Sven-Eric WiegemannChinese Intellectual Property ProtectionFinal Exam 01/2013
2012~2013 1nd Semester Final Test of General Courses Given in English
Chinese Intellectual Property Protection
姓名 中文： 同济大学注册学院
Chinese Name: /
School of Tongji University registered in: School of Automotive Studies
姓名 英文： 学号 国籍： 性别
English Name: Student ID:
Nationality: Gender:
Attention:
(1)This is a take-home exam. Please finish the test, have your answer printed and submit a copy with your signature to Prof. ZHANG Taolue at Room 805, IP Institute, Zonghe Building before the deadline (17:00, 10th, Jan. 2013); E-document might be sent to , however, E-document alone will not be accepted as a qualified personal answer.
(2) There is no standard answer to the questions; however, your score will be given according to the reasoning of your analysis. Please bear in mind that a core and sound reasoning is always starting from and based on the regulations of LAW;
(3) Chinese IP Law and Policy might be found in the following official website:
I. Read the materials below and answer the questions:
iPAD Trademark Dispute in China
On 6th Dec. 2011 the Intermediate People’s Court of ShenZhen (Court of 1st Instance) rejected the plea made by Apple Inc. to own the trademark “iPAD” in China on the ground that Apple Inc. has not right to use the English Word “iPAD” to sell its flat laptop.
Background:
Established in 1989, Proview International Holdings Limited is one of the earliest Taiwanese enterprises entering to invest in China. Proview, listed in the Hong Kong Stock Market since 1997, focuses in the development, manufacturing and marketing of flat panel TVs and monitors.
Over the years, Proview has advanced to become one of the best known IT and CE enterprises in the world. In addition to state-of-the-art factories in China (Shenzhen, Wuhan & Ningbo), Taiwan, Russia, Brazil and Mexico, Proview also has established sales and service locations in USA, Holland, UK, Belgium, Middle East plus various large to medium-sized cities in China.
Proview Technology Shenzhen Company, Limited (PTS) is Proview Group’s largest development and manufacturing center. PTS used to have an elite force of about 6,000 staff, together with cutting edge equipments, large volume manufacturing, and efficient, fast-moving logistics. PTS has also established the development and manufacturing of TFT LCD and backlight modules.
Proview Taiwan owns internationally well known brand names such as MAG, Proview and EMC. It is also built good cooperative relationship with top tier IT and TV OEMs in the world.
Dispute:
In 2006, when Jobs and Apple Inc. started to promote iPAD, it found that the trademark belongs to Proview International Holdings Limited, Taiwan. Later in 2009 Apple Inc. bought the trademark of “iPAD” from Proview Taiwan at 35,000 Pounds. According to Apple, Proview Taiwan has sold all of “iPAD” trademark to Apple Inc., including the one in mainland China.
PTS Shenzhen viewed that the mother company Proview Taiwan does not own the trademark of “iPAD” in China, Proview Taiwan only owned the trademark of “iPAD” in Europe, North American and Southeast Asia (mainly registered in 2000 by Proview Taiwan), whereas the trademark of “iPAD” was registered in 2001 by Proview Technology Shengzhen. At that time, the product of iPAD was still not born.
Proview Shenzhen argued that Proview Taiwan had no right to sell its trademark in mainland China. Therefore the sale of iPAD in China is infringement of trademark of Proview Shenzhen. Before the sale of iPAD in China in 17th Sept. 2010, Apple Inc. had discussed with Proview Shenzhen to change and register the ownership or “iPAD” at Trademark Office in China, but failed. Now, with the large volume of sales in China, Proview Shenzhen claimed RMB10 Billion for the compensation of infringing of its trademark.
Questions:
1. Can you please address the legal framework of protection of intellectual property right in China? 20 Points
China has compared to Europe and the USA a very young law for protection of intellectual Property. The reason for this is history. Once adopted the Russian system, it was abolished and due to the Cultural Revolution the oldest law is only a little over 30 years old. China’s law for intellectual Property Protection is divided into the four parts: trademark law (1982), patent law (1984), Copyright law (1990) and law against unfair competition and protection of trade secrets (1993). By now China agreed to many international treaties concerning the protection of intellectual property, such as the Paris convention, the Madrid agreement, the patent cooperation treaty, the Budapest Treats and many more. Since 1980 China is a member of the World Intellectual Property Organization (WIPO) and since 2001 a member of the World Trade Organization (WTO).
The trademark law regulates which visually perceptible signs can be registered as a trademark in China. These sings must be capable of distinguishing a good or a service. This includes words, devices, letters of an alphabet, numerals, three-dimensional signs and combination of colors. The trademark must be distinctive and must not conflict with rights, acquired by another person. Trademarks can be registered at China Trademark Office (CTMO) under the State Administration of Industry and Commerce (SAIC). The Trademark review and Adjudication Board (TRAB) is responsible for handling disputes regarding trademark disputes. When filed for a new trademark the CTMO will check the documents and whether the trademark is registerable. Afterwards the application will be published and the opposition period starts. Any person can file protest against the trademark within 3 months. When the application is denied, you can file for reexamination at TRAB.
Patent law defines the contract between the government and an inventor. It gives the inventor recognition of creativity and material reward. In China there are three types of patents with different characteristics: the invention patent, the utility model patent and the design patent. The invention patent is for new technical solution (product or process) and offers 20 years of protection, starting to count from the day of the application filling. Utility model patent and design patent only offer 10 years of protection. The utility model patent is for a new technical structure or combination of products with a practical use, whereas the design patent is for new designs referring to shape, color and material, which can create an aesthetic feeling. All patents have to be registered at the SIPO or regional offices. Foreigners can also use the PCT application, an international treaty for patents in 117 countries. When an application is filled, the content of the patent must not ne know to the public at this point, otherwise the patent is not valid and can be invalidated later on. When two inventors file for the same patent, whoever files first gets the patent granted. After 18 months of examination the patent is publicized. The application fees for all patents are relatively small. For lawsuits concerning patent issues the first instance will be the intermediate people’s court and second instance is the higher people’s court. The Reexamination Board is in power of reexamination and patent invalidation.
Copyright law protects the work of an author even without registration of it. Infringements, which are forbidden by the law, are publication without permission of the author, cooperative work, claiming ownership, distortion or alteration of the work, exploration, use of the work without payment, life broadcast of performances without permission. The outcomes of such infringement are cessation of the infringement, elimination of negative effects, public apology and compensation.
The unfair competition law forbids misleading advertisement, sale below costs, improper gifts and lotteries and defamation. Part of the unfair competition law is the protection of trade secrets. Trade secrets are the information that cannot be protected by the patent law. This technical and operational information must not be known to the public, must be applicable in practice and must be capable of bringing economic benefits for the owner of the secret. Furthermore the owner must take certain measures to keep the secret unknown.
The judicial infrastructure to enforce intellectual property rights offers four levels of courts to manage infringements: Basic people’s court, intermediate people’s court, higher people’s court (with highest judicial authority) and the supreme people’s court (with legislative authority). Most of the IP cases are handled in the courts of Beijing, Shanghai and Shenzhen. The people’s courts are empowered to order the infringer to bear civil responsibility, cessation of infringement, elimination of negative effects, public apologies, compensation or even criminal detention in very serious cases. Since the judicial infrastructure is still under construction it happens that “dual enforcement” occurs. This means that courts and administration can be in power of cases. The way by the administration is often the faster and cheaper way. Generally speaking mediation is always preferred over a lawsuit. Most of the time the administration will try to act as a mediator between the two parties. Only if the mediation fails, there will be a lawsuit. Local establishments that can help are: patent administration authorities, copyright administration organs and the trademark administration departments.
At the moment China is doing everything to establish a very efficient empowerment.
2. Do you think Apple Inc. has infringed the trademark right of Proview Shenzhen, and why? (Please use the trademark theory to explain, using domestic and international legal framework to explain the protection of IP Right). 20 Points
To decide on an infringement we have to analyze if the sale of the iPAD trademark by Proview to Apple (to be exact: the sale to IP company) is valid or not. Apple claims to have bought the worldwide (10 countries) rights of the trademark in 2009 from Proview Taiwan (PT) including the Chinese mainland.
Proview China’s (PTS) first tactic to invalidate the sales contract was by saying that PT had no right to sell the trademark in the first place because it does belong to PTS. This is untrue, because Apple did negotiate with PTS. PTS legal representatives identified themselves as capable of discussing the sale of the two mainland trademarks. The contract was only signed with PT due to financial distress of PTS. Nevertheless the person how signed the contract was Mr. Yang Rongshan. He is president and in charge of Proview Taiwan, Shenzhen and the rest of the group. Therefore he must have absolute knowledge of the trademark situation of his company and the ability to sell the trademark no matter to what part of the company it belongs. He can speak for PT und PTS. The argument of PTS that Mr. Yang Rongshan was only involved because of his English skills should be considered a poor lie to deny his involvement. And even if it was true one could claim that PTS misled Apple, which is forbidden by the Chinese Unfair Competition Prevention law. Furthermore PT is the mother company of PTS and therefore should be in charge of selling parts of the company such as trademarks. So the sale of the worldwide trademark to IP and therefore to Apple is valid. Shortly after the sale Apple announced the iPAD in China. PTS, now realizing to whom they sold the rights, did not transcribe the trademark at the CTMO. Technically they trademark still belonged to them but only because PTS was breaking the contract which they signed with IP Company.
Second strategy of PTS was to accuse Apple of having tricked PTS into selling the Trademark by setting up the IP Company which did the direct negotiation with PTS and then transferred the rights of the trademark to Apple. PTS points out that IP lawyers said that they want to buy the trademark due to the company’s name and that they don’t have any interest of competing with any products of PTS. To mask the true intentions during sales procedures is illegal due to international unfair competition law. The trademark IPAD was established for an iMAC like device by PTS in 2000. This device infringes Apples iMAc in the first place, but more important is that the IPAD by PTS did not have success in market. Due to this reason, when they started negotiation, the IPAD trademark was more or less abandoned since 2006. So PTS does not have any product in the market which could offer any competition to the Apple iPAD. Therefore IP lawyers did not mislead PTS. Since PTS is in huge dept and is restructuring, officials just stated that LED Headlamps are now their main field of effort. Moreover Apple started 2006 to promote the iPAD in the USA. PTS lawyers could have known about the possible economic potential of the trademark. But there is another issue concerning the misleading of PTS. Apple hired Farncombe International to negotiate with PTS. The managing director of Farncombe Graham Robinson used the alias Jonathan Hargereaves to approach PTS.
When the court decides that these facts hold up and invalid the sales contract apple may face losing the iPAD right in other countries (e.g. EU) as well. Personally I think that the lawsuit of PTS is strictly money related. Once they figured out that they could earn more money from the sales to brighten up their disastrous financial record they went for it. I don’t think Apple infringed PTS trademark rights, even though it is officially still in PTS’s hand.
3. If the final judgment still rules that the Trademark of “iPAD” in China belongs to Proview Shenzhen and the agreement of Apple Inc. and Proview Taiwan cannot cover the trademark ownership of Proview Shenzhen, what can you suggest Apple Inc. to change its strategy in China? 10 Points, simple answer is sufficient.
The easiest way to solve this dispute would be for apple to change the name of their product maybe to ePAD or keep the “i” and change the “PAD” to something else. But since Apple is known to be very stubborn concerning their company policy, it is very unlikely they would agree to that.
Since both companies claim ownership of the trademark the legal situation is unclear. This situation would call for a composition. This means that both parties ease up and find a solution that is suitable for both sides. It is just like a mediation.
Worthier solution for Apple would be to buy Proview Shenzhen. The company has huge financial problems and is deeply into dept. Apple could buy the company, transfer the trademark from Proview to Apple and then sell the company again.
The fourth option for Apple would be a countersue against the original IPAD of Proview, claiming that the product infringed their iMAC of that time. They could argue that the trademark IPAD could not have been registered a trademark because there was already the iMAC on the market with a similar name. Similar to this they could apply for a design patent for all names with “i” in the beginning.
II. Read the materials below and answer the questions:
On Mar. 18, 2008, shanghai No.1 Intermediate Court accepted a case brought by TTT Co. Ltd (hereafter TTT) against Lili for trade secret infringement.
The plaintiff TTT alleged that the defendant Lili was senior executive of TTT and according to employment agreement, had non-compete and confidentiality obligations to TTT. But defendant set up the TiTiTi Co.Ltd (hereafter TiTiTi) during his employment without permission and redirected clients from TTT to TiTiTi by making use of the trade secrets he acquired during his employment at TTT, which constitute trade secret infringement. The alleged trade secret, according to plaintiff, is the information about TTT’s client, specification, quantity, sales price of its product KA74. Therefore, TTT demanded compensation of RMB 1 million.
The court found that (1) the product KA74 manufactured by TTT are custom-made parts for WWW Co. Ltd (hereafter WWW). (2) Before quitting, defendant was a senior officer who has access to the information above. (3) The information that WWW is TTT’s client can be found on TTT’s website. Additionally, the specification of the involved products can be seen from the involved products itself. (4) In terms of the Employment Agreement between both parties, though it contained such contents as “the staff must abide by the company’s stipulations on confidentiality matters prescribed by the company”, there was no proof that both side have entered into any further contract on confidentiality matters.
Questions:
1. Do you think plaintiff’s claim can be supported by the facts above? Why?(Article 10，Chinese Anti-Unfair Competition Law）(25 points)
The plaintiff claims infringement of trade secrets. According to Article 10 of the anti unfair competition law there are four requirements for a trade secret: 1. Unknown to the public, 2. Potential of economic benefit, 3. Practical applicability and 4. measures to keep the secret. Information must fulfill these requirements to be defined a trade secret. TTT accuses Lili of infringement of four trade secrets: information about TTT’s client, specification, sales quantity, sales price of its product KA74. We must analyze if this information is qualified to be considered a trade secret according to Article 10.