At the meeting, the directors of the five offices discussed the strategic response to the new crown pneumonia epidemic. They listened to the five offices’ efforts to promote cooperation in emerging technologies and artificial intelligence, strengthen coordination of procedures and practices, strengthen work sharing, and improve the quality and efficiency of examination. The directors were introduced of the progress made in further improving the accessibility of patent information services and approved the next steps in these key areas. The director of the five offices also emphasized that by taking swift action, the five offices maintained business continuity and cooperation momentum, which demonstrated the ability of the five offices in quick response and continuous improvement.
(Source: China National Intellectual Property Administration)
Trial from July 31! The Supreme Law issued documents, perfected the search system for similar cases, clarified reference of cases, and unified the application of law
In order to deepen the comprehensive and supporting reforms of the judicial responsibility system, improve the search system for similar cases, and further unify the application of law, the Supreme People’s Court has issued the “Guiding Opinions on Unifying the Application of Laws and Strengthening the Search for similar cases (Trial)”. The “Opinions” will be implemented on a trial basis on July 31, 2020.
The “Opinions” has a total of 14 articles, clarifying the scope of application of search for similar cases, the subject and platform of the search, the scope and method of search, the identification and comparison of similar cases, the search report or explanation, the use of results, the judge’s response, the settlement of legal differences, and the trial case database construction etc. The “Opinions” clarified four situations under which similar cases should be searched: (1) It is to be submitted to the professional (presiding) judge meeting or adjudication committee for discussion; (2) Lack of clear judging rules or no uniform judging rules; (3) The president of the court or the head of the division requires conducting search of similar cases in accordance with the requirements of the jurisdiction of trial supervision and management; (4) Other cases that need searching.
The “Opinions” pointed out that the scope of search for similar cases generally includes: guiding cases issued by the Supreme Law; typical cases promulgated by the Supreme Law and cases where judgments are effective; reference cases issued by the Higher People’s Court of province (autonomous region, municipality directly under the Central Government) where judgments are effective; cases where the judgments of the higher level people’s court and the present court are effective. In addition to guiding cases, cases in the past three years are given priority; if a similar case has been retrieved in the previous order, it is no longer subject to search. The “Opinions” require that if the searched case is a guiding case, the people’s court shall make a judgment based on it; if other similar cases are retrieved, the people’s court may treat it as a reference for making judgment. If there are inconsistencies in the application of laws in the retrieved similar cases, the people’s courts may resolve them through the law application dispute resolution mechanism in accordance with the “Supreme People’s Court’s Implementation Measures on Establishing a Mechanism for Resolving Disagreements in the Application of Law” and other provisions.
(Source: China Changan Net)
Unify law enforcement standards! The China National Intellectual Property Administration revised and issued these three guidelines
In order to thoroughly implement the decisions and deployments of the Party Central Committee and the State Council on strengthening intellectual property protection, strengthen the guidance of patent enforcement, unify enforcement standards, and strengthen patent protection, a few days ago, the China National Intellectual Property Administration revised and issued the “Guidelines for Administrative Mediation of Patent Disputes”, “Guidelines for Investigating and Handling Patent Counterfeiting and Irregular Patent Marking Cases”, and “Guidelines for Patent Administrative Protection Reconsideration and Response to Lawsuits.”
In recent years, the China National Intellectual Property Administration has vigorously promoted the standardization of patent administrative protection, and successively formulated the “Guidelines for the Determination of Patent Infringement and Identification of Patent Counterfeiting (Trial)”, “Guidelines for Patent Administrative Enforcement (Trial)”, “Guidelines for Identification of Patent Infringement (Trial)”, “Evidence Rules for Patent Administrative Enforcement (Trial)”, “Guidelines for Administrative Mediation of Patent Disputes (Trial)”, “Guidelines for Administrative Reconsideration of Patent Enforcement (Trial)”, “Guidelines for Administrative Response to Patent Enforcement (Trial)”, “ Guidelines for handling cases of irregular patent labeling (Trial)” and a series of regulatory documents for case handling. They effectively standardized law enforcement work, and comprehensively improved the level of case handling. These documents have also been widely praised by local bureaus and the public after they were issued.
(Source: China National Intellectual Property Administration)
Further improve the efficiency of trademark registration, encourage and guide commercial banks to support small and medium-sized enterprises to secure financing with intellectual property rights
A few days ago, the General Office of the State Council issued the “Implementation Opinions on Further Optimizing the Business Environment and Better Serving Market Subjects” (hereinafter referred to as the “Opinions”).
The “Opinions” point out that China’s business environment has improved significantly in recent years, but there are still some shortcomings and weaknesses. Especially affected by 2019-nCoV pneumonia epidemic, the difficulties of enterprises have become prominent, and there is an urgent need to further focus on the concerns of market players, benchmark international advanced levels, and adopt more reform methods to solve the problems in the production and operation of enterprises. It is necessary to strengthen services for market players and accelerate the creation of a market-oriented, legalized international business environment. The “Opinions” put forward six policy measures.
(1) Continue to improve the convenience of investment and construction. (2) Further simplify the approval and conditions for enterprise production and operation. (3) Optimize the operating environment of foreign trade and foreign-funded enterprises. (4) Further lower the threshold for employment and entrepreneurship. (5) Improve the service quality and efficiency of enterprises. (6) Improve the long-term mechanism for optimizing the business environment. Establish and improve a policy evaluation system focusing on implementation effects.
The “Opinions” require that all regions and departments must earnestly implement the various tasks set out in the “Opinions” and study and launch more pragmatic and effective reform measures based on the needs of market entities. The General Office of the State Council should strengthen the business guidance for deepening the reform of “streamline administration, delegate powers, and improve regulation and services” and for optimizing the business environment, strengthen overall coordination, supervision and implementation, and ensure that the reform measures are implemented and effective.
(Source: Beijing Intellectual Property Protection Association)
Intellectual Property Court concluded three cases of Japanese companies suing European companies for patent infringement in China
Recently, the Beijing Intellectual Property Court concluded the trial of three cases about infringement of invention patent rights: the plaintiff Sumitomo Denso Co., Ltd. (abbreviated as Sumitomo) VS. the defendant Delphi Packard Electric System Co., Ltd., the defendant Delphi Packard Electric System Co., Ltd. Yantai Branch (collectively referred to as Delphi) and the defendant Beijing Qilu Lianchuang Auto Parts Distribution Center.
The court found that Delphi’s infringement was established and partially supported Sumitomo’s compensation request, totaling RMB 2.1 million.
As a Fortune 500 company, Sumitomo of Japan filed three lawsuits with the Beijing Intellectual Property Court, claiming that the technical features of the automotive connectors of Dongfeng Qichen D50 and R50 manufactured, sold and promised to be sold by Delphi fall into the protection scope of three “lever connector” invention patents owned by Sumitomo. According to the relevant provisions of the Patent Law, Delphi should compensate for economic losses and pay corresponding reasonable expenses.
The European company Delphi argued that the connectors used in the two cars did not fall within the scope of the three patent rights claimed by Sumitomo. Besides, the above-mentioned connectors were purchased from related companies and have legal sources. Moreover, even if it constituted an infringement, Sumitomo’s calculation for damages lacked appropriate basis, Delphi’s infringement profit was much lower than Sumitomo’s claim, and the court was requested to reject all Sumitomo’s claims.
After hearings, the court held that the scope of protection of the patent involved is the housing of the car connector, and the alleged infringing products all fall into the above-mentioned scope of protection. Based on the evidence in the case, Delphi’s legal source claim is not established.
At the same time, based on Sumitomo’s claim for compensation for infringement and profit, it was ultimately determined that Delphi shall compensate for economic losses and reasonable expenses totaling RMB 2.1 million.
(Source: Intellectual Property Beijing)
Xiaoi robot patent changed to valid, Apple infringement case is expected to reverse
On June 28, the Supreme People’s Court made the latest revision of the patent validity of the “Chatbot System” of Shanghai Zhizhen Intelligent Network Technology Co., Ltd. (Xiaoi Robot). The previous second-instance judgment of Beijing High Court was revoked, the first-instance judgment of Beijing No. 1 Intermediate Court was maintained, and the patent of Xiaoi Robot was considered valid.
Zhizhen Company filed a lawsuit with the Shanghai No. 1 Intermediate People’s Court eight years ago on the grounds of infringement of the chat robot Siri on Apple’s iPhone. However, the infringement lawsuit has been suspended for many years due to the pending “patent validity”.
It was learned from Zhizhen Company a few days ago that Xiaoi Robot is preparing to restart the infringement litigation process against Apple, or request it to terminate the infringement and pay compensation.
The Supreme People’s Court judged that Xiaoi Robot is the owner of the Chinese invention patent ZL200410053749.9 (a chat robot system). The patent is a human-computer interaction intelligent robot product with completely independent intellectual property rights, which can complete human-computer interaction in natural language.
The Supreme Court’s judgment on the above-mentioned patent means that the patent infringement case of Xiaoi Robot against Apple is expected to be restarted, and it will make Xiaoi Robot occupy a more advantageous position than eight years ago.
(Source: Intellectual Property Power)
How to make a successful trademark non-infringement defense on the ground of parallel import?
In May 2020, the Guangzhou Intellectual Property Court made the second-instance and final judgments on the three series cases of trademark infringement and unfair competition disputes between Opel Electric (Shenzhen) Co., Ltd. (Opel Company) v. Guangdong Shifu Electric Industrial Co., Ltd. (Shifu Company) (Referred to as the "Opel case") infavor of Shifu company, and ruled that the defendant Shifu Company did not constitute trademark infringement and unfair competition, and all the claims of the plaintiff Opel Company were dismissed. According to relevant media reports, the verdict was the first time that the Guangdong court made a clear determination on parallel import infringement (i).
In fact, trademark disputes concerning parallel import are common in China. Through the analysis of the Opel case and other cases involving parallel import trademark issues handled by other courts, the author attempts to summarize from the precedent cases the conditions that should be satisfied for a successful trademark non-infringement defense on the grounds of parallel import.
I.The owners of the trademarks in the product exporting country and the product importing country are the same
In the Opel case (ii), the plaintiff Opel was the exclusive licensee of the "OBO" trademark in China, while the trademark owner of the “OBO” series of trademarks in both China and Germany is OBO Bettermann Holding GmbH & Co.KG. The trademarks involved belong to the same company.
In the Hästens case (iii), the plaintiff, Hästens, was the exclusive licensee of the "Hästens" trademark in China, while the registered trademark holders of the "Hästens" series of trademarks in China and Sweden are both HASTEN SANGAR AB.
However, in the Fila Sports case (iv), the plaintiff Fila Sports Company was the exclusive licensee of the "FILA" series of trademarks. However, the trademark owner of the “FILA” series of trademarks in China is FULLPROSPECT(IP)PTE.LTD, while the trademark owner of the “FILA” series of trademarks in South Korea and other countries is FILA LUXEMBOURG S.a.r.l. In this case, the Beijing Intellectual Property Court held that the trademark parallel import refers to, in international trade, the importer, in absence of the permission of the domestic owner or authorized user of the trademark,imported the same products with the same trademark which were legally authorized from abroad. The essence of trademark parallel import is that the production of the products bearing the same trademark are legally authorized by the right owner or actual controller. Therefore, the key to this case is whether the Fila product put on the market by South Korea Fila Corporation is licensed by FULLPROSPECT(IP)PTE.LTD or Fila Sports Company; or vice versa, whether the trademark of FULLPROSPECT(IP)PTE.LTD claimed by the defendant was actually controlled by South Korea Fila Corporation. The court found that although the trademark involved and the Korean "FILA" trademark originated from the same right owner, however, under different interest arrangements, the trademark rights of "FILA" in China and the rights of "FILA" in other countries already belong to different entities. Although the two parties still have economic cooperation based on interest considerations, it is impossible to deny the fact that the trademark rights and trademark interests thereof belong to different entities. The entrance of South Korea Fila Corporation's Fila products launched in South Korea based on the rights of South Korea into the Chinese market cannot constitute the exhaustion of trademark rights of FULLPROSPECT(IP)PTE.LTD IP Company or Fila Sports Company, and is not a parallel import.
It can be seen that the consistency between the trademark owners in the product exporting country and the product importing country is one of the most basic conditions for satisfying parallel import.
II.The parallel import products involved in the case are themselves legal and of proper origin
The review of the legal and legitimate sources of the parallel import products includes two aspects, namely on the one hand, the products involved are genuine products that are produced and sold under the permission of the trademark owner in the product exporting country, on the other hand, the products involved have fulfilled the legal Import customs declaration and other procedures when being imported into China.
In the Opel case, the defendant Shifu Company claimed that the products involved were legally purchased from The White And Bai Pte Ltd in Singapore. In order to prove its defense argument, the defendant submitted relevant business transaction documents of the entire purchase transaction chain of the product involved, proving that the products involved were legally derived from the legally authorized distributor of the trademark owner German OBO company. That is, Singapore distributor Asia Sun Power Pte Ltd sold products to the Singaporean company The White and Bai Pte Ltd, and then The White and Bai Pte Ltd sold the products to Shifu Company. At the same time, the German OBO company issued a confirmation letter certifying that Asia Sun Power Pte Ltd is an authorized disitributor of German OBO company. The German OBOOBO’s Singaporean branch, Singapore OBO, issued a certificate of origin. Asia Sun Power Pte Ltd issued delivery note, letter and other evidence to prove that the alleged infringing product was produced by the German OBO company, and was supplied to The White And Bai Pte Ltd by Asia Sun Power Pte Ltd, an authorized distributor of the German OBO company in Singapore. Furthermore, Shifu Company also provided evidence such as sales contracts, invoices, and customs declarations to prove that the alleged infringing product was purchased from The White And Bai Pte Ltd. After legally completing the import declaration procedures, it was imported to China for domestic sales. The court found that the product name, quantity, price, weight and import time recorded in the above evidence provided by the defendant corroborated each other, forming a complete chain of evidence. It is sufficient to prove that the allegedly infringing products werelegally originated from the authorized distributor of the German OBO company. The purchase and import process is clear and the procedures are complete, which is in line with the general market trading habits.
In the Hästens case, the defendant Dongyi Furniture Store claimed that the product involved was legally purchased from Sweden RED CHECK AB. In order to prove its defense, the defendant provided the company registration certificate of the seller of the product in Sweden RED CHECK AB company, and the invoice, packing list, shipping bill of lading, original bill of lading, customs declaration, and other materials relating to the fact that the company purchased the product involved fromthe trademark owner Hästens. All the afore-mentioned documentation proved that the products involved were imported from Sweden RED CHECK AB company. Hästens recognized Sweden RED CHECK AB as a legally authorized distributor of Hästens in Sweden from 2007 to 2014.
In the Budweiser beer case (v), the defendant Gulong claimed that the product involved was legally purchased from Akay Ireland Ltd. To prove its defense, the defendant provided a statement from Akay Ireland. In this statement, the Irish company Akay stated that in order to prove that the beer involved was genuine, it also provided its business license, invoices between the Irish company Akay and Gulong, the sales contract and the certificate of origin, invoice between the Irish company Akay and the freight forwarding company, and invoice between freight forwarding company and Mexican distributor. In addition, the Ennis Chamber of Commerce issued a certificate of origin confirming that the beer sold to the defendant by the Akay company in the case was produced by Mexican beer maker Cervi Serra Modero Co., Ltd. In the end, the court found that the evidence provided by the defendant was consistent in time and content and the sales contract and the invoice, packing list, sea bill of lading, cargo declaration form, entry and exit inspection and quarantine materials also corroborated each other, which can certify the source of the imported goods.
In the "Ermenegildo Zegna" case (vi), the defendant Falco claimed that the products involved were genuine products from the plaintiff CONSITEX S.A.. In order to prove its claim, the Falco company provided evidence such as customs declaration form for imported goods and special payment form for customs import value-added tax. However, after trial, the court ruled that, although the company advocated that the goods involved were genuine products that had entered China through parallel import, evidences such as the customs declaration form for imported goods and the special payment form for value-added tax for customs import can only prove that the company imported through the customs the clothing and bags with the brands "Zegna" and "ZEGNA" and fulfilled the formal customs declaration procedures; it was impossible to prove the source of the batch of products and the authorization of the supplier, and it was not enough to determine that the products involved had a legitimate source. Moreover, Falco acknowledged the existence of a purchase contract during the court trial, and the customs declaration form for the imported goods was also marked with the contract number. Because Falco company had the ability to provide the purchase contract to establish the facts but did not provide it, the company should bear the corresponding adverse consequences. Therefore, with the existing evidence, even if the plaintiff cannot clearly point out the specific differences in quality, raw materials, specifications, etc. between the products involved and the genuine products, the products involved was difficult to be identified as genuine product.
It can be seen that in order to prove the legitimacy of the products involved in the parallel import, in addition to the formal import declaration procedures, the product's legal authorization of source of supply abroad and the legitimacy of the source are also one of the core keys. To carry out relevant defenses, parallel importers should provide complete transaction documents mutually corroborated in respect of the quantity and price of the products involved as evidence to prove that the ultimate source of the products involved comes from the trademark owner.
III. There is no substantial difference between the parallel imported products involved and the products provided by the right holder in the Chinese market, and no changes or alterations have been made
In cases of parallel import trademark infringement, the plaintiff often claims that the infringing product involved in the case is different from the product of the right holder in China. It will harm the interests of consumers, and it is further claimed that such parallel import infringes upon the trademark rights of the plaintiff.
In the Opel case, Opel claimed that the products it sold and the allegedly infringing product were different in terms of affixing certification, anti-counterfeiting marks and after-sales service; this will damage its trademark rights. In this regard, the court held after trial that the alleged infringing product was a finished product manufactured by the German OBO company and no additional assembly was required; without the import and sale of Opel, the products were not accompanied by Opel's anti-counterfeiting and quality inspection labels, which was consistent with the actual situation. As for after-sales service, Opel’s relatively complete after-sales service was a sales strategy to enhance the competitive advantage of its products. On the premise that the alleged infringing product did not cause confusion to consumers, the difference in after-sales service did not result in the substantial difference of products. Therefore, the infringed products’ source was clear and legal, the trademark logo was complete, and the product quality and characteristics had not been altered, and therefore should be determined as parallel imported products.
In the DAIO Diaper Case (vii), the plaintiffs DAIO PAPER CORPORATION and DAIO Nantong Company claimed that the "GOO.N" diaper product sold by the defendant Senmiao Company and the "GOO.N" diaper product manufactured and sold by DAIO Nantong Company had substantial differences in terms of repermeation index, after-sales service and non-targeted research and development. This led to negative consumer evaluations and damage to the business reputation of the "GOO.N" trademark. However, there was no dispute between the two parties that the product sold by Senmiao was manufactured by DAIO PAPER CORPORATION the product had not been changed in any way, and that the identification function of the product was not affected. In this regard, the court held after trial that the "GOO.N" diaper commodities imported by Senmiao did not differ substantially from DAIO’s commodities in terms of logo, packaging, and product quality. Although there were certain differences in the main body and process of after-sales service, there was no substantial difference, it did not affect the identification function of the "GOO.N" trademark, and there was no evidence to prove that the behavior of the appellee SenMiao Company caused damage to the business reputation of the second appellant.
IV.Conclusion
At present, although the "rights exhaustion" principle is one of the mainstream views to solve the problem of parallel import, China's trademark law has no clear legal provisions on the parallel import of trademarks and whether the principle of exhaustion of rights applies in the trademark field. In the Opel case, the Guangzhou Intellectual Property Court in the second instance proceeding corrected the non-infringement argument conducted by the Guangzhou Nansha District People's Court from the perspective of the principle of exhaustion of rights. In the Hästens case, the Beijing Intellectual Property Court also pointed out that, when judging whether parallel import constitute trademark infringement, the judgment criteria should still begin from the function of the trademark; it is necessary to make a comprehensive judgment based on whether the alleged infringement has harmed the trademark's functions in distinguishing the source of goods or services, quality assurance, and carrying business reputation.
Specifically, in the case where the trademark owners in the country where the product is exported and the country where the product is imported are the same, the sources of the goods or services pointed to by the trademark involved is the same rightowner. It will not break the inherent connection between the goods or services and the trademark owner, and will not damage the trademark recognition function. Generally speaking, products marked with the same business logo have basically the same quality. In the case where the legal source of the product can be verified and there is no substantial difference between the products, parallel import will not damage the quality assurance function of the trademark involved. Under such circumstances, as long as the parallel importer does not change or alter the product, the function of the trademark involved in carrying the business reputation will not be damaged. Therefore, trademark parallel import that meet the aforementioned three conditions often do not damage the trademark's functions of identification, quality assurance, and carrying business reputation, and they can succeed in the defense against trademark infringement.
1 Please refer to https://mp.weixin.qq.com/s/n-K2XgtB7TEEGawzPzvr4Q
2 Please refer to Guangzhou Intellectual Property Court (2019) Yue 73 Min Zhong Civil Judgment No. 6944, 6975, 6976
3 Please refer to Beijing Intellectual Property Court (2017) Jing 73 Min Zhong Civil Judgment No. 825
4 Please refer to People's Court of Yuhang District, Hangzhou, Zhejiang Province (2019) Zhe 0110 Min Chu, Civil Judgment No. 11546
5 Please refer to Intermediate People's Court of Ningbo City, Zhejiang Province (2018), Zhe 02 Min Chu, Civil Judgment No. 1822
6 Please refer to Intermediate People's Court of Jinhua City, Zhejiang Province (2018), Zhe 07, Min Chu, Civil Judgment No. 407
7 Please refer to Tianjin Second Intermediate People's Court (2017), Jin 02 Min Zhong, Civil Judgment No. 2036.
(Author: Lawyer: Yu ZHANG)
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