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

By Michiel Tjoe-Awie

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

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

Read Zhou Sufen's article for China Daily here.

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

Text Michiel Tjoe-Awie

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WikiLeaks U.S. Cable: "Chinese Government Ordered Hack Google"

Ellen Nakashima of the Washington Post wrote: "The penetrations resulted in the theft of "significant" intellectual property, Google officials said." Read her article her.

Whether it is true or not is unsure: the source is anonymous and the leaker too (are not necessarily the same). The reason why Google withdrew partly from China might be more complex.

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Goojje.com Infringes Intellectual Property Of Both Google And Baidu

Yu Le and Ralph Jennings have an article for Reuters on the PC Magazine website about a Google clone called Goojje.com, probably using Google's technology without permission, with part of the Baidu logo in its logo. It wants to compete with Google but also wants that Google stays in China. Read more here.

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IPR Infringements Can Make Investments in China Capricious

The Financial Times of January 4th (online), 5th (HK paper version) has an interesting article about famous stock-picker Anthony Bolton who is trying his expertise/luck in China. In the article , written by Sundeep Tucker, Jamil Anderlini and Robert Cookon, they cite Jack Perkowski, managing partner of JFP Holdings about legal peculiaraties that influence investments in China:

""China has a legal system but enforcement is missing, particularly on things like intellectual property and contractual issues," according to Jack Perkowski, managing partner of JFP Holdings, who after 20 years on Wall Street has spent the past 15 years in China. He warns investors to be "very carfeful looking at competitive positions of companies in China because it is such a competitive market with tremendous price pressure on most products". For example, a market leader can quickly find its intellectual property has been stolen, its products copied and its price position undercut. (..)"

Of course companies in China can be victims or perpetrators or both. When China was not booming Foreign Direct Investments (FDIs) into China were seen as dependent on the investment climate, including the legal situation in regard to IPRs. However, China has enough foreign reserves and because of the incredible economic growth (for the coming year expected at 10 percent) China attracts FDIs no matter what the legal situation is.

Read the FT article here.

Photo/text: Danny Friedmann

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IPR/Espionage Ping-Pong Case: Fiat Sues Great Wall, Great Wall Sues Fiat

Fiat sued Great Wall, because it alleges that the Great Wall Peri infringes the intellectal property rights of the FIAT Panda. After this Great Wall sued FIAT at the Shijiazhuang People's Court, based on "evidence" provided by FIAT to the court that they made photo's of production facilities.

Fiat suspected Great Wall to have infringed its Panda's IPRs (ping), so it made photo's of Great Wall Peri's production facilities, so Great Wall sued Fiat for espionage (pong). Is this how it went? Is this how it continues? Ping-pong, ping-pong.

Read the China Briefing article here, or at the Financial Times, via the site of Autonews Gasgoo, here.

Comment of the week:
IP Dragon's friend Richard Osinga (writer and digital entrepreneur) wrote: "I guess the Chinese don't like it if an Italian car manufacturer calls its model Panda."

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USCC 2008 Report to Congress: From Visible IPR Infringements To Undectable Cyber Espionage

The US-China Economic and Security Review Commission came up with their 2008 Report to Congress. The conclusion includes:

• "China continues to violate its WTO commitments to avoid trade distorting measures. Among the trade-related situations in China that are counter to those commitments are restricted market access for foreign financial news services, books, films and other media; weak intellectual property protection; sustained use of domestic and export subsidies; lack of transparency in regulatory processes; continued emphasis on implementing policies that protect and promote domestic industries to the disadvantage of foreign competition; import barriers and export preferences; and limitations on foreign investment or ownership in certain sectors of the economy."
• "China has an active cyber espionage program. Since China’s current cyber operations capability is so advanced, it can engage informs of cyber warfare so sophisticated that the United States maybe unable to counteract or even detect the efforts."

So it's all about intellectual property rights violated, noticed or unnoticed. Read the 405 page report here.

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Hon Hai versus BYD: IPR Infringement or Malicious Attack by a Rival?

Hon Hai Precision Industry Co. sued Build Your Dreams (BYD) at a People's Court in Shenzhen for intellectual property infringement in technology needed for electrical cars. Hon Hai is Taiwan's leading outsourced manufacturing company for Apple's iPhone, HP, Sony and Nokia etc. BYD started with the production of batteries in 1995 and combined this with the development of cars (electrical) six years ago. BYD already has its own museum.

Terry Gou, the CEO of Taiwanese Hon Hai, said in an interview with Economic Daily News in Taiwan: "Didn't Buffett proclaim that he would only invest in companies that are trustworthy? Then why did he invest in BYD which stole commercial secrets from (Hon Hai affiliate) Foxconn?" Billionaire Warren Buffett's Berkshire's MidAmerican Energy Holdings took a 10 percent stake last and stated that Hon Hai's accusation is a malicious attack by a rival.  

Read Alex Crippen's article for CNBC here.

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