you can prove that you created the work independently, you can use it as a valid defense against copyright infringement.

See Jonathan Mak's design here.

The design of UK designer known as Raid71 here.

In this YouTube video the voice-over says that Jonathan Mak "has been offered copyright offers". Well, if Mak is the creator he automatically has the copyright of the work, at the moment of creation. What the voice-over probably means is that he got offers to assign his copyright.

Steve Jobs on Creativity: Be Bored, Become Curious and Change The World

2011-10-06T22:58:00.000+08:00

Steve Jobs, visionary leader of Apple has passed away. His legacy is enormous. Whole new product categories, new way to think about consumer products and processes. There is also a lot one can learn from his words of wisdom. In Steven Levy's excellent effort to condense such an incredible full live into one article he quotes Jobs saying:

"I’m a big believer in boredom. Boredom allows one to indulge in curiosity. Out of curiosity comes everything.”

We can take this all at heart. Especially in Asia there are lessons to be learned, where the main culture is focused on using up every moment in a "useful" way. Most youth study at home or at cram school until bedtime. Basically there is no free time. Doing nothing and playing are essential ingredients to get the creative process going.

Chinese Brands Not Cool In UK? ......... Overseas Chinese Show The Way

2011-10-06T16:03:00.002+08:00

CoolBrands has orchestrated an expert panel and public vote to select the most cool brands in Britain. No Chinese brands in the top 20, and not even nominated. In the list of nominations one can find Wagamama, founded by Alan Yau (丘德威), the Hong Kong born London-based restaurateur, and Jimmy Choo (周仰杰), the Malaysian born London-based fashion-designer who gave his name to the fashion label, especially known for its shoes. Both entrepreneurs were awarded the order called Officer of the British Empire (OBE). Chinese brands, take a cue from overseas Chinese entrepreneurs and build strong brands.

Hat tip to Matt Fisher of IP Kat.

Should Hong Kong (Also) Get Its Own "Normal" Patent System?

2011-10-05T13:35:00.004+08:00

Hong Kong's patent system spinning...
Whirlpool in middle of flag, a suitable symbol

So far Hong Kong's patent system has been mainly a re-registration system of Chinese patents, United Kingdom patents or European patents. Yesterday, October 4, 2011, the Hong Kong government issued a consultation paper, about whether this should change.

Should Hong Kong be able to originally grant its own standard (20 years) patents? In that case should re-registration of Chinese, United Kingdom or European patents possible? If so, should other jurisdictions be included?
Should short-term (8 years) patents be retained as a supplement to standard patents? How can the system be improved.
The regulation of patent agency services is another subject about which you can give your opinion.

You give the Hong Kong government feedback on or before December 31, 2011.

Thanks Ron Yu for pointing me to the consultation paper.

Countries That Spend Most On R&D: Where Is China?

2011-10-04T21:01:00.004+08:00

The Economist came October 1, 2011, with the 2009 statistics on countries that spent most on Research & Development as a percentage of Gross Domestic Product (broken down by investments of businesses, educational institutions or government), and the statistics of the average patents filed per million people between 2007 and 2009. China is not in the top 12, and neither is Singapore. See here.

Research on Equipment Manufacturing Industry China: IPR Significant Impact on Transition From Imitative To Independent Innovation

2011-10-04T11:44:00.000+08:00

The Journal of Technology Management in China (Vol. 6 No. 3, 2011, p 257-266) has an interesting article A study of the evolutionary path of technological innovation modes in the equipment manufacturing
industry of China written by Yuan Yi-jun and Lv Cui-jie (Department of Economics, Dalian University of Technology).

Yuan and Lv use evolutionary game theory to research what hinders the transition from imitative innovation to independent innovation in the strategically important equipment manufacturing industry.

The authors come to the conclusion that the obstacle factors from imitative to independent innovation are internal and external mutation conditions:

Internal: path dependence and lack of benefit incentives;
External: lack of fiscal support and lack of intellectual property protection

Yuan and Lv: "The results show that the pursuit of the benefit (innovation return or above-average profits), as an internal mutation condition, is the most fundamental motivation for independent innovation, while policy incentives, as the external mutation conditions, have a significant impact on the evolutionary transition from imitative innovation to independent innovation in equipment manufacturing enterprises."

Netac President Complains About Unequal Treatment Overseas Patents

2011-10-04T00:10:00.000+08:00

Netac Technology, the first Chinese company that sued a U.S. company (Texas PNY Technologies) for patent infringement in 2006, and which settled out of court, expects that it has protected its IPR in all important markets by 2015.

Cheng Xiao-hua, president of Netac Technology alleges that it often takes a Chinese firm much longer to obtain a patent overseas than it does for its foreign counterparts. The next quote of Cheng suggests that this is the fault of the overseas patent office that is examining the Chinese patents.
"Cheng said he is expecting a better climate for Chinese companies in applying for patents overseas, and a more "equal examination period and fairer treatment"."

About which patent office his is talking remains unclear. It would be interesting to see this backed up by some statistics.

Read China Daily's Zhang Shiyi's article here.

Looking into the Back Mirror: "If I Were For Real"

2011-10-03T15:28:00.000+08:00

If I were for real, is a 1981 Taiwanese movie (including Hong Kong teams) that was censored in Hong Kong when it was still a British crown colony, because it was deemed too critical about the privileged life of the happy few of party officials.

Li Hsiao-chang (played by Alan Tam) tries to face the challenges in his life with ingenuity. And he has to, since he made his girl friend pregnant. In fact the movie is a kind of Chinese version of the Being There (1971), Jerzy Kosinski's masterpiece. Interestingly, the melody of "Like a virgin", played by an organ you can hear at end of part I and beginning of part II. Billy Steinberg and Tom Kelly composed the song in 1983, which launched Madonna's career. Maybe this music has been put under the video later.

To placate his future father in law he wants to buy a bottle of Mao Tai wine 茅台酒. But he cannot afford the needed twelve "dollar" fifty.

The liquor sales man said sarcastically:
"Just what I thought. That is what Nixon drank. Prime Minister Tanaka too. It's not for you."

Then Li ask what the cooking wine costs. Answer: "One twenty."
"I can afford that. Now an empty bottle of Mao Tai, a red candle."
The liquor sales man nods and gives a sardonic smile.
Later you see Li putting the cooking wine into the empty Mao Tai bottle.

Here is Part II: In the beginning you can hear the melody of "Like a virgin" and fast forwarding to minute 3 you can watch the liquor scene.

Innovative Enforcement of Trademark and Copyright Infringement by LVMH

2011-09-30T17:06:00.005+08:00

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

2011-09-29T13:19:00.000+08:00

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

2011-09-28T15:43:00.002+08:00

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

2011-09-21T11:56:00.003+08:00

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

2011-09-20T11:06:00.001+08:00

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

2011-09-20T10:22:00.000+08:00

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).

I don't understand really why it is located in Chapter 7 Cross Cultural Marketing, just after a Review of Culture and Materialism, when it could also be included in the chapter on Ethical and Social Issues.

Cavarkapa and Harvey point out that China, given its size and the prevalence of fake pharmaceuticals, poses a global threat. They argue that using trade restrictions could be an answer to IPR infringements: "One possibility to curb the flood of fake products coming from overseas is to reconsider the rights granted to these nations that provide them with quotas and exemptions from duties under the different bilateral and multilateral agreements, which could be used as a bargaining point if they fail to protect copyrights, trademarks, and patents."

Cavarkapa and Harvey determined that counterfeiters have three primary means of access to the system:

direct sales to drug distributors;
sales to pharmacists (retailers);
direct sale to customers over the internet.

They also list the key players.

government;
the pharmaceutical manufacturing association;
pharmaceutical manufacturers;
pharmaceutical distributors;
retailers (pharmacists);
consumers.

All these parties should communicate and coordinate and actively do surveillance to find counterfeit pharmaceuticals, if possible with monetary incentives.

Read Cavarkapa and Harvey's chapter here (page 135-141).

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

2011-09-15T16:30:00.001+08:00

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.

2011-09-13T11:28:00.002+08:00

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

2011-09-12T16:01:00.000+08:00

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?

2011-09-12T15:12:00.000+08:00

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

2011-09-06T11:54:00.000+08:00

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

2011-09-05T15:58:00.005+08:00

"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

2011-09-05T12:23:00.001+08:00

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?

2011-09-02T16:22:00.000+08:00

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)

2011-09-01T12:07:00.001+08:00

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.

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

2011-08-31T12:15:00.004+08:00

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

2011-08-30T17:51:00.009+08:00

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?

2011-08-30T08:10:00.004+08:00

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

2011-08-29T11:14:00.011+08:00

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

2011-08-26T16:13:00.002+08:00

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

2011-08-26T15:01:00.002+08:00

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

2011-08-25T00:01:00.001+08:00

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

2011-08-24T14:11:00.005+08:00

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?

2011-08-23T00:01:00.008+08:00

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

2011-08-22T13:37:00.005+08:00

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"

2011-08-20T00:01:00.005+08:00

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

2011-08-19T19:50:00.007+08:00

"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

2011-08-19T19:11:00.000+08:00

" 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?

2011-08-19T17:03:00.008+08:00

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

2011-08-18T06:35:00.001+08:00

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:

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

2011-08-17T13:51:00.003+08:00

"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

2011-08-17T00:01:00.041+08:00

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

2011-08-16T01:23:00.006+08:00

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)

2011-08-16T00:27:00.004+08:00

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

2011-08-15T00:02:00.052+08:00

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

2011-08-15T00:01:00.012+08:00

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

2011-08-14T17:16:00.008+08:00

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

2011-08-14T16:24:00.001+08:00

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

2011-08-13T12:52:00.001+08:00

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.