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Chinese Intellectual Property Rights and Enforcement

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					Chinese Intellectual Property Rights
                   and Enforcement

                                 Antony Craggs
                                      Associate
                          Intellectual Property
                              Wragge & Co LLP
    Wragge & Co LLP: General

    Background:

      –   We are a leading European law firm providing legal services to clients worldwide.


      –   We have over 110 partners and more than 500 qualified legal staff.


      –   We advise on all aspects of corporate and commercial work.


      –   We are specialists in all aspects of intellectual property including patents, designs, trade
          marks, unfair competition / passing off, copyright, database rights, marketing and
          advertising.




    Antony Craggs, Associate
    Wragge & Co LLP: Intellectual Property
    General
    Intellectual Property Specialists:


      –   European High-tech Law Firm of the Year 2009 - Managing Intellectual Property.


      –   No 1 UK National Firm – Legal Week Client Satisfaction Report 2009


      –   Runner-Up TMT Team of the Year 2009 – The Lawyer Awards 2009


      –   UK Intellectual Property Law Firm of the Year 2007 – Managing Intellectual Property




    Antony Craggs, Associate
    Wragge & Co LLP: Intellectual Property
    China
    Cradle-to-Grave Intellectual Property Management
      –   Registration
      –   Management & Exploitation
           – Licensing
           – Assigning
           – Tax
      –   Enforcement
           – Administrative Action
           – Civil Litigation
           – Criminal Sanction
           – Customs Action


    Antony Craggs, Associate
    Agenda

    Chinese IP Rights:
      –   Overview

      –   Copyright

      –   Trade Marks / Unfair competition

      –   Designs

      –   Patents

    Licensing

    Enforcement of Chinese IP Rights




    Antony Craggs, Associate
    Chinese IP Rights: Overview

    System:
      –   “Teenage” system: 15-25 years old
      –   Compliant with TRIPS and WTO (in most areas)




    Antony Craggs, Associate
    Chinese IP Rights: Copyright
    Features:
      –   The subject is not always “artistic” – product leaflets, website designs, advertising
          slogans and product packaging
      –   Arises automatically
      –   Voluntary recordal
           – Sample of the work to be registered
           – Description of the work (including the purpose of its creation, the creation process and the
             'creativeness' of the work)
           – Obtain information about the author and the work including: a) the author's name; b) the
             author's passport; c) the date and place for completion of the work; and d) the date and
             place of first publication;
           – Obtain any relevant documents regarding the ownership of copyright including: a) the
             employment contract or other copyright assignment; b) (if possible) a letter from the
             author stating that he/she created/modified the work and that you are the owner of the
             copyright; and c) any other copyright registration certificates for other countries
           – Obtain a copy of the certificate of incorporation for the copyright owner.



    Antony Craggs, Associate
    Chinese IP Rights: Trade Marks (1 of 2)

    Types of sign protected:

      –   A sign that identifies the goods or services of a producer or service provider and
          allows the consumers to distinguish these goods or services from those of others.

      –   A sign may be composed of words, devices, letters, numerals, three-dimensional
          shapes

    Translations of non-Chinese signs:

      –   It is extremely important to register common translations and transliterations of
          non-Chinese signs. The registration of a sign in roman characters does not
          automatically protect the trade mark against the use of the same or similar sign
          written in Chinese.

    Term:

      –   Renew every 10 years




    Antony Craggs, Associate
    Chinese IP Rights: Trade Marks (2 of 2)

    Class:
      –   Nice Classification with sub-classes
    Filing:
      –   “First-to-file” system: prior use affords little protection unless your mark is well-known
    Time:
      –   2 years to register a mark (but aiming for one year)
    Examination:
      –   Absolute and relative grounds
    Process:
      –   Approve – advertise – 3 months opposition – registered
    Cancellation:
      –   3-year non-use, absolute/relative grounds, but slow and uncertain




    Antony Craggs, Associate
    Chinese IP Rights: Designs

    Features:

      –   Design patents (no unregistered designs)

      –   No substantive examination

      –   10 years protection term

      –   Design registration is relatively simple and inexpensive, and is very useful for
          enforcement




    Antony Craggs, Associate
    Chinese IP Rights: Patents

    Types of patents:
      –   “Invention” patent: Innovations in the field of technology that are new and
          inventive and that are practically applicable.
      –   “Utility model” patent: Technical solutions relating to the shop and / or structure
          of an object that are new.
      –   “Design” patent: Original designs relating to the shape, pattern, colour or a
          combination of an object.
    Term of patents:
      –   Invention patents: 20 years from filing date
      –   Utility model patents: 10 years from filing date
      –   Design patents: 10 years from filing date




    Antony Craggs, Associate
    Licensing
    Confidentiality agreement
    Due Diligence
      –   Identify the company’s Chinese name (not pinyin), registered address and date of
          incorporation
      –   Identify the company’s legal representative, directors and shareholders
      –   Accounts / credit check / export licence
      –   Referees / private investigator
      –   Inspection / Audit
    Contract
      –   Written contract which is short, bi-lingual and subject to Chinese law
      –   State clearly who owns the intellectual property developed/licensed
      –   State clearly payment terms
      –   Chinese courts / arbitration body


    Antony Craggs, Associate
    Enforcement of China IPR Rights: Overview

    Three main enforcement options:

      –   Administrative Action

      –   Civil Litigation

      –   Criminal Sanctions




    Antony Craggs, Associate
    Enforcement of China IPR Rights:
    Administrative Action - Overview
    Chinese administrative body enforces intellectual property rights.

    Administrative bodies:

      –   Intellectual Property Offices (e.g. Yongkang IPO):

           – Patents (inc. designs)

      –   Administration for Industry and Commerce (AIC):

           – Trade marks and unfair competition

      –   National Copyright Administration:

           – Copyright




    Antony Craggs, Associate
    Enforcement of China IPR Rights:
    Administrative Action - Remedies
    The administrative body may:

      –   Raid premises and seize and destroy infringing items

      –   Order infringing party to cease infringement

      –   Fines (low)

      –   Compile evidence




    Antony Craggs, Associate
    Enforcement of China IPR Rights:
    Administrative Action - Advantages
    Administrative actions have the following advantages:

      –   Cost effective

      –   Efficient

      –   ‘Immediate’ enforcement

      –   Evidence gathered can be used in civil action

      –   Can be used as leverage for settlement




    Antony Craggs, Associate
    Enforcement of China IPR Rights:
    Administrative Action - Disadvantages
    Administrative actions have the following disadvantages:

      –   Idiosyncratic

      –   No damages

      –   Decision does not bind the court in any subsequent civil litigation

      –   Subject to appeal




    Antony Craggs, Associate
    Enforcement of China IPR Rights:
    Civil Litigation (1 of 4)
    Features of the court systems:

      –   Civil law system

      –   No doctrine of binding precedent

      –   Four levels of courts

           – Basic People’s Court

           – Intermediate People’s Court

           – Higher People’s Court

           – Supreme People’s Court




    Antony Craggs, Associate
    Enforcement of China IPR Rights:
    Civil Litigation [2 of 4]
    Injunctions:
      –   Court can issue interim injunctions (rare)
    Two tier approach:
      –   Court determines infringement
      –   SIPO determines invalidity of trade mark / design / patent
    Stay (pending invalidation proceedings):
      –   Depends: Less likely to stay infringement actions involving invention patents




    Antony Craggs, Associate
    Enforcement of China IPR Rights:
    Civil Litigation (3 of 4)
    Timeline:

      –   First instance: 6 – 9 months

      –   Second instance: 3 months

    Damages:

      –   Typically low but signs of increasing

      –   2007: Schneider Electric: Ordered to pay US$46 million (appealed and settled for
          US$23 million)

      –   2008: Samsung: Ordered to pay US$7.3 million

      –   2009: Neoplan: Awarded US$3 million

      –   2010: Strix: Awarded US$1.5 million




    Antony Craggs, Associate
    Enforcement of China IPR Rights:
    Civil Litigation (4 of 4)
    Remedies:

      –   Injunction

      –   Seizure and destruction of infringing goods

      –   Damages

    Costs:

      –   Only small proportion of costs recoverable




    Antony Craggs, Associate
    Enforcement of China IPR Rights:
    Criminal Sanctions - Overview
    Public Security Bureau (PSB

    Can be referred if liability is over a certain threshold:

      –   Individuals:

           – Turnover: RMB 50,000 or illegal profit of RMB 30,000

      –   Companies:

           – Turnover: RMB 150,000

    Consequences:

      –   Up to 3 years imprisonment

      –   Higher punishment of 3 – 7 years if value is 5 times the threshold

      –   More sever penalty if crime relates to substandard goods that affect people’s
          health and safety


    Antony Craggs, Associate
    Enforcement of China IPR Rights:
    Conclusions
    Implement the following steps:

      –   Register your intellectual property rights

      –   Perform due diligence on your business partners /licensees

      –   Ensure your contracts protect your intellectual property rights

      –   Make scheduled and unscheduled visits to your operations in China

      –   “Guanxi”: Build up contacts with local government authorities

      –   Patrol trade fairs

      –   Enforce your intellectual property rights




    Antony Craggs, Associate
  Antony Craggs, Associate           Dr. Jian Xu, Associate


  Email:  antony_craggs@wragge.com   Email: jian_xu@wragge.com
  DDI:    + 86 (0)203 810 3783       DDI:    +86(0)2038103782
          + 44 (0)207 664 0341       Mobile: +86(0)13 902 297 469
  Mobile: + 44 (0)792 188 1397




Antony Craggs, Associate
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& ANSWERS

				
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posted:10/29/2012
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