The plan points out that the establishment of the China (Beijing) Pilot Free Trade Zone is a major decision made by the Party Central Committee and the State Council, and an important strategic measure to promote reform and opening up in the new era. The plan stipulates 7 main tasks and 22 specific measures, with strengthening the protection of the use of intellectual property rights as one of the specific measures.
The plan specifies that the Beijing Pilot Free Trade Zone will strengthen the protection of the use of intellectual property rights, including: explore tax policies that encourage technology transfer; explore the establishment of a fair intellectual property evaluation mechanism; improve the intellectual property pledge registration system, the intellectual property pledge financing risk sharing mechanism, and the pledge disposal mechanism; set up an intellectual property trading center, and prudently and normatively explore and develop intellectual property securitization; carry out the pilot work for foreign patent agencies to establish resident representative offices; explore the construction of international digital product patents, copyrights, trade secrets and other intellectual property protection systems; give full play to the role of China (Zhongguancun) Intellectual Property Protection Center, and establish a coordinated protection system for rapid patent examination, right confirmation and right protection.
In addition, the plan also emphasizes the need to build a digital copyright trading platform to promote the development of intellectual property protection and intellectual property financing services as one of the specific measures to explore the construction of an international information industry and digital trading port.
(Source: China National Intellectual Property Administration)
From September 11 to 15, the Supreme People’s Court issued six judicial interpretations
The six judicial interpretations issued by the Supreme People’s Court are as follows:
(1) Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Civil Cases of Commercial Secret Infringement
(2) Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Administrative Cases Concerning Patent Allowance and Right Confirmation (I)
(3) The Supreme Law’s Reply on Several Legal Application Issues Concerning Internet Intellectual Property Infringement Disputes
(4) Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Specific Application of Law in Handling Criminal Cases of Infringement of Intellectual Property Rights (III)
(5) Guiding Opinions of the Supreme Law on Trial of Civil Cases Involving Intellectual Property Rights of E-commerce Platforms
(6) Opinions of the Supreme People’s Court on Strengthening the Punishment of Intellectual Property Infringements According to Relavant Law
This is an important measure taken by the Supreme People’s Court to implement the decisions and deployments of the Party Central Committee, increase judicial protection of intellectual property rights, and actively respond to social concerns.
(Source: Intellectual Property Circle)
The Anti-monopoly Commission of the State Council issued five anti-monopoly guidelines
On September 18, the Anti-monopoly Committee of the State Council issued five anti-monopoly guidelines consecutively, namely:
(1) “Guidelines for Operators’ Anti-Monopoly Compliance”;
(2) The Anti-monopoly Guidelines of the Anti-monopoly Committee of the State Council on the Automobile Industry;
(3) “Guidelines for Anti-monopoly of the Anti-monopoly Committee of the State Council in the Field of Intellectual Property Rights”;
(4) “Guidelines for the Application of Leniency System in Horizontal Monopoly Agreement Cases of the Anti-Monopoly Commission of the State Council”;
(5) “Guidelines for Promises of Operators of Monopoly Cases by the Anti-Monopoly Commission of the State Council”.
Among them, the Anti-Monopoly Guidelines of the Anti-Monopoly Committee of the State Council on Intellectual Property points out that anti-monopoly and protection of intellectual property rights share the same goals, namely, protecting competition and stimulating innovation, improving economic operation efficiency, and safeguarding consumer interests and social public interests.
The “Guidelines for Anti-monopoly of the Anti-monopoly Committee of the State Council on the Field of Intellectual Property Rights” elaborates on the anti-monopoly situation in the field of intellectual property rights and how to define it from four parts: general rules, intellectual property agreements that may exclude or restrict competition, abuse of dominant market positions involving intellectual property rights, and concentration of operators involving intellectual property rights.
(Source: Aijiwei)
“Guidelines for the Evaluation of Economic Value of Scientific and Technological Achievements” National Standards Released!
Recently, the State Administration for Market Regulation (Standards Committee) approved the release of 212 important national standards. Among them, the national standard of “Guide to the Evaluation of Economic Value of Scientific and Technological Achievements” was officially announced and will be implemented on February 1, 2021!
(Source: Sohu)
Regarding the non-infringement confirmation cases of Huawei, the Supreme Court ruled that Convenson will be fined with 1 million per day for violations! Cumulative no cap
Recently, the Supreme People’s Court issued civil rulings on three cases submitted by Huawei Technology Co., Ltd., Huawei Terminal Co., Ltd. and Huawei Software Technology Co., Ltd against Convenson Wireless Licensing Company for confirmation of non-infringement of patent rights and disputes over standard essential patent royalties (one of Supreme Court Zhi Min Zhong 732, 733, 734).
The Supreme Court ruled:
“Convenson Wireless Licensing Company shall not apply for the enforcement of the first-instance cessation of infringement judgment made by the Dusseldorf District Court of the Federal Republic of Germany on August 27, 2020 before this court makes a final judgment on the three cases. In case of violation of this ruling, a daily fine of RMB 1 million shall be imposed from the date of violation, cumulatively on a daily basis.”
The legal basis for a daily fine of RMB 1 million can be found:
The first paragraph of Article 115 of China’s Civil Procedure Law provides: “The amount of fines imposed on individuals shall be less than RMB 100,000. The amount of fines imposed on units shall be between RMB 50,000 and RMB 1,000,000.”
Therefore, once Convenson violates the law, an illegal act occurs every day, with a penalty of 1 million per day, and the cumulative amount will not be capped.
(Source: Intellectual Property Database)
Patent wars in the field of LED chips! Claim 80 million! Leading company Sanan Optoelectronics v. HC Semitek
According to reports, on September 3, 2020, Sanan Optoelectronics sued HC Semitek for patent infringement, which was officially accepted by the Intermediate People’s Court of Changsha City, Hunan Province.
It is understood that Sanan Optoelectronics accused HC Semitek Co., Ltd., HC Semitek (Zhejiang) Co., Ltd., and HC Semitek (Suzhou) Co., Ltd. of infringing its invention patent No. ZL201210286901.2 and patent No. ZL02142952.9. The patent names are “Nitride semiconductor light-emitting device and method of manufacturing the same” and “Semiconductor light-emitting element and semiconductor light-emitting device”.
The above two patents involve the basic technology of LED chip manufacturing. Sanan Optoelectronics believes that HC Semitek has infringed on its patented technologies for improving light extraction efficiency and hole injection efficiency in the manufacture of nitride LEDs.
Sanan Optoelectronics requires HC Semitek to stop manufacturing, promise to sell and sell applications that infringe the above patents, including TV backlights, consumer display backlights, automotive display backlights, display and lighting LED chips, destroy all equipment and related molds used to produce infringing products, and compensate Sanan Optoelectronics 80 million yuan for economic losses.
(Source: Lawyers learning law)
UMICORE sued Rongbai Technology for patent infringement, claiming RMB 62,033,500
Based on the Aijiwei news (author: holly), Ningbo Rongbaixin Energy Technology Co., Ltd. (hereinafter referred to as “Rongbai Technology”) recently issued an announcement saying that the company recently received relevant materials such as the “Civil Complaint” ((2020) Zhejiang 202 Zhi Min Chu No. 313) issued by the Ningbo Intermediate People’s Court regarding UMICORE.
It is reported that UMICORE accused Rongbai Technology’s S6503 product of infringing its invention patent No. ZL201280008003.9 “High nickel cathode material with low soluble alkali content”. Without permission, Rongbai Technology manufactured, sold and promised to sell products that fall within the protection scope of the invention patent right in the case.
In addition, UMICORE is requesting the court to rule Rongbai Technology to stop manufacturing, selling, and promising to sell infringing products, and is claiming 61,923,300 yuan.
(Source: Aijiwei APP)
Nanda Optoelectronics purchased 19 patent asset groups with over RMB 68 million yuan and 8.5% of net sales of all covered products in the patent validity period
On September 4, Nanda Optoelectronics issued an announcement stating that in order to further improve the industrial chain, enrich the precursor product structure, enhance technical strength, and improve the company’s position and competitive advantage in the industry, the company held the 28th meeting of the seventh board of directors on September 4, 2020, reviewing and passing the “Proposal on the Purchase of Patent Assets”. It is agreed to purchase 19 patent asset groups about new silicon precursor series under the name of DDP. The purchase price includes a one-time payment of US$10 million and a commercial payment, that is, 8.5% of the net sales of all covered products during the validity periods of the transferred patents. The fund comes from the company or is raised by the company itself.
(Source: Intellectual Property Circle)
Dragon Special Report and Agency Practice
Does the sale of parallel imported genuine products necessarily constitute no infringement?
From the perspective of the origin of parallel imports, under the conditions of free trade, due to factors such as production costs, market development, exchange rate fluctuations, and differences in multinational companies’ pricing policies in different countries, there are price differences for the same products in different regions. This will inevitably stimulate market entities to purchase products from low-priced sales areas and sell them to high-priced areas, and in this way, pursue the maximization of economic benefits, which in turn leads to reasonable parallel imports. The behavior of market entities to use regional price differences to reduce sales costs conforms to market laws and is an inevitable result of free competition, and thus should not be sanctioned by law.
In May 2020, Guangzhou Intellectual Property Court made a final judgment of second instance for three cases of Opel Electric (Shenzhen) Co., Ltd. (Opel Company) against Guangdong Shifu Electric Industrial Co., Ltd. (Shifu Company) for trademark infringement and unfair competition disputes. The defendant, Shifu, was judged not to constitute trademark infringement and unfair competition, and all claims of the plaintiff Opel were rejected. The Guangzhou Intellectual Property Court corrected the People’s Court of Nansha District, Guangzhou City’s application of the “exhaustion of rights” principle to resolve parallel import issues, believing that the determination of trademark infringement in parallel import disputes shall follow the basic purpose of the trademark law, and shall not deviate from the core element about damage to the basic functions of trademarks. Even so, the Guangzhou Intellectual Property Court finally upheld the verdict that parallel imports in question did not constitute trademark infringement. However, this does not mean that parallel importers who sell parallel imported genuine products can always be exempted, and their behaviors are still strictly regulated by the trademark law and the anti-unfair competition law.
I. Parallel importer infringes on the trademark owner’s service registered trademark rights in category 35
In the “MICHAEL KORS” case i, Michael Kors (Switzerland) International Co., Ltd., the right holder of the “MICHAEL KORS” trademark, sued the defendants Yiwu Business Travel Investment Development Co., Ltd. and Hangzhou Fakou Import and Export Trade Co., Ltd. for infringement of trademark rights and unfair competition due to the defendants’ unauthorized “MICHAELKORS” brand store in “Yiwu Heart Shopping Mall”. In this case, Michael Kors claimed the registered trademark rights of the 18th category of luggage products and the 35th category of service providers. Michael Kors accused the two defendants of separately and prominently using the “MICHAEL KORS” logo, which is the same or confusingly similar to the registered trademark of the right holder, on the signboards, doors, exterior walls, and floor index boards and walls of the involved shops without permission; this constitutes trademark infringement. In addition, Michael Kors also advocated that “MICHAEL KORS” is the plaintiff’s influential business name. In order to obtain their own interests, the two defendants improperly used the plaintiff’s influential corporate name to open “MICHAEL KORS” stores without authorization. Such behavior can easily make the relevant public mistakenly believe that the stores involved are from the plaintiff or have a specific connection with the plaintiff, which constitutes unfair competition. On the other hand, the defendant, Fakou Company, argued that the goods it sold were all parallel imports, which originated from Michael Kors Company. The defendant claimed that the use of “MICHAELKORS” logo on the door, exterior wall, window, etc. of the shops involved was to convey the brand information of the goods sold, which was a fair use. It should be pointed out that in this case, MICHAEL KORS did not clearly claim that the goods sold by Fakou were counterfeit.
After trial, the court held that: the categories of goods approved for use by the right holder’s registered trademarks, including goods display, commercial window layouts, etc., belong to service trademarks. Based on the size, location and general impression of the “MICHAEL KORS” logo used in the shop’s signboards, doors, exterior walls, and mall wall decorations, ordinary and rational purchasers will think that it conveys the impression that the store involved is a Michael Kors brand store. Such behavior can cause confusion about the relationship, and it is easy to mistakenly believe that MICHAEL KORS has established a branded cooperative relationship with Business Travel and Fakou. Its use is hardly bona fide and reasonable, it goes beyond the scope of fair use of trademarks, and infringes on the exclusive right to use the registered trademark of MICHAEL KORS. The use of the involved registered trademark in the floor index board of the involved shopping mall is an indicative use when selling goods to inform customers of the source of the goods sold. Thus, it does not exceed the range necessary for indicative use. Moreover, it also marked many other brands it sells. Such use will not cause misunderstanding or confusion to relevant consumers, and does not constitute an infringement of the above-mentioned registered trademark rights. Regarding whether the store’s use of the “MICHAELKORS” logo on the signboard infringes on the “MICHAELKORS” English name right, the court held that the “Anti-Unfair Competition Law” seeks to provide supplementary protection to the special intellectual property law. Where relevant actions can be adjusted under the trademark law, the trademark law should be applied first, and the anti-unfair competition law no longer needs to be applied. Since the court had determined that the relevant conduct constituted trademark infringement, it was no longer recognized as an act of unfair competition.
II. Parallel importers infringe on the corresponding Chinese registered trademark rights registered by the trademark owner
In the Budweiser “Corona” beer case ii, the registered rights holder of the series of trademarks such as “CoronitaExtra and graphics”, “Corona” and “Carona Aikola” in China is Mexico Servisera Modro Co., Ltd. Budweiser, as the trademark licensee in China, sued Xiamen Gulong Company for infringing its exclusive right to use registered trademark due to a batch of imported beer goods declared to Wenzhou Customs under Hangzhou Customs. Among them, the beer bottle involved used “CoronitaExtra and graphics”, and the “Carona” logo was used as the product name and logo in the customs declaration and inspection and quarantine declaration materials.
Regarding the issue of whether the use of the “CoronitaExtra and graphics” logo on the bottle and packaging of the beer involved constitutes a trademark infringement, the court held that the beer involved was produced by Mexico Servisera Modro Co., Ltd., the owner of the trademark involved. The defendant imported the beer involved in the case through legal channels, and its behavior was parallel import. The rights of the trademark owner have been exhausted after the first sale of the goods, and its due commercial profits including the goodwill benefits contained in the trademark have been realized when its goods were sold. The defendant also did not change the way of using the “CoronitaExtra and graphics” logo in the beer packaging. Its act of importing the beer involved in the case did not infringe the trademark owner’s exclusive right to the registered trademark “CoronitaExtra and graphics”, and therefore did not infringe the right of using trademark enjoyed by the plaintiff.
Regarding the defendant’s use of “Carona” as the product name and label in the import declaration, inspection and quarantine documents, the court found that: First, the defendant used “Carona” on customs declaration, inspection and quarantine documents, which has the effect of identifying the source of the goods, and this act belongs to the use of trademark. Second, “Carona” is similar to the trademark logos of “Corona” and “Carona Aikola”. Third, the defendant’s use of “Carona” does not constitute confusion, because the defendant’s use of “Carona” ultimately causes consumers to confirm that the goods involved in the case are goods provided by the right holder Mexico Servisera Modro Co., Ltd. Its use did not separate the product from the right holder, and did not cause consumers to mistakenly think it was someone else’s product. Fourth, the defendant, in accordance with the relevant provisions of the Food Safety Law, used Chinese trademarks in customs declaration and inspection materials, which is the relevant rules that the defendant should comply with. However, since the Chinese corresponding to the same English can have many permutations and combinations, the above-mentioned provisions are not the basis for the defendant to use the specific “Carona”, and the defendant cannot use it as a defense basis for its fair use. Fifth, the right holder Mexico Servisera Modro Co., Ltd. has a number of similar Chinese trademarks registered on beer products. The plaintiff enjoys the right to use all the registered trademarks of the trademark owner involved. When it sells the same type of beer imported by the defendant on the Chinese market, it uses “Corona Premium Beer” as the name. “Corona” is a mark that can identify the source of goods, and the trademark “Corona” is currently well-known in the Chinese market. Both the owner of the trademark involved in the case and the plaintiff who is the licensed implementer of the trademark spent a lot of money to promote the “Corona” trademark. According to the facts ascertained, no record of the use of “Carona Aikola” by the plaintiff was found. It can be seen that the right holder and the licensee have their choice and strategy when using trademarks. The plaintiff has the right to choose which trademark to use and which trademark not to use. Although the defendant’s use of the “Carona” logo did not separate the correspondence between the goods and the right holder, it is clear that the defendant’s behavior affected the plaintiff and the right holder’s trademark use strategy and hindered the plaintiff’s control of trademark rights. Under the circumstance that the right holders of the Chinese and foreign language trademarks are the same, in accordance with the relevant regulations and the usual customs declaration and inspection procedures, if the defendant must use a Chinese trademark when importing the beer involved, it shall also choose to use a Chinese logo consistent with the trademark strategy of the right holder, so as not to affect the right holder’s trademark rights. The defendant’s use of “Carona” in the customs declaration, inspection and quarantine materials objectively damaged the trademark rights of “Corona” and “Carona Aikola”. It should be determined that it is a situation that causes other damages to the exclusive rights of registered trademarks of others as stipulated in Article 57.7 of the “Trademark Law of the People’s Republic of China” and constitutes trademark infringement.
In addition, Budweiser also sued Wenzhou Qimeng Trading Co., Ltd. in a similar situation in 2019 iii. In this case, the Chinese logo used by Qimeng on the customs declaration form “Koonona” is different from Budweiser’s No. 3943293 “Korona” trademark in both text and pronunciation; they are not similar either. However, the court held that the defendant Qimeng’s use of the “Koonona” logo did not separate the correspondence between the goods and the right holder, and it affected Budweiser’s and the right holder’s trademark use strategy and obstructed the plaintiff’s control of trademark rights. It is a situation that causes other damages to the exclusive rights of registered trademarks of others as stipulated in Article 57.7 of the “Trademark Law of the People’s Republic of China” and constitutes trademark infringement.
III. Parallel importer’s infringement on the right holder’s business name constitutes unfair competition
In the “FENDI” case iv, “FENDI” trademark owner Fendi Adler Co., Ltd. sued Shanghai Yilang International Trade Co., Ltd. and Beijing Capital Outlets (Kunshan) Commercial Development Co., Ltd. for trademark infringement and unfair competition. FENDI asserted its exclusive right to use the “FENDI” registered trademark on the 18th category of luggage, the 25th service and the 35th service and the right to the company name of “FENDI”. Fendi claims that the trademark infringements carried out by Yilang and Beijing Capital Company are reflected in the use of “FENDI” trademark in the shop signs, exterior wall signs, discount information signs, interior decoration, sales receipts, shopping bags of the stores involved; the brochures, floors signs and WeChat public account of Beijing Capital Company. Yilang defended and provided evidence to prove that the “FENDI” products it sold were from SHP, the distributor of Fendi’s genuine products in France, and its use was reasonable. The court of first instance Shanghai Pudong New Area People’s Court rejected all Fendi’s claims after trial. Fendi Company appealed to the Shanghai Intellectual Property Court and submitted the “Luxury Store Image Investigation Report (Kunshan)” issued by Horizon Company as evidence in the second instance. It aims to prove whether consumers can accurately judge the relationship between the “FENDI” store operated by “EAST D0MAIN”/”Yidong Mingpin” and the “FENDI” brand in the Kunshan Capital Outlet Mall.
After the trial, the court of second instance held that the defendant Yilang Company’s use of the “FENDI” logo on the shop brand involved in the case did not constitute fair use based on good faith. It belonged to infringement of the use of the “FENDI” logo in the same category as the approved use of the trademark, that is, the category of business operations and business management services, without the permission of Fendi, the right holder of the trademark “FENDI”. In addition, the court of second instance further determined that without the permission of Fendi, Yilang had used Fendi’s brand name “FENDI” alone in the shop sign of the store involved. This caused the relevant public to generate confusion and misidentification that the store involved was operated by Fendi or authorized by Fendi, and the services provided by the involved store were provided by Fendi or authorized by Fendi. It was an act of unfair competition that used the company name of Fendi without authorization and caused misunderstanding that it was the service provided by Fendi. Yilang Company shall bear the corresponding civil infringement liability for this.
IV. Conclusion
It can be seen from the above cases that, although parallel importers can enjoy exceptions based on the principle of “exhaustion of rights” when selling parallel imported genuine products, they also need to pay extra attention to the use of related trademarks. Otherwise, they may still constitute infringement. As the court pointed out in the Fendi case, in order to explain business entities’ own goods or services, they may reasonably use the relevant trademark for the purpose of good faith. However, the fair use of a trademark should meet the following conditions: (1) The use behavior is well-intentioned and reasonable, and the trademark logo of others is not used as the logo of one’s own goods or services. (2) The use behavior is necessary, and it is only used within the necessary scope to explain or describe the goods sold. (3) The use behavior will not cause any confusion or misunderstanding to the relevant public. Whether an action belongs to fair use of the relevant trademark for bona fide purposes should still be comprehensively judged based on objective facts such as whether the specific use behavior and the actual use method exceed the necessary limit, and the cognition given to the relevant consumers.
(Author: Legal Department lawyer: Yu ZHANG, Patent attorney: Jialu DU)
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