Part III: Lessons Learned from Technology Transfer and Essential IP in China/HK

June 16th, the European Chamber of Commerce in Hong Kong (ECCHK) organised together with the European Union Business Information Programme of Hong Kong and Macao the 3rd annual China IPR SME Helpdesk seminar, this time about 'Technology Transfer and Essential IP Strategies for EU SMEs in Mainland China and Hong Kong'. 

For all companies that are involved in adding or acquiring technology to and from China and want to remit the Renminbis earned, this seminar could not have come more timely. You can find Part I here and Part II you can find here.

Peter Cheung, Director of IPD Hong Kong
Photo: Danny Friedmann

Then it was Peter Cheung's turn. Mr Cheung is the Director of Intellectual Property Department, Hong Kong SAR. He has been representing Hong Kong in WIPO law-making conferences. Mr Cheung settled two WTO disputes (DS 174 US versus EU and DS 290 Australia versus EU, both about trademark protection and Geographical Indications). Mr Cheung's message was that Hong Kong should and could become an IP hub. Hong Kong's advantages are, among many more factors, that it is a bilingual special administrative region and that it is part of China.

Claudia Xu, Director of Hong Kong University of Science & Technology
Photo: Danny Friedmann

After this hopeful and optimistic message Claudia Xu, director of Hong Kong University of Science & Technology (HKUST) spoke about the university's technology transfer centre.

Elizabeth Wong, Associate DLA Piper
Photo: Danny Friedmann

Elizabeth Wong, associate of the Intellectual Property & Technology group at DLA Piper Hong Kong, specialised in trademark law. Ms Wong guided the audience through the economically most important IPRs: copyrights, trademarks and patents. She warned that trademark holders that only have an English name should also register a Chinese character trademark, otherwise there is a big chance that the public will come up with a Chinese character version of the brand, as happened in case of Ralph Lauren's Polo, namely 三脚马 (three legged horse), and also with Salvatore Ferragamo 飞甩鸡毛 (fly off the chicken feathers).

Ralph Lauren does not always use the polo player on the pony
Festival Walk, Kowloon, Hong Kong
Photo: Danny Friedmann

Ms Wong's assessment of good and bad Chinese language marks

Ms Wong also assessed some Chinese characters chosen by international brands. My favorite is Heineken: 喜力 (xi3 li3 in Mandarin, but also phonetic in Cantonese hei lik) which means happy power.

Ms Wong explained that one should register your products/services as broadly as possible. She illustrated it with Apple's application for the iPhone trademark in China in 2002. However, under subclass 0901 computers and computer software. In 2004 Hanwang Technology registered the mark iPhone device in subclass 0907 communication and navigation instruments. Apple lost in the opposition and the subjsequent appeal. Apple had to pay Hanwang Technology a substantial amount to get its mark back. China does protect well known marks, but iPhone was at that time not well known, yet.

Philippe Healey, China IPR SME Helpdesk
Photo: Danny Friedmann

The excellent morning was closed by Philippe Healey who gave a good overview of all the services of the China IPR SME Helpdesk. Check out their website here.

Veronica Llorca and her team of the European Chamber of Commerce have again organised an insightful and inspiring event. Thank you Veronica.

Part I you can find here.
Part II you can find here.

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iPhoney: "This Is Different, It Is Fake!"

Nice CCTV 2 news item: Apple is coming with a second generation iPhone in July for 199 US dollar. But Chinese counterfeiters sell the 2G iPhone already for less than 100 US dollar.

Listen to the excited voice-over, read the subtitles and see a surprised customer:

"How comes it is so much cheaper?"

"This is different, it is fake!"

Footage found, captured, translated and subtitled by yummyporky.com, a video production company in Taiwan.

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"Games on iPhone Are 50-90 Percent Pirated"

Simon Carless of Gamasutra wrote that Vice-President Alan Yu of game developer ngmoco:) said at the GDC in Shanghai that "iPhone game piracy is a big issue, with 50%-90% piracy estimated in the first week of release on Ngmoco games." 50 to 90 percent of the potential income wiped out, thrashed, removed from the balance sheet. This gives the name of the upcoming ngmoco game "Eliminate" a whole new meaning. Read Mr Carless' article here.

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Fake iPhones: Rip-off or Innovation

iPhone in relation to China is in the news again. Stan Abrams of China Hearsay wrote about the alleged looming problems with Apple's iPhone trademark in China, see here. And then I was interviewed by Sophie Pilgrim of France 24, the French BBC so to say, about a video by MacMedics and about iPhones, counterfeiting and what you can do about it.

However, the third point I make about what to do against counterfeiting was not: "Get a strong legal team. This isn’t very useful in China, though, where foreign companies are afraid of saying anything because they want to continue investing in the country, since it’s very cheap to manufacture there."

It must be:

"Register your IPR's (or so you will get a strong legal team). But you need to be willing to litigate. Some foreign companies are afraid of saying anything because they don't want to jeopardise their investments in the country, and they want to keep on manufacturing there, since it is still relatively cheap."

You can check out the interview here.

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Knockoff Phones Explode And Not Just the Volume

Knockoff mobile phones such as Apple (hi-phone), Nokia (Nckia), Samsung (Sumsang), that sometimes explode or have high radiation, are immensely popular in China, 20 percent of this biggest market in the world! The phones are also exported to Russia, India, Middle East, Europe and US. David Barboza wrote an article about it: 'In China, Knockoff Cellphones Are a Hit' for the NYT, read here.

Mr Barboza explains why it is easy to produce a knockoff mobile phone in China for about 20 US dollar:

• Since 2005 came Mediatek, a Taiwanese semiconductor design company with a turnkey solution that can be used as a platform to produce low cost mobile phones;
• Since 2007 no license is needed to manufacture a cellphone;
• If you are a manufacturer of these so called Shan Zhai Ji (Mountain Bandit Machines), you are not going to pay value-added tax of 17 percent of the revenues;
• Tapping in the supply chains is not difficult, because there are manufacturers that cannot resist a request to run a night shift.

New Chinese brands emerge, such as Meizu, that aspire to emulate Apple. More information about Shan Zhai Ji, read here.

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

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

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

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

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

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Dan Koeppel On China's Product Cloning Industry

Mr. Dan Koeppel, journalist for the American Popular Science Magazine and writer of the book "To See Every Bird on Earth: A Father, a Son, and a Lifetime Obsession", took up himself the role to explain to his readership the phenomenon of cloning products in China in a popular but scientific way.
Mr. Koeppel followed the tracks of iPhone cloners in Hong Kong, Beijing and online.
The result gives a great overview and is very readable, and includes two quotes from yours truly.

One of the astounding facts Koeppel describes is how fast a product such as the iPhone can be cloned. Conclusion: Selective market introductions are not a good idea in this time and age of globalisation and where the cloning industry is climbing the learning curve fast. Read Mr. Koeppel's article here.

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Who cloned who: iPhone versus P168

According to Newlaunces Apple's iPhone has "inspired" many rip-offs. Read and see an alleged Chinese clone called P168 at Newlaunches here. Until there is more proof one cannot exclude the possibility that the iPhone is a P168 clone.

Update: Sir CH, of the French site Mobimania informed me about a Phonedaily article about the P168, which tells the extras one is getting with this phone: a bundled mah-jong game, dual SIM-card slots so you can use two networks. The SIM-cards are in simplified Chinese, so they are made for the mainland. The stamp inside the Operating System is according to CH very reminiscent of the mainland official stamps. But is it real?

UPDATE II (June 18, 2007): Video of the first iPhone "rip-off", see it at the site of Newlaunches.com here.

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