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>> Thank you for holding, parties will be
on a listen only mode until the question and answer session
of today's conference.
At that time you can press star 1 to ask a question,
this conference is being recorded,
if you have any objections you may disconnect.
I'd like to introduce your speaker Ms. Janet Wingo
[phonetic] of the International Trade Administration.
>> Good morning, welcome this morning's webinar
on Enforcement Issues in China.
This morning we're very lucky to have with us
from Beijing an attorney who works in Beijing
with 15 years experience on the enforcement side.
Edward Smitsahoa [phonetic] will be talking the basics
for enforcement, after about 20 minutes he will [inaudible]
questions and answers, the operator will explain to you how
to dial in so you can ask some questions.
A little bit about Edward, Edward has 15 years
of experience in china and he has his LLN degree
in Chinese law from Colombia University.
He's practicing at the [inaudible], Edward.
>> Hi everybody, first of all welcome to today's overview.
I'm sorry I have to apologize
because I'm having problems uploading the slides
so what we have today is more of the draft and if you wait
over the next few days Janice will be uploading the finalized
version with the right images.
So if you can bear with me I suggest going through the draft
and at the end I look forward
to answering any questions that you may have.
So today we're looking at enforcements
in China giving you more of a practical overview.
The basis of the whole discussion today was really
on the precept that you're a company
that neither manufactures nor sells in China [inaudible]
in China and what action is possible
when you have no presence in China
and no registrations as well.
So I've really divided the talk into two different aspects,
one's organization, getting your [inaudible] house into order
and then the second part is the offensive,
what can be done on a practical level.
So it's really the organization getting your house in order
and that's really getting your house
in order I've had [inaudible] abroad I think
for any SME that's facing these kind of problems that has
to work out first of all at home
in the U.S. how are their trademarks organized,
are they registered, what copyrights they have,
what patents they have and then once that's in order
and every thing's clarified if you look
at China the [inaudible] we need
to get registered as soon as possible.
Trademarks in China take about a year to two years
to be registered, this can be more than three years recently
and I think in the next 6
to 12 months you'll be seeing Chinese trademark registration
easily just being one year to get registered.
Copyrights in China takes about 2 to 3 months to be recorded
and patents vary but if you're looking
at a design patent you're looking at about 6 months.
So for example I think when we discuss today we're looking
at SME, I've just taken [inaudible] as a pure example,
nothing more but I think when you look at your own industry
and your company should be looking
at really if it's an IPR.
So let's say you are Sprinkles the cupcake company,
okay the trademark will be Sprinkles,
you would have copyrights in the way that Sprinkles is written,
you don't have copyright in the pack design,
you might have a design patent as well on your pack design
so all of these you know you've got
to consider throughout the registration work in China.
When you register in China goods and services are cut
up into 45 different classes.
You need to work out what industry,
what your company is dealing in, what goods
and services you're dealing in
and which class that would be in.
So let's you're doing clothes so it would be class 25
and you would ask to register in China in class 25.
You generally apply for your mark in the class of interest
that where you may be in the next three years just
because it takes that certain amount of time to register.
Let's say in the future you're making clothes now
but in the future might want to make bags, that's class 18
so you'd probably want to register in 18 and 25.
Whether you would register a Chinese trademark it really
depends if China thinks it's going to be an option
in the future but that could be a consideration,
remember that China may not be now but could be
in the future could be where your product is made.
Generally you would register in black and white because black
and white covers all colors.
When you're looking at a Chinese trademark there are a number
of different ways of doing it and that will be
in the final slides that we'll be going
through it in the final slides.
You can do a translation of your mark, for example Apple,
Apple computers the Chinese mark is [inaudible]
which is a pure translation of the apple mark,
otherwise you've got two different types
of transliteration.
The transliteration just means taking Chinese characters
that sound similar to your western mark, the famous one
of course is McDonald's that's [inaudible],
I know it sound similar [inaudible] and McDonald's,
the Chinese characters in themselves have no meaning.
While the Swedish Company Ikea has chosen a different route
of transliteration where as [inaudible] sounds similar
to Ikea, [inaudible] Ikea, E means beneficial to or good for
and [inaudible] means house.
You've got to remember also that China has no intention
of use principle as in the U.S. when you file
in the U.S. you normally have to use mark or have intention
to use your mark, that's not so in China.
There is a three year nonuse cancellation action
after registration if you don't use your trademark
for three years, as trademarks.
When you look at recording copyright you have to remember
that U.S. copyright is ultimately protected in China
with Berne convention however Chinese officials want
to see some kind of recordal U.S. or Chinese recordal
so copyright can be registered in the U.S. or in China
and you might already have the U.S. recordal
and that will be sufficient however you'll probably need a
[inaudible] and legalized translation of the same
or a translation in the court approved translation agency
in China.
So when you look at your brand you really have
to consider what elements of your brand have copyright
and you've got to see if you need to record it.
[ Pause ]
The problem with now looking at registered patents is
that it clearly doesn't have a novelty requirement
so if you have already registered and used
in the U.S. your various patents there will be the novelty issue.
There is extensive examination within the invention patents
in China but not with [inaudible] models
and defined patents or you might not have novelty any more
in China you can probably get registration [inaudible] models
and design patents.
However they're called in China paper tigers
but although they might [inaudible]
if they look carefully they will notice
that the novelty hasn't begun when you obtained registration
and therefore they can be invalidated
for being non-novel at the time.
[ Pause ]
Now [inaudible] we've looked
at the...you know the first thing is to get your house
in order and try to register your trademarks in China,
try to register you copyrights or record your copyright
or have the U.S. one and patents either you would have paper
tiger which is basically a patent for your novelty
or you might have to consider other options.
Another thing that you might also try to register
of course is the main name,
so Chinese characters dot com is registrable
and we would recommend that you do
that because it does show some kind of presence in China
and the Chinese court
and enforcement officials would welcome such a presence,
if you are taking enforcement actions and you have a website
in Chinese that would greatly help,
especially with trade name rights.
The time for the offensive, what would be doing?
China is quite unique in having a dual track system,
there's administrative enforcement
and also judicial enforcements, in layman's terms it's more
like the economic police if you want and the courts.
[ Pause ]
China gets sort of bad press
when in reality you can actually do a lot of things in China
with [inaudible] enforcement.
It's one of the fastest procedures
to [inaudible] you can also [inaudible] a [inaudible]
within half an hour if you have the relevant rights,
there's an increasing amount of fines
and damages being issued against infringers.
Under the draft trademark law coming
up the accessory damages have been increased
from 500,000 RNB [phonetic] to a million RNB.
[Inaudible section] and there has originally been a strong
push by the Chinese government to find counterfeits,
this is called the shining sword program
and we've seen a large number of seizures both
by the administration of industry and commerce,
that is the bureau that take care of trademark infringements,
the administrative bureau as well
as the court and the police.
We're also seeing through the courts more cases regarding the
regulation of Chinese companies operating and so the structure
of Chinese companies are becoming clearer and clearer.
[ Pause ]
What you really need to hear...do when you find
out about infringement, is you need to find more about it,
who's doing it, where is it coming from, what it is exactly.
You need to be clear who you're facing
and what rights they have in these.
If they have already substitute gained rights
of your mark you should try and cancel all [inaudible] same,
you should be using your contacts [inaudible]
investigators and law firms to try and find more information.
Where the investigation is coming from,
how big in structure is it and who's behind this.
As much clarity is important
when legal starting legal proceedings in China
so you can [inaudible] your strategy against the same.
Remember that China is a civil law system,
not a common law system so you really need
to register you rights, they much prefer registration.
Let's have a clearer look at the infringement, what would you do
if somebody is using your trademark,
if somebody is using your copyright,
somebody is using your patents
or somebody is using your company name.
For trademark clearly the issue
as I've mentioned before is the get registered, get registered,
get registered, there is a certain amount
of protection allowed under the PRC trademark law
for nonregistered trademarks, that's really
for well known mark
and generally an SME trademark will ultimately not be
well known.
You have to remember that the well known consideration is
Chinese so you would have to show
at least a 95 percent well known factor coming from China.
The issue is if somebody is using your trademark is
that a case of unfair competition
and it's a very interesting concept
and unfortunately it's not very clear.
There has been a case by a local court that has argued
that although you may not be in a Chinese market the fact
that somebody else is selling your product would deemed them
to have considered you a competitor
and therefore possible to argue unfair competition however
that's a local court and not a supreme court decision therefore
it's persuasive and not binding.
You also would have to show in bad faith elements,
how did they hear of your trademark.
How distinctive your trademark clearly is.
So the more distinctive the trademark is the more element
of bad faith element that you can show,
the more you could argue that there is a possibility
of unfair competition even if you're not selling in China
but as we say this could very difficult
but it's a possibility and a consideration.
[Inaudible section] that was to do
with the *** very much discussed the use
of the trademark in China and whether
that would be a problem or not.
Copyrights is actually your main weapon in China,
U.S. copyright is protected by the Berne convention
so basically any use in China
of your copyrights could be actionable and remember
that China has this dual track system
so the administrative bodies
under the National Copyright Administration
that would help you as well as the Chinese courts.
When you go after any infringement you really have
to consider how much copyright has been infringed
because there are other writers the ones
that will be the most actionable.
So if your packaging has been infringed
or your trademark there would be copyright elements normally
in that, that could be actionable in China.
We've got the internet, internet service providers have seen
[inaudible] they have knowingly taken part in or helped other
with copyright infringement.
That's very much [inaudible] the DMCA aligns
in the U.S. basically the idea that ISP are liable
if they knowingly allow the publication
of copyright material on their servers
so websites can be pulled down, infringements could be pulled
down for example from [inaudible] or other B2B,
specific action against [inaudible] infringement
packaging, infringement catalogs, infringing the use
of photos that we often see and even if the copyright is ready
where you have to start thinking,
the strongest is what can I do based
on copyright infringements in China.
[ Pause ]
Patents is a major issue, if you do not have patents in China
and [inaudible] uses patent technology the problems we
mentioned of novelty requirement [inaudible] register your patent
in China they could be invalidated for non-novelty,
patents is a national right you have to remember,
make trademarks as well they would...paper tigers can be
invalidated in China.
Arguably however I think in China you really have to think
of sort of the gray areas
for example all although they're using patent technology have
they copied your brochure,
have they copied your [inaudible] your
technical [inaudible].
There maybe copyrights in those that could be actionable,
maybe they're making claims that they relate to you
or that they're linked to you, belong to you,
other unfair competition
or [inaudible] law aspects could be considered as well.
Using your company name is also complex
because under the past [inaudible] there is protection
but the Chinese [inaudible]
that your company name had been actually used in China before,
the same thing with the [inaudible] competition,
you could consider possible outside competition action,
many courts would require for that to be confusion
and the issue is if you are not using it in China you would have
to show some kind of knowledge
by the Chinese consumers having a Chinese website
as I mentioned early
on discussion could be a consideration for this.
[ Pause ]
But getting practical the first step once you really found
out about the infringement is probably sending a warning
letter, we often see the mistake
that many people send warning letters from the U.S.
in English, the majority of Chinese will not respect
such warning letters, they really have to be in Chinese
and from a law firm on the ground.
We often advise clients that they should have...be as soft
as possible so that the Chinese infringer is not seen
as being legitimate, the more famous it grows the more right
[inaudible] the Chinese government will see
as being more and more legitimate in the same.
You really have to try and get local rights and they have
to know you're very much on the ground
and that you know all about them.
We would also recommend that you register your rights
with the PRC customs such as the copyrights for the PRC customs
where that would stop all the unauthorized import and export
of products from and to China.
[ Pause ]
Remember that there's always the possibility in many cases
of increasing the heed
if you not heed the warning letter you could also possibly
consider enforcement in action in China.
Out of the three intellectual [inaudible] that we've seen
in trademark, copyright and patent
and into the copyright would probably be the easiest
and the most effective right to enforce in China
if you have no registered right in China already.
So as I said you could be admitted [inaudible]
enforcement, fines can be up to three times the turnover
and damages can be your loss to the infringement, they're gain
to the infringement or statutory damages up to 500,000 RND.
You have to remember a lot of infringements and lots
of SME's come to us with regard to infringement
from [inaudible] etcetera, the [inaudible] sites,
all of these have pulled down programs and will pull
down for example if there's an infringement of copyrights.
If you have any questions on the above, I do apologize,
as I said they'll be a finished presentation that will be put
up shortly that's much more detailed
than this draft overview but if you do have any questions
in the meantime please feel free to e-mail me at that e-mail
and one thing...message that I do want to leave with you
and the message that I think many people don't understand is
that you do have rights in China although you have nothing
registered at the moment and it's really important
because many judges that you speak to complain
of foreign rights and not taking action.
I think...as you know [inaudible] you have a private
right, it's really for you to clarify the infringement,
clarify what rights you have in China and then facts based
on those rights, thank you very much.
>> Thank you Edward.
Operator can you inform the listeners how they can call
and ask a question of Edward?
>> Sure if you'd like to ask a question
from the phone press star 1, please un-mute your phone
and record your name,
to withdraw your question press star 2.
Once again it's star 1 to ask a question and you do need
to record your name, please standby for the first question.
[ Pause ]
I'm not showing any questions from the phones at this time.
>> Edward while we have you online could you tell us a
little bit on how you do the recordal with Chinese customs?
>> Humm, the recordal is basically...so let's get back
to the copyrights, if you have U.S. copyrights they will
recognize U.S. copyrights so you can record
with the general [inaudible] for customs in Beijing,
first it takes about two to three months.
Information on the right is sent to all the ports in China
and based on that the procedures can be carried out.
You would normally send a copy of your rights,
you would send a list
of authorized importers and exporters.
If infringements are found you would then have three days
to notify the customs if they are genuine or not,
if they are not genuine they would be seized by customs
and they would normally investigate the case
about six months after which they'll be a punishment
and normally destruction of the goods
or destruction of the labeling.
>> [Inaudible section] would you recommend that the point
of contact use an agent in China so that the customs can contact
that agent as opposed to contacting us in the U.S.?
>> Yes, I mean normally
if you're a foreigner the Chinese would require
that there be a Chinese agent
who would handle customs recording just
for ease of notification.
>> [Inaudible section] there was a question
from the phones whenever you're ready to take that.
>> Yeah.
>> Did you want to go ahead and take that now?
>> Yeah, please.
>> [Inaudible section] your line is open.
>> Thank you just a quick question
from our investigation we've been advised that there's kind
of a difference in the Chinese law firms about those
that might specialize in kind
of trademark enforcement proceedings
such as what you've described versus those
that might just handle
for example your trademark registration process.
We have found ourselves in a situation
of our trademark prosecution council has advised us on...it's
not a pure counterfeit situation but more
of a unfair competition knock-off situation
of stealing a brand in our view, is there in fact a school
of thought that we need to seek
out specialized enforcement council in lieu
of our peer registration or prosecution council.
>> I thank you for your question first of all,
of course I can't discuss the actual facts of the case
or who's involved because I don't know it,
generally in China yes there's a huge difference,
there are trademark agents which can be set up.
They're used to be an exam before
but the trademark officers to be trademark agents,
there is no longer such an exam so anybody can set themselves
up as trademark agents and they will do the trademark
prosecution work.
In China that does not mean of course that they are experienced
or know about trademark
of intellectual property enforcement or infringement,
I would definitely recommend you to go a PRC attorney
that is specialized in enforcement,
I think with any jurisdiction enforcement is a very
specialized field and not only because of the complexities
of the infringement because also the way the Chinese enforcement
structures change and the new laws that come out regularly,
so definitely I think in your case I would definitely
recommend you to look for an enforcement firm
and also a Chinese law firm I think is very important.
>> Thank you.
>> There are no further questions
from the phones at this time.
>> Edward can I ask you a question,
let's say that the U.S. [inaudible] has not registered
anything in China but there's a potential safety hazard
with this knock-off that's being produced
in China are there any other avenues that you might be able
to think of that would...enforcement avenues
regarding safety for example with an electrical appliance
that caused fires or tended to cause fires?
>> Yeah, I mean I think that's a very important thing to mention
as well is that in China you also have to think laterally,
that if you have infringements of course you should look
at the intellectual property aspects of it,
I mean something else that you will see
in the comprehensive slides
and really do recommend you have a look back in the next few days
for the comprehensive slides, there is a section also
with regards to contractural,
you know are these infringements apparent
because you met somebody [inaudible]
who signed a confidential [inaudible] agreement
of something they're producing in China,
you have to think laterally and I think as you mentioned Janice
as reinforcement [inaudible] with the health issues.
If there are infringements being made
with health issues China also has specific laws
that will address these.
There is a body in China called the Quality, Technical
and Supervision Bureau and that's similar
to the Administration for Industry and Commerce,
as I mentioned the Administration for Industry
and Commerce or AIC deal with trademark matters,
the second body, the Quality, Technical
and Supervision Bureau QTSB will deal with consumer issues,
labeling and quality and health issues.
More and more so they will take really quick action
against such infringements although it may not resolve the
matter in the long run because they could possibly increase the
quality and make it better,
in the short run you can get a very strong reaction
to such infringements including seizures, fines...
>> So if the good says made in U.S.A. when it's being made
in China, that's potentially something you can take
to the QTSB.
>> Exactly I mean things like labeling;
consumer protection will all go to the QTSB
and that's actionable through that and that will be
in my finished slide as well.
>> Which will be posted in three to four days
on the [inaudible] website.
[ Pause ]
>> There are no further questions from the phones.
>> Well, if there are no further questions, Edward we thank you
for your times this morning, I know it's quite late in Beijing
and anyone who is listening at home, Edward said he'd be happy
to take questions via e-mail, his e-mail address is up there.
So again thank you aigna for listening.
>> Thanks.