Jordan/Qiaodan Trademark Case – Translation Now Available Here

Thanks to the hard work of Jessie Zeng 曾 潇 of Tsinghua University Law School, and the support of his professor, former Chief Judge Randall Rader, we now have a translation of the Michael Jordan/Qiaodan case.  Here is a translation of the decision in word formatJessie Zeng has also kindly provided a translation of cited laws in the decision.

On first impression, the case has significant implications for entertainment law, trademark rights for well known foreign individuals in China as well  bad faith issues.  Here are some key points: 

A) The SPC overturned Beijing High Court’s view that required a definitive association between Qiaodan and Michael Jordan, but instead required a stable association.  The court relied heavily on general civil doctrine, including tort law, IP law and advertising law in making its analysis.  The court also noted that, with respect to foreigners,  the key factor is that the relevant public in China has gotten used to calling the foreigner with a Chinese name in translation.

B) The court also admitted a range of evidence to support the fame and reputation of Michael Jordan as proof of bad faith by Qiaodan, including a large number of articles, endorsements and survey data.

C) The court recognized that, with respect to foreign names,  sometimes the public may use a name for the individual that is different from the name the person actively uses, and that this name should be protectable.

D) The court also noted that Qiaodan’s prior investment activities and brand promotion did not give it any “squatter’s rights”, noting that “Qiao Dan Inc.’s operation condition, its efforts in related trademarks’ publicity, use, related trademarks’ awarded prizes and received protection and etc. cannot make the disputed trademark’s registration legitimate.” Qiaodan operates about 6,000 stores in China.  The case is in a sense a warning shot to trademark pirates that a business model based on bad faith is risky in today’s China.

In fact, in the many years that I have followed this case one of my greatest concerns was how much a court would be unwilling to disrupt expectations built around a bad faith business model.  Viewed as a political statement, the SPC is sending a strong and laudable signal by saying that relatively settled expectations based on bad faith registrations will not legitimize these trademark registrations and indeed can end up being quite costly.  Times are changing…

My thanks, once again, to Jessie Zeng! 

(Note: Translation revision: January 6, 2017).

 

Kong Xiangjun Leaves Supreme People’s Court and Enters Academia

 

Chinese and Western media have reported that former Supreme People’s Court IPR Tribunal Chief Judge Kong Xiangjun and former Deputy Chief Judge of the SPC’s first Circuit Court has been dismissed from his work at the SPC.  Shanghai Jiaotong University, Koguan Law School also announced on September 7 that he would be joining their faculty.  

Kong served nine months on the circuit court, when he was dismissed from that position by the NPC in 2015.   He was dismissed from his SPC positions as both a trial judge and a member of the adjudication committee on September 3, 2016 by at the 23rd meeting of the Standing Committee of the 12th NPC.  There had previously been rumors that Kong was going to leave the court when he served on the SPC’s circuit court, which he denied.

Kong pursued his Ph.D. under Jiang Ping 江平 at the Chinese University of Political Science and Law.  He also served as Deputy Chief Judge under the Administrative Tribunal of the SPC, deputy chief judge of the civil tribunal, and as Deputy Party Secretary in Sichuan in 2014.  Among his many honors, Managing IP nominated him to the 50 Most Influential People in IP in 2010 and 2011.

Owing to his work in the fair trade division of SAIC prior to entering the court, Kong also had an interest in unfair competition and antitrust matters, and was an example of the many of officials in China who worked on unfair competition and IP issues at different stages of their career.  Kong has also authored several books including on contract law, antiunfair competition law, trade secret law, the TRIPS Agreement, and trademark law.

US & China Conclude High Level Exchange on Judicial Reform and Commercial Rule of Law

WP_20160802_005 (1)(photo by Mark Cohen)

Last week, top U.S. and Chinese judges and legal experts came together to implement the agreement between Presidents Obama and Xi to hold a high level exchange on judicial reform and commercial rule of law, which stated:

China and the United States commit to conduct high-level and expert discussions commencing in early 2016 to provide a forum to support and exchange views on judicial reform and identify and evaluate the challenges and strategies in implementing the rule of law. U.S. participants are to include leading members of the U.S. judiciary, U.S. government legal policy experts, and officials from the Departments of Commerce and Justice and the Office of the United States Trade Representative. Chinese participants are to include officials from the Central Leading Group on Judicial Reform, leading members of the Chinese judiciary, and Chinese government legal policy experts. This dialogue is to result in an improvement in the transparency and predictability of the business environment. This dialogue does not replace, duplicate or weaken existing regular bilateral legal and human rights dialogues between China and the United States.

According to Amb. Baucus’ view of the dialogue: “companies – American and Chinese – need predictability.  An independent judiciary that can resolve civil and administrative disputes fairly, transparently, and according to the law, is critical.  If we can deepen cooperation between the United States and China on judicial matters, it will help improve the investment climate, to the benefit of companies and workers in both of our countries.”

Chinese media reported that there were over 30 experts, officials and judges attending the program, which included several important IP judges such as SPC Justice Tao Kaiyuan,  and Deputy Chief   IP Judge Wang Chuang, as well as Beijing IP Court President Su Chi, as well as He Zhonglin, head of the SPC’s Office of International Cooperation and a former IP judge himself (see picture above).  According to the media, members of the delegation also met with Meng Jianzhu, head of the Party Political Legal Committee.

The US Department of Justice released the opening speech of Bill Baer, Assistant Attorney General, who noted that the Dialogue included many topics germane to IP such as: “How can parties obtain the evidence they need to prepare for trial?  What evidence should be admissible in court?  How do courts and parties use expert witnesses?  What can courts do to handle a large number of cases fairly, transparently, and efficiently, when resources are finite?  What sort of personnel do we need to implement the rule of law, and how do we ensure that they are properly trained and feel they are part of a justice-focused mission? Finally, what is the role of precedents in providing guidance to business as to what behavior violates the law?”

This is not the first such judicial exchange, nor the first exchange with a common law country.   The Federal Circuit has been engaged in two major programs on IP adjudication with the Chinese courts, including one that involved over 1200 people including 200 Chinese judges  in 2012, and a second large sale  program in Shanghai in 2015This year, the focus on the UK judicial exchanges this year is also on commercial law.  Individual US judges, such as Denny Chin and Randall Rader have also traveled to China and engaged the Chinese judiciary on IP and commercial legal matters, including by attending important programs in the United States.  In the UK, Mr Justice Birss was very supportive of these exchanges in comments he delivered at the Fordham IP Conference this year. The  SPC has reportedly established friendly relationships with judicial institutions of more than 130 countries and 20 international or regional organizations.

Chinese media noted that the next meeting of the dialogue of scheduled for Washington, DC.

 

 

CATR’s Report on Copyright Enforcement in the On Line Enviroment

The China Academy of Telecommunication Research (CATR), at the request of the National Copyright Administration,  released a report on April 26, 2016 on Copyright Protection in the Online Environment.

The report noted that  there were 2,118 on line civil copyright cases in total, an increase of 28.3% from last year (this total number seems smaller than I would have guessed).  The SPC White Paper reported that overall there were 66,690 civil cases, an increase of 12.1% from 2014.  Regarding civil on line copyright enforcement, 44% of the online cases involved music and 18% involved audiovisual infringement.  Amongst the IP courts, Guangdong had the highest percentage of cases (39.5%), followed by Shanghai (33.5%) and Beijing (16.5).  However, the province with the most cases was Hubei (476), followed by Beijing, Guangdong, Zhejiang, Shanghai and Jiangsu) (see chart below).

graphofcivilcases

The report also notes several important legal and policy initiatives, including directives from the National Copyright Administration on online liability, and a revision to the Criminal Code, making it clear that on line technology providers can be held criminally liable for copyright infringement.  The report also singles out the release of a draft of  proposed rule on Copyright Administrative Enforcement. (著作权行政处罚实施办法 (修订征求意见稿)as well as new rules Concerning Specifications of the Copyright Order In Online Transmissions (关于规范网络转载版权秩序的 通知),  Stopping Online Music Service Providers Transmitting Unauthorized Content(关于责令网络音乐服 务商停止未经授权传播音乐作品 的通知)and the Rule Concerning Specifications of the Order of Cloud Driver Service Provider Copyright (关于规范网盘服务 版权秩序的通知).

Data on copyright administrative and criminal enforcement in the online environment was not made available in this report.   According to the SPC White Paper, there were 523 criminal copyright cases, involved 547 people.  Moreover, news reports accompanying its release reported the following data: during the Sword Network Campaign in 2015, there were 383 administrative enforcement actions, with fines of 4.5 million RMB, 59 cases transferred to criminal prosecution, and 113 websites closed.

Summarizing the SPC’s 2015 White Paper

 

WP_20160420_005China releases much of its IP data in April, on the margins of World IP Day (April 26).  This year there have been important conferences summarizing these reports in advance of their release, including reports from the Supreme People’s Court on IP litigation, as well as white paper reports on specialized IP courts in Beijing, Shanghai and Guangdong.  In addition, there are SPC reports on fifty model cases and 10 big IP casesThe Western media has also reported on some of these reports, as have state run media in Chinese and in English.   This blog has reported on SPC whitepapers and model cases for some time.  As in prior years many provincial courts, such as Hubei, are also reporting out white papers of various kinds, as have IP and administrative agencies, such as Beijing municipality.

As in prior years, interpretation of the data, particularly for the foreign business community, can be challenging.  Here is my digest of the SPC’s important 2015 White Paper:

Foreign Cases Are a Shrinking Share

Perhaps the most dramatic national news from the official national data involving foreigners is that in 2015 foreign related IP cases dropped 22% in absolute numbers from last year, despite an overall increase of 7.2% of total decided IP cases. The total number of civil cases involving foreigners was 1,327.   As a consequence, foreign related IP civil cases as a share of total cases dropped from 1.9% (2013), to 1.8% (2014), to 1.2% (2015).   By contrast, total administrative cases in 2015 were 10,926, of which 4,928 were foreign or about 45%, continuing the trend of an outsized foreign administrative presence, with an undersized infringement role.

Data from other sources also casts some doubt on the “foreign-related” data in the SPC’s report.  The Shanghai IP courts reported that approximately one in six lawsuits received involved an overseas party, with most pursuing trademark or patent infringement claims.  A newly set up database company, IP House, also reported that over 20% of the IP litigation in Beijing involved foreigners.  Former SIPO Commissioner Tian Lipu also cast doubt on data suggesting that the amount of foreign-related IP litigation is under 5%, in a letter to then USPTO Director Kappos.  Conflicting data on foreign-related cases is likely due to the manner of reporting.  Although there is no official explanation I know of, I believe that foreign-related cases are likely those cases reported as foreign related for purposes of suspension of mandatory time frames for adjudication under China’s civil procedure law.  However, litigation commenced by a foreign invested entity in China may be characterized by the SPC as a domestic case.

Another explanation may be that the high level of foreign-related administrative cases may be due to the centralization of IP prosecution in the headquarters of many foreign companies which file these cases in the name of the parent company.  After China’s patent office or trademark office grants the right, the foreign company might then transfer the rights to the subsidiary.  This transfer is validated by the high percentage of related party IP licensing activity which US census also reports. I have not, however, seen any studies that seek to correlate foreign licensing activity, foreign investment and foreign-related litigation, which might support this hypothesis.

As I have noted elsewhere, comprehensive data must, however, await publication of the relevant source cases or data by the SPC and other courts.

IP Cases Continue to Grow Overall

The shrinking reported foreign share contrasts with the rapid growth of IP cases in China.  The SPC reported that newly reported first instance IP cases increased to 130,200, up 11.73% from 2014.  Total cases adjudicated were 123, 059, an increase of 11.68%, of which 101,324  were civil cases, an increase of 7.22%.  Administrative cases adjudicated constituted 10, 926, an increase of 123.57%, most likely due to changes in China’s trademark law which establish a more direct role for the courts.   Criminal cases adjudicated were 10,809, maintaining their slightly decreased level since 2013 (the SPC report notes that the cases are “stable” 同比基本持平)。

Patent Cases Continue to Grow

The SPC reported that patent and licensing cases continued grow, and that they increasingly involved complex areas of technology, with an increase of 22.1% to 13,087 cases.   However, I have not yet seen a breakdown of cases by type of patent or technology type which fully documents this observation.  The data appears too general at this point, considering that perhaps 2/3 of China’s patent cases involve unexamined utility models and designs of varying technological complexity, the relatively small share of licensing disputes, and the reality that many software and unfair competition cases may in fact involve high technology cases (but may not otherwise be reported as such).

Unfair Competition Cases on the Rise

The SPC report shows that unfair competition cases have increased, including those involving the internet and software technologies. Civil cases increased to 2,181, with antitrust cases increasing to 156. The total increase was 53.38%. Trade secret cases have not yet been separately reported out. They are generally a significant share of this relatively small portion of the IP docket. In 2009, for example, there were 1,282 cases under the Law to Counter Unfair Competition in the courts, of which 253 involved trade secrets.

What the Data Suggests on Courts Foreigners May Want to Pay Attention To

A foreigner traveling to China who is considering where to bring a case, or risks of being sued in a particular venue, should not consider all court as equally well situation.  The Beijing courts, for example, clearly play a key role in foreign related IP adjudication. As administrative cases are overwhelmingly located in Beijing, the Beijing IP court hears perhaps 80% of the combined civil/administrative foreign docket.

In addition, the SPC reports that Beijing, Shanghai, Jiangsu, Zhejiang and Guangdong accounted for 70 percent of the first instance IP litigation of all types. Shanghai is also a good place to engage, as it has the SPC has established an international exchanges base there. Indeed, the Shanghai white paper also reported out on its exchange activities, including singling out a significant conference last year with the US Court of Appeals for the Federal Circuit. Still, several courts are assuming increasing importance, and some may pose defensive risks and opportunities for foreigners.   Jiangsu’s docket increased by 38.71%; the docket in Tianjin increased by 50.41%. Anhui saw an increase of 101.26%, while courts in Shandong, Shaanxi, Hunan and Helilongjiang all saw increases of over 30%.

Just as the specialized IP courts were releasing their white papers, the SPC reported that NPC delegates from a number of provinces had been asking to establish their own IP courts in their region, and that the SPC would report out in August on these proposals.  In my opinion, these requests reveal the problem of this otherwise noble experiment in specialized IP courts: if multiple regions have specialized IP courts at the intermediate level, then efforts to insure national unity in reduce local protectionism in IP litigation through a national appellate court may be compromised. However, it is also important to note that these specialized IP courts would replace specialized IP tribunals – a significant difference from US trial court litigation, which  involves courts of general jurisdiction.

At the same time as these papers were being released, a judicial delegation from China was engaging with US federal and state judiciary to discuss the role of IP courts and possibility of future cooperation (see picture above by me from the Wisconsin Supreme Court).  I also believe that we can expect more discussion on these important issue in the months and years ahead.

Revised Patent Infringement Judicial Interpretation Released

The Supreme People’s Court published its revised judicial interpretation on patent infringement litigation.  I previously blogged about the early draft here.  Here is a Chinese language article on the press conference announcing the draft Judicial Interpretation, which was held on March 22, 2016.  The JI goes into effect April 1.

The drafting and timing of the JI seems to be drafted in part in response to perceived problems in enforcing patents in China, which have put pressure on the legislative bodies, courts and administrative agencies to seek appropriate reforms.  In particular, the JI may be perceived to be another policy initiative undertaken to address the continuing competition between the courts and administrative agencies over which agency should be the principle patent enforcing agency. Justice Tao Kaiyuan addressed this issue for the courts in an article earlier this year, while SIPO’s efforts to enhance its role were articulated in a draft SIPO revision of the patent law released for public comment by the State Council Legislative Affairs Office at about the same time as the draft law was released.

For those inclined to seek political motivations to legislative and policy actions particularly by competing agencies, the release of this JI is also proximate to the release by SIPO of its revised provisional guidelines for administrative enforcement earlier this month (March 2, 2016) (专利行政执法操作指南(试行).

The court’s press conference noted that the revision of the JI seeks to address concerns over patent litigation involving a high burden of proof, low damages and delay.

Who is winning in this competition – the courts, SIPO, the State or the patentee?  I hope to provide more detailed comments on the JI later.

Update April 3, 2016: : Song Haining has done a good summary of these recent developments in his blog, including an unofficial translation of the JI, available here.

Imminent Program in Shanghai with the IP Judiciary

IP Key, the European program for IP cooperation with China is sponsoring an EU-China Judge’s forum in Shanghai on March 17-18.  The program is jointly organized by IP Judicial Protection Research Center of Supreme People’s Court, Chinese Courts International Exchanges Base (Shanghai) for Judicial Protection of Intellectual Property Rights and the European Commission.  Topics to be covered include:

  • Innovation of Business Model and Intellectual Property Protection
  • Burden of Proof, Damages Calculation and Punitive Damages in IP Lawsuits
  • Judicial Protection of Trade Secrets

For more information on this activity, visit the IP Key website.