Tuesday, April 24, 2012

IP Dragon has found a new den: IPDRAGON.ORG

From now on, you can find new articles of IP Dragon on: ipdragon.org.

So good bye to ipdragon.blogspot,com and hello ipdragon.org.
All ipdragon.blogspot.com links will continue to be active, but will be redirected to ipdragon.org
Also you can find the articles from 2005 until now on ipdragon.org.

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Saturday, April 07, 2012

Constructed Knowledge Works Like a Red Flag To An Internet Intermediary

 Shades of Red by Skram1 see Colourlovers
The real question: "What shade of red will attract liability?"
After publishing a draft of the copyright law, the National Copyright Administration comes now with a A Brief Explanation concerning the Copyright Law of the People's Republic of China (Revision Draft)translated by China Copyright and Media. It makes the copyright more complete but most things were already known.

This time let us look at the safe harbor provisions for network service providers, which were already promulgated in 2006 in the Regulation on the Protection of the Right to Network Dissemination of Information, and will probably be incorporated in the copyright law. The provisions exempt them from civil secondary liability of copyright infringements and related rights infringements. The Chinese safe harbor is broader than Title 17 U.S.C. section 512, Digital Millennium Copyright Act (DMCA) because it also includes the related rights performances and audio-visual recordings, and more narrower than Chapter 2, section 4, articles 12-15 Electronic Commerce Directive of the EU, because the latter applies horizontally, which means to all infringing online material.

Since primary and secondary liability is such a colourful subject, this author has used primary and secondary colours to show similarities of concept between the different jurisdictions.

- transitory digital network communications
- system caching
- information residing on systems or networks at direction of users
- information location tools
- non-profit educational institutions

E-Commerce Directive (EU)
- mere conduit
- caching
- hosting

Network Dissemination Information Regulation  (China)
- automatic access
- automatic storage
- information storage space to users, or services to the public
- searching or linking services
- educational institutions

Chinese networks that host can be exempted from civil liability if they have no actual nor constructed knowledge. In the Network Dissemination Information Regulation there is article 22 (1): "Having not known and having no justified reason to know that the works, performances, or audio-visual recordings provided by the service object have infringed upon an other’s right;"

In the DMCA the constructed knowledge (Red flag) provision is § 512(c)(1)(A)(ii): limiting liability where, “in the absence of such actual knowledge, [the service provider] is not aware of facts or circumstances from which infringing activity is apparent”. 

Almost the same wording can be found in the E-Commerce Directive the constructed knowledge provision can be found in article 14 (a): "the provider does not have actual knowledge of illegal activity or information and, as regards claims for damages, is not aware of facts or circumstances from which the illegal activity or information is apparent".

In Viacom v. YouTube, that was decided April 5, 2012 by the Court of Appeals for the Second Circuit, it was formulated eloquently: "The difference between actual and red flag knowledge is thus not between specific and generalized knowledge, but instead between a subjective and an objective standard.  In other words, the actual knowledge provision turns on whether the provider actually or “subjectively” knew of specific infringement, while the red flag provision turns on whether the provider was subjectively aware of facts that would have made the specific infringement “objectively” obvious to a reasonable person."

UPDATE: April 8, 2012, translation of Copyright Law of the People's Republic of China has been uploaded on China Copyright and Media here, and includes:

Article 69: "When network service providers provide storage, search, linking and other purely technological network services to network users, they do not bear a duty to examine for information concerning copyright or related rights.
                 Where network users utilize network services to conduct activities infringing copyright or related rights, the infringed person may notify the network service provider in writing, and require it to adopt necessary measures such as deletion, shielding, breaking links, etc. Where the network service provider adopts the necessary measures timely after receipt of the notification, it does not bear responsibility for compensation; where it does not timely adopt the necessary measures, it bears joint responsibility with the said network user.
                 Where network service providers know or should know that network users use their network services to infringe copyright, and do not adopt necessary measures, they bear joint liability with the said network users.
Joint liability suggests the same gravitas as the liability of a primary infringer. This might be different from the U.S. and EU secondary liability.
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Tuesday, March 13, 2012

Chinese Movie Posters Give You "Double Vision" Without The Alcohol

Clone and Original
The silver screen is known to bring out the imagination of people. However, China's film industry has not given birth to a poster child of creativity, eyeing laboriously to any movie that has some measure of success, Chinese or foreign, and subsequently clone the film poster designs.

In November of 2011 I had my doubts about the independent creation of a Taiwanese movie poster, see here. Now Jing Gao of Ministry of Tofu has a series of 41 pairs of copycats and their originals, see here.
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Thursday, March 08, 2012

Hausse of Chinese Companies Protecting Their Inventions Overseas

+ 33.4 %
Some international patent filings statistics from Geneva. The amount of international patent filings of Chinese companies and educational institutions grew with a stunning 33,4 percent in 2011 to 16,406. This means that more and more Chinese companies and educational institutions value overseas patents to protect their inventions. The U.S. still leads the applications with 26.7 percent of the total share, followed by Japan (21.4 percent), Germany (10.2 percent) and China (9 percent).

Please note that there is no such thing as an international patent. Under the Patent Cooperation Treaty (PCT) you can file a standard national or regional patent application (international patent filing), and designate one or more countries. After that each jurisdiction decides whether or not to grant you a patent for that designated country. The moment of the international patent filing establishes the filing date for all designated countries. 18 months after the filing date or the priority date, the international application is published by the International Bureau at the World Intellectual Property Organization (WIPO) in one of ten languages, which includes Chinese. In case the international patent application only designates the U.S., this publication is not automatically published.

Since January 1, 1994 China is a member the PCT. China's State Intellectual Property Organization is one of 16 institutes which offers the services of the International Searching Authorities (ISA) and International Preliminary Examining Authorities (IPEA).

There are 4 Chinese companies in the top 100 of companies that filed the most PCT applications.
1. ZTE Corporation 2826 applications
3. Huawei Technologies Co. Ltd. 1831 applications
4. Huawei Device Co. Ltd. 327 applications
87. Alcatel Shanghai Bell Co. Ltd. 176 applications

Of the educational institutes there is only one Chinese institute that secured a position in the ranking. With 36 international patent applications Tsinghua University in Beijing landed a shared 493rd position with Korean institute Postech Foundation, University of Pittsburgh and Danmarks Tekniske Universitet.

See WIPO's press release here.
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Tuesday, March 06, 2012

Google And the Law, The Book

Did Google go too far ... or is Google victim of legal lag?

Yours truly had the honour to write a chapter for a very promising book called Google and the Law edited by Dr. Aurelio Lopez-Tarruella, of which I have so far only read my own chapter. But the colleagues I know are all very knowledgeable in their respective fields and we all share a passion for the law. Hope I will see them soon and meet the colleagues I have not met before.

My chapter 'Paradoxes, Google and China' is about the blessings of intellectual property and the evil of censorship, two subjects about which both Google and China had some issues. I forgot to place a disclaimer at the end of my chapter, which should have said: I used Google when researching the chapter and enjoyed the hospitality in Shenzhen at the same time.

The text of the publisher is:
Google has proved to be one of the most successful business models in today’s knowledge economy. Its services and applications have become part of our day-to-day life. However, Google has repeatedly been accused of acting outside the law in the development of services such as Adwords, Google books or YouTube. One of the main purposes of this book is to assess whether those accusations are well-founded. But more important than that, this book provides a deeper reflection: are current legal systems adapted to business models such as that of Google or are they conceived for an industrial economy? Do the various lawsuits involving Google show an evolution of the existing legal framework that might favour the flourishing of other knowledge-economy businesses? Or do they simply reflect that Google has gone too far? What lessons can other knowledge-based businesses learn from all the disputes in which Google has been or is involved?

This book is valuable reading for legal practitioners and academics in the field of information technologies and intellectual property law, economists interested in knowledge-economy business models and sociologists interested in internet and social networks.

Table of contents

1 Introduction: Google Pushing the Boundaries of Law . . . . . . . . . . 1
Aurelio Lopez-Tarruella
2 The Power of Google: First Mover Advantage or Abuse
of a Dominant Position? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Sophie van Loon
3 Google AdWords: Trade Mark Law and Liability
of Internet Service Providers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Jeremy Phillips
4 Google and Personal Data Protection . . . . . . . . . . . . . . . . . . . . . . 75
Bart van der Sloot and Frederik Zuiderveen Borgesius
5 Google News and Copyright . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Raquel Xalabarder
6 Copyright Issues Regarding Google Images and Google Cache . . . 169
Miquel Peguera
7 The ‘‘Viacom v YouTube’’ Litigation and Section 512(c) DMCA:
When the Safe Harbour Becomes a Permanent Mooring . . . . . . . . 203
Annsley Merelle Ward
8 Looking Beyond the Google Books Settlement. . . . . . . . . . . . . . . . 239
Gary Rinkerman
9 Google Chrome and Android: Legal Aspects
of Open Source Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259
Malcolm Bain
10 Google, APIs and the Law. Use, Reuse and Lock-In . . . . . . . . . . 287
Andrew Katz
11 Paradoxes, Google and China: How Censorship can Harm
and Intellectual Property can Harness Innovation . . . . . . . . . . . . 303
Danny Friedmann
12 The International Dimension of Google Activities: Private
International Law and the Need of Legal Certainty. . . . . . . . . . . 329
Aurelio Lopez-Tarruella
13 In Search of Alterity: On Google, Neutrality and Otherness . . . . 355
Marcelo Thompson
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Sunday, March 04, 2012

Do Trademarks Killl? Or Are They Victim? A Hong Kong Story With A Happy Ending

Florence Ka-Yee Lam, lawyer at Wilkinson & Grist which was already founded in 1860, wrote an interesting legal brief for IAM magazine on a current decision by the trademark registry of Hong Kong that upheld the registration of Philip Morris' trademark Marlboro Lights, see here.

When one reads the original decision of the Trademark Registry of Hong Kong one can ask why this relatively simple case had to take around 5 years before a decision was taken. The application for revocation was filed September 22, 2006 and an amended version was filed December 11, 2006.

Annelise Connell asked the Trademark Registry of Hong Kong to revoke trademark Marlboro Light, based on Caption 559 Section 52 Trade Marks Ordinance:

“(2) The registration of a trade mark may be revoked on any of the following
grounds, namely –
(c) that in consequence of the use made of it by the owner or with his
consent, in relation to the goods or services for which it is registered, the 
trade mark is liable to mislead the public, particularly as to the nature, 
quality or geographical origin of those goods or services: or …

Ms Connell's arguments are that the word “lights” in combination with cigarettes gives the false impression that Marlboro Lights are less harmful than Marlboro Red or other Marlboro cigarettes that do not contain the descriptor “lights”. Research has shown that light cigarettes are no less harmful, but that the perception amongst smokers is that Marlboro Lights cigarettes are less harmful. This perception might be based on  news about machine tests that measured that tar output of lights cigarettes was lower. However, humans are no robots, and managed to inhale more tar than could be measured with robots.

Ms Ling Ho, of Clifford Chance argued successfully for Philip Morris, that no distinction, in terms of health warnings to be applied to all cigarettes packs of all types of cigarette sold in Hong Kong since 1982, had ever been drawn between tobacco products producing lower tar yields and others.
According to the registrant, the applicant did not show sufficiently a serious risk for an average consumer, who is deemed to be reasonably well informed, reasonably observant and circumspect. In other words the registrant asserts: people know that smoking is bad for your health, all smoking. This is an important point, because deception has two parties, the deceiver and the one that is or is not susceptible for the deception.
Section 52 (2)(c) starts with "that in consequence of the use made of it by the owner or with his consent". According to the registrant, the public health authorities were responsible for the erroneous belief that low tar cigarettes are less harmful to health. 

Ms Lam writes: "Thus, even assuming that the use of the subject mark was liable to mislead the public, the applicant had also failed to establish that the alleged deceptiveness of the mark was the consequence of the use made by it by the registered owner." 

Trademarks are just as kitchen knifes, which can be used by third parties in a culinary or in a homicidal way. 

Time for slogans
This Marlboro Lights case reminds me of the former city marketing slogan (trademarked) of the Hong Kong Tourism Board: Hong Kong, The City of Life! Isn't this deceptive? If, out of every 100,000 deaths in Hong Kong, 43 can be blamed on air pollution? I suggest the following slogan: Hong Kong people should get rid of pollution before pollution gets rid of Hong Kong people. Read more hereHong Kong City of Fatal Attractions might be better? My beloved Hong Kong has now chosen, together with many other Asian cities I am sure, for the more generic Asia's World City. I know HK can do better than this.
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Wednesday, February 29, 2012

Current State On Writing On Counterfeiting in China

Comment on comment
Neil Wilkoff, blogger of IP Finance, commented on an Economist article, called Pro Logo: Brands in China (January 14, 2012) see here, that did not give enough context nor support for its assertions. The first part of the article is about the backlash the Chinese furniture company DaVinci got after it was revealed that their "Italian" products were made in China then shipped to Italy and reimported back to China. The media Schadenfreude was probably created because the company stressed to be the real thing. So far, I was thinking that only the subtitle of the Economist article Chinese consumers are falling out of love with fakes was made by an editor that might have read the article diagonally. But then the following assertion was made: "Whatever the truth behind this murky affair, it has revealed something about how the attitudes of Chinese consumers are changing. Counterfeiters are no longer popular. Not long ago, Chinese shoppers applauded the fakers for saving them money. Now they scorn them. If it’s a fake, the well-heeled sneer, you can’t flaunt it." I agree with Wilkoff that these assertions and those made later in the text miss enough context, and are not substantiated by enough facts. In der Beschränkung zeigt sich der Meister as Goethe once said. Therefore it might have been better if the Economist article would have restricted itself to retell the tale of the rise and fall of DaVinci, although this story broke already in July 2011, see IP Dragon's article here.

Bold statements are nice in times of love, war and sports, but otherwise it might be preferable to add words such as might, could and would in case one poses hypotheses. So the sentence "Counterfeiters are no longer popular", could be changed into "Counterfeiters might no longer be popular". And of course in talking about China specificity is well served if questions are answered such as who, what, where, when, why and how. But the Economist might already know this.

Read Neil Wilkoff's comment here.
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Tuesday, February 28, 2012

Precious Lessons Learned From Hermès' Unregistered Trademark In China

Love for horses, Love for gems
Although Hermès registered its trademark in China since 1977, it had not yet registered its Chinese name 爱马仕 (Ài mǎ shì) as a trademark the Legal Evening News wrote, according to Shanghai Daily, see here.
In 1995 Dafeng Garment Factory registered a trademark 爱玛仕 (Ài mǎ shì), which is, indeed, pronounced exactly the same as the Chinese name of Hermès. 
In that year Hermès filed an objection at the Trademark Review and Adjudication Board (TRAB) of the State Administration for Industry and Commerce (SAIC). However TRAB approved Dafeng Garment Factory's registration in 2001. After that Hermès appealed at a Chinese court. 

In 2009,  Hermès again appealed to the board, saying its Chinese name enjoyed a high reputation around the world and demanding the board cancel the disputed trademark. However,  Hermès' application was rejected for a second time May 2011.

Lessons to be learned:
  • Protect your trademark name together with the Chinese version of your trademark, otherwise either the public will come up with a, possibly not so positive Chinese name, or worse a competitor will take unfair advantage of your reputation and/or will confuse the public into believing that your company is the origin of the products of your competitor.
  • Unregistered trademarks can be protected only if they are famous/well-known. That is famous in China, not in other countries, and not even in Hong Kong or Macau which are special administrative regions with their own jurisdiction. 
  • You have to proof that your trademark is famous, before the trademark dispute. Because otherwise it is hard to proof that the public knows your trademark or that of your competitor who is using an identical or similar trademark.
Unfortunately for Hermès, the luxury good company could not convince the court that the Chinese version of its name 爱马仕 was unregistered but a famous name for some time before Dafeng Garment Factory even started using their registered trademark 爱玛仕. They used evidence that originated from the period after the dispute and they used evidence that showed that their trademark was famous to consumers in Hong Kong instead of the mainland. 

Spot the Difference In The Chinese version of the Hermès Trademark And Its Clone

Top row
Hermès' unregistered trademark: 爱马仕 (Ài mǎ shì = love horse officials = officials who love horses)

Bottom row
Dafeng Garment Factory registered trademark: 爱玛仕 (Ài mǎ shì = love agate officials = officials who love agate). The difference is indeed, the second character which is 王 wáng (king) + 马 mǎ (horse)= 玛 mǎ (agate), a kind of gem.
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Supporting Qiaodan Brand Is Not Patriotic, But Harmful To China

An iconic photo of Michael Jordan getting the basketball was made into a mirror-like silhouette logo, and then used with the phonetically similar name 乔丹 Qiáodān, and both the logo and name were trademarked in China without Michael Jordan's permission.

The most iconic basketplayer ever, Jordan, is going to protect his name, his identity and the Chinese consumer against a Chinese company that has made a business of his name by taking advantage of his reputation. 

In a video on his site The Real Jordan Michael Jordan said: "I have established a name, likeness, identity, that represents me personally. When you see the Jordan brand it is a direct connection of who I am, Michael Jordan. I have always thought that my name means everything to me and is something that I own. If someone takes advantage of that, or misrepresents that, I think it is up to me to protect that. I think that is for everyone, not just Michael Jordan, globally all over the world, when you have your name it is your DNA.

Stan Abrams points to article 31 Trademark Law that has been applied by Yao Ming and Yi Jianlian, see here
Article 31 Trademark Law: An application for the registration of a trademark shall not create any prejudice to the prior right of another person, nor unfair means be used to pre-emptively register the trademark of some reputation of another person has used. 

Chinese Radio International (CRI), the website of China's state radio published an article written by Fuyu entitled "Linsanity" Offers Entrepreneurs a Chance to Cash In. The article is writing about pre-emptively registering a trademark of reputation of another person as something commendable. Fuyu writes about Yu Minjie, who registered in 2011 the trademark "Jeremy S.H.L (Shu-How Lin) when Jeremy Lin just entered the NBA: Using her sharp business acumen, Yu immediately recognized Lin's business value when she saw him play basketball on television, prior to Lin becoming famous." And of course Lin's reputation is short, but Lin should be able to make use of article 31 Trademark Law too.

Fortunately there is also information coming from China that does not accept this pre-emptive practice. The video below covers a survey at Sina website. They asked 59,279 people if they think the 乔丹 Qiaodan brand deceives the public. 78.6 percent agreed, and 16.2 percent did not agree.
The presenter 白岩松 Bai Yan Song asked: "If 乔丹 Qiaodan would win, does it means the company would win?" Bai gave the answer: "No, even if they win in the lawsuit, they will still lose, because they are cheaters in the eye of the consumer."

A boy said that if the 乔丹 Qiaodan will win the lawsuit, it will improve the position of this company in his mind. Then the reporter asked why? He replied: "乔丹 Qiaodan must win, because it is our national brand." A girl asked: "If the company was wrong, why the original Michael Jordan brand never sued them before?"

The presenter said: "I'm really worried about what the boy in the street said. If so many people think like him, it is not patriotic, but harmful to our nation. We should have greater expectations of China, not just stop Shanzhai products, such as these fake Jordans or iPads."

Thank you Michelle for pointing me to this video, which is in Chinese but in which Michael Jordan talks English.

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iPad, youPad, wePad? Who Is the Owner of the Trademark in China?

iPads for sale in the Apple Store at Central, Hong Kong
 Photo Danny Friedmann
Apple introduced a third category, in between a laptop and smartphone, on January 27, 2010 (see the late Steve Jobs give the presentation here and demonstration here and here). April 3, 2010 it was intoduced in the U.S. and one month later in other places around the world. Two months later already a million of these devices were sold. And according to Reuters, Apple has sold 15.43 million iPads in the last 14 weeks of 2011.

So Jobs vision became reality. But how to name this third category? 

" ... and we call it the iPad." 
That other companies had already registered the name iPad in some jurisdictions could be solved, so the thinking went. For this purpose Apple set up a special purpose company to acquire these trademarks in all relevant jurisdictions. The name of the company IP Application Development Limited is interesting, because abbreviated it is IPAD Ltd. 

In the acquisition process, or rather effort to assign the trademark, a mistake was made. IPAD Ltd. and Proview Holdings, Proview Electronics (Taiwan) and Proview Technology (Shenzhen) entered into a written agreement, December 2009, whereby they agreed to sell, transfer and assign the Chinese trademark of iPad to IPAD Ltd. for £35,000. However, in the written agreement Proview Electronics (Taiwan) pretended to be the proprietor of the trademark and "assigned" the trademark to IPAD Ltd. But the real proprietor was Proview Technology (Shenzhen). John Paczkowski seems to have gathered some of the documents, see here. Then Proview Technology (Shenzhen) started to try to enjoin the sale of iPads in China for alleged infringement of their iPad trademark, and was successful in cities such as Shijiazhuang and Huizhou, according to David Levine in an article for Reuters. Or, if Apple wanted to avoid getting banned from the Chinese shops and gain control over the iPad trademark, they had to pay 10,000 U.S dollar. 
Also it became clear that Proview Technology (Shenzhen) had lodged applications with the Trademark Office, part of the State Administration for Industry and Commmerce, to transfer the Chinese iPad trademarks to Yoke Technology on May 7, 2010. 

The mistake by IPAD Ltd/Apple could have been easily prevented. If you go to Trademark Search of China's Trademark Office, part of State Administration for Industry and Commerce, and type in IPAD in class international trademark 9, you will see that Proview Technology (Shenzhen) registered the trademark January 10, 2000, see registration number 1590557 and that the effective period of exclusive right: June 21, 2011-June 20, 2021, however, it seems to be repealed because of non-use for three years). Also Proview Technology (Shenzhen) has registered the stylized version of the trademark, international trademark class 9, under registration number 1682310, application date September 19, 2000. Effective period of exclusive right: December 14, 2001- December 13, 2011. Continued after objection. So at least IPAD Ltd could have easily found a starting point to trace who owns the iPad trademark for international trademark class 9. 

Everybody knows Apple these days, but Proview used to be famous too. Proview Group is a producer of display devices, which  include LCD monitors, CRT monitors and flat-panel digital products. It has operations and offices around the world, including Taiwan, Mainland China (Shenzhen and Wuhan), Hong Kong and Europe. Proview Holdings was incorporated in Bermuda and is listed on the Hong Kong Stock Exchange. Proview International Holdings Ltd was the first Taiwanese technology company to list in Hong Kong, and was quite successful. In 1999 it teamed up with U.S. chip maker National Semiconductor "to launch the I-PAD, a stripped-down desktop computer whose main selling points were its Internet connectivity and ease of use." Then Proview was hit by the financial crisis and May 12, 2010, the Hong Kong Stock Exchange issued a notice that trading of Proview Holdings’ shares had been suspended. Read here Jeremy Wagstaff and Lee Chyen Yee's Reuters article on Proview's rise and demise, see here.

May 20, 2011, Apple Inc. and IPAD Ltd filed a lawsuit in Hong Kong against Proview International Holding Ltd, Proview Electronics Co (Taiwan) Ltd, Proview Technology (Shenzhen), Yang Rong-Shan (founder of the Proview Group and  chairman and CEO of Proview Holdings who was adjudicated bankrupt on August 2, 2010) and Yoke Technology (Shenzhen). The Hong Kong case reveals many of the relevant facts: High Court Of The Hong Kong Special Administrative Region Court Of First Instance, Action no. 739 of 2010  (HCA739/2010). On June 28, 2011 the Poon J. (潘兆初法官), decided and July 14, 2011 he motivated his decision to allow  the interlocutory injunction and restrain the defendants to "sell, transfer, assign, otherwise dispose of and/or give good title" to the Chinese iPad trademarks. 

May 24, 2010, Apple instituted proceedings against Proview Technology (Shenzhen) in the Shenzhen Intermediate People’s Court and filed an application for Asset Preservation Order (APO) in respect of the Chinese iPad trademarks. June 12, 2010 the application was granted on 12 June 2010, subject to the APOs obtained by some other Mainland banks.

Proview Technology (Shenzhen) has started suing Apple resellers at the Shenzhen Futian District Court (December 30, 2011) and Huizhou Intermediate People's Court (January 7, 2012), read Katrin Hille's FT article here and about Apple losing there here, at Stan Abram's China Hearsay.

According to Shenzhen Media People’s Court Apple lost its trademark ownership on December 6, 2011, see Huang Mengren's article here. Apple decided to appeal at the Guangdong Higher People's Court.
February 22, 2012, there was a trademark infringement case between Proview and Apple at the Shanghai  Pudong New Area People's Court. Apple was successful to the extent that Apple's iPads were not banned from the shelves. But as Stan Abrams of China Hearsay made clear, see here and here, the real question is who owns the iPad trademark. This will be decided at the Guangdong Higher People's Court, February 29, 2012.

In the mean time Proview Electronics (Taiwan) has accused Apple of fraud in a lawsuit filed at the Superior Court of California, County of Santa Clara. See here. However, in contrast to trademark lawyer Martin Schwimmer of The Trademark Blog, who was quoted by David Levine responding to the case: "I have never encountered this level of ruse", see here: I think it is not so strange nor unusual if you set up a special purpose company for the acquisition of a name such as iPad. Especially since iPhone is so ubiquitously known that if Apple pursued the trademark iPad, it would have definitely driven up the price, as this case proofs: from 35,000 pounds to 10 million U.S. dollars. There is no legal requirement to disclose the reason why you want to buy a trademark. Or is there?
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Saturday, February 18, 2012

SPC Notice: Full Exertion of IPR Adjudication Functions to Promote the Boom, Socialist Culture and Autonomous and Harmonious Development

16 December, 2011, Supreme People's Court of the People's Republic of China issued the notice to fully play the role of IPR judicial functions to promote the great development and prosperity of socialist culture and the promotion of economic autonomy to coordinate the views of developing a number of issues "最高人民法院印发《关于充分发挥知识产权审判职能作用推动社会主义文化大发展大繁荣和促进经济自主协调发展若干问题的意见" [Zuìgāo rénmín fǎyuàn yìnfā “guānyú chōngfèn fāhuī zhīshì chǎnquán shěnpàn zhínéng zuòyòng tuīdòng shèhuì zhǔyì wénhuà dà fāzhǎn dà fánróng hé cùjìn jīngjì zìzhǔ xiétiáo fāzhǎn ruògān wèntí de yìjiàn = Opinions on Several Issues Member 's Concerning the Full Exertion of the of IPR Adjudication the Functions to Promote the Boom, of Socialistic Culture and Promote the Autonomous and Harmonious Development of Economy]. 

Read here in Chinese and here a translation in English from China Copyright and Media, and a comment will follow.
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Wednesday, February 15, 2012

China's Influence On Non-Trade Concerns In International Economic Law

Maastricht University, Faculty of Law
Professor Paolo Farah organised with a grant from China-EU School of Law (CESL) in Beijing three conferences on China and Non-trade Issues. The first was held at the University of Turin (November 23-24, 2011), the second at Tsinghua University and the third was hosted by the Faculty of Law of the Maastricht University, the Netherlands, January 19-20, 2012.
Hall of fame at Maastricht University, Faculty of Law
The papers of the speakers presented will be collected in a book edited by Professor Farah called "China's Influence on Non-Trade Concerns in International Economic Law", will be published by Ashgate Publishing (UK), forthcoming in 2012. Beside the English version, there will be an Italian, Hungarian and Chinese version of the book, thanks to the CESL in Beijing.

Law scholars at Faculty of Law, Maastricht University
Professor Farah describes what non-trade concerns of international trade are and why they are of crucial importance: "Both public opinion and policy makers fear that international trade, in particular a further liberalization thereof, may undermine or jeopardize policies and measures on a wide variety of issues, for example, the protection of the environment and a sustainable development, good governance, cultural rights, labour rights, public health, social welfare, national security, food safety, access to knowledge, consumer interests and animal welfare." The list is not exhaustive and includes intellectual property rights.

Professor Paolo Farah
This author had the honour to present his paper 'Rise and Demise of U.S. Social Media in China' at the last conference hosted by the Faculty of Law of the Maastricht University. It is about how U.S. social media sites such as Facebook, Twitter and YouTube were cloned by Chinese social media sites, RenRen, Sina Weibo and Youku, then blocked from China, and then the Chinese clones got funding in the U.S. at the New York Stock Exchange or NASDAQ.

Speakers from right to left
Professor Anselm Kamperman Sanders, Arianna Broggiato, Danny Friedmann, Rogier Creemers
On January 19, the programme for experts included:
Professor Farah of the University of Turin and visiting scholar of Harvard Law School (East Asian Studies) and Professor Thomas Christiansen of Maastricht University, Political Science Faculty of Arts and Social Sciences, discussed the EU External Action toward China on Non-Trade Concerns in International Economic Law.
Professor Thomas Christiansen
Sergi Corbalán, Executive Director of the Fair Trade Advocacy Office (FTAO) in Brussels, was talking about fair trade and the new EU policies on Corporate Social Responsibility and Development.

Sergi Corbalán
Benjamin Barton of King's College of London, gave a presentation about the EU, China and international development.
Benjamin Barton
Professor Anselm Kamperman Sanders of the Faculty of Law of Maastricht University gave a presentation on China-EU Relations in the Field of Intellectual Property Law. He is not only Intellectual Property Law, Director of the Advanced Masters Intellectual Property Law and Knowledge Management (IPKM LLM/MSc), and Academic Director of the Institute for Globalisation and International Regulation (IGIR), but also Director of the Annual Intellectual Property Law School and IP Seminar of the Institute for European Studies of Macau (IEEM), Macau SAR, China.

Professor Anselm Kamperman Sanders
Arianna Broggiato, BIOGOV UNit, Université Catholique de Louvain, Centre for the Philosophy of Law (CPDR) talked about Genetic Resources and Traditional Knowledge at the Crossroads of Intellectual Property and the Environmental Regime.

Rogier Creemers, who made a transfer from Maastricht University to the Centre of Socio-Legal Studies at Oxford University presented his paper called Cultural Products and the WTO: China's Domestic Censorship and Media Control Policies. Rogier has an interesting blog called China Copyright and Media.

Rogier Creemers
On January 20, the programme focused on public health, product and food safety and consumer protection. Lukasz Gruszczynski of the Law Institute of the Polish Academy of Science talked about product safety in the framework of the WTO agreement on Technical Barriers to Trade.
Lukasz Gruszczynski
Denise Prevost of Faculty of Law of the Maastricht University discussed her paper Health Protection Measures as Barriers to EU Exports to China in the framework of the WTO Agreement on Sanitary and Phytosanitary Measures.
Denise Prevost
Enrico Bonadio of the Law School of the City University of London presented his paper on Plain Packaging of Cigarettes and Public Health under the TRIPs Agreement.

Enrico Bonadio
Paolo Vergano of FratiniVergano European Laywers in Brussels gave a Practitioner's Perspective on Specific Non-Trade Concerns in the Areas of Food Safety and Consumer Protection: A Comparative Analysis of WTO Notifications.

Paolo Vergano
Lorenzo di Masi presented his paper on The Protection of Public Health and Food Safety in East Asia Regional Trade Agreements (RTAs): ASEAN and China.

Lorenzo di Masi
Maastricht city on the banks of the Maas
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Tuesday, February 14, 2012

Future President China Mentions IPR First As Sino-U.S. Challenge

Xi Jinping, Vice President of PRC
probably the next President of China in 2012
Xí Jìnpíng 习近平, China's vice president, and probably the successor of Hu Jintao as president in 2012, wrote to the Washington Post in response to some specific questions an overview of Sino-U.S. relations over the last 40 years, plus a look into the future.

It is telling that Mr Xi started with IPR when he wrote about the challenges the U.S and China have:
"We have taken active steps to meet legitimate U.S. concerns over IPR [intellectual-property rights] protection and trade imbalance, and we will continue to do so. We will continue to press ahead with the reform of the RMB [renminbi] exchange rate formation mechanism and offer foreign investors a fair, rule-based and transparent investment environment. At the same time, we hope the United States will take substantive steps as soon as possible to ease restrictions on high-tech exports to China and provide a level playing field for Chinese enterprises to invest in the United States."

Read Xi Jinping's text in the Washington Post here (quote about IPR on page 2, see here).
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Monday, February 13, 2012

"Chinese Government Takes IP Dead Serious"

"“The government is taking IP dead seriously,” says Danny Friedmann, an IP rights consultant in China and founder of the popular blog IP Dragon. “In fact their fate is connected to it.”"

Read Melissa Maleske's InsideCounsel article 'China aims to strengthen IP rights enforcement'.
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Sunday, January 15, 2012

Must Read of the Month: Subject of the Emperor Filed Enhanced Nutcracker Patent in U.S. and Canada

Mark Cohen, IP in China expert, who is now a visiting professor at Fordham Law School, has a great blog called ChinaIPR.com. He recently posted the most fascinating article post of the year: China's First Overseas Patent Filer written by Scott Seligman, who was assisted by Mr Cohen on patent law. Read Mr Seligman's book Three Tough Chinamen will be published in the Fall of 2012. In this book the colourful Dr. Jin Fuey Moy, and his two brothers, will return.
        Jin Kee                  Jin Mun                Jin Fuey
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Friday, January 13, 2012

Toyota on a Chain: Creatively Challenged Art or Parody?

Last year's Hong Kong International Art Fair at the Hong Kong Convention and Exhibition Centre included the "Toyota Chain", by Thomas Hirschhorn, which, was exactly that. Mr Hirschhorn, a Swiss artist, made the piece in 2002, and so far, nobody wants to buy it.

To magnify an existent trademarked logo, without authorisation by the trademark holder, and put it on a chain seems quite stale as a piece of art. But is it legal? In Hong Kong there is no such thing as parody in the Trade Marks Ordinance (and not even in the Copyright Ordinance, so that excludes an analogous application, although it is being considered, see here). And even if there was, I think it is doubtful that this piece of cardboard, adhesive tape, aluminium and red spray falls within the scope of parody. Mr Hirschhorn uses the name recognition and reputation of the Japanese car brand to exploit commercially. In Hong Kong Mr Hirschhorn was definitely diluting Toyota's trademarked logo and name and possibly in jurisdictions with a parody provision as well.
Hirschhorn's "Toyota chain" at the 2011 Hong Kong International Art  Fair
Photo: Danny Friedmann

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Microsoft Applies Doctrine of Landlord Liability To Software Piracy

Peter Ollier has an interesting article for Managing Copyright about Microsoft's alleged first landlord liability case to tackle rampant software piracy.

Microsoft is suing Beijing Chaoyang Buynow because two of retailers, Beijing Hongguang Century Trading and Beijing Zhuojue Elements Trading were selling computers with pre-installed counterfeit Microsoft Windows and  Office. 
The other case, whereby Microsoft is suing retailer Shanghai Gome at Shanghai Huangpu District People's Court seems to be a traditional case (at least when Shanghai Gome is a subsidiary of Gome Electrical Appliances Holding Limited)

Read Mr Ollier's article here.

Landlord liability in tort law 
Article 2 Tort Law 2010: Those who infringe upon civil rights and interests shall be subject to the tort liability according to this Law. “Civil rights and interests” used in this Law shall include the right to life, the right to health, the right to name, the right to reputation, the right to honor, right to self image, right of privacy, marital autonomy, guardianship, ownership, usufruct, security interest, copyright, patent right, exclusive right to use a trademark, right to discovery, equities, right of succession, and other personal and property rights and interests.

Article 9 Tort Law 2010: One who abets or assists another person in committing a tort shall be liable jointly and severally with the tortfeasor. One who abets or assists a person who does not have civil conduct capacity or only has limited civil conduct capacity in committing a tort shall assume the tort liability; the guardian of such a person without civil conduct capacity or with limited civil conduct capacity shall assume the relevant liability if failing to fulfill his guardian duties. 
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Sanrio Brand Licensor Says The Darndest Things, Or Maybe Not


Peter Ollier wrote an article about how Disney and Sanrio are licensing some of their brands in China.

Licensable "cuteness" popular among Hong Kong population
Lanham Place, Mong Kok
Photo: Danny Friedmann
Roberto Lanzi, president of Sanrio Consumer Products for Europe, Middle East and Africa, was speaking at a panel called "Licensing and the flourishing region: Asia", at a conference during the 10th annual Hong Kong International Licensing Show. Mr Lanzi said that he was the only speaker on the panel that did not hate counterfeits.

He claimed to feel relieved when he once saw fake Hello Kitty products being sold in Hong Kong's Ladies Market:

"When Hello Kitty disappears from there we might be dead."

However, the Ladies Market in Mongkok, has been removed by the USTR from the list of Special 301 Out-of-Cycle Review of Notorious Markets, on December 20, 2011, see here.
Maybe that is the reason why Mr Lanzi is president for Europe, Middle East and Africa, and not Asia.

UPDATE: In a reaction (still have to verify the identity of commenter) Roberto Lanzi wrote: "I never mentioned Lady's market, I spoke about Temple Street and I was just jocking. Best regards Roberto"

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Thursday, January 12, 2012

Rethinking Intellectual Property Protection in Hong Kong

After the welcome remarks by professor Douglas Arner (head Department of Law, HKU) and the opening speech by Peter Cheung, (director IPD, HKSAR Government) see here, the first panel presentation of the Round Table event organised by Law & Technology Centre of HKU and IP Law Center at Drake University started, moderated by assistant professor Haochen Sun, of the Faculty of Law, HKU.

Assistent Professor HKU Haochen Sun is moderator
Photo: Danny Friedmann
Professor Alice Lee, Associate Dean, Faculty of Law HKU gave a presentation entitled: "Reflections on Intellectual Property Reform in Hong Kong"

Professor Lee explained that the Hong Kong Copyright, Trade Marks and Registered Design Ordinances of 1997 did not change dramatically the substantive rights, in contrast to the patent reforms. Hong Kong amended its Patent Ordinance, June 27, 1997 and on February 22, 2008. The Patent Ordinance probably will be amended again after the government have considered all responses to its consultation paper (consultation period ended December 31, 2011). Given the limited time, Professor Lee focused on possible reform of small-term patents, instead of on possible reforms of standard patents, (read more about Hong Kong's need for an Original Grant Patent in combination with reciprocity and Hong Kong's potential as regional legal hub here), nor on whether there should be regulations for patent agents in Hong Kong.

Hong Kong is in need for a balanced approach for the short-term patent, which is relatively cheap and easy to get, since there is no substantive examination for a protection of 8 years. However, Professor Lee is concerned that the short-term patent might be prone to abuse. She illustrated this with the Octopus Card Limited v ODD.HK Limited case.

The conflict was about the validity of two short-term patents registered in the name of ODD.HK Limited. A judgment delivered on March 17, 2009, by Deputy High Judge Chen Jiangyao (陳江耀), whereby Madam Fung Wai Mun Polly was unrepresented, HCMP104/2007, ordered the revocation of the two patents with costs to the petitioner, because both patents lack novelty and creativeness (兩項發明都不是新穎和沒有創造性). Madam Fung Wai Mun Polly of ODD.HK Limited simply removed the chips from the Octopus Card (with which you can pay to use the MTR, buses, mini-buses and at many shops in Hong Kong) and put them in plush toys, and after she got the short-term patents sued Octopus Card Limited for patent infringement. Read the case here in Chinese.

Professor Alice Lee, HKU
Photo: Danny Friedmann
The Octopus Card case was mentioned in the April 19, 2010 Environmental Systems Product Holdings Inc. v DPC Technology Ltd., case HCMP1465/2008. And the Windsurfing test (Windsurfing International Inc. v Tabur Marine (Great Britain) Ltd [1985] RPC 59 (at 73) was mentioned to see whether the patent is obvious or not. In the same Environmental Systems Product Holding case, the counsel for the applicant, Mr Felix Pao, "described the short-term patent application system under Part XV of the PO as an “honour system” as it depends heavily on the integrity and honesty of an applicant in that an applicant would not make any application in respect of a claimed invention known to be not patentable for whatever reasons." The Recorder Rimsky Yuen, SC in Chambers, Court of First Instance, High Court, agreed. 

Professor Lee questioned who is going to pay for the abuse? Her question is very relevant. The strength of the short-term patent (not expensive and easily granted) might be its weakness as well. Therefore it might be considered to increase the fee to get a short-term patent, so that bad faith applicants will be deterred, or use a part of the fee to compensate the abused party in the legal costs.

Then moderator Haochen Sun introduced Mr Mayank Vaid, IP Director, Louis Vuitton, Hong Kong, as the IP director of the most popular luxury brand. Mr Vaid's presentation was called "Corporate Decision Making in IPR Protection and Enforcement"

Mr Vaid is responsible for protecting the intellectual property rights of LVMH Fashion Group, which includes iconic brands such as LV, Marc Jacobs, LOEWE, CELINE, KENZO, Emilio Pucci and Berluti. Therefore, the company has made the IP perspective part of its overall business strategy. Mr Vaid said that from a commercial sense IP is crucial to guarantee the customer experience. LV's promise of exclusivity is per definition incompatible with counterfeit goods, that confuse customers and dilute the distinctiveness of the brand, and damage its reputation. Therefore Louis Vuitton takes full control over its production process (no production is done in Asia) and supply chain (no distribution to Hong Kong via the internet) to protect its brand value very seriously. Louis Vuitton has now around 80 stores in Asia, excluding China and Japan.

Mr Vaid explains that a transformation has taken place in the economy, from one that was based for 80 percent on the value of goods and services and for 20 percent on the value of the underlying intellectual property rights, to an economy where this ratio has been reversed.

Bernard Arnault, CEO of LVMH, and Yves Carcelle, CEO of Louis Vuitton stand in Louis Vuitton's tradition of proactively and assertively protecting and enforcing the IP of its brands. This tradition dates from 1908 when LV fought its first IP battle. Louis Vuitton has a zero-tolerance policy against counterfeiters, (which IP Dragon thinks, deserves emulation). Why do not more companies protect and enforce their intellectual property rights as assertive as Louis Vuitton? According to Mr Vaid, some might take the view that marketing is more important, or some might be afraid to annoy the local government, or they have not reserved enough budget to enforce their intellectual property rights.

Mr Vaid summed up product categories in which Louis Vuitton is not active, but where people use the trademarked logo unauthorisedly: fake nails, rikshaws, tiles, a Romanian LV themed restaurant, bedsheets, iPhone caps, and condoms, see here. Especially in Korea one can find bags with similar monograms, such as LX, LJ etc, which leads to confusion and/or dilute the trademark, and Louis Vuitton is tirelessly filing lawsuits against those manufacturers, distributors and sellers.

It is getting increasingly more challenging for LV to protect and enforce its intellectual property rights, since the reaction time of the counterfeiters is getting faster. It takes LV about halve a year to launch a new product (from design, production and distribution to sales). Before, the counterfeiters needed to send someone to a fashion show in Paris or Milan, but now they only have to watch the fashion shows via Facebook and three months later one can find counterfeit designs in places such as Dubai. The challenge to fight counterfeiters is not just for companies such as Louis Vuitton, but for society in general: since counterfeiting has been linked to organized crime, child labour, degradation of the environment, violation of safety laws, money laundering, etc.

Louis Vuitton has not only a reputation thanks to its exclusive products, but also because of its proactive intellectual property protection and enforcement. It is well known that Louis Vuitton did not only trademark the name Louis Vuitton, and the monogram LV but also the Monogram Canvas, and each of its constituting parts: the fourpointed stars, four-pointed stars inset in curved diamonds (flower quatrefoil diamond), and four-pointed flowers inset (flower quatrefoil). These marks are enforced too, read here. Read Paul-Gerard Pasol's Evolution of the Monogram Design here. In City Chain Stores (S) Pte, Ltd. vs Louis Vuitton Malletier, the Court of Appeal of Singapore overturned the trial court which enjoined City Chain Stores of using Louis Vuitton's flower quatrefoil, and flower quatrefoil diamond designs, because it deemed that City Chain Stores used the designs in a random pattern and non-uniform way and therefore not in a origin-related use but for embellishment and decorative purposes. Although sections 27(1) and (2) of the Singapore Trade Marks Act (1998) are based on article 5 (1) a-b, EU Trade Marks Directive (Directive 89/104/EEC, December 21, 1988), the Court of Appeal chose to interpret the requirement of trademark use stricter than the European interpretation (which is to look whether the defendant's use is liable to affect the functions of the trademark). Reason was that the answer by the European Court of Justice (Arsenal Football Club plc vs Matthew Reed) on whether non-origin-related use could constitute trademark infringement, was considered uncertain and controversial by UK professors Lionel Bently and Brad Sherman. Also, the Max Planck Study on the Overall Functioning of the European Trade Mark System of February 2011, stated that current European Court of Justice jurisprudence on the issue was "neither consistent nor satisfactory" (see paragraph 2.178 here). However, the anti-dilution provision of section 53 (3) (b) seems to be able to protect the communication, investment and advertising functions of a trademark. Read Ng-Loy Wee Loon's article about it here.

Louis Vuitton is using some innovative ways to prevent counterfeiting and new protection and enforcement routes. These include pioneering landlord liability (read Joseph Simone's article for WIPO Magazine here and Daniel Plane's Law Journal of INTA article here), cooperating with Thai monks to raise the awareness that trademark infringement is a sin, and is looking whether the principles of Sharia law can be construed in a way to provide support for such a protection, see here.

Mr Mayank Vaid, IP Director, Louis Vuitton, Hong Kong
Photo: Danny Friedmann
Peter Cheung, director Intellectual Property Department HKSAR Government, asked Mr Vaid about the Chewy Vuiton case (Louis Vuitton Malletier S.A., Plaintiff, v. Haute Diggity Dog, LLC, Victoria D.N. Dauernheim, and Woofies, LLC, Defendants. 464 F.Supp. 2d 495, US District Court For The Eastern District Of Virginia, Alexandria Division, November 3, 2006, uploaded by Susan Scafidi of Counterfeit Chic here, and the appellate decision of Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 4th Cir. November 13, 2007, Ms Scafidi uploaded here).

The district court did not apply the statutory factors for dilution, and simply reasoned that because Haute Diggity Dog’s product was a parody it meant that "there can be no association with the famous mark as a matter of law." The 4th Circuit recognises that a claim of parody does not preclude liability for dilution. But by checking the statutory factors for dilution the 4th Circuit came to the same solution. However, IP Dragon agrees with appellant Louis Vuitton Malletier and the Amicus International Trademark Association (INTA). To use a name such as Chewy Vuiton in combination with the monogram of the letters C and V constitutes dilution by blurring. Dogs chewing on products that are purposively been associated with Louis Vuitton brand, can be seen as tarnishing to a luxury brand. The same can be said if a vulgar snack bar is purposively associating itself in the mind of the public with a 5 start hotel chain via a similar sign as the mark. The similarity between the sign and the mark is not controversial to both courts: "similarity is an essential part of a parody, as the similar marks and trade dress must "convey two simultaneous-and contradictory-messages: that it is the original, but also that it is not the original and is instead a parody."" The 4th Circuit stated: "The satire is unmistakable. The dog toy is a comment on the rich and famous, on the Louis Vuitton name and related marks, and on conspicuous consumption in general." This statement is subjective. Even if it really is parody, it can be argued that Haute Diggity Dog rides on the coat tail of a famous brand and misappropriates Louis Vuitton's substantial investments in labour, skill, effort and capital.
Hong Kong does not have a parody exception in its Trade Marks Ordinance. If they would have such a provision, it would be in Chapter 559, Section 19 'Exceptions to infringements', see here.

Louis Vuitton filed a lawsuit for trademark dilution, false designation of origin and unfair competition against Warner Brothers over the use of a fake LV bag in the movie The Hangover 2, and wants that all DVDs will be pulled. Watchful Louis Vuitton employees found out that the bag used in the movie was made by Diophy, a company that Louis Vuitton is suing, see here.

Over the years Louis Vuitton has organized art exhibitions and supported many artists as a kind of modern maecenas. Mr Vaid is clear about when Louis Vuitton will file lawsuits: when one of its trademarks is used for commercial exploitation. The trademarked logo LV has been abused by a Belgian "artist" in a not so kosher nor halal way: he tattooed pigs with the LV trademark without the permission of Louis Vuitton, and then killed them and sold their skins. Besides the blatant trademark infringement, the lack of animal welfare caused a controversy. The tattooed pigs were banned from the Shanghai Art Fair in 2008, see here.
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Monday, January 09, 2012

"Rethinking IP" Round Table HKU - Drake University

Knowles Building, at HKU
Photo: Danny Friedmann
Last Saturday morning, lawyers, academics and students from Hong Kong, Macau, Singapore, Australia, Japan and the U.S., all passionate about intellectual property rights, gathered at the University of Hong Kong for a round table discussion on intellectual property and policy. It was organised by the Law & Technology Centre of the University of Hong Kong (HKU) and the Intellectual Property Law Center at Drake University Law School located in Des Moines, Iowa. The 10th floor of the Knowles building with its great wooden concentric structure accommodated the participants for this purpose.

The programme consisted of four panel presentations (will be separate blog postings) that urge us to rethink:
Panel I: IP Protection in Hong kong;
Panel II: IP Protection in the Digital Age;
Panel III: IP Protection in Mainland China;
Panel IV: IP Protection globally.

After the opening remarks by professor Douglas Arner, head of the Department of Law of HKU, who welcomed everybody and told that Law & Technology Centre of HKU has already existed for a decade.

Professor Douglas Arner, head of Department of Law, HKU
Photo: Danny Friedmann
The opening speech was given by Peter Cheung, director of the Intellectual Property Department (IPD) of the HKSAR government. 

Left professor Peter K. Yu, Drake University and the right Peter Cheung, director IPD, HKSAR Government
Photo: Danny Friedmann
"Trading Intellectual Property in Hong Kong"   
Mr Cheung recalled that he was invited by the Motion Picture Association of America (MPAA) to come to Hollywood. There, he familiarised himself with the Three-Act Structure, which is a success formula to make a blockbuster movie. But, as Mr Cheung explained, it can be applied to reach his goal, namely to use IP trade to drive stakeholders' economic development. In Act I the context is given, Act II the challenge, and Act III the resolution. I am sure that the Hong Kong movie scene uses a similar scheme to keep the audiences captivated. Those Chinese from the Mainland, versed in Marxism, might recall the different acts as Hegel's thesis, anti-thesis, synthesis, respectively. So if Act I is the setting whereby Hong Kong is introduced as a Special Administrative Region with the ambition to become a regional knowledge hub, Act II is the challenge of how to get there? In other words, how to apply IP, how to monetise these intangible assets? Mr Cheung was inspired by a Japanese car manufacturer who was not interested in cars, but in the money that you can make with cars. This same approach should be followed with IP. (IP Dragon wonders whether it is really possible to exploit IP, without really loving it?). MBAs teach you many interesting things but not about the role of intangibles, Mr Cheung said. Therefore, we need to map out our niche, and make an inventory of what is already available, predict change, seize opportunity and collaborate to innovate, and execute these processes in parallel. Because, we live in an IP economy, Mr Cheung told. The significance becomes clear when one looks at the most valuable brand in the world: Coca-Cola (71,861 million U.S. dollar, according to Interbrand in October 2011). If all tangibles are destroyed, Coca-Cola could resurrect itself because of the worth of its intangibles. IP can be lucrative, even though it is sometimes tiny. For example Mr Cheung knows the composer of the two second jingles.
If one accepts that one person in a million goes to the best university and has the change to become really  innovative, then Mainland China wins (with 1,340 people), Europe will be in second place (833 person ) and the US (312 person) third place. Hong Kong gets only 8 of these talented people. Hong Kong should become a platform where demand and supply come together. According to Mr Cheung Hong Kong can bring together IP owners that want to sell some of their IP, via IP intermediaries (for this Hong Kong needs officials, professionals, scientists and financiers) so that investors can buy IP. Now only goods and services are traded. There should be transformation to IP.
Hong Kong can have a first-mover advantage in IP trade. Hong Kong has a rule of law, attractive tax system, with a bilingual work force, and is not a gate-to-China, but is part of China. Hong Kong has to take the initiative and make it blaze its own trail. Shenzhen already has a trade platform, but just a website and they seem not very active, they do not have an international nor a holistic approach to the trade platform. China each province has its own platform. In Hong Kong there are more professionals.
The HKSAR government seems to have a lot of attention to niches such as Islamic banking. In the audience there was some concern about whether Mr Cheung is getting enough support from the government. Mr Cheung is well positioned to convince the HKSAR government for his case.
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Friday, January 06, 2012

Key IP Question Before Considering Joint-Venture: Am I Educating My Future Competitor Or Building A Long-Term Partnership?

Colin Davies, managing director of Accenture Software, wrote a column for China Daily European Weekly (always asking whether the content is not usable for the Chinese edition) about ways that will make a better cooperation between Chinese and Western software companies possible: "The West will need greater assurances that the regulatory environment is friendly and conducive to building strong business relationships in ways that both sides can view as credible and mutually beneficial." Who can disagree with this.

Mr Davies also tries to answer the question of how a Western software developer can give a client in China a jump-start asset and let them customize it, while at the same time protecting their intellectual property?

"Although Chinese laws do exist to protect intellectual property (IP), the question is whether anyone is prepared to enforce them. IP protection will need to be adequately addressed before Western software developers are prepared to dive aggressively into the Chinese market."

Then he sketches the situation of a Sino-Western joint-venture, in a bit too optimistic light, in my view:

"Meanwhile, the prospect of a joint venture is attractive because Western companies, rather than investing resources to establish a foothold in a new and very different environment, have the advantage of leveraging the know-how of a local organization already well entrenched in China. This affords them the immediate benefit of a partner that has trust and recognition in the marketplace, knows the local players, and is more likely to defend the IP fiercely for the simple reason that it is also part of theirs."

When simple might be more complex
Some Western companies have been lured (or pushed) a bit too easily in "sharing" their intellectual property without rock-hard agreements that guarantee that the Western company is getting the intellectual property back once the joint venture dissolves. In other words, your joint venture partner can be a significant intellectual property challenge too. Also each company has to think carefully about how much of its knowledge it is willing to transfer in order to get market access. To sum up: Each potential Western company has to ask itself this question: Am I educating a future competitor or building a long-term partnership? Although Mr Davies is not asking the question, he is answering them: "Trust is vital." Read his article here.
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China's NCA: Authorized Copyrighted Works on Video Sharing Sites Average 76 Percent

"China's National Copyright Administration (NCA) recently announced that on average, only 76 percent of the movies and TV series on the country's 18 major video-sharingwebsites are authorized copyrighted works",  wrote Lu Yanxia of Beijing Daily, edited and translated by Yao Chun of People's Daily Online here.

The top 5 most popular video sites in China are, according to Alexa
1. Youku
2. Tudou
4. 56.com
5. Joy.cn

Video sharing sites Xunlei, VeryCD, and Baidu video have not submitted the list of copyrighted movies and tv series they share to NCA. So the percentage might go up or down.

I think this percentage is too low. This problem is not limited to China. I think the enforcement system for online copyrighted works is in need for a systemic overhaul. I will publish a paper on the subject soon. 

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Wednesday, January 04, 2012

Fast Moving Counterfeit Goods From China Found in India

For a long time FMCG was the abbreviation for Fast Moving Consumer Goods, also in India. But you might take the C to mean counterfeit, because an increasing amount of counterfeit healthcare, skin cremes, shampoos, toothpaste and cigarettes of famous Indian companies such as ITC (India's second biggest FMCG) and Dabur (India's fourth biggest FMCG) and are sold in India and some African countries. India's motto "Truth Alone Triumphs" hopefully provides solace.

Read The Economic Times article about fake Indian products made in China here.

There is something fundamentally wrong
when the label Made in India is
Made in China.

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Tuesday, January 03, 2012

Golden Combination: Chow Tai Fook and Disney

"You can't stay in your corner of the Forest waiting for others to come to you. You have to go to them sometimes," said Winnie the Pooh.

Winnie the Pooh: "All this gold makes me crave for ... honey."
Exhibition at Yitian Holiday Plaza,
Windows of the World, Shenzhen
Photo Danny Friedmann

Now Winnie is talking the talk and walking the walk, since Disney joined forces with Hong Kong jewelry chain store Chow Tai Fook Jewellery Group Ltd., that just was listed to the Hang Seng Stock Exchange (and as of today is part of the Hong Kong Global Composite Index and Hong Kong Composite Index, see here). 

Chow Tai Fook raised 2 billion U.S. dollars in its Initial Public Offering to get enough funds to realise its plan to expand its points of sale in China, Hong Kong and Macau to 2,000 stores by 2016. Now, Chow Tai Fook has around 1,500 stores, mostly in China. In Macau it has about 80 stores. Chow Tai Fook also has stores in Taiwan, Singapore and Malaysia. 

Chow Tai Fook was awarded Disney's product licence, see here, to take advantage from the recognition of Disney's  iconic bear (which, according to girls and even grown up women has a high "cuteness" factor) and combine it with the jewelry retail expertise of Chow Tai Fook in China, Hong Kong and Macau.

Do you consider to engage in co-branding and you want to know more information about the legal implications, contact ipdragon at gmail.
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