“I’m Lovin’ it!” – A “Wrong Way” for McDonalds?

mcdonalds

My colleague at Fordham Law, Geoffrey Sant, has written an interesting  blog  on Salon “McDonald’s self-hating complex: Why its overseas P.R. campaign is the worst of all time” that addresses McDonald’s Chinese slogan which translates “I’m lovin’ it” to 我就喜欢  (wo jiu xihuan).

As Geoff explains:  “The second word in this sentence (jiu) is used to emphatically contradict what someone else has said.  The natural implication is that the speaker is responding to someone who has just insulted McDonald’s food.  While there is no perfect translation for the phrase, it has the same essential spirit as “I like it no matter what you say!”

Every student of Chinese in the West learns about the jiu particle early in their Chinese language career.   However, rather than rely on my study of Chinese grammar forty years ago,  I checked with Google translate, which suggests that the phrase  indeed connotes faint praise, and translates it as “I would like to.”

There are many other similar mistakes in both Chinese and English, including such notables as the “Rongwei” car, which sounded suspiciously like ‘wrong way”, and is now known in English as the Roewe.

Goeff suggests positive alternatives such as  “我很喜欢” (wo hen xihuan) or “我好喜欢” (wo hao xihuan), both of which mean “I really like it.”

Apparently the SAIC trademark database reflects a different market reality.  When I checked on March 15, 2015, I noticed that McDonald’s has six registrations in four classes (28, 29 , 30, 32 and 43) for 我就喜欢  (wo jiu xihuan).  There were an additional 21 registrations by other companies or individuals.

Perhaps McDonald’s has some squatters who are more interested in being paid off than grammatical niceties?

 

JCCT 2014 Winds Up – Joint Fact Sheets Now Released

JCCT2014

The 2014 JCCT was hosted by the US government in Chicago, Illinois this year. Here is a link to the updated English  fact sheet (released Dec. 29) (Chinese:第25届中美商贸联委会联合成果清单)  that is now a joint fact sheet.    Here is a summary of the IP accomplishments of this year’s JCCT according to the joint fact sheet:

One significant outcome involved “technology localization” which is the practice whereby China grants tax preferences based on where IP is owned or R&D is undertaken.  Here is what the fact sheet says about the outcome in this area:

The United States and China commit to ensure that both countries treat intellectual property rights owned or developed in other countries the same as domestically owned or developed intellectual property rights.  ..Both China and the United States confirm that the government is entitled to take measures to encourage enterprises to engage in research and development and the creation and protection of intellectual property rights. 

In my personal estimation, the significance of this outcome is that China committed to not discriminating in awarding tax preferences based on where IP is owned.  To a degree this reflects footnote 3 of the TRIPS Agreement, which prohibits discrimination in “protection” of IP, which includes “matters affecting the use of intellectual property.”

Regarding service invention compensation, which has been important to readers of this blog, the JCCT commitment reflected the accomplishments of the 2014 Innovation Dialogue regarding freedom of contract:

The United States and China commit to protect the legal rights of inventors in respect of their inventions and creations, in accordance with their respective domestic laws and regulations, and in line with their domestic laws, commit to respect the legitimate rules and regulations developed by employers and legitimate contracts between employers and inventors concerning inventor remuneration and awards.

Another JCCT outcome involved protection of trade secrets in government regulatory proceedings:

The United States and China confirm that trade secrets submitted to the government in administrative or regulatory proceedings are to be protected from improper disclosure to the public and only disclosed to government officials in connection with their official duties in accordance with law…

The rather “hot” issue of geographical indications was also the subject of an “outcome” involving not extending GI’s to generic terms and establishing procedures to object to and cancel the registration of the GI.

There were also a number of cooperative commitments which will likely be a focus of various bilateral discussions and programs, including on technology licensing, bad faith trademark registrations, judicial best practices, data supplementation for pharmaceutical patents, IP in standards setting, sale of IP-intensive goods and services, and addressing on-line infringement.

The revised joint fact sheet also includes a joint commitment on abusive litigation:

Patent Protection and Bad Faith Litigations

  • The U.S. and China remain committed to promoting a robust intellectual property system that will incentivize future innovation and economic growth in both countries. Both parties are to strengthen cooperation to protect innovators from bad faith litigations, including to hold a joint seminar on IP licensing, so as to create positive conditions for innovation.

 

 

There were also outcomes that weren’t focused on IP but have significant IP implications.  One involved medical device and pharmaceutical market access, where China committed to accelerate approval procedures, which has long been hampered by inadequate resources at China’s Food and Drug Administration.  Another involved clarifying standards for antimonopoly law enforcement, including providing for greater due process and law firm access.  Still another commitment involved collaboration on law firm market access, which certainly affects foreign IP lawyers practicing in China.

In my personal experience, this 25th JCCT might equally be labeled JCCT v. 3.0.  The JCCT has changed to accommodate the growing complexity and importance of US-China trade.  In its first version (1983 to approximately 2001), the JCCT was as often a rather sleepy technical exchange mechanism.  I remember attending an early JCCT dealing with the enforcement of arbitration awards.  Another iteration (v 2.0) was under the leadership of Vice Premier Wu Yi after China’s WTO accession.  The JCCT then became a mechanism for negotiating trade issues with the Vice Premier chairing on the Chinese side and the Secretary of Commerce and US Trade Representative as formal co-chairs, but with an important added role for the Secretary of Agriculture.  Version 3.0 includes the same leadership structure, but with more involvement by industry and the host locality through various programs and symposia, joint fact sheets, and commitments to move negotiations changes in the negotiating calendar, including “a year of continuous work to address important issues facing our two nations.”

The above are my personal, non-official observations.

A Quick Report on the EIPC MIIT Conference Including SAIC’s IP Abuse Rules, Patent Law Amendments, EIPC MIIT Standardization Policies, Standards and IP Abuse…

EIPC MIIT’s Conference on Intellectual Property Standards and Anti-Monopoly Law convened on December 10 and 11 in Beijing.  The conference brought together about 150 international and Chinese experts, including lawyers, judges, academics, diplomats, and other professionals to the Wanshou Hotel in the Haidian District, Beijing.  There were over over 30 speakers. The initial speakers set the tone for the conference by concentrating on one theme:  China’s anti-monopoly regime had entered a new phase from theory to enforcement.  Further, this transition period is characterized by the need to balance anti-monopoly law and IP rights, regulation and innovation.

One example of the struggle for balance is the debate over the prevalence and importance of holdouts, or the practice of standards implementers engaging in conduct intended to drive royalties down royalties for Standards Essential Patent (SEP) holders to lower than F/RAND levels.  Dina Kallay, Director of Intellectual Property and Competition at Ericsson Ltd.  argued the problem of hold outs was real.  David Wang, Director of Standards and IPR Strategy, Intellectual Property Rights Department of Huawei Technologies Co., argued that that there is no evidence of real life hold outs.  His opinion comes in light of Huawei’s recent litigation with IDC, in which a court ruled that IDC should compensate Huawei for excessive pricing and tying practices.

Many speakers addressed current and future reforms.  Yang Jie, Director of the Anti-Monopoly and Anti-Unfair Competition Enforcement Bureau at SAIC, explained new revisions to its forthcoming rules on abuse of dominance and exclusionary relief (presumably, SAIC’s IP Abuse guidelines or rules). Since August, SAIC has modified seven articles. First, Yang Jie said that SAIC has maintained the “essential facilities” doctrine in the new version, however with some modifications. The doctrine will apply when an intellectual property right cannot be easily substituted in the relevant market, other players want to be part of the market, a refusal to deal would restrict competition or innovation in the relevant market, it harms the public interest, and the licensing of the patent would not negatively or unreasonably harm the interests of the patentee.

Yang Jie also explained that SAIC has adopted a narrow interpretation of refusal to deal for players in a dominant position.  It will only apply when the intellectual property right constitutes an essential element for production.  Moreover, a violation only occurs when the behavior limits competition. Additionally, in abuse of dominance, “abuse” must be considered parallel to other elements and the behavior must harm the public interest or consumer behavior.

Concerning guidelines for the standard setting process, Yang Jie explained that the rules do not include a special provision for horizontal agreements in the standard setting process, because this is covered under the provision for anti-monopoly agreements.  Furthermore, Yang Jie divided monopolistic behavior in the standard setting into standard setting procedures – for instance if a firm fails to say something in a patent application – and standard implementation, which would include violations of F/RAND commitments.  Yang Jie said that the standards clarify the “what should have been known” standard for the standard setting process.  For standard implementation, the guidelines add the requirement of restricting or limiting competition.  Additionally, the new guidelines will treat intellectual property rights the same as other property rights. In other words, SEP holders are not automatically deemed to have market dominant positions. Instead, a case specific analysis must show that a firm is “dominant” within the meaning of relevant provisions of the Anitmonopoly Law.

Lastly, the guidelines no longer include a specific provision targeting copyright collecting societies for abuse of dominance or restricting competition. Yang Jie explained that the provision was cut because there was no real evidence of copyright organizations abusing their position. That being said, enforcement agencies can still pursue copyright organizations as they are not otherwise exempt from the law.

Yang Jie also said that the official version has not yet been promulgated. The regulations have been submitted to relevant bodies within the State Council for review (note from Mark Cohen: it is unclear to me if this is registration with the State Council, or review by the Antimonpoly Enforcement Agencies, or another process.  If this document is an SAIC rule, then review by the State Council should be limited).

Zhang Yonghua, Deputy Director of No. 1 Division of the Legal Affairs Department of the State Intellectual Property Office of China (SIPO), provided details regarding the latest draft of the proposed patent law amendments.  The new draft empowers judicial and administrative bodies with the right of investigation and evidence collection. It also allows administrative agencies to effectively settle infringement issues by compensation.  Furthermore, the draft provides for punitive damages for severe infringements, a concept already employed in China’s trademark law. Additionally, protection for industrial design is extended to 15 years. The new draft also introduces a burden of proof shifting scheme in which the burden of proof shifts once the patentee has satisfied certain of its evidentiary burdens.

Zheng Wen, Deputy Director General of the Anti-Monopoly Bureau, focused on the need for improvement in the merger review process of MofCOM.  Zheng Wen said that MOFCOM had received over 1000 cases since August 2008 and had finished over 900, imposing sanctions in only 3% of the cases.  Zheng suggested that there was a need to impose more sanctions and to crack down on parties that illegally skipped merger review.  Since November, MOFCOM has been publishing notices of sanctions on parties that did not report their proposed merger but should have.  Zheng Wen also expressed the desire to set up a long term cooperation mechanism with the E.U. and U.S., especially for large scale transnational mergers.

Huang Yong, Vice Chair of the Expert Advisory Committee under the State Council Anti-Monopoly Commission, stated that allowing agencies the rights of investigation and suggestion would be a step in the right direction.

Concerning the new Specialized IP Courts, Jin Kesheng, Deputy Chief Judge of the IPR Tribunal and senior Judge of the Supreme Court said that we could look forward to a judicial interpretation regarding the role of the court’s “technology investigator” position.  Additionally, Zhang Xiaojin, Chief Judge of the Second Tribunal in the Beijing Intellectual Property Court, expressed serious concern over the new court’s ability to handle their large caseload. For instance, the Beijing specialized IP court has 100 staff in total, only 22 of whom are judges and the court is expected to receive 15,000 cases annually.  He expressed further concern over their ability to carry out judicial reform while so severely understaffed.

Finally, Shi Shaohua of EIPC MIIT spoke about feedback to EIPC MIIT’s own Template for IP Policies in Industry Standards Organizations, (which I previously wrote about here). Two criticisms were that the structure was too complicated and that courts do not have sufficient expertise to adjudicate F/RAND issues; injunctions and unwilling licensors;  and reference factors for unreasonable licensing, including factors such as the smallest component or device, the total aggregate royalties of all potential SEPs, the influence of standards on patents, and the extra value that standards bring to a patent.  EIPC MIIT also received comments concerning reciprocity requirements, for instance what standard should be employed and whether adding restrictions to SEP licensing will influence cross-licensing, market access, and reciprocity.

The conference also included presentations on Legal Issues of Competition in Internet Industry” and “Internet Based Information Security and Intellectual Property Protection” which unfortunately we were not able to cover.

Prepared by Marc Epstein of Fordham Law School with edits by Mark Cohen.   A special thanks to EIPC MIIT and Shi Shaohua for allowing a Fordham student to attend this important conference!  Please provide us with any corrections, additions or comments!  As always, these comments are the authors’ own.

China’s Explosion in Administrative IP Appeals and Its Impact on the New Beijing Specialized IP Court

 As I have previously blogged here, China’s specialized IP courts are in fact a kind of misnomer: their jurisdictional bases are directed more towards technology-related IP (patents, technical secrets, plant varieties, semiconductor layout designs, software copyright).  “Softer” IP (trademarks, copyright) is not their focus.  In addition, they will provide a more professional appeals court from China’s patent and trademark office.

Surprisingly, one of the most active areas of this court will be trademark administrative appeals, and not in the technology-related matters that is their raison d’etre.

On October 30, 2014, the Beijing Higher People’s Court published a report on patent and trademark administrative appeals for the first nine months of 2014, which underscores the kind of docket that this new court will face.  Trademark administrative cases increased drastically, from 2139 for all of 2013, to 7749 for the first nine months of 2014.  If these 7749 cases were annualized, the total would be 10332 — a five-fold increase for 2014.  Moreover, in 2013, about 50% of this docket involved foreigners.  This court will be of key interest for foreigners.

Patent administrative cases by comparison have been relatively stable and fewer.  The data for 2013 also shows that about 35% of the cases involved foreigners.  Chen Jinchuan (陈锦川) of Beijing Higher People’s Court also noted in a conference, that most foreign patentees are from the United States, Japan, and Germany, and that most of these cases involve invention patents.

The two charts below are drawn from a 2014 article and a 2013 article .  Data in the charts for 2014 is not annualized and may therefore understate the growth in the docket.

Chart one: Trademark Cases From 2013-2014

Screen Shot 2014-12-30 at 10.43.12 AM

Chart two: Patent Cases From 2013-2014

test 2

According to the Beijing Intellectual Property Office, cases of review of refused trademark administrative cases, involve two parties (the Trademark Review and Adjudication Board of SAIC and the applicant), are relatively stable and thus easy for the court to handle.  But other administrative cases involve three parties (SAIC, and the two parties contesting the right) and are more difficult for the court to handle.   SAIC also reported that there was a big increase in TRAB activity in early 2014 in anticipation of trademark law reforms that went into effect this year.   In fact, the cases filed in the courts in the first quarter in 2014 (2160) exceeded all cases for 2013.

Is it worth foreigners’ filing cases to challenge the TRAB in the courts?  The TRAB reported that its first instance success rate in the court was 82.8%.  In other words, there is about a one-in-five chance of winning on appeal in the courts.

The initial data shows that this new specialized IP court will continue to be highly important to foreigners.  The court will be quite busy with trademark administrative matters, in addition to the smaller quantity of patent cases.  Both of these cases will be very important to the foreign business community
.

MofCOM’s September 12 IP Program in DC Covers A Wide Range of IP Developments

Here is a digest of some of the highlights of the half day program hosted by MofCOM on IP in Washington DC on September 12.

The Supreme People’s Procuratorate gave a useful overview showing the policy reasons for the big increase in criminal IP cases, including the expanding role of the procuratorate.

SIPO underscored the increase in its examiners and the decreasing pendency periods to 22.2 months.   SIPO has also conducted a social survey which showed a relatively high approval rating of its procedures (81.8%).

The Chinese side did not address the foreign-related impact of the Specialized IP courts. However the low foreign utilization of the civil IP system was generally acknowledged.

Regarding the new TM law, procedures for auditory marks was discussed, oppositions for non use, and changes in the recordal system for licenses. SAIC was careful to underscore that its recordal system did not require submission of business confidential information.   SAIC also discussed the changed provisions for liability by reasons of “providing convenience” to infringement, including storage, transportation, mailing, printing, concealing, providing a business premises and providing an on-line goods trading platform.

SAIC also noted that the TM law also sought greater coordination with other laws, including the anti-unfair competition law and criminal laws. For example, it provided support for demonstrating “intentionality” in  TM infringement when other indicia, such as trade dress infringement, are present.  Chinese IP Attaché Chen Fuli also noted that a key provision of the new TM law was its including of concepts of honesty and credibility into the TM system, which were borrowed from the civil law.

The National Copyright Administration noted that there were now at least 632 million Internet users in China, and 527 cell phone users, with 2,730,000 websites. NCA also noted that there were widely differing opinions on the types of amendments that were necessary for the copyright law.  In revising the law to address recent developments, NCA was looking at earlier State Council regulations on on-line liability, and recent civil and criminal JI’s.  NCA also noted that the on-line “Sword Campaign” resulted in 201 cases sent to criminal referral.  In addition NCA was supervising 25 websites for their content of top movies, and TV programs.  In NCA’s view, music and published works were continuing to experience significant problems, and NCA hoped to address these through a black-list system.  Also, NCA noted that many IP addresses for companies that were subject of its enforcement campaigns were located overseas, including in the US.

The Leading Group reviewed its numerous, generally successful, efforts at improving coordination on IP enforcement, including its recent campaigns. Unfortunately, its special campaign on trade secrets had only resulted in 21 administrative enforcement cases in the first half of 2014.

Regarding China’s sui generis system of GI’s, AQSIQ noted that this system was based on China’s Product Quality Law, and was initially implemented in 2004 by the Department of Science and Technology of AQSIQ. AQSIQ noted that relevant rules governing operation of the sui generis system included the Provisions on Protection of Geographical Identity Products, and the Working Rules on GI Product Protection, which provide for opposition and cancelation of GI applications.  Describing GI’s as a “public rights” system, AQSIQ also noted that it has set up a  GI working group, it has started work on a GI products encyclopedia,  it had promulgated over 1000 standards for GI products,  and that it had set up exemplary zones for GI products..  AQSIQ also noted that NAPA Valley had secured GI protection in China.  Its GI application was published in August 2011 and there had been no opposition to it.

Altogether, it was a useful and informative program.

Full disclosure: I co-moderated the program, although this summary represents my personal views only.

Microsoft under Chinese Antitrust Scrutiny?

Yesterday, July 28, the Western press, including the Washington Post and South China Morning Post, as well as Chinese online media reported that the State Administration for Industry and Commerce (SAIC), one of China’s three antitrust regulators, was investigating Microsoft for possible antitrust violations by visiting Microsoft’s offices at Beijing, Shanghai, Guangzhou and Chengdu.

Chinese IT analysts suggested that if there were an antitrust investigation, it would involve Microsoft’s operating system, which controls 95% of the market.   However, analysts also noted that while PC OS has not been a principal focus of attention of China’s antitrust regulators, China has potentially eight domestic competitors to Microsoft in the OS sphere, and that there market share has been growing in part through government procurement efforts. While OS is a basic platform for building computer systems and services, these analysts noted Microsoft’s technological depth in this area has brought it many competitive advantages.

One hopes that Chinese regulators note that the 95% “market” dominance figure that is being discussed necessarily refers to the legitimate, non-pirated market only since Microsoft’s chief competitor in China is likely the stolen pirated versions of its own software.

The limited news that is available makes it difficult to infer much. SAIC handles non-pricing related investigations involving monopolistic agreements, and abuse of dominance. In recent months, however, NDRC has undertaken several price-related antitrust investigations. SAIC is a vast agency which also has broad authority in a range of IP and market regulation areas, including “abuse of IP” pursuant to article 55 of China’s Antimonopoly Law as well as supervisory authority under China’s contract law.

History also offers little guidance, in part because of Microsoft’s extensive involvement in a range of tech sectors. A Hong Kong based company reportedly accused Microsoft of discriminatory and excessive pricing for its software products in 2012 in a case in Guangdong. .” On a positive note, however, Microsoft’s merger with Nokia was also recently approved by China’s antitrust regulators

China does appear to be more clearly expanding its efforts to regulate technology markets.   These efforts began even when there was an unclear legislative basis. The press had reported that Microsoft had been reported to be the subject of an antitrust investigation by SIPO in 1998, which thereafter led nowhere except to a flurry of denials. In fact, as I noted in the 2011 book I coauthored on Antimonpoly Law and Practice in China, MofCOM Vice Minister Yi Xiaozhun complained even before implementation of the antimonopoly law (2007) of high licensing fees “running counter to fair competition”. More recently,the Huawei/Interdigital case appears to have been a harbinger of a more active role by the government, particularly NDRC, in regulation of foreign players in China’s technology markets.

We noted in the 2011 book that there are likely be “increasing concerns regarding policies that appear oriented towards enhancing national competitiveness rather than competition per se. These concerns over an emerging Chinese “techno-nationalism” have been escalating with increasing frequency.” At the same time, I also expressed hope that “China’s emergence as a major center of innovative intellectual property activity may alter policies that appear to diminish the value of foreign IP rights and may also temper rhetoric that is occasionally heard of using competition law and other policies as ‘counter strategies’ to Western ‘IP oppression.’”  More recently, these themes were echoed at the recently concluded Strategic and Economic Dialogue where China “recognized that the objective of competition policy is to promote consumer welfare and economic efficiency, rather than to promote individual competitors or industries, and that enforcement of its competition law should be fair, objective, transparent, and non-discriminatory. ”

These days at conferences no one seems to doubt that China is interested in IP protection. The “goods news” remains that China is interested in IP. Unfortunately, the bad news is also that China is interested in IP  —  as a tool of development for its “socialist market economy.” Striking the right balance will be a critical issue for both China and its trading partners in the years ahead.

The opinions expressed above are the author’s own.