Swiss Watches: 50 Percent Chinese, 50 Percent Swiss

When can you call a watch a Swiss watch?

According to the Swiss law (Verordnung vom 23. Dezember 1971 über die Benützung des Schweizer Namens für Uhren) when:

- its movement is Swiss, cased up in Switzerland and the manufacturer carries out the final inspection in Switzerland.

- a watch movement is Swiss if the movement has been assemled in Switzerland, the movement has been inspected by the manufacturer in Switzerland, the components of Swiss manufacture account for at least 50 percent of the total value, without taking into account the cost of assembly. Read more about the 50 percent rule on the site of the Federation of the Swiss Watch Industry (FH).

Felix Addor, deputy director general of the Swiss Federal Institute of Intellectual Property is not happy with the 50 percent rule for "Swiss made". Neil Gough of the South China Morning Post (SCMP) quotes him saying: "This situation could lead to an insidious dilution of the [Swiss-made] designation, which is damaging for the image of Swiss watches because consumers expect more."

The draft legislation that must lift the percentage of Swissness of the watch to 60 to 80 percent already started in 2007 and is finally under review by the legal commission of the Swiss National Council.

Mr Gough of the SCMP wrote that China and Hong Kong are respectively Switzerland's first and fourth most important markets in the world. Switzerland imported 2.05 billion US dollar of watches and related components last year by customs value, according to UN commodity trade data. Mr Gough quotes Jean-Daniel Pasche, president of FH that when it comes to China, protecting both the watch brand and the Swiss national marque are major concerns. FH helped with the seizure of about 600,000 counterfeit watches in China, in 2009, out of a total of one million fake watches, seized globally.

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China and ACTA: Why Is The Problem Not Made Part Of The Solution?

Medio December 2008 IP Dragon wrote about the controversial genesis of the China-less Anti-Counterfeiting Trade Agreement (ACTA) by Japan and the US (joined by Australia, Canada, the European Union, Mexico, Morocco, New Zealand, Republic of Korea, Singapore and Switzerland) whose goal it is to stem the tide of counterfeit and pirated goods that originate for the lion share from China, read here.

ACTA is not only controversial because it was born in darkness (then again out of darkness beautiful flowers grow), but also because:

- Why start a new multilateral trade agreement when the international community has already the World Trade Organization (WTO)'s Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs). Then again it is hard to reform TRIPs because there are many WTO members. So the way of least resistance is to start a new trade agreement with pre-selected countries that think the same about a TRIPs plus level of IPR enforcement;

- If the People's Republic of China causes the initiators of ACTA such headaches, should they not involve this country in some way with ACTA? In the philosophy of Yin and Yang, the problem (China's lack of IPR enforcement) is existent in the solution (multilateral trade agreement) and vice versa;

- ACTA's content is unknown, so this opens the gates to speculations.

Now the United States Trade Representative has posted ACTA's 'Summary of Key Elements Under Discussion' (Summary) which gives the countours of the draft structure:

• Chapter 1. Initial Provisions and Definitions;

• Chapter 2. Legal Framework for Enforcement of Intellectual Property Rights;

Section 1. Civil Enforcement

Section 2. Border Measures:

Under discussion is whether border measures should apply not only to importations (as TRIPs prescribes) but also to export and transit of goods;

Another possible point of contention is whether travelers can import counterfeit or pirated goods for their personal use (de minimis exception);

It is no surprise that ACTA tries to solve some of the points, which especially has frustrated the US (which among other reasons brought a claim against China at the WTO: DS 362): measures to ensure that infringing goods are not released into free circulation and the destruction of goods that have been determined to infringe intellectual property rights.

Section 3. Criminal Enforcement; the holy grail (overestimated to my taste) remains criminal enforcement of IPR. In the leaked out version of the ACTA proposal of 2007, see below on page 2 here, it was proposed to apply criminal sanctions to IPR infringements on a commercial scale "IPR infringements for purposes of commercial advantage or financial gain. This sentence that I could not find back in the Summary was a bit unclear, because either you apply criminal sanctions if a commercial threshold of the infringed goods is reached (problem: which threshold is not arbitrary and what to do with infringers that keep their activities just under the threshold) or you sanction the intention of commercial advantage/financial gain plus the infringement of minimal one product.

Section 4. Intellectual Property Rights Enforcement in the Digital Environment: surprisingly no draft proposal has been tabled yet.

• Chapter 3. International Cooperation;
• Chapter 4. Enforcement Practices; I cannot stress the importance of the exchange of best practices enough. Transparence of IPR enforcement information, including statistics is key;
• Chapter 5. Institutional Arrangements;
• Chapter 6. Final Provisions.

Expect a lot more discussion when the first draft provisions are disclosed (or leaked).

UPDATE: First draft leaked; read 'Do ACTA Member Countries Want to Confront China With A Fait Accompli?'

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EU Will Not Support US WTO Piracy Case: Good Cop Approach

The EU is not joining the US in filing formal complaints at the WTO in Geneva against China for inadequate copyright and trademark rights enforcement. Although the EU agrees with the WTO case against China in substance, it is not willing to burn its fingers, anxious for economical retaliations.

Ben Blanchard of the Guardian Unlitited wrote:
"Viviane Reding, the EU Information Society and Media Commissioner, said protecting intellectual property rights was a fundamental concern of the block, China's largest trading partner, but legal action was not the way to go."

Read Blanchard's article here.

We'll see whether the good cop bad cop approaches of the EU and US respectively will bear any fruit.

UPDATE
The position of Japan, Switzerland and Australia is unknown. They have 10 days to join the formal complaint of the US as of April 1o. See Managing IP's article 'Allies slow to join US WTO case against China' (which is a bit strange title, because they are undecided and may decide not to join at all) here.

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