SAMR Releases Legislative Work Plan for 2020

On 26 March 2020, SAMR released its Legislative Work Plan for 2020 (“2020 Legislative Plan”) 国家市场监督管理总局2020 年立法工作计划. In 2020, 7 draft laws and administrative regulations行政法规, including the Amendment to the Detailed Rules for the Implementation of the Patent Law and the Amendment to the Anti-Monopoly Law, will be proposed for deliberation to the Ministry of Justice. Additionally, 48 administrative rules部门规章 will be formulated or amended.

SAMR’s practice is to designate one or two SAMR bureaus/departments with primary drafting responsibility for these projects. This is likely the second time that a yearly legislative work plan was publicly released since SMAR was organized in 2018. The prior legislative work plan is here.

The Class I Projects of administrative rules shall be submitted for legal review by June 30, 2020,  and completed by the end of the year. The 2020 Legislative Plan does not give a specific deadline for the 7 laws and administrative regulations, as well as the Class II Projects of administrative rules. It simply states that these categories shall be submitted for review on time, ensuring high-quality and efficiency (“部门规章第二类项目以及法律、行政法规,要确保高质高效推进,按期送审”).

IP-related projects, drafting departments, and some brief comments follow below:

Laws and Administrative Regulations:

1.Anti-Monopoly Law 中华人民共和国反垄断法. On January 2, 2020, SAMR issued the Draft Amendments to China’s AML (Draft for Public Comment) “反垄断法”修订草案 公开征求意见稿) (“Draft AML Amendments”). The ABA’s Antitrust Law and International Law Sections submitted comments to SAMR on the Draft AML Amendments. According to the NPC Observer, the Draft AML Amendments are on the State Council’s calendar for the 13th NPC Standing Committee Legislative Plan. It is a priority Class II Project. According to the recent government reorganization, it would otherwise be expected that the Ministry of Justice would prepare a draft of the AML revisions for consideration by the State Council which would then forward on to the NPC for three readings.  As mentioned in a previous blog, Article 55 of current AML (Article 62 of the Draft AML Amendments) stayed unchanged in the most recent draft and there are otherwise very little IP-related amendments contemplated at this time. 

Drafting Department: Anti-Monopoly Bureau

6.Regulations for the Implementation of the Drug Administration Law 中华人民共和国药品管理法实施条例  On August 26, 2019, China’s National People’s Congress adopted the new Drug Administration Law (“DAL”), which took effect on December 1, 2019. The legislative history is set forth in the NPC Observer. As noted in the previous blog, the new law addresses some important issues involving counterfeit and substandard medicines. However, it does little to improve the IP regime for innovative medicines.

In order to coordinate the implementation of the DAL, the revision of other supporting regulations and administrative rules will be further implemented this year.

The Regulations for the Implementation of the DAL had been amended and published on March 2, 2019. It has now been put into the Legislative Plan again. These revisions may be intended to implement changes in the newly revised DAL. On the other hand, it is also hoped that a linkage system would emerge as part of a package of legal reforms as contemplated by the US-China Phase 1 Agreement and to implement an earlier CFDA policy decision.

In addition, this 2020 Legislative Plan includes more than ten Drug/Medical Devices-related administrative rules, including: Measures for the Administration of Drug Registration药品注册管理办法, Measures for the Supervision and Administration of Drug Production药品生产监督管理办法, Measures for the Supervision and Administration of Drug Operations药品经营监督管理办法, Measures for the Supervision and Administration of Drug Online Sales药品网络销售监督管理办法, Measures for the Administration of Registration of Medical Devices医疗器械注册管理办法, Measures for the Supervision and Administration of Medical Devices医疗器械生产监督管理办法, and the Measures for the Supervision and Administration of Medical Devices医疗器械经营监督管理办法

Drafting Department: National Medical Products Administration (NMPA)

7.Rules for the Implementation of the Patent Law 中华人民共和国专利法实施细则. The Rules for the Implementation of the Patent Law, were last amended in 2010. It is likely that these amendments will also be in the form of amendment to the previous Rules,  and perhaps may anticipate some of the changes expected in a revised patent law

On January 4, 2019, the National People’s Congress released a public comment draft of the long-awaited revised patent law. The NPC Observer’s summary of the legislative history to date is here. As we noted previously, a major disappointment remains the absence of a patent linkage regime, including a notion of “artificial infringement.” If the new Patent Law fails to address patent linkage, then the Rules for the Implementation of the Patent Law are also very likely to omit a patent linkage regime.

Drafting Department: China National Intellectual Property Administration (CNIPA)

Administrative Rules:

 Class I Projects

10.Provisions on Prohibiting Infringements upon Trade Secrets禁止侵犯商业秘密若干规定.  SAIC, as a predecessor agency to CNIPA, promulgated the Provisions on Prohibiting Infringements upon Trade Secrets in 1995 and amended it in 1998. These Provisions were formulated in accordance with the relevant provisions of the Unfair Competition Law then in effect.  These early rules were especially important for administrative enforcement of trade secrets and do need to be amended in light of recent revisions to the Anti-Unfair Competition law.  One overdue change is to correct language that specifically enumerated rights in trade secrets to Chinese citizens, legal persons or other organizations, and not to all natural persons such as foreign natural persons, which is a legacy that unnecessarily violates national treatment obligations (Art. 2): “The term ‘rights holder’ in these regulations refers to citizens, legal persons or other organizations that have ownership or use rights over trade secrets according to law. ” 本规定所称权利人,是指依法对商业秘密享有所有权或者使用权的公 民、法人或者其他组织。

In addition, in the Phase 1 IP Agreement, the trade secret provisions generally memorialize amendments already made to China’s Anti-Unfair Competition Law, including an expanded scope in defining “operator” (Art. 1.3), acts that constitute trade secret infringement (Art. 1.4), as well as a shifting of the burden of proof in civil proceedings where there is a reasonable basis to conclude that a trade secret infringement has occurred (Art. 1.5). The Agreement also requires China to change its trade secret thresholds for “initiating criminal enforcement.” (Art. 1.7).  It is hoped that some of these provisions will be incorporated into China’s administrative trade secret enforcement mechanisms.

Drafting Department: Price Supervision and Inspection and Anti-Unfair Competition Bureau

36.Measures for the Administration of Trademark Agency 商标代理管理办法

Drafting Department: CNIPA

37. Provisions on Protecting Geographical Indication Products地理标志产品保护规定. Prior rules in this area had been adopted by one of the precursor agencies to SAMR, the State Administration for Quality Supervision, Inspection and Quarantine in furtherance of China’s sui generis GI system. On April 3, 2020, CNIPA promulgated the Administrative Measures for the Use of Geographical Indications (Trial) 地理标志专用标志使用管理办法(试行). These measures will hopefully also be harmonized with China’s trademark-based GI system, which is also undergoing reform (see item 55, below). 

Drafting Department: CNIPA

38. Official Logo Protection Measures官方标志保护办法. On March 24, CNIPA released Official Logo Protection Measures (Draft for Public Comment). Comments will be due on April 23, 2020.  

 Drafting Department: CNIPA

 Class II Projects

54. Provisions on the Determination and Protection of Well-Known Trademarks驰名商标认定和保护规定.

Drafting Department: CNIPA

55Administrative Measures Concerning the Registration of Collective Marks and Certification Marks集体商标、证明商标注册和管理办法.

Drafting Department: CNIPA

Class I Projects Administrative Rules Nos. 36 and 37 and Class II Projects Nos. 54 and 55 all have prior effective versions that were issued in 2014 or earlier.  It is likely that these projects will be in the form of amendments to the previous Administrative Rules.

Prepared by Dr. Xu Xiaofan and Mark Cohen

EPISODE 900: THE STOLEN COMPANY

Recently National Public Radio’s Planet Money aired an extensive radio broadcast entitled “Episode 900: The Stolen Company” about a counterfeiting case involving a US adhesives company, ABRO.  The case occurred over 10 years ago but continues to have meaning today.  Owing to my role at the US Embassy at the time, I was interviewed along with Bill Mansfield, who implemented ABRO’s anti-counterfeiting strategies, ABRO’s executive team, and others.   The Planet Money segment recalls the extreme measures that the counterfeiter undertook as well as Bill Mansfield’s creative countermeasures.  I won’t spoil the show by telling you now.   The case continues to stand for the proposition that it is possible to win complex counterfeiting cases in China.

One of the individuals who was not included in the final broadcast was Jack Chang 张为安.  Jack is a friend and fellow veteran of many anti-counterfeiting campaigns, and he has been particularly active in the Quality Brands Protection Committee (QBPC), an association of foreign-invested enterprises (FIE’s) that work together to improve China’s IP system.  He remembered those early days involving ABRO.  Jack noted the following to me in a recent email exchange regarding ABRO after this program aired:

“1) After the Hunan counterfeiter was arrested in London but managed to return to China, he conducted a press conference blaming on USG and ABRO for cheating and framing him. His story was widely spread in China. Even within QBPC, many Chairs circulated the counterfeiter’s one side story. It was Mark Cohen, whom I checked with and who provided me with ABRO’s story. Mark did not disclose that he was involved in the operation at that time though. After learning that the Hunan counterfeiter was the bad guy, I asked the QBPC Chairs and members not to repeat the counterfeiter’s one side story and they did.

2) I know Bill [Mansfield]  for many years. His drinking tea and presenting appreciation plaques served in fact as an important value that “a U.S. citizen, who was so frustrated with China’s counterfeiting problem, ended up recognizing Chinese authorities’ sense of honor.” … Chinese Customs and Economic Crime Police are the heroes in the minds of many U.S. (European as well) companies. … Having said that, why the western world is still so frustrated? The simple answer is that the magnitude of counterfeit trade is huge and the technology related IP issues have caught almost every western leaders of public and private sectors’ attention.

3) …In terms of fighting counterfeiting trademark and copyright piracy, there is no difference between industries. Pfizer, J&J and many other pharm giants got tremendous support from the Chinese police to conduct serious criminal investigations on counterfeit rings. Our semiconductor members got the support too. The problem was with prosecutors and courts, which believe that IP owners were not the victims of IP crimes … and that paying civil damages would suffice while no need to put people in jail. The Chinese police are on our side. Some procuratorates are too… [I]n terms of fighting counterfeiting, industrial differences is not an issue at all. However, I agree with Mark partially that technology-related IP protection may be a different story. As I said earlier in this email, forced tech transfer is NOT a real issue from the perspective of many QBPC front line IP soldiers. But lack of effective legal framework for trade secret protection, which threatens both foreign and domestic companies, national treatment for FIEs in terms of the implementation of national innovation and technological policies, FIEs’ participation in the national technological standard setting, the harmonization of “Regulations on Administration for Import and Export of Technology Transfer” and the tech transfer section of Contract Law etc. are the real concerned areas of QBPC IP experts. …”

The ABRO case may also have some parallels with the current controversy involving extradition of Meng Wanzhou of Huawei.  In the ABRO case, the Chinese government also reacted strongly to the arrest of Yuan Hongwei, the alleged Hunanese counterfeiter in London, on a writ of extradition to the US.  Ultimately the ABRO case quieted down as the facts became better known.

Jack also graciously noted of my own involvement in the ABRO case: “Without your telling me the ABRO story in the old days, QBPC might have rejected ABRO’s application to join QBPC and the Chinese colleagues might turn their anger to the USG. You probably did not know how critical your contribution was to the QBPC (possibly to China’s anti-counterfeiting momentum). I thank you now!! All the best!”

Thank you Jack, Bill Mansfield, the team at ABRO and NPR and others for working together on this important case and sharing your memories and insights.

 

 

“Dying to Survive” and Pharmaceutical IP Reform in China

Last week while in Beijing, I finally had the opportunity to see “Dying to Survive” (Chinese title: “我不是药神”[translation: I am not the god of medicines]), the hit Chinese movie which concerns the problem of high priced cancer medicines that were not available through insurance on the Chinese market and had also been subject to patent validity and infringement disputes.  The screening I saw was filmed in Mandarin and subtitled in English.  When it opened in China, the movie was the second highest grossing movie in the world, and it is now on track to gross over 3 billion RMB.

The cancer medicine that is the focus of the movie is Imatinib Mesylate (Gleevec/Glivec), which was marketed by Novartis and is used to treat Leukemia.  The protagonist, Cheng Yong 程勇, was approached by a leukemia patient to travel to India and supply this person and others with a generic form of Novartis’ Gleevec.  Cheng Yong buys Gleevec for 500 RMB a box, and resells it at a 2,000 RMB, but which is still cheaper than Novartis’ offering (40,000 RMB).

Cheng Yong evolves over time from an unsympathetic trafficker in black market drugs  and possibly substandard medication for local patients to the lifeline of leukemia patients of an effective generic throughout China.  The evolution begins after nearly being arrested for selling counterfeit medicines when he briefly renounces his business in favor of a competitor.  However, he is soon approached by leukemia patients who desperately need his product at a reasonable price. He ultimately subsidizes the sale of Gleevec in China with his own money by distributing the product at cost.  Cheng Yong is thereafter arrested and sentenced.  He is released from jail early after petitioning by patients he has helped.  By contrast, the Novartis anti-counterfeiting investigator’s role remains a one-dimensional villain throughout the movie. The movie closes by noting that Imatinib Mesylate was ultimately made available legally and placed on insurance reimbursement lists and that new laws and regulations have been introduced since the incident described in the film.

The movie is based on an actual incident involving an individual named Lu Yong 陆勇.  The movie also bears some similarity to Dallas Buyers Club, which involved distribution of AIDS medication in the United States.  In real life, generic forms of Gleevec were approved by Chinese regulatory authorities in 2013. The product was also placed into the Chinese insurance reimbursement list in 2017.

The official and public reactions to the film suggest that China is indeed dedicated to both pharmaceutical IP and regulatory reform.  Premier Li Keqiang cited the movie in encouraging accelerated new product introduction and lower drug prices.  A translation by the Anjie law firm of an article by IPHouse on a screening of the film with leading judges, academics and lawyers is attached.   Based on this article and meetings I held in China, I believe that most people thought that the movie’s message was that China needs to continue to engage in a range of legal reforms, including:  accelerating approval of new drugs by China’s National Drug Administration; improving IP protection to encourage innovative drug development; and providing insurance to cover treatments.

Notorious Markets, Alibaba and the JSP

alibabastock

At the end of 2016, a trio of reports are being released by the US government all of which reflect upon the IP environment in China

The first one to be released was the Joint Strategic Plan of the IP Enforcement Coordinator at the White House for the years 2017-2019 (released Dec. 12, 2016) (152 pp).  The second is the Notorious Markets Report of the US Trade Representative, was released yesterday, December 21, 2016 (22 pp).  A third report on China’s WTO compliance, hearings for which were held earlier in 2016.  This annual report is due shortly.  The last report focuses on WTO issues (including IP), while the first two focus on IP issues (including China).

The Joint Strategic Plan singles out China’s “weak protection of intellectual property” (p. 4), relying upon a variety of sources of data, including USTR reports, US Customs seizures, “massive online and physical markets” , business survey data, antitrust concerns, and other sources.    The report also notes China’s legislative efforts to reform its IP laws, the positive role of the National Leading Group, and the “welcome” development of the specialized IP court pilot project.   

The report also singles out US engagement with China on cyber theft as well as US efforts more generally to “mitigate the theft of US trade secrets.” As I have pointed out elsewhere, trade secret misappropriation is a complicated area, where civil, criminal and administrative remedies can be improved and there can be close links to industrial policy.

The Notorious Markets report has gotten the most attention because Alibaba’s Taobao has now been placed back on this list. Taobao is not the only market with a Chinese link.  Other sites included Gongchangcom, which reportedly sells counterfeits, including counterfeit security acts to attach to counterfeit merchandise; Nanjing Imperiosus Technology Co., Ltd (also operating as Domainerschoice.com), which provides services to illegal online pharmacies;  and several physical markets.  These markets include the Baiyun Leather Goods Market (Guangzhou), Jing Long Pan Foreign Trade Garment Market (Guangzhou), Chenghai District Market (Shantou), Wu Ai Market (Shenyang), Cheng Huang Cheng Intenraitonal Auto Parts Market (Beijing), and the Silk Market (in Beijing).

The reports notes that Alibaba’s leadership has underscored the efforts it is taking to address counterfeits but that Taobao “is an important concern due to the large volume of allegedly counterfeit and pirated goods available and the challenges right holders experience in removing and preventing illicit sales and offers of such goods.” Alibaba was previously on the notorious markets list four years ago. Taobao is among the 15 top sites globally, and among the top 5 in China and was the subject of numerous notorious market submissions by industry.  Some US companies had been questioning why Taobao had been dropped from the list (see my blog from a program at Cardozo law school).  Alibaba’s President, Michael Evans, in response to the relisting of Taobao, noted that the decision “leads us to question whether the USTR acted based on the actual facts or was influenced by the current political climate.”  A press release of the American Apparel and Footwear Association supporting USTR’s decision to list Taobao is found here.

The Notorious Markets Report was released in the afternoon of December 21, 2016; it remains to be seen how much affect (if any) the report has on shares being traded in the United States (see chart above).  Alibaba did overcome other counterfeiting-related legal hurdles this year.  Alibaba had been the subject of several US law suits involving its alleged involvement in counterfeiting activities. A racketeering claim was dismissed in August of this year.  In June of 2016, Alibaba reported that seven securities class actions law suits against Alibaba were dismissed that involved allegations that Alibaba failed to disclose a “white paper” issued by the State Administration for Industry and Commerce before its US public offering.  The white paper was reportedly critical of Alibaba’s IP protection policies.   Attached are two of the recent US court decisions involving the shareholder law suits.

These are personal, non-official opinions.

27th JCCT Concludes in DC: Many IPR-Related Outcomes

 

JCCTPanorama.jpg

The 27th Joint Commission on Commerce and Trade concluded in Washington, DC on Wednesday, November 23, 2016, in time for the Thanksgiving holidays in the United States.  Here is a link to the U.S. government fact sheet.  The following is my summery of IP-related issues –

Amongst the “core” IP issues the fact sheet notes that China agreed to “take further efforts to combat bad faith trademark filings.”  Regarding technology transfer, China advised that it is “actively conducting research on the Technology Import and Export Administration Regulations (2002) (TIER) to address U.S. concerns.”  Both of these statements are forward leaning although they admittedly lack specificity.  Regarding trade secrets protection, China agreed that “ in practice, trade secrets misappropriation may be committed by individuals, including employees, who may not be directly involved in the manufacture or sale of goods and services” , thus addressing the concern that the trade secret provisions of the anti-unfair competition law only address commercial undertakings (this issue was also addressed in the draft revisions of the AUCL that was released earlier this year).  China also announced that it plans to bolster other elements of its trade secrets regime, including with respect to  evidence preservation orders  and damage calculations.  Also on the technology side, China also confirmed that “the government has never asked the fund to require compulsory technology or IPR transfer as a condition for participation in [state semiconductor] Funds’ investment projects.”

Issues involving entertainment market access in China also got some attention.  Regarding music licensing, China committed to “issue a measure allowing foreign-invested enterprises to engage in online music distribution and revoking the requirement established by the Ministry of Culture’s 2009 Circular on Strengthening and Improving Online Music Content Examination.”  Regarding theatrical film distribution, which had been the subject of a settlement of a WTO case between the United States and China, China affirmed that it will “enter into consultations with the United States in calendar year 2017 in order to provide further meaningful compensation to the United States.”  Furthermore, the United States and China agreed that, as part of the calendar year 2017 consultations, they will seek to increase the number of revenue-sharing films to be imported each year and the share of gross box office receipts received by U.S. enterprises.

There are several outcomes which are cooperative in nature.  Regarding on-line IP issues, both sides committed to training of small and medium-sized enterprises as well as exploring the use of big data and other new information technologies to enhance the capability for combating infringement and counterfeiting online.  A program on copyright protection for live sports broadcasts is planned for 2017.  In addition, China committed to further study the feasibility of protecting the broadcasts of sporting events under its Copyright Law and the United States “welcomes further clarification” on this issue from the Chinese judiciary “at the earliest possible time.”    Other cooperative programs include ones on: “legal protections for product and service designs, and U.S. trade dress protections “; “criminal enforcement of trade secrets and counterfeit pharmaceuticals”; a joint conference in 2017 on criminal law, legislation and enforcement “to share experiences on recent trends in technologies, business models, and legal developments”; and a workshop on Judicial IPR Protection in China in 2017.

Often events happen on the margins on the JCCT which may not be fully reflected in JCCT outcomes.  There were two notable developments around the time of the JCCT affecting intellectual property rights.  One was the publication of the draft revisions of China’s patent examination guidelines, which address post filing data supplementation, software and business method patents.   Post-filing supplementation of data has been the subject of prior JCCT and bilateral commitments.  Another development involved de-linking of government procurement policies with indigenous innovation, which has been the subject of a recent State Council document that, according to the fact sheet, “requir[es] all local regions and all agencies to further clean up related measures involving linking the indigenous innovation policy to the provision of government procurement preferences….”

The JCCT has a long history, but has typically grown in scope and significance over the years as the US and Chinese economies have increasingly become interdependent.  This was the last JCCT of the Obama administration.  It will next be up to the Trump Administration to decide how to guide the JCCT to continue to play a useful role in bilateral trade relations.

The above are my personal, non-official observations.  All photos are by Mark A. Cohen.

JCCTwangyang.jpg jcctend

 

Counterfeits in Microchannel Marketing … and Case Law

Amidst the escalating focus on online counterfeiting, piracy and patent infringement, online social media, such as WeChat are also becoming a source of infringing products, as documented in a Wall Street Journal article and other journals.  

James Luo (罗正红), a prominent IP lawyer in China, has been following these developments in his blog, where he recently reported on a Supreme People’s Court promoting of  ten model cases that promote “core socialist values” (最高人民法院关于弘扬社会主义核心价值观典型案例). One model case involved a couple that sold counterfeit goods through WeChat Moments, which was held to  constitute the crime of selling commodities bearing counterfeit registered trademarks 微信朋友圈销售假冒注册商标的商品案)。

The reason for the insertion of the case according to the court, was to promote “honesty in business.” As the court noted:

The case was a typical case of selling via microchannel marketing circle of friends, goods bearing counterfeit trademarks. …Compared with the traditional IPR criminal cases, the perpetrators of such crimes use relatively covert means, but the scope of their promotion and sale of counterfeit goods is broad with an adverse social impact.  …Currently, the “Consumer Protection Law” and the “Rules for Network Transaction Management” do not have specific provisions addressing microchannel shopping, and microchannel marketers do not have to register their business with the State Administration for Industry and Commerce.  The relevant laws and regulations need further improvement in this area. “

本案是一起通过微信朋友圈销售假冒注册商标的商品的典型案例。,利用微信朋友圈等新平台售假者也越来越多。与传统侵犯知识产权犯罪案件相比,这类犯罪作案手段相对隐蔽,但传播面广及推广速度快,销售假冒注册商标的商品涉及面广,社会影响恶劣。目前,消费者权益保护法和《网络交易管理办法》在微信购物方面还没有明文规定,而且微商没有经过工商注册登记,相关法律法规还需要进一步完善。

As the accused had intentionally sold a relatively large amount of counterfeit goods, the defendants were found guilty of the crime of selling commodities bearing counterfeit registered trademarks by the Shaoguan Zhengjiang District People’s Court of Guangdong Province.  Sentences were imposed of  6 – 7 months and a fine of RMB 15,000.

In my opinion, this case appears to be headed in the right direction in terms of addressing the use of social media to commit IP crimes.  The court suggests that the case was important to fill in the gaps in the current legislative regime based on technological changes – the way in which criminals do business online.  This is a typical evolution for IP-related case law in the United States, where courts have a record of using existing statutory provisions to address emerging technologies or ways of doing business.

Why this case was categorized as promoting core socialist values?  Perhaps it promotes socialist core values because it addresses problems in the market of unscrupulous unlicensed individuals who transact business without basic principles of good faith and fair dealing and is thus intended to send a policy signal to other courts and the legislative agencies.

How do these cases compare to other types of cases that the court is promoting?  In my opinion, China is paying more attention to cases to guide judicial decisions and create a more predictable legal environment, with 20,000,000 court cases available on line and new regulations on publishing cases in effect.  China is seeking  to develop a Chinese style system of precedent, and has elicited  much government and academic involvement, including scholarship in journals.  These cases need to be compared to the efforts to become more transparent, promote “model cases”, the system of guiding cases,  judicial interpretations, etc., which are all part of an evolving system intended to insure greater consistency of judicial decision making and address emerging issues.

Addendum of 1/1/2017: Here is a useful blog by Jeremy Daum  from 31 August 2016 on the Beijing IP Court’s experiment in precedent, which lines up nicely with the perspective in my blog.

Anticounterfeiting Roundup

This is the fourth in a series on IP enforcement developments.  I previously blogged on judicial developments, online copyright, Customs enforcement, and now I am writing on anticounterfeiting, particularly trademark counterfeiting.

There has been much happening on anticounterfeiting in China the past several weeks, including the much-reported dramas of the annual meeting of the International Anticounterfeiting Coalition, with  Alibaba being denied membership­­­, US Ambassador Baucus speaking at the IACC annual meeting,  and Jack Ma meeting President Obama.  On top of this drama, there had also been data out of China from IP Week (April 26), as well as the availability of other reports, such as USTR’s Special 301 report, which also singled out China’s online environment.

There have also been several high profile cases, typically involving allegations of bad faith trademark acquisition.  One such case is the IPhone trademark dispute.  Another case that may be in the making between Under Armour and Uncle Martian.   These two disputes came on the backs of a hearing on the Michael Jorrdan / Qiaodan trademark dispute which was heard by the Supreme People’s Court on World IP Day, (April 26, 2016).

Despite the adverse publicity for China’s IP system, there is plenty of enforcement taking place.  Alibaba reported through news outlets that the company has identified 3,518 groups selling fake goods on its platforms in 2015. It helped the police seize counterfeit goods worth $125 million and nail 300 suspects.  In addition, surveys conducted by 91% of AmCham China respondents in a recent survey believed that that IPR enforcement had improved over the past five years, a view that was generally shared by USCBC [US-China Business Council] respondents (38% reported some improvement over the past year).

The sense of improvement may be due in part to the high level attention being given to long standing enforcement issues, particularly in the online environment.  Towards the end of April 2016, the State Council released the outline of the Outline for the Work Plan for 2016 for the National Anti-IP Infringement and Anti-Manufacturing and Sales of Substandard and Counterfeit Goods (April 19, 2006).  This Work Plan contains numerous provisions that address on-line and transborder enforcement.  The first action item in this plan is to “strengthen control of infringement in the online environment. (Sec. 1.1)”  Product sectors targeted include:  food and pharmaceuticals; agricultural chemicals, household electronics, building materials, car parts, and childrens’ toys.  Exports by post and express services are to be targeted.   The Work Plan notes that there will be a 12thSword Network” campaign against online copyright enforcement.  Cooperation with large online platforms is to be intensified, and supervision over them is to be strengthened.  An e-commerce law is to be drafted (Sec. 3.10).  International cooperation between law enforcement is also underscored (Sec. 7.26).

On May 4, SAIC announced its own on line enforcement campaign for 2016 (2016网络市场监管专项行动方)(May 4, 2016, for action until November).   The campaign calls for SAIC to take a leading role in “combatting online trademark infringement and other illegal activities. Each region’s AICs/ market supervision departments should intensify the legitimate rights and interests of the network of sale of counterfeit famous trademarks, should increase their efforts to deal with foreign trademarked goods, and safeguard the rights of consumers. They should investigate and punish the network abuse, fraudulent, counterfeit agricultural products of geographical indications.   As for large-scale, cross-border complaints by trademark rights holders and consumer complaints involving centralized network typical cases of trademark infringement and counterfeiting, SAIC shall strengthen its attack on the production, sales of registered trademarks and other aspects of the work of the whole manufacturing chain.”

The courts have also not been shy at tackling difficult issues.  One of the most important decisions affecting exports of counterfeit goods in 2015 was the PRETUL decision at the SPC (Nov. 16, 2015).  This case held that unauthorized use of a mark in China constitutes infringement only if it can serve as an indicator of source of a product or service in the Chinese market. In appropriate circumstances, export sales by an OEM may not constitute infringement of the Chinese rights owner rights.

I welcome your comments and corrections!