On June 25, the Quality Brands Protection Committee of China Association of Enterprises with Foreign Investment (QBPC) held its second IP protection forum in Beijing. With a theme of Driving Innovation, Strengthening Cooperation, Furthering Development, the forum is a part of QBPC’s annual meeting. QBPC Chair Michael Ding presided over this forum and gave an opening speech. Deputy Director of NLGO and Deputy Director-General of Bureau of Law Enforcement and Inspection of SAMR Lu Zhengmin, Senior Consultant of WIPO Office in China Wu Kai, Deputy Director Song Jianli from IP Procuratorial Office of Supreme People's Procuratorate (SPP), Chief Judge Wei Lei of No.10 Tribunal of IP Court of the Supreme People's Court (SPC), IP Counselor of U.S. Embassy Duncan Willson, EUIPO IP Attaché Benoit Misonne, CEO of INTA Etienne Sanz de Acedo and Emerson Senior Vice President, Secretary and General Counsel Sara Yang Bosco delivered the keynote speeches.
In the opening remarks, Michael briefly introduced the QBPC vision, mission and this year's four main focuses, namely to follow the implementation of the latest revision of laws and regulations related to intellectual property, strengthen the communication with the central and local law enforcement and the judicial organs, seek the solutions to industry-specific IP issues, and continue to expand international exchanges and cooperation. He said that the QBPC forum was characterized by the combination of theory and practice while focusing on specific hot issues of different industries. Through in-depth discussion, the best practice of top ten cases could be promoted widely in international IP community. He also explained the theme of the forum--- Driving Innovation, Strengthening Cooperation, Furthering Development.
According to Deputy Director Lu Zhengmin, the CPC Central Committee and the State Council attached great importance to the protection of intellectual property rights. President Xi Jinping had emphasized the protection of the legitimate intellectual property rights of all enterprises on many occasions, and Premier Li Keqiang had written important instructions on IPR protection and cracking down on infringement and counterfeiting. She reviewed the major progress made in the nationwide fight against IPR infringement, and the production and sale of fake and shoddy goods since 2020 as well as the next-phase plan. On April 23, NLGO organized 16 provinces (autonomous regions and municipalities) to carry out a simultaneous disposal operation on counterfeiting and inferior goods; On April 26, the Report on the Latest Development of IPR Protection and Business Environment in China (2020) was released, introducing the main measures taken by the Chinese government in 2020 to protect intellectual property rights, crack down on infringement and counterfeiting, and optimize the business environment; In May, NLGO issued Key Points of the Nationwide Crackdown on Intellectual Property Infringement and the Production and Sale of Counterfeit and Inferior Goods in 2020, listing the protection of intellectual property rights of foreign-owned enterprises as a special article; NLGO also held a national teleconference to promote the implementation of the fight against infringement and counterfeiting. Next, NLGO would focus on five concerns (the concerns of the CPC Central Committee and the State Council, the public, society, market entities and the international community), highlight four key points (key fields, key commodities, key markets, key regions), focus on three strategies (The Belt and Road, Regional Integration, Free Trade Zone Construction), strengthen overall planning and coordination, promote social co-governance, and build a good pattern of law enforcement and anti-counterfeiting covering both online and offline channels, both urban and rural areas, the whole process of production and consumption, and the whole chain of export and import.
Senior Consultant Wu Kai said that in 2020 China ranked first in the world with 68,720 international patent applications through Patent Cooperation Treaty (PCT) system, an increase of 16.1% year on year; the number of international trademark registration applications by China reached 7,075, ranking third in the world, up 16.4 percent; the number of applications for international registration of appearance design reached 826 in 2020, ranking ninth in the world, with a year-on-year growth of 22.7%. These achievements were the results of the close communication and cooperation between WIPO and the Chinese government. WIPO highly appreciated the efforts made by the Chinese government in recent years to build and improve the intellectual property system and was very optimistic about the prospects of innovation, invention and intellectual property cause in China. WIPO would continue to strengthen cooperation and coordination with all sectors in China, seize the opportunities and dividends of China's future development, and provide timely and better debt service to all stakeholders in China, so as to make greater contributions to China's development in a more effective manner.
Deputy Director Song Jianli introduced the work of the procuratorial organs in creating new measures in the judicial protection of intellectual property, linking different systems and mechanisms, updating judicial mindset, and building the integrity system of intellectual property. At the beginning of 2021, the SPP launched a pilot program to combine intellectual property, criminal, civil and administrative duties in nine provinces and municipalities across the country. Relevant provinces and municipalities had all set up intellectual property procuratorial offices and handled a number of civil, administrative and criminal IP cases, which was well recognized by the public. In the future, when dealing with some relatively simple criminal cases involving trademarks and copyrights, procuratorates could actively promote the application of civil suit collateral to criminal proceedings penal action, rationally allocate judicial resources in terms of system and mechanism, and practically improve the effectiveness of judicial protection of intellectual property rights. At the same time, procuratorial organs would strengthen judicial protection of all kinds of intellectual property rights, effectively reduce the cost of safeguarding rights and increase the intensity of sanctions. In addition, procuratorial organs should actively participate in the comprehensive governance of the society and cultivate the awareness of intellectual property and credit culture.
The Intellectual Property Tribunal of the Supreme People's Court (SPC) is a permanent organ of the SPC established based on the decision and deployment of the CPC Central Committee. It hears all civil and administrative appeals of technology-related intellectual property cases nationwide, including patents, technical secrets, monopolies, plants variety, etc. Chief Judge Wei Lei shared the court's establishment, functions and positioning, human resources strategy, trial mechanism and judicial reform trend with the participants. Since its establishment on January 1, 2019, the IP Tribunal had accepted more than 5,000 cases and concluded more than 4,000 cases by the end of 2020, with an average trial period of 123 days, which had greatly improved the trial quality and efficiency of technology-related IP cases of second instance. The tribunal had fulfilled its role in adjudicating technology-related IP cases, further unified adjudication standards, constantly formed rules for handling cases, built a database of adjudication rules, and coordinated the allocation of technical investigation resources nationwide. As judicial protection and administrative protection were the two carriages of intellectual property protection, the IP tribunal had actively cooperated with China National Intellectual Property Administration, the Department of Seed Industry of the Ministry of Agriculture and Rural Affairs, and other IP administrative departments, which created a joint force of protection.
As a bridge between Chinese and foreign IP community, QBPC has been promoting the optimization of China's IP business environment and is well recognized by the international community. Duncan Willson, Intellectual Property Counselor of U.S. Embassy in Beijing, said that the QBPC had played an important role in the development of China's intellectual property protection and enforcement system over the past 20 years. QBPC had won the respect and admiration of multinational companies and foreign government officials through serious cooperation, frank communication and unremitting efforts to promote the reform of China's intellectual property system.
EUIPO IP Attaché Benoit Misonne believed that in the past 20 years, the exchanges between China and the EU in the field of intellectual property had never stopped, and the two sides had made joint efforts to establish the legal framework and improve the system of intellectual property. In terms of copyright protection, the EU and the relevant Chinese departments had maintained close cooperation; new progress had also been made in trademark applications; in the field of patent application, both sides were faced with new situations and challenges. Through joint efforts, practical solutions would be put forward. He emphasized the importance of an open, frank and constructive dialogue to continue addressing existing and forthcoming challenges to ensure IP protection globally.
Later, CEO of INTA Etienne Sanz de Acedo gave a speech on the protection of intellectual property rights in the context of the epidemic. He said the protection of intellectual property in the new situation required all stakeholders around the world to work together, make the legal institution and system more global and inclusive, and further promote the establishment of a more solid and effective protection of intellectual property. Relevant parties should continue to support small and medium-sized industries and young entrepreneurs, who played an important role in driving China's and the world's economic development and were an important engine of economic development. In addition, it was necessary to strengthen the publicity and promotion of intellectual property work to protect the interests of consumers.
The last speaker was Sara Yang Bosco, Senior Vice President, Secretary and General Counsel from Emerson. She said that Emerson warmly congratulated China on the reform of its legal system, especially the establishment of the Intellectual Property Court and IP court of the Supreme People's Court. Changes in China's economy and legal system, such as the increase of the maximum legal compensation limit to 5 million RMB and the imposition of punitive damages for infringement of intellectual property rights, had a significant deterrent effect on those who infringe or plan to infringe. Emerson had been plagued by malicious trademark applications, which the company had invested a lot of manpower and resources, and taken a lot of measures to deal with. The relevant case was appealed to the Beijing High Court and eventually won, which encouraged Emerson and increased its confidence in China's legal system and judicial authorities. She looked forward to greater results in China’s IPR protection.
The Forum had three panels, respectively focusing on Criminal IP Protection, IP Litigation, and IP infringement and crimes in the Era of Digital Economy. Below is a detailed coverage of the panels.
Trends, Challenges and Explorations for Criminal IP Protection
QBPC Vice Chair Ji Ying hosted the first panel——Trends, Challenges and Explorations for Criminal IP Protection. Based on the top ten criminal cases selected by QBPC, the discussion explored the new trend of criminal judicial protection of intellectual property under the new situation. Deputy Procurator-General of Shanghai Railway Transportation Procuratorate Zhu Weidong, Director Li Chunlei of the Food, Drug and Environment Crime Research Center of People's Public Security University of China, Head of Division, Shanghai Food, Drug and Environment Crime Investigation Brigade Yu Meng, Deputy Director Pan Li from No.6 Division, the Third Branch of Shanghai People's Procuratorate, Head of Product Security from Sanofi Victor Shao and Senior Counsel of LEGO Group Angela Shi shared their insightful views from different angles.
The supervision over logistics industry has always been one of the key concerns of intellectual property protection. In the case of“Spring Thunder Operation” Central Project No.1– Harbin “12.7” Case of Extremely Large-scale Production and Sales of Counterfeit Drugs, we could definitely tell new changes in the distribution of fake and inferior drugs, namely mail and express delivery. Fake and inferior drugs may be threatening to people's lives and health. Meanwhile they also infringe the IP of related enterprises and damage the reputation of enterprises. In an era of rapid development of the Internet, fake and inferior drugs are distributed to the society through modern logistics, which leads to a wider impact and greater damage to the public interest. In addition, it has been found that relevant logistics enterprise staff knowingly provided services such as receiving, delivering and packing, with the knowledge that the drugs sold by the perpetrators were illegal, and the relevant information on the waybill was false.
In response to the problems encountered in the case, the enforcement authorities promptly launched a public interest lawsuit investigation along with the criminal review. While investigating the crime of the relevant personnel, they also conducted in-depth investigations over the distribution channels of fake drugs and identified the loopholes in daily management of the logistics enterprise. Some couriers did not even verify the identity of the consigners and inspect the relevant items, thus allowing the counterfeit drugs to flow around the country. In workshop, the speakers suggested that case-handling authorities should strengthen coordination in terms of criminal justice, public security investigation, postal and express platforms, academic research and self-discipline of enterprises, so as to realize the effective connection of different procedures and cooperation among different departments. The supervision and punishment on the postal and express companies involved should be intensified, and the enterprises shall also conduct general and special prevention by themselves. The relevant public security authorities, procuratorate, academia and right owners have made a meaningful exploration and provided valuable experience for strengthening the supervision over the logistics industry.
In the case of Criminal Conviction against Li and Others for Copyright Infringement on the LEGO Group, there are two main legal issues, namely whether the copyright of an overseas owner could be protected by law in China and whether the toy of building blocks belongs to the "artistic work" under the copyright. The court's decision confirmed that Li and others had violated the copyright of LEGO, which was meaningful for the toy industry and provided a reference for future similar cases. During the trial, the prosecuting authority made careful preparations focusing on the features of the case, namely "large number of people, documentary evidence and excuses". The evidence was presented in a "visual" form through PPT, which effectively refuted unreasonable justifications and greatly improved the quality and effectiveness of the trial. In addition, it is a showcase for substantive participation of the right holders in litigation. At the stage of arrest examination, the right holder received the notification of the rights and obligations of the intellectual property criminal case; the right holder and its lawyer timely provided relevant ownership certificates, third party authorization letters, notarization documents and other documents. The lawyer participated in the whole trial process and fully expressed opinions. As a result, the right holder witnessed the efforts of the judicial organs in strengthening intellectual property protection in accordance with the law, which further beefed up the confidence and determination of LEGO Group in continuing to invest in China!
New Hotspots and Characteristics of IP Litigation
The second panel discussion was moderated by QBPC Customs Committee Chair Alan Liu. The speakers included Senior Director and Senior Counsel of NBA China Victor Liu, former Judge and Chief Judge of Beijing Higher People’s Court Su Zhifu, IP Manager of New Balance Chen Yongming and Chief Judge Liu Li from Jiangsu Provincial People’s High Court. They made presentations and discussed the new hotspots and features of intellectual property litigation from the perspectives of judges, scholars and right holders. Based on two non-criminal cases, the panel explored the issues of audiovisual works and behavior preservation.
In the case of Copyright Dispute on NBA Live Broadcasting, the right holder faced a huge challenge since there was no clear regulation on whether a live sports broadcast was a work, whether it constituted a work, and whether it could be protected by the copyright law. It was also the focus of the dispute in this case. The main reason against the live sports broadcast being protected as a piece of work was that it failed to meet the requirements of originality and fixity. This view made it extremely difficult for right holders in sports industry to protect their legitimate rights and interests. For many years, unauthorized transmission had caused great distress to right holders and legal licensees, and put hundreds of millions of dollars of investment at great risk.
On 1 June 2021, the new Copyright Law came into force and introduced the concept of "audiovisual works". Speakers believed that originality, as a cornerstone concept of copyright law, should be clear. When judging whether a subject constituted a work, the core element should be the originality rather than the degree. The live sports broadcast in this case displayed the individual choice and arrangement of the creators such as the photographers, editors and directors in terms of the shooting angle, shot switch, shooting scene and object selection, picture selection, music, lighting, editing, arrangement and off-screen commentary. As a unique expression of information and thoughts, it had originality. For fixity, Article 2 in paragraph 2 of the Berne Convention states that “It shall, however, be a matter for legislation in the countries of the Union to prescribe that works in general or any specified categories of works shall not be protected unless they have been fixed in some material form.” The definition of this concept is times-bound. With the rapid development of technology, especially in today's streaming media environment, it should no longer be limited to the literal requirements. When judging cinematographic work, the so-called fixity requirements should be weakened, instead its form of expression should be emphasized more. The judgment was a clear illustration of Beijing's efforts to establish the highest standards of intellectual property protection. It paved the way for the effective protection of intellectual property rights for the upcoming 2022 Winter Olympics.
The dispute case of infringement of New Balance trademark right and unfair competition involves the application of injunction and behavior preservation. During the first instance trial, the court held that the conducts of the defendants were likely to constitute infringements against the distinctive decoration of the plaintiff's well-known commodities and trademark in addition to possible false advertisement. The court held that irreparable damages might incur to the plaintiff if no interim measures were taken to cease the infringement. Considering that the injunction would not harm public interests and the proper guarantees had been provided by the plaintiff, the Court ordered the defendants to immediately cease manufacturing and selling the accused infringing products, and remove suspected false advertisements. This was the first IP injunction order in China covering the whole infringing supply chain including manufacturing, distribution and false advertisement. Meanwhile it was the first injunction order concerning distinctive decoration of well-known commodities in Jiangsu Province.
The record-high damage was another highlight in this case. The defendants' infringements were huge in scale, involving trademark, unauthorized use of distinctive decoration of well-known commodities and false advertisements. Furthermore the infringement continued even after the injunction order was served. As a result, it was deemed as malicious infringement with serious consequences. Supported by the plaintiff's enormous evidence and detailed calculations, the Courts of two instances carefully examined the actual losses of the right holder caused by the infringement as well as the infringers' gains. After taking into consideration of the defendants' maliciousness and reasonable expenses of the plaintiff in this case, the courts hence affirmed that the amount of damage, either calculated based on the plaintiff's actual losses or the infringers' profits, had far exceeded the RMB 10 million claimed by the plaintiff. In addition, since the defendants refused to comply with the court's effective injunction order, the Courts of two instances affirmed the defendants had obviously carried out infringements maliciously, which had resulted in serious consequence and should be imposed with punitive damages. Finally the courts supported the plaintiff's claim for compensation of more than RMB 10 million. The successful handling of this case had broad and positive social impact. It was not only a landmark victory for a brand against parasite brands, but also a milestone for other foreign brands that have been infringed in China.
Digital Economy and Intellectual Property Protection
---Trends in intellectual property infringement and crimes: cyber technology,
cross-border action, tight organization, specialization
Tao Yang, QBPC Government Affairs and Public Policy Committee Chair and AI & Digital IWG Coordinator presided over the third panel, joined by Executive Director Wu Shenkuo of International Center of Cyber Law at Beijing Normal University as well as PhD Tutor,and Deputy Director of the Research Center of the Internet Society of China, Litigation Director of Sina Group Zhang Zhe, IP Director of ANTA Sports Simon Cui and others. They discussed some frontier issues of intellectual property protection in the era of digital economy.
In the era of digital economy, many enterprises are troubled by the potential infringement on enterprise data. With the development of network information technology, enterprise data plays a more and more important role in the development of national economy and Internet enterprises. However, the existing laws and regulations need to be further clarified in respect of the value and legal positioning of corporate data, so that relevant judicial protection can intervene in a timely manner when the rights and interests of data holders are violated. Some enterprises choose to adopt technical means or strengthen data management to protect their data, which can improve the accuracy, timeliness, and integrity of data to some extent, but at the same time, it will also increase the operating cost and development cost. To promote the sound and orderly development of related industries, it is also necessary to promote comprehensive treatment, improve laws and regulations, and formulate accurate, unified and reasonable rules on enterprise data management, so that the data can be shared, circulated and protected with order.
Digital transformation is a hotspot for traditional enterprises, which also drives the connotation and extension of the protection of intellectual property rights. This new situation has brought about many new challenges to the traditional means of intellectual property protection. Most notably since the epidemic outbreak in 2020 led to the booming of online economy, the infringers quickly shifted to various online platforms for sales. To adopt more covert approaches of selling counterfeits, they operated not only in traditional platforms but also rapidly penetrated into the live video platforms and various private domain flow channels, or even developed independent smart programs and APPs. Due to the new trend of selling counterfeits in full digital form, the traditional brand protection strategies and means must be adjusted and changed accordingly, so as to overcome the difficulties in finding infringement acts, obtaining evidence, landing and cracking down on them in the digital age. Therefore, it is necessary to make the intellectual property protection strategy technology-centered and information-oriented, focusing on data investigation and intelligence collision, strengthening multi-party collaboration, seeking to strike offline operating infringement groups offline, and combining administrative, criminal and civil litigation means to form the siege.
With the development of network information technology, new fields, new technologies and new criminal means constantly emerged, and intellectual property crimes are featured by cyber technology, cross-border action, tight organization, and specialization. Under this circumstance, electronic data and evidence, public-private partnership, and cross-border collaboration are particularly critical. Digital wave creates innovative opportunities more than challenges for the protection of intellectual property rights. Therefore we should establish and strengthen the trend perception ability behind the digital numbers, identify new strength in the digital revolution, and improve awareness, which could be applied to the practice of the protection of intellectual property rights, in order to promote the level of protection.