Shake or Crush Your Hand: Huawei versus ZTE versus Huawei

Photo: Danny Friedmann
Shake Or Crush Your Hand, you choose. 

What if you are developing a product but your competitor has patented some technology needed to achieve the technical result? And at the same time you have some patents that you know you competitor likes to use? You might consider to cross-license. However, from a patent strategy point of view, excluding your competitor from some crucial technology might be the best thing to do.

Bien Perez reports in the South China Morning Post (April 30, 2011): "Huawei had also invited ZTE on many occassions to enter into cross-patent licensing negotiations, but was unsuccessful."

Then April 28, Huawei sues ZTE in Germany, France and Hungary for alleged patent infringement related to its data card and Long Term Evolution standard (candidate for 4G mobile communication standard) technologies, and trademark infringement.

April 29, ZTE counter sues Huawei for alleged patent infringement on Long Term Evolution.

"Proxy PRC Courts" in Europe and now also China

China Hearsay's Stan Abrams is not surprised that the legal fight "in a most non-harmonious fashion" between two Chinese giants took place overseas, see here.

It is interesting that Chinese competitors fight some patent and trademark issues abroad. But I think it becomes really interesting now that ZTE has sued Huawei in China. ZTE also threaten to take a series of legal actions globally to protect its IPR rights.

UPDATE:  The Hungarian site Portfolio.hu has a picture provided by Huawei that it uses to proof that ZTE is infringing its trademark. See Porfolio.hu's article Huawei files patent, trademark lawsuits against ZTE, rival rejects charges.

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China's Supreme People's Court Will Tell You How Safe Safe Harbours Are

Photo Rneches
Main entrance Supreme People's Court Beijing

The writers versus Baidu case triggered the Supreme People's Court to draft a judicial interpretation of online copyright, and can be expected this year. A refinement of the Regulation on Protection to Network Dissemination of Information, is welcomed. Hopefully the Supreme People's Court will succeed in making the principles crystal clear whether a safe harbour applies or an online service provider is held contributorily liable. The president of the Supreme People's Court, Kong Xiangjun was quoted by Li Mao saying:  "The judicial interpretation would help protect copyright owners, network service providers as well as online users [..]." Judge Kong also said that half of all copyright cases were online cases. I hope they also illuminate the subject of online trademark, which sometimes is interpreted analogously with online copyright, but, given is distinct character, deserves its own attention from China's highest authority in the interpretation of the law.

Read Li Mao's article for the Global Times here.

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On Counterfeit liquor and wine

People's Republic of China

During the massive IP enforcement campaign “Bright Sword” police cracked down in Beijing, Jiangsu, Zhejiang and Guizhou in 40 cases involving the production and selling of fake alcohol. China Daily wrote: “March 23 to 25, police raided 272 production and sales outlets nationwide and found more than 300 devices used for counterfeiting as well as over 13.5 million pieces of forged packaging materials, such as bottle caps, labels and boxes of well-known brands. Meanwhile, more than 30 tons of bulk wines and 13.5 million fake bottles, caps and labels worth up to 2 billion yuan (US$ 306 million) were also seized by police.” Read here.

Hong Kong
Special Administrative
Region

It is estimated that five percent of all wines in China are counterfeit. Is Chateau Le Tromperie on sale, instead of the label that is on the bottle? According to an article by Alexandra Lages for the Macau Daily Times: “Hong Kong’s expert Simon Tam recently alerted that the HKSAR newly-gained reputation as the wine-trading hub must be protected against fakes in the market. Tam said that the problem is not serious yet, but urged authorities to act fast.”

Macau
Special Administrative
Region

In China, Hong Kong and Macau wine drinking has only recently become en vogue. Thus not everybody has the knowledge yet of what taste a certain wine should have. If it smells like paint remover it is clear, but the difference between a bulk wine and some special wine can be more subtle. And it is well known that it is near impossible to find out before buying some vintage wine whether the bottle is real but its content might be not. There is a luctrative trade in real bottles. As Peter Shadbolt points out Chateau Lafite bottles can fetch 1,500 US dollar on the black market in China. He quotes Fongyee Walker, a Beijing-based wine consultant with Dragon Phoenix Fine Wines. Ms Walker makes it clear that gifting is bad for a brand. Because if someone receives a counterfeit wine as a gift and recognises it as a counterfeit, chances are that he or she in turn will give it to someone as a gift, etc. See here.

(Chateau La Tromperie= Castle The Deception)

Read Ms Lages article here.

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Why Could Polo Ralph Lauren/Burberry Clone Get Trademark In Hong Kong?

The outdoor advertisement of Polo Santa Roberta no longer has the
Burberry tartan pattern background

"Buy one get one free"
Is this what luxury goods manufacturers such as
Polo Ralph Lauren and Burberry want to be associated with? 

Here you can see the ® of registered trademark on the promotional poster

Still Polo Santa Roberta bags use Burberry-like tartan patterns

Polo Santa Roberta shop seen yesterday in Mongkok, Hong Kong. Remember my January 2011 posting when I thought that these kinds of shops were closed in Hong Kong, see here.

Polo Santa Roberta uses the ® of registered trademark in their promotional material. After checking the database of the Intellectual Property Department of Hong Kong, see here, they indeed have registered their brand (which is in my eyes controversial). 

The Polo/Lauren company registered (actual registration) its logo with the polo player with a stick high in the air in combination with the words 'Polo' and trademarks in July 12, 1994 in class 25 and July 17, 1996 in class 42. In February 2, 1999 was the actual registration of the word mark Polo for class 25. 

Santa Roberta Polo & Racoquet Club (owned by Hampton, Winter and Glynn), actual registration for class 25 on January 27, 2006. stick low. See the spelling of Racoquet. 

Polo Santa Roberta (owned by Santa Roberta Polo & Racquet Club International Limited), actual registration for classes 3 and 25 July 7, 2009, stick high in the air. 

I am interested to know why the Trade Mark Registry of the Hong Kong Intellectual Property Department did not refuse the registration of Polo Santa Roberta based on article 12 (3) Trade Marks Ordinance: 

"A trade mark shall not be registered if -

(a) the trade mark is similar to an earlier trade mark;

(b) the goods or services for which the application for registration is made are identical or similar to those for which the earlier trade mark is protected; and 

(c) the use of the trade mark in relation to those goods or services is likely to cause confusion on the part of the public." 

Not only The Polo/ Lauren company's trademark is harmed, but the registered designs of Burberry tartan patterns as wel

Polo Santa Roberta shirts are no longer sold at the Ladies Market (女人街) in Mongkok. Instead "Polo" shirts are sold.

Polo shirts with the iconic Polo player logo
 at sale at Ladies Market (女人街), Mongkok, Hong Kong

One "Polo" shirt for 45 Hong Kong dollar (a little over 4 euro),
three for 120 Hong Kong dollar (almost 11 euro)

During the Tang dynasty, early 8th century CE, polo was a popular sport
This figurine can be found at Musée Guimet in Paris 

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Emergent brandscape in China: “Sony was not built in a day”

David Barboza interviewed Karl Gerth who teaches modern Chinese history at Oxford University about his new book 'As China Goes So Does The World'. Professor Gerth is optimistic about Chinese brands. His take is that China will get strong brands indigenously or it will acquire foreign brands. We just have to give it some time: Professor Gerth: “Sony was not built in a day.”

However, on an ominous note professor Gerth said about IPR protection and enforcement in China: “Rather than China increasingly protecting the intellectual property like the brand integrity of multinationals, perhaps counterfeits manufactured in China and exported globally will undermine global brands and consumerism itself. This is happening. Even as retailing and branding have been encouraging much more consumption in China, consumer confidence (both nationally and internationally) has been undermined by the massive production of Chinese counterfeits.”

Read Mr Barboza's interview for the New York Times here.

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How bright is Bright Sword?

Is the Force with mass campaigns?

Are mass campaigns of intellectual property enforcement mere temporary patchwork, leaving untouched the underlaying problems? Most mass campaigns are still announced with starting date and expiration date. The only thing trademark counterfeiters and copyright pirates need to do is book a holiday and start after the campaign is over, reinvigorated. Now I exaggerate a bit. But mass campaigns are in my view suboptimal and overrated, despite all the impressive statistics, and to be consumed by foreign media tired about reporting on IPR infringement cases in China.

The newest campaign is named Bright Sword. The question is whether it is a bit less typical in that it will continue for quite a long time. It started November 2010 and will continue until the end of 2011. The police seized 14,185 suspects in five months, allegedly involved in over 8,000 cases of IPR infringements, according to the Public Security Ministry.

Zhang Yan and Cai Yin wrote for the China Daily that Bright Swords focuses on eight fields including fake international brands, fake food and drugs, pirated film and television works as well as organised crime. Zhang and Cai wrote in the same article that the police is targeting four activities: agriculture, fake drugs, counterfeit wine and food, as well as fake brands. If the journalists are so unclear about which categories are targeted IPR infringers have a more difficult job finding out if they need to temporarily stop their activities.

Deputy director of the ministry's economic crime investigation department, Gao Feng was quoted saying that of 7,000 production and sales outlets were shut down and that the ministry will focus on the supervision of 340 major cases to ensure thorough investigation and punishment of violators. This information is a bit cryptical: does it mean that out of 8,000 cases just 340 cases are prosecuted?

Read the China Daily article here.

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Trends Counterfeit Trademarks/Infringed Patents From China: Smaller Scale, Bigger Risks

Two trends can be abstracted from the 2010 report of the Austrian Federal Finance Ministry to the National Council about the application of Council Regulation (EC) 1383/2003 of July, 22 2003, concerning customs action against goods suspected of infringing certain intellectual property rights and measures against goods found to have infringed such rights. According to the report these trends are in line with the other countries of the European Union.

Unlike in the movie
Matrix, there is no choice
between a blue or red pill.

Only blue pills.
But which one is real?

• Trend 1. From containers and trucks to postal packages via internet

The Austrian customs administration in 2010 seized 2,803 cases after it implemented the EC Counterfeiting Regulation 2004, these consisted out of 292,606 articles. This resulted in (because sometimes a consignment involves more than one person) 4,038 prosecutions. The products represent a value, if they were genuine goods, of € 6,765,057. This is much less than in 2009, when the amount was 16 million euro. So smaller amounts representing lesser value per consignment. These were ordered via the internet and send via the postal service.

• Trend 2. From counterfeit luxury goods to counterfeit daily products with lower original prices
and higher risks

Mass consumer products such as food, cosmetics and hygiene products, auto spare parts, toys and equipment, with all inherent health and safety related risks. Fake drugs were mainly lifestyle drugs such as sexual enhancers, diet pills and hair growth preparations. These trends together are quite a challenge for customs the world over. To check each and every postal package is hardly feasible. If customs in cooperation with industry can find an automised way to authenticate goods, it could decrease risks.

The report says that the EU-China customs action plan, which intensifies the contact between the respective customs, will be extended to 2012. The action plan was a pilot project and will now probably become institutionalised.
For those who can read German, read the Piracy report 2010 of the Federal finance ministry of Austria (in German): Produktpirateriebericht 2010 des Bundesministers für Finanzen (III-226 d.B.) , April 1, 2011.

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Unoriginal trademarks unpopular in Quanzhou. Good news or wishful thinking?

Hao Nan of China Daily wrote about the trade at the Quanzhou Trademark Trade Center in Fujian that almost dried up. Read here. Why did not Adam Smith's invisible hand work? Was the invisible hand here invisible, to quote Joseph Stiglitz, because it was not really there? Hao writes that the problem was that
sellers had an inflated expectations of the price of their brands.

Ge Yongli, general manager of the Fujian Asia-Pacific Intellectual Property Organization was quoted by Hao Nan as saying: “They quote high prices not because their trademarks have such great value but due to a strong resemblance to some international renowned trademarks.”

Stan Abrams of China Hearsay writes: “That doesn’t sound good at all. Not surprising, though. This is the short-cut mentality that you get with emerging markets, and despite the tremendous numbers of trademark filings in China, the commercialization side is still pretty young.” Read here.

This impasse might be a positive sign. Are the buyers just realistic, that in this time and age they better start with an original name to build up their own reputation? Wishful thinking? At the moment it might be not so nice for the people working for the Quanzhou Trademark Trade Center if they have nothing to do. But I am sure the market will come up with new realistic price, it always does. I hope in this price the possibility of getting sued for trademark infringement is factored in.

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IP Dragon Checks International Clothes Market in Beijing: "Waterbedding" Effect of Trademark Enforcement

Building of the International Clothes Market 

While all eyes are fixed on Silk Market in Beijing, IP Dragon focuses its attention to the International Clothes Market in Beijing to check whether counterfeit apparel and bags were on sale.

Let's first take a look at the notorious Silk Market. Tim Smith of Rouse Beijing sent his intern Dominic to take a look at Silk Market. He witnessed that the Beijing Administration for Industry and Commerce (AIC) had put a notice on the wall in Chinese that stated that merchants in Silk Street that were caught selling counterfeit items bearing a list of foreign brands, including Prada, Chanel, Burberry, Givenchy, Boss, Hermes, Miu Miu, North Face would be subject to administrative penalties. If the landlord knowingly permitted the sale of any such goods they were held contributorily liable and it was made clear that they be subject to administrative measures and criminal punishment. It was Dominic's observation that no counterfeit products of the trademarked brands that had filed lawsuits against the landlord, and whose names were mentioned on the notice were on display in Silk Street.

IP Dragon went to the International Clothes Market (金jin 开kai 俐li 德de 国guo 际ji 服fu 装
zhuang 市shi 场chang), which is located near the Beijing Zoo. That it is not hard to find counterfeit products at the second floor of the International Clothes Market is an understatement: counterfeit use of famous foreign brands is omnipresent. From adidas sweaters with hood for 20 RenMinBi (a little over 3 dollar) to North Face jackets for 80 Renminbi. Robe di Kappa, Calvin Klein (but then written as Calvin Kiein), Levi's, Björn Borg. I am not sure whether the design of the pattern on the adidas sweater was also copied. The counterfeit manufacturers also expand the model and product range of famous brands. For example a non-existent LV bag model and “Louis Vuitton” underwear. Text continues below.

The area was patrolled by a police officer. But it seemed not to be his priority. The landlord liability cases in 2005, 2006 and 2010 have shown that private companies can do something about the counterfeit problems at markets by suing the landlord (owner) of the market and the second-hand landlord (the market management company). Check the excellent presentation of Dr. James Luo, Managing Partner of Beijing's Xiang Kun Law Firm about the subject, here. The question is whether the problem just moves away from a place where it seems contained to other places, just like a waterbed. Are the counterfeit products of these active brands not sold in Silk Street, but via a plethora of other channels?

"Calvin Kiein"

"North Face" jackets for 80 RMB

"adidas" sweater for 20 RMB

Robe di Kappa

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