Protecting Chinese Broadcasts …. In the United States

As I noted recently, a Beijing district court recently decided that live broadcasts of sports events can be protected under China’s copyright law (June 30, 2015).

Only a few weeks earlier, a US district court decided in CCTV et al vs. Create New Technology (HK) Ltd.  et al.  (June 11) (Case No. CV 15-01869 MMM (MRWx) (C. D. Cal) (Morrow, J). that the pirated streaming of live and time-shifted CCTV and TVB  (Hong Kong) channels  through media boxes  and apps on a peer-to-peer network and/or through servers in the United States to large numbers of users who had no right to access the content constituted copyright infringement.   The CCTV and content covered by the court’s preliminary injunction included live news, sports, and television.

The U.S. case underscores the availability to Chinese plaintiffs of strong civil remedies in the United States, including preliminary injunctions. Although Chinese courts normally dispose of first instance cases in six months, this case was filed on March 13, 2015 and the preliminary injunction was granted June 11 – precisely 90 days later, not including the end date.  In other words the preliminary injunction in this case was rendered in case involving foreign interests in less time than a Chinese court would have rendered its first instance decision in a domestic case (time frames are expanded if there is a foreign litigant).

Of about 90,000 civil IP cases in the Chinese courts in 2012, there were only  27 cases involving preliminary injunctions.  By contrast, US courts are, by all accounts, more willing to grant provisional relief of all kinds.  Judge Morrow, in her decision, noted that “unauthorized and uncompensated internet streaming that competes directly with the television programming of a  copyright owner and its authorized licensees causes harm that is ‘neither easily calculable, nor easily compensable.’ ”  She further stated that “given the extensive nature of the infringement alleged … it is unclear that defendants would be able to satisfy any damages award entered. This further supports the conclusion that injunctive relief is appropriate in this case.”

These two recent cases are positive steps in protecting broadcasts, including live sports broadcasts.  The U.S. case is also a good guide post for Chinese courts looking to extend the availability of provisional remedies in civil IP adjudication for foreigners and Chinese alike, including in cases involving online infringement and live broadcasts.

New National Standards Proposed for IP Management by Higher Ed and Research Institutions

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On June 30, the State Intellectual Property Office posted a draft for comment of proposed national recommended standards for  Intellectual Property Management for Research and Development Organizations and  Intellectual Property Management for Higher Education.  Comments should be submitted before July 28, 2015.  The final recommended standards are to be adopted by the Standardization Administration of China (SAC).  The drafts were prepared by SIPO, the Research Institute of SAC and the Chinese Academy of Sciences (for R&D), and the Ministry of Education (for higher education).

The R&D provisions are intended to govern national and local R&D institutions, as well as organizations which they have invested in and established (Art.1) and can be used for reference by other R&D institutions.

R&D organizations should have internal materials on their operations, including such matters as protecting trade secrets (Art. 6.4 of the R&D Standard), requiring staff working on core technologies to sign post departure IP agreements or non-compete agreements, rules for disclosure of IP-related information in scholarly materials including theses and dissertations, and procedures for IP-related contracts.  Relatively simple rules for licensing (8.2.1) are set forth, which include: due diligence before licensing, confirming the effectiveness of the IP, and drafting of a written contract.  Strategies for joining IP “alliances” are also mandated (8.3)

The Higher Education standard encompasses all types of higher educational institutions, including those who recruit students from the national entrance exams.  It also covers all types of faculty, including full-time faculty and visiting faculty.  It sets up an organizational structure for managing intellectual property within a university.   Rewards are mandated for those who make a significant contribution, although specific amounts are not set forth (6.1.2).

Specific provisions are also made for creation of copyrighted works in the humanities and social sciences when works are made for hire (7.2)

Although these standards are general in nature, foreign entities may wish to become familiar with these standards when they enter collaborative research projects with Chinese institutions.  In addition, the standards can help to inform visiting foreign faculty and students of their host institution’s expectations regarding IP.  These procedures. once final, can also serve as useful reference materials for privately funded R&D efforts.

Update on Revisions to the Antiunfair Competition Law

According to the Beijing Intellectual Property Institute  (“BIPI”) (June 2015 newsletter) and other press sources  the State Administration of Industry and Commerce (SAIC) had completed its draft revisions of the Antiunfair Competition Law  (“AUCL”) at the end of May 2015, and is preparing to submit the draft to the State Council Legislative Affairs Office.

According to  press reports, the research on the revision was done by a mixed team of academics and a provincial AIC, which spent a year working on eight separate research topics.  Universities involved in discussing the draft included Peking University, Wuhan University and Renmin University.

This would be the first major revision to the AUCL since it was enacted 22 years ago.  BIPI suggests that the two biggest changes are: (a) an increase in the types of conduct that constitute unfair competition, and an (b) increase administrative enforcement penalties.

The types of conduct covered have increased, notably to include anticompetitive online conduct, on the basis that these types of conduct are different from those found in traditional physical markets.   Rather than elaborate on specific types of conduct one by one the new draft has included a prohibition against “conduct that is against commercial ethics ” to capture additional conduct that is not otherwise specified.

Depending on the type of infringing conduct, administrative enforcement penalties would be increased to between 1,000,000 and 4,000,000 RMB.

Finally, BIPI points out that the draft clarifies that the enforcement authority under the AUCL  is the authority for supervising and investigating conduct arising under  the AUCL and the draft AUCL also gives the SAIC additional power.   This clarification, other press sources note,  is intended to address conflicts arising under the existing law, where other agencies, such as AQSIQ, Ministry of Culture and Pricing Bureaus, had authority if separately specified under applicable law or regulations (Article 3 of the AUCL).  The draft is intended to address a problem of the type that arose under the existing AUCL, such as  a case involving Xinglong County in Hebei (河北省兴隆县工商局) where there was a conflict with the local AIC over the local telecommunications authority in its insisting that customers used services and equipment designated by it, which caused the local AIC to drop an investigation under the AUCL.

I have not personally had a chance to review this draft, although I did review a draft of several years ago.  Based on the press reports, I have two areas of concern:

The press reports do not elaborate on changes in the law regarding trade secrets or trade dress, which are two of the IP rights that are covered by the AUCL that have long been subjects of discussion.  Improved trade secret protection is also the subject of specific bilateral commitments.  An early draft of the revisions of the AUCL also included provisions regarding regulatory data protection (which is a type of trade secret protection under TRIPS) for pharmaceutical products and agricultural chemicals, which are not mentioned in the recent reports.  Increased interests in design protection by China, whether through design patents, applied art in copyright or through trade dress, would seem to be consistent with Chinese interests.  Trade secret protection may also be incorporated into a revised civil code, which hopefully will address some of the weaknesses of the current law and its enforcement.

The revisions appear to adopt many proposals of other laws undergoing revision, including increasing administrative deterrence, expanding the roles of the administrative enforcement agency, increased attention to on-line enforcement and even a focus on commercial ethics which may not equally benefit IP cases.  Particularly important for trade secret litigation, for example, will be providing more robust discovery, clear standards for evidence preservation and preliminary injunctions, and harmonization of the law with rules regarding labor mobility and non-compete agreements.  I believe that more robust civil and criminal trade secret remedies are likely to bring more benefit than administrative trade secret remedies.    Concepts of commercial ethics also parallel developments regarding practices to address bad faith prosecution practices in China’s trademark and patent offices.  While the concept of commercial ethics is noble, we will need to wait to see how, if adopted, it will be specifically applied in trade dress and trade secret matters, as well as on-line issues, and if gaps in existing coverage or enforcement, which might include areas varied as inevitable disclosure, regulatory data protection or more robust trade dress protection, are addressed.

Beijing Court Grants Copyright Protection to Live Sports Broadcast

In a very postiive development for Chinese football sports leagues, CCTV, Tencent, NBA,  as well as Olympic and other international sports competitions in China,  the Chaoyang basic level court in Beijing determined on June 30 that live broadcasting of a sports competition is sufficiently creative to be protectable under China’s copyright law in Sina v. iFeng(2014)朝民(知)初字第40334号). The case can be found here (Chinese only).  The key language of the case with my very  informal translation is as follows:

新浪互联公司在本案中提出,涉案转播的赛事呈现的画面应受到我国著作权法保护的作品范畴。依照法律规定,具有独创性并能以某种有形形式复制的智力成果,才可构成我国著作权法所保护的作品。是否具有独创性,成为本院判断涉案赛事转播画面是否构成作品的关键。独创性意指独立创作且不具有对他人作品的模仿、抄袭。

In the present case the Internet company Sina raised an issue involving the presentation of broadcast screens (pictures) and their status as works under the copyright law. In accordance with the law, protected works must be original intellectual achievements that can be replicated in some tangible form. The key factor for this court in determining whether the broadcast of a live competition was original is the broadcast screen.   Originality means independently created, which is to say that it does not imitate the work of others or is a copy.
从赛事的转播、制作的整体层面上看,赛事的转播、制作是通过设置不确定的数台或数十台或数几十台固定的、不固定的录制设备作为基础进行拍摄录制,形成用户、观众看到的最终画面,但固定的机位并不代表形成固定的画面。用户看到的画面,与赛事现场并不完全一致、也非完全同步。这说明了其转播的制作程序,不仅仅包括对赛事的录制…

In broadcasting a competitive event, from the point of view of the overall production, the event broadcast and record production involves shooting by setting several or several dozens of  unfixed or fixed recording equipment as the basis to film and record to a final picture for the user or audience to see the final picture.  However a fixed position does not mean a fixed picture.  The picture that the user sees is not completely the same as taking place on the field, and it does not proceed completely or fully synchronized. This explains that the broadcast production process is not just a record of events, …

就此,尽管法律上没有规定独创性的标准,但应当认为对赛事录制镜头的选择、编排,形成可供观赏的新的画面,无疑是一种创作性劳动,且该创作性从不同的选择、不同的制作,会产生不同的画面效果恰恰反映了其独创性。即赛事录制形成的画面,构成我国著作权法对作品独创性的要求,应当认定为作品。从涉案转播赛事呈现的画面看,满足上述分析的创造性,即通过摄制、制作的方式,形成画面,以视听的形式给人以视觉感应、效果,构成作品。

In this regard, although there is no provision on legal standards of originality, but it should be understood that the choice of lens for recording events, editing, a new screen for viewing the picture, is undoubtedly a creative work, and the creation of different options and different productions, will produce a different picture of the effect that  precisely reflects its originality. The formation of the picture of the sporting event constitute originality under the Copyright Law of China and should be recognized as a work. From the perspective of this case, the picture screens presented satisfy the requirements of originality not only in their filming and production, but also in the auditory and visual style which thereby gives a final result of audio and visual sensations, thereby constituting a work.

The case may be appealed to the Beijing IP Court.  Damages of 500,000 RMB were assessed, plus costs and an injunction.

UCSD May 20 Program Materials Available on Line

UCSD

The videos and slides from a May 20 event “New Perspectives on Innovation and Intellectual Property Policy in China: What Does the Evidence Say?”, co-hosted by the U.S. Patent and Trademark Office and UC San Diego are now available on line.

This valuable program included economists, political scientists, trade associations and lawyers looking into data-driven approaches to analyzing China’s IP and innovation.  Presentations discussed such topics as antitrust economics in China, global benchmarking of iP and innovation, analyses of patent data and patent quality,

Here’s the full list of individual presentations:

Panel I: Chinese IP Data and Innovation

Introduction of the USPTO China Resource Center and Various Examples of Empirical IP Data We Analyze (PDF) Larry LIAN, USPTO Office of Policy and International Affairs

What Chinese Patenting Data and USPTO Data Show about Innovation (PDF) Rick MILLER, USPTO Office of Chief Economist

GIPC International IP Index (PDF) Ellen SZYMANSKI, Global Intellectual Property Center at the U.S. Chamber of Commerce

Panel II: Chinese IP & Innovation Policy and its Effects (Part I)

How Economists Can Drive Change in IP Policy (PDF) Stuart GRAHAM, Scheller College of Business at Georgia Tech

Roads Less Traveled: Using Empirical Data to Revisit Assumptions About IP in China (PDF) Mark COHEN, USPTO Office of Policy and International Affairs

Panel III: Chinese IP & Innovation Policy and its Effects (Part II)

China’s planning for patenting: planning for patently unplannable (PDF) Brian WRIGHT, UC Berkeley

China’s patent subsidy policy: evidence from a firm level study (PDF) LEI Zhen, Penn State University

Innovation Driven Development and Its Implication for Innovation and IPR in China (PDF) LIU Xielin, School of Management at the University of Chinese Academy of Sciences

Panel IV: Industry and Corporate Perspectives

Competition Data and Antitrust – a Corporate Perspective (PDF) CHEN Liren and Kirti GUPTA, Qualcomm Inc.

Legal and Regulatory Context for China’s Antitrust Enforcement (PDF) Elizabeth WANG, Charles River Associates

How to Calculate Piracy and Its Impact on the Economy (PDF) Jared RAGLAND, Business Software Alliance

Chinese Customs’ Annual Report and What It Suggest for Corporate IP Strategies

Chinese Customs published its 2014 Report on the Situation for IP Protection last month. The report summarizes the current situation for Customs protection of IP in China as follows:

  1. The vast majority of seizures were initiated on an ex officio basis by customs (98% or higher)
  2. Nearly 97% of the seizures by quantity involved infringement of trademark rights. Chinese Customs can also seize goods that infringe copyright and patents. The low level of copyright seizures likely reflects the increased incidence of on-line infringement.
  1. About 96.5% of the product seizures were on exports.
  2. Consumer Goods Dominate Seizures. Amongst suspected infringing goods, tobacco products, light industry, cosmetics, clothing, etc. dominated. There was also an adjustment in product mix compared to last year, with a decline in hardware goods, pharmaceutical, hats, telecommunication equipment, toys, and food products. Note that 44 percent of the seizures were tobacco related. The next largest single category was cosmetics and personal care products. Less than one percent was pharma products.
  3. Postal and sea shipments are principal channels. Postal shipments accounted for 80.2% of seizures, with an increase of 33% from past year. 96.3 percent of the seizures were made involving shipments by sea.
  4. Greater Diversity in Destinations of Seizures. Chinese Customs seized goods involving 153 countries and territories. Amongst these, the Middle East and Latin American had significant increases.   By value the US was the second largest destination of seizures after Hong Kong. However many third world countries in Africa and elsewhere were in the top ten by value, quantity of products, and/or numbers of shipments. Brazil for example was number one for seized shipments.
  5. Seizure Activities Are Dispersed, but also Concentrated in Several Ports.  Shenzhen, Shanghai, Ningbo and Hangzhou regions dominate by value of seized shipments.

Based on this report, here’s my takeaway of steps US rights holders can take to improve cooperation with Chinese Customs:

A) Train Chinese Customs on product identification. As most of Chinese customs seizures are ex officio, the report underscores the importance of advising Chinese customs on how to identify infringing products. Of course, the prerequisite to these activities is recording your rights with Chinese Customs.

B)  Work with on-line e-tailers. There are an increasing number of seizures coming from inland ports, where goods are likely being booked on line. Moreover, goods are being shipped to a diverse number of ports. The report suggests the importance of working with on-line e-tailers, like Alibaba, to take down shipments.

C) Leverage cooperative agreements. Chinese Customs has numerous agreements with foreign countries, and has also been involved in several agreements to improve domestic enforcement, such as between Chinese customs and public security (police) authorities. Leveraging these cooperative agreements may help facilitate enforcement activity.

D) Use enforcement resources strategically. Clearly some Chinese ports are more active than others. In addition, some products seem to be attracting more attention than others. Although seizures of counterfeit pharmaceuticals, auto parts and other health and safety items are relatively low, I believe there is still room to encourage Customs to focus on items where public health or safety are affected.

USPTO’s Annual China Update Program … and Some China Updates

USPTO is scheduling its annual China update program for July 15, 2015.   The program is open to the public, however seating is limited and the program is popular so register early.  Here is how you can sign up.

Also of interest, here are some updates on USPTO activities in China.

English links:

Here’s a blog from Michelle Lee on her activities.

For a SIPO interview with Michelle Lee (Chinese language/English language), and a report on Michelle Lee’s lecture on STEM and women at Columbia University’s center in Beijing.

Chinese links:

For short articles on Michelle Lee’s meeting with Vice Premier Wang Yang; and her meeting with Madame Tao Kaiyuan of the Supreme People’s Court; the NPC; and the SAIC.

As some of you may have noticed, I have been off-line a while due to being busy with other matters –  I hope to be contributing more now, and look forward to contributions from readers!

Mark Cohen