Administrative enforcement

Other perspectives on Apple/Proview

Last week, we had a group of Chinese IP officials visiting Fordham – from Chinese Customs, a local Administration for Industry and Commerce and the Supreme People’s Procuratorate  – it was a perfect combination of officials to ask about the Apple / Proview case from the perspective of different Chinese government agencies, other than the courts.

One question that the Proview case involves is whether Chinese Customs can or should detain goods for export ordered by a legitimate foreign rights holder when that rights holder does not own the rights in China, or when those rights are unsettled.  Several years ago, Chinese Customs detained goods in Ningbo China that had been ordered by Nike/Spain, a company unaffiliated with Nike/USA.  Nike USA also owns the relevant marks in China.  The case caused some controversy, and has not been followed everywhere.

In particular, I was told by this group that a court in Shanghai has ruled that an export transaction may not amount to an infringement.   Chinese Customs now seems more inclined to let the courts decide this matter, rather than undertaken an administrative determination that could be challenged later.  This is the same perspective that Customs is also taking with respect to exports of items that infringe patents, which have been increasing in number and which present particular difficulties for Customs officials to determine whether infringement exists.

When I asked the SAIC and Customs officials if manufacturing and/or sale of a product for export constituted “use” in China under the Chinese Trademark Law, I was surprised to see that they believed there was a basis to view it as something other than infringing “use”.  A Supreme People’s Procuratorate official offered an analogy: in food safety laws, China permits food companies to use chemicals or additives that may be banned in China if the products are only sold for export.   Should the trademark laws, he said, be any different?

Then asked the procuratorate official if his view was based on the criminal law and not civil law, since in the past had declined to view an “export” as a “sale” for purposes of satisfying Chinese criminal trademark thresholds.  This case appears to present an analogous type of situation.   This, however, was an old decision by the procuratorate.

It would be ironic, I ventured, that one of the first victims of a broad perspective of what constitutes “use” in China under the Chinese TM law would be a US company, as US companies had long urged China to undertake enforcement measures against export, which are currently not required by the WTO/TRIPS agreement.   The circumstances do appear to afford an important opportunity for the courts to look at these issues from a broader perspective, with fewer constraints than Chinese Customs, which needs to move goods through the ports quickly.  Because of China’s critical role in manufacturing supply chains and the increasing importance of IP to China’s own economy, Apple/Proview presents unique challenges to China in how to balance competing economic, legal and trade interests. (3/23/2012)

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