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cellspacing="0" cellpadding="1"> <tr> <td width="101"><b><font face="verdana,helvetica,arial,sans-serif" size="2" class="knowledgeheading1">Author:</font></b></td> <td width="245"><font face="verdana,helvetica,arial,sans-serif" size="2" class="knowledgecontent1"> <a href="/eng/ourpeople/AnnieTsoi.htm"><font color="#0000CC">Annie Tsoi</font></a> </font></td> </tr> <tr> <td width="101"><b><font face="verdana,helvetica,arial,sans-serif" size="2" class="knowledgeheading1">Service Area:</font></b></td> <td width="245"><font face="verdana,helvetica,arial,sans-serif" size="2" class="knowledgecontent1"> <a href="/eng/ourservices/services_11.htm"><font color="#0000CC">Intellectual Property</font></a> </font></td> </tr> <tr> <td width="101"><b><font face="verdana,helvetica,arial,sans-serif" size="2" class="knowledgeheading1">Date:</font></b></td> <td width="245"><font face="verdana,helvetica,arial,sans-serif" size="2" class="knowledgecontent1"> April 2007 </font></td> </tr> <tr> <td width="101"><b><font face="verdana,helvetica,arial,sans-serif" size="2" class="knowledgeheading1">Country:</font></b></td> <td width="245"><font face="verdana,helvetica,arial,sans-serif" size="2" class="knowledgecontent1"> <a href="/eng/aboutus/overview.htm"><font color="#0000CC">Hong Kong</font></a> </font></td> </tr> </table> </td> </tr> <tr> <td width="140" background="/eng/images/knowledge/symbol.gif"></td> <td width="500" valign="top"> <hr> <table width="500" border="0" cellspacing="0" cellpadding="0"> <tr> <td>&nbsp;</td> </tr> <tr> <td> <div align="left"> <table border="0" cellpadding="0" width="500" cellspacing="0"> <tr> <td valign="top"> <p ><a NAME="contents"><u><strong><font color="#0000ff" size="4" face="verdana">China IP Bulletin </font></strong></u></a></p> <div align="left"> <table BORDER="0" CELLPADDING="5" WIDTH="500" cellspacing="5"> <tr> <td WIDTH="231" VALIGN="TOP"><p align="left"><a href="#1"><b><font face="verdana" size="2">The Supreme People's Court Issues Judicial Interpretation on the Anti-Unfair Competition Law</font></b></a></td> <td WIDTH="234" VALIGN="TOP"><p align="left"><a href="#5"><b><font face="verdana" size="2">Reciprocal Enforcement of Judgments Bill Gazetted in Hong Kong</font></b></a></p></td> </tr> <tr> <td WIDTH="231" VALIGN="TOP"><p align="left" ><a href="#2"><b><font face="verdana" size="2">ISP Liability for copyright infringement - Sharing the burden? </font></b></a></td> <td WIDTH="234" VALIGN="TOP"><p align="left"><a href="#6"><b><font face="verdana" size="2">Taking Action Against Company Name Hijackers</font></b></a></p></td> </tr> <tr> <td WIDTH="231" VALIGN="TOP"><p align="left" ><a href="#3"><b><font face="verdana" size="2">Introduction of a General Bond to facilitate Customs Protection of Intellectual Property Rights</font></b></a></td> <td WIDTH="234" VALIGN="TOP"><p align="left"><a href="#7"><b><font face="verdana" size="2">Comparative Advertising in the PRC - Treading a fine line?</font></b></a></p></td> </tr> <tr> <td VALIGN="TOP"><a href="#4"><b><font face="verdana" size="2">Top 10 Cases for 2006 Announced by the Beijing Higher People's Court</font></b></a></td> <td VALIGN="TOP"><a href="#8"><b><font face="verdana" size="2">Professional Profiles:<br> Ronald Chu<br> Alice Tang </font></b></a></td> </tr> </table> </div> <table border="0" cellpadding="0" width="500" cellspacing="0"> <tr> <td valign="top" WIDTH="500"><p ALIGN="left" style="margin-right: .98">&nbsp;</p> <p ALIGN="left" style="margin-right: .98"><strong><font size="2" face="Verdana"><a name="1"></a>THE SUPREME PEOPLE'S COURT ISSUES JUDICIAL INTERPRETATION ON THE ANTI-UNFAIR COMPETITION LAW </font></strong></p> <p ALIGN="left" style="margin-right: .98"><font size="2" face="Verdana">On 30 December 2006, over a decade after the Anti-Unfair Competition Law (&quot;UCL&quot;) was promulgated, The Supreme People&rsquo;s Court issued its judicial interpretation on the application of the law in civil unfair competition cases (the &quot;Interpretation&quot;). The Interpretation became effective on 1 February 2007 and provides the first detailed explanation of the UCL since it came into effect in 1993. The main thrust of the Interpretation is to clarify the scope of Article 5(2) of the UCL, which prohibits the unauthorised use of the trade name, packaging or trade dress of a well-known product and Article 10, regarding the protection of trade secrets.</font></p> <p ALIGN="left" style="margin-right: .98"><font size="2" face="Verdana"><strong>Well-known Product</strong></font></p> <p ALIGN="left" style="margin-right: .98"><font size="2" face="Verdana">According to the UCL, the unauthorised use of the name, packaging or trade dress of a well-known product so as to mislead or confuse consumers, constitutes an act of unfair competition. However, the UCL provides no definition as to what is a &quot;well-known product&quot;.</font></p> <p ALIGN="left" style="margin-right: .98"><font size="2" face="Verdana">The Interpretation defines a &quot;well-known product&quot; as &quot;a product which is known and has a certain degree of reputation among the relevant public in the territory of the PRC&quot;. The Interpretation set out the factors that need to be taken into consideration when determining whether a product is well-known including the duration and geographical extent of sales of the product; the product's revenue and market share; the duration, extent and geographical area of any advertising of the product; and examples of where the product was previously recognised as well-known.</font></p> <p ALIGN="left" style="margin-right: .98"><font size="2" face="Verdana"><em>The extent to which the product must be well known in the PRC itself is not clear but if the product has been recognised as well-known elsewhere, this may enhance the chances of it being recognised in the PRC. However, if a product has no reputation in the PRC, recognition as well-known in other countries alone, is unlikely to help.</em></font></p> <p><font size="2" face="Verdana"><strong>Confusion</strong><br> &quot;Confusion&quot; includes not only confusion that the defendant's product is the well-known product, but also that it has been endorsed by the proprietor of the well-known product, or that it is in some way connected or associated with the proprietor of the well-known product. There is no need to prove actual confusion provided that the defendant&rsquo;s conduct is sufficient to cause confusion. Confusion is deemed if the name, packaging or trade dress is identical, or almost identical, to the well-known product.</font></p> <p><font size="2" face="Verdana">The Interpretation makes clear that the burden of proving the product's reputation rests with the Plaintiff. Also, the product must be well-known to the relevant public in the PRC.</font></p> <p><font size="2" face="Verdana"><strong>Trade Dress</strong><br> The Interpretation provides guidance as to what constitutes &quot;trade dress&quot; which is not defined in the UCL. This includes the decoration of a place of business, the tools and equipment used, and the uniforms of personnel. However, generic, descriptive or non-distinctive trade dress will not be protected. It may be possible to acquire distinctiveness through use but the shape of a product which is dictated solely by function or technical effect will not be recognised.</font></p> <p><font size="2" face="Verdana">The Interpretation provides that when determining whether a product is identical or similar to the name, packaging or trade dress of a well-known product, references can be made to the principles and methods adopted for determining identical or similar trade marks.</font></p> <p><font size="2" face="Verdana"><strong>Enterprise Names and Names of Individuals</strong></font><br> <font size="2" face="Verdana">The UCL prohibits the unauthorised use of another's enterprise name or personal name which causes confusion. The Interpretation provides that &quot;enterprise name&quot; shall include not only enterprise names legally registered in the PRC, but also foreign enterprise names which have been used commercially in the territory of the PRC, but not necessarily registered.</font></p> <p><font size="2" face="Verdana">Protection will also be extended to the &quot;name of a natural person&quot; which has been used in merchandising operations, including a pseudonym or stage name. This should help celebrities to take action against unauthorised use of their names.</font></p> <p><font size="2" face="Verdana">The Interpretation makes clear that the enterprise name or individual name must have acquired a certain degree of reputation in the market and be known to the relevant public.</font></p> <p><font size="2" face="Verdana"><strong>Trade Secrets</strong><br> The UCL already prohibits businesses from obtaining trade secrets by way of theft, inducement, duress or other illegal means. It also prohibits the disclosure of trade secrets obtained illegally or in breach of a confidentiality agreement. As the scope of manufacturing and production in the PRC increases in scale and sophistication, the pressure on companies to protect their trade secrets has increased.</font></p> <p><font size="2" face="Verdana"><em>The UCL defines &quot;trade secret&quot; as any technical or operational information, which is unknown to the public; is of practical use and is capable of bringing economic benefits to the owner of the information; and which is subject to confidentiality measures adopted by the owner of the information.</em></font></p> <p><font size="2" face="Verdana">The Interpretation provides guidance on the scope of protection of trade secrets:</font></p> <ul> <li><font size="2" face="Verdana">Information &quot;unknown to the public&quot; means information &quot;not generally known and easily obtainable by the relevant personnel belonging to the same realm of technology, business or industry.&quot; The Interpretation sets out in detail various circumstances for assessing whether information is &quot;unknown to the public&quot;. These are similar to the test for the novelty of a patent.<br> </font></li> <li><font size="2" face="Verdana">The information must have actual or potential commercial value and is capable of enabling the owner to gain a competitive advantage.<br> </font></li> <li><font size="2" face="Verdana">Reasonable protective measures appropriate to the commercial value of the trade secret must have been adopted. Factors to be considered are set out and examples of appropriate measures are provided including:</font> <ul> <li><font size="2" face="Verdana">ensuring that only relevant personnel are informed of sensitive information;</font></li> <li><font size="2" face="Verdana"> adopting encryption or other protective measures;<br> marking information as confidential;<br> </font></li> <li><font size="2" face="Verdana">adopting passwords or codes for access;<br> </font></li> <li><font size="2" face="Verdana">confidentiality agreements;<br> </font></li> <li><font size="2" face="Verdana">limiting physical access to areas containing confidential information.</font><br> </li> </ul> </li> </ul> <p><font size="2" face="Verdana">The Interpretation makes clear that &quot;reverse engineering&quot; is not a trade secret infringement. However, if a trade secret was obtained by means of unfair or illegal measures, the infringer cannot rely on this defence.</font></p> <p><font size="2" face="Verdana">In the past, it was not clear whether &quot;customer lists&quot; should be regarded as trade secrets. The Interpretation clarifies that they are. However, it also provides that an ex-employee will not be in breach of the UCL for entering into business dealings with customers of his ex-employer if it can be shown that the customer independently chose to enter into business dealings with the ex-employee. It is uncertain whether this is still the case if the employee actively solicits customers from the ex-employer.</font></p> <p><font size="2" face="Verdana">The burden is on the plaintiff to establish that there has been a violation of trade secrets.</font></p> <p><font size="2" face="Verdana">The Interpretation also gives a licensee of trade secrets the right to sue for infringement.</font></p> <p><font size="2" face="Verdana"><strong>Conclusion</strong><br> The Interpretation codifies many administrative regulations and provisions already promulgated by the SAIC or local government. However, these existing regulations do not have the same legal effect as the Interpretation, which is binding on all People&rsquo;s Courts. It is hoped that the Interpretation will help to strengthen IP protection in the PRC. </font></p> <p><font size="2" face="Verdana">However, the issue of whether a product must have been used or sold in the PRC in order to be regarded as well-known is a crucial one for many brand owners. Strictly speaking, the definition of &quot;well-known product&quot; does not exclude the possibility of a foreign product being recognised as well-known in the PRC to the relevant public, even though it has not actually been sold there. It is interesting to note that the Draft Interpretation which was published for consultation provided that &quot;a product which has not been used in the PRC would generally <u>not be recognised as well-known</u>&quot;. This clause does not appear in the Interpretation. However, it remains to be seen whether, in practice, the Courts or administrative authorities will still require some actual use in the PRC.</font></p> <p align="right"><font size="2" face="Verdana"><a href="#contents"><font face="verdana" size="1">Back to Top</font></a></font></p> <p ALIGN="left" style="margin-right: .98"><strong><font size="2" face="Verdana"><a name="2"></a>ISP LIABILITY FOR COPYRIGHT INFRINGEMENT - SHARING THE BURDEN? </font></strong></p> <p ALIGN="left" style="margin-right: .98"><font size="2" face="Verdana">The China Internet Network Information Centre (CNNIC) has reported that the number of active Chinese Internet users was 111 million at Dec. 31, 2005. According to a recent statement made by Charles Zhang, chairman and CEO of Sohu.com, Chinese Internet users actually number over 150 million, perhaps even 200 million, since the CNNIC does not take account of mobile users connecting online. Either way, there seems little doubt that the PRC is on its way to, or has already surpassed, the US in internet usage. Nielsen NetRatings reports that the U.S. had 154 million active users in January 2006 and only a fraction of the Chinese population are currently online.</font></p> <p><font size="2" face="Verdana">The infringement of IP rights through online platforms has become an increasingly visible problem. The PRC Government has worked hard to strengthen the online IP protection regime. Under the Copyright Law, copyright owners have exclusive rights to distribute their works over information networks and the copyright regime seeks to balance the interests of Internet Service Providers (ISPs) and copyright owners. However, the recent billion dollar lawsuit filed by <em>Viacom</em> against <em>YouTube</em>, the decisions in the Baidu cases last year (where the Chinese internet search engine was sued for copyright infringement in 8 separate cases) and the <em>Cooper v Universal Music Australia Pty Ltd</em> decision in February this year, highlight the difficulty of determining the role played by ISPs in copyright infringement.</font></p> <p><font size="2" face="Verdana"><em>The Measures for the Administrative Protection of Internet Copyright (&quot;the Measures&quot;) introduced in 2005, specifically provide for administrative penalties to be imposed on ISPs in certain circumstances. The Measures are supplemented by the Regulations on Protection of Information Network Transmission Right of 1 July 2006, (&quot;the Regulations&quot;) which help to clarify the extent of liability for ISPs in the PRC. The Measures and Regulations are similar to some provisions contained in the US Digital Millennium Copyright Act (&quot;DMCA&quot;) and indicate that the PRC is following the international trend. It is interesting to note that a recent Consultation Paper issued by the Hong Kong Government suggests adopting measures similar to the DMCA.</em></font></p> <p><font size="2" face="Verdana"><strong>ISPs, ICPs and OSPs</strong><br> An Internet Service Provider (&quot;<strong>ISP</strong>&quot;) is a business or organization that provides consumers with access to the Internet and related services, such as domain name registration and web-hosting. ISPs are distinct from Internet Content Providers (&quot;<strong>ICP</strong>&quot;) who actually create information, educational or entertainment content for the Internet, CD-ROMs or other software-based products. ISPs that simply connect users to the Internet also need to be distinguished from Online Service Providers (&quot;<strong>OSPs</strong>&quot;) such as America Online (AOL) who provide access to the Internet but also have their own independent online content.</font></p> <p><font size="2" face="Verdana"><em>The Measures make clear that they apply to those service providers that deal only with the uploading, storage, linkage and searching of works, audio and video contents, but have no part in editing, revising or selecting the stored or transmitted content. The direct provision of internet content falls to be governed by the Copyright Law.</em></font></p> <p><font size="2" face="Verdana"><strong>Liability of ISPs</strong><br> Under the Regulations, some specific activities of ISPs are exempted from liability:</font></p> <ul> <li><font size="2" face="Verdana">where the ISP merely transmits copyrighted material provided by a third party by an automatic, technical process without selecting or modifying the content of the material and the material is provided to designated parties and access by others is prevented;</font></li> <li><font size="2" face="Verdana">system caching through an automatic process, whereby the ISP temporarily stores material on its network for the purpose of improving network efficiency. </font></li> </ul> <p><font size="2" face="Verdana">Generally, the Measures and the Regulations provide that ISPs may be subject to administrative penalties if they do not comply with specific conditions. A copyright owner may serve a notice on the ISP identifying infringing content on the ISP&rsquo;s service platform. Upon receipt of the copyright notice, the ISP should immediately remove or disable access to the alleged infringing works and at the same time forward the notice to the relevant content provider. For webhosting, there is also a requirement that the ISP does not derive economic benefit directly from the works uploaded by the users.</font></p> <p><font size="2" face="Verdana"><strong>Obligations of ISPs</strong><br> <em>There is an obligation on the ISP to keep the copyright owner's notice for 6 months. Records of the information provided, the time of dissemination, the content provider&rsquo;s time of access, user account number, internet address or domain name and contact details must also be preserved for 60 days. </em></font></p> <p><em><font size="2" face="Verdana">Article 13 of the Regulations provides that the copyright administrative authorities may require ISPs to hand over this information when investigating suspected infringement. This is extremely significant for copyright owners who face great difficulties identifying online infringers.</font></em></p> <p><font size="2" face="Verdana"><strong>Counter Notice</strong><br> If the provider of the alleged infringing content is of the view that there is no infringement, it can send a counter notice to the ISP and the copyright owner. Upon receiving such a counter notice from the content provider, the ISP may restore the removed content.</font></p> <p><font size="2" face="Verdana"><strong>Penalties for ISPs</strong><br> If an ISP disseminates internet content with actual knowledge that the content is infringing, or if the ISP does not have knowledge, but fails to take the steps outlined above when notified by the copyright holder that the contents are infringing, the ISP will be jointly liable with the content provider. The administrative authorities may order it to remove the content and may confiscate illegal income and impose a fine of not more than 3 times the illegal revenue, or a maximum of RMB 100,000, if the illegal revenue is difficult to calculate.</font></p> <p><font size="2" face="Verdana"><strong>ISP Knowledge</strong><br> Article 12 of the Measures states that if there is no evidence to indicate knowledge on the part of the ISP, or if the ISP removed the relevant content after receiving the copyright owner's notice, the ISP shall not bear any administrative or legal liability.</font></p> <p><font size="2" face="Verdana">However, it should be noted that Article 22 of the Regulations concerning &quot;hosting&quot; activities only exempts the ISP&rsquo;s liability provided that it &quot;is not aware and <u>has no reason to be aware</u> that the works provided by the content providers are infringing&quot;. Article 23 concerning searching and linking services, also provides that &quot;a network service provider which is <u>or should be aware</u> that the linked works, performances, audio and video products are infringing shall bear joint tort liability&quot;. This suggests an element of &quot;constructive notice&quot;.</font></p> <p><font size="2" face="Verdana">In the <em>Baidu</em> cases (7 of which were determined after the Regulations came into force), the courts held that the function of a search service is to locate target information and that the ISP cannot be held responsible for the legality of content on third-party websites over which it has no control.</font></p> <p><font size="2" face="Verdana"> This is in contrast to the Australian <em>Cooper </em>case, which involved the provision of hyperlinks to copyright sound recordings. The court held that the ISP hosting the site was liable for authorising copyright infringement as it had knowledge of its contents, high usage and copyright problems, as well as the power to remove the website. </font><font size="2" face="Verdana">The ISP also gained a commercial advantage from advertising on the website. The Chinese legislation should catch the cases where the ISP had actual knowledge.</font></p> <p><font size="2" face="Verdana"><em>But to what extent Article 22 and 23 introduce the possibility of ISPs having &quot;constructive notice&quot; of infringements, remains to be seen. This is particularly interesting in light of the reported comments by YouTube that the DMCA gives online service providers protection from copyright lawsuits so long as they comply with requests to remove unauthorised materials.</em></font></p> <p><em><font size="2" face="Verdana">As the number of Internet users in the PRC grows, it may be that ISPs will<br> have to share the burden of eliminating infringing materials from the Internet.</font></em></p> <p align="right"><font size="2" face="Verdana"><a href="#contents"><font face="verdana" size="1">Back to Top</font></a></font></p> <p><strong><font size="2" face="Verdana"><a name="3"></a>INTRODUCTION OF A GENERAL BOND TO FACILITATE CUSTOMS PROTECTION OF INTELLECTUAL PROPERTY RIGHTS</font></strong></p> <p><font size="2" face="Verdana">Using Customs to enforce Intellectual Property Rights (&quot;IPRs&quot;) has been proven to be very effective in the PRC. Figures disclosed by the Authorities indicate that Customs dealt with over 8,000 cases of IPR infringement from 1996 to 2006, amounting to nearly RMB1 billion in value.</font></p> <p><font size="2" face="Verdana">However, the requirement to pay a separate security bond in respect of each consignment of suspected counterfeit products detained by Customs, has often been a big problem for foreign IP owners. The bond is calculated on the basis of the value of the detained goods, which may be used as compensation in the event of loss suffered by the Consignee or Consignor due to wrongful detention, plus the cost incurred by Customs for storage, maintenance and disposal of the detained goods.</font></p> <p><font size="2" face="Verdana">Under the Regulations issued in 2004, IP owners were required to provide a<br> bond for each seizure within 3 working days upon receipt of Customs&rsquo;<br> notification of the discovery of suspected counterfeit goods. The requirement is especially troublesome for foreign IP owners who need to verify infringing goods quickly but may be hampered by internal approval procedures for the payment of the bond.</font></p> <p><font size="2" face="Verdana">In order to ease the financial and administrative burden on IP owners, the General Administration of Customs of the PRC issued Notice 31/2006, effective from 1 July 2006, providing for the acceptance of a general bond in enforcing IPRs through Customs.</font></p> <p><font size="2" face="Verdana">Under the Notice, IP owners may now provide a general bond in the form of a continuing bank guarantee to cover all the bonds necessary for seizures by Customs throughout a year.</font></p> <p><font size="2" face="Verdana"><em>Only those IP owners who have recorded their IPRs with Customs and have already filed several detention requests with Customs within the past year will be entitled to take advantage of the general bond. The amount covered by the general bond shall be for RMB200,000, or the sum equivalent to the aggregate of storage, maintenance and destruction fees paid to Customs by the IP owner for cases concluded in the previous year, whichever is greater.</em></font></p> <p><font size="2" face="Verdana"><strong>Application Procedure</strong></font></p> <p><font size="2" face="Verdana">An application must be made to Customs together with a letter of guarantee issued by a bank that is allowed to provide financial services in Mainland China and a list of seizures by Customs concluded in the preceding year, itemizing the expenses for storage, maintenance and disposal of the infringing goods paid in each case.</font></p> <p><font size="2" face="Verdana">The bank guarantee must be effective until 30 June of the following year. However, the bank guarantee can only be relied on until the end of the calendar year in which the application was made. The extra 6 months before the expiry of the general bond is to allow the Customs to investigate and conclude the case within that time frame.</font></p> <p><font size="2" face="Verdana">A foreign IP owner can rely on an existing account with a bank which has been approved to provide financial services in China; it is not necessary to open a separate bank account with a particular bank in China. A subsidiary of a foreign IP owner can apply for the bank guarantee on behalf of its parent company.</font></p> <p><font size="2" face="Verdana">If Custom&rsquo;s expenses are unpaid 10 working days after receipt of a request<br> from Customs, or if an IP owner does not pay compensation for a wrongful<br> detention and the People&rsquo;s Court has issued an enforcement order, Customs will notify the Guarantor in writing seeking reimbursement up to the guaranteed amount. If the expenses or compensation exceed the amount of the general bond, Customs will have to pursue the IP owner.</font></p> <p><font size="2" face="Verdana">The new measure should make it easier for IP owners to enforce their rights through Customs. For large foreign IP owners, who have direct investments in China or subsidiaries in China, the requirement of a bank account with any China-approved bank may not be difficult to achieve. However, for medium to small foreign IP owners, this requirement may still cause problems.</font></p> <p align="right"><font size="2" face="Verdana"><a href="#contents"><font face="verdana" size="1">Back to Top</font></a></font></p> <p><font size="2" face="Verdana"><strong><a name="4"></a>TOP 10 CASES FOR 2006 ANNOUNCED BY THE BEIJING HIGHER PEOPLE'S COURT</strong></font></p> <p><font size="2" face="Verdana">In December 2006, the Beijing Higher People's Court announced the 10 top intellectual property (&quot;IP&quot;) cases of 2006. Whilst Chinese courts are not bound by precedent, the principles stated in these cases will offer guidance for future similar cases and illustrate the wide variety of different IP issues being litigated in the PRC.</font></p> <p><font size="2" face="Verdana"><strong>Trade Marks</strong><br> The top trade mark case which attracted much overseas attention is the <u><em>Xiu Shui Clothing Market (&quot;Silk Market&quot;)</em></u> trade mark infringement case. Here, Chanel, Burberry, Gucci, Louis Vuitton and Prada successfully sued the proprietor who sold counterfeit products in the market as well as the market operator for trade mark infringement. The court ruled that the market operator had a responsibility to monitor, stop and eliminate counterfeiting in the market. Yet the operator failed to take timely action after being informed by the plaintiffs to stop its tenant&rsquo;s infringing<br> activities in the market. These rulings were upheld on appeal.</font></p> <p><font size="2" face="Verdana">In <u><em>China National Cereals Oils &amp; Foodstuffs Corp (COFCO). vs. Beijing Jiayu Oriental Wine Co., Ltd. and others</em></u>, the court compensated the plaintiff for economic losses of more than RMB10 million, the highest amount of compensation awarded in IP cases in recent years. The Supreme People&rsquo;s Court upheld the lower court&rsquo;s decision that the defendant&rsquo;s mark &quot;Jia yu Great Wall in Chinese &amp; device&quot; was confusingly similar to the plaintiff&rsquo;s well-known trade mark &quot;Great Wall in Chinese &amp; device&quot; and constituted trade mark infringement.</font></p> <p><font size="2" face="Verdana"><strong>Copyright</strong><br> In the <u><em>&quot;matchstick man&quot;</em></u> case, the Chinese cartoon artist, Zhu Zhi Qiang (&quot;Zhu&quot;) sued Nike Inc. and others for copyright infringement. Nike used the image of a &quot;stick man&quot; in its worldwide advertising campaign to promote a new product and Zhu claimed that this infringed his copyright in the hero of his well-known cartoon works, the &quot;matchstick man&quot;. On appeal, the decision of the lower court was overturned by the Beijing Higher People&rsquo;s Court. It held that the main similarities between the &quot;matchstick man&quot; and &quot;stick man&quot; were commonplace and as such were not protected by copyright.</font></p> <p><font size="2" face="Verdana">The second copyright case concerned the infringement of software created by Beijing Han King Science and Technology Co. Ltd. called the <u><em>&quot;Han King Optic Character Recognition Software Series&quot;</em></u>. The court held that the defendant, Changzhou City Wu Jin District Education Bureau, in allowing its registered users to freely download the said software (the protective mechanism set in place by the plaintiff was decoded) from its website, had committed copyright infringement.</font></p> <p><font size="2" face="Verdana">In an unusual decision involving alleged copyright infringement of a novel written by the plaintiff Zhuang Yu, the court not only ordered the defendant to pay economic losses of RMB200,000, but also to pay RMB10,000 for mental distress suffered by the plaintiff. </font></p> <p><font size="2" face="Verdana">The last copyright infringement case concerned the unauthorised use of the <em><u>China Academy of Science&rsquo;s (&quot;CAS&quot;)</u></em> name and logo by the defendant in the latter&rsquo;s website and promotional materials. The court ruled that the defendant&rsquo;s conduct constituted infringement of the CAS&rsquo;s right to its name and of the copyright in its logo. </font></p> <p><font size="2" face="Verdana"><strong>Patent</strong><br> A significant case to the car manufacturing industry is the case against <em><u>Qin Huang Island Jin Cheng Auto Car Industry Co. Ltd.</u></em> Shenyang Hua Chen Jin Bei Vehicle Co. Ltd successfully sued the defendant for infringement of its registered design patent and was awarded compensation of <br> RMB200,000.</font></p> <p><font size="2" face="Verdana">In a utility model patent infringement case brought by <em><u>Hua Run Li Zhi Yang Hang Furniture Co. Ltd</u></em>, the court in both the first and second instance held that screens being sold by the defendant infringed the plaintiff&rsquo;s registered utility model patent for &quot;assembled screens&quot;. It also held that because the defendant, although claiming to be a distributor only, failed to provide evidence of the source of the infringing products, it was also liable for manufacturing them.</font></p> <p><font size="2" face="Verdana"><strong>Recording Right</strong><br> In the case against the internet content provider (ICP), <em><u>Beijing Famous People Global Technology Co. Ltd.</u></em>, the court found that allowing internet users to download the plaintiff&rsquo;s songs from its website constituted infringement of the plaintiff&rsquo;s right to transmit the songs via the internet. The defendant&rsquo;s argument that the contents of the website were provided by another party and that it was only responsible for uploading the information onto the website were rejected by the court. The defendant was the holder of the ICP permit and as such was responsible for its contents.</font></p> <p><font size="2" face="Verdana"><strong>Unfair Competition</strong><br> In the case of <em><u>Guangdong Da Sheng Culture Transmission Co. Ltd. vs. Guangdong Fei Le Video Production Co. Ltd. and others</u></em>, the defendants&rsquo; use of an album title, album design and packaging similar to those of a popular album of the singer &quot;Daolang&quot; constituted unfair competition. The singer and the producer of the album were ordered to pay compensation of RMB710, 000 to the plaintiff.</font></p> <p align="right"><font size="2" face="Verdana"><a href="#contents"><font face="verdana" size="1">Back to Top</font></a></font></p> <p><font size="2" face="Verdana"><strong><a name="5"></a>RECIPROCAL ENFORCEMENT OF JUDGMENTS BILL GAZETTED IN HONG KONG </strong></font></p> <p><font size="2" face="Verdana">In our November 2006 Asia IP Bulletin, we reported on a groundbreaking agreement (the &quot;Agreement&quot;) signed by the Hong Kong and Mainland Chinese Governments, under which they agreed to recognise and enforce judgments made in each others courts. Legislative changes are now underway in Hong Kong in order to implement the Agreement.</font></p> <p><font size="2" face="Verdana">The Mainland Judgments (Reciprocal Enforcement) Bill, gazetted in Hong Kong on 23 February 2007, is modelled on the Foreign Judgments (Reciprocal Enforcement) Ordinance. The Bill will implement the Agreement by providing for the registration and enforcement by Hong Kong courts of certain money judgments given by designated Mainland courts, exercising their jurisdiction pursuant to a valid exclusive choice of court clause contained in a commercial agreement.</font></p> <p><font size="2" face="Verdana"><strong>Legislative Timetable</strong><br> The first reading of the Bill took place on 7 March 2007. There is no indication of when the second and third readings will take place, but is hoped that the Ordinance will come into effect by the end of this year. In the Mainland, the Supreme People&rsquo;s Court is to promulgate a judicial interpretation to set out the details for implementation of the Agreement.</font></p> <p align="right"><font size="2" face="Verdana"><a href="#contents"><font face="verdana" size="1">Back to Top</font></a></font></p> <p><font size="2" face="Verdana"><strong><a name="6"></a>TAKING ACTION AGAINST COMPANY NAME HIJACKERS</strong></font></p> <p><font size="2" face="Verdana">The registration of company names by unrelated entities incorporating third party trade marks is has always been an issue for trade mark owners. In Hong Kong, the problem is becoming more acute, particularly with PRC entities setting up companies in Hong Kong, and a growing number of companies are being incorporated with well-known company names or trade marks as part of their company name.</font></p> <p><font size="2" face="Verdana">There are a large number of companies in Hong Kong that blatantly include well-known company names or famous trade marks as part of their company name with a view to deceiving the public into believing that these companies are in some way related to the legitimate rights owner. Often, the infringing companies have a Hong Kong address as their registered office but do not carry on any business in Hong Kong. These companies engage in counterfeit or illegal activities in a foreign jurisdiction, such as the PRC, by using the Hong Kong Company Registration to convince the public and/or the authorities in the foreign jurisdiction that they are a branch or overseas office of the legitimate rights owner. Some of these activities are very serious involving financial institutions and manufacturers of goods and services.</font></p> <p><font size="2" face="Verdana">The current legislation in Hong Kong is not well equipped to deal with this problem. The Hong Kong Government is undertaking a complete review of the Companies Ordinance and may address this issue but a Bill is not likely to go before the Legislative Council until 2010. In the meantime, there are a number of possible avenues in striking off these infringing company names. Further information is available upon request.</font></p> <p align="right"><font size="2" face="Verdana"><a href="#contents"><font face="verdana" size="1">Back to Top</font></a></font></p> <p><font size="2" face="Verdana"><strong><a name="7"></a>COMPARATIVE ADVERTISING IN THE PRC - TREADING A FINE LINE? </strong></font></p> <p><font size="2" face="Verdana">Statistics show that in 2006, advertising spending in the the PRC has risen to US$20 million as brands and businesses fight for market share. The regulatory environment governing advertising is now a major concern for companies big and small.</font></p> <p><font size="2" face="Verdana"><strong>What is comparative advertising?</strong><br> Comparative advertising is a sales promotion device that compares the products or services of one trader with those of another. It is designed to highlight the advantages of the goods or services offered by the advertiser as compared to those of a competitor. An inherent danger of this is the potential for unfair practices.</font></p> <p><font size="2" face="Verdana"><strong>The Law of Comparative Advertising in the PRC</strong><br> The<em> &laquo; Advertising Law of the PRC &raquo; (1994)</em> (&quot;ALP&quot;) and the <em>&laquo; Anti-Unfair Competition Law &raquo; (1993)</em> (&quot;UCL&quot;) are the two main laws relevant to comparative advertising in China. The ALP prohibits unfair, misleading and deceptive conduct in advertising activities. The UCL prohibits the passing off of registered trade marks, infringing trade secrets, the illegal use of well-known goods or names of other people, as well as other misleading and deceptive conduct.</font></p> <p><font size="2" face="Verdana">Article 21 of the ALP links the ALP and the UCL by prohibiting any unfair competition in advertising activities. Both the ALP and the UCL must be considered when determining the legality of a particular advertising campaign. The new judicial interpretation on the UCL also provides that advertisements containing biased, disparaging or other misleading views or comments are prohibited.</font></p> <p><font size="2" face="Verdana"><strong>The ALP</strong><br> Article 12 of the ALP prohibits the making of disparaging comments about competitors&rsquo; goods or services in advertising. In practice, many kinds of comparisons, even when the purpose is not to disparage but to compare methods, are forbidden even if the disparagements are only implied.</font></p> <p><font size="2" face="Verdana">In applying the ALP to comparative advertising, three principles need to be considered 1) legality - the products/services advertised and the method of advertisement must be legal, e.g. Article 14 of the ALP explicitly prohibits comparative advertising on medical products; 2) objectivity - the comparison must be based on facts and be scientific and fair; and 3) fairness - all comparisons must be done honestly on the same basis e.g. between products of the same class and age; superiority of a product or service may not be claimed based only on one particular aspect.</font></p> <p><font size="2" face="Verdana"><strong>The UCL</strong><br> While the ALP specifically regulates advertising, the UCL is much broader in scope and prohibits unfair competition in general. Article 9 of the UCL provides that: &quot;an operator may not use advertisements or other means to give false, misleading publicity as to the quality, composition, performance, use, manufacturer, useful life, origin, etc., of the goods. An advertisement operator shall not act as an agent for, design, produce or release advertisements containing false representations of which he is obviously aware, or should be aware.&quot; Article 14 also provides that &quot;an operator may not utter or disseminate falsehoods to damage the goodwill of a competitor or the reputation of his goods.&quot;</font></p> <p align="right"><font size="2" face="Verdana"><a href="#contents"><font face="verdana" size="1">Back to Top</font></a></font></p> <font size="2" face="Verdana"><strong><a name="8"></a>PROFESSIONAL PROFILES </strong></font> <table width="100%" border="0" cellpadding="3" cellspacing="3"> <tr> <td width="25%" align="left" valign="top"><font size="2" face="Verdana"><img src="RonaldChu.jpg" width="114" height="151"></font></td> <td width="75%"><font size="2" face="Verdana"><strong>Ronald Chu</strong> <br> <br> Ronald joined Deacons as an associate in the China I.P. Group in January 2007. He holds a B. Eng. (Hons) in Computer System Engineering from the University of Bristol, U.K., a Postgraduate Diploma in Management Science from the University of Southampton, U.K., CPE from the Manchester University, U.K., PCLL from the University of Hong Kong as well as an LL.M in Chinese and Comparative Law from the City University of Hong Kong.</font></td> </tr> <tr> <td colspan="2"><font size="2" face="Verdana">Ronald specializes in protection and enforcement of intellectual property. He also has experience in conducting intellectual property due diligence exercises in corporate finance transactions such as listing, mergers and acquisitions. He has also advised on various areas of intellectual property law including copyrights, domain names, assignment and licensing of intellectual property rights in Hong Kong and the PRC.</font></td> </tr> </table> <p>&nbsp;</p> <table width="100%" border="0"> <tr> <td width="24%" align="left" valign="top"><font size="2" face="Verdana"><img src="AliceTang_small.jpg" width="116" height="156"></font></td> <td width="76%"><p><font size="2" face="Verdana"><strong>Alice Tang </strong></font></p> <p><font size="2" face="Verdana">Alice joined Deacons as an associate in the China I.P. Group in November 2006.</font></p> <p><font size="2" face="Verdana">Alice holds an LL.B (Hons) from the University of Hong Kong. She has experience in advising, filing and prosecuting trade mark applications as well as opposition and cancellation proceedings. Her practice also cover portfolio management and providing advice on trade mark protection and copyright issues.</font></p></td> </tr> <tr> <td colspan="2"><font size="2" face="Verdana">Alice enjoys outdoor activities in her leisure time. She likes hiking and participating in orienteering activities, as she likes to get in touch with nature. She has also recently developed an interest in water sports and is exploring activities such as canoeing. Besides outdoor activities, she also likes watching movies, bowling and reading all kinds of novels ranging from classics to contemporary literature. She also enjoys poetry, an interest developed from her high school English Literature class.</font></td> </tr> </table> <p align="right"><a href="#contents"><font face="verdana" size="1">Back to Top</font></a></p> </td> </tr> <tr> <td valign="top" WIDTH="500"> <p>&nbsp;</p> <p><font face="verdana" size="2">Whilst every effort has been made to ensure the accuracy of this publication, it is for general guidance only and should not be treated as a substitute for specific advice.</font> </p></td> </tr> </table> </td> </tr> </table> </div> </td> </tr> </table> </td> </tr> <tr> <td width="140" height="95">&nbsp;</td> <!-- <td width="500" valign="bottom" height="95" align="right"><a href="javascript:window.print();"><img src="/eng/images/cmn/printthispage.gif" border="0"></a>&nbsp;&nbsp;<a href="javascript:window.location = 'mailto:?body=' + window.document.URL;"><img src="/eng/images/cmn/emailthispage.gif" border="0"></a></td>--> <td width="500" valign="bottom" height="95" align="right"><a href="javascript:window.print();"><img src="/eng/images/cmn/printthispage.gif" border="0"></a>&nbsp;&nbsp;<a href="javascript:window.location = 'mailto:?body=' + window.document.URL;window.location = window.document.URL;"><img src="/eng/images/cmn/emailthispage.gif" border="0"></a></td> </tr> <tr> <td width="140" height="95">&nbsp;</td> <td width="500" valign="bottom" height="95" align="right"><a href="/eng/knowledge/knowledge.htm"><img src="/eng/images/knowledge/backup_to_knowledge.gif" width="305" height="36" border="0"></a></td> </tr> </table> <!----> <!--End Template Here--> </td> </tr> <!--Begin Menu--> <tr> <table width="800" border="0" cellspacing="0" cellpadding="0"> <tr> <td width="53"><img src="/eng/images/spacer.gif" width="53" height="10"></td> <td class="index_footer"> <a href="javascript:newPopUp('/eng/header_session/terms_of_use.htm');"><font color="#6699cc">Terms of Use</font></a> | <a href="javascript:newPopUp('/eng/header_session/Disclaimer.htm');"><font color="#6699cc">Disclaimer</font></a> | <a href="javascript:newPopUp('/eng/header_session/privacy.htm');"><font color="#6699cc">Privacy Policy </font></a> | <a href="javascript:newPopUp('/eng/header_session/pic.htm');"><font color="#6699cc">Personal Information Collection Statement</font></a> | <a href="/index.htm"><font color="#6699cc">Deacons International</font></a> <br> Copyright&copy;2006, Deacons All rights reserved. </font> <td width="155"> <p><img src="/eng/images/img_hk_asia.gif" width="155" height="18"></p> </td> </tr> <tr> <td width="53"><img src="/eng/images/spacer.gif" width="20" height="20"></td> <td class="footer">&nbsp;</td> <td width="155">&nbsp;</td> </tr> </table> </tr> <!--End Menu--> </table> <!--Begin Menu--> <!-- ******** BEGIN ALLWEBMENUS CODE FOR deacons ******** --> <img name='awmMenuPathImg-deacons' id='awmMenuPathImg-deacons' src='/eng/cmn/js/awmmenupath.gif' alt=''> <script type='text/javascript'>var MenuLinkedBy='AllWebMenus [2]', awmBN='456'; awmAltUrl='';</script> <script language='JavaScript1.2' type='text/javascript'> var awmMenuName='deacons'; var awmLibraryPath='/eng/cmn/js/awmData-deacons'; var awmImagesPath='/eng/cmn/js/awmData-deacons'; var awmSupported=(navigator.appName + navigator.appVersion.substring(0,1)=="Netscape5" || document.all || document.layers)?1:0; if (awmAltUrl!='' && !awmSupported) window.location.replace(awmAltUrl); if (awmSupported){ var awmMenuPath=''; if (document.all) mpi=document.all['awmMenuPathImg-deacons'].src; if (document.layers) mpi=document.images['awmMenuPathImg-deacons'].src; if (navigator.appName + navigator.appVersion.substring(0,1)=="Netscape5") mpi=document.getElementById('awmMenuPathImg-deacons').src; //awmMenuPath=mpi.substring(0,mpi.length-16); var nua=navigator.userAgent,scriptNo=(nua.indexOf('Gecko')>-1)?2:((document.layers)?3:((nua.indexOf('Opera')>-1)?4:((nua.indexOf('Mac')>-1)?5:1))); document.write("<" + "SCRIPT SRC='"+awmLibraryPath+"/awmlib"+scriptNo+".js'><\/SCRIPT>"); var n=null; awmzindex=1000; } var awmSubmenusFrame=''; var awmSubmenusFrameOffset; var awmOptimize=0; function awmBuildMenu(){ if (awmSupported){ }} </script> <script type='text/javascript'>awmBuildMenu();</script> <!-- ******** END ALLWEBMENUS CODE FOR deacons ******** --> <!-- ******** BEGIN ALLWEBMENUS CODE FOR deacons ******** --> <img name='awmMenuPathImg-deaconstop' id='awmMenuPathImg-deaconstop' src='/eng/cmn/js/awmmenupath.gif' alt=''> <script type='text/javascript'>var MenuLinkedBy='AllWebMenus [2]', awmBN='456'; awmAltUrl='';</script> <script type='text/javascript' language='javascript1.2' src='/eng/cmn/js/topmenu.js'></script> <script type='text/javascript'>awmB