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The 2017 Symposium on Intellectual Property Protection of Foreign Invested Enterprises Held in Beijing

    The Symposium Intellectual Property Protection of Foreign Invested Enterprises was jointly held by  National Leading Group on the Fight Against IPR Infringement and Counterfeiting (hereinafter referred to as the “NLGO”) and Quality Brands Protection Committee of China Association of Enterprises with Foreign Investment (QBPC). It is a traditional scheme that has been running for years. This meeting aims to provide a communication platform where Chinese governments, IPR holders, and foreign-invested enterprises can discuss and exchange views on IPR protection issues of common concern.

    On June 16, the Symposium on Intellectual Property Protection of Foreign Invested Enterprises was held in Beijing. A total of 200 people, including Chai Haitao, Deputy Director General of NLGO. Sun Yong, Leader of the Inspection Liaison Team of NLGO. Wang Fei, Deputy Director of the Intellectual Property Division, Economic Crime Investigation Department, MPS,Tan Jian, Director of the Intellectual Property Rights Service Center, China Council for the Promotion of International Trade (CCPIT), Zhao Jie, Director of National Copyright Administration Of General Administration of Press, Publication, Radio, Film and Television of the People’s Republic of China, Fu Zhu from the Supervision Division of the Trade Mark Office of The State Administration for Industry and Commerce (SAIC), Wang Liting from the Department of Policy and Legal Affairs, GACC, Liu Shengzhong from the Department of Market Supervision, State Post Bureau (SPB), representatives from U.S., Israeli, Polish, and British embassies in China, members from the Japan External Trade Organization, and members from Quality Brands Protection Committee (QBPC), attended the meeting. Haitao Chai, together with Jack Chang, Chair of the QBPC, hosted the meeting.
    Representatives from the QBPC spoke first.
    Colin Chen, Vice Chair of the QBPC and also Greater China and Asia-Pacific Director for the Global Security Department of Johnson & Johnson, delivered a speech themed on Suggestions on Right Owners’ Proactive Participation of Belt & Road Exchange and Cooperation on Intellectual Property. Colin elaborated on the role that foreign-invested enterprises play in communication and cooperation on intellectual property rights between the countries along the Belt and Road. He explained the proposal from the following four aspects:
    1. Foreign-invested enterprises can proactively drive customs and other law enforcement agencies in countries and regions along the Belt and Road to carry out more communication, training, and discussion activities. This will help the customs and agencies improve their law enforcement capabilities.
    2. Foreign-invested enterprises have been paying great attention to major infringing product and counterfeit markets in China, and undertaken a great endeavor to fight against infringement and counterfeiting. This will help Chinese governments and law enforcement agencies regulate and supervise major markets.
    3. Strict quality monitoring that foreign-invested enterprises have implemented will help Chinese governments and enterprises strengthen the supervision on products to be exported to countries and regions along the Belt and Road.
    4. Foreign-invested enterprises can play a principal role in the construction of intellectual property right systems in countries and regions along the Belt and Road, and spur bilateral or multilateral treaties on IPR protection.
    Colin Chen stressed the commitment that representatives from the QBPC made on December 9, 2015 at the CAEFI council hosted by Deming Chen, President of the CAEFI. Colin Chen showed the QBPC’s determination to proactively participate in activities initiated by departments, such as the State Intellectual Property Office (SIPO), to drive intellectual property cooperation with countries and regions along the Belt and Road. When reporting to Mr. Chai and other NLGO members on January 18, 2016, Colin Chen, on behalf of the QBPC, expressed the willingness to obtain help and guidance from the NLGO as to how the QBPC, as a civil organization, can play a good role in international communication on intellectual property protection and cooperation with countries and regions along the Belt and Road.

    Steven Wang, QBPC Vice Chair,  Senior IP Counsel of Royal Philips made speech themed on Issues and Solutions on Online IP Infringement.
    Steven shared his observation about Alibaba’s change of attitude towards online IP infringement, and take it as an example to show the importance of the IP protection dialogue mechanisms. Steven raised four issues on online IP infringement and proposed the solutions on it accordingly: improvement of drafted E-commerce Law, protection of design patent, legal liabilities of e-commerce platforms, and criminal actions from online to offline leading to the whole supply chain of counterfeits.
    Yang Tao, Vice Chair of the Best Practice/Enforcement Committee (BPEC) and the intellectual property consultant of BRITA, gave a speech themed on Counterfeiting Problem in Courier and Logistic.
    Thanks to the rapid development of E-commerce, the number of express parcels in 2016 reached 30 billion, with 70% of these parcels related to E-commerce. The express and logistics industries have become a crucial part of national economy. However, many express companies got caught up in fraud scandals due to two reasons, sending parcels from a different place other than the place of origin, and false express information and payment collection. Yang Tao made suggestions on building some mechanisms through which right holders and the express industry can better communicate and cooperate with each other. This way, counterfeiting in the express and logistics industries can be eradicated, and a win-win result can be achieved.
    Conan Chen, Vice Chair of the BPEC and also the Brand Protection Director of L Brands, made a speech themed on The Fair Use of Trademark Problem.
    The legitimate use of trademarks is a hot and difficult issue that QBPC members focus on. In the real business activities, trademarks are often used without the authorization of trademark owners. Trademark use issues can be mainly classified into three types: use of trademarks on authentic products, independent distributors’ use of trademarks for promotion, and accessory dealers and maintenance service providers’ nominative use of trademarks. These are common issues that trademark owners often encounter in the field of commodity circulation which is also a knotty problem in judicial practice. Issues related to the circulation of authentic products involve the boundary between proper trademark use and infringement or unfair competition. If this issue can’t be solved effectively, trademark use in the circulation field will spin out of control. Consequently, trademark owners will lose their competitive advantages in the markets, and the rights of trademark owners and consumers will be infringed.
    Felix Zhang, Vice Chairman of Best Practice/Enforcement Committee and Brand Protection Manager for Eaton Electrical APAC: Bad Faith Registration of the Similar Trademarks
    The speech is composed of three parts: manifestations in practice, dangers of malicious registration as well as problems existed in malicious registration examination and suggestions. In the problems and suggestions, Felix Zhang pointed out that many factors urgently need to be solved, such as non-transparent examination standards for similar logos and trademarks, abuse of the trademark examination power, non-transparency of trademark examiners, arbitrary identification of generic names, lack of prevention mechanisms for the repeated registration and scope of agents / representatives / persons concerned.
    Wang Minghong, trademark lawyer for Honeywell APAC:Issues related the Criminal IP Protection
    Wang Minghong pointed out in the speech that such issues as the determination of counterfeit product values, probation, litigation status of right holders and transparency of criminal proceedings are the common issues in the criminal protection of intellectual property (IP). The right holders have taken great efforts and invested financial resources to investigate the behavior of the infringer and hence understand more facts, and more fully understand product prices. The right holders’ participation in the proceedings is also beneficial for the courts in fact finding and making of fair and just judgments.
    Miller Wang, Brand Protection Manager for MCM APAC:The Counterfeiting Problems in WeChat
    Miller Wang’s speech involves a new topic that the wechat individual trader sells counterfeit products. Taobao has actively taken measures to fight against and close the online shops selling counterfeit products. For MCM, Taobao closed more than 3,000 online stores in 2016. Many foreigners, especially those at headquarters,  misunderstand that Taobao is the largest platform to sell counterfeit products. But we found that WeChat has surpassed Taobao to some extent. It has become a real platform to sell counterfeit products on Moments among invited friends/visitors,which is different from Taobao store whose counterfeit products can be witnessed and accessed by everyone. Miller Wang stated whether WeChat’s Moments/Friends Circle (朋友圈) should be a territory out of rule of law and whether Tencent should control the Moments/Friends Circle through technical means in a proactive way and take active sanctions against the advertisements on counterfeit products.
    Comments of Jack Chang, QBPC Chairman and Special Counsel to L Brands International, on E-Commerce Law (Draft) and Anti-Unfair Competition Law (Revised Draft)
    Jack first focused on the E-Commerce Law (Draft) and he noted that an IP owner can currently complain to the operator of a third-party e-commerce platform if he/she finds that E-commerce retailers are selling goods which infringes his/her rights or using his/her copyrighted works without permission on the platform. Based on the preliminary evidences provided by the right owners and the E-commerce retailers and when deemed under strong suspicion of infringement, the platform operator may take necessary measures such as delete, block, break the link of or terminate relevant transactions and services of the E-commerce retailers. This practice currently has yielded certain positive results. However, the second paragraph of Article 54 of the E-Commerce Law (Draft) provides that if the retailer makes a unilateral declaration to the e-commerce platform claiming the inexistency of any infringement, the platform operator shall terminate all such relevant measures and the right holder may lodge an administrative complaint or file a lawsuit in this regard. Such a provision not only deprives the rights and obligations of the third-party e-commerce platform operator to govern its own platform, but also inevitably increases the burden of competent judicial and administrative authorities. Moreover, it is hard for even the third-party e-commerce platform operator to locate the actual position of retailers, not to mention right holders who need to identify competent administrative authority or court to safeguard their legal rights.

    The Anti-Unfair Competition Law(Revised Draft) is another focus of Jack’s speech. He pointed that the Revised Draft, though shows certain progresses, such as Article 10.1.1 provides that employee or former employee of the right holder of business secrets conducting the acts under Article 9.1 of this Law shall be deemed as infringing upon the right to such business secrets, still leaves many loopholes (This paragraph of provision has been deleted in the Revised Version for Second Review issued by the NPC in 2017). Take the behavior patterns of unfair competition in article 6.1 for example. The Revised Draft only lists three characteristics of famous commodities, i.e. name, packaging and decoration, which is too narrow in scope. This provision is intended only for commodities, and not for the decoration design, layout and color, decoration and business equipment style of a commodity competitor’s business premise. Therefore, it is recommended to add “the overall appearance on decoration design, layout, color and decoration of the business premise, business equipment style, operating personnel’s clothing design and color, or the combination of the above elements” in article 6.1. The definition of commercial bribery is so ambiguous that it may involve certain lawful commercial acts. Moreover, the Revised Draft is at odds with the provisions of the E-Commerce Law (Draft) on unfair competition acts.

    Jack shared with participants the news that Shanghai People’s Procuratorate and Beijing People’s Procuratorate will make efforts to promote the right holder to participate in criminal prosecution of IP crimes and judicial proceedings of criminal cases, pointing out that this progress will greatly enhance the transparency and effectiveness of criminal protection of IP. Jack hoped that the Office of the National Leading Group on the Fight against IPR Infringement and Counterfeiting can promote the practices of Beijing and Shanghai to other key provinces and municipalities with the support of the Supreme People’s Procuratorate and the Supreme People’s Court. This will be a milestone advancement in China’s criminal protection of IP.
    Director Chai Haitao introduced the recent work developments and focuses of the National Campaign against IPR Infringements and Counterfeit Products to the representatives attending the exchange meeting. Director Chai clearly pointed out that China has been strengthening the work on the fight against IPR infringement and counterfeiting and the IP protection, rather than weakening in recent years. The number of fake and shoddy cases and the amounts of money involved in 2016 have been increased than that in 2015. At the same time, the number of judicial cases in China’s IP judicial protection has also been increasing greatly in the past three years. In the near future, the National Leading Group on the Fight against IPR Infringement and Counterfeiting will carry out the work on the IP protection and the fight against counterfeiting in Internet, rural markets and import and export. The Leading Group is vigorously promoting cross-department, cross-regional, trans-provincial and cross-border cooperation in law enforcement and the participation and co-governance of all circles of the society. It aims to enhance citizens’ IP awareness through education, increase the disclosure and supervision on IP infringement cases through the news media, strengthen the industry’s self-discipline and norms through the development of industry associations and fulfill the obligations of IP protection by encouraging and clarifying the obligations and responsibilities of enterprises.

    Next, Director Chai summarized the speeches of eight QBPC representatives as follows:
    I. China put forward the Belt and Road Initiative and how does the IP protection go out with Chinese goods and investment?
    II. How does the supervision on the e-commerce field and the sales of counterfeit products on WeChat platform be strengthened?
    III. With the rapid development of e-commerce and cross-border e-commerce, how do the express industry and post industry, as transport channels, deal with new challenges?
    IV. How do the copycat brand and bad faith trademark registration and improper use of the trademark be dealt with?
    V. Enterprise representatives have given their views and suggestions from the legislation to trial of the case.

    Foreign-funded enterprises play a role in awareness, skills and experience of enterprise intellectual property during the implementation of the Belt and Road Initiative, which is in accordance with the co-governance and participation of all circles of the society promoted by the Leading Group. The participation of right holders is placed great expectations. The Leading Group will carefully study how to support the Belt and Road Initiative to better play the role of enterprises including foreign-funded enterprises in the second stage of Qingfeng Action.

    The NPC Financial and Economic Committee is developing the Electronic Commerce Law, which is a huge improvement, because there was no applicable laws to fight against infringement and counterfeiting in the e-commerce field, and only the Substantive Law could be applied in the past. The process of legislation is relatively long. China’s e-commerce has made rapid development. The practice of seeking for opinions from the public in two or three years is enough to explain that the legislative departments have paid attention to the e-commerce legislation. The current Electronic Commerce Law has added a lot of legal obligations and standards for the obligations of third-party platforms. It adds the legal obligations rather than voluntary obligations, including establishing an internal review system for e-commerce operators, making public the e-commerce platform trading rules, keeping the records of e-commerce transactions, and establishing the exit mechanism for enterprises to conduct the platform e-commerce.

    For the fake imports of express industry and overseas online shopping, the main focus of supervision is changed from export commodities to both export and import commodities. At the same time, more attention is given to new issues occurring in cross-border e-commerce.

    WeChat, the social software used by the microboss is only one link of the sales of counterfeit products. The actual deal, settlement, payment and logistics occur in the e-commerce link. So a situation that social software and e-commerce lie in different links is formed, adding a lot of challenges and difficulties in management. Tencent should be taken into consideration. This is a new issue which is also realized by China’s internet enterprises.

    The copycat brand and bad faith registration have been one of priorities for the annual work of the Leading Group in the past two years. The issue of improper use is put forward as a new one and will be considered in the future. The blacklist system for malicious registration has begun to implement.

    Currently China is conducting active explorations to solve the problems encountered in criminal protection. The system of informing the right holder developed by courts and procuratorates in Shanghai is a good pilot.

    The newly revised Anti-Unfair Competition Law clearly stipulates that the administrative law enforcement departments have the right to enter into the operation places and other places for law enforcement, which has solved a big problem at present. The clear stipulation in the new Anti-Unfair Competition Law that the administrative law enforcement departments can enter into other places has solved a very big problem.

    Director Chai expressed special thanks to QBPC, Li Ling, Vice Chairman of China Association of Enterprises with Foreign Investment, and all business circles and industry peers for their attendance. He sincerely hopes that the environment, legal system, law enforcement and judicial system of China’s IP protection can make steady progress every year in such a communication and interaction.

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