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HongFangLaw ~ HFL Events ~ n’ 72
07 December 2018

How can Startups Protect their Intellectual Property in China

China Classifieds together with HFL explore the topic of how to protect intellectual property for startups
WeWork Labs, Shanghai, China

On Dec. 5, 2018, HongFang Law jointly organized an event with China Classifieds, focusing on the protection of intellectual property rights for Startups, and also the recent developments of IP Law protection in China as well as online monitoring and enforcement, along with how to monetize one’s own IP portfolio in China.

The event was hosted at the WeWork Labs location in Nanjing road in Shanghai and welcomed several professionals coming from different business sectors in exploring the on-going changes that are affecting the Chinese market in the last years. In details, we focused our attention on the acquisition of rights in China and the protection of such rights both online and offline.

With this opportunity at hand, HFL decided to highlight the recent developments of the IPR system in China, to explain how it can provide a better protection for our goods and services and a safeguard for the future of the production of them in the country.

We had 3 speakers involved from our team, whom each focused on a separate topic.

Karen Hao took the stand and introduced to the attendees’ the clear definition of what IP law is and what it can protect, she explored the landscape of trademarks, patents, and copyrights systems and how they are the product of a company uniqueness. She then focused on the importance of IP protection for the future and for the establishment of a successful company, as well as the new developments on the Chinese IP system, such as the 2017 Unfair-competition law amendment (effective on 1 Jan 2018) and the Trademark Office calling this March for public comments for the future amendment of the Trademark Law.

Karen was closely followed by our colleague Cathy He, she decided to switch the conversation focus towards online monitoring and enforcement of a company IP portfolio. Once your IP is protected, we believe that a company has to actively be aware of the market share it is a part of. Several squatters and counterfeiters try to succeed by creating fake and misleading stores online, such things are naturally not appreciated by both the police authorities and the government.

For this reason, Alibaba and several other platforms have moved to secure the right older positions on the market, by instituting online IPR protection platforms, which are extremely successful in cracking down counterfeiters.

Cathy has then focused on the best practices to take in order to protect one’s IP rights both online and offline.

After the presentation was completed a panel took place, where both Karen and Cathy took the stand, together with our team Business Development and Marketing expert Federico Bartolini. The team replied to several questions from the audience, in relation to how their specific trademarks or patents could be protected, as well as how they could monetize their IP portfolio in the Chinese market. There was a clear interest in the prices of such registrations, which we agreed, in the end, were quite fair, and the length of a court proceeding as well as their success rate.

The IP practice and regulations in China have come a long way since their first institution, and are now one of the most successful around the globe, still, misconceptions are prevalent outside of China, and many foreign businesses are wary of the market. We at HFL firmly believe that even if there is always room for improvement, the current IP regulations are strong and stable enough to protect all companies that seek safeguard of their IP portfolio.

There is no reason for concern, as China is a country of consumers always interested in trying new experiences and high-quality products, and the legal system protects both consumers and producers of goods, as best as possible.

In conclusion, we would like to thank once again our partners at China Classifieds and WeWork Labs for their support in the organization of the event, and their continuous effort to educate and support new companies and startups in the Chinese market. China landscape is one of high competitivity and we firmly believe that any new company that wishes to succeed here, needs to be relevant, be innovative but most importantly be protected.

If you would like to know more about the event and receive additional insights on the IPR system in China, please get in touch with our team.

If you would like some more personalized review of the news from us, please kindly let us know by writing to:public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 71
23 November 2018

JIA SHI DUO (Castrol) v. JIA SHI JIE
Protection Bridging between the Trademark Law and the Anti-Unfair Competition Law

Co-authors: Edmond Au, Shirley Lin

Recently, Castrol, aka JIA SHI DUO in Chinese, has filed an administrative complaint, claiming for anti-unfair competition protection against a kind of lubricant product named JIA SHI JIE. In the case, the counterpart noticeably labeled his “嘉世捷”(JIA SHI JIE) lubricants as related to “嘉实多” (JIA SHIDUO is the Chinese equivalent of Castrol), the registered trademark and tradename of Castrol in China. Despite the aggressive use of the text “authorized by JIA SHI DUO (China) Ltd.”, “JIA SHI JIE – JIASHI DUO Group”, “supervised by JIA SHI DUO (China) Ltd.” to confuse consumers, the difference between the two Chinese marks make it difficult for trademark infringement. Faced with the conundrum, Article 58 of the Trademark Law caught the attention of the author as a potential solution.

Article 58 was added to the Trademark Law in the 2013 amendment as “Where any entity uses a registered trademark or an unregistered well-known trademark of others as a trade name in its enterprise name to mislead the public, if any unfair competition is constituted, it shall be handled in accordance with the Anti-Unfair Competition Law of the People’s Republic of China.” [1] On the issue, it is similarly provided in Article 1.1 (hereinafter “Interpretation1”) of the Interpretation of the Supreme People’s Court Concerning the application of Laws in the Trial of Cases of Civil Disputes Arising from Trademarks that “using the words that are identical or similar to the registered trademark of any other person as the tradename on identical or similar commodities so that the relevant public is liable to be misled” constitutes an act of “causing other damages to the registered trademark of other people”. The provisions together provide a relatively well-round solution to the conflicts between a prior trademark and the use of it as the trade name. They also serve to complete an improve Article 4 of the provisions of the Supreme People’s Court on Issues Concerned in the Trial of cases of Civil Disputes over the Conflict between Registered Trademark or enterprise Name with Prior Right which regulates the court’s jurisdiction over such issues. [2]

For precise law application of Article 58, the key concepts that the provision entails should be taken right. “A registered trademark” mentioned therein should refer to a registration either well-known or not since the former is unarguably entitled to broader protection, regardless of the singled out “unregistered well-known trademark” that follows as a parallel. It is because the wording intends only to draw the line between a registration and non-registration, and should not be cited against a registered well-known trademark. When bringing in the first Interpretation that outlaws a questionable trademark use “as the trade name”, it becomes obvious that Article 58 actually regulates against a less severe condition — the use” as a trade name” in the user’s enterprise name. While both usages are expected to give rise to confusion, the former imposes graver damages for the high-profile violation, whereas the latter is less noticeable in the disguise of the infringer’s own company name, and thus only constitutes an act of unfair competition as opposed to blatant trademark infringement. Although it has been accepted that any violation that fits in Article 58 should be handled pursuant to the Anti-Unfair Competition Law, opinions still vary on which provision should be cited in practice for the void unfilled.

There are mainly three opinions: firstly people deem it is about the Article 2 of the Anti-Unfair Competition Law, which has been validated by a number of judgments of the High People’s Courts in Tianjin, Chongqing, Jiangsu, Jiangxi, Shandong etc. [3]; the second one to Article 6.2, an approach taken by some other courts[4]; and third opinion agrees that it is to “false advertising” provided in the same law before amendment, citing untruthful statement about the producer[5]. While the former two opinions both have a point and help navigate judicial and administrative enforcement, the other hinges on a condition that is no longer regulated by the Anti-Unfair Competition Law, and thus should not be cited when more applicable provisions are still available, in a way to avoid unnecessary expansion of the interpretation of any specific legal concept.

In citing the more general Article 2, the court is suited to do so as it is within their rights to interpret laws. It is not uncommon for the court to give its take on the intertwined trademark and enterprise name matters at issue based on general rules of laws: in addition to the above mentioned, there is Article 10 of the Notice of the Supreme People’s Court on Issuing the Opinions on several issues concerning Intellectual Property Trials Serving the Overall Objective under the Current Economic Situation, “…We shall, under the principle of good faith, maintaining fair competition and protecting the prior rights, hear such disputes of rights according to law. Where there is a legitimate form of business such as industrial and commercial registration but still trademark infringement or unfair competition substantively constituted, such violation shall be affirmed according to law. For commercial identifiers such as enterprise names acquired outside China, trademark infringement or unfair competition is still applicable if relevant laws are violated and economic order disrupted within the borders, pursuant to the principle that intellectual property is independent and regional…Where an enterprise name appropriates a considerably high-profile registered trademark of others and thus inevitably causes confusion in the market no matter the use is accentuated or not, the court shall rule to ban or change the name at the request of the party concerned…” Therefore, the court may similarly apply Article 2, a general provision of the Anti-Unfair Competition Law, together with Article 58 of the Trademark Law to find unfair competition in hearing such trials.

As for Article 6.2, it provides for “using without permission another person’s name with certain influence, such as the name(including abbreviations and trade names) of an enterprise”. Such uses should include the direct and high-profile way, as well as sneakily incorporating other’s trade name into one’s enterprise name. The latter is exactly what we have discussed in the context of Article 58. To finish the case building, the last piece is to establish that the trademark being cited (“a registered trademark of an unregistered well-known trademark”) is also the rights holder’s trade name. Compared to Article 2 above, Article 6.2is a specific regulation easier to enforce in administrative proceedings. All conditions being fulfilled, law enforcers may take action against unfair competition by citing Article 58 of the Trademark Law and Article 6.2 of the Anti-Unfair Competition Law. This was precisely the way they pursued the infringer in “JIA SHIDUO” v. “JIA SHI JIE”. With “JIA SHI DUO” being the trademark and trade name of Castrol Ltd., it was argued on grounds of unfair competition pursuant to the articles, winning the support from the authorities who punished the adverse party accordingly.

In summary, to bring out the potential of Article 58 of the Trademark Law in synergy with the Anti-Unfair Competition Law for law enforcement in judicial and administrative practice, we should understand what the provisions are for and how they can be applied in both proceedings to achieve substantial outcomes.


Notes:

[1] Article 1 of the Interpretation of the supreme people’s Court Concerning the Application of Laws in the Trial of Cases of Civil Disputes Arising from Trademarks:

a. Using the words that are identical or similar to the registered trademark of any other person as the name of one enterprise on identical or similar commodities so that the relevant public is liable to be misled.

b. Copying, imitating or translating the registered well-known trademark of another person or the major part thereof is used on non-identical or dissimilar commodities as a trademark for the purpose of misleading the general public so that the interests of the registrant of the well-known trademark may be damaged;

c. Registering the words or characters identical or similar to the registered trademark of another person as a domain name and engaging in the electronic commerce of relevant commodities via the domain name so that the relevant general public is liable to be misled.

[2] Article 4 of the Provisions of the Supreme People’s Court on Issues Concerned in the Trial of Cases of Civil Disputes over the conflict between Registered Trademark or Enterprise Name with Prior Right: If the enterprise name of the defendant infringes upon the right to the exclusive use of a trademark or constitutes unfair competition, the people’s court may, by taking the plaintiff’s claim and the specific situation of the case into account, order the defendant to stop or regularize the use of enterprise name and assume corresponding civil liability.

[3] Article 2 of the Anti-Unfair Competition Law of the People’s Republic of China: Businesses shall, in their production and distribution activities, adhere to the free will, equality, fairness, and good faith principles, and abide by laws and business ethics.

For the purposes of this Law, “act of unfair competition” means that in its production or distribution activities, a business disrupts the order of market competition and causes damage to the lawful rights and interests of the other businesses or consumers, in violation of this Law.

For the purposes of this Law, “business” means a natural person, a legal person, or a non-legal person organization that engages in the production or distribution of commodities or the provision of services (commodities and services are hereinafter collectively referred to as “commodities”).

[4] Article 6 of the Anti-Unfair Competition Law of the People’s Republic of China: A business shall not commit the following acts of confusion to mislead a person into believing that a commodity is one of another person or has a particular connection with another person:

(1) Using without permission a label identical or similar to the name, packaging or decoration, among others, of another person’s commodity with certain influence.

(2) Using without permission another person’s name with certain influence, such as the name (including abbreviations and tradenames) of an enterprise, the name (including abbreviations) of a social organization, or the name (including pseudonyms, stage names, and name translations) of an individual.

(3) Using without permission the principal part of a domain name, the name of a website, or a web page with certain influence, among others, of another person.

(4) Other acts of confusion sufficient to mislead a person into believing that a commodity is one of another person or has a particular connection with another person.

[5] Article 9 of the Anti-Unfair Competition Law of the People’s Republic of China (1993): Managers shall not use advertisement or the other methods to make a false propaganda for the quality, composition, function, usage, producer, time of efficacy and place of production of commodities.

Advertising company shall not be an agent of, or design, or make, or propagandize false advertisement if it knows or should know the truth.

If you would like some more personalized review of the news from us, please kindly let us know by writing to:public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 70
16 November 2018

Being squatted of your own domain name? Arbitration helps

Just as a house number is to a building, so a domain name is to a website, guiding readers to their desired destinations. Business owners tend to register a domain name with their brands for brand development and as greater traffic to their websites in the shortest time as possible. The process for registering a new domain name is easy and fast with the rule of “first-apply, first-register” as long as there is no prior identical domain name existing, squatters have been lured to exploit the resource, taking the free ride of reputable brand owners, but this also brings misleading damage to relevant consumers’ legal rights.

What can we do if being squatted with domain name registration by others? Negotiation for assignment might make you feel uncertain about the cost, a civil lawsuit would bring you into a long judicial proceeding process that might take years. Comparatively, to go through the arbitration proceeding would be a good option to solve the domain name dispute.

1. Definition of domain name arbitration

It involves filing a complaint with an institution for domain name dispute resolution, in an attempt to have a registration canceled or transferred to the complainer based on the arbitrator’s administrative decision.

2. Domain name dispute resolution institutions in China

There are various arbitration organizations in China for different types of disputes. For those concerning generic top-level domains (gTLD), for instance, .com, .net, .org and so on, complaints may be filed with organizations certified by the Internet Corporation for Assigned Names and Numbers (ICANN).In practice, when a Chinese party is involved, the complainer often takes the case to the Asian Domain Name Dispute Resolution Centre (ADNDRC), whose Beijing Office is run by the China International Economic and Trade Arbitration Commission (CIETAC), and Hong Kong Office by the Hong Kong International Arbitration Centre (HKIAC).

In the meantime, similar mechanisms and institutions have been established for disputes over .cn,.com.cn and a collection of Chinese domains used within the country. They are also handled by the CIETAC and the HKIAC.

3. Mechanisms and rules for domain name dispute resolution

Institutions arbitrate in gTLD-related disputes based on the Uniform Domain Name Dispute Resolution Policy (UDRP) and the UDRP Rules acknowledged by the ICANN. As for national domains in China, the relevant disputes are handled pursuant to the China Internet Network Information Center (CNNIC) Domain Name Dispute Resolution Policy (CNDRP) and the CNDRP Rules.

4. Grounds for decisions by domain name dispute resolution institutions

The above-mentioned policies and rules share the same principles at the core. In summary, institutions factor in the following conditions when they decide whether a domain name should be canceled or transferred.

The domain name in question is identical or confusingly similar to the trade name or trademark to which the complainer enjoys certain civil rights and interests

Generally, a common scenario that suffices for the above condition is the complained domain names incorporating the full name or mark cited by the rights holder. Take the disputed “Webwework” as an example. It was found to be confusingly similar to the complainer’s trademark “WEWORK” for the full use of the mark, and for the failure of the additional “Web” to distinguish the domain name because the word is too generic in the context of the Internet.

The complained holder is not legally entitled to the domain name or the main part of it

After establishing that the complained party has no authorization, no commercial exchange with the complainer, no application or registration of the mark concerned etc. to preliminarily fulfill the complainer’s burden of proof, it is the respondents turn to shake off the assumption that he/she is not entitled to his registration, as requested by arbitrators. In the dispute over “bananaboatcn”, the presiding expert panel held the same opinion and shifted the burden to the respondent after the complainer showed that there existed no authorization or distributorship between the parties.

Bad-faith registration or use of the domain name in question by the respondent

In practice, the more well-known the complainer’s cited mark is, the more likely the respondent would be found with bad faith, a critical circumstance similarly considered in trademark infringement cases. This is because a well-known mark tends to boast more exposure than usual, which helps establish that the respondent could have knowingly appropriated the mark while he/she was supposed to take reasonable measures to avoid touching upon other’s prior rights. However, in a trademark dispute, a rights holder may not be granted protection in a country where the evidence of the cited trademark’s well-known status is not sufficient, considering that intellectual property is highly regional. It turns out to be less of a concern to expert panels for domain name arbitrations when they decide whether to acknowledge some evidence generated outside the country.

JVP, a company based in Israel who had neither registration of a namesake trademark nor sufficient evidence of its use in China, took to filing a complaint against “jvpvc.cc”. Regardless of the vulnerabilities, JVP as a trademark was found to enjoy considerable fame and reputation by the expert panel, based on an enormous amount of evidence from websites and publications originated from overseas, which could have been dismissed in a trademark dispute.

It usually takes around 60days from complaint filing to service of a decision. After the decision becomes effective, the complainer may request with the concerned domain name registrar for the relevant cancellation or transfer.

Domain name arbitration has its cons though, and institutions are not in the power to grant damages, and the respondent may go on to filing a lawsuit if he/she has objections. A comprehensive review of all factors in play is necessary for reaching the best solution based on the circumstances.

If you would like some more personalized review of the news from us, please kindly let us know by writing to:public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 69
26 October 2018

Co-existence agreement helps secure thwarted trademark applications

Co-authors:?Walker Xu, Shirley Lin

According to statistics published by the China Trademark Office (CTMO) of the State Administration for Industry and Commerce on its website [1], the total number of trademark applications in China has amounted to 22.931 million up to 2017, among which 15.145 million were granted registration. Validly registered trademarks account for 12.937 million. It goes without doubt that the colossal base of trademark applications and registrations is expected to increase refusals of new filings [2].

In light of a rejected trademark application, a well-planned plan should be developed first before an applicant apply for a review of the unfavorable decision with the Trademark Review and Adjudication Board (TRAB).

In countering the CTMO’s dismissal of the applied trademark for similarity ruled out by Article 30 of the Trademark Law, besides establishing the opposite argument, the most favored strategy is to get prior trademarks out of the way. Therefore, cancellation and/or invalidation proceedings are often initiated against cited trademarks when the refusal is sent on appeal. Negotiation for a buy-out is also an option [3]. Certainly, it is also possible for the applicant to hit the jackpot, finding that the blocking trademark is no longer an issue, as a result of the no renewal to its lapsing validity period. [4]

Another approach that can be tried in addition to the above, or amid insurmountable difficulties in carrying the actions through, is seeking a co-existence agreement. It may be a silver bullet and thus a highly recommended solution for troubled trademark applicants going forward.

Although no provisions have been made on co-existence agreements in the Trademark Law, it is known that the Beijing Higher People’s Court and the Beijing Intellectual Property Court are quite open and positive to the practice as has recently been revealed.

Multiples cases, that have lately been publicized, see the Beijing Higher People’ Courtrepeal several judgments rendered by the Beijing Intellectual Property Court and decisions by the TRAB who ruled against trademark applicants. The higher court’s opposite ruling is due to co-existence agreements reached between trademark applicants and owners at odds [5].

In the course of this new developments, the Beijing Higher People’ Court affirmed the TRAB and the first-instance court’s determination that the disputed trademarks had touched-upon Article 30 of the Trademark Law for being similar to their corresponding item trademarks. However, co-existence agreements had come in being, between the parties of conflicting interests in second-instance proceedings, so prior judgments and decisions against the trademark applicants were eventually overturned based on the change of situations.

The precedents show that trademark co-existence agreements may come to play a decisive role in getting certain blocked applications through to preliminary approval and publication even if they have been found similar to cited trademarks and thus been rejected pursuant to Article 30 of the Trademark Law. This is a revealing lesson on the importance of such agreements to successful trademark registration.

Notes:

[1]Reference: http://sbj.saic.gov.cn/gzdt/201705/t20170524_265379.html

[2]?Trademark refusals discussed in this article are limited to those deemed similar to prior trademarks and thus violating Article30 of the Trademark Law by the CTMO.

[3] Cancellation and invalidation can be launched only when certain conditions are met; buy-out negotiation has varying outcomes and comes with relatively large costs.

[4] For example, it happens when a trademark has the refusal of the registrant to retaliate the case, or at the stage of the lawsuit, it has expired due to time constraints.

[5] For example, judgments No. (2018)JXZ1617 and No. (2018)JXZ1980.

If you would like some more personalized review of the news from us, please kindly let us know by writing to:public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 68
10 October 2018

Should Invalidation Action Cease for Non-use Cancelled TM?

Co-authors: Betty Chen, Shirley Lin

Source Material:
Judgement No. (2015)JZXCZ02902

Parties Concerned:

Plaintiff: Wm. Wrigley Jr. Company (“Wrigley Co.”)
Defendant: Trademark Review and Adjudication Board of the State Administration for Industry and Commerce (“TRAB”)
Third Party: Garton International Limited (“GartonLtd.”)

Case Overview:

Wrigley Co. applied for invalidation of Garton Ltd.’s registered trademark No. 8416566 “MELEPINA5 and device” (the “Disputed Trademark”) before the TRAB who decided to maintain the trademark. Not satisfied with the result, Wrigley Co. took the TRAB to the Beijing Intellectual Property Court in May 2015. In December of the same year, the Disputed Trademark was canceled for not having been in use for a three years period. In February 2018, the invalidation of the trademark dispute was declared in the first instance of the administrative confirmation case between Wrigley Co. and the TRAB. In court, the Plaintiff pleaded for termination of the court proceedings since the Disputed Trademark’s cancellation has been effective and published on the Trademark Gazette issued in December 2015, citing no necessity to continue the trial.

Court Opinions:

The court held that trademark cancellation and invalidation are different in their nature and implications. While cancellation hinges on whether a trademark has undergone true and valid commercial use in a certain period, invalidation is centered around its compliance with regulations on trademark application and registration. As for their legal consequences, the cancellation means that the related exclusive trademark rights are terminated upon the Trademark Office’s decision as such, but after invalidation, the rights are deemed non-existent in the first place. In summary, a trademark that suffers cancellation is still able to maintain a validity period from the date of its registration to when canceled, as opposed to invalidation. The court thus regarded it was necessary to carry on with the trial, and eventually maintained the TRAB’s decision not to invalidate the Disputed Trademark.

HFL Comments:

Even if both proceedings aim to erase rights to a registered trademark, cancellation and invalidation still differ in some ways. A trademark is canceled by the competent administration for incidents that have undermined the grounds for its protection after its registration, pursuant to Article 49 of the Trademark Law. Since no wrong has been done during the acquisition of the trademark rights but rather it was found the improper use (or no substantial use at all) of the trademark, later on, the deprivation of the rights is thus relative and only concerned with the period after registration. On the other hand, invalidation occurs when laws and regulations on a trademark’s application and registration are violated, threatening the country’s order of law and the public’s interests.

The Trademark Office or the TRAB has the power to announce a wrongfully registered trademark to be invalidated citing absolutely or relatively banged circumstances according to Articles 44 and 45 of the Trademark Law.

This results in prima facie and absolute void of trademark rights effective ab initio – as such, the trademark is deemed to have never been applied or registered and there existed no rights attached thereto upon the authorities’ decision.

In practice, the Beijing Intellectual Property Court should bring an end to a court action concerning disputes over a trademark’s cancellation after it has been invalidated. But in reverse order, court proceedings should continue their course to decide whether a canceled trademark should be subjected to invalidation or not.

If you would like some more personalized review of the news from us, please kindly let us know by writing to:public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 67
07 September 2018

HongFangLaw won the “2017-2018 Excellent Trademark Agency Case” award

From August 31 to September 3, 2018, the 2018 China International Trademark Brand Festival was held at the Tangshan International Convention and Exhibition Center. As one of the major events held around the field of intellectual property, the China International Trademark Brand Festival has an important position in the national intellectual property strategy market. At the same time, the China International Trademark Brand Festival is also a world-renowned international “brands for trademark” event, aiming to serve enterprises to better build internationally renowned brands, promote international exchanges and cooperation, build a communication platform between government and enterprises, and to be highly recognized by domestic and foreign trademark brand experts alike. The event drew the attention of scholars, entrepreneurs, and related professional institutions.

This year’s trademark brand festival organized 17 sub-forums and 5 trademark salons around the theme of “creation, protection and application” of trademarks. It has gathered many entrepreneurs, trademarks agents, and scholars in the field, as well as professionals from all over the country. In addition, foreign authorities shared cutting-edge news and information about trademarks.

The climax of this year’s trademark brand festival was undoubtedly the awarding of prizes for excellence and the announcement of the “excellent trademark agency case” award. In this year’s Trademark Brand Festival, Mr. Zhang Zhaolong’s (Bob Zhang) “‘Cat Force Steps” trademark opposition was awarded the 2017-2018 Excellent Trademark Agency case. This case demonstrated how to effectively protect the names of works with high visibility and the names of characters in the works with prior commercialization rights. It was an excellent practice case for its display of relatively new problems in the trademark field around the protection of prior commercialization rights. In addition, we also believe it is worth mentioning, that HongFang won last year a similar award the “2016-2017 Excellent Trademark Agency case” with the “Fa Qi Bao” trademark refusal review case, during the previous trademark brand festival.

The selection of the annual excellent trademark agency case is utilized as a way to summarize and publicize the innovative practices and advanced experience of trademark agencies and establishing a good case benchmark to play the role of guidance and future reference. The excellent trademark agency case was selected by a number of applicants from an expert jury composed of the heads of trademark authorities, well-known experts and scholars in the intellectual property field. The consecutive awarding of HongFang’s “Fa Qi Bao’s” trademark refusal and “‘Cat’s chaos” trademarks cases are undoubtedly a reaffirmation of HongFang’s trademark agency level.

“Cat force chaos” trademark opposition
Main reasons for the selection and legal significance of the case:

The prior rights advocated in this case are the right to commercialization based on the name of the best-selling work and the name right based on the author’s pseudonym. This prior right is different from the more common copyright, portrait or trademark rights. In the previous relevant laws, there was no clear definition of “commodity right”, which was only reflected in some cases. However, the name of the work or the name of the role does allow the owner of such work or name to gain reputation, fame, popularity, etc. through the work, name, etc., and the owner can combine the above-mentioned reputation, fame, popularity, etc. with additional goods or services. Commercial use of such relevance and popularity might be abused to achieve economic benefits by infringers of the right.

Article 22 of the Supreme People’s Court’s Regulations on Several Issues Concerning the Trial of Administrative Cases for the Recognition of Trademark Authorizations, which was adopted in 2017, may be used as a prior commodities interest for the name of the work with higher visibility and the role name in such work. For this reason, protection had to be clearly defined. The case, starting from the writing of the objection grounds and considering the preparation of the relevant evidence to the final decision of the Trademark Office in accordance with the law, was in line with the legislative spirit of the law, and as such the protection of the prior commercialization right was well practiced.

If you would like some more personalized review of the news from us, please kindly let us know by writing to:public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Event Updates ~ n’ 66
12 September 2018

PTL Group Partners Exchanging Opinions with HFL & Procon Pacific LLC about the China-US Trade War’s Impact on Supply Chain Shift in Asia and China IPR Development
Servcorp Kerry Center, Shanghai, China

On Aug. 31, 2018, HongFangLaw jointly organized an event with PTL Group & Procon Pacific LLC, focusing on the impact caused by China-USA trade war to the supply chain shift in Asia, and also the recent developments of IP Law protection in China, along with the increasing level of domestic market and industry sectors.

The event welcomed several professionals coming from different business sectors in exploring the on-going changes that are affecting the Chinese market in the last years. In details, we tried to focus on the latest changes mandated by the US government that started the so-called “Tariff War” with China, basically affecting a good number of businesses and industry sectors both in China and in the whole south-east Asia markets.

The China-US tariff war has already singled out the manufacturing, ICT and energy industries as the most affected by it. As companies are starting to invest in this shift into the South East Asia market, many have taken the decision to move their industrial efforts from China to other countries, mainly Vietnam, Thailand, and India.

This naturally affects the landscape of the labor cost and labor displacement, as our colleagues in Procon Pacific LLC stated during the event, and accelerated the shift that was already in action from the massive Chinese market, into the newly developed South East Asia one (and its countries). Such countries have still some challenges, including the demand for high-speed production and international logistics services and the control of labor cost.

At the same time, customs and IPR protection in these countries are still in the early stages, if compared to the international standards. With this opportunity at hand, HFL decided to highlight the recent developments of the IPR system in China, to explain how it provides a better protection for our goods and services and a safeguard for the future of the production of goods in China.

Karen Hao took the stand and highlighted how in recent years companies that produce in China through OEMs and corporations that just export to the country have seen a swift change in how the authorities and the customs deal with their cases, which is now more severe in line with the international standards. More protection brings out fewer chances for trademark squatters and patents infringements and a better environment for international and Chinese companies alike.

At the end of the event, we all came to the conclusion that the overall quality of the Chinese market and industry landscape is increasing, which brings China even more to the forefront of the goods production, but also, prices for production and overall cost have increased, as the quality of life in those production areas has risen at the same time. We will see an upsurge in the shift, during the next years, of the production of some goods and materials, from China to other countries in South East Asia.

In conclusion, we would like to thank once again our partners at PTL Group and Procon Pacific LLC for their insights in this new everchanging landscape, and we have achieved a better understanding of the international market together.

If you would like to know more about the event and receive additional insights on the IPR system in China, please get in touch with our team.

If you would like some more personalized review of the news from us, please kindly let us know by writing to:public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 65
31 August 2018

How liabilities on sellers of products constituting Unfair Competition have been implemented in the new amendment of the law

Co-authors: Edmond Au, Shirley Lin

“Products constituting unfair competition” defined in this article largely correspond with the circumstances provided in Article 6 of the new Anti-unfair Competition Law, where unfair competition is typically characterized as “unauthorized use” of other’s rights. Such use is, in our opinion, consistent with trademark use prescribed in Article 57.1 and 57.2 of the Trademark Law in terms of their nature. This is because even though the context is different in the two laws, the meaning of “use” should remain unchanged, as the provisions concerned are closely correlated and aim to address the same issue – identification of the source of products.

Similar to trademarks, a product’s “name, packaging or decoration”, a business’s “corporate name” and “the name of an individual” set forth in article 6 also function to identify where the product in question comes from. The two laws go hand in hand to serve as a bulwark against IP infringement inChina. So what does “unauthorized use” cover? Does it include pure distribution activities? We believe the answer is no, given its counterpart’s coverage in the Trademark Law. In the Trademark Law, the echoing trademark use is an act parallel with “sale”, and separate provisions have been designated for them.

In light of the correspondence between “unauthorized use” and trademark use, the same rule applies to the former. Therefore, the scope of the term “use” is supposed to be linked with direct use, i.e. by manufacturers who may also sell as well as produce. As for sellers who do not manufacture, their behavior is not regulated by this provision.

With pure distributors’ liabilities up in the air in the Anti-unfair competition law, reference could be drawn from ministerial regulations or administrative opinions. In the 1995 Certain Regulations on Prohibiting Unfair Competition Activity Concerning Imitating Specific Names, Packaging or Decoration of Well-known commodities, the State Administration for Industry and Commerce of PRC (SAIC) laid down in Article 9 that “Selling commodities containing specific name,packaging or decoration of a well-known commodity which is known well or ought to be known well by the sellers shall be punished according to the provisions of Articles 7 and 8 of these regulations.”

The Administration also rendered an official reply to its subordinating bureau in Tianjin on such an issue. Upon the latter’s query about how to deal with the sale of free-riding commodities, the SAIC affirmed that distributors’ selling goods exploiting other’s brand and reputation constitute a violation of Article 5.3 of the Anti-unfair Competition (before 2017 amendment) and should be punished pursuant to Article 21. The aforementioned regulations and reply are still in effect as of today and continue to be an established major standard that has been in place for years to guide law enforcement with regard to whether sellers are infringers by unfair competition.

In judicial practice, the regulations and reply shortly of legislation would not be cited for rendering judgment. Instead, courts factor in how well the product being infringed upon and the related right holder (name of corporate or individual) are known, and how much of bad faith the seller has displayed in a case. If the seller is obviously ill-intentioned and fails to justify the selling with proof of a legal source of the product in question, courts would generally make the seller stop the infringement and compensate the right owner, pursuant to Article 58 of the Trademark Law and Article 2 of the Anti-unfair Competition Law. The practice has been witnessed in two cases where the distributors were found with obvious bad faith to have sold products infringing upon their well-known competitors’ rights. Although unfair competition perpetrated by mere selling is not elaborated in the legislation, courts are within their rights to affirm infringement by resorting to Article 2, a fundamental provision of the law. In view of such court discretion within an acceptable range, it is no wonder that law-makers were comfortable enough to have left out a provision for pure selling as a form of unfair competition in the law.

We reckon that the omission has its bright side because some sellers might otherwise suffer loss. Unlike trademark or patent or copyright, rights concerned in unfair competition disputes are not publicized for the public to check on. If unfair competition by mere selling was written down in the law, small and micro sellers with good faith but lacking resources could have been found infringing to their surprise when they were not able to foresee what would constitute unfair competition, a term encompassing so many forms of infringement. Reasonable or not, the legislation is the way it is, but it should not be a reason to let go of infringing sellers at stake.

Lenient enforcement would aggravate the already severe landscape of unfair competition in China. Perpetrators would step up their violations knowing that they could easily get away, pushing originally good-faith operators towards the pursuit of illegal easy money. But if we stem unfair competition on the demand side by punishing sellers, it would in turn curb violations by manufacturers. It is, therefore, necessary to put administrative and civil liabilities on pure distributors considering the current workings of China’s market and economy.

But the question is, when and how to do it? Articles 60 and 64 of the trademark law could be a way. If a seller unknowingly provides products constituting unfair competition and is able to prove legal acquisition and identify a source of the products, it is only required that the seller stop the distribution without being subjected to any administrative penalties or civil liabilities. With the above-mentioned regulations and reply in place, infringing sellers can be effectively punished on reasonable grounds by the administrative authorities. As for court proceedings, Article 2 of the Anti-unfair competition law is available to be cited depending on the circumstances of selling activities to pass down judgments at courts’ discretion.

If you would like some more personalized review of the news from us, please kindly let us know by writing to:public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 64
17 August 2018

“Ghost Blows Out the Light” vs. “Captain Touchers of Gold”
Copyright dispute arises over an author’s novel re-creation containing elements of a previous novel that had its copyrights acquired

Co-authors: Mamie Mai, Shirley Lin

Source Material:

Judgment No. (2015) PMS (Z) CZ838

CaseOverview:

Shanghai Xuanting Entertainment Information Technology Co., Ltd. (“Xuanting Co.”) has acquired the economic rights on the series novel “Ghost Blows Out the Light” from the author Zhang Muye (pen name: Tianxia Bachang). They have reached a contractual agreement that Xuanting Co., with the assigned rights, is entitled to develop works and products derivative from the novel in question, as it pleases, based on market demand. On the other hand, the author Zhang Muye, in light of the effective agreement, can no longer create any work identical to or similar to the novel with his real name or pen name, or with the book title or the major chapter titles of “Ghost Blows Out the Light”.

After some time from the agreement, Zhang Muye wrote and published a new novel “Nine-Phantom General of the Captain Touchers of Gold” (“Captain Touchers of Gold”), in which an array of ingredients of “Ghost Blows Out the Light” are used, including the names, images of the characters and their relationships, including the methods, taboos, and rules for tomb raiding. Therefore, Xuanting Co. sued Zhang Muye, alleging the defendant’s infringement of the company among other rights and interests concerning the copyrights it has on “Ghost Blows Out the Light”.

Court Opinions:

The court has examined the use by the author of such forming parts of the novel from 1) the parties’ contractual agreement and 2) protection of the elements in question (e.g. character names and images).

Regarding the first point, the court is of the opinion that the author should be allowed to produce derivative works with the elements of his/her writing such as the characters he/she has given life to. This is in line with the spirit underlying the legislation of the Copyright Law that aims to flourish the literary and artistic industry, which eventually benefits audiences at large. Bearing the spirit of the law in mind, interpretations of the agreement between the plaintiff and the defendant should be strictly literal, limiting extensions to those backed by solid evidence. As far as what the parties have agreed, the assignment of the economic rights to Xuanting Co. is general with no exclusion. The author Zhang Muye has not been barred from re-creating activities with the objects contained in the writings of “Ghost Blows Out the Light”.

The case also hinges on whether such elements in question deserve copyright protection. According to the court, works that could be copyrighted should be external expressions objectively perceivable by others. However, building blocks of a literary work such as the characters therein hardly constitute such expressions, as they generally serve as no more than just media via which the plot develops and tools with which the author works on storytelling. Therefore, to determine whether the alleged infringement is established, the stories as a whole should be compared. “CaptainTouchers of Gold” is different from “Ghost Blows Out the Light” in this sense. The court has thus dismissed the plaintiff’s claims against the defendant for copyright infringement, citing insufficient evidence for the argument that elements of the story are entitled to copyright protection.

HFL Comments:

The case provides two approaches to viewing an author’s re-creation with the ingredients of a work whose copyrights have been assigned. One way to go is to look into the assignment agreement, evaluating whether the author has been precluded from using elements related to the transfer. The other aspect comes down to comparing the original story and its derivative for similarity.

Another issue to note is that storytelling elements including characters installed in the plot, while not qualified for copyright protection, are not to be used as freely as the author wants. If they are distinctive enough to identify the work concerned, they might be able to enjoy protection from the Anti-unfair Competition Law as a bundle. Infringement in this regard should be determined based on whether the use of the items in a new work complies with certain codes observed in the industry. Factors such as who the user is, what he/she intends, where the original work stands and how the use affects the market of the original work should be taken into consideration.

If you would like some more personalized review of the news from us, please kindly let us know by writing to:public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 63
10 August 2018

A View on the State of Variation against Reference Views – How do they impact a design patent’s scope of protection?

Co-authors:?Jessica Li, Shirley Lin

As Article 59.2 of the Patent Law states, “For the patent right of an invention or utility model, the scope of protection shall be confined to what is claimed, and the written description and the pictures attached may be used to explain what is claimed.” Requirements for pictures are further stated in the Guidelines for Patent Examination, “Concerning the relevant views and stereoscopic drawings or photographs, so far as a product with a three-dimensional design is concerned, if the essential features of the design of the product involve six sides, the applicant shall submit orthographic projection of six-side views; if the essential features of the design of the product involve the view from one side or several sides only, the applicant shall submit at least orthographic projection view and space diagram of the side concerned.

So far as a product with more simple design is concerned, if the essential features of the design of the product involve the view of one side only, the applicant may submit the orthographic projection view of the relevant side alone; if the essential features of the design of the product involve the view of two sides, the applicant shall submit the orthographic projection views of the two relevant sides. The applicant may also submit, if necessary, the complete view, cutaway view, sectional view, enlarged view, and view of the state of variation.

In addition, the applicant may submit the reference views. Reference views are usually used to indicate the purpose, method or place of use of the product incorporating the design.” There is no doubt from the above statements that orthographic projection and space diagram dictate the scope of a design patent’s protection, but regarding the view of the state of variation and reference views, the influence is left unclarified. This article will aim to illuminate how the latter pair would affect the protection scope, we will start by defining the terms.

According to the Guidelines, “A product of variable states means a product that can be in different states when on sale or in use.” That is why the view of a state of variation could be necessary. Again the guidebook mentions “reference views are usually used to understand to which field the product belongs, where the product is to be used, its use or purpose of use, in order to ascertain the classification.” It thus follows that the view of a state of variation displays a product’s state at some point, while reference views have other jobs to do. Therefore, a design patent’s scope of protection could be said to be confined by the view of the state of variation while reference views do not take on this role.

With the lack of explicit provisions on how the view of a state of variation and reference views relate to protection scope, left untouched in both the Patent Law and its Implementing Rules, the issue has long been debated by academics and professionals alike. However, official views are not missing: “Regarding a design patent on a product of variable states, if an allegedly infringing design is identical or similar to the design in all the various states of use as illustrated in the view of the state of variation, the People’s Court shall find that the allegedly infringing design falls within the protection scope of the patent right; if the allegedly infringing design lacks the design of one state of use or is neither identical nor similar to the design in a state of use, the People’s Court shall find that the allegedly infringing design does not fall within the protection scope of the patent,” as stated in Article 17 of the Interpretation on Several Issues Concerning the Application of Law in the Adjudication of Patent Infringement Dispute Cases by the Supreme People’s Court (II) (2016), in addition according to Article 92.2 of the Guidelines for Patent Infringement Determination (2017)“Reference views are usually used to indicate the purpose of use, the method of use or the place of use, etc. of the product incorporating the design, and cannot be used to determine the protection scope of the design patent of a product of variable states,”. Such statements offer support for our conclusion above.

HFL’s Comments:

A distinction should be made as to the roles of reference views and the view of the state of variation when ascertaining the scope of protection of a design patent. Reference views usually serve as an indication of the products method, purpose or function of use whereas the other works complementarily with the product’s six-side views to show its variable states, if applicable, when in use. Therefore, the view of a state of variation should be a factor for determining to which extent a design patent should be protected. With reference, the view also draws boundaries for such patent rights.

If you would like some more personalized review of the news from us, please kindly let us know by writing to:public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 62
31 July 2018

Celebrity’s Impact on Trademark Registration

Co-authors: Waker Xu, Shirley Lin

Michael Jordan is a household name referring to the basketball star that once shone on the court, however, its Chinese equivalent “乔丹” (read and written as “QIAO DAN”) has a different meaning. In China, this trademark is owned by sportswear manufacturers that are neither owned nor controlled by the former basketball player, nor does it have any license from the legend, yet they legally use the name. Agonizing over the alleged infringement upon his name, Michael Jordan has taken aim at a slew of “QIAO DAN” trademarks in various forms used by sportswear companies with the same brand name. His quest for protection has carried on for a few years and will continue its path, but the prospects are gloomy in the foreseeable future. And he may not be the only person that has to deal with this mess.

When the French team was carrying home the FIFA World Cup Trophy from the Luzhniki Stadium in Russia on July 15, 2018, they never would have expected what had been going on in the Far East as they strived for glory for their country and themselves on the field. Unbeknownst to them, their names were already applied for registration as trademarks on varying goods and services by individuals and companies that they have no ideas about or connection to. Accordingly, to the published Chinese trademark applications, 10 out of the 11 players in France’s starting line-up for the final of the 2018 FIFA World Cup Russia have seen their names in Chinese filed by others for trademark registration. Only Benjamin Pavard was spared for now, but just temporarily. The most exploited name points to no other but Kylian Mbappé, the most watched star athlete of this world cup. By the day of the final game, 159 trademark applications had been filed to own his name. Another member of the French team Samuel Umtiti was also subjected to the ‘name rush’. A corporate applicant has already filed “乌姆蒂蒂切尔西” (meaning “Umtiti Chelsea”), even though he has never played for the Chelsea Football Club that competes in the Premier League. Some might take it as a joke, but it would definitely not make even the jovial Kylian Mbappé laugh.

A takeaway from Michael Jordan’s fight for protection is that odds are against the athletes even if they dole out time and cash in the disputes. It is forbiddingly difficult for such individuals to secure protection of their names on grounds of their name rights alone. It is not surprising that cases like Michael Jordan’s will follow the players through to retirement as they are still being ruled. In China, pure trademark application (or even cybersquatting) is not illegal in itself and does not bear any actual legal liability. But it is not difficult to predict inevitable damages to a certain people’s rights including consumers’ rights to learn the truth should there be any improper practice in the registration system. Contrary to the low cost in trademark squatting, efforts required of individuals to seek for protection are disproportionately tremendous. It is high time that we take action to root up trademark squatting before any serious harm could be done.

If you would like some more personalized review of the news from us, please kindly let us know by writing to:public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 61
20 July 2018

A View on the Statute of Limitations Applied in Trademark Disputes in the Era of Post-General Provisions of the Civil Law

Co-authors: Kevin Xu, Karen Hao, Shirley Lin

The General Provisions of the Civil Law of the People’s Republic of China (“General Provisions”) was passed by the National People’s Congress and published on March 15, 2017, set to become effective as of October 1, 2017. One of the most controversial elements of the new provision on the statute of limitations for civil litigation is Article 188: “An action instituted in a people’s court for protection of civil rights is prescribed by three years, except as otherwise prescribed by any law.” Since new laws have precedence over old ones at the same level, the two-year period for general civil cases set forth in the old PRC General Principles of the Civil Law (“General Principles”) was immediately adjusted to this change.

However, as statutory provisions have not yet followed up on how to apply the new statute of limitations in specific disputes and how it accommodates other effective laws and regulations, opinions are split on certain issues concerned in practice. This article is an attempt to illustrate how the law applies specifically in cases of trademark infringement.

Despite a major procedural issue in trademark lawsuits, no statute of limitations has been provided in the Trademark Law, neither in the 2001 enactment nor the amended version in 2014. For the time being, reference can only be drawn from the Interpretation of the Supreme People’s Courton Certain Issues Concerning the Application of Law in the Trial of Civil Cases Involving Trademark Disputes (“SPC Interpretation on Trademark Disputes”).

The 2002 judicial interpretation prescribes in Article 18 that “the statute of limitations for bringing a suit for the infringement of a registered trademark is two years”, giving light to the issue after the Trademark Law entered into effect in 2001. With the absence of a new provision on how to apply the statute of limitations in trademark disputes in light of the new General Provisions, which standard should we follow as the new law and the old interpretation clash with each other?

Academics propose two conflicting approaches. Some give priority to the new law and thus advocate the three-year time limit, whereas others value special laws over general provisions and sticking to the custom. Before making a choice, we deem it necessary to answer the above question by giving literal explanations of the provisions concerned in the General Provisions and the SPC Interpretation on Trademark Disputes.

As mentioned above, the statute of limitations is prescribed as being three years in the General Provisions, followed by an exception when it is “otherwise prescribed by any law”. We will focus exactly on this exceptional situation.

There is no doubt that any statute of limitations laid down in the Trademark Law will be applied in lawsuits concerned, regarding the legislation’s statutory status in China. However, such provision is given not in the Trademark Law but rather in the aforementioned judicial interpretation by the SPC. We must, therefore, try to find an answer to whether judicial interpretations are treated as equal to laws and whether they can be certainly applied over statutory provisions.

Pursuant to the Legislation Law in China, legal interpretations have legal effects the same as legislation. The right to enact such interpretations is vested in the Standing Committee of the National People’s Congress. As for “judicial interpretations”, it is provided that “interpretations on law application by the Supreme People’s Court and the Supreme People’s Procuratorate should be made based on the laws concerning the relevant trial and prosecution, and should be in line with the goals, principles, and intentions for the legislation”. It is revealing that “judicial interpretations” by the SPC carry no effects equal to those of “laws”.

Coming back to the issue surrounding trademark suits, the statute of limitations of two years is prescribed by the SPC in the form of a “judicial interpretation”. It can, therefore, be concluded that the period should, in fact, be extended to three years pursuant to the new General Provisions as the law is of a higher level and thus takes precedence.

Furthermore, when looking into the general provision of the SPC Interpretation on Trademark Disputes, we can see that the interpretation has been made to “correctly try the cases of trademark disputes pursuant to the General Principles of the Civil Law of the People’s Republic of China, the Contract Law of the People’s Republic of China, the Trademark Law of the People’s Republic of China, and the Civil Procedure Law of the People’s Republic of China, etc.”. As one of the cornerstones of the interpretation, the General Principles of the Civil Law provides the former with the 2-year statute of limitations in question. In light of the enactment of the new General Provisions, the 3-year time limit sets in, evoking adjustment in the General Principles of the Civil Law. The shift, in turn, affects the trial of trademark disputes, putting the new statute of limitations in place.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 60
06 July 2018

Copyright Infringement by Online Game Adaptations of Original Novels

Co-authors: Cathy He, Shirley Lin

Source Material:

No. 2016S03MC369 Civil Judgment

Case Overview:

In recent years, one of the fastest developing areas in IP Law is the adaptation of online games from popular literature, with the same name. The point is to develop games out of popular novels and comics of the same name, keeping the original characters and storyline, so that by using the already established audience and popularity of the original novel, the online game of the same name, can quickly accumulate a large number of users and gain a lot of benefits in the short term. However, this results in multiple copyright infringement disputes where the original copyright owner claims that the game company infringed the original book adaptation rights. This article aims to conduct a case study to illustrate how the courts think of such disputes between online games and an owner’s adaptation rights to his original work.

In 2016, the operator of the high-profile web novel site www.qidian.com, Shanghai Xuanting Entertainment Information Technology Co., Ltd. (“Xuanting Co.”) initiated litigation procedures to protect the adaptation rights of its popular novel Douluo Dalu. The defendants are www.4399.cn (“4399”) and Chengdu Jiqian Technology Co., Ltd. (“Jiqian Co.”), respectively the operator and the developer of the novel-adapted game. Recently, a first-instance judgment has been rendered by Jiangsu Xuzhou Intermediate People’s Court, granting Xuanting Co. a 5 million compensation for its loss and expenses against Jiqian Co.

Xuanting Co. claims that the mobile game New Douluo Dalu (The God’s Realm) bears an overwhelming resemblance to the copyrighted novel Douluo Dalu, which they own, with respect to; character names, story development, dialogues between characters, etc. Xuanting Co alleges that the adverse party infringes its adaptation rights.

Adversely, Jiqian Co. argues that the game’s adaptation is based not on the original novel but its derivative work Douluo Dalu – Legend of The Gods’ Realm for which the company has obtained a license for adaptation, allowing for its game’s development and operation. As for the alleged similarity, Jiqian Co. dismisses anything substantial, claiming the similar aspects are proportionately smaller when comparing the plaintiff’s novel and the game as a whole. Moreover, they also allege that their use of similar elements was in fact entirely reasonable.

Court’s Opinion:

The judging court states after examination that, “adaptation, as opposed to creation, exploits the fundamental creative expression of the original, making it a prominent part of the adapted work, thus forming its base or substance. “Under this rule, the court finds the alleged infringement established after comparing and contrasting the novel and the game in question, in terms of their names, characters, skill sets, basic storyline, details, etc.”

HFL’s Comment:

The court, in this case, has laid down a set of clear-cut standards for determining whether an online game’s adaptation infringes upon an original work. In doing this, infringement of the original creators’ creative expression must first and foremost be examined. The creative expression at stake can generally be made up of; the names – including that of the work and those of the characters -, skills deployable, core storyline, finer locations settings, dialogues, etc.
Although compared with the original novels, online games are relatively rare in terms of text expression, this does not allow online games to use the substance of the original works, nor may they rely on the excuse of reasonable use.

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HongFangLaw ~ Chinese IP Law Updates ~ n’ 59
29 June 2018

Interpretation and determination concerning Article 10.1.7 of the Trademark Law

Co-authors: Mandy Wang, Shirley Lin

Parties Concerned:

Plaintiff: Zhejiang Dongli Real Estate Consulting Agency Co., Ltd. (“Zhejiang Dongli”)

Defendant: Trademark Review and Adjudication Board (TRAB) of State Administration for Industry and Commerce

Case Overview:

Trademark No.19194458 “卫斯理” (aka “Wesley”, hereinafter “Disputed Trademark”) was filed for registration on March 2, 2016, by Zhejiang Dongli, designated on services such as “teaching, training” in Class 41. The China Trademark Office (CTMO) later rejected the Application.

Out of dissatisfaction, Zhejiang Dongli requested for a review by the TRAB, which administers trademark disputes on January 12, 2017. It argued against the CTMO’s decision by the counter-claims that the Disputed Trademark can be interpreted in many different ways. One of which is a Chinese equivalent of an English name commonly seen, which has been associated with the Hong Kong-based writer Mr. Ni Cong. Mr. Ni Cong was cited by the CTMO for having the same Chinese pen name, but it was decided that the similarity was not deceitful in nature. Meanwhile, the Disputed Trademark’s other namesake as an educator is not particularly well-known. “卫斯理/Wesley” has already been in use and has caused no misperception among the public. It is a legal and legitimate application filed under the applicant’s license from theUS Wesley Education Research Center.

However, the TRAB upheld the CTMO’s decision regarding the Disputed Trademark’s association with Mr. Ni Cong. It deemed the trademark’s registration and use on the designated services without Mr. Ni’s consent likely to mislead consumers when they identify the services’ origin. As a result, the application had remained rejected pursuant to Article 10.1.7, 30 and 34 of the Trademark Law.

Zhejiang Dongli continued its quest and filed an administrative lawsuit with the Beijing Intellectual Property Court. The Plaintiff insisted on arguing for the legitimacy, innocence, and lack of arising confusing from the Disputed Trademark. In the Applicants opinion, the name “卫斯理” does not correspond “one-to-one” with Mr. Ni. It was argued that even if protection was to be sought based on rights to the pen name, which is a sub-category under rights to personal names, Article 10.1.7 as an absolute prohibitive provision should not be cited because of such rights are merely relative ones. Based on those grounds, the Plaintiff claimed the TRAB’s decision as imprecise in fact, improper in law, and erroneous in the procedure by blocking its application pursuant to Article 10.1.7 and 30.

On the other hand, the TRAB defended its decision as unquestionable and pleaded to dismiss the Plaintiff’s requests.

After examination, the first-instance Court found in the Plaintiff’s favor that the Disputed Trademark does not violate Article 10.1.7 in its filing, as the TRAB was not able to establish their claimed correlation between “卫斯理” and Mr. Ni Cong. In the event of any civil rights being infringed upon, provisions other than the above-cited should be applied instead. Based on solid factual and legal grounds, Zhejiang Dongli was able to have the TRAB’s decision annulled with the Court’s support.

After the judgment was rendered, the TRAB was not satisfied and thus appealed to the Beijing Higher People’s Court. Ensuing court proceedings are still pending at the time.

HFL Comments:

Here we would like to break down Article 10.1.7 of the Trademark Law from the perspective of this case.

As the provision states, “None of the following signs may be used as trademarks: … (7) Those that are deceptive and likely to mislead the public in terms of the quality, place of production or other characteristics of the goods;” Technically, it has been embedded with certain loopholes since legislation. As a result, interpretations of the regulation vary drastically, giving rise to problems in law application.

  • Understanding “deceptive and likely to mislead the public in terms of the quality, place of production or other characteristics of the goods”
    We view “deceptive” therein as the core idea behind the provision, followed by two specific examples of how the public could be misled, which are not exclusive, allowing space for other characteristics of goods similar to “quality”. In other words, the provision can be interpreted as: What is implied and described by the trademark is not in line with the properties of the designated goods and services. Such efforts to hide the truth suffice to conjure up wrong perceptions of the products among the public.
  • Determining “deceptive”
    To tell whether a mark is “deceptive”, the general cognitive level and capacity of the public should be referred to when judging what the mark concerned entails exactly. One should not be called deceptive when it suffices not to arouse misunderstanding under general circumstances based on conventional experiences and recognition.

In practice, we might as well orient our judgment from the following considerations:

1. Deceit and mistake built around the characteristics and origins of goods and services may practically involve: quality, place of origin, raw materials, content, category, function, use, model, mass, quantity, price, time of production, technical points etc. Determination thereof should be made when the trademark’s meaning is also taken into consideration. For example, there were times when trademarks with the word “organic” were free to be registered, resulting in a plethora of them. However, it is a no-brainer to give every single of such trademarks a red light today for they are in themselves deceitful and likely to cause misunderstanding.

2. There are boundaries when it comes to how a trademark and its composing elements are expressed and described in real situations. No deceitful behavior should be found when the exaggeration of the subject is not misleading based on the public’s everyday experiences and knowledge. To take the trademark “永和大王” (“YONG HE DA WANG”, aka “King of Yong He”) as an example, “大王” meaning “king” herein implies quality goods and services in relation thereto, but it is in no way deceitful when used within boundaries, thus causing no mistake to the public.

3. The public is supposed to recognize the origin of goods as the way it is. A typical trademark review and adjudication case feature the dispute over the trademark refusal review on “恒大银行” (“HENG DA YIN HANG”, aka “Evergrande Bank”). The trademark was filed by Evergrande Real Estate Group on financial services in Class 36 and was rejected by the CTMO, citing misleading implications of the Applicant’s operations. Pursuant to Article 10.1.7, the trademark being applied was found deceitfully in corresponding with the applicant’s business in a substantial way, likely to mislead consumers if it was to be used to identify “bank” services.

In summary, judicial practice calls for better understanding of Article 10.1.7 of the Trademark Law, including its implications and extensions. Proper application thereof helps to reduce the abuse of administrative and judicial resources, eventually safeguarding the legal rights and interests of right owners.

If you would like some more personalized review of the news from us, please kindly let us know by writing?to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 58
22 June 2018

Reflection on “trademark use” prescribed by Art. 48 of the Trademark Law in OEM industry

Co-authors: Edmond Au, Shirley Lin

Source Materials:

No.(2016) ZGFMZ339 Civil Judgment by the Supreme Court

No.(2015) SZMZZ00036 Civil Judgment by the Jiangsu Higher People’s Court

Parties Concerned:

Retrial Applicant (defendant at first instance, appellee at second instance): Jiangsu Changjia Jinfeng Dynamic Machinery Co., Ltd. (“Changjia Co.”)

Retrial Respondent (plaintiff at first instance, appellant at second instance): Shanghai Diesel Engine Co., Ltd. (“SDEC”)

Case Overview:

SDEC has rights to the trademarks No. 100579 and No. 624089 “东风 DONG FENG and device” on “diesel engines” etc. under Class 7 in China. TM No. 100579 was registered in 1981 and later extended to retain its validity through to Feb. 28, 2023. TM No. 624089, valid from Dec. 30, 1992, to Dec. 29, 2002, upon registration, also had experienced extension and will now continue to be in place until Dec. 29, 2022.

On the other hand, a company incorporated in Indonesia named PTAD IPERKASABUANA (“PTAD Co.”) is the registrant of the Indonesian trademark #IDM000089328 “DONG FENG”. Also registered under Class 7, the trademark covers a range of goods related to diesel machinery. It enjoys 10 years’ protection in the country starting from Jan. 19, 2007.

On Oct. 1, 2013, Changjia Co. and PTADI Co. entered into an agreement where the trademark registrant of TM #IDM000089328 asked the former to manufacture diesel engines and components with the trademark at issue and export the goods to import and export dealers who should limit the distribution within Indonesia. The agreement was set to expire on Jan. 19, 2017, exactly when the trademark “DONG FENG” concerned was also expected to expire.

Subsequently on Oct. 8, 2013, Changjia Co. declared the diesel engine parts (including bodies, oil tanks, and water tanks) destined for Indonesia with the Changzhou Customs. The batch of goods weighed 228,000 kg with a total value of USD 659,700. Informed of the declaration, SDEC requested Customs to seize the export on grounds of suspected trademark infringement. The Customs acted accordingly and withheld Changjia Co.’s products on Oct. 23.

SDEC continued to pursue Changjia Co. by taking it to the Changzhou People’s Court, which found the defendant not liable in its concerned OEM business. Unsatisfied, SDEC appealed to the higher court and won the lawsuit.

Changjia Co. was thus ordered to bear liabilities but in turn challenged the second-instance judgment, requesting the Supreme People’s Court (SPC) to have a retrial. In the trial proceedings, the SPC ruled in Changjia Co.’s favor and overturned the questioned judgment, thus affirming what the lower Changzhou People’s Court had delivered.

Court Opinions:

Trademark use specifically refers to attaching trademarks to goods, packages or containers as well as transaction documents, or applying them in commercial contexts including advertising and exhibition, with the aim to identify the origin of the goods concerned. In its essence, a trademark is meant to help with identification of or reference to where the goods or services related come from, functioning to distinguish between different sources.

Generally, when someone deals with a trademark that is not used to identify or distinguish between sources of goods from which misconception or confusion does not arise, the behavior does not interfere with trademarks’ function and thus does not constitute infringement prescribed in the Trademark Law.

Back to the case, the defendant Changjia Co. as an OEM service provider entrusted by PTADI Co. had sufficiently performed due diligence by reviewing the Indonesian company’s trademark rights concerned when it entered the contractual relationship. Furthermore, when proceedings unfolded in Indonesia where SDEC successfully secured rights to its trademark “东风 DONG FENG and device”, Changjia Co. voluntarily negotiated with SDEC over its manufacturing of the products in question, and paid reasonable compensation to SDEC, pursuant to a reached agreement between the two parties.

Obviously, Changjia Co. had reasonably fulfilled the duty of care required of a prudent actor when it came to examining its client’s trademark rights before it agreed to provide its services. Therefore, the second-instance erred in having opposite opinions on the fact.

At the time of the lawsuit between Changjia Co.’s OEM activities, the Indonesian Supreme Court had already affirmed PTADI Co.’s ownership of TM “DONG FENG”. This, in fact, had come to make it illegal for SDEC to export any further relevant or similar products bearing the identical trademark to the country. It was also revealed in the retrial that, between 2004 and 2007, SDEC’s export of its trademarked products to Indonesia was also entrusted. Given the circumstances, Changjia Co.’s OEM services in question did not substantially harm SDEC’s chances of striving for opportunities and interests in a competition based on its trademark rights in the Indonesian market.

After all, despite a trademark’s basic function of identification, it works not merely by itself, but in synergy with the goods and services as well as their quality it represents. Looking at the realities of international trade, there was no practical reason that could justify SDEC’s claim of substantial damages caused by Changjia Co.’s behavior and therefore, determination of trademark infringement was not applicable.

HFL Comments:

Although the Jiangsu Higher People’s Court rendered a judgment which was overturned by the Supreme Court, we still find some reason in the logic running through its determination of OEM infringement that is worth studying. Fundamentally, However, it was wrong in finding PTADI Co.’s registration of “DONG FENG” in Indonesia illegitimate, as the judicial and administrative bodies in the country had decided in favor of affirming the trademark rights of PTADI Co. Meanwhile, in 2008, when SDEC still had rights to “东风 DONG FENG and device” in Indonesia, Changjia Co paid contractual damages to SDEC. This fact was combined with its legitimate OEM business where it was reasonably prudent and careful enough to vet PTADI Co., to sell products only in Indonesia and not to be involved in any circulation and distribution in relation in China. Thus, the SPC found Changjia Co. not liable for trademark infringement.

In judicial practice concerning OEM infringement disputes, there have been significant Changes, over the years, in the Chinese judicial bodies’ attitude to what was thought of as infringement, as it has gradually shifted to the other side of the spectrum. There are many explanations for this development. Besides abiding by laws and regulations including the Trademark Law, the social impact should also be factored in, i.e.development of international trade, the balance of interest between domestic trademark owners and manufacturers, and foreign trademark owners or users. Back in 2001, a court found a Defendant’s OEM business infringing and liable (No.(2001) SZFZCCZ55 Civil Judgment). The dispute surrounded the use of TM “NIKE”; however, the court did not elaborate on whether such use functioned to identify a source. In the civil judgment No. (2007) SMSZZ0034, another court, while delivering the same result as to whether the infringement was established, had a change in opinion on granting compensation. On this issue, it said no harm could be done to the trademark owner’s interest in the market because there was no confusion or mistake concerning the origin of goods that could be caused to domestic consumers by OEM services. After the watershed “JOLIDA” case in 2009, it has become a common sense for courts in China to conclude that “OEM business constitutes no infringement as it involves no trademark use prescribed in the Trademark Law because it cannot confuse the relevant public in the domestic market regarding the source of goods”.

This time, the SPC goes in its judgment like this: any use of a trademark that works not to identify or distinguish between sources, and triggers no misconception or confusion thereof to such an extent that a trademark’s function is influenced, does not constitute an infringement for the purpose of the Trademark Law. It could be inferred from this conclusion that: there is trademark use in OEM business, but it does not count as what makes trademark stick. In similar precedents such as some three-year non-use administrative disputes, the Beijing Intellectual Property Court also affirmed trademark use in OEM industry that is set forth in Article 48 of the Trademark Law (No.(2015) JZXCZ5119 and No. (2015) JZXCZ408 judgments). With echoing court opinions, we can see a general theory that has been formed in the recent years’ judicial practice: a trademark used in OEM is not an identifier as it is supposed to be for a trademark to function.

There might be something confusing about why “trademark use” as in Article 48 is stated as “behavior for identifying the source of goods” in the first place given the above conclusion. In our opinion, the provision is somewhat unreasonable. In fact, “trademark use” differs from “trademark use in the Trademark Law”. The former can be interpreted as concrete ways of how a trademark can be applied, e.g. on commodities or their packages, but should not imply its legal consequences. This should be the notion to adopt when we decide whether a trademark has been used in three-year non-use cancellation disputes that focus on the substantial existence of and access to a trademark.

As for the latter, it is trademark use plus a process of identification, so it is concerned with what will follow after a trademark is exploited, which forms a big part in determining trademark infringement. In summary, we advocate that the kind of “trademark use” elaborated in Article 48 of the Trademark Law should not be restricted to identification involved behavior.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Company Updates
11 June 2018

HFL’s 140th INTA (International Trademark Association) Seattle Event report

This May 2018 another annual INTA event has taken place in Seattle, and HongFangLaw had the opportunity to visit Seattle together with colleagues coming from all over the world. Latest statistics tell us that this year more than 11,000 participants were greeted by this cold but welcoming city. Once again, the INTA presented itself as the prime enhancer of the trademark industry, thanks to its educational and networking events. Professionals from 150 countries were present including professional IP experts and corporate members.

As always, the INTA focused on the main innovations and achievements in the intellectual property practice, in order to push forward, once more, the limits of IP protection all around the world. International expert have taken part to the event and shared their insights on their own countries IP regulations and news.

This year, HongFangLaw was part of the event, represented by our firm partners, Nikita Xue, Tiger Zhao, Eric Su, Irene Zeng, Zhang Xu and Kevin Xu.

In addition to attending numerous receptions and networking events, we were able to take in a wide range of exhibits, presentations, committee meetings, and legal education sessions. Hot topics of discussion in both formal sessions and informal conversation included customs training, international trademark law and practice, mediation trainings, anti-counterfeiting, protection and enforcement of the rights of Logos, data protection and security, infringement and nonuse cancellation cases. One of the most interesting and useful aspects of our many conversations was to compare the Chinese legal system and other jurisdictions where our clients do business.
This year, our partner Nikita Xue had an active part in the INTA Bulletin committee thanks to her appointment as Co-chair of the Asia & Pacific, Law & Practice Sub-committee of INTA for the 2018-2019 period.

The event lasted from May 19 until May 24 with each day focusing on a separate topic, related naturally to the IP practice.

Most notably, on the first day, the focus was set on the fight against counterfeit, considering it a universal problem, as we know; tackling counterfeiting requires a holistic approach in which brands, consumers and other stakeholders must work tighter closely. Success is usually based all on planning, for such reason sessions were held between government official, corporate in-house representatives, and digital commerce service providers to exchange best practices and views on how to tackle online counterfeiting. Since the second wave of EU trademark reforms were introduced in October 2017, several questions have come up repeatedly and were reviewed during the event. In particular the removal of the need to represent a trademark graphically in an application was a cornerstone of the October reforms.

The second day, the focus was mostly on Design and trademark infringement, with attention on how to support businesses in closing the knowledge gap with the IP regulations. A big focus was set also on the different geographical difference in IP, this day the main focus was the African legal system which is growing steadily in this last years and has more and more a strong basis for protection.

May 21st was the official opening day of the event, and as such branched on various topics of conversation, bringing most of the new developments in the worlds IP practices to the table. Most notably we can see how there was a huge focus on the IP outlook in Latin America, which is improving but with still in need of a lot of harmonization and awareness. In addition, with the EU general data protection regulation coming into effect in May, brands need to get a grip onto their data privacy, and understand its implications. We also reviewed several other topics, such as Copyright in China, the trademark in the Cannabis industry, and a new approach against privacy.

May 22nd we shifted focus on Licensing, and how it can achieve more for a company than mere financial gain, but also balancing the requirements of licensor and licensee. We then came to understand that INTA’s new strategic partnerships & economic research department is conduction work across a range of topics and countries, with the brand value special task force, generation Z, and bridge building with non-legal association as its top priorities for 2018. Finally, we had some insights around IP enforcement in Asia, and how tackling counterfeiting in Asia can be a challenge, but with the right approach, brands can achieve effective results.

May 23rd was the last day for the conferences, leaving May 24 for the networking and final events. The focus on these days was more on linking the real with the virtual, and how to protect digital assets with the support of the new IP regulations, in fact designing ways to connect differently can play an important role in reaching global competitiveness. The last day then we had the chance of enjoying Seattle with the final parties and exploring the city most interesting venues, such as the space needle, the glass garden and the Pop music museum.

2018 INTA was a big success in many ways, and an opportunity to share insights with professionals around the world; preparations are well underway for the 2019 annual meeting in Boston, where all will enjoy an exciting program and fun city. We will look forward to meet our colleagues there as well.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 57
06 June 2018

Standards for determining contributory infringement in patent disputes

Co-Authors: Jessica Li, Shirley Lin

Source Material:

Case Docket No.: (2017) Jing-Min-Zhong No. 454

The civil lawsuit surrounding the invention patent ZL02139508.X granted on “a method for the secure access of the mobile terminal to WLAN and for secure communication via the wireless link”

Parties Concerned:

Appealer (defendant at first instance): Sony Mobile Communications (China) Co., Ltd. (“Sony”)

Appellee (plaintiff at first instance): Xi’an Xidian Jietong Wireless Communication Co., Ltd. (“Iwncomm”)

Case Overview:

In this case, the appellee Iwacomm owns the patent ZL02139508.X and sued Sony for the latter’s infringement thereon at the Beijing Intellectual Property Court, seeking to cease of the claimed violation and compensation for Iwacomm’s economic losses and reasonable expenses. The court ruled in Iwacomm’s favor, which dissatisfied Sony who continued to file an appeal with the Beijing Higher People’s Court. The higher court bought part of Sony’s opinions but affirmed the existing judgment anyway as its conclusions had remained intact, crushing Sony’s case.

In the second instance judgment, the higher court finds the appealer Sony’s grounds for no contributory infringement established. In details, the court says: in this case, no one could fully implement the patent concerned on his own, which is also true for non-commercial individual users. Meanwhile, there were no actors being instructed or controlled by a single person in implementation, or coordinating to jointly implement the patent. Without a direct implementer satisfying the above conditions, it is unlawful to deem a provider of a single component used in the infringement to be a contributory infringer. Otherwise, there would be too much protection to right holders, impairing public interests in turn. Therefore, the appellee Sony’s behavior does not constitute contributory infringement, pursuant to Article 21.1 of the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Disputes over Infringement of Patent Rights (II).

HFL’s Comments:

Currently, for contributory infringement, China’s Patent Law provides no specific regulation. The only citable provisionin regarding this is the above-mentioned article, “Where any party fully aware that the relevant product is exclusively used for the materials, equipment, parts, and components or intermediates, among others, that exploits the patent provides such product for any other party for the purpose of production or business operation to implement the act infringing upon the patent right without the approval of the patentee, the patentee’s claim that the act of the provider falls within the scope of “assisting others in committing a tort” as prescribed in Article 9 of the Tort Law shall be supported by the people’s court.” However, issues still have not be solved surrounding (1) whether an indirect infringer should be held liable if a direct actor implements other’s patent for non-commercial purposes, or he behaves in a way that does not count as infringement according to Article 69 of the Patent Law, and (2) who should bear the burden of proof as to the determination of a product “exclusively used for something that “exploits” a patent?

Rightly so, in the second instance judgment, the Beijing Higher People’s Court addresses the above issues in a concrete way: (1) In an uncommon case where an “indirect infringer” should still assume civil liabilities even when direct infringement does not exist, the following conditions should all be in place: a. The actor provides, without a license from a patentee, products exclusively used for the materials, equipment, parts, and components or intermediates, among others, that exploits a patent to a direct implementer for business purposes, whilst aware of the products’ nature; b. The products being questioned “substantially” exploit the patent concerned, which is to say, the materials, equipment, parts, and components or intermediates are major enough to be indispensable to implementing the patent rather than playing a trivial or minor role; c. The products have “substantial non-infringing use”, meaning they generate no reasonable economic or commercial value except being used in relation to the patent; d. Existing evidence suffices to point to a direct implementer who at the same time is an individual with “non-commercial purposes” or his acts should be governed by Paragraph 3, 4 and 5 under Article 69 of the Patent Law; (2) Except that evidence of the above condition c should be provided by the”indirect infringer”, the burden of proof is all the patentee’s.

In an excellent attempt to balance protection of the patentee and public interests, the Beijing Higher People’s Court has rendered a judgment that helps establish standards for determining contributory infringement in patent disputes.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 56
08 May 2018

The Tale of the Two Innisfree Chinese Trademarks

Have you ever seen a touch of delighting green dotted around shopping malls or business centers? It may be brought to you by a naturalistic brand of cosmetics from South Korea. Established in 2000, it opened its first flagship store in Shanghai in 2012 and now boasts over 300 outlets flourishing in central business areas in China.

The brand is none other than Innisfree, with a Chinese equivalent of “悦诗风吟” (read “YUE SHI FENG YIN”).

What if one day you bumped into another “YUE SHI FENG YIN”, but noticed it had its last character changed, resulting in a slightly different pronunciation? This “悦诗风茵” (“YUE SHI FENG YIN”) you see, is how much likely to be mistaken as the genuine “悦诗风吟” (“YUE SHI FENG YIN”)?

We HongFangLaw, representing the trademark owner INNISFREE CORPORATION, has filed an opposition on the company’s behalf against “YUE SHI FENG Y?N” and won our client a favorable decision. The presiding administration China TrademarkOffice (CTMO) has refused to register the trademark in question, citing concerns of mistake and confusion over the similar trademarks among consumers if they were to coexist in the market as for how we argue in our application.

Our client’s trademark “YUE SHI FENG Y?N” is a coined word without any innate meaning fixed to it. However, it has acquired quite a reputation and distinctiveness in cosmetics after being promoted and used by INNISFREE CORPORATION.

Notwithstanding the fact that “YUE SHI FENG YIN” is also not a part of a conventional vocabulary in Chinese, it highly resembles “YUE SHI FENG YIN” in word composition and pronunciation. Had they been allowed to be used concurrently on cosmetics, consumers would almost be sure to find them confusing. It is exactly why the CTMO has adopted our opinions and made the refusal decision.

Therefore, it is safe to conclude that the two “YUE SHI FENG YIN”s are similar from the viewpoint of trademark use.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 55
24 April 2018

Administrative Dealing with Free-riding Trademarks
Confusing similarities of “CQVARTA”, “Chongqing VARTA”, “Josohnn Coslortn” with “VARTA”, “Johnson Controls” on storage batteries determined by the Wuxi AIC.

Source Materials:

AIC Raid Action against the Infringers on March 27th, 2018.

Concerned Parties:

Trademark Owner: Johnson Controls
First Infringer: Wuxi Ruixi Auto Parts Co., Ltd.
Second Infringer: Wuxi City Xueshi Auto Parts Co., Ltd.

Case Overview:

The Trademark Owner Johnson Controls owns trademark rights to “VARTA” and “Johnson Controls” registered in Class 9.

VARTA, the world famous brand of automotive batteries, was founded in Hagen, Germany in 1888. For a long time, the VARTA brand has been the first choice of the world’s most famous carmakers with its high quality and advanced technology. With nearly 130 years of history, the VARTA brand is the advanced model of world automotive battery industry. Johnson Controls’ total business volume reached $16billion in 1999 and $37.2 billion in 2015. In 2016, Johnson Controls ranked 70th on the Fortune 500 list.

The above-mentioned trademark is derived from the Chinese and English trade names of the trademark owner. The trademarks have acquired quite a reputation in batteries after being constantly and broadly promoted and used in China mainland. Under the development of more than a century, the above-mentioned trademarks have gradually accumulated a unique and classic brand image and reputation in the world. VARTA has also formed an inseparable and complementary connection with the trademark owner, not only as the identifier of the right holder but also as the manifestation of its history and future. The relevant public has become very familiar with VARTA.

On the other hand, the Infringers are respectively the distributor and manufacturer of the CQVARTA/重庆瓦尔塔 (“Chongqing VARTA”) batteries, on which both English and Chinese trademarks in question are used. They also used “Josohnn Coslortn” which was passed off by changing the letters of “Johnson Controls”.

Pursuant to Article 57.2 of the Trademark Law, “Using a trademark that is similar to a registered trademark on the same goods, or using a trademark that is identical with or similar to the registered trademark on similar goods without the licensing of the registrant of the registered trademark, which is likely to cause confusion” is deemed as an infringement of the exclusive right to use a registered trademark. In this provision, “likely to cause confusion” requires only the possibility of misleading the consuming public over the goods’ origins or their relevance with a Trademark Owner’s products on which a registered trademark is used.

In this case, HongFangLaw supported the Trademark Owner Johnson Controls in winning the support from Jiangsu AIC and Wuxi AIC. They have recognized that the trademarks “VARTA” and “Johnson Controls” among other trademarks are highly reputed on the battery products. The infringer’s using the similar logos of the registered trademark of the owner “VARTA” and “Johnson Controls” on the car batteries constituted trademark infringement and could cause confusion to the relevant public. This case is typical and offers a lot to be studied.

AIC’s Opinions:

Regarding the similarity between Infringer’s marks and Trademark Owner’s trademarks

In 2004, Johnson Controls officially opened its new car battery factory in Fuling District, Chongqing City. The infringers used the “CQVARTA” and “Chongqing VARTA” logo, which would cause the consumer to mistake that their products were produced by the Chongqing factory of Johnson Controls, causing confusion. For the mark “Josohnn Coslortn”, it is reproduced by just simply changing the letter order of “Johnson Controls”.

The Infringers also used the devices “X” and “Y”. After comparing the signs separately and together, the AIC found Infringer’s marks and Trademark Owner’s trademarks were similar without much difference.

Regarding the possibility of confusion of Infringer’s and Trademark Owner’s products
While the products do differ in how much they are priced, it is still possible for consumers to relate the Infringer’s commodities in some way to the Trademark Owner’s when seeing the similar signs, considering the popularity of the latter. Such capitalization of the Trademark Owner’s fame would contribute to an unfair comparative advantage to the Infringer’s offerings over products of their like. It is plain that the coexistence of Infringer’s and Trademark Owner’s products causes confusion among the consuming public.

On the other hand, regarding the overall appearance of the infringing products and the VARTA products, the infringers undoubtedly had bad faith Because the color, layout, and appearance were all similar.

On the above grounds, the AIC held that the Infringer’s use of signs similar to the Trademark Owner’s registered trademarks on the same or similar goods is an intentional act to capitalize on the Trademark Owner’s famous trademarks and is likely to confuse the relevant public. Hence, the Infringer’s conduct constitutes an infringement of the Trademark Owner’s exclusive trademark rights.

Raid Achievements:

Under the joint cooperation of many departments, 3 stores and 2 warehouses were checked at the same time. More than 500 batteries were seized and the related books and lists were temporarily held. The AIC has investigated the parties involved in the case according to law, and actively unveiled the distribution network of the parties.

Live news coverage followed throughout the whole raid and continued to turn out follow-up reports.

HFL Comments:

The advantage of administrative raid action on free-riding trademarks

For such trademarks, besides trademark opposition and evidence preservation via notarization against the target stores, trademark right owners may also consider a more effective and efficient approach and file the administrative complaint. The active period is shorter and could target the infringement directly. At the same time, the AIC raid action could provide good support and guarantee for the subsequent trademark opposition and civil proceedings.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 54
16 April 2018

A Brief Analysis of the “JIAO GE YA ZI” Case
Second-instance court: “JIAO GE YA ZI” (“order a duck”) shall not be interpreted beyond its literal meaning

Source Materials:

First-instance judgment: No. (2017) J73XC2359

Second-instance judgment: No. (2017) JXZ3393

Concerned Parties:

Appellant (plaintiff at first instance): Beijing Wei Mei Qu Xiang Catering Management Co., Ltd.

Appellee (defendant at first instance): Trademark Review and Adjudication Board (TRAB) of State Administration for Industry and Commerce (SAIC)

Case Overview:

In September 2014, Beijing Wei Mei Qu Xiang Catering Management Co., Ltd. (“WMQX Co.”) was established. 2 months later, it filed for registration of the trademark “JIAO GE YA ZI” with the China Trademark Office (CTMO) who subsequently issued a notice of its decision to reject the application in April 2016. WMQX Co. attempted an appeal for review but failed to get its trademark through, and eventually brought the case to the Beijing Higher People’s Court.

Court’s Opinions:

CTMO & TRAB:

“JIAO GE YA ZI” has vulgar implications prone to cause bad social influence.

First-instance court:

The trademark in dispute comprises the text “JIAO GE YA ZI” and a cartoon of a duck. Generally, “YA ZI” refers to a domestic bird but is also used to address “male prostitutes” in subcultural contexts. The latter interpretation has no place in mainstream cultures and values and thus is not allowed to be spread as a trademark. Combined with the designated services “bar services; accommodation bureaux [hotels, boarding houses]” etc. in the application, the words “JIAO GE YA ZI”, which means “order a duck (male sexual worker)”, is expected to further associate the trademark with the inappropriate perception among the relevant public, thereby giving rise to ill effects in the society.

Second-instance court with an opposite opinion:

The public usually perceives “YA ZI (duck)” in general terms. Therefore, it is quite unlikely that consumers will overly interpret “JIAO GE YA ZI” under normal circumstances. The lower court’s understanding of the trademark as low-class does not necessarily represent the public’s thinking. In summary, there will not be adverse influence caused by the registration and use of the trademark in question with its designated services.

HFL Comments

It is stated in Article 10.1.8 of the Trademark Law that, “The following signs shall not be used as trademarks: those detrimental to socialist morality and custom or having other ill effects.” For the purpose of this provision, “ill effects” are those arising from the registration and use of a trademark that may do harm to ethical norms or impose negative impacts on public interests and social order concerning the nation’s politics, economy, culture, religion and ethnicity.

Interpretation of trademark has long been an issue in the department. To reach a consensus on a trademark’s generally accepted meaning, it is considered that multiple facets should be examined based on how a case unfolds, including the cognition of the general public or relevant consumers, the primary meaning of a trademark is preferred to its other connotations, social and commercial custom, the contemporary way of thinking, possible broadening or alienation of the meaning etc. However, in today’s society overflowing with diversified values, varying opinions exist as to what the public generally thinks and further imagines. Meanwhile, the definition of “ill effects” is unlikely to be as objectively precise as to articulate where it goes and ends.

That is why the second-instance court’s opinions on what “JIAO GE YA ZI” means turn out to be opposite to those of the CTMO, the TRAB, and the lower court. A takeaway from this case is that a trademark applicant could eventually reverse a refusal decision by staunchly but wisely resorting to every means available. On the other hand, the quest could be time-consuming – 4 years in the case of “JIAOGE YA ZI”. While its applicant has been using the trademark and thereby building up some reputation in the market, it would still be vulnerable if any trademark infringement committed by its competitors occurred. For this reason, companies in the same situation should also consider new trademark applications and advertising strategies as a second plan as they seek for protection of their trademark rights.

It is also notable that, WMQX Co. has taken steps accordingly to avoid risks even after the favorable second-instance judgment was delivered. It has applied to the CTMO to remove the services “hotels” and “bar services” from its trademark application and changed its slogan from “Bring some fantasy to your life.” to “Add a dish to your table.” This is an example of how the public may negatively interpret of “JIAO GE YA ZI” when seeing it related to such services.

Trademark registration is core to establishing an enterprise’s brand. Yet only wholesome brand images are sustainable in the long term as an enterprise develops. For advertising considerations, an enterprise may be inclined to get attention by using sensational trademarks. It is reasonable as public attention drawn to stunts can sometimes be turned into huge benefits, but what wins over consumers for growing a stronger brand is never hype but quality products and satisfactory services.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 53
10 April 2018

Is Video Ad Blocking Unfair Competition?
The first case on ad-blocking technology in Zhejiang goes on to second-instance trial

Source Material:
www.zhichanli.com

On March 16, a dispute between video streaming services and an ad-blocking app was openly debated by the Zhejiang Hangzhou Intermediate People Court on the second instance. It is the first case of this kind on trial in the province. The proceedings have been initiated by the defendant at first instance – Hangzhou SEVEN Software Co., Ltd. (“SEVEN”). Which was not satisfied with the lower Hangzhou Railroad Transportation Court’s ruling affirming its acts of unfair competition against the video streamers Youku and Sohu by developing the application AdClear to block adverts aired by the plaintiffs. For its violations, SEVEN has been ordered to stop its illegal acts and pay Youku and Sohu a total RMB 620,000 (US$ 100,000) in compensation for the latter’s economic loss and reasonable expenses.

From the plaintiffs Youku and Sohu’s part, they jointly claim at first instance that they, as the leading video streaming services in China, feed on proceeds arising from paid memberships that exempt users from viewing ads to maintain their daily operations and provide licensed contents that come with loyalties packages. However, SEVEN’s app AdClear enables viewers to skip those ads they are made to watch if they prefer to enjoy videos for free, which is deemed to constitute unfair competition by the plaintiffs. Therefore, they respectively seek compensation, including RMB 1 million in damages and RMB 60,000 in reasonable costs of their legal actions.

SEVEN argues in defense that it is not a legitimate behavior for Youku and Soku to put their users to endure boresome and prolonged adverts that cannot be opted out ahead of videos, and thus there should not be legal rights and interests in relation thereto. Furthermore, AdClear has been developed on neutral technology to give its users a choice to block whatever they consider a threat to their cybersecurity. Indeed, such technology might hurt part of the plaintiffs’ vested interests. The result is part and parcel of free competition and technological advancement in the market economy, and thus should be accepted as a consequence of the risks inherent in the plaintiffs’ business model.

According to the first-instance court, SEVEN’s development and offering of the ad-blocking software AdClear, in addition to its advertising of the service as one that is capable of “blocking video adverts put on mainstream apps: Youku, Tencent, LeTV, Sohu etc.”, is been clear as to its intentions. Obviously, the defendant is aware or should be aware of the fact that users of AdClear will inevitably go on to block ads on the aforementioned video streaming sites, which eventually impairs the effects and returns that the plaintiffs expect from their business model, making the plaintiffs less attractive to advertisers as a result. That is to say, SEVEN has knowingly blocked adverts displayed by Youku and Sohu, thereby undermining the appeal and interests they are entitled to enjoy in the market based on their way of operations. This is disruptive to the plaintiffs’ business and not conforming to the principle of good faith and commercial ethics that are generally accepted. Therefore, SEVEN’s conduct is deemed in violation of Article 2 of the Anti-unfair Competition Law. Accordingly, the defendant has been ordered to provide the remedies above mentioned.

However, SEVEN did not accept the judgment and filed an appeal to the Hangzhou Intermediate People’s Court.

Now an appellant at second instance, SEVEN builds its case on three pillars: 1. The lower court erred in fact determination by finding it a competitor to Youku and Sohu, and improperly found ad-blocking illegitimate and the counterparty’s business model otherwise; it was inconsistent in its standards of evidence examination and failed to run an analysis of whether there has been an actual harm to the other companies business. 2. The lower court erroneously interpreted and applied laws, including Article 44.2 of the Advertising Law and Article 2 of the Anti-unfair Competition Law. 3. The lower court granted unreasonably high compensation without clear factual and legal grounds.

Together, the appellees Youku and Sohu replied against SEVEN that it has continued its bad-faith ad-blocking against the former’s legal and legitimate placement of adverts leading up to the trial; its behavior also violates Article 16 of the Interim Measures for the Administration of Internet Advertising besides Article 12 of the Anti-unfair Competition Law; its service pronouncedly targets Youku and Sohu by singling the two out in the description presented on its website and in the app in question.

The final judgment of this case is still undecided. However, it is reported that the parties are open to settlement as they have expressed their attitudes in court.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 52
30 March 2018

Non-use TM Cancellation Dispute
Tactics for Identifying Fake Evidence of TM Use

Co-authors: Cathy He, Shirley Lin

Case Overview:

Recently, HFL has secured a favorable decision for our client in a 3-year long “non-use trademark cancellation” dispute, where it was sought to annul a trademark squatter’s registration. At first in the cancellation proceedings presided by the China Trademark Office (CTMO), the authority decided to keep the trademark in question based on the evidence of trademark use for the bad-faith registrant’s part. In order to examine further, whether such evidence was substantially valid, genuine and sufficient, a process that is not required in the CTMO’s decision-making, we suggested taking the case to the Trademark Review and Adjudication Board (TRAB) for a review of the previous decision and we eventually won the case. This article will focus on what tactics can be deployed to verify suspicious evidence based on our experiences.

Comments and takeaways:

On the validity of evidence:

Pursuant to Article 49 of China’s Trademark Law, everyone has the right to apply to the CTMO to cancel a trademark when it has not been used for 3 years without acceptable reason. Hence, only evidence generated within 3 years prior to the date on which the trademark is requested to be canceled qualifies to prove its use. The principle has thus made it a primary and critical job to check whether the registrant’s submission registers at a specific time and satisfies the prescribed limit.

This is how we found out most of our counterparty’s exhibits did not fall into this time slot and should be deemed invalid.

On the genuineness of evidence:

The genuineness of evidence is also a pillar of the examination tactics in those disputes, considering that transactional documents sometimes can be easy to falsify. Ill-intentioned trademark registrants may provide deceptive contracts, invoices, product pictures etc. to create nonexistent trademark use. Here are five parts that should be considered, in order to see through the squatter lies:

1. Are the submissions to the CTMO and the TRAB both without question?

It came to our attention that, notwithstanding the registrant’s failure to provide the CTMO with valid evidence that could meet the time requirement, he was suddenly able to gather everything, at least so at first glance, during the TRAB’s review. It appeared counterintuitive to us as the registrant actually had more time in the previous stage given the two months for evidence submission granted by the CTMO.

2. Is the evidence consistent enough to show a reasonable business pattern?

Generally, a company does its business in its own way along developed workflows. The pattern can normally be identified in the materials they comply during transactions, such as documents and invoices. However, this was not the registrant’s case. The deeper we looked into the party’s exhibits submitted respectively to the CTMO and the TRAB, the more inconsistent and even conflicting his commercial practice seemed. For example, he first presented no formal contract concerning his sale of wines (even for a big order trading hundreds of products) to the CTMO, but later turned out perfectly formatted agreements with accompanying invoices for selling merely dozens of wines before the TRAB. It was quite abnormal to see the registrant make a U-turn in his accustomed practice of business in such a short time.

3. Is the registrant’s evidence in line with common sense?

Regardless of what to prove, the evidence should at least be consistent with our common sense. Specifically for the kind establishing trademark use, the information is given, such as the goods’ pricing and sales, should reflect what we normally see in real life. In our case, the other party did not seem to be following this rule. He sold his products to his intermediate distributors and end consumers at the same price, charged far more in larger orders than in purchases that hardly impressed, and let his wines’ prices remain completely without fluctuations for years, which was not common for consumer products as such.

4. Do third parties concerned in the evidence have a stake in the registrant’s case?

When it comes to falsification, you normally don’t turn to someone you don’t know. Therefore, when parties other than the registrant appear in the evidence, efforts should be made to illuminate their relationships such as affiliation and partnership because the chances are high that they are also stakeholders. Some of our respondent’s exhibits were sales contracts entered into with other companies. During our investigation, one was found just next door to the registrant’s affiliated company with respect to their registered domiciles, and the other was said to have never purchased any product recorded in the contract by its own staff. It was telling that the evidence was not genuine.

5. Can the evidence be verified via authoritative channels?

In a modern society prospering in the information era, there are many ways we can tell if some evidence is credible with services provided by the authorities. For example, there is the tax bureau’s official website for sales invoices and the portals operated by departments for industry and commerce to verify a company’s status and capacity for executing a contract. There is one more thing that can be examined when the trademark in question is designated for goods that are more rigorously regulated: the qualifications of the registrant that are a prerequisite for the related manufacture and distribution. This piece of information can also be obtained from authorities concerned.

On sufficiency of the evidence to establish facts to be proved:

1. Does the evidence apply to the designated goods?

Since the substantial use of a trademark is limited to its designated goods, examination of the coverage should always come first. Trademark use on similar goods should not be considered as valid evidence.

2. Does the chain of evidence have links that cross-reference each other?

Contracts and invoices concerning a trademark’s designated goods are critical to establishing the use of the mark. Still, they need to be combined to show a clear picture and should, therefore, be consistent, which is vulnerable if the evidence is not genuine. With this tactic, we found during the dispute that the registrant was not able to provide such materials in complete sets or printed with his trademark. The missing pieces made it impossible to present a complete chain of evidence, thus insufficient to establish real transactions.

3. Is the registrant the one and only source of the evidence?

It is commonly acknowledged that evidence generated solely by a disputing party is less convincing. Hence, some materials provided by our counterparty such as the invoices unilaterally issued by him did not suffice to establish his trademark use due to the innate weakness.

4. Has the claimed trademark use been conducted only for display?

In past cases, we have seen bad-faith trademark registrants try to maintain their marks by using them no more than just enough to get the upper hand in potential cancellation proceedings, with minimum trade and documents in relation therewith. In fights against those deliberated moves, we have developed a strategy to analyze the scale of the infringers’ business activities concerned, combined with the goods’features, so as to shake their grounds by proving no substantial use can be established with so little sales volume.

Similarly in this case, regarding the trademark use in relation with wine documented on the registrant’s contracts and invoices, nothing substantial could be established given the few products sold. For a popular consumer product like wine, what was presented by the registrant was only superficial evidence, and he needed much more business activities to prove otherwise.

In the preceding paragraphs, we have listed a collection of strategies for examining evidence of trademark use in our 3-year non-use disputes. We believe that they can be adopted in combinations as fit for individual cases in practice to win over decision-makers.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 51
27 March 2018

Collective Trademark Protection Case

Co-authors: Edmond Au, Shirley Lin

Case Docket

First-instance judgment: No. (2014) PMS (Z) CZ468

Second-instance judgment: No. (2016) H73MZZ468

Parties Concerned

Appellant (defendant at first instance): Qingdao Ma Ke Li Pu Alcohols Co. Ltd.

Appellee (plaintiff at first instance): Scotch Whisky Association

Defendant at first instance: Shanghai Ma Ke Li Pu Alcohols Co. Ltd.

Case Overview

In light of the joint infringement by Shanghai Ma Ke Li Pu Alcohols Co. Ltd. (“Shanghai MKLP”) and Qingdao Ma Ke Li Pu Alcohols Co. Ltd. (“QingdaoMKLP”) who had manufactured and distributed whiskies infringing upon the collective trademark “Scotch Whisky” owned by the Scotch Whisky Association (SWA), the authorities of China took both criminal and administrative action against the infringers. In July 2014, the competent offices for industry and commerce in Shanghai, Laixi, and Qingdao respectively imposed a trail of administrative penalties including fines on the companies. Subsequently, the SWA sued the two before the Shanghai Putuo People’s Court to pursue their civil liabilities for joint infringement.

Examination Opinion

1. Did the defendants’ products and websites concerned constitute an infringement upon the SWA’s collective trademark?

The sign “BLENDEDSCOTCHWHISKY” was used by the defendants on the packages of four products including “Imperial Prestige Sislay Whisky 12 Years”; “SCOTCH” and “WHISKY” were used on the front label (split into two ends with a lion-shaped graphic in the middle, as above) of two products including “Imperial Prestige Scotch Whisky 12 Years” which was outright labeled as “Scotch Whisky” in Chinese on the back. Meanwhile, the products were advertised by Shanghai MKLP on e-commerce platforms such as Taobao.com with the description “Scotch Whisky”. The court of first instance held that the defendants, though presented “SCOTCH WHISKY” in English and Chinese in stylized ways that are not commonly seen, they failed to erase the similarity of those signs to the SWA’s collective trademark. Even more confusing was the Britannic tint falsely splashed on the products on the advertising rhetoric they used, sufficient for the relevant public to relate the products to Scotland or the SWA in some way. The defendants’ acts were thus deemed infringing.

2. Was there joint infringement?

The court assumed joint infringement on the grounds that:

(1) The defendants cross-referenced each other on their official websites;

(2) Qingdao MKLP facilitated the sale of the products concerned;

(3) Qingdao MKLP manufactured the products, knowing they were not genuine Scotch Whiskies;

(4) The defendants purposely used the same exotic trade name to boost the false brand story they told about the products.

3. What civil liabilities should the defendants bear?

As the defendants’ infringement was likely to undermine the reputation of “Scotch Whisky” among the relevant public and thus cause damage to the SWA and its members, the court ordered the infringers to respectively publish statements on their official websites to reverse the ill effects, and jointly compensate for the SWA’s economic loss (reasonable expenses included) with a RMB 450,000 (USD 70,000) payment.

4. Should the infringing products be destroyed in the seizure as requested by the SWA?

The court ruled that destruction was applicable if the defendants failed to remove the infringing elements related to the SWA’s collective trademark from their products and packages within 60 days.

HFL Comments

Collective trademarks are in many ways different from individual ones in definition and registration. They contribute to a different set of criteria for trademark protection. Based on the applied subject, collective trademarks are roughly divided into what are and what are not geographical indications (GI), while the former accounts for the majority. The plaintiff’s trademark, in this case, is the perfect example. Regarding the management and use of collective trademarks as such, Article 4.2 of China’s Trademark Law Implementing Regulations provides: in the case of a GI-made collective registration, those who do not belong to the trademark-owning organization are still able to use the mark in a lawful way when certain requirements are met. As here the determination of infringement primarily comes down to whether legitimate trademark use exists, and the acceptable way of using a trademark to “certain requirements”, the focus of this case should be how the defendants behaved around the SWA’s trademark regulations.

In its Scotch Whisky Regulations, the SWA prescribes in Chapter 2 at great length for the origin, production, and quality of Scotch Whisky. Such provisions should be abided by if anyone was to use the collective trademark. It also states that a company which does not have a membership of the SWA or a distillery which does not produce Scotch Whisky may also use the collective trademark when it purchases the product from Scotch Whisky distilleries for its own brand as long as the regulations concerned are satisfied. This is a deciding factor to say whether the defendants, in this case, were allowed to use “Scotch Whisky” without the SWA’s authorization. However, their use of the collective trademark cannot be justified because they could not prove their products were imported from Scotland or made of Scotch Whisky, neither could the products be regarded as Scotch Whisky as they fell short of the criteria prescribed in Chapter 2 of the SWA’s regulations. Hence, the defendants who were not SWA’s members could not use “Scotch Whisky” without permission. Their acts constituted an infringement upon the SWA’s exclusive rights to use its collective trademark.

The courts made their decisions relying heavily on the aforementioned Article 4.2.The grounds for legitimate use of a collective trademark thereunder had been drawn for reference throughout the examination. However, there is yet another approach that can be found in Article 12 of the Procedures for the Registration and Administration of Collective Marks and Certification Marks but went unmentioned. It is a provision dedicated to protecting collective trademarks registered with GIs for wines and spirits, stating, “Where any party uses another party’s registered geographical indication for wines or spirits as a collective mark or certification mark to identify wines or spirits not originating in the place indicated by the geographical indication in question, even where the true origin of the goods is indicated…, Article 16 of the Trademark Law shall apply.” In this case, the defendants’ whiskeys count as a type of spirit and are self-made rather than from Scotland, making their use of the SWA’sGI-turned collective trademark a violation, not to mention that they did not honestly indicate their products’ origin. As an even more severe circumstance than provided in the Procedures, the defendants’ behavior could have been determined as illegitimate and infringing by simply citing Article 12 above.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 50
16 March 2018

Inclusive Coverage of Goods Helps Standardize TM Use

Co-authors: Edmond Au, Shirley Lin

Third party Attorneys:

Kayla Sun, Eric Su from HongFangLaw

Concerned Parties

Retrial applicant (plaintiff at first instance, appellant at second instance): Suntory Holdings Limited (“Suntory Ltd.”)

Respondent (defendant at first instance, appellee at second instance): the Trademark Review and Adjudication Board (TRAB)

Third party: Zhejiang Xiang WangTechnology Co., Ltd. (“Zhejiang Xiang Wang”)

Introduction

Suntory Ltd. applied for a retrial due to its dissatisfaction with the administrative judgment delivered by Beijing High People’s Court (court docket number: 2016 JingXingZhong No.2631). In this case, Suntory Ltd. disputed with the TRAB, trying to cancel the third party’s registered trademark (as below) for no use in three years, but failed. Mr. Eric Su and Ms. Kayla Sun, from HFL, represented the third party Zhejiang Xiang Wang in court. The case has been concluded now as the Supreme People’s Court (SPC) agreed with our opinions and rejected Suntory Ltd.’s retrial application.

Case Overview

Main arguing points with this case:

  1. Which are the designated goods under the disputed trademark?
  2. Does “drinking water” belong to the same scope as “liquid drink”?
  3. Can a trademark use on similar goods but out of its designated goods be deemed standard use?
  4. Is the Suntory Ltd. eligible to apply for a retrial?

By Suntory Ltd.’s retrial application, the TRAB, first and second instance court had all decided to maintain the disputed trademark, based on the fact that the trademark is designated on “cola; liquid drinks; solid drinks; health drinks” (the semi-colon between “cola” and “liquid drink” was omitted during extension in 2008) and the determination that using the trademark on similar products beyond the designated ones shall be the same as within them. However, the SPC later corrected the errors in the factual determination and law application, making a clarification that trademark use shall be limited to a trademark’s designated goods, and it shall not be deemed legitimate otherwise. On the other hand, the evidence and opinions given by our firm were adopted by the SPC, which identified the original and corrected “cola; liquid drinks; solid drinks; health drinks” as the designated goods, and drinking water shall belong to liquid drinks. Thus, the disputed trademark being used on drinking water was justifiable as trademark use, and on this ground, the SPC found it reasonable to maintain the disputed trademark.

HFL Comments

In China, trademark registrations have an exponential annual growth, increasingly squeezing the available resources. Therefore, it has become more difficult to obtain creative trademarks that fit in a certain business, turning new trademark applicants often into a three-year non-use cancellation case. This situation has naturally contributed to an increase in the number of such cases. In order for a trademark to be easily canceled, evidence of trademark use should be well-managed. Besides, reviewing the SPC’s opinions, in this case, has also taught us a lesson: inclusive coverage of goods helps standardize trademark use.

It does not matter which industry an operator is in, an issue inevitably comes up: the goods or services under registered trademarks do not always match with the strategies for brand development. It becomes even more pressing when the trademark is actually in use if the goods or services bearing the trademark have not been standardized by the book. Specifically, in this case, the product “drinking water” where the trademark in question has been used is not a standard item of goods on its own, as it is included with “liquid drinks”. As a result, the disputed trademark would have been canceled if the designated goods were determined to be “cola; liquid drinks; solid drinks; health drinks” because any trademark used beyond the designated goods is not protected. For an enterprise that manufactures and sells beverages, “non-alcoholic beverages” in Group 3202 should be the most inclusive item in terms of beverages and drinks. As long as this item is included in trademark registration, the omission of other specific goods under this umbrella will not break it out of its foundations.

To sum it up, trademark registration with extensive coverage of goods can not only avoid the embarrassing situation where a trademark used on goods similar to those designated can be canceled but also help standardize trademark use.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 49
12 March 2018

Pros & Cons of Cease & Desist Letter Use

Recently Mr. Eric Su, partner at HFL, and Ms. Jessica Li, patent attorney at HFL, have jointly shared their professional views by writing an article on PATENT LAWYER magazine about the pros and cons of sending cease and desist letters, talking about another recent court case that granted Shuanghuan Auto RMB 16 million (approx. to US$ 2.5 million) in monetary compensation.

In recent years, we have witnessed several cases in which sending a Cease and Desist letter turns out exposing the right-owner to a litigation case. In the end, a person who intends to protect his/her rights may have to pay damages or face an unfavorable court decision as to the counterparty’s infringement. By exploring the Honda vs Shuanghuan Auto case, this article reviews the court decision that granted Shuanghuan Auto the monetary compensation and focuses on how to deal with sending C&D letters appropriately.

The authors have looked at the two rounds of C&D letters sent to the dealers and business partners of Shuanghuan Auto, by Honda. By also reviewing the Supreme Court opinion on the case and understanding who is entitled to make use of C&D letters, we can understand better how to approach similar cases in the future. In addition, it is important to take into consideration the right time of when to send a C&D letter, the recipient, and the contents included in it. The sending of these two rounds of letters brought different results for HONDA in terms of protection of its rights, as the timing and recipients of its letters changed. Therefore, special attention should be paid to these two factors, which led to a different duty of care in different cases.

The conclusion reached by the authors is that sending a C&D letter is an efficient and low-cost mean of rights protection. It is significantly beneficial to right-holders when used properly, protecting their rights in a timely manner without the burden of complex and tiring court proceedings. However, when sending letters parties should check in advance whether they are entitled to do so and consider what to include in those letters, regarding the timing and the target, in order to avoid legal risks in their legal action.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 48
09 February 2018

Exhaustion of the rights conferred by a trademark
Schweppes SA v Red Paralela SL, Red Paralela BCN SL

Source Materials

JUDGMENT OF THE COURT (Second Chamber) 20?December 2017 In Case C?291/16

Concerned Parties

Plaintiff: Schweppes SA

Defendant: Red Paralela SL, Red Paralela BCN SL (Red Paralela)

Case Overview

In a request for a preliminary ruling – a special procedure exercised before the Court of Justice of the European Union (CJEU), which enables national courts to ask CJEU about the validity or interpretation of the European Union (EU) law – Commercial Court No?8, in Barcelona, Spain, presented a case, which concerns the exhaustion of the trademark “Schweppes”. The sign in question is known globally and registered in many countries. It is not only registered as a European Union trademark, but it is also registered in every single EU Member State and the European Economic Area (EEA). In addition, those nationally registered trademarks are alike. Originally, all the “Schweppes” trademarks registered in the EEA (the parallel trademarks) belonged to one company. After several acquisitions, restructurings, and licences granted, the outcome was as follows: identical trademarks in Spain and in the UK were exploited by different entities, which were?also?producing the tonic water separately.

In the infringement proceedings started by Schweppes against Red Paralela regarding parallel trademarks registered in Spain, plaintiff argued that the defendants had imported and distributed in Spain tonic water, manufactured in the UK, bearing Schweppes trademark. In the plaintiff’s opinion this was unlawful because those bottles of tonic water were produced and marketed not by Schweppes or with it consent, but by another entity, which as plaintiff argues, has no economic or legal connection with the parent company group. Therefore, given that the goods and signs are identical, consumers are unable to distinguish the commercial origin of the tonic water, i.e. whether it is from the UK or Spain.

The defendants Red Paralela claimed that the trademark rights have been exhausted. In addition, they argued that legal and economic connections between the entities involved in the proceeding in their mutual utilization of the ‘Schweppes’ sign as a worldwide trademark are unquestionable.

Inevitably, the most important legal provision in this case is Article?7(1) of DIRECTIVE 2008/95/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 22 October 2008 to approximate the laws of the Member States relating to trade marks. Entitled ‘Exhaustion of the rightsconferred by a trade mark’, it provides: “The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent.”

Court’s Opinions

Link to the original court Judgment:?http://curia.europa.eu/juris/liste.jsf?language=en&jur=C,T,F&num=C-291/16&td=ALL

CJEU held that Article 7(1) of Directive 2008/95 does not allow the national trademark owner to oppose importation of identical goods with identical trademark that previously, in another EU country, was owned by him/her, but now belongs to a different entity in two specific cases. Firstly, when after the assignment of the trademark, he/she continues to enhance the reputation of the trademark, alone or with third parties (which also deepens the confusion among the relevant public). Secondly, when after the trademark assignment, there are economic connections between the trademark owner and the third party (which leads to control the use of the trademark, goods and their quality).

HFL Comments

While the case is truly rooted in the EU law, especially regarding the free movement rule and intertwined exhaustion of the rights rule, some general remarks can be made.

  • When administering your IP rights portfolio, regardless of what it is consisted of, one must be very careful. Very often big commercial enterprises, in order to optimize tax policies, or expand their businesses to new markets, in consequence of acquiring or selling assets or in relation to many othe revents that lead to the reshaping of the companies’ structure, fiddle with their IP rights, sometimes with detrimental results. Whether granting a licence, creating a joint venture or commercializing IP rights in any way, some exceptional precautions must be taken, with special consideration to future business plans, i.e. future markets, the degree of control over other companies, which exploit the same trademarks, regional laws, connection to the IP rights and the prevailing parallel import doctrine.
  • Trademark right is very powerful, but it has many dimensions. In the case at hand, the shared care of a trademark, a very valuable asset for each party, created a unique situation.Should the different parties not care together about the trademark and cooperate in maintaining it, maybe they could oppose import of the same goods bearing the same trademark but owned by another entity.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Company news
06 February 2018

2018

Chinese New Year 2018 Holidays

Dear Colleagues,

Please kindly be noted that we will have our public holiday for the “2018 Chinese New Year” from February 14th (Wednesday) until February 21st (Wednesday), 2018, and all cases’ deadlines for any official procedures with China Trademark Office and the State Intellectual Property Office, which fall into this period, would be officially extended to February 22nd (Thursday), 2018.

For this reason, communication via office phones might not be available on those days, and emails response might be delayed.

For urgent matters, please contact our colleagues that are working on your case, and if you need any other support, please feel free to write us:

shanghai@hongfanglaw.com
guangzhou@hongfanglaw.com
beijing@hongfanglaw.com

We wish you all a very prosperous and healthy new year in 2018!

Thank you
Best Regards
HongFangLaw

HongFangLaw ~ Chinese IP Law Updates ~ n’ 47
05 February 2018

“Wesley” should not be mistaken for “Wisely”

Plaintiff’s Attorneys:
Bob Zhang, Eric Su from HongFangLaw

Source Materials
First instance judgment: (2017) J73XC No. 9152 administrative judgment affirmed by Beijing IntellectualProperty Court

Concerned Parties
Plaintiff: Zhejiang Dongli Real Estate Consulting Agency Co., Ltd.
Defendant: Trademark Review and Adjudication Board (TRAB) of State Administration for Industry and Commerce

Introduction

Both the plaintiff’s trademark (hereinafter “Wesley”), adopted after a commonly used English name, and the author Mr. Ni Cong’s pen-name (hereinafter “Wisely”), which was also given to an adventure character created by him, have been written as “卫斯理”. What would happen when two 卫斯理s (“Wesley” and “Wisely”) were to be confronted beside each other by the court? As an involved party advocating for the rights to “Wesley” in the trademark dispute, HFL will unveil the whole story for you in this article.

Case Overview

Previously, the defendant (hereinafter TRAB) decided to block the trademark application No. 19194458 “Wesley” from being registered on the services of “Teaching; Tuition” etc. in Class 41. The plaintiff Zhejiang Dongli Real Estate Consulting Agency Co., Ltd., who unsatisfied with the registration refusal, entrusted HFL to file a lawsuit with the Beijing Intellectual Property Court, had filed the above mentioned application. The decision in question was made because the TRAB deemed that the renowned Hong Kong writer Mr. Ni Cong who literarily addressed himself as “Wisely” owned the rights to “Wesley”.

The TRAB held that the registration without Mr. Ni’s consent on “Teaching; Tuition; Practical training [demonstration]; Coaching [training]; Arranging and conducting of workshops [training]; Mobile library services; Publication of electronic books and journals on-line; providing not downloadable on-line electronic publications; providing not downloadable on-line videos,” would mislead consumers as to the origin of the services, which falls foul of Article 10.1.7 of the Trademark Law of the People’s Republic of China (“Trademark Law” in short).

Focus of Dispute
Is the application for the registration of “Wesley” in violation of Article 10.1.7 of the Trademark Law?

Court’s Opinions

As the defendant provided no evident to prove that consumers perceives “Wesley” as identical to Mr. Ni Cong’s pen-name, the application for the registration of “Wesley” does not violate Article 10.1.7 of the Trademark Law. In the event of the Hong Kong author’s civil rights being infringed upon, other provisions should be cited for the remedy instead. Hence, the TRAB erred in its decision in both determination of facts and application of law while the plaintiff’s claims are well established on factual and legal basis. In its judgment, the Court supported the plaintiff by revoking the TRAB’s decision that blocked the registration of “Wesley” (TRAB’s Decision: (2017) No. 124176 Decision of Refusal Review on No. 19194458 “Wesley”).

HFL Comments

  • As an absolute prohibitive provision, Article 10.1.7 of the Trademark Law can be used to block any registration once it is deemed by trademark examiners to be infringing a right. Therefore, to avoid abusing it when other regulations should be used, examiners should take into consideration the when, where and how Article 10.1.7 should be applied. The TRAB examiners involved in this case were found to have crossed the line when HFL started to work on the case. Not only they did cite a misplaced provision, they also misinterpreted the facts. Although, Mr. Ni Cong enjoys prior rights to his pen-name “Wisely”, registering “Wesley” on goods or services that are not quite relevant with the former will not necessarily make consumers mistake the origin of the goods or services. In addition, rights to pen-names are protected as those to names, which should be regulated by the relative provision of Article 32 of the Trademark Law. In this case, remedy should be sought for by the person concerned based on his or her rights instead of the trademark authorities’ direct intervention.
  • In the Supreme People’s Court’s Interpretation on “Certain Issues Concerning Trials of Administrative Cases Involving the Grant and Confirmation of Trademark Rights” that was published in early 2017, it is affirmed that the People’s Courts acknowledges claims for rights to pen-names, stages names and translated names if those names are well-known and stable enough to be used by the relevant public to refer to the specific natural person. Furthermore, prior rights and interests to names of artistic works or characters in those works are also protected by courts if they are highly recognizable, but if used by others as trademarks, which may lead the relevant public to falsely relate them or the products used by them to the right-owners. However, both rights to names and rights to characters’ names are owned by specific individuals as civil rights and interests. Generally, no social or public interests are involved, neither will their use disrupt public order. Therefore, Article 10.1.7 cannot be applied every time when a name is filed for trademark registration.
  • When considering whether registering a prominent figure’s pen-name as a trademark will mix up the source of the goods or services for consumers, there are several important factors: the distinctiveness, the visibility etc. of the pen name concerned. While in this case, HFL argued for “Wesley” on the following grounds: Firstly, “卫斯理” is the direct translation of the English name “Wesley” which is a common name in foreign countries. It is not an original and exclusive use of Mr. Ni Cong. As such the Wesley trademark application is justified. Secondly, the word “Wesley” does not directly connects itself to Mr. Ni Cong. The defendant failed to provide evidence that “Wesley” and Ni Cong had a unique association between them and failed to prove that Ni Cong had a high reputation in the education industry and would cause the relevant consumers to misidentify the trademark. Thirdly, the plaintiff applied for “Wesley” trademark not with the purpose of damaging the rights of others and this act did not result in damaging consequences or undermining the rights of others. Finally, seeking protection for pseudonyms is a matter to be dealt with by other provisions and it does not require such a prohibitive and absolute one as Article 10.1.7. Therefore, the plaintiff’s application for “Wesley” in Class 41 is not deceitful or misleading and thus is not in violation of Article 10.1.7 of the Trademark Law.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 46
02 February 2018

“Ronghua” Trademark Infringement Case
Why the protection of unregistered trademark should be based on its influence in its target market

Concerned Parties:

Plaintiff: Foshan Shunde Sushi Ronghua Food Co., Ltd.
Defendant: Dongguan Wing Wah Cake Shop Ltd.

被告商标/ Defendant’s Trademark

原告商标/ Plaintiff’s Trademark

1

2

3第533357号商标/TM

4第1255171号商标/TM

Case Overview:

Recently, the Beijing High People’s Court has delivered its second instance judgment on the dispute over the trademark infringement between Su Guorong, Foshan Shunde Sushi Ronghua Food Co., Ltd. (plaintiffs in first instance court, hereinafter “ShundeRonghua”) and Dongguan Wing Wah Cake Shop Ltd., Wing Wah Cake Shop Ltd.(defendants in first instance court, hereinafter “HK Wing Wah”). In the judgment, the Court dismisses Wing Wah’s argument that “榮華” (traditional Chinese characters of “荣华”, hereinafter “RONG HUA”) amounts to a name peculiar to well-known goods.This is because the evidence submitted by HK Wing Wah is not sufficient to prove that the sign had well-known status as an unregistered trademark or a name peculiar to well-known goods like mooncakes before Nov. 14, 1989, when Shunde Ronghua’s trademark No. 533357 “荣华” (hereinafter “Rong Hua” for disambiguation) was filed for registration.

For this reason, the Court affirms its lower court’s judgement that HK Wing Wah has infringed upon the trademark “Rong Hua” by using signs containing “RONG HUA” on similar goods such as mooncakes and desserts. On the other hand, the Court lowers the damages from the enormous RMB 15 million (USD 2,400,000) that was granted by the lower court to RMB 3 million (USD 500,000) after considering the nature, the period and the consequences of the infringement in its decision.

Analysis and the Way Forward:

The focal point of this case is how to deal with the conflicts between a previously used but unregistered sign and an officially granted trademark. Those troubles are not unheard of in such a large country like China where the same product names may coexist in different areas. And in judicial practice, conflicts of rights are rising over and over again between similar marks. To give a solution to those conflicts, legislators have amended China’s Trademark Law. Pursuant to Article 59.3 of this law, “Where, before a trademark registrant applies for registration of a trademark, another party has used a trademark that is of certain influence and is identical with or similar to the registered trademark on the same kind of goods or similar goods, the holder of the exclusive right to use the registered trademark shall have no right to prohibit the said party from continued use of the trademark within the original scope of use, however, the holder may require the latter to add a proper mark for distinguishment”. Literally, the provision can be interpreted as: in the event of any conflict, an unregistered mark used before a registered one can only prevail when it is “of a certain influence”. However, it cannot be used beyond where it has been in use. Obviously, what matters most is whether the prior mark is “of a certain influence”.

Although the provision is new, the point is familiar. Therefore, when it comes to determination, we regard it appropriate to draw reference from Article 32 of the Trademark Law: “No applicant for trademark application may infringe upon another person’s existing prior rights, nor may he, by illegitimate means, rush to register a trademark that is already in use by another person and has certain influence”. Considering that, judges and examiners might think they have more discretion when determining what amounts to a trademark “of a certain influence”, and it gives prior trademark users a relief opportunity to support their claim that their goods did not constitute infringement.

Regarding the case at hand, while HK Wing Wah was able to establish substantial use of “RONG HUA” before “Rong Hua” was registered, “certain influence” thereof was not proved due to insufficient evidence. Thus, in this regard, the Court did not support HK Wing Wah’s claim. Trademark owners and users have a big lesson to learn from this case. As China improves its trademark administration system, it is moving from a lopsided protection of registered trademarks to a more holistic approach, giving more attention to prior users. This can reduce lawful but unreasonable judgments on trademark infringement that deprive the genuinely entitled users of their rights. At the same time, right-owners should raise their awareness of how they could use their trademark and invest more into it. What matters most is not the fact that a trademark has been used. It must be used profusely, because it is the key to acquire well-known status by a trademark when it cannot be registered at the time. Meanwhile, relevant evidence of trademark use should be gathered and preserved in advance to help secure a victory in any future dispute.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 45
29 January 2018

Sulwhasoo vs. Sulansoo Trademark Case
Confusing similarity of “XUE LIAN XIU” and “XUE HUA XIU” on cosmetics products was determined by the first instance court

Plaintiff’s Attorneys:
Karen Hao, Eric Su from HongFangLaw

Source Materials:
First instance judgment: (2016) H0115MC No. 86694 Civil Judgment

Concerned Parties:
Plaintiff: AMOREPACIFIC CORPORATION
First Defendant: Shanghai Wei Er Ya Cosmetics Co., Ltd.
Second Defendant: Shanghai Wei Er Ya Daily Chemicals Factory

被告商标/Defendant’s Trademark

原告商标/Plaintiff’s Trademark

1

2

被告产品/Defendant’s Products

原告产品/Plaintiff’s Products

3

4

5 6
7 8

Case Overview:
The plaintiff AMOREPACIFIC CORPORATION owns trademark rights to “Sulwhasoo” and its Chinese equivalent “雪花秀” (“XUE HUA XIU”) registered in Class 3. The trademarks have acquired quite a reputation in the cosmetics market after being constantly and broadly promoted and used in Mainland China. On the other hand, the defendants are respectively the distributor and manufacturer of the Sulansoo/雪莲秀 ( “XUE LIAN XIU”) cosmetics, on which both English and Chinese trademarks in question are used.

Pursuant to Article 57.2 of the Trademark Law, “Using a trademark that is similar to a registered trademark on the same goods, or using a trademark that is identical with or similar to the registered trademark on similar goods without the licensing of the registrant of the registered trademark, which is likely to cause confusion” is deemed as an infringement of the exclusive right to use a registered trademark. In this provision, “likely to cause confusion” requires only the possibility of misleading the consuming public over the goods’ origin or their relevance with a plaintiff’s products on which a registered trademark is used.

In this case, HongFangLaw supported the plaintiff AMOREPACIFIC CORPORATION in winning over the first instance court. Recognizing the visibility of “XUE HUAXIU” on cosmetic products, court has determined that the similar goods manufactured and sold by the defendants are likely to confuse the relevant public as they bear the signs similar to the plaintiff’s registered trademarks. It is a case worth studying.

Court’s Opinions:

  • Regarding the similarity between the Defendant’s “XUELIAN XIU” and the Plaintiff’s “XUE HUA XIU”. The signs are identical in word composition except the middle Chinese characters “莲” (“LIAN”) and “花” (“HUA”), but they are also similar, sharing the element “艹” (related to flora) on the top of a paralleling bottom part with the same font. In addition, the defendant’s sign also follows suit when the plaintiff stylizes “XUE HUA” and “XIU” in different ways to section the three-character trademark. After comparing the signs separately and together, the first instance court delivered the above conclusions and thus found Defendant’s “XUE LIAN XIU” and Plaintiff’s “XUE HUA XIU” signs similar without much difference.
  • Regarding the possibility of confusion of Defendant’s and Plaintiff’s products. While the products do differ in how much they are priced and where they are sold, it is still possible for consumers to relate the Defendant’s commodities in some way to the Plaintiff’s when seeing similar signs, considering the popularity of the latter. Such utilization of the Plaintiff’s fame would contribute to an unfair advantage for the Defendant’s offerings over products of their like. It is plain that the coexistence of Defendant’s and Plaintiff’s products causes confusion among the consuming public.
  • On the above grounds, the first instance court held that the Defendant’s use of signs similar to the Plaintiff’s registered trademarks on the same or similar goods is an intentional act to capitalize on the Plaintiff’s famous trademarks and is likely to confuse the relevant public. Hence, the Defendant’s conduct constitutes infringement of exclusive trademark rights.

HFL Comments:

  • Factors to be considered when judging trademark similarity are: the fame of the cited trademark and the defendant’s other attempts of imitation (e.g. slogan, packages etc.) in addition to the similarity per se. Such aspects weigh significantly when court deals with trademark infringement and looks at whether the disputed and the cited trademarks are similar in the meaning of the Trademark Law. Moreover, according to our experiences in practice, products or services on which the trademark in question is used also matter. It is because the likelihood of confusion varies as consumers pay different attention to different products. For example, goods affecting life and health or costing a larger sum such as real estates or automobiles, or printed with bigger signs generally attract more attention. Therefore, even if the signs themselves are similar, they are still allowed to coexist when their target consumers tend to be more cautious as in the case of car brands and . Another opposite example can be seen when dealing with watch brands, because the logo printing area in the watch dial itself is relatively small, minor differences are imperceptible to the normal public and are likely to cause confusion and misidentification.
  • Factors to be considered when judging the likelihood of confusion are: the registered trademark’s distinctiveness and reputation, the intention of the defendant, the extent of attention given by the consuming public, evidence of actual confusion along with other relevant factors and their influence on each other.
  • Regarding the damages from intellectual property infringement: where the plaintiff fails to establish his losses or the defendant’s profits. Article 16.2 of the Supreme People’s Court’s Interpretation on Several Issues Concerning the Application of Law in Trial of Civil Trademark Dispute Cases applies: “When a people’s court is determining the measure of damages, it should make an overall determination having considered factors such as the nature, the period and the consequences of the infringement, the reputation of the trademark, the amount of trademark licensing royalties, the types, periods and scope of trademark licenses for the mark, the reasonable expenses incurred in stopping the infringement etc.” For this reason, rights holders should consider gathering evidence in a number of ways and note as many of the features of the product concerned as possible, for example, the full list of products and production operations of the defendants, including any kind of infringement episodes, duration of those, implication of the product (such as harm done to the public), the price of the product, and many other kinds of categories and variety of factors. The plaintiffs has the duty of the full burden of proof at trial, in order to facilitate the court, having conclusive evidence will support a higher amount of compensation at the time of the verdict.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Event Updates Sharing
26 January 2018

CBBC-QBPC IPR Owners Meeting

We are pleased to share the news that on January 19th, 2018, China-Britain Business Council (CBBC) jointly with QBPC (Quality Brand Protection Committee) hosted in Shanghai an IP Rights Owners Exchange Meeting on enforcement against logistics industry and express delivery companies.

QBPC is registered under the China Association of Enterprises with Foreign Investment (CAEFI) in order to contribute facilitating and promoting continuous improvements of administrative and judicial protection for intellectual property in China.

Tom Duke, IP Attache of the UK Embassy in China, and Mick Ryan, Director of IP and Business Environment of CBBC, gave the audiences the opening and closing remarks and chaired the event.

Our Partner, Zhang Xu, participated to the event on behalf of one of our clients, member of CBBC, and gave a speech focusing on IPR challenges in logistics/couriers. Beside the IPR issues, the event went for a brief introduction to Chinese logistics industry and express delivery companies’ business model as well as their business and working procedures. Closing the event was QBPC’s sharing their experiences and challenges on enforcement with express delivery companies.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 44
22 January 2018

TM Law Protection on Deceased Celebrity’s Name
How TM Law Protects Deceased Celebrity’s Name from MICHAEL JACKSON to MONET

Case Docket:

(2017)SBYZ No. 0000041130 Decision on Disapproval of Trademark Registration of No.16677034 “MONET GARDEN”

Concerned Parties:

Opponent: Académie des Beaux-Arts
Respondent: 阿依古力·阿不都肉苏力

Case Handled by:

Kayla Sun, HongFangLaw

Case Overview:

被异议商标/ Opposed Trademark

异议人引证商标/ Cited Trademark

def dsad

Issues over how rights to the names of famous people, especially of the ones who already passed away, should be protected by the Trademark Law in administrative procedures have been dealt with in the opposition against the “MICHAEL JACKSON” trademark. The Trademark Office blocked its registration, citing Article 10 of the Trademark Law that provides for an absolutely prohibitive scenario: signs that are likely to cause public confusion or have other ill effects shall not be used as trademarks. However in the “MONET” case, the Trademark Office instead resorted to Article 30 of the Law in its disapproving decision, showing a more cautious approach towards the absolute provision. Similar, but more direct elaboration on applying Article 10 to protect the name of a deceased famous person can also be seen in the Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Administrative Cases on Granting and Affirming Trademark Rights.

Examination Opinion:

During the opposition procedure, our IP consulting company under HFL has succeeded in winning over the Trademark Office and blocking the opposed trademark MONET GARDEN registration for Académie des Beaux-Arts.

According to the official decision, the opposed trademark and the cited trademark constitute similar trademarks on similar goods on the grounds that, “MONET” is perceived by the public to be the renowned painter Oscar-Claude Monet in both of the trademarks, especially when the element is highly noticeable in the opposed one. Besides, they are designated on goods sharing similar use and functions, sales channels and target consumers, therefore likely to cause confusion and mistake when they are both present in the market. Despite the favorable decision, the opponent’s other reason went unsupported. It challenged the opposed trademark on its infringement of the respondent’s right to the name and to its commercialization based on the aforementioned Article 10.

However in the “MICHAEL JACKSON” case in 2015 where Article 10.1.7 and 10.1.8 were cited, the Trademark Office held that the trademark in question should not be registered because it was possible to mislead consumers to relate the designated goods “backpacks” to the legend singer Michael Jackson who had been widely known in China before the trademark filing and thus could cause undesirable impacts (Decision on Disapproval of Trademark Registration of No.11777656 “MICHAEL JACKSON”).

HFL’s Comments:

  • It is not difficult to figure out from the above two cases that the Trademark Office has grown more prudent on the application of Article 10 of the Trademark Law despite the similarity of the two cases. Once supportive of opposition for inappropriate relevance to household names, it now turned against the opponent’s argument that “the opposed trademark is possible to mislead consumers to relate the designated goods under ‘MONET GARDEN’ to the famous painter Oscar-Claude Monet”. The shift in the Trademark Office’s attitude was contributed by another fact: In yet another opposition review case involving “WEI XIN”, which means WeChat, the Beijing Supreme People’s Court further clarified the “ill effects” in Article 10.8 as “passive and negative impacts on social interests and order concerning politics, economy, culture, religion and ethnicity”. The narrower interpretation has limited the application of Article 10. As a result, the Trademark Office eschewed the article but resorted to confirmation of trademark similarity based on possible confusion when faced again with relevance between the opposed trademark and the name of the famous deceased.
  • Note-worthily, there is still an open window in Article 5 of the Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Administrative Cases on Granting and Affirming Trademark Rights that, “Where a trademark sign or its constituent elements may cause passive and negative impacts on the social and public interests and public order of China, the people’s court may determine that it falls under the circumstance of “having other ill effects” as prescribed in Article 10.1.8 of the Trademark Law. Applying for registration of a name of a public figure in the political, economic, cultural, religious, ethnic and other areas as a trademark falls under the circumstance of “having other ill effects” as prescribed in the preceding paragraph.” Highlighting the names of public figures, the provisions have been effective since March 1, 2017. Given such guidance, the Trademark Office and the Trademark Review and Adjudication Board might as well cite Article 10 when dealing with infringement on names of deceased public figures in a more proactive spirit so as to render ever more sufficient and powerful protection in this regard.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 43
11 January 2018

Invalidation of the “PRINS” preemptive trademark
Trademark Rights Confirmation case based on the application of Trademark Law art. 32 [“copyright” as a “prior right”]

Source Materials:

TRAB Decision: SPZ [2017] No. 0000114762 on the Application for Invalidation of No.13042896 “PRINS” Trademark

TRAB Decision: SPZ [2017] No. 0000114765 on the Application for Invalidation of No. 13042897 “PRINS” Trademark

Concerned Parties:

Applicant: Verkade Veenendaal B.V.

Respondent: Zhuhai Duopu Kang Food Science and Technology Co., Ltd. (referred to as “Duopu Kang”)

Case Handled by:

Kayla Sun, HongFangLaw

Case Overview:

被申请商标

Applied Trademark

申请人在先美术作品

Applicant Prior Mark

prins prins 2

In many cases, for determining whether a copyright is considered as a prior right for trademark opposition and invalidation, the standards of trials run by the Trademark Office and the TRAB differ from one another. In the latest judicial interpretation of how to determine trademark rights, during the trademark application, prior copyright evidence is clearly taken into consideration. Yet currently, how the Trademark Office, the judges, and the court apply the law in this situation remains divisive. In this particular case, the TRAB took as an important evidence of copyright ownership the “Benelux trademark application records” and the “Global Trademark Application” of the design works of the applicants, instead of limiting the evidence to “design of manuscripts, originals, acquisition of rights contract” and so on. Compared with precedents, this is an important breakthrough in this case, reflecting the TRAB’s position on whether trademark applications can be evidence of copyright ownership.

Court’s opinions:

In the invalidation procedure of this case, HongFangLaw, assisting Verkade Veenendaal B.V. with the support of the Trademark Review and Adjudication Board, successfully invalidated the trademark registrations stolen by Duopu Kang, also a pet product manufacturer.

The TRAB holds that:

The proof of ownership, works specification, designer’s statement, Benelux trademark application and global trademark application registration, and the evidence of the work published, prove that the PRINS design owned by Verkade Veenendaal B.V., is in line with China’s “Copyright Law” provisions of the work of originality requirements. The recently applied controversial trademark and the original graphic logo copyright of the applicant display several relevant similarities, with its composition of the elements involved, and its overall appearance. Considering then, that the respondent did not submit evidence to prove that it had the prior right to the trademark during the dispute and did not state any reasonable source of creation, it should be concluded that the applicant’s earlier copyright was infringed upon.

HFL’s Comments:

  • Currently, in many cases copyright is judged on whether it counts as a prior right for trademark opposition and invalidation, the standard trial application of such consideration from the Trademark Office and the Commercial Judging Committee is usually diverse. Taking into account the ownership of copyright contains a certain degree of difficulty, and the Trademark Office and the TRAB’s rarely decide based on copyright infringement in administrative confirmation of trademark rights, this case is a significant breakthrough in that sense. It’s also interesting to note that, the important evidences of the ownership of copyright by foreign companies and the fact that the “Benelux trademark application records and the application of global trademark applications” where considered in the ruling, helped conclude that ownership can be proved by more than “design draft, the original, the right to obtain the contract” and so on. Compared with the previous precedents, there was an important breakthrough in this case.
  • Article 19 of the Regulations on Several Issues Concerning the Trial of Administrative Cases Involving the Granting and Confirmation of Trademark Rights states in the latest version that: “… Where a trademark representation constitutes a work that is subject to copyright protection, and a party provides design drawings, original documents, contracts for the acquisition of rights, and copyright registration certificates from before the application date for the disputed mark, etc., involving the said trademark representation, these can all be used as ‘prima facie’ evidence of copyright ownership.” It is also clear from the legislation that “trademark gazettes, trademark registration certificates”, i.e., trademark application records, can be used as preliminary evidence in determining whether a trademark applicant is entitled to claim copyright, which greatly increases the possibility of identifying a copyright owner. Of course, when examining and hearing the case, it is necessary to combine the design draft, the transfer agreement and the application for prior trademark registration for comprehensive consideration.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 42
05 January 2018

Johnnie Walker case: no free ride by John Walker

Source Materials:
First instance judgment: Beijing Intellectual Property Court (2016) Jing-73-Xing-Chu No. 2833 Administrative Judgment
Second instance judgment: Beijing High People’s Court (2017) Jing-Xing-Zhong No. 3828 Administrative Judgment

Concerned Parties:
Appellant (former Defendant): Trademark Review and Adjudication Board of the State Administration for Industry and Commerce (“TRAB”)
Appellee (former Plaintiff): Diageo Brands B.V. (“Diageo”)
Third Party: Yiwu San Dou Apparel Co., Ltd. (“San Dou”)

Lawyers:
Bob Zhang, Shanghai HongFangLaw associate
Mia Li, Shanghai HongFangLaw associate

Case Overview:

Disputed Trademark (owned by Yiwu San Dou Apparel Co., Ltd.) Cited Trademark (owned by Diageo Brands B.V.)
Trademark JOHN WALKER JOHNNIE WALKER
Designated Goods Coffee; Tea; Candy; Chocolate; Non-medical nutrient (Class 30) Whisky (Class 33)

Recently, the Beijing High People’s Court has delivered a final judgment in favor of HFL’s client Diageo on the administrative trademark dispute, affirming the lower court’s judgment and dismissing the TRAB’s appeal. During the proceedings, Diageo’s trademark “JOHNNIE WALKER” has been determined as a well-known trademark, based on which the freeriding “JOHN WALKER” mark owned by the third party San Dou was invalidated.

Originated from Scotland in 1820, JOHNNIE WALKER represents a series of classic blended whisky. Existing evidence shows that the brand has become widely known by the Chinese consumers with affection and appreciation in the past 40 years since its debut in China in the 1970s. As early as 1958, Diageo had already filed application for registration of “JOHNNIE WALKER” designated on whisky. As for the disputed trademark “JOHN WALKER” (No. 9760890 in Class 30), it was filed on July 25, 2011 by the third party and been granted registration on September 21, 2012. It is designated on the goods of “coffee; tea; candy; chocolate; non-medical nutrient” etc.

Court’s opinions:
The administrative lawsuit filed by Diageo with the Beijing Intellectual Property Court was preceded by opposition, opposition review and invalidation announcement. Enormous evidence from such procedures was submitted. After examination, the lower and higher courts both decided in their judgments to repeal the TRAB’s previous decision against Diageo.

The courts hold that:
The evidence submitted by Diageo, including proof of the cited trademark’s fame among the relevant public, its long-term use, expansive promotion in the Chinese mainland, and previous protection as a well-known trademark. All show that the JOHNNIE WALKER whisky is highly renowned around the globe, including China, thus making it possible to determine the trademark to be well known on the product;

The disputed trademark and the cited trademark are the same in their major distinguishing parts; “Coffee; tea; candy; chocolate” and whisky as an alcohol respectively designated under the disputed and cited trademarks are relevant to some degree in their target consumers and sales channels.

The registration and use of the disputed trademark have improperly capitalized on the cited trademark’s fame. It is prone to cause confusion among the relevant public and is likely to impair the reputation of the well-known trademark and other rights and interests concerned of the trademark owner.

The third party has violated Article 44.1 of the Trademark Law as a great many of its 180 trademark registrations in Chinese or English in different classes are identical or similar to existing foreign brands. Those include the disputed trademark rip-off of Diageo’s well-known trademark. As an enterprise in apparel and toys, the disputed registration designated on candy etc. is not reasonable, neither are its other trademarks obtained obviously not for substantial use in business. On such behavior, the third party made no explanation in either the administrative stages or proceedings.

In summary, the courts hold that 1) the trademark “JOHNNIE WALKER” designated on “whisky” etc. in Class 33 has become well known after years of expansive use and promotion. 2) The disputed trademark “JOHN WALKER” on “coffee; tea; candy” etc. constitutes copying and imitation of the determined well-known trademark, which may damage its reputation and its rights holder’s rights and interests concerned. 3) The third party’s behavior constitutes registration “by other improper means” by obtaining marks that are identical or similar to preceding brands across multiple classes. Based on the above, the disputed trademark shall be invalidated for violating Article 13.3 and Article 44.1 of the Trademark Law by copying and imitating the cited well-known trademark

HFL’s Comments:
The case is a significant one as it has taken on all resorts available in administrative procedures for trademark rights determination, including opposition, opposition review, invalidation announcement, as well as first and second instance administrative trials.

I. On cross-class protection of a registered well-known trademark:
In this case, the court declared the disputed trademark invalid with the well-known status of “JOHNNIE WALKER” that had been affirmed on whisky products. However, copying and imitating a well-known trademark is not necessarily a silver bullet to knock out an infringing mark because cross-class protection does not apply to every case, but to what involves relevance between the designated goods or services, as in this case where “coffee;tea; candy; chocolate” and whisky are deemed relevant. Both in the category of foods and beverages, the goods see their sales channels and target consumers overlap. For this reason, if the disputed trademark highly similar to the well-known cited trademark is used on its designated goods, it tends to cause confusion and mistake.

To determine a well-known trademark, how strong the case is and how much it is worth doing so naturally are factors to be considered. Confusion that may arise rise, i.e. the degree of similarity also weights significantly and it depends on the relevance between the designated goods or services. Standards for deciding on similarity differ between the courts and the Trademark Office/TRAB in this case. The latter seems to uphold the Table for Differentiating Similar Goods and Services in a more prudent manner.

II. Application of Article 44.1 of the Trademark Law:
Article 44.1 of the Trademark Law provides that, “A registered trademark shall be declared invalid by the Trademark Office if it is in violation of Article 10, Article 11 or Article 12 of this Law, or its registration is obtained by deceptive or other improper means. Other entities or individuals may request the Trademark Review and Adjudication Board to declare such registered trademark invalid.” For the purpose of this law, registration obtained by “other improper means” refers to disruption of trademark registration order, damage to public interests, misappropriation of public resources etc.

In this case, the third party who owns multiple trademarks in different classes that are highly similar or identical to others’ well-known registered trademarks is supposed to be aware of those existing rights. However, such rights, including those of the disputed trademark, have been ignored and damaged in the third party’s bad-faith registration, causing confusion in the market. If such behavior goes unpunished, the free-riding tricks that undermine the market’s health will be encouraged while hard-working operators who establish their businesses by law will lose their faith. This will distort the market by hurting the public interest and social resources. Hence, the third party’s conduct counts as an improper means according to Article 44.1 of the Trademark Law and the disputed trademark should be invalidated.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Company Update
29 December 2017

HFL New Office and New Graduate Program with ECUPL Inauguration Ceremony

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We are honored to announce the official establishment of the Graduate Student Research & Practice Station jointly developed by HongFangLaw and East China University of Political Science and Law (ECUPL). On December 25, 2017, on the inauguration day of its new offices in Shanghai, HFL welcomed the educators from ECUPL to inaugurate the Practice Station. The delegation consisted of Dean Ms. Hong Dongying and Vice Dean Mr. Shi Hongguang of the Graduate School, as well as Deputy Chief Mr. Chen Yi and Office Director Mr. Dai Guoli of the LLM Center.

ECUPL is among the top highest learning institutions of politics and law established by the People’s Republic of China. In June 1952, its predecessor was established on the campus of the former St. John’s University upon the approval by the East China Military and Administrative Committee. It rose from the merger of the law schools, politics schools and sociology departments of 9 institutions, including St. John’s University, Fudan University, Nanjing University etc. There were various notable rises and falls in its history, when the institution was merged in 1958, re-established in 1963, open to new enrollments in 1964, banned from recruiting students in 1966, and removed from registration in 1972. In March 1979, it came back to life again upon the State Council’s approval and was given new life in March 2007 by having its name changed into the current ECUPL approved by the Ministry of Education.

Earlier this year on November 17, “HongFangLaw iMeritScholarship” dedicated to supporting excellence aspiring students was launched in ECUPL.

The cooperation between HFL and ECUPL is further strengthened by the Station’s setup. The staff at HFL is looking forward in supporting the cause of IP talent cultivation in China with this opportunity by providing graduate students with valuable knowledge in research and practice that is based on our years-long experience in IP law. HFL with the access to ECUPL’s academic prowess will continue to run at the forefront of IP law research and practice.

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The ECUPL’s delegation led by Dean Ms. Hong Dongying in HFL’s new office visit in Shanghai

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HFL Partner Zeng Ning and ECUPL Vice Dean Mr. Shi Hongguang unveiling the Station’s plate

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HFL Partner Mr. Su Jianfei and ECUPL Dean Ms. Hong Dongying signing the cooperation agreement

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 41
20 December 2017

Dispute over Trademark Infringement and Unfair Competition between AkzoNobel and Doulax

[Source Materials]
First instance judgment: Jiangsu Nanjing Intermediate People’s Court (2016) Su-01-Min-Chu No. 584 Civil Judgment.
Second instance judgment: Jiangsu High People’s Court (2017) Su-Min-Zhong No. 211 Civil Judgment.

[Concerned Parties]
Appellant (former Defendant): Doulax Pipes Technology (Suzhou) Co., Ltd.(“Doulax”)
Appellee (former Plaintiff): Akzo Nobel Coatings International B.V. (“AkzoNobel”)

AkzoNobel Doulax
asdada 22222
22sada2 2222


[Case Overview]
In the practice of administrative trials concerning trademark rights, it is not uncommon for the Trademark Review and Adjudication Board (“TRAB”) and the Beijing Intellectual Property Court to determine goods to be similar even if they are in different classes, according to the guiding Table for Differentiating Similar Goods and Services. However in the scenario of civil disputes, the courts seldomly delivers such precedents, one of which is the case to be studied here.

Resorting to civil proceedings, we Hongfu Law Firm assisted AkzoNobel to win over the court which supported our argument on the similarity between paints and pipes, taps, valves etc.. While they respectively fall in Class 2, Class 11 and Class 17, we sufficiently established the relevance between the goods in terms of their function, usage, and sales channels. The court also determined AkzoNobel’s trademark “Duo Le Shi” (“DULUX” in Chinese, exploited by Doulax) as a considerably well-known trademark. The finding was and will be favorable to prove free rides on AkzoNobel’s reputation. “Duo LeShi/DULUX” paints are signature coating products of AkzoNobel. Consistent operation and marketing for years in China have grown the brand into a household name. In the course of this process, “DULUX” has been recognized as a well-known trademark by the China Trademark Office, so has its Chinese equivalent “Duo Le Shi” been recognized in administrative procedures multiple times.

[Court’s Opinions]
The first instance court held that, although paints and coatings designated under “Duo Le Shi” in Class 2 and pipes, valves etc. sold by Doulax are of different classes of goods, their usage, sales channels and target consumers largely overlap. The general consumers therefore are prone to draw connections and harbor confusions between them. To be specific, Doulax’s products bearing “Duo Le Shi” are likely to be directly or indirectly attributed to AkzoNobel. For this reason, the goods were determined as similar goods for the purpose of the Trademark Law by the court. Thus, Doulax’s using “Duo Le Shi” on its products, packages, brochures, business cards and web pages constitutes trademark infringement for the confusion caused to the relevant consumers. Doulax was ordered to immediately cease the infringement, pay RMB 500,000 in damages to AkzoNobel, and eliminate the adverse effects it had caused.

Regarding the company’s name, the first instance court held that Doulax has unreasonably used and registered “Duo Le Shi”, quite a visible and reputable trademark of AkzonNobel in the market, as its trade name alone or combined with other elements in its business operation, suffices to cause confusion and even mistake in the companies’ relationship. The relevant consumers might be misled to reckon that Doulax is licensed by or affiliated with AkzoNobel, which will unfairly give strength to the former due to the latter’s renowned trademarks, reputation and competitiveness. In this way, Doulax’s conduct will inevitably impair AkzoNobel’s legal and legitimate rights by breaching good faith and business ethics required in market activities, therefore disrupting the social and economic order. Therefore, the first instance court determined that such behavior of Doulax constitutes unfair competition and ordered it to change its name in good time. Doulax was unsatisfied and filed appeal, followed by the higher court’s affirmation of the first instance judgment and dismissal of the appellant’s pleading.

[HFL’s Comments]

  • The Table for Differentiating Similar Goods and Services serves as a reference rather than a decisive standard for determining similar goods. In practice, more weight is given to the market’s status based on a comprehensive analysis of the goods’ function, usage, departments, sales channels, target consumers etc. Thus, goods of distinct classes can still be determined as similar goods for the purpose of the Trademark Law as long as the relevant consumers plausibly find them relevant and their sources confusing based on general knowledge and common sense of transactions.
  • Regarding the registration and marked use of other’s trademark with considerable fame as trade name, Article 58 of the Trademark Law prescribes that, “Whoever constitutes unfair competition by using a registered trademark or an unregistered well-known trademark of another party as the trade name in its enterprise name to mislead the public shall be dealt in accordance with the Anti-unfair Competition Law of the People’s Republic of China.” The situation, though not specified in the Anti-unfair Competition Law, is generally governed by its Article 2, “Managers shall abide by the principle of voluntariness, equality, impartiality, honesty and good faith, and also adhere to public commercial moral in their business transactions.” However the courts tend to be precautious when invoking the fundamental provision. They instead have developed more applicable standards and measures, such as referring to how intensely a registered trademark is well-known and distinct, when the trademark rights were generated, when the ensuing trade name was registered, how likely confusion or mistake arises etc. The issue of trade name use and registration is further regulated in the revised Anti-unfair Competition Law, “Where a trade name registered by an operator violates Article 6 of this law, the operator shall change the registration in time; before the change is made, the trade name shall be substituted for the operator’s Unified Social Credit Code by the registering administration.”

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 40
14 December 2017

How “Jia De Shi” Successfully Blocked the Registration of “Jia De Le”

Recently, the Beijing Intellectual Property Court has delivered a first instance judgment in favor of the Trademark Review and Adjudication Board (“TRAB”, the “Defendant”) after hearing the administrative dispute over grant and validation of the trademark No. 9741931 “Cadelo Jia De Le” (the “Disputed Trademark”, see the below table).The court dismissed the claims of Huai’an HUA MAO Trading Co., Ltd. (the “Plaintiff”) and affirmed the Defendant’s decision disapproving the registration of the Disputed Trademark. The case leads back to July 2012 when the Disputed Trademark was preliminarily approved for registration on “lubricants” etc. in Class 4. It was followed by our Firm’s filing an objection from Chevron Intellectual Property LLC. Nevertheless, the China Trademark Office (“CTMO”) later officially approved the Disputed Trademark for registration. Our Firm, dissatisfied, appealed to the TRAB for objection review in March 2014, after which the authority decided that the Disputed Trademark should not be registered. Plaintiff thus filed an administrative suit in March 2015 against the TRAB, out of dissatisfaction with its decision. In the proceedings, our Firm played a proactive role to protect the rights and interests of our client Chevron Intellectual Property LLC (the “Third Party”).

Our Firm claimed the Third Party’s prior trademark rights pursuant to Article 30 and Article 13.3 of the Trademark Law, citing its two existing registered trademarks on similar goods (collectively the “Cited Trademarks”, see the below table). In light of the Cited Trademarks’ well knowingness and influence, as well as Disputed Trademark’s bad faith imitation of the former composing elements, our Firm argued that the marks constituted similar trademarks on similar goods, which would cause the relevant public to confuse the origins of their designated goods.

The court tried the facts and found that Disputed Trademark is similar to Cited trademarks. In the former, the part “Jia De Le” in Chinese characters is more recognizable to the relevant public and is approximate to the distinct coined words “Jia De Shi” and “De Le” of the latter. The goods designated there under also constitute similar goods.Thus in the eyes of the relevant public, the goods are prone to be identified to be sharing the same origin or to have close relation in regard to the coexistence of the marks on the same or similar goods. For this consideration, the court dismissed the Plaintiff’s claims upon finding that the marks are similar trademarks citing Article 30 of the Trademark Law.

Information of the trademarks involved in this case:

Disputed Trademark Cited Trademark I Cited Trademark II
No. 9741931

12

“Cadelo Jia De Le”

No. 876389

123

“Jia De Shi”

No. 167431

1234

“De Le”

Huai’an HUA MAO Trading Co., Ltd. Chevron Intellectual Property LLC

[Key takeaways on the case by HFL]

  • Key points: In cases of administrative litigation with the right of trademark confirmation, it is imperative that a comprehensive analysis of the trademark dispute and quoted trademark, including glyphs, pronunciation, meaning, the relevant public’s focus, etc., must be conducted first. In addition, the direct relevance, indirect relevance and potential relevance between the goods should be as clear as possible; and the evidence related to the popularity of the citation mark is of great significance to winning the case.
  • Procedural points: In this case, the Third Party did not give up seeking further relief procedures, in the opposition review phase even if its claims were not supported by the CTMO (since the implementation on May 1, 2014 of the newly revised “Trademark Law ” there has been no objection review process proposed by one of the opponents, but rights protection can still be done through the procedure of trademark invalidation, even if it is based on the same facts and reasons, and does not violate the principle of retrial.”) The case received the court’s approval and support, eventually successfully blocking the registration of the trademark dispute, thus safeguarding the earlier trademark rights of the opponent. Therefore, even if the procedure of trademark right confirmation case is complicated and difficult, trademark rights holders should exhaust all means to protect their legal rights from a long-term perspective before giving up.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 39
29 November 2017

First Big Data Case by Penfolds & Alibaba

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On Oct. 16, 2017, HFL was invited to the Alibaba Xixi Campus to accompany the IP Counsellor of the Australian Embassy in China, as well as the Director of Global Intellectual Property and the Intellectual Property Manager of Greater China for Treasury Wine Estates (TWE), the brand owners of Penfolds. Representatives from all sides had an in-depth discussion on how to pursue the advancements of IP protection with the support of big data.

Previously, TWE discovered that multiple online shops operating on Alibaba Group’s Taobao.com e-commerce platform were suspected of selling counterfeit Penfolds wines. TWE soon brought the case to the Shanghai PSB Hongkou Branch, which worked closely with the brand owner and Alibaba in the investigation. Given full access to the internet company’s big data capacity and analytical model, the authority was able to locate the infringing manufacturing site and crack it down with high efficiency. With the case successfully closed, the PSB organized a press conference to publicize the proceedings. It was reported that 9 suspects were detained and 14,000 bottles of counterfeiting wines were seized, accounting for over RMB 10 million.

The case is the first of its kind where TWE cracked down infringement with the support of Alibaba’s big data, and also an unprecedented one involving both online and offline cooperation between the two. Along with the authorities, they both demonstrate a tough attitude of zero tolerance towards counterfeits. The efficiency, accuracy and inventory value of the operation also caught the attention of relevant Australian authorities. David Bennett, Director of Intellectual Property and Intellectual Property Counselor of the Australian Embassy in China made a special trip to visit the headquarters of Alibaba Group and contacted Alibaba Brand cooperation and protection team conducting an in-depth discussion on the use of big data in IPR protection. Both parties believed that the role of big data in IPR infringement cases will become increasingly prominent. The cooperation between rights holders and the Alibaba platform is of crucial importance. A win-win cooperation will become one of the major goals of IPR protection in the future.

Following this QR you can find the report on the Hongkou PSB press conference:
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If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Event Report
23 November 2017

MOU Signed by ALIBABA–CBBC on IP Protection

During a meeting held in Hangzhou on November 8, 2017, China-Britain Business Council (CBBC) and Alibaba Group have both recognized the joint efforts achieved from the cooperation between CBBC, UK Industry and Alibaba on IP protection in the past years, and decided to renew the Memorandum of Undertaking for IP protection again.

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On Nov. 8, 2017, representatives from these corporations have gathered in Hangzhou City, the headquarters of Alibaba Group, including Mr. Tim Moss, CEO of the United Kingdom Intellectual Property Office (UKIPO) and his team, the officials from CBBC, the colleagues from UK brands and the colleagues from Alibaba Group. Our partner Mr. Zhang Xu, on behalf of our client BP p.l.c., has been honorably invited to attend the ceremony and round-table to share experience for the work done on IP protection under the MOU in past three years.

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It was back in 2014, that CBBC and Alibaba firstly signed the cooperation agreement to promote intellectual property protection on e-commerce in China. Through this partnership, CBBC has assisted UK companies in addressing infringing product listings on Alibaba’s branding platforms, using their take-down mechanisms, as well as new advanced pilot initiatives, and the Big Data from Alibaba has also greatly supported the brand owners to conduct more accurate legal actions. All stakeholders involved have agreed to engage in more productive dialogues to improve the cooperation on IP protection in the ever dynamic changing environment, and considered that obviously this would bring more benefits not only to the brand owners, to the e-commerce platform operators, but most importantly to the consumers.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Company Update
17 November 2017

“HongFangLaw iMerit Scholarship” for ECUPL 2017-2027
Event at the ECUPL University in Shanghai

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We are pleased to share the exciting news that on November 17th 2017, our firm, HongFangLaw (HFL) in collaboration with East China University of Political Science and Law (ECUPL) in Shanghai, have announced the sponsorship of a new scholarship program dedicated to the law master education center and to support students focused on the excellence in the field of law studies. This new scholarship will go by the name of “HongFangLaw iMerit Scholarship”.

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ECUPL is one of the higher learning institutions of politics and law established by the People’s Republic of China, and also the university jointly administered by the Ministry of Justice and local government, with the local government enjoying the priority of administration. Through the efforts of several generations, ECUPL has gradually developed into a multidisciplinary university of economics, management, finance, foreign languages, etc. with focus on law.

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Our scholarship program will last for a decade, from 2017 to 2027, and will focus on supporting up to eight students per year doing their master degree at ECUPL. The total amount set forth by HongFangLaw will be of around 1 million RMB for the duration of these 10 years, and will help relieve students of some of the burden of university costs and reward them for the good work done in their studies every year. The University will be in charge of selecting the merit students and a special commission including professors and some of the partners from HongFangLaw will take part to the yearly assignment ceremony. All eligible applicants are strongly encouraged to apply via the University channels.

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HongFangLaw has always focused its attention and business model on the work around Intellectual Property in China, and in finding ways to promote and contribute to the innovation of IP laws for the future. We strongly believe that the future of IP resides in the minds of those who are students right now, in Law Universities around China. We hope that this scholarship will help support some students in focusing more on their studies, and create a better environment for them to apply what they learned in their future employment.

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Education is the basis of a strong society.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Event Report ~ Australia Road Show
23 October 2017

“STAY ALERT, STAY CONFIDENT” – IP PROTECTION IN CHINA
Event at the CA ANZ building, Sydney, Australia

On October 13, 2017, HongFangLaw has organized a seminar in Sydney, Australia focusing on introducing the IP practice of China to all the audiences from local Australian business owners, lawyers, legal associates and even law students, with our deep insight on the development of the Trademark Law of China. We are more than honor to have the support from Mr. LU Ping, the Science Attaché of China Consulate in Sydney, and Attaché LU gave the seminar an opening introductory speech about the growing relationship between China and Australia, focusing then on the new developments of regulations and laws directed at a better protection of Australian IP portfolios.

Mr. ZHANG XU and Mr. Eric SU, both partners from HongFangLaw have respectively shared with their profound knowledge and experience to all the people onsite, educating on the new intellectual property development in China.

The seminar this time focused selected topics, including the true power for Intellectual Property in China, Trademark Acquisition & Maintenance, Trademark Enforcement & Protection, and finally IP Related Compliance. Eric has given an overall introduction on the true power of IP in China, and how it differs from the one found in Australia. He then took a deeper dive into explaining the TM Acquisition and maintenance system, and in which way the two systems in China and Australia are different. He took the time to review the latest laws that came in action in the last 10 years, and the growth of TM registration in the last 4 years in china, which reached a stunning figure of 3.691.365 new cases.

Eric focused also on presenting some peculiar cases, especially related on well-known trademarks and sound based trademark. We reviewed the most important rules to take into consideration when talking about trademark in China, like the principle of first-to-file, and many others. Finally, we dealt with the good and bad faith dilemma, which is very prominent as court case in this period, and we explained how to arrange a TM opposition, based on acquired documentation.

After a short networking break, Zhang Xu took the stage to talk about a more serious and challenging matter, the TM enforcement, giving some real cases as example, where we could see how the Police Bureau and the Government took action into cracking down counterfeiters of foreigner goods in China. New laws and regulation have come into effect in the last years, which simplified the work of officials and associates to find and stop infringers in their tracks.

At last, but not least, we dealt with some important IP related compliances that many international companies often forget or don’t know about, such as labeling and advertisement requirement and issues, which more often than know create problem for our clients.

After an interesting Q&A session, we made a final call to action for TM and Patents registration in China, as it is the only way to really protect one own IP portfolio in China, before any problem arises.

Great thanks for the support from our partners at Maxim Legal based in Sydney and also thanks to the support from the Chartered Accountants Association for Australia and New Zealand. HongFangLaw would keep effort in organizing further interesting events for sharing and learning.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com . Thank you.

HongFangLaw ~ Company Update
20 October 2017

International recognition for excellence

Dear Colleagues and Partner, HongFangLaw has always thrived in providing our clients and colleagues with the best service quality, and our motivation to support in IP matters is what drives our work every day.

We are always interested in participating in publications and we are happy to be recognized by some of our clients as best service providers in China.

For these many reasons, we are happy to announce that our Partner Ms. Nikita Xue has been nominated as a ranked individual for her work in IP in the past year from WTR1000, and will appear on their magazine in the next issue. In addition, we are honored to announce that Nikita has also been appointed to be co-chair of Asia & Pacific, Law & Practice Sub-committee, and Bulletin Committee of International Trademark Association for the term from 2018-2019.

We are then happy to announce that our other partner Mr. Eric Su has been nominated for the Client Choice Awards 2018 in association with the International Law Office and Lexology. A nomination from one of our clients is reason of great pride for us.

We all know how impressive the work done by Nikita and Eric has been in this year, and we are thrilled to be able to have such announcement to you all today. The whole team is always working hard for our clients, and any recognition for an individual is a recognition on the team good work. We strongly believe that a job well done is always a product of teamwork.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com . Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 36
12 Sep 2017

19.6% of Admin Decision Canceled by Beijing IP Court -?Report on the Work of Intellectual Property Courts

Editor’s note:

During the plenary meeting held by the 29th Session of the 12th National People’s Congress Standing Committee (NPCSC) on the afternoon of August 29, Report on the Work of Intellectual Property Courts by the Supreme People’s Court (SPC) was delivered.

According to the SPC President Mr. Zhou Qiang who released the report, 46,071 cases have been received, among which 33,135 have been concluded, by the three IP Courts in Beijing, Shanghai and Guangzhou.

For the Beijing IP Court, it has trialed 18,732 administrative cases filed for authentication of rights arising from trademark and patent licensing. Among 11,046 cases concluded, 2,166 ended up with the Court’s judgment to cancel the sued administrative decision, making the percentage an impressive 19.6%.

See full text of the Report below::

Supreme People’s Court

Report on the Work of Intellectual Property Courts

At the 29th Session of the 12th National People’s Congress Standing Committee, August 29, 2017

By SPC President Zhou Qiang

Esteemed members of the National People’s Congress Standing Committee:

On behalf of the Supreme People’s Court, I hereby report to you on the work of Intellectual Property Courts in the recent three years for your deliberation and approval.

To establish IP Courts is an important move to uphold and practice the spiritual fortune conceived at the 3rd Plenum of the 18th Central Committee of the Communist Party of China (CPCCC). It is also profound for upholding and implementing the national strategies of intellectual property and innovation-driven development, building and improving a judicial system with Chinese characters, and further strengthening judicial protection of intellectual property.

On June 6, 2014, Plan to Establish Intellectual Property Courts was approved at the 3rd meeting of the Central Leading Group for Comprehensively Deepening Reforms held by General Secretary Xi Jinping. On August 31, 2014, Decision on the Establishment of Intellectual Property Courts in Beijing, Shanghai and Guangzhou was approved during the 10th Session of the 12th NPCSC.

For three years, the SPC and the three local Higher People’s Courts have been guiding the IP Courts to follow and practice requirements of the Plan and the Decision, under the leadership of the CPC’s Central Committee closely united around Comrade Xi Jinping, the supervision of the NPC and its Standing Committee, and the support by relevant bodies of the central government and municipal/provincial CPC committees, People’s Congresses and governments of Beijing, Shanghai and Guangdong. Thanks to efforts made by all parties, work in all aspects has witnessed substantive progress and smooth improvement.

  1. Overview of Work and Results

The SPC has attached great importance to setting up IP Courts, and thus guided local Higher Peoples’ Courts in Beijing, Shanghai and Guangzhou to vigorously press forward the preparation work. Meanwhile, local CPC Committees upgraded their supervision by forming leading groups. They were in charge of making working plans, selecting locations, and constructing facilities. In addition, internal bodies of the Courts were designed and committees for selection of presiding judges were organized in accordance with the principle of judicial system reform.

The long expected IP Courts were eventually unveiled in Beijing, Shanghai and Guangzhou respectively in November and December, 2014.

For a good start after establishment, the SPC stepped up its role in coordination and guidance by holding meeting after meeting to research on the work of IP courts for better deployment. It organized seminars respectively in Beijing, Shanghai and Guangdong, which gave birth to Guiding Opinions on Selecting and Appointing Judges for Intellectual Property Courts (for Trial Implementation), Jurisdiction of the Intellectual Property Courts of Beijing, Shanghai and Guangzhou over Cases, Outline of the Judicial Protection of Intellectual Property in China (2016-2020), Interim Provisions of the Supreme People’s Court on Several Issues concerning the Participation of the Technical Investigators of Intellectual Property Courts in Legal Proceedings, Guiding Opinions on the Selection of the Technical Investigators of Intellectual Property Courts (for Trial Implementation).

Three local Higher People’s Courts have also been generous to provide supervision, guidance and support.

Three IP Courts have strictly practiced justice, deepened judicial reform and improved the judicial personnel when implementing in all aspects the spirit conceived at the CPC’s 18th National Congress and the 18th CPCCC’s 3rd, 4th, 5th, 6th Plenums, and digging into and upholding the spirit delivered in General Secretary Xi Jinping’s series of important speeches, and New Ideas, New Thoughts and New Strategies on Governance. The IP Courts also takes on the mission to “make equity and justice felt by the people in every case” and put into practice the national strategies of intellectual property and innovation-driven development. Work in all aspects has thus delivered significant results.

1.1 We have improved the judicial level and given full play to judicial protection in securing IPR.

We have focused on trials to expand judicial protection of intellectual property. By unbiased and effective handling, infringement has been tamed and innovation-driven development has been promoted.

Three Courts have received 46,071 and concluded 33,135 cases up to June 2017. The numbers include 12,395 received and 8,247 concluded first-instance civil and administrative cases concerning quite complicated matters, such as patents, new plant species, layout designs of integrated circuit, technological know-how and computer software.

First, we have enhanced innovation via trials.

Totally 21,620 civil cases have been concluded.

Among those cases, 7,041 involve patents. Through legal handling of cases concerning high technologies such as unmanned aviation vehicles and 4G communication, and disputes over design patents such as which between M&G Stationery INC. and DELI Stationery, protection of core and cutting-edge technologies as well as design patents have been accordingly enhanced.

Trademark cases concluded have totaled 1,462. We rendered protection to domestic and foreign trademarks including “Lao Gan Ma” and “LV” by recognizing them as famous trademarks, so as to regulate the use and protection of time-honored brands and intangible cultural heritage, and penalize trademark infringement such as counterfeiting, squatting and imitation. It is conducive to implementation of brand development strategy.

Concluded copyright cases account for 11,664. By enhancing copyright protection during legal proceedings of cases such as iQiyi.com Inc.’s litigation against Huandian Technology Co., Ltd. over rights to internet dissemination, we were able to guide and guard cultural innovation with IP trials.

Cases involving unfair competition and monopoly account for 564. The IP Courts have been able to cultivate an unified while open, regulated while competitive and open market environment when settling significant cases over unfair competition such as the one brought by Yaoyu Culture & Media Co., Ltd. against Douyu TV.

11,113 administrative cases have been concluded to protect legal rights and interests of the administrative counterparts and regulate administrative enforcement involving intellectual property.

The Beijing IP Court has handled 18,732 and concluded 11,046 administrative cases filed for authenticate rights arising from patent and trademark licensing. 2,166 cases delivered judgments to cancel the sued administrative decisions. The IP Court has thus performed its role of judicial review and supervision over such administrative behavior.

Second, we have strived to solve issues such as that the cost is low for infringement while high for protection.

We built and developed the “Intellectual Property Judicial Protection and Market Value Research (Guangdong) Base” to delve deeper into issues such as compensation for infringement and step up penalty on such misconduct against IPR.

We increased the scale of monetary compensation pursuant to the laws. For severe infringement on trademark rights in bad faith, punitive damages will be adopted according to the laws. As for deliberate infringement and repeat offense in other fields related to IPR, the sized of compensation will be determined based on the involved market value. Infringers shall pay for their misconduct by taking on the cost for rights protection previously shouldered by the infringed who are entitled to sufficient compensation.

In the litigation over patent infringement against “USBKey”, the court of first instance fully supported the plaintiff’s claim for RMB49 million (approx. USD $7.5 million) in compensation. More significantly, it supported the claimed attorney fees of RMB1 million (USD $153,000) arising from time-based service for the first time.

We have enhanced judicial efficiency by law, expanded application of interim protection measures such as preservation of property, behavior and evidence, and thus rendered more timely, convenient and effective judicial relief to IPR.

We ruled that the infringer shall shop his misconduct immediately for violating the pre-trial injunction during the case over infringement against the design patent of the “bullet lipstick”.

We have vigorously established honesty and trust in litigation by imposing penalty by law on offenders who destroy, hide or falsify evidence, interrupt and refuse evidence preservation, purposely delay providing evidence, or disrupt testification by witnesses.

We safeguarded the order of legal proceedings by imposing by law a maximum fine of RMB1 million on the offender for his perjury in the case where Hainan Travel Television sued Aimeide Co. for copyright infringement.

Third, we have actively sought to standardize application of IP laws.

We have established a series of important standards for trials to showcase the right way the industry shall behave in development, which proves to be effective guidance. They have been erected by trials of significant and complicated cases with great social influence and high profile, and by research on and handling of key, complex and trended issues in the practice.

By setting up the Intellectual Property Case Guidance and Research (Beijing) Base, the SPC has sought to establish an intellectual property case guidance system with Chinese characteristics, and improve the existing system where sample cases are formed, selected, recognized and used. Efforts have also been put on building the National Intellectual Property Case Guidance and Theory Research Center to integrate the conception, gauge and standard in IP trials.

  • We have deepened judicial reform and renovated how judicial power is used in IP trials.

As the pioneer at the forefront of judicial reform, the three IP Courts have been formed in accordance with requirements thereof while trying to build a system where judicial power can be used in the frame of IP judicial disciplines. Their attempt has given birth to abundant experiences that are replicable, which has upgraded IP trial system and judicial capacity, as well as improved judicial quality and efficiency.

First, we have comprehensively implemented the system of judicial accountability.

As the principle goes, “he who trials shall judge, and he who judges shall be held accountable”. We took the lead to implement measures to reform the way judicial power is used by adopting the systems of specified number of personnel, judicial accountability etc., so that we can regulate judicial power in trials, management and supervision to renew the judicial system where judges are in the lead, personnel is classified, rights and responsibilities are clarified, and every element is in coordination.

In addition, we have rendered court presidents and presiding judges less administrative and more judicial, to make their presence at court a normal sense.

We have tried to change the judicial committee’s role based strictly on the according reform requirements by drawing lines between the judicial committee, the collegial penal and the judge regarding their power. The Beijing IP Court put all the members of the judicial committee to a public trial for the first time, which delivered satisfactory results, in the litigation launched by Anhui Huayuan Pharmaceutical Co., Ltd. against the China Trademark Office. We have also attached importance to organizing profession judge meetings to solve complicated legal issues.

Second, we have renovated the system of judicial office management.

In accordance with requirements of judicial reform, we have directed judicial resources to case dealing. On the other hand, management of internal matters has been integrated for a compact office.

The Beijing IP Court has actively explored to establish new systems of integrated support and horizontal management. It held its integrated office responsible for a range of internal work including discipline inspection, personnel organization, information technology, judicial popularization, office facilities as well as logistics and financial affairs.

The Shanghai IP Court combined its office work with that of Shanghai Third Intermediate People’s Court but keeping their case dealing independent. In this way, the judicial committee has been able to focus on coordination of case dealing from reception, trial, to enforcement.

As for the Guangzhou IP Court, it built multiple working teams in the integrated office. The staff works quite independently in respective positions for the whole office, and is held responsible for the member’s personal mistake. Work efficiency has thus been improved.

Third, we have established a multi-dimensioned technical fact-checking system.

The SPC built a system around technical investigators with detailed and well-designed duties in litigation to regulate the use of technical investigation reports as evidence.

All of the three IP Courts have set up offices for technical investigation and hired totally 61 technical investigators. It is conducive to establishing a multi-dimensioned technical fact-checking system where technical investigation synergizes with expert auxiliary, forensic verification and expert consulting.

Technical investigators have provided professional consulting to judges in 1,144 cases to ensure that the technical fact-checking was neutral, objective and scientific.

  • We have given full play to the IP Court’s role and thus increased judicial public trust and influence.

As we fit ourselves into the grand economic and social development and respond to judicial demands of the general public, we have played an important part in facilitating national strategies, deepening judicial disclosure and promoting international exchange and cooperation.

First, we have facilitated the implementation of national strategies.

We have organized our work around the main direction to which the CPC and our nation are heading, and guaranteed a sustainable and health development for the economy and society through our service. The Beijing IP Court has stepped up research and argument on concentrated jurisdiction of technical cases in Beijing, Tianjin and Hebei, which proves to be strong judicial support to coordinating an innovative community in the area and accelerating its economic transformation.

The Shanghai IP Court issued the Opinion on Facilitating Shanghai as an Influential Global Center for Scientific and Technological Innovation, and Several Opinions on Providing Judicial Support for Establishment of Shanghai International Trade Center during the 13th Five Year Plan, to pave way for Shanghai’s plan to build an international economic, financial, trade, and shipping center.

The Guangzhou IP Court also issued the Opinion on Providing Judicial Support for Innovation-driven Development by Strengthened Judicial Protection, and Specialized Working Plan Concerning the Lawful Punishment on Intellectual Property Infringement and Manufacture and Sale of Counterfeits, to provide judicial support for the development of China (Guangdong) Pilot Free Trade Zone.

Second, we have comprehensively deepened judicial disclosure.

Under the principle of initiative, lawful, comprehensive and substantive disclosure, we have given full play to four platforms for all-around judicial disclosure.

Online system was launched for reception, consulting, conciliation, and visit along with trial with distance live video to make judicial disclosure more informative and detailed. Research on judicial data was also conducted by professional institutes to establish a scientific, reasonable and objective assessment system for judicial public trust.

We availed of the International Intellectual Property Day to hold events for promotion and popularization of sample IP cases. It has helped to raise the common people’s awareness towards protection of intellectual property, and thus cultivate a climate where the whole society participates in and gives support to IP protection.

Third, we have continued to expand our influence in the global society.

Foreign parties have increasingly demonstrated the will to put their IP cases in our hands thanks to our positive image as impartial and efficient as we handled foreign-related IP litigation by law.

The SPC signed an MoU with the World Intellectual Property Organization as a beginning to increase its presence in international cooperation in other fields.

We built the Chinese Courts International Exchange Base (Shanghai) for Judicial Protection of Intellectual Property to be more engaged in international communication and cooperation.

Significant international conferences such as the Intellectual Property and International Trade Forum, and EU-China Judges’ Forum were held to delve into cutting-edge issues related to judicial protection of IP as well as showcase the achievement we had made in this field.

More than 110 groups of delegates accounting for over 1,300 members from many countries and international organizations including the US, the EU, the WTO and the INTA have been received and engaged in international communication in the Sino-US exchange program for IP judicial protection and at the forum noting the 10th anniversary of IP dialogue between China and the EU. They have all contributed to a more equal and reasonable framework of international IPR.

1.4 We have cultivated the judicial personnel to improve the IP judicial capacity.

Since IP trials are highly technical, expansively applicable, and globally influential, the three IP Courts have strived to armor their personnel and built a reliable team to keep up with the constantly changing situations and tasks. Such a well-structured arrangement has effectively facilitated their case dealing.

First, enormous work has been done to build the mind. We launched the “Three Stricts and Three Honests” and “Two Studies and One Action” education campaigns to study and practice the spirit delivered in General Secretary Xi Jinping’s series of important speeches and New Ideas, New Thoughts and New Strategies on Governance, and entrench Four Consciousness in our mind. Through our efforts to synergize party building and team building, judicial reform and trial proceedings for common improvement, internal commitment, judicial belief and professional conscience have been upheld and remained unshaken, which has given rise to a number of reputed judges who have always do the people justice. As a result, 4 tribunals and 22 individuals of the three IP Courts have received provincial and/or above level awards.

Second, we have built the IP Courts towards a formal, specialized and professional team. As required in the judicial reform, 90 judges have been selected and employed, 78.9% of which holds Master’s or above degrees. Auxiliaries such as judicial assistants and clerks account for 195, and the administrative personnel counts 27. We have also pooled talents for IP trials, and put expert judge thereof for complicated cases so as to give them even more training. Thanks to our professional team of judges, judicial quality and efficiency have been enhanced. On average, the teams of judges have concluded 368 cases. As for other personnel, position-relevant training and study have been conducted to promote interpersonal communication and their work performance.

Third, we have comprehensively implemented strict disciplines on governance of the party and the IP Courts as required. We have always upheld strict standards throughout team building of the IP Courts in education, management and supervision. Together with enhanced work on party conduct, clean government and anti-corruption and down-to-earth practice of the Politburo’s Eight Rules, we have been able to operate a clean and honest judicial team with better discipline. No violation of discipline or breach of law has occurred since the establishment of the IP Courts.

In general, in the recent three years, the Beijing, Shanghai and Guangzhou IP Courts have slashed open a path of specialized IP trials with Chinese characteristics with the spirit and courage to do what has never been done. Their innovative work has renew the nation’s image as a IP protector in judiciary, and invoked positive comments from the general public and the international society.

The IP Courts have increasingly showcased their importance as they deliver satisfactory results in the three years.

First, we have set up a series of rules for trials by handling significant sample cases. In the process, we have demonstrated a clear-cut attitude for encouragement and protection to innovation, and thus guided the industry and facilitated the national strategy of innovation-driven development.

Second, we have stepped up punishment on IP infringement. By promoting an honest society, and solving issues of low cost for infringement but high for relief, we have maximized the role of judicial protection as a leading element in IP protection.

Third, we have continued to specialize judicial bodies, personnel and work, unify judicial standards, and improved judicial efficiency. It has served as an example of courts nationwide to improve their capacity in IP trials.

Fourth, we have implemented the requirements of judicial system reform in building and operating the IP Courts. By pressing forward judicial accountability system, classified personnel management and job security reform, we have continued to regulate the use of judicial power and lead the judicial system reform.

Fifth, we have scaled up the nation’s international influence in IP judiciary by telling a good story, making our voice heard and showcasing our achievement regarding law-based governance during international exchange and cooperation in the field.

As a milestone on the path to strengthen IP judicial protection, the establishment of the Beijing, Shanghai and Guangzhou IP Courts has renewed IP trials. Practice in these three years comes as solid evidence to prove correct the CPCCC’s decision and deployment, and prove suitable the NPCSC’s decision for what is in need for IP protection. They are both profound moves.

What has been achieved by the IP Courts owes plenty to the leadership of the CPCCC united around Comrade Xi Jinping, the supervision of the NPC and its Standing Committee, the support of the State Council, the supervision of the Chinese People’s Political Consultative Conference, and the care, support and help contributed by the party committees, people’s congresses, governments, political consultative conferences, all walks of the society, and the people in Beijing, Shanghai and Guangdong.

Members of the NPC and the municipal/provincial people’s congresses are not to be left. They have supervised and supported the work of the IP Courts with high responsibility and thus propelled and witness the development of the cause of IP judiciary. I hereby express my heartfelt gratitude on behalf of the SPC and the three IP Courts.

  1. Current problems and difficulties

In spite of notable success, we have remained sober and become aware of some problems and difficulties noticeable in practice as the IP Courts’ work unfolded.

First, the scale of cases received has grown unexpectedly faster, which has kept adding pressure to our work.

Second, new situations and problems have kept arising in the field as scientific and technological innovation progresses. It has become a great challenge to the IP Courts’ judicial capacity.

Third, our teams of cadres and talents have become less sustainable over time as the security system is not yet satisfactory to attract, retain and cultivate high-leveled talents.

Fourth, courts in charge of second instance trials for IP cases vary a lot. For example, administrative cases concerning confirmation of licensing rights are handled by the Beijing IP Court for first instance trial and then by Beijing Higher People’s Court for second instance trial. However, for other IP cases in general, second instance courts vary from basic, intermediate, to higher ones. Such a chaos is likely to cause conflicting law application, and in the end damage public trust of the judicial system. The IP judicial structure and trial standard are pending further unification.

Fifth, specialized IP jurisdiction has an arm not long enough to cover areas with dynamic innovation and judicial needs.

  1. Advice on following work and measures

As a significant part of the CPCCC’s plan of reform, the establishment and development of the IP Courts concern implementation of the innovation-driven development strategy, building of an innovation-oriented country, and development of the economy and culture. The People’s Courts will continue to improve the work of the IP Court’s and regard it as our strategic mission in the long term. We will strive for improvement of work and IP judicial capacity and level.

3.1 We will build our mind to guarantee a healthy and orderly development of the IP Courts.

We will practice the party and the nation’s plan on strengthening IP judicial protection by consciously taking on heavier political responsibility and historical mission with the awareness of the IP Courts’ important role, by giving full play to the leading role of judicial protection in safeguarding IPR when upholding the New Development Ideas, and exercising the innovation-driven development strategy as well as cultivating a new climate of law-based governance for optimization of technological innovation.

  • We will make better use of the IP Court’s role with clear targets.

We will handle all types of IP cases with reason and by law within the frame of the party and the nation’s work. We will take gradual and coordinated steps to perfect a judicial system to make it adaptable for IP cases, to improve the quality and efficiency of IP trials, and to intensify judicial protection of IPR. In this way, infringement on IPR can be effectively tamed, during which our public trust will see an increase. We will improve our judicial protection system with Chinese characteristic while adopting an international vision and respecting rules in the world to build the nation into one with priding portfolio of IP and technology.

  • We will insist on a problem-solving-oriented reform to push it further.

We will unswervingly press forward judicial reform and make measures for reform more targeted and rewarding. It all comes down to encourage and protect innovation in innovative ways. In practice, we will build a mechanism that is able to dynamically adjust the number of judges in the IP Courts. With scientific estimation of the judges needed, it can fill vacancies as soon as possible. We will reasonable allocate judicial resources by distinguishing between simple and complicated cases, optimizing judicial proceedings, and renew the presentation of ruling and judgment. We will also use more cadres in exchange to the courts, judicial volunteers and legal interns as well as explore to use social service to fill vacancies of auxiliaries.

  • We will work on team building to further improve the IP Court’s judicial capacity.

We will continue to build a formal and professional team with enhanced morals and skills by cultivating its judicial capacity and providing trainings on technical knowledge. We will engage IP judges in international exchange for closer cooperation and meanwhile seek to better international rules on IP governance by more participation therein. We will build a stronger technical investigator team to boost its role in guaranteeing unambiguous case facts.

Here are three pieces of advice on new situations and existing problems faced by the IP Courts:

First, it is suggested to deepen reform of the way IP cases are trialed at first instance courts.

The NPCSC may authorize the IP Courts to pilot single-judge trials when it comes to simple first instance civil and administrative cases, so as to make legal proceedings proportionate with the size of cases.

Second, it is suggested to conduct special inspection to the IP Courts.

The NPCSC may launch special inspection now and then to the Beijing, Shanghai and Guangzhou IP Courts to overhaul their work.

Third, it is suggested to improve the work mechanism of the IP Courts.

From the strategic vision of building a nation that leads the world in IPR and technology, a state-level mechanism for appeal and review of IP cases is recommended to be brought under research and put on the agenda for establishment. I will be conducive to specialization of trials, centralization of jurisdiction, intensification of proceedings and professionalization of personnel.

I also call for setting up more IP courts step by step based on successful experiences of the three IP Courts. In this way, we can further improve the specialized judicial system oriented for judicial protection of IPR and better serve the development of technology and innovation which is giving birth to increasing needs for such judicial proceedings.

Distinguished chairman, deputy chairmen, general secretary, and all members presented, I would like to thank you for your attention to my report on the work of the IP Courts. Your deliberation and approval at the meeting serves as solid evidence of how you care and support the work on IP judiciary by the people’s court.

We will take your opinions by heart and keep improving our work at the IP Courts under the leadership of the CPCCC closely united around Comrade Xi Jinping, and the solid supervision and support of the NPC and its Standing Committee. We will avail of new opportunities while welcome new challenges, work with down-to-earth attitude while keep seeking progress for better results at the eve of the 19th National Congress of the Communist Party of China. I wish the meeting all success.

If you would like some more personalized review of the event from us, please kindly let us know by writing to:?public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 35
08 Sep 2017

HongFangLaw Case on Rejection Review of Trademark “發育寶-S” was Awarded “Excellent Case Award”

The 2017 China Trademark Festival (“CTF”) was held in Guilin, Guangxi from September 2 to 4, 2017. As one of the CTF’s highlights, the 2016-2017 “Excellent Trademark Cases” were unveiled at the Forum on Typical Trademark Case Review and Analysis on September 3. The event at its fourth session has contributed much to improving trademark agencies’ service via the promotion of typical cases as guidance to the industry.

This year, 93 cases involving trademarks in 11 Classes were submitted to the China Trademark Association by enterprises, trademark agencies and law firms. Among those cases, 14 had been filed for rejection review, 1 for cancellation review, 21 for invalidation, 13 for objection, and 2 for objection review. Cases of administrative litigation were also many. In this area, 6 arose from disputes over rejection review, 6 over cancellation review, 11 over invalidation, and 6 over objection review. There are also 9 civil cases on trademark infringement and unfair competition, and 4 on trademark infringement only. In the end, 21 “Excellent Cases” arose from the pool after review on each case regarding six criteria: typicality, influence, exemplariness, innovativeness, practicality, and referentiality.

HFL’s case on rejection review of the trademark “發育寶-S” had the honor to be one of the chosen cases.

The case was rewarded for winning the rejection review by convincing the Trademark Review and Adjudication Board that long-term and widespread advertising and use of the subject trademark has made the source of its designated goods identifiable by the relevant public via the mark. Therefore, the mark can be deemed to have obtained distinguishing features required of a registrable mark even if it inherently does not have any. The TRAB’s decision is pursuant to Article 11 Paragraph 2 of the Trademark Law, “The signs mentioned in the preceding paragraph may be registered as trademarks after they have acquired distinctiveness and become easily distinguishable through use.”

If you would like some more personalized review of the event from us, please kindly let us know by writing to:?public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 34
22 Aug 2017

Trademark Dispute Between Under Armour and Uncle Martian

The case concerning trademark infringement and unfair competition brought to Fujian Province Higher People’s Court by Under Armour Inc. (hereinafter the “Plaintiff”) against Fujian Tingfei Long Sporting Goods Co. (hereinafter the “Defendant”) bore fruit on June 19, 2017, after nearly a year of public hearing under common proceeding at the court of first instance since accepted on June 27, 2016 (Docket No.: (2016) Min-Min-Chu No. 78).

The dispute surrounds infringement on Under Armour Inc.’s registered trademarks in China, especially on the significant “UN” device mark. The Defendant’s “UM” logo is almost identical to its counterpart’s: a stylized letter “U” with an inverted “U” directly beneath it, only that they do not intersect like the “UN” logo. As soon as the Defendant debuted its new brand “UNCLE MARTIAN” with the “UM” logo, the Plaintiff quickly vowed to take action, saying it would “vigorously pursue” the “blatant infringement”.

Plaintiff’s claims

  1. Trademarks of the “UN” logo, “UNDER ARMOUR” and “Andema” (transliteration of “Under Armour” in Chinese) owned by the Plaintiff are well known globally, including in China;
  2. The Plaintiff has registered in China trademarks of the “UN” logo, “UNDER ARMOUR” and “Andema” on goods and services in Class 25, 28 and 35, and it is also the copyright owner of the original “UN” device mark;
Trademark Registration No. Class Validation Period
3463213 25 Feb. 14, 2015 – Feb. 13, 2025
G1007431 25 Jun. 22, 2009 – Jun. 22, 2019
28
7329792 28 Nov. 21, 2010 – Nov. 20, 2020
3479748 25 Apr. 7, 2005 – Apr. 6, 2025
3463214 25 Feb. 14, 2005 – Feb. 13, 2025
7329795 25 Aug. 28, 2014 – Aug. 27, 2024
G996450 25 Feb. 18, 2009 – Feb. 18, 2019
28
12675844A 25 May 21, 2015 – May 20, 2025
12165772 28 Jul. 28, 2014 – Jul. 27, 2024

Plaintiff’s registered trademarks in China

  1. The device mark “UM” owned by the Defendant is similar to the Plaintiff’s “UN” regarding the main element and overall composition. They are designated on the same goods, reaching the same consumers via the same sales channel, and thus will cause confusion among the consumers. Therefore, use of the trademark “UM” constitutes infringement on the Plaintiff’s trademark rights. Meanwhile, general manager and shareholder Mr. HUANG Canlong of the Defendant has registered “Under Armour (China) Co., Limited” which was later renamed as “Uncle Martian (China) Co., Limited” (Co. No. 2352969 at Hong Kong Company Registry) in Hong Kong. In use, the registered company is displayed on the Defendant’s business cards in Chinese as “Andema (China) Co., Limited” with the Plaintiff’s registered trademark “Andema”. The trade name is likely to leave the consumer an impression that it is associated with the Plaintiff and thus constitutes unfair competition;
  2. The Defendant is in obvious bad faith.

For the above reasons, the Plaintiff pleaded that the Defendant should: 1) immediately stop using TM “Uncle Martian” and device; 2) destroy the infringing products and relevant promotional materials; 3) award the plaintiff RMB100,000,000 (approx. USD $15 million) in compensation for what it pays to stop the infringement and eliminate reverse effects; 4) apologize to the Plaintiff; 5) undertake the litigation costs.

Defendant’s claims

  1. The Plaintiff is hardly known in China;
  2. TM “Uncle Martian” owned by the Defendant has been obtained from trademark assignment; the device mark has also been assigned as a separated part from an existing trademark and has been later registered. The device mark is quite different from the Plaintiff’s “UN” logo and is not likely to cause confusion, according to an online survey. Meanwhile, the Defendant has no substantive product on the market and de facto is not able to confuse the consumers. Furthermore, the Defendant uses the disputed trademark explicitly in the name of “Uncle Martian” with no mention of “Under Armour”. Therefore, the Defendant is in good faith using a distinguishable and legal trademark;
Trademark Registration No. Class Validation Period
(obtained via trademark assignment) 3951618 25 Jun. 7, 2007 – Jun. 6, 2017
(obtained via trademark assignment) 15151285 25 Sep. 28, 2015 – Sep. 27, 2025

Defendant’s registered trademarks

  1. As for registration by Mr. HUANG Canlong, he did it in his own name in no relation with the Defendant. In addition, the Law Against Unfair Competition of the People’s Republic of China is inapplicable in Hong Kong SAR regarding Mr. HUANG’s behavior;
  2. There is no ground for the Plaintiff’s plead for compensation since the Defendant has never manufactured any relevant products;
  3. There exists no trademark infringement and unfair competition since TM in use by the Defendant has been obtained from legal assignment and registration, and no substantive product has been manufactured up to the case hearing.

Opinions held by the court

Regarding trademark infringement: In spite of no substantive product, the Defendant has used the disputed trademark. The Defendant’s trademark device is designated on the same or similar goods with that of the Plaintiff which is relatively well-known in China. The two trademarks are similar with regards to the main element and the overall visual effect, which is of high possibility to confuse the relevant consumers in ordinary situations. The trademark actually in use by the Defendant is the uppercase “UNCLE MARTIAN” instead of the registered “Uncle Martian” which only capitalizes two initial letters. They are not completely the same and thus constituted “use of registered trademark under change of notable features” stipulated in Article 1 Paragraph 2 of the Provisions of the Supreme People’s Court on Issues Concerned in the Trial of Cases of Civil Disputes over the Conflict between Registered Trademark or Enterprise Name with Prior Right. Therefore, the case falls within the scope of civil proceeding. However, “UNCLE MARTIAN” is nothing near “UNDER ARMOUR” no matter in pronunciation or connotation. In all, the graphic trademark constitutes infringement whereas the textual one does not.

Regarding unfair competition: The existing evidence is insufficient to determine Mr. HUANG Canlong’s registration as related to the Defendant. However, by displaying the company as “Andema (China) Co., Limited” on the business card while realizing the Plaintiff’s trademarks and the Hong Kong company’s status, the Defendant obviously intends to capitalize on the Plaintiff’s reputation, misdirect the consumers and legitimately occupy the market proportion concerning the relevant products. Such behavior constitutes violation of business morals which highlight the principles of good faith and fair competition and also damages the Plaintiff’s interests. Therefore, the Defendant’s behavior constitutes unfair competition.

Regarding monetary compensation: The Plaintiff fails to prove the losses it has suffered or the Defendant’s gains from its infringement. Thus the monetary compensation is determined as RMB2 million (approx. USD $0.3 million), in consideration of the Plaintiff’s fame in China, the Defendant’s malicious intention, the sued behavior’s nature as trademark infringement and unfair competition, as well as the relevant expenses paid by the Plaintiff.

If you would like some more personalized review of the event from us, please kindly let us know by writing to:?public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 33
18 Aug 2017

Shanghai IP Court: International Purchase on E-Commerce Platform Constitutes Trademark Infringement

Editor’s Note: This is a summary of the article published on the INTA bulletin by Nikita Xue, partner at HongFangLaw.

For a link to the original article, please click?here

On August 20, 2014, Shanghai Customs stopped a batch of 8,424 pieces of men’s knitted T-shirts bearing the PEAK trademark, produced by Zhenyu, for exportation to Isaac Morris Ltd. in the United States. On November 3, 2014, Peak Sports brought the case to Shanghai Pudong New District People’s Court against the two defendants.

On April 21, 2017, the Shanghai IP Court determined that Isaac Morris Ltd. and Zhenyu Co. had jointly infringed the trademark rights of Peak Sports by using PEAK SEASON on their clothes. Peak Sports is the owner of the PEAK trademark (TM No. 676992), registered in China. The court ordered Isaac Morris Ltd. and Zhenyu Co. to cease using the mark immediately, and awarded Peak Sports monetary compensation of RMB 20,000 (US$ 2,900). This final judgment overruled the first instance judgment made by Shanghai Pudong New District Court (Court Docket File Number [2014] PMSZCZ1131).

During the second trial, Peak Sports supplemented further evidence, including their sponsorships, promotional activities, and news reports by the media. They also provided crucial notarization purchase evidence to prove that customers in China via the e-commerce platform, Amazon.com, could purchase the clothes featuring the PEAK trademark in the U.S. market. For this reason the court has sided in the end with Peak Sports.

If you would like some more personalized review of the event from us, please kindly let us know by writing to:?public.relation@hongfanglaw.com. Thank you.

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HongFangLaw ~ Chinese IP Law Updates ~ n’ 32
17 Aug 2017

SPC Rules JDB & GPHL to Use Jointly the Red-can Trade Dress on WongLo Kat

China Supreme People’s Court has brought an end to the trade dress dispute used on the red-can unique design of “Wong Lo Kat” herbal tea drink product between Guangdong Jiaduobao Drink & Food Co., Ltd. (hereinafter “JDB”), and Guangzhou Wanglaoji Pharmaceutical Co., Ltd. (“WLJ”), Guangzhou Pharmaceutical Holdings Limited (“GPHL”) on August 16, 2017, concluding that ?both parties should share the rights to use the subject trade dress design on Wong Lo Kat without damaging any third party’s legal right , considering these two parties have contributed together on this unique package design until developing the famous products.

As early as July 6, 2012, GPHL and JDB respectively brough teach other to court, claiming rights on the subject unique red-can trade dress and suing the counterpart for trade dress infringement. Guangdong High People’s Court has trialed the first instance and held that GPHL should own the legal rights on the trade dress, while JDB is constituting the infringement activity against GPHL, and thus JDB should stop the infringement immediately, eliminate the bad impact caused by their infringement, and compensate GPHL RMB 150,000,000 (approx. USD $22.5 million) plus RMB 260,000 (approx. USD $38,800) for reasonable expenses to stop such infringement.

JDB was unsatisfied with the first instance judgment and appealed to the Supreme People’s Court. SPC holds that ?the red-can package design of Wong Lo Kat herbal tea product, consisting of yellow Chinese characters of Wong Lo Kat with a red background, is an unique packaging of famous product. As the trademark owner of “王老吉” (Wong Lo Kat in Chinese mark), GPHL argued that relevant consumers certainly attribute the red-can trade dress to the registered trademark as the origin of the products, and such attribution is unlikely to be swung by choice of formula or taste. However from the perspective of JDB as the former operator of Wong Lo Kat herbal tea, they thought the trade dress and trademark should be separated when being discussed, and ?consumers prefer JDB’s product for its unchanged taste and thus relate the red-can trade dress to JDB.

SPC deemed that taking into account the history and development of the subject red-can trade dress, the consumers’ recognition and the principle of equity, both JDB and GPHL have respectively contributed importantly to such achievement from its formation, development and reputation, and it would prove unfair and possibly damaging to public interests if the involved trade dress rights are to be completely owned by either side. Consequently, the Court made the final judgment that the subject trade dress on the red can should be jointly used by both JDB and GPHL pursuant to the principle of good faith, and reject their claims of trade dress infringement with cease of use from the counterparts.

If you would like some more personalized review of the event from us, please kindly let us know by writing to:?public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 31
28 July 2017

Starting a Business in China | How does a foreigner start up a Business in China?

Thanks to the support of China Classifieds, HongFangLaw had the opportunity to present an insight into the Chinese IPR system alongside some case studies to reveal some of the steps in starting and running a successful company in China.

The event took place at Mixpace·Amyitis in Shanghai on Thursday July 18th, 2017. The objective of the event was to enlighten foreign individuals and businesses on how to start and run a company in China.

In total, 5 speakers were invited to offer their professional expertise on the steps in starting and maintaining a business in China. The topics covered were as follows: the ways to attract and retain talented staff, HR and payroll, tax and accounting, insights into joint ventures (JV), WFOE set up, and intellectual property rights acquisition and protection in China.

Our partner, Mr. Zhang Xu was invited to give some insights into the Chinese IP system and provide essential awareness on the steps foreigners must take to secure their IP rights in the Chinese market.

Speaker: Zhang Xu

Zhang Xu introduced the Chinese IP system to the audience who wanted to know the steps required to successfully start a business in China. He briefly revealed the origins, history and meaning behind Intellectual Property Rights (IPR). Specifically, he revealed the importance IPR plays in the world of business as these rights ensure a certain monopoly within particular time frames and territories.

Accordingly, he revealed the different angles IPR can be protected, whether it is through a trademark, a copyright or a patent. However, the emphasis in his speech was to distinguish the different practical reality between the Western hemisphere and the Eastern hemisphere in IP law. Notably, Zhang Xu stressed that China’s trademark system operates under a first-to-file doctrine.

Therefore, the entity that files their trademark first, theoretically, is granted the exclusive trademark and this provides the registrant strong legal protection for its use in China. As a consequence, this system provides the opportunity for trademark squatters to arise. This is extremely important to understand for any foreign entity who wishes to start business in China.

Importantly, in Zhang Xu’s presentation he unveiled a checklist of 5 key points a business should be attentive about in regards of IPR when entering the Chinese market.

  1. Ensuring your trademarks have been registered in China with proper classes;
  2. Ensuring your contract with business partners and employees include the necessary clauses for trade secret/know-how/trademarks/traded dress;
  3. In the case where your trademark has been squatted by others, ensure you have other prior rights in place, such as the copyright;
  4. Ensure that key trademarks are integrated in your mail signature and disclaimers, for prior usage;
  5. Develop a centralized intellectual property portfolio.

In support of his speech, Zhangh Xu showed some very typical case study to all the audiences for their better understanding how the IP situation is in China.

In addition to Zhang Xu, four additional speakers covered different topics when elaborating on the steps on how to start a business.

Speaker: Yolanda He (CEO/Founder of CBA Consulting)

Yolanda covered WFOE set up, tax verification, cost of employment and annual compliances.

In regards to tax verification, Yolanda stressed that tax verifications must be done within 30 days after the company registers. After the tax is verified, the company must file tax in the following month and every month during the company’s operation period. It is crucial not to miss the deadlines with tax verifications as it will pose major problems to the company and the legal representative. As a result, she admitted that the payroll will look very different to a foreign employee compared to a Chinese employee.

Speaker: Julia Polyakova (Account Manager at Fesco Adecco)?

Julia highlighted, that students from Chinese universities look for these top 5 attributes as an ideal employer from: good reference for future career, competitive base salary, high income in the future, career progression and professional training and development.

Julia explained that the most common reason why companies fail to retain their talented staff is because there isn’t scope for career progression. In other times, it can be because there isn’t an increase in salary, or a lack of learning and development.

Speaker: Zach Lichtblau (Partner at Bonnard Lawson)

Zach provided an insight into the structures of joint ventures (JV) and revealed some of the advantages and disadvantages in starting a JV.

He explained that some of the reasons why people set up a JV are because it is relatively easy to start and receive local support. Other reasons can also include legal restrictions and complementary interests. Also, he elaborated on different type of JVs, where he explored Equity Joint Ventures and Cooperative Joint Ventures. He also allocated some time describing a WFOE in the context of China.

Speaker: Marco Pearman-Parish (President at Yingke Global)?

Marco Pearman-Parish provided an insight in HR and gave some practical advice on how to control risk when hiring staff.

Specifically, he covered the importance of contracts where he elaborated on some potential risks in not giving someone a contract in an appropriate time, and the possible backlash that can occur. Similarly, he also covered the potential risks when contracts are given and advised that there should be appropriate strategies in place to ensure the company manages its affairs in the most professional way.

The conclusion of all speakers initiated a break, and the opportunity to have dinner while networking.? Shortly after, everyone returned to start the panel discussion where several questions were floored to the speakers.

If you would like some more personalized review of the event from us, please kindly let us know by writing to:?public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 30
21 July 2017

Mercedes-Benz and Chery Agree on Use of “EQ” Trademark

It was reported that Chery has reached an agreement with Mercedes-Benz on their trademark dispute, allowing each other to continue their respective use of “eQ” and “EQ”. Mercedes has promised to acknowledge Chery’s eQ brand and products in the global market while gaining access for its “EQ” trademark to China.

Chery launched its eQ electric vehicle in 2014 and applied for registration of the subject trademark in Class 12 and 37 in Dec 2016. The application is still in the registration process at the moment.

On the other hand, Mercedes publicized last year its new electric vehicle under the sub brand EQ, for whose protection on designated goods including vehicles in Class 12, it requested territorial extension from January to April 2017.

Subsequently, Chery filed for arbitration to the China Trademark Office against Mercedes for infringing the former’s prior rights on “eQ” with the trademark filing, as Mercedes was also trying to register “EQ” on new energy vehicles.

Regardless of Mercedes’s influence as an international enterprise, it could not have moved any further in the face of Chery who had previously registered “eQ”. That is a main reason why it rushed into settlement with Chery over the dispute. Meanwhile, Chery faces a dim future as it marches towards the global market with its new-energy eQ vehicles. As we could see through research in WIPO’s database, it did not yet register the trademark overseas while its rival had filed for registration in July 8, 2016 in the UK before it actively sought territorial extension around the globe.

Trademark disputes use time and energy which are supposed to be invested in the main business, especially when the industry of new-energy vehicles is rapidly developing in today’s world. The agreement reached by both parties may be an expedient considering that neither of their trademark strategies is impeccable. Still, it is a good idea for Chery and Mercedes, who target different markets, to take a step back and reconcile with each other as long as everyone is satisfied in the end. That is what we can call a win-win situation.

If you would like some more personalized review of the news from us, please kindly let us know by writing to:?public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 29
13 July 2017

China: Court Imposes Highest Statutory Penalty for Refusal to Abide by Injunction – INTA Bulletin
Nikita Xue

Editor’s Note: This is a summary of the article published on the INTA bulletin by Nikita Xue, partner at HongFangLaw.

For a link to the original article, here

New Balance brought five defendants to Suzhou Intermediate People’s Court on the 1st of August 2016. The charges forwarded were based on unfair competition for using New Balance’s unique trade dress without prior authorization. The unique trade dress of New Balance is the letter “N” on both sides of the sport shoes.

In addition to this, the plaintiff applied for an injunction to the court, which requested an immediate stop of production and distribution of all relevant items. Suzhou Court held two injunction hearings on August 10th 2016 and September 12th 2016. The following day of the second hearing the court ordered the defendants to cease production and distribution of the disputed ”NEW BOOM“ shoes that feature the “N” letter with accompanying reasons.The full case was heard on April 11th 2017.

However, the defendants refused to implement the injunction and continued with their activities. Consequently, the court decided to issue the maximum punishment against the defendants by ordering the highest possible statutory penalty, in accordance with the Civil Procedure Law of China, in the total amount of RMB 1.7 million (approximately USD $260,000)。

If you would like some more personalized review of the news from us, please kindly let us know by writing to:?public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 28
29 June 2017

Xia Junli – Judicial Policies for Prevention of Bad Faith Trademark Registration

Part III

Editor’s Note: This is a translation summarizing the speech by Xia Junli, presiding judge at the Supreme People’s Court’s Intellectual Property Division, at the 2017 annual meeting of the China Intellectual Property Law Association. The speaker herself has approved the content of this article. This article was originally published in Chinese by the Wechat public account: zhichanli. Link to the original here.

Part I of our translation can be found here.
Part II of our translation can be found here.

2. Guidance with publication of model cases and judicial policies

In addition to the SPC’s years long practice in clarifying provisions of the Trademark Law in individual cases, guidance to prevention of bad faith trademark registration has always been provided by publishing model cases and judicial policies. The cases mentioned in section 1, are all published in the SPC’S annual reports on IP cases from 2009 to 2016.

Judicial policies published in recent years are as follows:

  • April 2009 –?The SPC’s Opinions on Some Issues Concerning the Serving of the Main Objective When Handling Intellectual Property Trials in View of the Current Economic Situation
  • December 2011 –?The SPC’s Opinions on Some Issues in Fully Giving Rein to the Function of Intellectual Property Rights Adjudication in Promoting the Grand Developmentand Grand Flourishing of Socialist Culture and Stimulating the IndigenousEconomy and Coordinated Development
  • April 2010 –?The SPC’s Opinions on Some Issues Related to Trials of Administrative Cases of the Granting and Confirmation of Trademark Rights

3. Reference to guiding cases in similar situations

The SPC’s guiding cases play an important role in clarifying and unifying the criteria for application of law in individual cases. They serve as reference for judges in similar trials.There exist quite a few series of guiding cases, among which the 16th?batch that has been published in March 2017 is consisted of nothing but those involving intellectual property. One is the Guiding Case No. 82 where the plaintiff Wang Suiyong sued Shenzhen Ellassay Fashion Co., Ltd. and Hangzhou Yintai Century Department Store Co., Ltd. for trademark infringement ([2014] Min-Ti-ZiNo. 24).

The plaintiff’s claims were not supported by the court which held that the plaintiff had obtained and exercised his trademark rights in “mala fide” against the defendants. His behavior constituted violation of the principle of good faith, damages to others’ legal rights and disruption of healthy competition in the market.

In the “effective judgment” section of the law it is held that the principle of good faith forms the basic criteria for participants in market activities. In a way, it encourages and supports the public to accumulate wealth and create value by honest labor, and further protects property rights and interests that emerge ?from it, as well as people’s freedom and rights in disposing them based on legal and legitimate intentions. In addition, it also requires people not to pursue those rights and interests in bad faith, damaging others’ legal rights, public interest and market balance.

The principle of good faith also applies to civil procedure in securing people’s rights to exercise and dispose their civil and procedural rights within limits stipulated by the laws, as well as preventing people from ill-intentionally and indiscreetly appropriating those rights, causing harms to social and public interests.

Claims should not be supported if they are intended for abuse of this right, which includes obtaining and exercising rights in “mala fide” and disrupting healthy market activities in the aim to take advantage of others’ ?legitimate rights and interests. Practice such as this are in violation of the laws’ intention and spirit.

We may safely draw a conclusion from this case, that malicious trademark preemption and trademark right abuse are clarified and objected in both trademark registration and civil procedure.

4. Regulation by promulgation of judicial interpretations

In January 2017,?The SPC’s “Regulations on Some Issues Concerning Trials of Administrative Cases of the Granting and Confirmation of Trademark Right”?was published. It’s purpose is to standardize and regulate trademark trials by promulgating judicial interpretation.

The document regulates provisions related to procurement and other relationships, protection of prior rights, “improper means” in Article 32 of the Trademark Law, “other improper means” in Article 44, presumption of “bad faith registration” in Article 45 and additional regulations in its Article 15 and 16. It shows how our judicial policies can be upheld, and summarizes applications of law with model cases.

If you would like some more personalized review of the news from us, please kindly let us know by writing to:?public.relation@hongfanglaw.com. Thank you.[/column]

HongFangLaw ~ Chinese IP Law Updates ~ n’ 27
29 June 2017

Xia Junli – Judicial Policies for Prevention of Bad Faith Trademark Registration

Part II

Editor’s Note: This is a translation summarizing the speech by Xia Junli, presiding judge at the Supreme People’s Court’s Intellectual Property Division, at the 2017 annual meeting of the China Intellectual Property Law Association. The speaker herself has approved the content of this article. This article was originally published in Chinese by the Wechat public account: zhichanli. Link to the original here.

Part I of our translation can be found here.

Let us explain?the application of Article 15. It is clarified in the (2013) Zhi-Xing-Zi No. 97 Judgment that anyone who is complicit in preemptive trademark registration with a procurator/representative shall be deemed a procurator/representative as well; complicity in such behavior could be determined with respect to the person’s relationship with the procurator/representative depending on the actual circumstances.

In the (2014) Xing-Ti-Zi No. 3 Judgment, the SPC highlights how Article 15 should apply. It is clearly pointed out that the application of Article 15, which describes a situation where a procurator/representative registers in his/her name a trademark of the principal, shall fulfill the following conditions: the applicant and the opposing party are engaged in procuration/representation; the disputed trademark is owned by the filer; the goods or services at issue are similar; the procurator/representative violates the principle of good faith in registering the disputed trademark in his/her name without authorization.

Procuration/representation is a special legal relationship concerning trust. Thus a procurator/representative should be dedicated to prioritizing the principal’s interests for his/her duty of faithfulness and diligence therein. Article 15 does not necessarily require prior use of a trademark when applying in such a special relationship for the purpose of protecting the filer based on the principle of good faith. The procurator/representative should be faithful and diligent and resist from bad faith registration as long as the trademark is owned by the filer. The Article also includes no requirement of commercial use by the filer of the trademark. This case perfectly illustrates how Article 15 applies.

Let us?explain?the “improper measures” section stipulated in Article 31. The idea has already been defined in the (2013) Xing-Ti-Zi No. 11 Judgment: the party who requests for cancellation of the disputed trademark pursuant to Article 31 should prove two matters. 1. The party has used the same/similar trademark on the same/similar product and the use has left some influence on the public before the date of filing for the disputed trademark. 2. The applicant is applying for the disputed trademark “mala fide” to take advantage of the opposing party’s goodwill. Generally, presumption that the applicant has malicious intention to benefit from others’ trademarks and goodwill can be made when he/she is known filing for registration while “aware of” or “should be aware of” the fact that the trademark has been previously used and left some impact.

However, it is also likely that the applicant is not in bad faith despite the prior trademark’s influence. Our country’s Trademark Law values the principle of “Applicant First”, so it should not be inferred that “common users are supposed to be joint rights holders” without support of other laws or an existing contract. The disputed trademark registration in this case should not be cancelled for it constitutes no infringement on existing legal rights or violation of the principle of good faith.

Let us?explain the “some impact” section stipulated in Article 31. In (2013) Zhi-Xing-Zi No. 80 Judgment it is further illustrated that “some impact” for the purpose of Article 31 should be deemed as a legal effect caused by continuing use of a trademark, and “prior rights” should be the rights existing till the filing of the disputed trademark. A long hiatus in use of a commercial mark will undermine its fame and influence, that Article 31 requires of an unregistered trademark, and in the end render it ineligible for the stipulated “prior use” and “some impact”, or any “prior rights”. In this case, registration of the disputed trademark will not violate the principle of good faith.

Now let’s explain Article 41. As has been defined in the (2013) Zhi-Xing-Zi No. 41 and No. 42 Judgments, to obtain registration by other improper measures for the purpose of Article 41 Paragraph 1 refers to seeking for registration by disrupting administrative order, impairing public interests, or appropriating public resources other than adopting deceptive measures in a way to exploit improper gains. Civil subjects should apply for registration of trademarks based on the intention to use them so that the application can be justified as reasonable and legitimate. In this case, the involved party, Mr. Li, tried to register a number of preemptive trademarks related to Haitangwan Resort District and other relevant projects under construction, taking advantage of their influence inflated by governmental organs. In addition, Mr. Li also hoarded other trademarks in the same way for no reason. The lack of good faith intention in him failed to justify his behavior, which could be seen as appropriation of public resources and disruption of registration order.

The “Jordan” case, (2016) Zui-Gao-Fa-Xing-Zai No. 27, is not to be missed here. The case highlights that business success and market order established on the basis of bad faith operation are not eligible to sustain the registration of a trademark because they have exploited the mistake in identifying the trademark made by the relevant public to some extent. To support such business achievement or market order will prove detrimental to the rights holder in protecting his name. Worse still, it would pose adverse influence on securing consumers’ interests and purifying the environment for trademark registration and use.

(to be continued)

If you would like some more personalized review of the news from us, please kindly let us know by writing to:?public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 26
28 June 2017

Xia Junli – Judicial Policies for Prevention of Bad Faith Trademark Registration

Part I

Editor’s Note: This is a translation summarizing the speech by Xia Junli, presiding judge at the Supreme People’s Court’s Intellectual Property Division, at the 2017 annual meeting of the China Intellectual Property Law Association. The speaker herself has approved the content of this article. This article was originally published in Chinese by the Wechat public account: zhichanli. Link to the original here.

The subject under discussion surrounds judicial policies for prevention of bad faith trademark registration. In fact, one cannot study and discuss judicial policies without referring to substantive cases and mulling over other relevant issues. The subject issue is worthy of discussion for it involves legislative and judicial practice as well as a research on relevant issues in the academic community. As a judge at the Supreme People’s Court, Xia Junli would like to summarize what we have done, what we are doing, and what we are trying to do to prevent malicious trademark preemptive registration in years long judicial practice.

We can divide our work in four areas: 1. Clarification through application of law in substantive cases; 2. Guidance with publication of model cases and judicial policies; 3. Reference to guiding cases in similar situations; 4. Regulation by promulgation of judicial interpretations.

  1. Clarification though application of law in-substantive cases

Among all sorts of IP cases that the SPC IP division has reviewed in the recent two years, cases involving trademarks, especially trademark administration, account for the largest proportion. They stand out for the following reasons:

  • Trademark cases have witnessed a considerable increase in general and administrative trademark ones have grown substantially during 2015 and 2016. Legal issues related to the determination of similar trademarks and goods as well as protection of prior rights remain dominant.The principle of good faith is highlighted more than ever as the guiding principle when trademark cases are heard in light of how to render protection of trademark rights proportionate with its fame regarding the actual situation in the market by deploying instruments such as similarity and confusion of trademarks and goods.
  • Case hearing have grown increasingly difficult and eye-catching, such as the “Jordan” trademark administrative case concluded by the SPC.
  • Standards for granting and determining trademark rights have been clarified and the substantive solution of disputes has been given more importance.
  • Judicial protection is gathering increasing momentum.

When we approach today’s topic, we should make clear how bad faith registration and the principle of good faith applies in the Trademark Law, and how they are connected to each other. In the 3rd amendment of the Trademark Law, Article 7 stipulates that “The principle of good faith shall be upheld in the application for trademark registration and in the use of trademarks.” The principle was disputed during legislation when it comes to whether it could apply as a substantive standard in dealing with trademark objections or trademark disputes.

Eventually it has remained non-substantive as we can see in today’s Trademark Law. Thus, we need to think through how to uphold the principled Article 7 and adjust its relations with other substantive provisions including Article 10 Paragraph 1 Clause 8, Article 15, Article 30, Article 32 and Article 44 in the latest amended Trademark Law when promulgating judicial interpretations and applying laws in substantive cases.

As early as in the “CHENG LIAN” case ([2006]Xing-Jian-Zi No.118-1) in 2006, the SPC clarified that a registered trademark shall be cancelled if its registration is obtained by deceptive or other improper means as stipulated in Article 41, Paragraph 1 along with other absolute reasons that lead to the cancellation of a trademark. (The provision mentioned here is inscribed in the Trademark Law before amendment for its application in the case. Same with provisions below.) It was also clarified that it would only take correct comprehension and application of Article 31 to prevent unfair competition and resolve issues such as violation of the principle of good faith, trademark preemption or other infringements on prior rights.

Article 31 stipulates three conditions on triggering protection of an unregistered trademark, which are, prior use of the trademark, impact exerted on the trademark, and improper means by which the preemptive trademark is registered. The former two conditions are quite flexible. When determining the impact on the preempted trademark, a lower threshold should be adopted in addition to considering whether the registrant is aware of the prior rights or is in bad faith.

As for Article 28, it stipulates how trademark similarity is determined. In the 2011 “LIANG ZI” case ([2011]Zhi-Xing-Zi No. 50), the trademark “LIANG ZI” was in dispute over whether it should be cancelled for malicious preemption. The focal point fell on whether the coexistence agreement in this case would undermine the trademark’s registrability. The TRAB held that the cited trademark and the disputed trademark constituted similar trademarks, which was in violation of Article 28, and the coexistence agreement was irrelevant to this case. The court of first instance held that the agreement failed to exclude the legal requirements of a trademark’s registrability in the Trademark Law while the court of second instance held that the agreement manifested party autonomy and obeyed the law’s legislative intention.

Thus, the opposing party’s application for cancellation violated the coexistent agreement and the principle of good faith. As for the SPC, it eventually supported the court of second instance and held that the balance of interests settled in the agreement and the years long market structure would be broken if the disputed trademark was cancelled, which would prove obviously unfair to the opposed party.

(To be continued)

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Updates
05 June 2017

The 139th INTA (International Trademark Association) has just gone by, and HFL experienced the wonderful Barcelona for you.

Another annual INTA event has taken place in Barcelona this year, and HongFangLaw visited one of the most beautiful cities in Europe, in order to be there with colleagues coming from all over the world. Over 10,000 participants were greeted by the comfortable weather, the difficulties of getting around, and the vibrant nightlife. All of these factors enhanced the trademark industry’s premier educational and networking event.

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As always, the INTA focused on the main innovations and achievements in the intellectual property practice, in order to push forward, again, the limits of IP protection all around the world. International expert have taken part to the event and shared their insights on their own countries IP regulations and news.

This year, HongFangLaw was once again part of the event, represented by our firm partners, Nikita Xue, Tiger Zhao, Eric Su, Irene Zeng, Zhang Xu and Kevin Xu.

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In addition to attending numerous receptions and other networking events, we were able to take in a wide range of exhibits, presentations, committee meetings, and legal education sessions. Hot topics of discussion in both formal sessions and informal conversation included customs training, international trademark law and practice, mediation trainings, anti-counterfeiting, protection and enforcement of the rights of Logos, data protection and security, infringement and nonuse cancellation cases. One of the most interesting and useful aspects of our many conversations was to compare the Chinese legal system and other jurisdictions where our clients do business.

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Nikita Xue had a very active part in this year INTA, as she was selected for a further year as member for International Trademark Association, Bulletin Committee. This Year in particular, we and Nikita especially were awarded a price in commemoration of the contribution of members for the contribution over the bulletin, the Commission presented the Outstanding Contribution Award for two members from Australia and China, and Nikita representing China and HFL collected the prize.

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For this reason, we would like to give you in this report a short insight of what happened in this year INTA, also redirecting you to the news service of the INTA bulletin, in order to provide you with as many information as possible.

During the first day, 21st of May, the INTA has focused its attention on the publishing war, keynote controversy, Brexit blues and much more.

You can read more on the INTA from the full day report from IAM here: LINK

The second day, 22nd of May, the INTA focused more on Strikes, and again on the Brexit. We dived into the fake news issue, and the Trump administration.

You can read more on the INTA from the full day report from IAM here: LINK

The third day, 23rd of May, had instead a focus more on the CPA planning for change. The .sucks booth momentum and we found out which are the top in-house teams in IP, and the challenges on protection of Trade dress.

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On the fourth day, 24th of May, were tackled news related to China’s upcoming e-commerce law, we tried to understand if big data could bridge the legal-marketing divide, and if Trademark industry facing a ‘Kodak moment’?

You can read more on the INTA from the full day report from IAM here: LINK

Our Colleague Federico Bartolini, was attending his first INTA this year, and had a small comment on the event, that we would like to share:

“It has been almost 1 week since my return and I am still recovering (mostly my feet) from the INTA experience!? I was not expecting such a big event related to our daily work, it is as clear as ever to me how important the work we do every day is. The importance of the INTA is not only to enjoy and to meet fellow colleagues, but also to tell the world that we are ever watchful, we will not stop until our clients’ brands, and trademarks are protected and are safe from counterfeiters and fakes. Clearly, there is no other equivalent to the INTA in the IP world, when we can meet more than 10,000 IP professionals from all over the world, all in one location.? We exchanged cards, shared stories and created new memories, many of which I will carry with me, at least until the next INTA! Thank you Barcelona and thank you to all my colleagues, for allowing the knowledge about IP to be shared to the world!”

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If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 25
02 June 2017

OEM Trademark Infringement on “PEAK”

Recently, the Shanghai IP Court has issued a final judgment on the trademark dispute involving the Plaintiff Fujian Quanzhou Peak Sport Products Co. Limited (hereinafter referred to as “Peak Co.”) and the Defendants Issac Morris Ltd. plus its OEM manufacturer Wuxi Zhenyu International Trade Co.(“Zhenyu Co.”). Amending the prior judgment to rule the defendants’ contract manufacturing as contributory trademark infringement.

Facts:

Peak Co. is the owner of the trademark “PEAK and figure” in Class 25 “shoes, clothing”, which was determined as a well-known trademark by the Trademark Office of China’s State Administration of Industry and Commerce in 2009. As for Issac Morris Ltd., it was granted approval for registration of the trademark “PEAKSEASON” in the US on Nov. 2, 2010, whose description regarding the mark drawing goes “standard character mark typeset” (without specific typeface, font style, font size or color).

On Apr. 7, 2014, Issac Morris Ltd. ordered from Zhenyu Co.448 dozens of men knitted T-shirts with labels and tags printed with “PEAKSEASONNCAA”. The order was made at a unit price of FOB 28.80 US dollar, totaling US $12,902.40. Later, on Jun. 25, an email was sent from the former to the latter to request manufacture of the “PEAKSEASON” tags as in the attached design while the “NCAA” ones would be provided separately. Two months later on Aug. 20, the ordered products were seized by the Shanghai Customs when being exported, following the Peak Co.’s application for detainment and litigation preservation of the seizure.

Decisions:

The court on first instance ruled against Peak Co., pursuant to the territorial principle. It held that the involved trademark would not cause confusion to domestic Chinese consumers since the products were solely for overseas distribution, without plans of entering the Chinese market, despite its similarity to the Plaintiff’s mark.

However, Peak Co. disagreed and lodged an appeal. In second instance, it presented a decisive new exhibit, which revealed that a product link to the US Amazon would appear as the user keyed in “peakseason” on its Chinese website, which meant that the involved products were available to Chinese consumers through the US shopping platform. It was based on this fact that the court of second instance remedied the prior judgment and ruled that the two companies involved in OEM shall assume joint liability.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Event Report ~ Australian Chamber of Commerce
16 May 2017

“STAY ALERT, STAY CONFIDENT” – IP PROTECTION IN CHINA
Event for Latrobe Valley Delegation in Shanghai

Thanks to the support of the Australian Chamber of Commerce in Shanghai, HongFangLaw had the opportunity to present an insight on the Chinese IPR system and some case studies to corroborate the theory. HongFangLaw Partner Zhang Xu, was part of a selection of speakers that engaged with an Australian delegation coming directly from the Latrobe Valley in the Victoria region.

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The delegation included a selection of company owners in various businesses that have interest in approaching the Chinese market in the near future.

As part of the speakers team, Zhang Xu has given a clear and educating overview of the Chinese IP protection environment and given a list of suggestions on how best to approach the market from a legal standpoint. Zhang Xu, took charge of the second presentation, introducing the delegation into the IP and legal considerations that should be made prior to entry in the market.

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At the end of the speaker round, the honorable Victorian Minister for Small Business, Innovation and Trade, Phillip Dalidakis, joined the delegation. He himself gave a well-rounded speech to the audience, providing them with insight on how best to do business in China, coming from Australia. He suggested a list of best practices and most importantly attitudes that new business owner should develop to be successful in China.

Austcham Shanghai CEO Udo Doring, gave then the final speech related to the chances that the delegation might find in China and how best should businesses approach the market and start their operations.

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He touched again on all the main topics discussed during the day, and made special notice on the steps one should take, in order to be safe and save as much as possible in terms of capital investment.

At the end of the round of presentation, the Minister joined the delegation and discussed the previous mentioned topic directly with the audience. It was a good opportunity for HongFangLaw to connect with the Victoria Government and delegation and be of support for their questions and doubts about IP protection in China.

We are glad that we were able to be of support to the Austacham and to the Victoria government in giving a clear guideline to the audience on how to do business and protect their brands in China, which is what we continuously try to aim for with our clients and partners.

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The Minister was so kind to allow the delegation and our team to take photos with him, and have a nice lunch together. We hope that we could be part of future delegations, as to support the Australian businesses to thrive in China.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 24
12 May 2017

Alert: Legal Risks in Trademarks Fading into Generic Names

As stipulated in China’s Trademark Law, the generic name of a product cannot be registered as a trademark because it fails to distinguish the product’s origin from others’. Apart from that, privatization of a generic name through trademark registration might also damage relevant public interests.

The PowerPoint software, part of the Microsoft Office suite, has nowadays become a must-have on personal computers, which self-evidently proves its fame. However, there are also risks in such an evolution from an icon to a generic name, as is revealed in a recent case heard by the Beijing High People’s Court.

What happened was that Microsoft had initially registered in the US the trademark of “PowerPoint” in Class 42 for which it later hoped to seek protection under the Chinese Trademark Law with territorial extension. Yet the process turned out to be quite a tough journey when the company’s application was continuously given red lights by the Trademark Office. In addition, the Trademark Review and Adjudication Board, and the Beijing Intellectual PropertyCourt refused it for the same reason: “PowerPoint” has evolved into a generic name for “slides and presentations”, so it now lacks significance as a trademark on a specific product. Eventually, it was at the Beijing High People’s Court that Microsoft managed to save the “PowerPoint” mark, narrowly.

Microsoft’s “PowerPoint” mark was quite a significant one when conjured and it has acquired a huge fame after use. However, it has nearly been reduced to a generic name entitled to no Trademark Law protection due to problems underlying long-term use and protection. It is thus clear that trademark protection is by no means limited to registration and rights protection, but a long-term cause of risk prevention.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 23
28 April 2017

Design Patents Involving GUIs Pose New Challenges

In China, pursuant to prior regulations?a “design displayed on a product when connected to power” clearly excluded it from being granted a design patent.

The Patent Examination Guidelines, revised in 2013 and entered into effect in 2014, expanded the scope of design patent protection, including matters related to graphical user interfaces (GUIs). However, it should be noted that the “GUI design” itself is still kept out of design patent protection while the “product with a GUI” is the one entitled to obtain patent protection.

Subsequently, GUI-related design patents began to appear in large numbers, especially in high-tech fields.

Recently, the Patent Examination Board of SIPO has published a decision declaring invalid a design patent for a mobile phone with a GUI. It is interesting to report that the decision was the first of its kind to invalidate a design patent involving a GUI.

From what has been revealed in this case, the examination of design patents involving GUIs is much more complex and requires higher levels of professionals involved compared to traditional cases. Meanwhile, from a practical viewpoint, it is foreseeable that proof-providing will turn out to be a new challenge when administrative and civil disputes arise around design patents involving GUIs.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 22
27 April 2017

China Customs Publishes Its Top 10 IP Protection Cases of 2016

On April 20, 2017, China’s General Administration of Customs(GAC) published its top 10 intellectual property protection cases of 2016, one of which was related to a special operation on infringing activities involving imported lubricant. HongFangLaw, representing the involved lubricant brands, participated in the whole operation deployed by the China Customs and the Public Security Bureau (PSB).

As early as May 2016, clues to the infringement were identified when the GAC and the PSB worked closely to clamp down on an e-commerce platform for selling fake lubricant. As the authorities tracked down the thread, the case turned out to be a part of this mega infringement on lubricant in a cross-border trade. At stake were the import section, cross-border e-commerce platforms, as well as domestic consumers’ lives and property as the counterfeits circulated, therefore the GAC and the PSB decided to cooperate in the case dealing. They called upon local customs in Hangzhou, Ningbo, Guangzhou, Huangpu and Tianjin to set up special teams and deploy crackdowns accordingly. The authorities managed to carry out a thorough operation thanks to their division and coordination of labor: On one hand, they set out respective administrative arrangements and gave full play to enforcement forces in key areas; on the other, they exchanged information and shared resources, which brought timely intervention and excellent synergy.

The five local customs reported 6 cases to the PSB and seized fake lubricant mounting to 80 plus tons with a value of over RMB 9.5 million (approx. USD $1.4 million) after careful data monitoring of imported lubricant from key countries and active implementation of risk examination and prevention. The Huangpu and Tianjin Customs, as traditional shipping ports adept at risk examination and prevention, were capable of precisely targeting infringing imported lubricant without blocking the clearance of legal goods as they kept narrowing the operation scope by analyzing and filtering digital data, identifying suspicious targets, and studying the pattern in the declaration of counterfeits. During the operation, Huangpu Customs seized three batches of fake lubricant totaling 31.7 tons in Huangpu New Port and Dongguan Shatian Port. The Tianjin Customs seized another three batches with 38.1 tons in Tianjin New Port and Dongjiang Port. It was the first time we saw such an outrageous amount of seizure with such a tremendous value. As for the PSB, it crushed five domestic storage sites, held 11 suspects and seized 110,000 pails of infringing lubricant with the support of the Customs.

We can learn from the case that IPR infringement is a global issue and China is with no exception a victim to foreign counterfeits. This case stands out as it was dealt under the cooperation of the GAC and the PSB involving infringing imported goods with a huge value. The successful operation serves as a valuable experience, for reference in future cooperation between the two bureaus against infringement and in big cases. It is also a model able to guide the coordination between the Customs and e-commerce platforms.

The international community and mainstream media have also closely watched the case. The impressing effort and result made by the China Customs in combating cross-border fake lubricant were highly appraised in a visit to the GAC by the Commercial Counsellor at the British Embassy in China. Sean Dennehey, acting chief executive at the British Intellectual Property Office, highlighted them in a letter to the GAC from China-Britain Business Counsel, and in a visit to the Huangpu Customs. Central and local media including CCTV, International Business Daily, Guangdong Television, and Southcn.com published special reports on the case in a variety of forms, raising extensive attention from the public who also gave positive comments.

As the representative of the involved rights holders, HongFangLaw took part in the special operation and coordinated with the GAC and the PSB. We bridged e-commerce platforms and enforcement agencies, protected the legal rights of holders, and therefore ensured those of consumers.

Source: http://www.customs.gov.cn/publish/portal0/tab65602/info846634.htm

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 21
14 April 2017

China’s attempt to establish a patent priority review system

Recently, China’s State Intellectual Property Office (SIPO) released a draft, for public consultation, of the Administrative Measures on the Prioritized Patent Examination (hereinafter referred to as “MPPE”) which offers a glimpse into the prioritized patent examination system to be established and implemented in China.

According to the contents of the prioritized patent examination method, patent cases that meet certain conditions may apply for priority examination. The scope of patent cases that may require priority review includes several stages from patent application to patent review up to patent invalidation. For example, for what concern application and review, the focus should be on matters concerning Internet and new technologies or important industries supported at the national/local level. As for invalidation, the cases are supposed to be involving infringement, litigation/arbitration or concerning national/public interests. Meanwhile, the MPPE also stipulates some procedural conditions.

The most obvious benefit in implementing a prioritized patent examination is that case review time will be significantly reduced. For example, a utility model or design patent application approved for priority review will deliver results within two months upon the date of approval.

The establishment of a patent priority review system will serve as a legal guard to the transition from technology to product, resulting in giving priority to the most critical transition between an asset and the time needed of its implementation.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law news
05 April 2017

New Partnership between HongFangLaw and the Shanghai Association of International Trade

At HongFangLaw we always had at heart the development of the service industry in China, by supporting Chinese businesses in their services and protecting their brands in China.

For this and many other reasons, we have officially established a partnership and became members with the AIST, the Shanghai Association of International Trade, to better connect to Chinese companies and support them in the protection of their Intellectual property portfolio.

AIST was established in October 1996, from the Shanghai Municipal People’s Government Business Council (Trade in Services), under the initiative of the Ministry of Commerce (at the time Ministry of Foreign Trade and Economic Cooperation), in Shanghai to promote the development of trade in services. AIST is one of the main associations in this area and the first association in the country to set up a cooperation between the trades in services organizations. At present, the association has more than 500 members in the group, respectively, in the international trade, exhibition, finance, insurance, transportation, advertising, information, consulting, design, accounting, lawyers, tourism, hotels, business and other enterprises and institutions.

Here the official website address: www.servtrad.org.cn

Thanks to this cooperation, we could better support our clients in understanding the structure of government and enterprise communication platform for the service industry, and create a direct connection to government departments, such as the Shanghai Municipal Commission of Commerce, Foreign Economic and Trade Commission and the Shanghai Municipal Bureau of Quality and Technical Supervision Center.

We believe that this new cooperation can bring an interesting new view of the legal protection for the service industry and educate our fellow colleagues in the Intellectual property landscape of China.

If you would like to know more about our cooperation plans or about the AIST, please feel free to contact us at public.relation@hongfanglaw.com

HongFangLaw ~ Chinese IP Law Updates ~ n’ 20
01 April 2017

Huami Sued in USA for Patent Infringement

On March 23, the US “patent troll” Sportbrain Holdings LLC took Huami Inc., part of Xiaomi’s Eco-chain, to the United States District Court of the Northern District of Illinois, claiming that the latter had been infringing its United States Patent No. 7,454,002 (hereinafter the “002 Patent”) with the smart watch Huami Amazfit Pace, sold in the US.

The plaintiff, Sportbrain Holdings LLC, has filed over 90 lawsuits in the US with the 002 Patent since 2012. The number mounted to as high as 75 just in 2016, making Sportbrain the third on the list of “the most prolific patent trolls” of the year. Companies drawn into litigation include US companies such as Apple, HP and Nike, as well as their Chinese counterparts Lenovo, Huawei, Haier and TCL. Huami, as a component of the Xiaomi Eco-chain, was also not spared from this “black list” that continues to grow.

Although Xiaomi has already passed the “baptism of fire” launched by “patent trolls” (already twice so far), this instance still counts as the first real encounter for a Xiaomi Eco-chain enterprise with respect to the US patent check system of Huami products (if we don’t consider the Ninebot’s acquisition of Segway). The phenomenon of “patent troll” lawsuits in the US has always been a meter of a company’s business achievement.

As for Huami, it has already become one of the most successful members among its counterparts in the Xiaomi’s Eco-chain, as the second largest manufacturer of wearable devices in the world, second only to the big Fitbit, according to IDC. In 2016, Huami sold globally around 16 million wearables devices with sales skyrocketing to RMB 1.5 billion (approx. USD $20 million), thanks to which it leapt to “unicorn” status, been valued at USD $1 billion.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law news ~ Trademark Official fees reduction
31 March 2017

China Trademark Office: Official Fees reduced by 50% since April 1, including Trademark Registration, etc.

From the announcement from the Trademark Office of the State Administration for Industry & Commerce, official fees of relevant trademark issues will be reduced by 50%, including trademark registration, trademark assignment, trademark renewal, etc.

Details are as follows:

Item Official Fee (RMB)
Application for registration of a trademark in one class 300

(for up to ten goods/services, RMB 30 additional for each good/service in excess of ten)

Re-issuance of registration certificate 500

(publication fee of a Loss Notice included)

Application for transfer of a trademark 500
Application for renewal of a trademark 1000
Additional fee for renewal in a grace period 250
Application for review and adjudication of a trademark 750
Application for change of a trademark 250
Issuance of registration certificate 50
Application for registration of a collective mark 1500
Application for registration of a certification mark 1500
Application for a trademark opposition 500
Application for a trademark cancellation 500
Recordal of license contract for a trademark 150

HongFangLaw ~ Chinese IP Law Updates ~ n’ 19
30 March 2017

Sony Ruled by IP Court in Beijing for Invention Patent Infringement and Judged with Huge Compensation

Recently, the Beijing Intellectual Property Court (BIPC) has made a judgment in first instance on the invention patent infringement dispute between a Chinese wireless network communications company and Sony Mobile Communications (China).

The court ruled that Sony China had infringed a communication related invention patent, held by the Chinese wireless network company, having procuded and sold dozens of phone models, and ruled that Sony shall immediately cease the infringement and pay the compensation.

The focal question is whether the production of Sony China does constitute infringement. Since the patent involved is deemed a Standard Essential Patent (SEP), and has de facto become a part of GB standards, it was clear that the Patent was already recognized. Thus controversies swirl around whether it could be inferred that Sony China had complied with GB standards and used the patent involved, thus leading to infringement.

BIPC presumed that Sony China had grounds for implementing GB standards based on its failure to submit relevant evidence including its internal regulations on quality management during the hearing, and extended the test results concerning the patent of the four involved mobile devices to dozens based on the absence of counter-evidence from Sony. As a result, the court is of the opinion that dozens of Sony phones involved are in infringement due to their compliance with GB standards and use of the patent involved. In addition, compensation concerning the infringement also caught professionals’ attention for the complexity in determining the case’s nature.

BIPC supported the plaintiff in not only its claim for “compensation of three times the amount of the licensing fee”, recognizing an amount as high as nearly RMB 10 million (approxi. USD$1.5 million), but also a reasonable expense amounting to nearly RMB 500,000 (approxi. USD$70,000) for securing its rights. With respect to patent infringement disputes, judgment involving such a high compensation was almost never been seen before.

It is also reported that the involved patent holder had brought Apple China to court in 2016 with claims similar to the preceding case whose result is expected to swing to one side favor before the pending ruling.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 18
22 March 2017

Lawsuit against Mobike’s Smart Lock for Patent Infringement

Recently, Linglingkaimen, a Chinese provider of smart-phone ACS (access control system), stated that a lawsuit and an administrative disposition request had been filed against Beijing Mobike Technology Co., Ltd (hereinafter referred as Mobike) for infringing more than one patents of Linglingkaimen, and that the filing had been accepted by both Beijing Intellectual Property Court and Beijing Intellectual Property Office. In the lawsuit, Linglingkaimen requests Mobike to cease the infringement and compensate, without a specific amount mentioned, for the infringement of the patent rights with the valuable technology patent of smart-phone unlocking included.

Mobike’s smart lock system, with three modules of positioning, alarming and anti-theft function, not only realizes the timely positioning and anti-theft function, but automatically locks and unlocks a Mobike bicycle through renters’ scanning of a QR-code. With the smart lock as the core competitive technology, Mobike is one of the early pioneers of using smart locks in the bike sharing industry and has embraced great success over its competitors. If the lawsuit is ruled in Linglingkaimen’s favor, Mobike will be ordered to cease the infringement, and then the more than 10 million bicycles deployed all over China by Mobike will be made unavailable, which will become a disaster for Mobike who is now aggressive in taking the market.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 17
17 March 2017

Legal risk for the improper use of the “well-known trademark” expression

The “Chinese well-known trademark” propaganda has been widely used in commodity packaging, and commercial advertising. In fact, consumers are often lured into thinking that the wording “well-known trademarks”, in Chinese “驰名商标”, must represent a good and respected brand, with high credibility.

In recent cases involving “well-known trademarks” false propaganda, there was one concerning a manufacturer in the product packaging business, which carried the “Chinese well-known trademark” expression. Consumers whom bought the products in question, asked the court to prosecute the company for false advertising, and asked the product sellers to bear punitive damages. The court has given its support to the consumers after hearing the case.

In this case, the manufacturer’s misleading “well-known trademark” behavior was clearly contrary to the Consumer Rights Protection Law, and the relevant provisions of the Advertising Law. Even though carrying the “well-known trademark” was not fictitious, its packaging marking “Chinese well-known trademark” violates the provisions of the Trademark Law.

The Trademark law, which was revised early in 2013 and came into effect on May 1, 2014, imposes severe restrictions on the use of the “well-known trademarks” wordings, stating that improper use may face high administrative penalties.

However, the use of the “well-known trademark” expression is not always prohibited in business processes, but it is not easy to know how to use it rationally, as you would need to accurately grasp the legal risks, and boundaries.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 16
06 March 2017

Legal Risks of using a Sign Identical with or Similar to the Name or Sign of the Red Cross for Commercial Use

The Red Cross emblem is a sign of international humanism protection and the symbol of the Red Cross Movement, reflecting humanity and compassion. The sign of “Red Cross Society of China” is the Red Cross on white background.

The current widely used Red Cross emblem is derived from the birthplace of the Red Cross Movement, Switzerland, and it is the color-switched version of the Flag of Switzerland.

In accordance with the Trademark Law of the People’s Republic of China, it is stipulated that a sign identical with or similar to the name or sign of the Red Cross may not be used as trademarks and may not be used as a non-registered trademark commercially.

In recent amendments the “Red Cross Law of the People’s Republic of China” was recognized, it was stipulated that, were a party to use a sign identical with or similar to the name or sign of the Red Cross commercially, he shall be subject to legal liabilities, which are further defined in the Law. The Law shall come into effect on May 8, 2017.

It is stipulated that, “It shall be prohibited from using the sign of the Red Cross for profit-making.?It shall be prohibited from falsely using, abusing, tampering the sign and name of the Red Cross under any circumstances.” Where a party violates the stipulation, it shall assume civil responsibility, criminal liability and administrative responsibility.

The sign of the Red Cross is distinctive but its elements are simple, which could be easily used in logos, posters and packages. Therefore, enterprises and individuals shall consider with more attention to avoid using a sign identical with or similar to the name or sign of the Red Cross in business operation and promotion.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 15
24 February 2017

AutoNavi Co. Filed an Unfair Competition Lawsuit against DI DI Co. and Claimed Compensation of 75 Million RMB

Recently, AutoNavi Software Co., Ltd., AutoNavi Information Technology Co., Ltd. (hereinafter referred to as “AutoNaviCo.”), whose products are also known as GAO DE MAP, filed eight lawsuits to Chaoyang District Court. AutoNavi Co. sustained that, (i) Beijing DI DI Infinite Science & Technology?Development?Co., Ltd. (hereinafter referred to as “DI DI Co.”), Beijing XIAO JU Science & Technology?Co., Ltd. (hereinafter referred to as “XIAO JU Co.”), China International Intellectech Corporation (hereinafter referred to “CIIC”) and the former Senior Manager HU of AutoNavi Co. violate trade secrets and constitute unfair competition. (ii) DI DI Co. and XIAO JU Co. are suspected of false propaganda.

AutoNavi Co. claims that, Mr. HU nominally established a labor relationship with CIIC for the purpose of evading the non-competition agreement and actually works for DI DI Co. after leaving AutoNavi Co.. He subsequently urged six senior engineers of AutoNavi Co. to resign and work for DI DI Co. and XIAO JU Co. These six engineers copied AutoNavi Co.’s trade secrets before resignations, which seriously damaged the rights and interests of AutoNavi Co. ?AutoNavi Co. sustained that, their behaviors violate trade secrets and constituted unfair competition and requests the Court to order them to immediately cease and desist from activities of unfair competition, to dismiss above-mentioned seven employees and to make compensation for economic losses for 10 million RMB.

Furthermore, AutoNavi Co. filed an unfair competition lawsuit of false propaganda against DI DI Co. and XIAO JU Co. separately. AutoNavi Co. claims that, DI DI Co. and XIAO JU Co. falsely publicized that, “they are the world’s largest one-stop diversified travel platform”, “their drivers are the best” and “DI DI Co. dominates tailored taxi service in China with the market share of 87% and 99% of online taxi service market”. AutoNavi Co. believes DI DI Co. and XIAO JU Co.’s false, exaggerated and misleading propaganda may disturb the market order and cause enormous losses to AutoNavi Co., thus they shall assume compensation liabilities. Therefore, AutoNavi Co. requests to the Court to order them to stop immediately the acts of unfair competition, to offer a public apology and to compensate economic losses for 5 million RMB.

At present, Beijing City Chaoyang District People’s Court accepted above-mentioned eight lawsuits and they are currently in the process of beginning trial.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 14
17 February 2017

Should Derivative Work Without Authorization Be Protected?

A Kazakh?singer was accused of infringement by covering the work “Opera 2” of the Russian singer Vitas on a Chinese TV program during the Spring Festival.

The copyright owner is from Russia, but the event main body and site were in China. Nevertheless, performing others’ work without authorization constitutes infringement, this cannot arounse any controversy.

However, people have different views about whether the work, created by infringing others’ copyright, should be protected by the Copyright Law. Moreover, this is not explicitly stipulated in the Copyright Law of the People’s Republic of China.

In judicial practice, some believe that the Copyright Law shall protect the creation of a work even though it infringes the legitimate rights and interests of other works. Although there is the legal flaw in the creation of a work, it shall be protected by the law as long as it is with original creation as required and stipulated in the Copyright Law. Its own protection shall be separate from the infringement and they shall be considered as two independent legal relations respectively.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw insights and publications for this month
13 Feb 2017

Reluctance to reveal evidence causing negative legal consequences

Nikita Xue, HongFangLaw, discusses the China Supreme People’s Court’s Sustention on trademark infringement by 3N against 3M with USD $53,000,000.00 monetary compensation. In fact, Minnesota Mining & Manufacturing Company, known as 3M, has finally announced an end to their civil lawsuit on March 2016 against a local Chinese company.

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Follow the link attached for the whole article or see page 27~29 of February issue 2016 of Trademark Lawyer Magazine. here

HongFangLaw ~ Updates
25 January 2017

HongFangLaw Receives the “Best Service Provider” Award for 2016 from AkzoNobel

After a prize award ceremony on January 10th 2017, HongFangLaw has officially been awarded the “Best Service Provider” award for 2016.

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Thanks to a long and fruitful cooperation between our two companies, a great score of 100% successful invalidation cases and the fruitful civil lawsuits against trademark infringers and unfair competition in 2016, especially the well-known trademark status of “Dulux in Chinese” , HongFangLaw was recognized in four cases in 2016 by AkzoNobel.

Eric Su, HFL partner, has participated to the event and presented a case review of the aforementioned cases directly to the global trademark director of AkzoNobel.

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We are honored to be recognized by such renowned institution and we are proud of practicing in IP industry, with our professionalism and passion.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 13
16 December 2016

Interpretation of “QIAODAN” (in Chinese characters: 乔丹) Trademark Infringement Dispute

In China, trademark disputes of well-known foreign companies and celebrities are relatively common, especially the disputes of trademark registration applications infringing upon the existing prior rights of others. The “QIAODAN” (in Chinese characters: 乔丹) Trademark Infringement Dispute had lasted for four years and a favorable judgment was lately made on December 8th, 2016. Similarly, the “TRUMP” Trademark Infringement Dispute of the U.S. President-elect Donald Trump had lasted for a decade and last month, there was a favourable turn of the trademark “TRUMP” registered on class 37 which was preliminarily approved and published.

Case background:

On February 23rd, 2012, Michael Jordan filed an appeal against QIAODAN Sports Co., Ltd (hereinafter referred to as “QIAODAN Co.”) that the trademark “QIAODAN” (in Chinese characters) registered and used by QIAODAN Co. has infringed the right of personal name of Michael Jordan. However, Beijing First Intermediate People’s Court concluded that QIAODAN Co. has not infringed the right of personal name of Michael Jordan in the first instance after the Trademark Review and Adjudication Board of State Administration for Industry & Commerce of People’s Republic of China (hereinafter referred to as “TRAB”) and made the decision to maintain the trademark “QIAODAN” (in Chinese characters). On July 27th, 2015, in second instance, Beijing Municipal Higher People’s Court ruled that the appeal was rejected and the decision was upheld as the grounds of appeal were insufficient and that the involved trademark of QIAODAN Co. shall be maintained.

Michael Jordan filed an application for retrial. On December 8th, 2016, the Supreme People’s Court of the People’s Republic of China delivered a verdict that the trademark “QIAODAN” (in Chinese characters) has infringed upon the prior right of personal name of Michael Jordan and ordered TRAB to remake the decision. In regards to other cases involved “QIAODAN” (in Chinese pinyin), Michael Jordan does not enjoy the right of personal name, therefore the decision made in second instance shall be sustained and the retrial application shall be rejected.

Analysis:

“The prior rights” stipulated in the Article 32 of Trademark Law includes the right of personal name. The right of personal name is applicable to the regulation stipulated in General Principles of the Civil Law, “Citizens shall enjoy the right of personal name and shall be entitled to determine, use or change their personal names in accordance with relevant provisions. Interference with, usurpation of and false representation of personal names shall be prohibited.”

“QIAODAN” (in Chinese characters) is a partial translation of “Michael Jeffrey Jordan” while “QIAODAN” and “qiaodan” are the literal translation from “QIAODAN” (in Chinese characters) into Chinese pinyin. To determine whether the disputed trademark infringed the prior right of personal name in the retrial, it is considered that,(i) whether the name enjoys high popularity in China; (ii) whether the name could directly refer to the retrial applicant; (iii) whether there is a close correlation between the name and the retrial applicant. While the trademark “QIAODAN” (in Chinese characters) is cancelled and the judgment of “QIAODAN” and other related trademarks is sustained, we could make out the recognition among relevant public, the association between the retrial applicant and the Chinese characters and Chinese pinyin of involved trademarks, is the most important factor in judging the trademark’s popularity and correlation.

Furthermore, the close correlation does not indicate the exclusive correlation and it refers to whether the trademark usage may cause any confusion or misunderstanding among consumers instead. Although the retrial applicant has not used the trademark commercially, it is highly associated with his career which may cause confusion. On account of above mentioned grounds, it was ruled that “QIAODAN” (in Chinese characters) has infringed upon the prior right of personal name with the premise of affirming its popularity and relevance.

With regard to the retrial, both parties respected the Court’s ruling. QIAODAN Co. stated, three trademarks involved in the retrial application supported by the Court are defensive trademarks used on other goods and the trademark “QIAODAN” (in Chinese characters) judged to be cancelled is not a part of their core business. Though the retrial judgment is made, they still have to wait the TRAB to remake the decision. However, it would have an influence on the issue that how long it would take the involved products with trademark “QIAODAN” (in Chinese characters) to fade out the market.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw insights and publications for this month
13 December 2016

Can voluntary administrative action be deemed as a clear notice of infringement in a non-infringement declaration lawsuit?

Kevin Xu & Karen Hao, HongFangLaw, explore non-infringement declarations and specifically examine an instance where a non-infringement declaration was made due to voluntary administrative investigations, thinking about how this impacts the parties involved.

download

Follow the link attached for the whole article or see page 41~42 of December issue 2016 of Trademark Lawyer Magazine. here

HongFangLaw ~ Chinese IP Law Updates ~ n’ 12
06 December 2016

What kind of business problems are revealed to us from this Trademark Assignment Invalidation Judgment made by the Court?

According to a recent published First Instant Judgment* (*2015 CZMCZ No.: 02062) made by Changsha Municipal Intermediate People’s Court of Hunan Province, it was ruled that the assignment of the involved trademark was deemed invalid.

Briefly speaking, the Defendant filed a trademark assignment application with the Trademark Office and finished all formalities through an agency without authorization.

Fortunately, the Court who protects the trademark right holder’s legitimate rights and interests supported the litigation claim filed by the trademark right holder. Due to timely and effective judicial remedies, it prevented the act of unauthorized trademark assignment from suffering greater losses. Obviously, negligence and deficiency exist in some enterprises in the management process, including IP management.

In China, trademark assignment needs to meet formal requirements, including that the assignor and the assignee shall jointly file an application (or authorize a trademark agency) with providing relevant certification and proof to the Trademark Office. The main problem in this particular case was that administrative vulnerability existed in the enterprise management which lead to the unauthorized usage of important materials and unauthorized completion of trademark assignment.

It is significant for enterprises to enhance personnel management and asset management. In addition, taking timely measures for nipping such problems in advance is the best solution for such management problems.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Event Report ~ Australian Chamber of Commerce
16 November 2016

How to protect your Brand from Copycats

Thanks to the support of the Australian Chamber of Commerce in Shanghai, HongFangLaw had the opportunity to present an insight on the Chinese IPR system and some case studies to corroborate the theory.

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The event took place at Andaz hotel in Shanghai on November 15th. Mr. Andrew Kuiler and our partner Mr. Zhang Xu were invited to talk about the copycat industry in China and how to protect brands from imitation.

First Speaker: Zhang Xu

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The conference started with the speech of our partner Zhang Xu who talked about trade dress: the combination of distinctive elements of a brand, which make it different from the others. There are different particulars that can evoke a brand: colors, design, shape, the font of the logo, etc.

Unfortunately, in China it is extremely common to find fake products similar to those from famous brands known worldwide. Trade dress cannot be registered, recorded, or patented in China, but there are various remedies to take when dispute happens.

Despite the evolution in the China Legal and Brand Management space and the new laws, which support brand protection, it is still easy for copycats to reproduce some elements that can confuse clients and drive them to buy something that is not what they would like to purchase.

In support of his speech, Zhangh Xu showed some case studies:

  • The case of Castrol Ltd., which sued a Chinese lubricant company for trademark infringement and unfair competition to local court in Zhejiang Province; where the design of the container and overall image of the brand was too similar to the original to be discerned by an unprepared customer.
  • The famous case of Ferrero Roches against Chinese Tresor Dore for unfair competition to court; where packaging and design of the product were too similar.
  • Victoria’s Secret, which sued a Chinese company and retailer for trademark infringement and unfair competition in Shanghai City, China. Where the infringer again copied the store layout.

Second speaker: Andrew Kuiler

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The founder of The Silk Initiative, a brand and insight strategy agency based in Shanghai specializing in the food and beverage sector, shared an insight into how Chinese consumers respond to knockoff products.

Andrew showed some cases of stolen brand, both based on the evocation of some international famous brands. In this examples Andrew showed how producers put tricky logos or claims on their products in order fool the buyers.
One of these cases is the one of a famous Danish biscuits brand, Kjeldsens copied by an Indonesian brand, Danisa. The two products are extremely similar due to the presence of the same claims on the package and very similar design.

He also detailed the cases of the American snack brand Goldfish and the one of Land Rover cars, which both have Chinese brands using their trade dress.

Andrew and his team decided to make a research in order to understand how people feel about fake products. What they discovered is that consumers do not really care about the original products; they only care about quality, price, promotions and the utility of what they buy.

For this reason, brands should care less of what other brands and competitors do and focus more on the creation of their own strong brand image trough:

  • The knowledge of what the other competitors stand for and how they tell their story;
  • Determining where the strongest point of difference is and what claims they can put a stake in the ground on:
  • Being consistent across your whole marketing mix: proposition, product, pack, price, place, promotion and also being single-minded in the communication at all times;
  • Land the hero occasion and primary and secondary target markets and focus the resource spent on those, communicating very clearly to the customers;
  • Avoid wasting resources exploiting competitor’s weaknesses. Instead, it is important to make their strength either less important or less interesting by showing that you have something better to offer, which results in their strengths being less relevant in the future.

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At the end of the speeches, the attendant had the opportunity to ask some question to Andrew and Zhang about the Chinese legislation, the importance of offline and online protection, and what are the first steps in?approaching the change of the Brand image.

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If you would like some more personalized review of the event from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~New INTA Bulletin Update
15 November 2016

Our partner Nikita Xue, has reviewed a new topic for this month’s INTA bulletin related to Chinese IPR practice cases.

The topic of the new update is about how the District Court Finds Vacuum Cleaner Products for Export to Be Infringing.

A Chinese company, Ming Fei, has used the trademark BOSCHTURBO on vacuum cleaner products, 1,220 of which had been detained by Ningbo Customs on their way to be exported to Iraq. On this note, Bosch filed a lawsuit on March 24, 2016, arguing that Ming Fei products infringed on its BOSCH marks, and the hearing was conducted on July 11, 2016.

After examining the evidence submitted by both parties, the collegiate bench determined that the activity of the defendant constituted trademark infringement against Bosch, and all infringing products were ordered to be destroyed. An economic penalty of RMB 200,000 (approx. USD 30,303) was imposed against Ming Fei, and, as the sole investor and legal representative of Ming Fei, Shen Qiping was deemed to have joint liability.

Although Ming Fei is a limited liability company, the court deemed that Shen Qiping did not submit evidence to prove that the company’s property is independent of his personal property. This was a first instance court judgment.

It has already become into effect since neither party has appealed.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 11
11 November 2016

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Adidas Succeeds in Trademark Infringement case Against Tmall Online Store and Receives Compensation of RMB 1.2 Million

Recently, Wenzhou Ouhai District Court held a public hearing, pertaining to the trademark infringement lawsuit between Adidas and Wenzhou XIAO JIN DAN Trading Co., Ltd (here in after referred as “XIAO JIN DAN”).

On September 15th, 2016, staffs from Adidas bought three pairs of shoes through a Tmall online store named “XIAO JIN DAN Flagship Store”.

They hold that these three pairs of shoes constitute the infringement of the exclusive right to use Adidas’s top 3 registered trademarks respectively. Adidas filed a lawsuit to Ouhai District Court on May 16th, 2016 and demanded that, (i) “XIAO JIN DAN” shall immediately cease and desist from producing and selling infringing products; (ii) “XIAO JINDAN” shall compensate Adidas for economic losses in the aggregate amount of RMB 3 million.

Adidas said, according to transaction records, it shows that the sales volume of involved products is extremely large. “XIAO JIN DAN” has sold over 150,000 pairs of infringing shoes since the first half year of 2015 and the sales amount is over RMB 10 million.

In court, “XIAO JIN DAN” claimed that, (i) the trademark of involved products is not identical or similar to the trademark of Adidas; (ii) it would not show any relevant information of their products while searching Adidas trademark online; (iii) it shall not cause confusion and misunderstanding among consumers. Therefore, it shall not constitute the infringement of the exclusive right to use a registered trademark of Adidas. They also claimed that the total sales amount is not consistent with the record showed on the webpage due to goods’ scalping and returning.

After hearing, the court holds that, (i) “XIAO JIN DAN” used trademark is too similar to the registered trademark of Adidas and it constitutes a trademark infringement; (ii) “XIAO JIN DAN” is an online store and their consumers are not bound by regional limitation; (iii) the trademark infringement was constituted for a long time and the total sales volume of involved products is over 100,000 pairs. Therefore, Ouhai District Court ruled that “XIAO JIN DAN” shall stop the trademark infringement immediately and compensate Adidas in the amount of RMB 1.2 million for economic losses.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 10
09 November 2016

The Granted Number of China’s Invention Patents Decreased Significantly

Public data show that the number of granted China’s invention patents decreased significantly in recent September and October months, compared with the past August and September.

A total of 29,542 of granted invention patents were publicized in September which amount only to the 39.45% of the 74,891 which were published in August. Then again the total of granted patents in October dropped to 16,139, accounting for only the 54.63% of the number published in September. In total, the number of granted invention patents in October decreased of 20% in comparison to the ones published in August.

The growth rate of China’s domestic invention granted patents in the first 7 months of 2016 reached 49.5% if compared to the same period of last year, according to earlier reports.

We believe that, it is relatively normal that the growth gradually tends to stabilize itself after a high rate growth during a short period of time. However, the number of granted invention patents has dropped steeply in recent months, it seems that there are some issues is some areas that need reconsideration. If those issues were to be addressed properly, it is expected that such a significant fluctuation would not happen again in the near future.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 9
02 November 2016

CTMO Promises to Issue Trademark Filing Receipt in within Three Months

To fulfill the promise of shortening trademark registration application filing and receipt issue period from 6 months to 3 months, the Application Office has decided to reform the formal examination process and organize better with the Cooperation Center for Trademark Examination, Digital China office and relevant organizations ensuring to shorten the issue period as required.

Please find below a simplification of the key features:

I. The CTMO promises to listen to useful opinions and ensure proper adjustment in examination process.

II. In addition, to choose rationally and ensure the practicability of trademark registration application diversion.

Differences exist between online applications and paper applications. The Application Office proposes optimization scheme of application diversion and formulates different formal examination processes for different application ways.

(i) Online Applications: Adjustment of formal examination process has been completed in early September. After that, online applications would follow the new process. After having proved to be qualified and having charged the necessary trademark fees, the filing receipt will be issued.

A total of 1.25 million online applications should be submitted before adjustments will be examined in accordance with the original process.

(ii) Paper Applications: Coordinating with Digital China,the CTMO examines applications in progress and use background programme to submit qualified applications after the evaluation in order to shorten the period of invoice issuing.

At present time, all trademark registration applications submitted and complied with accepted requirements on July 26th and before will receive filed receipts issued in succession starting immediately.

III. Improve efficiency and ensure the quality of formal examination.

Annex:
CTMO has formulated SEVEN measures during the Opposition Division Work Conference in October 30th.
Please find below a simplification of these measures taken during the conference:

1.Overall implementation on Sole Examination System.
2.Formulation of the Opposition Substantive Examination Regulation.
3.Facilitation of opposition process.
4. Digitalization of opposition evidence.
5.Shorten archival retention period of opposition evidence.
6.Set up “Blacklist” system.
7.Strengthen the Party building and team building.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 8
27 October 2016

Guangzhou Plans to Set Up an E-commerce Patent Rights Protection Centre

Guangzhou Daily reported on October 26th, an official from Guangzhou Intellectual Property Office (IPO) said they are now applying for setting up an E-commerce IPR (Patent) Protection Centre in Guangzhou. This Centre specializes in handling patent infringement disputes and investigating patent passing-off behaviours in the e-commerce area. The aims of establishing a specialized rights protection centre are to deliver a verdict about whether e-commerce marketing constitutes patent infringement or patent passing-off behaviour and to conduct enforcement in a short time.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 7
19 October 2016

Trademark infringement lawsuit between CHANEL and Guangzhou Tianma Development Co., Ltd.,et al.

Case background

CHANEL is the trademark owner of No. 793287 trademark. Tianma Company is the operator of Guangzhou Tianma International Clothing Wholesale Centre. ZHAN Chuzhou is the tenant and actual operator of Store F1021 of the Centre. ZHAN did not AIC registration.

CHANEL filed a complaint to Guangzhou AIC Yuexiu Bureau about ZHAN selling infringing products in his Store F1021. The AIC Yuexiu Bureau issued the Administrative Punishment Decision on August 15, 2012, holding ZHAN had constituted trademark infringement. On August 20, 2012, CHANEL sent a Letter to Tianma Company requesting Tianma Company to enhance its supervision in the Wholesale Centre inorder to prevent trademark infringement. On April 12, 2013, CHANEL discovered again some infringing products in Store F1021 run by ZHAN. Based on the above, CHANEL sued both ZHAN Chuzhou and Tianma Company and requested the Court to order ZHAN to stop trademark infringement and to make compensation in the amount of 100,000 RMB while Tianma Company should bear the joint liability for satisfaction.

After examination, Guangzhou Yuexiu People’s Court made its judgment declaring that ZHAN Chuzhou had constituted trademark infringement, and ordered ZHAN Chuzhou to stop trademark infringement and to make compensation in the amount of 30,000 RMB. Despite this, the Court believed that Tianma Company had no right to force the Store to stop its infringing activity because there was no evidence certifying Tianma Company had intentionally facilitate ZHAN’s infringing activity by providing storage, transportation, mailing, concealing, etc. to ZHAN, nor was there any evidence certifying Tianma Company and ZHAN had jointly conducted the infringing act or had any kind of communication. For this reason, it could not be established that Tianma Company was at fault. Therefore, CHANEL requesting Tianma Company to bear the jointly liability for satisfaction was lack of factual and legal basis, and the Court could not support it.

CHANEL was not satisfied with the 1st Instance Court Decision and filed an appeal. The 2nd Instance Court held Tianma Company knowing that ZHAN had been selling fake CHANEL products and that it failed to fulfill its supervision duty as well as its duty of care, and to take any effective action to prevent the infringing act from happening. On the contrary, Tianma Company provided both property and property service to ZHAN as convenience. In accordance with Article 50 (2) of the 2002 Regulation for the Implementation of the Trademark Law of the People’s Republic of China, Tianma Company had constituted trademark infringement upon CHANEL’s trademark. With regard to whether Tianma Company should be jointly liable for ZHAN Chuzhou’s compensation liability, although Tianma Company knew about ZHAN’s infringing act, there was lack of evidence certifying that Tianma Company had jointly conducted infringing act or that Tianma Company had intentionally assisted ZHAN’s infringing act. Therefore, Tianma Company and ZHAN Chuzhou conducted different infringing act based on different subjective will and for this reason Tianma Company shall bear the liability based on its own infringing act and not bear the jointly liability for satisfaction based on ZHAN’s act. Since there was lack of evidence indicating the CHANEL’s loss owing to Tianma Company’s infringing act or the profits made by Tianma Company from its infringing act, considering the reputation of CHANEL’s trademark as well as Tianma Company’s fault degree, etc., the 2nd Instance Court ordered Tianma Company to bear the damage in the amount of 10,000RMB. Based on the above, the 2nd Instance Court changed the decision of the 1st Instance Court.

Analysis

  • The relationship between the professional market operator and the actual operator

There’s no legal definition of a professional market operator. To construe it literally, a professional market operator obtains the AIC license for market operation, and it allows it to run certain market in accordance with the laws. In real practice, a market operator is not engaged in sales activity within the market (such as selling cloths, toys, etc.), but it is engaged in renting out properties and providing property services within the market. Its main profits consist in renting and in property service fees. A market operator does not take part in the operation of properties that have been rented out to the actual operator. Both the market operator as well as the actual operator will not share profits or bear joint risks. From an ordinary consumer’s point of view, a market operator is not a seller and the sales activity of the actual operator of the Stores cannot be considered as the market operator’s activity. With regard to whether the actual operator has obtained the business license, this is the issue which ought to be dealt with by the AIC when it comes to the order of market operation, which shall not influence the relationship between the actual operator and the market operator.

Therefore,the role of a market operator is similar to the role of a landlord. And its relationship with the actual operator is mainly leasehold as well as property service relationship. Although a market operator often bears the supervision duty of the market to some extent, such duty is not the same as the market supervision duty of departments of AIC. The effectiveness of the two types of supervision duty is different as well. Such supervision duty of the market operator is not necessarily transferred into civil liability for sure, but shall require certain conditions.

  • Liability of the market operator in judicial practice

Injudicial practice, the tort liability of a market operator is an old problem and it is quite controversial. At present, it is commonly agreed that the market operator does not take part in any specific sales activity and it is not the executor of the infringing act. Consequently, it is commonly agreed that the market operator does not constitute direct infringement. So, liability of the market operator shall be based on indirect liability theory as well as Article 50 (2) of the 2002 Regulation.

Back to this case, the indirect liability borne by the market operator is a statutory liability in accordance with the laws. Such indirect infringement is different from the actual operator’s direct infringement with regard to the way of act, the subjective intent as well as the consequence of the act. To be morespecific, the market operator rented out its property to the actual operator with the subjective intent to make rent instead of providing property to the actual operator for infringing purposes. Meanwhile, the actual operator solely conducted the infringing act operating in its own store, without direct communication with the market operator. Even if the market operator knows that there’s infringing activity inside the market/centre, the subjective intent of the market operator is not to provide its own property as a tool to facilitate the actual operator’s infringing act. Therefore, from the subjective point of view, the market operator does not obtain the intent to conduct joint infringement with the actual operator. Furthermore, the market operator cannot obtain any direct interest from the actual operator’s infringing act because his rent is fixed. Then, although the indirect infringing act of the market operator has certain connection with the actual operator’s infringing act, the indirect act has constituted an independent infringing act which has generated independent liability. To make it equal the liability of indirect infringement and direct infringement does not comply with the equity principle as well as the principle of integration of power and responsibility. From the legal point of view, the indirect infringement clause did not clarify the liability of the indirect infringement. However, based on the above jurisprudential analysis, it is more rational for indirect infringer to solely bear the liability of the indirectly infringement.

If you would like some more personalized review of the news from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Event Report ~ European Chamber of Commerce
28 September 2016

China investment Conference Shanghai 2016

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The European chamber of commerce invited on September the 26th a great number of representatives of companies active in the Chinese market, to discuss the best approaches on investment for the following years.

Numerous speakers have given their own insights on the matter at hand, and have given their own suggestions on how to approach the ever-changing Chinese market.

First speaker: Mr. Michael Seitz

After the usual opening remarks, the conference started promptly with the introduction of the research prepared by KPMG advisory, regarding the Global Manufacturing Outlook in China.

The research focused mostly on the areas where the manufacture industries were competing for growth and how prioritized the research and development of innovations were held in their plans for growth.

Growth the next 2 years was seen as a high priority by the 74% of the interviewed companies, and as strategy for such growth, the most popular approach was to enter new geographical markets, with China and India in the lead with a combined 56% of companies.

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Another relevant sector, which was held in high regard, was the development of new R&D offices with organic investments.

As the competition is these two countries is considered very high, there is a need for most of the companies (56%) to increase investments steadily in China and India in the following years.

At the same time, Chinese companies are pursuing the export of even more products, and are switching their focus toward new markets, especially India and Africa.

Main concerns for companies operating in China in the following years are economy disruption, market disruption and supply chain disruption. For this reasons the main are for investments are IoT, or internet of things, to allow supply chains to became more technologically advances and increase the production of products.

In order to control then the market, several steps can be taken by companies:

  • Map and adapt their products
  • Create the right relationships
  • Develop partnerships
  • Increase R&D development
  • Focus investments on the Chinese market [as to improve the technology in use in the factories]

Second speaker: Mr. Clas Neumann

Once the steps for companies have been clearly defined, the focus moved more on the digital transformation in the IoT industry.

Right now, especially in the manufacturing business, factories are pushing toward new innovation in this digital world.

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As the market is filled with customer centricity, the industrialized products are making more and more decisions based on data. One clear example is the agricultural business of today, like the one we can experience in Germany; we can see how the farms of today are more digital than ever. Where most of the automated task are connected to a central computer, which makes most of the routine decisions.

The future holds only good prospects for China in this new era of digitalization, as China is to become the world largest R&D investor for 2020.

In addition, China and the new plan for “Made in China 2025”, is focusing more and more on consolidating the country’s name as the producer of reliable products and new technology.

This can also be see in the new developments in IP regulations, and the need to strengthening the laws, as suggested by the Chinese prime minister, as high R&D generates high IP risks.

Third speaker: Mr. Reto Bless

On the same topic of new development for factories with IoT technology, and the desire for China to pursue the “Made in China 2025” plan, the focus was moved on the Industry 4.0, the new name for what is believe the new industrial revolution of the 21st century.

It was explained how technology and its influence on the Chinese Smart Factory landscape works.

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New advancement in technology brings a natural evolution on the manufacturing processes, a central control of the factories brings a growth in production, and the reduction of labor force required operating the machines.

What is needed now is a standardization of the requirements for this new technologies and an understanding on how to manage the new complexity, as well as how to have the best infrastructure to support the new connectivity for this digital innovations.

Closely at the same time has to go the design of the new robots and machines utilized in the factories and the training for the new labor force required operating such factories.

To achieve the best results there has to be a good combination of trained people, standardized processes and new technologies.

Fifth speaker: Larry Y.Ho

How can then China develop their factories to be successful in this new industrial revolution and what are China IoT opportunities?

IoT is regarded as the future of industrialization, and is a great part of the Industry 4.0 campaign, it is considered the way to go to adapt production line as much as possible to the products itself.

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To complete the passage from the Industry 3.0 and Industry 4.0, different steps have to be taken, especially regarding the automation of the environment, incorporation of Robotics and the delivery of data in a more direct and secure way.

The only setback now, is the lack of a standardization in the innovation of the manufacturing line and production line, as such, many companies follow different standards and productions are very different from one another, as well as the software utilized.

The various areas of difference are mostly on electro-mechanical design of robots, machines utilized, packaging and assembly line orders, and IoT embedded system engagement, as well as the development of proper software to be connected with the new innovative hardware.

Other Speakers: Mr. Laurence Barron, Mr. Jean-Claude Zhang

With a more clear idea in mind about the new Industry 4.0, the focus of the event switched toward some case studies of companies developing new products in this new digital revolution.

We assisted to the presentation of Market for the Market about Airbus Group China, a very long-standing successful company in China that has been operating for more than 30 years. Innovation is part of the whole business plan of the company for decades, as any new plane has to be developed with the latest technologies.

In addition, we had a presentation about new mobility services, or NMS, which are flooding the digital market in the last years here in China. Principally we discussed about car sharing and car transport services in Tier 1 cities, which will potentially replace the need for everyone to own a car, and as such reduce pollution in bigger cities.

Seventh speaker: Wallace Bie

After hearing about more practical case studies, the focus moved again back to the Industry 4.0, and the rising of robotics in China.

With the support of a representative of COMAU, Consorsio Macchine Utensili, we traveled into the topic of robotics and the use we do of robots in the production lines, and how the new IoT approach is helping in modifying the manufacturing line.

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At the moment China’s industrial robot, density is below average, but has a high chance of growth, and we reviewed market data and trends for the future of Chinese robotics.

We learned that more than 600 companies in China are now producing robots, and for this reason the competition and development of innovation is very high, all this is in line with the “Made in China 2025” plan from the government, which is providing huge capitals for R&D developments in the field.

In addition, the government itself is regulating the robotics industries, thanks to the national robot testing and assessment center. At the same time, Chinese capitals are used to purchase high quality European brands, to acquire patents and trademarks in the field.

All this, is because most people believe that the future of the manufacturing business needs robots easy to use, collaborative and mobile in order to produce real innovative products.

Other speakers: Focus on HR

The focus now switched more on how to select the correct employee to push a company forward, in this high competitive market.

As there is a big change in demand for core work-related skills, the main point for the future should be to rescale supply and demand for jobs, supporting new workers to acquire the relevant skills to be integrated in this new industrial revolution, skill that are not yet accessible to all levels of education.

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We moved on with the demonstration of a list of Key recommendations for general management:

How to develop an agile business:

  • Strategy:
    • Inclusive / bottom up / Stakeholder Involvement
    • Align workforce / planning with innovation strategy
    • Communicate changes
  • Culture:
    • Personal & Responsive
    • Entrepreneurship & achievement orientation
    • Failure culture
  • Structure:
    • Shorter time horizon
    • Change management
    • Involve HR as business partner
    • Design thinking, SCRUM, Cross-function project management

How to support the development of an agile business:

  • Leadership
    • Get involved in the early phase of business planning
    • Align competency needs with business
    • Support development of agile management tools
  • Attract
    • Fluid organizations / alternative modes of employment
    • Bottom-up development rather than lateral recruitment
    • Partner with select institutions
  • Assess
    • Hire slowly and fire fast
    • Apply a multi-tool assessment to cover all fit elements
    • Emphasize transfer skills rather than technical skills
  • Develop
    • Pareto: invest in key skills development
    • Action driven blended learning
    • Offer structured career programs for Young Professionals

Beside the above-mentioned points, another way to properly recruit the workforce of industry 4.0 is to use the predictive Index, or behavioral analysis index. Which is considered a reliable way to assess the culture and reliability of new potential employees.

Last Speaker: Mr. Federico Bonotto

The focus of the last speaker was more on the development of new businesses in China, and the explanation of how new companies that would like to set up offices and factories in China can assess the developments zones given by the government, and what kind of concessions and facilitation they provide.

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New companies should choose well the right location, “New development zones” which are very focused on improving themselves, or “2.0/3.0 Industrialized zones” which are already very rich and can invest their own money in developing and supporting new businesses. Understand the need to fix a contract with LOCAL government, considering that 4-6 months will be necessary to achieve a good deal. Decide for a higher registered capital, which will be the key to achieve better conditions and good deals with the government, as well as better concessions. Use the initial capital injection of 15% to setup all the company’s SOP operations. During tax holiday period, start to work on High Tech Economic Status, which requires the development of ? real invention patents or 10/13 improvement patents.

In addition, to receive more local subsidies, it always recommended to companies to move to China part of their R&D offices.

By Federico Bartolini

If you would like some more personalized review of the event from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 6
21 September 2016

Blizzard Entertainment succeeds in infringement lawsuit against World of Warcraft

Recently, Blizzard Entertainment and NetEase make an announcement that Guangzhou Intellectual Property Court has delivered a verdict in favor of Blizzard and NetEase in joint copyright infringement and unfair competition proceedings against Chengdu Qiyou Technology Co., Ltd. (“Qiyou”), Beijing Fenbo Times Internet Technology Co., Ltd. (“Fenbo”) and Guangzhou Dongjing ComputerTechnology Co., Ltd. (“Dongjing”), ruling that (i) Qiyou and Dongjing shall immediately cease and desist from activities of copyright infringement and unfair competition, from operating, offering the disputed game to public; (ii)Dongjing shall immediately stop transmitting the disputed game; and (iii) the three Defendants shall jointly compensate the Plaintiffs for economic losses in the aggregate amount of RMB 6 million.

The Court holds the following: Without Blizzard Entertainment’s consent, Qiyou and Fenbo developed and operated a game World of Warcraft: Warlords of Draenor, which is substantially similar to the product of Blizzard Entertainment, and which shall be deemed as an infringement of Blizzard Entertainment’s copyright. In the disputed game, Qiyou and Fenbo have used without permission the unique elements of World of Warcraft including the title World of Warcraft: Warlords of Draenor, decorations of game title, logo interface, character creation interface, etc.; The in-game characters from the“World of Warcraft” series of games are highly recognized characters that drive demand when used in games and related commodities. Qiyou and Fenbo have used the characters’ names and names similar to these recognized characters in the disputed game with the intention of associating them with Blizzard’s recognized original game, which may easily cause confusion to gamers and constitutes unfair competition. Fenbo has used promotional words and phrases, such as Warcraft mobile game, the most Warcraft mobile game, Warcraft at fingertips, heritage of Warcraft etc.. Dongjing has failed to exercise reasonable care in its dissemination of the disputed game on 9You website, which constitutes contributory infringement.

If you would like some more personalized review of the news?from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ New Event
30 August 2016

How to Protect Your Trade Dress in China

Join HongFangLaw & the Australian Chamber of Commerce in Shanghai on the 13th of September 2016, for an overview of trade dress protection in China and how one can go about protecting its product.

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What exactly is trade dress? A form of intellectual property, trade dress generally refers to characteristics of the visual appearance of a product or its packaging that signify the source of the product to consumers.

We will explain, in detail, what is considered trade dress in china, and why it is so important, as well as any means to protect it from a legal standpoint.

Key features:

  • What does a Trade Dress include?
  • Why are your trade dresses important?
  • How do you protect it in China?
  • Case studies
  • Q&A session

For informations about cost and RSVP please check the Australian Chamber event page, here: http://www.austchamshanghai.com/en/event/upcoming-events/how-protect-your-trade-dress-china

Or contact our public relation team at: public.relation@hongfanglaw.com

4Symbold

Speaker:

Zhang Xu – HongFangLaw

Zhang Xu is founding partner at HongFangLaw, one of the leading China-focused legal practice firms. HongFongLaw is a team founded with professionals dedicating to intellectual property practice for over 15 years. Zhang Xu has been practicing in IPR industry in China since 1996 and passed the People’s Republic of China Bar admission in 1998. Zhang Xu has an outstanding experience in complicated IP dispute solutions, including trademark and acquisition, litigations, both administrative and criminal enforcements. Zhang Xu is a member of the International Trademark Association (“INTA”) and is a Certified Public Accountant in China.

HongFangLaw ~ Event Report
26 August 2016

China-Britain Business Council and the International Publishers Copyright Protection Coalition in China sign agreement with Tencent to advance protection of IP on Weixin

HongFangLaw partner Zhang Xu, on behalf of the UK‘s energy industry, and in collaboration with China-Britain Business Council, joined in the signature ceremony of the new agreement for international intellectual property protection in China, which occurred on August 23rd.

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During the event, Tencent Holdings Limited (Tencent), the China-Britain Business Council (CBBC), and the International Publishers Copyright Protection Coalition in China (IPCC) together have signed the memorandum of understanding (MOU) to further the protection of IP on Weixin, China leading social communications platform.

UK Minister of State, Baroness Neville-Rolfe, witnessed the signing for Energy and Intellectual Property, as part of her official annual visit to China.

Please find below a simplification of the key features of the agreement:

  • Emphasis was given to the importance of IP protection, and to the positive step of creating the Weixin Brand Protection Platform
  • Simplifications will be set up for CBBC and IPCC members to better utilize Tencent IP protection systems
  • An “express channel” will be set up to prioritise needs of CBBC and IPCC members within Mainland China
  • The parties will work together to explore offline cooperation with law enforcement agencies
  • Focus was underlined for ambitions around the development of enhanced IP protection mechanisms
  • Support will be provided to Tencent for any construction and improvement of technical and legal measures
  • Regular meetings will be held to discuss systemic improvements on IP protection

Different eminent personalities from the involved parties have witnessed the signing, such as Tencent Vice President Victor Jiang, Executive Director of CBBC Jeff Astle, and IPCC co-chair Kong Yuyan, which also serves as Managing Director of BMJ China.

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The MOU between Tencent, CBBC and IPCC was reached after following the desires of common interests and objectives regarding Intellectual property protection, and has reached the final draft after extensive communication and exchanges.

Through the signing ceremony, all parties have expressed their intentions of further cooperation to reach their shared objectives in the following months and years.

If you would like some more personalized review of the event from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw insights and publications for this month
24 August?2016

HongFangLaw Partner Kevin Xu and Mandy Wang, associate, discuss the protection principles and recommendations on the right of Personal name registration in China. Among the numerous formulations of trademark right cases, those involving the prior right of personal name are considered quite complicated.

download

Follow the link attached for the whole article or see page 39~41 of August issue 2016 of Trademark Lawyer Magazine. here

HongFangLaw ~ Chinese IP Law Updates ~ n’ 5
23 August 2016

An Interpretation of Statistics Report on China Patent 2015(III)
— The coming of spring for patent holders?

Chinese?State?Intellectual Property?Office published Statistics Report on China Patent 2015 (the “Report”) which contained statistics information throughout each phases of patent research and development, use, management and protection. The Report brings to light some patent-related phenomena and issues. It suggests the environment of China patent has significantly improved, and for patent holders, the spring is approaching.

The Report indicates that between 2010 and 2014, infringement cases experienced by patentees have substantially dropped. The percentage remained as high as 36.3% in 2010, whereas the figure reduced to only 18.4% by 2014.

Based on the statistics, the gravity of patent infringement situation facing right holders has seen noticeable improvements over recent years.

A number of factors such as growing tendency of judicial remedies and strengthening administrative enforcement, maturing self-initiated consultation between the parties on patent infringement, in some measure, serve to solve part of these disputes. From the view of professional Intellectual Property services, a slowdown in infringement trend has not yet fully emerged in the past few years. The factors described above may contribute to diversifying of patent dispute solutions. However there is a long way to go before the coming of spring for patentholders in real sense.

If you would like some more personalized review of the news?from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 4
12 August 2016

An Interpretation of Statistics Report on China Patent 2015(II)
–a look at unreasonably low utilization rate of valid patented invention

Chinese?State?Intellectual Property Office published Statistics Report on China Patent 2015(the “Report”) which contained statistics information throughout each phases of patent research and development, use, management and protection.

The Report brings to light some patent-related phenomena and issues. Low utilization rate of valid patented invention held by foreign-invested enterprise is particularly worthy of attention.

According to Year 2014 statistics, among China-based companies, patent implementation rates in domestic enterprises of valid invention patents, utility patents and design patents remain 68.2%, 67.5% and 69.0%, in the most balanced way. On the other hand, the data hinted at apparent imbalance concerning the rates of valid design patents and invention patents, i.e. 77.0% and 60.4% respectively, in foreign-funded enterprises (excluding enterprises with funds from Hong Kong,Macau and Taiwan).

Meanwhile, ratios of patents converted into finished and marketable products to valid patents show that the implementation rates for different types of patents have become increasingly imbalanced in the foreign-invested companies mentioned above. Such disparity is mainly manifested in the proportion of design patents being changed into finished and marketable products in relation to valid design patents has reached 62.8%, whereas such ratio regarding patents of invention is only 42.0%.

Based on the statistics, a peculiar phenomenon has emerged that foreign companies see unreasonably low implementation rate for valid invention patents, as well as the ratio of patents being transformed into finished and marketable products to the total of valid invention patents.

As stated by the Report, the fact suggests a localization trend in products made by foreign-invested enterprises.

If the Report is precise in presenting such view, that means product localization has reduced the need to integrate patent of invention with actual product. The base of invention patent is generally larger than those of utility patent and design patent,given that Foreign-funded enterprises have long been paying attention to the protection over patented invention with high technology content. During the course of product localization, it is only natural that limited need for invention patent will result in unusually low utilization rate for invention patent, in contrast to persistently high utilization rate for design patent.

Besides, compared to the old trend where enterprise used to exploit patents on its own, progressive development and frequent patent reserve and technology licensing may serve as an important factor in the low utilization rates of valid invention patents owned by foreign-invested enterprise.

If you would like some more personalized review of the news?from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 3
08 August 2016

Review of “Chateau Lafite” Trademark Opposition
by the Supreme Court

(source: zhichanli)

Chateau Lafite Rothschild (the “Chateau Lafite”) disagreed with administrative judgment (2014) Gao Xing (Zhi) Zhong Zi No. 3129 by Beijing Higher People’s Court with respect to trademark dispute between Trademark Review & Adjudication Board (the “TRAB”) of Trademark Office under State Administration for Industry and Commerce and Nanjing Golden Hope Wines Co., Ltd. (the “Golden Hope”), and subsequently applied for supervisory review. The Supreme People’s Court rendered a ruling for retrial on January 7, 2016. No. 5 Tribunal of the Supreme People’s Court heard the case in open session dated August 2.

Background:

On April 1, 2005, Golden Hope filed a registration application concerning trademark No. 4578349拉菲庄园 (Chinese translation for “Chateau Lafite”) (hereinafter the “Disputed Mark”), purported to be used on goods in class 33 “wine, alcoholic beverages, fruit extracts (alcoholic). The Disputed Mark was approved for registration on November 14, 2007, with ten-year exclusive-use period from November 14, 2007 to November 13, 2017.

Ch?teau Lafite owns TM No. 1122916 “LAFITE” (the “Cited Mark”) in class 33 Alcoholic beverages (except beers) (appl. date: October 10, 1996; reg. date: October 28, 2007). Query result from official website of State Trademark Office shows the Cited Mark is now in the process of revocation on the ground of non-use for three consecutive years.

On August 24, 2011, Ch?teau Lafite submitted an application to TRAB in order to revoke the Disputed Mark. On September 2, 2013, the TRAB delivered a ruling Shang Ping Zi [2013] No. 55856, while maintaining the Disputed Mark should be annulled. Because of disagreement, Golden Hope brought an administrative action before the No. 1 Intermediate People’s Court of Beijing. However, the Court decided to sustain the aforesaid decision after hearing. Golden Hope thus appealed against such ruling with the Higher People’s Court of Beijing. Upon review, the Higher Court opined that (i) With “拉菲” serving as distinctive part, the Disputed Mark completely consists of four Chinese characters “拉菲庄园”, whilst the Cited Mark is made up by foreign letters “LAFITE”; (ii) Significant differences exist in terms of appearance and pronunciation between the Disputed Mark and the Cited Mark; and (iii) Judging by available evidence, it is difficult to determine that before the application date of the Disputed Mark, the Cited Mark had gained popularity in Chinese mainland market and relevant public are able to distinguish the Cited Mark and “拉菲”. The former decisions (2013) Yi Zhong Zhi Xing Chu Zi No. 3731 by the Intermediate People’s Court, Shang Ping Zi, [2013] No. 55856 by the TRAB were subject to revocation.

If you would like some more personalized review of the news?from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw ~ Chinese IP Law Updates ~ n’ 2
29 July 2016

An Interpretation of Statistics Report on China Patent 2015(I)
Corporate-Owed“Dormant Patent”

Chinese?State?Intellectual Property?Office published Statistics Report on China Patent 2015(the “Report”) which contained statistics information throughout each phases of patent research and development, use, management and protection.

The Report brings to light some patent-related phenomena and issues. “Dormant patent” is particularly worthy of attention.

According to statistics, patents invented by enterprise and ultimately put into market consist of no more than 52.3%. In other words, nearly half of the corporate patents have not been made best use of by the inventors. Meanwhile, data shows the percentages of patent licensing and assignment in relation to active patents are 10% and 5.9%, respectively.

How to activate the “dormant patents” is a challenge that emerges in the process of enterprise patent management.

At the core of the problem are unusable patent resulting from unclear R&D purpose, patent quality insufficient to meet up with production demand, diminishing market demand for patented product, patent defense initiated by enterprise, patent hoarding policy etc..

To solve the problem, corporation can market patents in dormant status, boost the circulation (i.e. licensing, assignment) of such patents to yield economic benefits. On the other hand, small and medium enterprises which do not need patent defense may consider suspending the payment of annuity for the non-economically beneficial patent, so as to avoid cost accumulation.

If you would like some more personalized review of the news?from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw insights and publications for this month
26 July 2016

HongFangLaw Partner Eric Su and Bob Zhang, associate, discuss the protection of graphical user interface (GUI) design in China, by presenting the case of QIHU 360 vs. Jiangmin, looking closely into GUIs and design patents. With the development of technology and new online media, Graphical User Interface (GUI) acts as a very important role for man-machine interaction, affecting not only the extent of friendship of human-computer interface, but also the selection of products of users.

Follow this link for the whole article or see page 45~46 of July issue 2016 of Patent Lawyer Magazine.

downloads

HongFangLaw Partner Eric Su, discuss administrative enforcement, with an article focusing on the enforcement as ?an important remedy for design disputes. Administrative enforcement is a useful tool for resolving design disputes, but it remains underused by international design owners. Product design plays an increasingly important role in commercial competition, given that a well designed product is more likely to impress consumers with its appearance.

Follow this link for the whole article or see page 88~90 of July issue 2016 of World Trademark Review

WTR

HongFangLaw ~ Chinese IP Law Updates ~ n’ 1
22 July 2016

Are you registering your trademark properly? Let’s learn from the analysis of recent cases in the sporting equipment industry in China.

The Higher People’s Court of Guangdong Province has delivered judgment on “New Balance” trademarkright dispute. The decision is final and rules that besides a compensation totaling RMB 5 million, New Balance Trading (China) Co., Ltd. (“New BalanceCompany”) shall immediately cease and desist from infringing upon exclusive rights attaching to registered mark “New Balance”.

At sentencing, the Defendant not only faces high amount of compensation payable, but also irretrievably loses the “New Balance”mark.
Well-known sports brand “Under Armor” files an action concerning trademark exclusive right infringement against YAN FEI LONG Sporting Goods Co., Ltd. with Higher People’sCourt of Fujian Province. Media reports reveal the compensation requested by the Plaintiff is in excess of RMB 0.1 billion.

The issue “UnderArmor” has to address is far more complicated than trademark infringement itself. Without a doubt, the ongoing dispute will affect the brand’s normal growth in China market, together with further promotion and development on China soil in days to come.
However the lawsuit is not inevitable. If “Under Armor” could pay close attention to filings and uses of its mark and logo in China, Brand Owner can surely nip such disputes in the bud through legal procedures like trademark opposition,invalidity etc..

If you would like some more personalized review of the news?from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

Embracing Innovation Across Borders: A China and Australia Perspective
– An Australian Chamber of Commerce event report from HongFangLaw –
01 July 2016

HongFangLaw has attended yesterday the Austcham event focused on innovation development.

please find the official AustCham page here.

HongFangLaw has always supported the development of new applications and the innovation of the science and technology, both from Chinese nationals and foreigners companies that wanted to publish and share their work and insight in China.
HongFangLaw supports these new innovators by filing patents and utilizing all others Intellectual property practices that could help these developments.

On this note, we were invited to a special breakfast event to hear from two innovation experts – Professor Tim Kastelle hailing all the way from Australia and Dr Vicky Au sharing her insight on the grounds here in China. The speakers provided an overview of the Australian and Chinese government recent innovation strategies. In addition, they focused on how they affected company and economic growth.

IMG_1074

As the same time, they opened a discussion on the outlook of such strategies on Australia-China business relations.

Tim Kastelle is an Associate Professor in innovation at UQ Business School, and a leading consultant, facilitator, and expert on innovation. His broad work is on the impact of innovation on firm and economic growth, and the application of complex network analysis to innovation at the levels of the firm, region, sector and nation. Tim’s current projects include national innovation systems, how internal structures influence innovation outcomes in project-based firms, and internal networks within an organization and their impact on innovation performance.

If you would like to know more about Tim’s researches you can always check his blog on innovation here: http://timkastelle.org/

Vicky Au is a Director with PwC China based in the Shanghai office, and has specialized as a research and development tax advisor since 2007. She uses her previous experience in the government and higher education sectors to bring together different perspectives on R&D and innovation. Vicky has served as on panels for many Australian government innovation grants and awards, and for commercialization and entrepreneurship business school programs.

During the event, Tim focused on explaining his view on how an innovation should be developed and how we should all follow the lean startup approach.

The most important thing should not be to pursue only the “can I do this”, but also, and more importantly the “should I do this”, and what kind of use my new innovation could have in the world, and who could take advantage of this new innovation in the long run.

Much too often Startups and new ideas fail because the do not have a good application in the real world, and when an innovators has to start and instruct the public on the reason for his innovation, and so implying that the innovation was not requested and not obviously useful, he has failed on his task.

This has already been brought up to the innovation market, both internationally, and in this case for Australia and China, and a new mindset on who and when to found an innovation or idea. This we all hope will bring forth a new business model and a new formalized approach also from the side of the government in dealing with innovations in the future.

Vicky on the other hand, was more focused on the Tax exemption that could be reached using R&D departments inside one own company.

IMG_1071

Chinese and Australian governments alike have an interest in developing new technologies and innovations, and for this reason, they are trying to create reasons for companies and individuals to pursue more the development of new ideas and technology by integrating the use of R&D teams.

In addition, there is a huge focus on the protection of these innovations, thanks to the IP Ownership of said innovations, through the IP practice and protection.

For these reasons, we hope that law firms like HongFangLaw will become more and more indispensable to corporations and governments as a protection of their own intellectual property ownership became more and more fundamental.

This is all truer if we see what has been said during the 13th Five-Year Plan with president Xi Jinping reiterating his vision for an innovative China.

The 13th FYP Proposal contains five main principles underpinning the policies for China’s future development. None of these ideas is new, but has been put into one place for the first time. They are to work in tandem to achieve the overall goal of creating “a moderately prosperous society.”

The first principle is innovation, primarily as a driver of economic development. This is in order to shift China’s economic structure into a higher-quality growth pattern. This means finding new drivers of growth by promoting innovation and entrepreneurship, while simultaneously creating an environment conducive to producing Chinese national champions. The quest for innovation will be across the board from enterprises to government regulations.

This will mean new regulations of control of such innovations, and the development of a new set of rules for the IP practice and protection, and HongFangLaw will keep good track of this new developments to protect our clients on the best of our possibilities.

By Federico Bartolini

If you would like some more personalized review of the event?from us, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

138th INTA (International Trademark Association) just passed by, and HongFangLaw was there for you
03 June 2016

This year INTA was a huge success both in terms of participation and achievements, and topic discussed during the event, all in order to push forward the Intellectual Property practice globally.
International expert have taken part to the event and shared their insights on their own countries IP regulations and news.

HongFangLaw was part of the event, represented by our firm partners, Nikita Xue, Tiger Zhao, Eric Su and Irene Zeng.

Nikita Xue had a very active part in this year INTA as she was selected as member for International Trademark Association, Bulletin Committee, 2016-2017.

For this reason, we would like to give you in this report a short insight of what happened in this year INTA, also redirecting you to the news service of the INTA bulletin, in order to provide you with as many information as possible.

During the first day, 21st of May, the INTA has focused its attention to the problem of counterfeit, which lead to multiple talk sessions, in order to tackle the problem at its core. Multiple countries have brought their own solutions to the problem and experience on the matter.

You can read more on the INTA news bulletin related to the day here: Link

The second day, 22nd of May, the INTA focused more on the big issues founded in Asia and Africa, principally related to Trademark. Issues have been discussed around privacy and infractions in the Trademark industry in India, China and multiple African countries.

You can read more on the INTA news bulletin related to the day here: Link

The third day, 23rd of May, had instead a focus more on the company organization, both of legal firms around the globe, but also at big corporates. Suggestions on the correct or best approaches on how to build a respected team and how to protect one own company from fraud. Also how to create a good brand, with the support of the IP practice. In addition, was discussed how to deal with the online and internet presence of one own company.

You can read more on the INTA news bulletin related to the day here: Link

On the fourth day, 24th of May, were tackled issues related to non-traditional marks; how to deal with new inventions and how to protect the brand in the IP practice. A focus was made on the customs coming from Asian countries, as well as how to protect one company products with IP in a 3d printed future.

You can read more on the INTA news bulletin related to the day here: Link

Finally the last day of the INTA came about, 25th of May, were there was a discussion about ARIPO to call on users to try its improved system. Speakers pushed companies to pursue enforcement and anticounterfeiting practices. In addition, there were news on the front of the Chinese trademark laws that were promulgate 2 years ago, and on how they affected the market.

You can read more on the INTA news bulletin related to the day here: Link

Thank you for sticking with us during the report; we believe that the more information are shared inside the IP practice community, the best it is for the whole community.

If you would like some more personalized review of the event from one of our company partners, please kindly let us know by writing to: public.relation@hongfanglaw.com. Thank you.

HongFangLaw insights and publications for this month
31 May 2016

May 2016 was a very productive month for our partners and lawyers in the production of interesting and inspiring articles about Chinese IP law practice.

HongFangLaw has contributed and cooperate with multiple respected publications to share our knowledge and experience to the whole legal community.
This was made especially to support the INTA event of this year, and to share as much information as possible on the last year of Legal achievements in China.

Our Partner Nikita Xue, profile here, has provided an interesting view on how Judicial authorities differ on Trademark law Interpretation in her article on the CBLJ (China Business Law Journal) magazine.
You can find a preview of the article on the following link.
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Our Partner Zhang Xu instead, profile here, with the support of our colleague Jessica Li, profile here, have tackled an interesting article on Patent Law, with the new May issue of Patent Lawyer Magazine they shared A look at Chinese patent legislative trend from the perspective of Patent Law.
You can find a preview of the article on the following link.
downloads

Nikita Xue, profile here, has also decided to share some more insight on her trademark experience, by providing an ulterior article for the Trademark Lawyer Magazine, where she explored the Trademark usage for OEM’s: China SPC decision.
You can find a preview of the article on the following link.
download

We thank the support and experience of our colleagues, and their decision to share their words of advice, which will surely help others who wants to approach the Chinese legal practice, and we suggest to anyone interested in the topics discussed above, to read their articles.

If you would have any questions regarding the articles, and or, would like to communicate directly with our Partners, please send us an email to the following address, public.relation@hongfanglaw.com
Thank you

This year INTA is now in session, and HongFangLaw is an active part of it
22 May 2016

The INTA, or International Trademark Association is the global association of trademark owners and professionals dedicated to supporting trademarks and related intellectual property in order to protect consumers and to promote fair and effective commerce.

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HongFangLaw is now participating to the event from May 20th until May 25th. We will update you with our Firm’s achievement during the event.

If you wish to schedule a meeting with us, please kindly let us know by writing to: public.relation@hongfanglaw.com, and we would look forward to meeting you there. Thank you.

Participation to the 138th INTA Annual Meeting in Orlando
April 2016

HongFangLaw would take part to the 138th INTA Annual Meeting held in Orlando, Florida, USA from May 20th till May 25th, 2016 with the firm’s partners of Irene Zeng, Nikita Xue, Eric Su and Tiger Zhao.
If you wish to schedule a meeting with us, please kindly let us know by writing to: public.relation@hongfanglaw.com, and we would look forward to meeting you there. Thank you.

WD 40 Excellence Award

奖杯

2012

Nominated as “Best Service Provider” by AkzoNobel, Mr. Zhang Xu & Mr. Eric Su

2012

Recommended by Managing IP, Mr. Eric Su

2012

Recommended by Legal 500, Mr. Eric Su & Ms. Tiger Zhao

2014

Recognized as the only one for “Award of Excellence” by WD-40 Company, Mr. Zhang Xu & Ms. Nikita Xue

2014-2015

Nominated as “Global IP Star” by Managing IP, Mr. Eric Su

2016-2017

Selected as member for International Trademark Association, Pro Bono Committee, 2012-2013 & 2014-2015; Bulletin Committee, 2016-2017, Ms. Nikita Xue