Wednesday Whiskers

Miracles do happen, it seems. Despite several hurdles and a legislative calendar that was drowning in debt-related issues, the long-awaited US patent reform legislation passed the Senate vote on Monday. The Leahy-Smith America Invents Act (AIA) was passed unamended by the US Senate with a 89-9 vote (see previous AmeriKat and IPKat posts here). Once signed into law by President Obama, the bill will introduce several changes to the US patent system including harmonizing its first-to-invent system to a first-to-file system and ending fee diversion. AIA has been criticized by many as being overly burdensome to small independent inventors, will increase the number of provisional applications being made to the USPTO and would allow the Appropriations Committee to unduly control the fees generated by the USPTO. USPTO Director David Kappos heralded the passage of the bill, claiming that it will "...drive down the backlog of patent applications, and expedite the issuance of high quality patents - all without adding a dime to the deficit." Director Kappos proceeded to then walk on water.... Joking aside, the AmeriKat is excited about this new act and will be back on Sunday to report on the fall-out and commentary surrounding its passage.



The Rolls Building is nearing its opening day. For those IP litigators, like this Kat, the new £300 million Rolls Building will soon become a home-away-from-home as the Patents Court moves from the resplendent Royal Courts of Justice to its new home. You needn't spend long in the RCJ chambers and filing offices to hear comments about the new building - a mixture of views mostly punctuated by comments of how small the court rooms are, how some are being dragged across to Fetter Lane kicking and screaming and how no one will know where anything is [cue wandering judges and barristers looking for their lost court rooms, Merpel remarks cattily]. Then there is the elevator problem - only 3 public lifts (i.e. fitting only one clerk with the first set of disclosure bundles for your standard Chancery case - promises of e-filing be damned). The AmeriKat is more worried that, as with many new buildings, the air conditioning system will be out of control and set on a level that only pacing barristers can endure. There are rumors floating around about who will be the first IP case to grace the Rolls Building, but no concrete word until the doors first open this fall. The IPKat says that whoever gets there first should give the rest of us tips about managing the new building - flaws, free wi-fi, and all!


8+3 =11 big problems for HathiTurst, a partnership of research libraries and universities, including the University of Michigan . On Monday, the 11 strong contingent of authors' groups and individual authors including the Authors Guild filed a copyright infringement suit in the Southern District of New York against the libraries and universities claiming that their initiative to digitize millions of books without authorization constituted copyright infringement and posting the books online. The claim also objects to the partnership self-designating works as "orphan works" and thus self-permitting the digitization and use of those works. So far 9.5 million books and journals have already been digitized with around 30% of those works being in the public domain. The twist in the story is that the executive director of the partnership, John Wilkin, stated that the digitized works were provided by Google. IPKat readers will remember that last March, Judge Denny Chin rejected the proposed settlement in the Google Books litigation (more here) in a similar dispute. A hearing is schedule for tomorrow in the Google Books case.


On Tuesday, IPR2, better known as the EU-China Project for the Protection of Intellectual Property Rights, between the European Commission, EPO, OHIM and the Ambassador of the People's Republic of China to the EU formally came to a close. The closing ceremony of IPR2 comes at the end of a four-year 16 million Euro joint project. Under IPR2 European and Chinese officials, judges, legislators, experts and academics implemented technical assistance and training activities across China. The parties have agreed to continue their cooperation [what else would you expect?, says Merpel] Would you like to see the what 4 years and 16 million Euros can get you? Well you can't, at least not yet... But while the database is being built, there is a collection of a hodge-podge of documents from the project here.

Many of the IPKat's beloved readers will be in or journeying to Baveno, Italy for this year's annual MARQUES conference (Kat Jeremy is currently stalking the Italian venue.) Today's MARQUES conference agenda, for those Kats and readers who are not so lucky to travel to Italy this week, is premised on "Reality Checks" - reality check on costs, reality check on trends and reality checks on function. The last check is a topic being discussed after lunch entitled "Reality Function" and is promoted as an "update on legal analysis on the trade mark function." For those attendees whose brain activity does not decrescendo following a hearty pasta and foccacia lunch, please let the Kat know what panel suggest is "the trade mark function" in European trade mark law.

China, IP enforcement, trade fairs and trade marks

China: are we progressing from unfair to funfair?

The IPKat's recent posts on IP enforcement in China have, not unsurprisingly, generated a good deal of interest and comment (see here, here, here and here).  Adding fuel to the fire of readers' interest is the IPKat's friend Michael Lin, who tells us:

"IP Enforcement at ChineseTrade fairs is possible, and relatively easy at the larger fairs -- if you have the proper documentation ready. This is because all Chinese trade fairs that last three days or longer are required to have an IP officer on-site to handle infringement complaints.

While this is an Administrative action, and not a court action, it pays to have the documents notarized and legalized, at least on the patent side. Trade marks officers may have looser requirements, and one should always check out the actual requirements of the trade show you intend to attend.

The required documents include, as originals (the IP right) or legalized copies (other documents):

• the IP right;
• a certificate of incorporation/good standing of the IP Right owner if it is a company. If the owner is an individual, proof of identity is needed;
• a certificate of legal representation, testifying as to the identity of the legal representative;
• a power of attorney signed by the legal representative, giving a named person the right to enforce the IP;
• Chinese translations of all the above.

Other documents may be required, depending on the requirements of each trade show. While legalized documents are not always needed, if they are legalized the officers have no excuse to refuse a request for enforcement.

The Canton Fair in Guangzhou (allegedly the largest export trade fair in the world), with which I am most familiar, always has groups of trade mark and patent officers in attendance. Following submission of the documents and the filing of a complaint identifying the specific booth(s) showing the allegedly infringing article(s), the officers will go to investigate. If they find the items, they will order the booth to remove them. If the booth contests the charge and/or the IP, they will have 24 hours to present the evidence.

In extreme cases, the officers can close the booth and, for repeat offenders, they can prevent them from displaying at the next show. In my experience, trade marks are the easiest to enforce, then designs, and finally utility models and patents.

If people want to enforce their IP in Chinese Trade Fairs, especially the larger ones, it is definitely possible. But it is worth it for IP owners to check what specific requirements there are at that specific trade fair, and to have the proper documentation ready well in advance.

Alternatively (or concurrently), some IP owners attend in order to collect evidence of infringement. By bringing a Chinese notary to the fair, you can gather notarized evidence that may be used in a future Chinese litigation or administrative enforcement action. IP owners can also find out other useful information, such as infringing manufacturers, sellers and volumes".

Michael has also provided a copy of the 6 May 2011 Consultation Paper on Measures for Protection of Intellectual Property Rights Involved in Exhibitions, which you can download as a Word document here.


Meanwhile, from the ever-excellent Paul Jones (Jones & Co., Toronto) comes news of a sudden development in the process for revision of China's trade mark legislation.  He writes

"The third set of amendments to the PRC Trademark Law Have been under way for some time, with several consultations having being conducted by the PRC State Administration for Industry and Commerce .... Eventually the draft was finalized and passed to the State Council ... for review and approval before being sent to the Standing Committee of the National People’s Congress (the legislature) for debate. However last Thursday the State Council Legislative Affairs Office posted a draft online for public comment (in Chinese) here.

Comments are due October 8, 2011.

According to a brief article (in Chinese) on the web site of the State Intellectual Property Office, revisions have been made to allow sound marks and to limit the use of geographical names, both Chinese and foreign".

Paul adds that generally the proposed amendments are considered a significant improvement and that it is good to see them move forward through the legislative process.

The IPKat is delighted to see that the position of rights-owners, both foreign and local, appears to be improving. Let's see if the results match the good intentions.

Apple and IKEA in China: is it just a matter of accepting the loss?

The IPKat's recent reports here and here on the Chinese "shoplifting" of Apple and IKEA store formats may not have won him many friends among the Chinese authorities (this weblog is not currently accessible to Chinese readers), but they have reflected the anxieties and concerns of intellectual property owners as to the adequacy of IP protection as well as the mores of the Chinese business community.  In this context, the sage words of Paul Jones (Jones & Co., Toronto) are always worth noting, even though the IPKat and Merpel do not always agree with them. In "Branding in the Far East: The Fake APPLE and IKEA Stores in Kunming Do Not Tell the Whole Story", a piece written for an (unspecified) magazine, he says:

"... Despite the impression left by the fake APPLE and IKEA stories, China actually has intellectual property laws that meet international standards [Merpel notes that having IP laws that meet international standards is a necessary condition of IP enforcement but not a sufficient condition: 153 World Trade Organization members have IP laws that meet international standards -- but she wouldn't fancy her chances of enforcing her rights in every single one of them]. The courts do enforce the laws and most Chinese courts in the more advanced regions have separate divisions for intellectual property cases. These divisions also handle Anti-Monopoly Law cases and franchise cases, and are considered the more sophisticated and elite divisions of the courts. The courts have made posting their decisions online a priority and tens of thousands of IP decisions are now available online, albeit in Chinese [This is of course good news, particularly for those of us old enough to remember how much worse things were a couple of decades back].

The fake APPLE and IKEA stores discovered in Kunming, the capital of Yunnan Province, were obviously in violation of the law. In the case of the fake APPLE store, although it sold real APPLE products, it used the APPLE trademarks that had been registered in China, which is a breach of the PRC Trademark Law. There have been court decisions in China on how much use a re-seller may make of the name and trademark of the manufacturer of the goods. Two of the more notable ones, involving PORSCHE (北京泰赫雅特汽车销售服务有限公司诉保时捷股份公司(Porsche AG), 北京市高级人民法院 民事判决书 （2008）高民终字第326号 (issued December 19, 2008) and available online here and HARLEY-DAVIDSON (H-D密执安公司诉北京哈雷商贸中心, 北京市第二中级人民法院, （2007）二中民初字第10758号 – November 25, 2008, available online here, were decided in 2008. In the PORSCHE case, the dealer’s unauthorized use of the “PORSCHE” and the logo in its exhibition hall, on the automobiles in the exhibition hall, and in its brochure infringed the German manufacturer’s trade mark rights.

In addition both the fake APPLE store and the fake IKEA store were in breach of the PRC Anti-Unfair Competition Law (反不正当竞争法 (“Fan Bu Zhengdang Jingzheng Fa”) adopted at the 3rd Session of the Standing Committee of the 8th National People’s Congress on September 2, 1993 and effective as of December 1, 1993. Available online here. Article 5 provides that business operators shall not make :

unauthorized use of the name, packaging or trade dress unique to well-known products or use of a name, packaging or trade dress similar to that of well-known products, thereby causing confusion with the well-known products of another party and causing purchasers to mistake the products for such well-known products.

The leading case here is the Ferrero chocolates case that was ultimately decided by the Supreme People’s Court in 2008 (蒙特莎（张家港）食品有限公司诉意大利费列罗公司（FERRERO S.p.A），中华人民共和国最高人民法院，（2006）民三提字第3号 ， March 24, 2008, available online here. Clear plastic boxes and gold foil are not uncommon elements in the packaging of chocolates but the court held that the Chinese party had copied Ferrero’s packaging. Thus despite the fact that that the Chinese party had been using such packaging for 16 years before Ferrero took action, and had won several awards in China for their products, the Chinese party lost.

Then why were there fake APPLE and IKEA STORES in Kunming?

Kunming is the capital of Yunnan Province, in the far south of China. The province borders on Vietnam, Laos and Myanmar. It is thus far inland and is not one of the richer coastal provinces where foreign retailers first open their stores. But Kunming Prefecture has about 6 ½ million people. In other words there is demand there but no supply. [If there is demand, is it for the goods or is it for the format of the stores?]

Intellectual property rights are private rights of the owner, and thus the primary responsibility for enforcement lies with the owner. In China the State Administration for Industry and Commerce (“SAIC”) will assist with enforcement in straightforward cases, and apparently even without the cooperation of Apple the SAIC did close the fake stores. In the U.S. and Canada for example, the U.S. Patent & Trademark Office and the Canadian Intellectual Property Office will provide no such assistance with enforcement [Merpel leaves it to readers to consider whether this unfavourable comparison is fairly made, given the respective circumstances of the jurisdictions concerned -- and noting how few are the complaints in the US and Canada about the egregious "lifting" of trade mark-protected retail formats]. 

It is unlikely that the fake stores were causing direct damages to either APPLE or IKEA by taking away sales. Their stores in China were several hours away by air. While their trademark rights were diluted to be sure, some famous international brand-owners choose not to enforce their rights against pirates unless they are actually losing sales. It is in the end an economic issue. [Presumably this is all right then. And if Apple and/or IKEA wished at some later stage to open a store in the area, it wouldn't have to adopt a different format, would it, to avoid the charge that it was deceiving customers into thinking their real stores were in some way connected with those of the not-really-damaging, little-bit-diluting infringers?  It's also true to say that "some famous international brand-owners choose not to enforce their rights against pirates unless they are actually losing sales" -- but isn't this because their enforcement budgets are finite, which means they have to be selective in whom to sue?].

Is branding in China only for the adventure-seekers? Not really. Going to China should be an economic question. Because there is still a lack of “market order,” due diligence and enforcement costs will be higher than in markets in the developed world. In part because China is a lower middle income country, prices and margins may need to be lower, despite the higher due diligence costs. But China is a very large market, and a number of retailers are finding that despite the thinner margins, the large volume of sales can make China a good country for their business".

The IPKat says, Paul is more knowledgeable on China IP issues than practically anyone he can think of, and he has an unusual degree of sensitivity to the unique and sometimes delicate Chinese IP eco-system. However, his words of explanation are unlikely to bring much comfort to brand owners, or at least to those who are uniquely sensitive to the need to police and enforce their greatest asset.

The Ultimate Fake-Out: the Apple Stoer

This Kat has seen a number of genuine-looking counterfeit goods in her IP practice.  However, three Apple Stores in Kunming China appear to have taken faking it to a whole new level. Instead of just knocking off a convincing copy of the latest Apple gadget, blogger BirdAbroad has reported that some Chinese counterfeiters seem to have gone one step further and have actually replicated an entire Apple Store. The fake-out was so good that apparently some of the employees thought that they were working in genuine Apple Stores.

At a glance, according to BirdAbroad, the three stores in Kunming resembled a typical Apple Store. The employees wore blue t-shirts with official-looking Apple name badges around their necks. The goods were presented in the usual way so that customers had easy access to try them out. There was a winding staircase leading to an upstairs seating area.

On closer inspection by BirdAbroad, all was not as genuine as it seemed. One of the store signs reads ‘Apple Stoer’ instead of just bearing the Apple logo. The walls were not painted properly. The winding staircase was of poor quality.

According to the Apple website, there are only four official stores in China. All of these are located either in Beijing or Shanghai, not Kunming. Apple also has a network authorised sellers in China, including one seller in Kunming. However, this was not one of the three stores named by BirdAbroad.

Fortunately, the Chinese authorities and/or Apple have sprung into action. Chinese official news outlet Xinhua states:

"Kunming launches inspection on fake 'Apple Stores'

Industrial and commercial authorities in Kunming, capital city of southwestern Yunnan Province, on Friday started an inspection on all the city's electronics stores.

The inspection is carried out after three stores, self-named "Apple Stores" yet never authorized by the Apple Inc., were exposed via the Internet.

The inspection includes business licenses, authorized permits of brand use, and the purchase channel of each store, said a worker with the city's industrial and commercial department.

The inspection result will be announced to the public soon, the worker said.

The three alleged fake "Apple Stores" were discovered by a traveling blogger named BirdAbroad, who posted photos and challenged the stores' legitimate status and rights to use Apple's logo".

The IPKat thinks that there is never a more apt moment to remind readers of the Chinese word for fake or counterfeit: shanzhai (pronounced SHAN-JAI and previously mentioned on this blog here).

The ever-cautious Merpel is going to pay extra special attention next time she is in the Apple Store in Regent Street in London, just to be on the safe side ...

Litigating IP in China: a word of advice regarding evidence and proof

No-one handed the corporate seal over, so he took
himself off to the sea-side for a little break

The importance of adequate preparation of one's evidence in IP or indeed any other litigation is so blindingly obvious that we should never need to be reminded of it.  However, the IPKat's talented friend Paul Jones (Jones & Co., Toronto) has just drawn his attention to the good news that the need to get one's evidence property sorted out has been recognised as far afield as China.  This is illustrated by a decision of the Beijing No.1 Intermediate People’s Court dated December 10, 2010 and posted online here on 29 January of this year, According to Paul, 

"The plaintiff was a Taiwanese company that had a trade mark, ZHENGLIN & Design, that it used in Taiwan. In the early nineties the principal of the Taiwanese company, Lin Ken, incorporated a company called Lanzhou Zhenglin Land Reclamation Food Co., Ltd. (兰州正林农垦食品有限公司 -- “Lanzhou Zhenglin”) with some local partners in Gansu Province, a poor province in the north west, along the route of the old silk road, in order the develop supplies for export and for the PRC market. The PRC company registered the mark in China.

There was a falling out and in August of 2007 the principal of the Taiwanese company, Lin Ken, was removed as President. He disputed that decision and refused to hand over the corporate seal. In China the corporate seal or “chop” is a very important indicator of the authority of the corporation, unlike in North America.

The plaintiff then claimed that the PRC company, Lanzhou Zhenglin, should not continue to use the marks. The plaintiff claimed that the right of Lanzhou Zhenglin to register the marks in the PRC was based on an “Authorization Letter” and Trademark License and Renewal Letters dated 1993, 1999, 2004 and 2008. He presented copies of the letters to the court. But he lost. 

Article 49 of a Supreme People’s Court rules on evidence of 2001 provides that the other party has the right to demand that the original document be submitted. But all Mr. Ken submitted was a photocopy notarized by a law firm in Taiwan in 2008. The Taiwanese law firm carefully limited its authentication to the signature and seal. It did not say that it had compared the copy to the original and that they were the same. It did not talk about the dates on the letters. Interestingly the letters were also stamped with the seal of Lanzhou Zhenglin, the seal that Lin Ken had refused to hands over in 2007.

The Plaintiff claimed that the originals of the letters were in the office of Lanzhou Zhenglin, to which it had no access. In the PRC courts there is no discovery as there is in North America and the defendant was under no obligation to produce evidence to help the Plaintiff. The plaintiff also claimed that a copy was in his home in Lanzhou (the capital of Gansu Province), but the documents there had been seized by the police as part of an action against him regarding misappropriation of the assets of Lanzhou Zhenglin. Interestingly the police records did not show that such letters were among the items seized.

Article 69(4) of the SPC rules on evidence states that photocopies may not be used as evidence if they cannot be verified as against the original. Mr. Ken lost his claim for the trade marks in the PRC.

Were there ever such  authorization letters? Certainly it is not uncommon for business people to forget about such details when setting up a company that they control. But even if the letter existed, the plaintiff did not take the necessary steps at the time that the letters were written to ensure that they would be effective evidence in court.  Remember that in China, as in many other civil law jurisdictions, there is no discovery in litigation. You have to collect your own evidence, usually before you start the lawsuit.

So when the agreements are entered into the parties should have them notarized in China. They should be careful to ensure that the “legal representative” (法定代表人) signs on behalf of the Chinese company. The legal representative can be held personally responsible for the actions of the corporation. There is no similar concept in North America. And use a seal. If your company does not have one – buy one.  Finally trade mark licences and other IP licences should be registered. That was obviously not done in this case.

In China litigation generally is all (or at least mostly) about the evidence. The court rely more on documents than they do on oral testimony. And the rules of evidence and the courts are stricter about documentary evidence than in North America. And there is no discovery to help you out.

So the rule in Chinese litigation is “Be Prepared.”

Says the IPKat, much has been said about the difficulties of enforcing IP rights in China -- but the usual story for a very long time has been that it's somehow always the fault of the Chinese and their system.  One rarely hears people saying that the reason why they lost was that they had failed to comply with local rules, gather the necessary documentary or other evidence etc.  Absence of a procedure for discovery may be thought to be a nuisance or a misfortune by some, but there are plenty of reputable jurisdictions that manage without it -- Germany, for one, is not exactly a paradise for those seeking discovery.  This little tale should be taken to heart; it contains some sound advice.

Seal recipes here and here

Why do Chinese academics file so many patents?

A few weeks ago this Kat published her first report from the Global Forum on Intellectual Property. This report included a summary of Professor Williamson's (University of Oxford) presentation which showed a variety of pie charts, one of which that indicated that as much as 23% of patents applied for were from academic institutions in China, compared with only 7% in the US. This Kat, now fervently watching the academic patent debate with the Stanford v Roche patent battle now before the Supreme Court (reports here and here), asked whether readers could explain why there was such a higher per cent of academics filing patents in China. The IPKat called and her lovely readers answered in the form of Michael Lin of Marks & Clerk (Hong Kong). Writing from his personal opinion and not in his professional capacity, Michael says this:

"The reasons why you are seeing such a large increase in Chinese Patents filed by Academics is that for them 1) it's free and 2) they get academic credit for it. Filing patents is encouraged by the Chinese Government and Academia. The Chinese Government has given Universities (as well as local companies) funds for filing patents in order to spur innovation - one measure of which is the number of patents filed by China, as a country. Also, the Chinese Universities are ranked against each other according to how many patents they've filed. As a result, Chinese Universities have adjusted their tenure requirements and expectations such that professors who want to advance are virtually required to file patents as well as to publish papers. In one specific University I know of, filing a patent is "worth" 3 published papers. This practice has been around for at least 2.5 years. Thus you are seeing (proportionally) a very large number of Chinese Academics filing patent applications in China.

Notice all of this relates to filing patent applications - there is no discussion above about actually getting them granted, or any other such matters.

This is also a major factor as to why there is such an amazing increase in Chinese Patent filings (in the Chinese Patent Office) in 2008-10, while filings everywhere else in the world were dropping."

The reason for these incentives could be tri-fold. Economically the programs of incentives are part of China's 50-year technology plan which is confirmed by the National Patent Development Strategy released a few weeks ago (click here to see the English translation). Politically, being able to show an increasing number of patent filings to the rest of the world can be seen to legitimize China's dedication to IP and IP protection - an area which they are oft-criticized. The third reason is that socially, the Chinese Government realizes that it is essential to shift from a manufacturing economy to a research & development economy, which may help pacify rising dissent in the countryside. By increasing, or at least showing, an increasing level of innovation this may also instil in the Chinese public a sense of pride and nationalism (see, the Beijing Olympics).


What is missing from the data, and as the IPKat identified during Professor Williamson's speech is how many of these filings result in grants? Further, how many of those grants enter countries via the Patent Cooperation Treaty (PCT)? Do such numbers exist?

And what do UK and US academics think about a system where their academic standing can be judged by how many patents one files?

The IPKat would like to thank Michael for his e-mails and invaluable insight into an area that many of us on this side of the world seldom have an opportunity to explore.

DMCA review and iPhones; Chinese font copyright case

Mobile and iPhone locking v. the DRM

Every three years the US Copyright Office reviews whether there is a need to provide further exceptions to the digital rights management provisions of the Digital Millenium Copyright Act. This process will next take place in 2009 and cellular news reports that the US-based Electronic Frontier Foundation has filed a request for an exemption to cover ‘jailbreaking’. Before law and order fans start tut tutting, ‘jailbreaking’ is the process of unlocking iPhones so that they will run software that does not originate from Apple. The EFF has made a similar application to continue an order which allows those who own mobile phones to unlock them so that they work on other networks.

The IPKat thinks that this is quite right and sounds like the sort of practice that would be stopped by competition law if copyright law doesn’t get there first. However, if you make is harder for service providers to ‘hook’ customers by giving them cheap or subsidised handsets, it is likely that the providers will recoup their profits elsewhere – probably by making the handsets reflect something more like their true market value.

EFF press release and documents available here.

Chinese font copyright case

The IPKat has learnt from People’s Daily Online that Founder Electronics has sued Procter & Gamble (Guangzhou) for copyright infringement. The claim is that P & G infringed Founder’s copyright in its fonts by using Founder’s “Qian style” and "Cartoon style” fonts on 55 P & G products (including the one pictured) and publicity material. The case is before the People’s Court in Beijing Haidian District.

The IPKat reckons that this is one to watch. It’s rare that font copyright cases come before the courts.

Phony Sony -- or 索爱

The IPKat's friend Paul Jones is a formidable character. Paul has the responsibility for preparing the section on IP in China for the ABA International Section’s Year In Review. In the course of making his preparations he came across a case involving Sony Ericsson that is of great interest to foreign companies doing business in China, particularly those threatened by bad faith registrations in China. He writes:

"A number of famous marks have had problems in China with bad faith registrations by third parties. If somehow the registration of the mark in China has been overlooked, the third parties will register the mark in the Latin alphabet. And if not they will try to register the Chinese characters. It is always important to develop and register a Chinese character version of the brand.

Sony Corporation has a long history of doing business in China, and its Chinese character name, 索尼 (pronounced “suo’ni”) is well recognized. Ericsson was founded in 1876 in Sweden and it too has an established Chinese name, 爱立信 (pronounced “ai li xin”). But in 2001 when they formed a joint venture to manufacture and sell mobile phones a trade mark problem developed in China. How would the new venture, Sony Ericsson, be written in Chinese characters?

Unfortunately for Sony Ericsson a PRC businessman in the electronics industry saw the answer faster than their trade mark counsel. Liu Jianjia from Guangzhou in southern China filed an application to register the mark “索爱” (pronounced “suo’ai”) with respect to DVD/CD players, mobile phones, speakers and entertainment goods, cassette players and the like on March 19, 2003 (No. 3,492,439). Sony Ericsson opposed the application but the mark was registered on August 7, 2004. Sony appealed to the Trade Mark Review and Adjudication Board (“TRAB”) but it lost again. China is a first-to-file jurisdiction.

Sony Ericsson then appealed the TRAB decision to the Beijing No.1 Intermediate People’s Court. The decision, dated August 10, 2008, is available here.

Sony Ericsson had put forward three reasons as to why Mr. Liu’s registration should be expunged. The first reason was that the registration was contrary to Article 10, first paragraph, (8) of the Trade Mark Law. This provision denies registration to marks which are “detrimental to socialist ethics or customs, or having other unwelcome influences.” The court in a somewhat incredulous manner said that while the dispute has a certain public interest, its impact does not reach the field of ideology or the political system.

Secondly Sony Ericsson said that there mark was “well-known.” But the Chinese version of the joint venture, and the plaintiff in this case was known as “Sony Ericsson Mobile Communications Products (China) Ltd.” (in Chinese - 索尼爱立信移动通信产品（中国）有限公司 – Suo’ni Ailixin Yidong Tongxin Chanpin (Zhongguo) Youxian Gongsi) and had only been in existence for a short time, and the evidence to prove such status was insufficient. So Sony Ericsson lost on this point also.

Thirdly Sony Ericsson argued that the registration was contrary to Article 31 of the Trade Mark Law, which provides that "No applicant for trade mark registration may infringe another person’s existing prior rights, nor may he, by illegitimate means, rush to register a trade mark that is already in use by another person and has certain influence'.

Sony Ericsson had advertised on the internet in China from December 2002 using the mark “索爱.” The Court took note of the fact that, to a Chinese speaker, the name 索尼爱立信 (Suo’ni Ailixin) is cumbersome. It is very common in Chinese to shorten such names or phrases by using the first characters of each word. Thus the Court said that the abbreviation of Sony Ericsson to “索爱”would be very natural (其简称是非常自然的). Accordingly it is not surprising that most Chinese would consider the mark “索爱” to suggest goods that are associated with Sony Ericsson.

The Court said that the purpose of Article 31 is to prevent violations of the principle of good faith (“诚实”chengshi). This is a key principle of China’s civil law system and is enunciated in Article 4 of the General Principles of the Civil Law. The Court said that the joint venture between Sony and Ericsson was widely reported in the press and that therefore Mr. Liu would obviously know about it. Therefore his actions do not have a clear legitimacy (不正当性). Mr. Liu’s application for the mark was in violation of the principle of good faith.

Accordingly the Court ruled that the decision of TRAB in favor of Mr. Liu was overturned and that the opposition by Sony Ericsson to the registration of “索爱” by Mr. Liu is to be reviewed again by TRAB.

It should be added that the currently proposed amendments to the PRC Trade Mark Law include a new Article 7 that requires that all applications for and use of a trade mark be undertaken in good faith (诚实)".

The IPKat is heartened to see that things are gradually moving in the right direction. Merpel is less optimistic. This is good news for big companies whose activities are highly publicised in the media, and who have the resources and the patience to press their case -- but how would things work for a smaller, less well known and less persistent enterprise?

Changes to Chinese patent law in the offing

China Daily reports that amendments to the Chinese Patent Law have been speeded up following the adoption of the Chinese National Intellectual Property Strategy. Amendments include:

1. 1. the introduction of an absolute novelty standard – inventions will need to be novel worldwide, and not just in China;
2. 2. streamlining the patent application process to encourage more Chinese inventors to apply for patents;
3. 3. removing the requirement that Chinese legal and natural persons must first apply for patents in China before making foreign applications;
4. a compulsory licensing scheme where a patent has not been sufficiently exploited within three years of grant, or has been abused by the grantee
5. changes to the damages regime.

The amendments have been submitted to the National People's Congress (NPC) Standing Committee for a first reading, but would require two further readings to be passed.

The IPKat welcomes the changes, which appear to put China more in step with the international position, while at the same time addressing Chinese social concerns.

Gold in China; Mother wins round 1 of YouTube dancing baby case

Another British success in China

No, it's not the Olympics, but rather the news in the Scotsman that the Scotch Whisky Association has succeeded in gaining geographical indication protection in China for the term 'Scotch Whisky'. China imports 17 million bottles of Scotch a year.

The IPKat is too busy celebrating this Scottish triumph in traditional fashion to comment.


Fair use take-down victory

The LA Times reports that Stephanie Lenz, a mother who posted a clip of her baby dancing to the artist formerly known as the artist formerly known as Prince's song, 'Let's Go Crazy' has won the first stage of her battle against Universal Music (see earlier IPKat post here). Ms Lenz's clip was removed from YouTube after the site received a takedown notice under the Digital Millennium Copyright Act from Universal, the holder of the copyright in the song. The clip was reinstated after a month, but Lenz sued under the DMCA, pointing to the requirement therein that copyright owners can only demand the taking down of a work if they have "a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law."

Universal argued that copyright holders, in making this assessment, did not need to take into account whether the use made by the subject of the notice was fair use, since fair use is a defence, rather than a legal right. Not so, according to Judge Jeremy Fogel, who states:

"Even if Universal is correct that fair use only excuses infringement, the fact remains that fair use is a lawful use of a copyright. Accordingly, in order for a copyright owner to proceed under the DMCA with “a good-faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent or the law,” the owner must evaluate whether the material makes fair use of the copyright. 17 U.S.C. § 512(c)(3)(A)(v)."

However, he went on the conclude that Lenz was unlikely to win the case at full trial as she would need to show subjective bad faith on the part of Universal, i.e. that when it issued the takedown notice, it knew it was making a groundless threat of infringement.

The LA Times observes that the need to evaluate fair use will make it difficult for copyright owners to use automated 'bots to root out works which borrow from copyright works and issue take down notices ('bots can't evaluate whether use is fair).

The IPKat reckons that this is a good decision. On the whole, copyright owners are likely to be in a better position to evaluate fair use than individuals who post materials, and hosting sites, if forced to evaluate fair use may take a risk-averse strategy that would prevent them from allowing many socially useful works. The IPKat reckons that unless copyright owners are forced to evaluate fair use, many works which constitute fair uses will just disappear if made the subject of take-down notices since only exceptional individuals like Ms Lenz will persevere in getting their work reinstated.

Chinese hotel liable for sales by shop; Apple opposes Hamburg recordings

The IPKat offers his thanks to Birgit Clark for drawing his attention to this link to some good news for the much-faked Louis Vuitton brand. The news is that the Intermediate People's Court in Dongguan City (southern Guangdong Province) has held a five-star hotel responsible for leasing space to a seller of knock-off Louis Vuitton products. The hotel was ordered to pay 100,000 yuan (US$ 13,888) together with the shop manager. Injunctive relief and destruction of infringing products was also ordered. Sadly those who like transparency -- or who just want to stay there -- the court documents didn't name the hotel, but they did record that the hotel collected a monthly rental of 20,000 yuan from leasing the shop, whose sales staff wore hotel uniforms. No public apology was however ordered, on the basis that the hotel hadn't caused the brand widespread market harm.

The IPKat is impressed with this decision, which looks like it's based on something between vicarious liability and ostensive agency. Merpel says, next time the hotel should dress the sales staff as pirates. That way it should escape liability ...


Another of the IPKat's trusted friends, Ben Challis (of Music Law Updates fame), has emailed him with details of the Beatles' company Apple Corps' plans for legal action against Miami-based Fuego Entertainment, which proposes to release live recordings of the Beatles singing various cover version during their pre-fame residency days in Hamburg. Fuego announced in January that it had acquired the rights to the live recordings off producer and promoter Jeffrey Collins, who claims to have represented the DJ who actually recorded the live Beatles show at Hamburg's Star Club in 1962. The recordings include Paul McCartney performing Hank Williams' 'Lovesick Blues' and McCartney and John Lennon singing together on 'Ask Me Why'.

The copyright situation regarding the recordings is a bit hazy. Collins says the DJ who recorded the gig had permission to do so from the venue, though it seems unlikely the band gave their go-ahead - but crucially these aren't dodgy 'audience member takes tape player into back of venue' recordings. Collins and Fuego both seem convinced the recordings can be released without infringing the copyrights of the band who appear on them, presumably because technically speaking - assuming you accept the recording was sanctioned - the sound recording copyright would originally belong to whoever made the recording, in this case Collins' DJ.

Apple however intends to sue, alleging that the recordings were unauthorised. Moreover, in the terminology of trade mark law, release of the live recordings would "dilute and tarnish" the band's memory because, says Apple, the recordings are of a poor quality.

The IPKat hopes to monitor the progress of this dispute, with a little help from his readers.

Beatles in Hamburg here
How to make a perfect Hamburger here

IFPI bests Yahoo!China in Higher People's Court

The IPKat has just received an informative press release from Rouse International, headed "IFPI wins the ‘illegal music download’ cases against Yahoo!China". It reads, in relevant part:

"On 20 December 2007, the Beijing Higher People’s Court made its final judgment in the case of 11 sound recording companies (all members of the IFPI, International Federation of Phonographic Industries) filed against Yahoo!China. It found Yahoo!China liable for copyright infringement as it provided links to sound recordings which it ought to have known were infringing.

The Beijing No.2 Intermediate People’s Court made the first instance judgments in favour of the claimants in April. This was on the grounds that Yahoo!China failed to remove the infringing links in question, and was assisting the copyright infringement of others.

Yahoo!China appealed the first instance judgments, and argued that as a neutral search engine provider they should not bear any liability.

The Beijing Higher People’s Court upheld the first instance judgments and found Yahoo!China liable as it had participated and assisted in the infringement of others. It was also held to have had subjective fault. One of major breakthroughs is that the court held that Yahoo!China has obligation to remove all links of infringing sound recordings, not only the links which the specific URLs are provided. The failure of this was deemed an “obvious indulgence” of infringement.

[The IPKat notes: there then follow the usual lawyer-quotes about what a good decision it was]”

The IPKat hopes that a full version of the decision, in English, will soon become available so that we can all study its ramifications. What exactly is the degree of responsibility of Yahoo!? Is it as a search engine provider or as a host? Is its duty merely to remove links once it knows about them, or does it have to verify their status in advance? What implications does this have for businesses that generate and host content, and for consumers? We must have the chance to find out. Merpel adds, well done Rouse International. For years they have been working hard in all sorts of places that we western kats need loads of vaccinations for. Their specialist knowledge and experience in many Asian jurisdictions has been acquired with great effort and we all benefit from it.

Danone loses Wahaha dispute

Forbes has just reported that China's Hangzhou Arbitration Commission has ruled in favour of Wahaha Group in its highly-publicised trade mark dispute with Groupe Danone (see brief note by the IPKat here). Apparently Danone failed on a technicality, having failed to meet a filing deadline. As a result, the 'Wahaha' brand was ruled to belong to Danone's Chinese joint venture partner. A Danone spokesman has told the local press that it has yet to receive the ruling.

This is not the end of the story. Danone and Wahaha are also involved in proceedings with the International Arbitration Commission in Sweden; the case will be heard in mid-December. Danone has claimed that Wahaha was undermining the joint venture by producing items identical to the JV's products and then selling them outside the agreed channels. Wahaha has itself complained that Danone was trying to seize control of the Wahaha brand.

The IPKat feels that there are issues here in terms of JV negotiation and management. The parties obviously have quite different expectations as to what their cooperation was expected to achieve; IP lawyers can't remove those differences, but it is their duty to reflect as accurately as possible the intentions of the JV partners and explain to them, in advance of the agreement, what it will bind them to. Merpel adds, am I alone in finding it uncomfortable to contemplate a JV that is subject to arbitration before two different bodies, on different continents, at the same time? Or is there something missing in the news report but which explains why this should be either possible or necessary?