The Scotch Whisky Victory for Trademarks

On September 17, the Scotch Whisky Association announced a significant anti-counterfeiting victory in the Anqing Intermediate Court in Anhui Province.  The case is Scotch Whisky  Association vs. Anhui Guangyu Packaging Company Ltd., Wang Xuming and others (Trademark Infringement, First Instance) ,” 苏格兰威士忌协会与安徽广宇包装科技有限公司、王旭明等侵害商标权纠纷一审民事判决书.”(August 31, 2015) ((2015)宜民三初字第00024号).  The case is available on line at the Chinese court website.

This case appears to have involved the unauthorized printing of Scotch Whiskey packaging in the form of bottle caps, some of which appears to have been made available for sale on line through Alibaba.com.  The court awarded damages of 100,00 RMB, and injunctive relief.  The court found that the SWA had difficulties proving damages and therefor awarded what appears to be statutory damages, plus costs of 11,820 RMB.

Damages may seem quite low, but according to the CIELA database, the average damages for the eight trademark infringement cases in the food and beverage area that they collected in Anhui Province (where SWA likely had to bring the case) was 6,000 RMB.

The case has been picked up by the media.  One article in the spirits sector noted that it was the second victory for Scotch Whisky, in addition to some additional recognition of its GI in Africa. Another article linked the victory to the Scotch Whiskey’s “historical granting” of a “Geographical Indication in 2010”which is “fully backed by China’s government through the GI”.

Curiously, both of these articles refer, directly or indirectly, to the sui generis GI system which is administrated by AQSIQ and the Ministry of Agriculture, and failed to mention the role of trademark protection.  This might lead one to suspect that the protection arose under China’s sui generis GI system,which the SWA has been actively promoting. However, China’s trademark system is much more fully developed in enforcement by comparison to the sui generis GI system, which lacks the full panoply of TRIPS-mandated civil, criminal and border remedies that attach to trademarks as intellectual property that may be granted to, and owned and protected by individuals and enterprises.

As I read the civil decision, the basis for the civil enforcement action was the 2008 collective mark obtained by the Scotch Whisky Association in Trademark Class 33  (no. 5915031  for “ScotchWhisky”).  Information on sui generis GI protection was, however, accepted as evidence of proof of the fame of the mark, although it had been introduced for its distinctiveness (evidentiary group 2, in the court’s decision).

The court decision did not analyze in great detail issues such as the application of the newly revised trademark law, the role of statutory damages and proof of injury,  and the role of the bottle caps in the export trade.  A principal of the company,l Wang Xuming was, however, held jointly liable with the packaging company for paying damages.   The caps were, according to one media report, used to produce counterfeit whiskey for sale in Burma.

Information presented on police actions involving these defendants in prior years were accepted into evidence.  According to the English press reports, additional police investigations are also possible.

Altogether, this is a well-deserved victory for the SWA.  In addition to vindicating the role of the trademark enforcement system, the case showed the impact of such hot issues as the efforts to better coordinate civil, criminal and administrative enforcement actions, address on-line sales,  consider the impact of the new trademark law on pending cases, address transnational sales, successfully bring a case in the home court of a counterfeiter, and address those who contribute to the chain of counterfeit production.

Congratulations to the SWA and its team!

Note: Please send any corrections to the author (chinaipr@yahoo.com).  This article consists of the author’s personal opinion only.

Developments in Online Civil Copyright Enforcement in China: NCAC’s Analysis

The National Copyright Administration of China (NCAC), in its 2014 Annual Report Online Copyright Protection in China (2014年中国网络版权保护年度报告), analyzed published opinions on online civil copyright cases involving the “right of transmission to the public” (making available right)  drawing on three public databases (the Supreme People’s Court’s “中国知识产权裁判文书网” 、 “中国裁判文书网” ,and Peking University’s “法宝数据”).

There were 1650 reported civil opinions on online infringement in 2014, an increase of 18.8 percent from last year. Audiovisual cases occupied first place, at 44.5 percent of these opinions.  Literary works constituted 390 cases, or 23.6 percent. This was an increase of six times over last year. Graphical works were 363 cases, a 3.3 times increase. Video games totaled 56 cases and music was last of these major categories with 20 cases, or about 1 percent, a decrease from last year of 80 percent. In total these categories constituted 98 percent of reported cases.

The report identifies that were 86 cases involving 11 of the 20 websites that were subject to supervision by China’s copyright administrative authority (NCAC), and were 5.2% of the total cases.  These cases were a declining percentage of online infringement cases compared to past year.  It appears that NCA is using this data to show the effectiveness of its administrative mechanisms.

The decline in music cases, in my estimation, likely reflects the great difficulty the music industry faces.  Music is a priority area for NCA this year.  Improvements in administrative IP protection planned at the beginning of 2015, including a recently launched campaign,  will also hopefully reduce the level of infringement by key internet companies and/or support more effective civil enforcement in this sector.

Plaintiffs in online copyright cases were mostly enterprises, and defendants were mostly internet companies. Individuals were a small number of the plaintiffs (about 6.4 percent), which was about the same as last year. Online media companies were principal defendants (87%).  The remaining 13 percent consisted of traditional media companies, including traditional publishers, newspapers, motion picture studios, and television stations.

Civil online cases were principally heard in Guangdong, Beijing and Zhejiang with about 70 percent of the cases.  Zhejiang jumped from fifth place last year to third place.   Fujian also showed a significant increase.  A large share of the audiovisual infringement cases in Guangdong involved Kuaibo (www.qvod.com).  The regional distribution of the cases also shows that there was a drop in audiovisual cases in Beijing, but an increase in other areas such as written works.  Most of the plaintiffs in Beijing were well known companies in such fields as motion pictures, cultural product distribution, and internet technologies, which in NCAC’s view could suggest a maturing of the Beijing environment towards protecting a greater variety of content owners.

The increase in cases in Zhejiang in online cases is due to the rapid increase in online industries in that province, which also has consequences for trademark counterfeiting. As I recently reported, online counterfeiting has also become a priority for China Customs in China, with Zhejiang also figuring prominently in seizures of exports at such ports as Hangzhou and Ningbo.

The report also notes that there were 30 online criminal copyright cases as well, and that fines and punishment had increased, with one fourth of the cases involving fines over 500,000 RMB.

Note that I tried to compare this data with the data that is available on www.ciela.cn.  Unfortunately the data sets do not match well.  CIELA analyzes data by cities and provides more granular detail on proceedings and outcomes (length of time, damages, “win” rates, etc.).  Moreover, CIELA does not breakout on-line copyright cases.  I was thus unable to reliably further validate NCA’s observations in this report.

The NCAC report was released on April 22, 2015.  However, with only 219 hits since it was placed on line as of today, it remains a “sleeper” of a report, notwithstanding the dramatic growth in online copyright issues in China.

Honey Laundering Comes to Texas

Honeylaundering

It’s substandard, it may be unhealthy and it misstates the country of origin, and it may be counterfeit.  Due to high tariffs, the United States appears to be targeted for diversion of Chinese honey through misstating the country of origin.   The Department of Homeland Security just completed a big bust in Houston on this “counterfeit” honey, some of which may contains a banned antibiotic.