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It’s an honor to be included in ABA (American Bar Association)’s Spring Meeting in DC to discuss tips on China IP management.  This is an excellent panel with deep knowledge and experience in China.  It’s always nice to meet some friends both old and new!

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What is it like to be on a panel with some of the most elite China IP experts (with experience for over 1000 cases)?

I had the incredible honor to speak at and participate in the IP seminars in Shenzhen and Shanghai last month. One big thing I learned during this trip was the Chinese companies’ hunger (especially those of China Fortune 50) about expanding their IP overseas.

Our speakers include first tier experts on China IP such as Mr. Chi (China’s arbitration expert, recognized by State Council with over 30 yrs experience), Dr. Zhong (former Beijing IP Court judge with experience in over 1000+ civil/administrative trademark cases; Dr. Zhong has been an invaluable resource on our team since his joining), Ferry Li (the head litigator winning the landmark Dior trademark case in 2018, arguing in front of China Supreme People’s court – way to go Ferry!).

None of them are able to be on LinkedIn because it is very difficult to access LinkedIn from China (I’ve tried and almost threw my computer out the window in frustration!). But it was an incredible experience and conference so I want to give them a ‘shoutout’ nevertheless.

One way to judge how successful a conference was is to look around and see how many people are still left in the last afternoon session — these sessions were still full. And after the full day seminar, we still had a full house at dinner!

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Why This Impacts Companies’ Rights in China and How This Led to the Arrest of Former Canadian Diplomat Michael Kovrig

The Chinese government has been extremely busy these days. In addition to dealing with President Trump’s rhetoric and tariffs, they overhauled a number of important laws.  For example, China’s E-Commerce Law is set to become effective on January 1, 2019.  There’s an equally important yet lesser known law which became effective two years ago on January 1, 2017 – the Law governing foreign NGOs’ operations in China.  While Taobao, Alibaba and other giant eCommerce sites are figuring out exactly how they will implement the E-Commerce Law, I thought it would be helpful to take a look at China’s NGO Law and see how it’s currently impacting businesses in China.

Wait – affecting businesses? Why would an NGO operation have an impact on any businesses? Isn’t the basic definition of an NGO that it is a non-profit? 

Contrary to the typical understanding of an NGO operation in the Western world, many US/European/South East Asia companies are in fact profiting from China through an NGO setup (or, under the disguise of an NGO). Touting a business with NGO status, or using language that suggests or alludes to an NGO status, gives the business the needed legitimacy and accordingly, the credibility, to convince the public to open its checkbook.

Since the New NGO Law became effective in 2017, there have been a total of 427 registered NGOs in China as of December 2018. China had approximately 7000 NGOs registered prior to the New NGO Law taking effect. It doesn’t take a rocket scientist to notice that the New NGO Law has drastically decreased the number of registered (i.e., approved) NGOs in China.

We can ask WHY but since China is a communist regime, we would probably never get a clear answer to this question.  The more “appropriate” and “practical” question is HOW.  How does China’s New NGO Law significantly reduce the approved foreign NGOs operating in its market and what are the new rules if anyone wants to play along?

The requirements for a foreign NGO to start its operation in China are very similar to the joint venture requirements.  A foreign NGO needs to either get approval from the Chinese government or form an alliance with a Chinese entity. Neither is an easy or, quite honestly, inexpensive exercise. Accordingly, prior to the New Law, most foreign NGOs in China did neither.  The good news then was that the local Chinese enforcement agents were willing to turn a blind eye – they had bigger fish to fry: they were busy chasing the counterfeiters who were selling fake wine, poisonous dog food or harmful baby formula which led to sensational international headlines and pressure from Beijing to put a stop to these activities. The fake NGO status was problematic but at least it did not lead to any deaths.  With the law and enforcement agents in China willing to let it slide, a fake NGO was in fact a smart and lucrative business model especially for foreign companies in the following industries: finance, environment, agriculture, tourism, and education.

Things have taken a drastic turn since January 2017.  This is how it worked before and after the New Law:

Company Savoy Chester is a UK educational company. In 2000, it registered an NGO in Hong Kong which was quite easy.  In 2010, it decided to enter the Chinese market and China’s NGO requirements as discussed above were much tougher. As such, Savoy Chester simply set up a local for-profit Chinese company which is very easy to set up and requires very little capital commitment.  Once the Chinese Savoy Chester company is up and running, the company markets itself as the: “International Association Providing British Style English Education” (sounds NGO-ish).  In some instances, Savoy Chester uses its registered Chinese name but omits the ending characters which are for-profit companies. Under the NGO-ish disguise, Savoy Chester has been successful in attracting millions of eager parents and their children to attend their classes, conferences and even competitions. The non-profit status is appealing in this context because it allows Savoy Chester to stand out from the hundreds of other money-sucking (and mostly illegitimate) companies trying to make a quick profit.  The catch here is that Savoy Chester is indeed an NGO; but its NGO was granted in Hong Kong, not China. Its status in China is nothing but a simple for-profit LLC registration. This, prior to 2017, was an “acceptable norm”.  However, since January 2017 ‘things have changed dramatically’!

Under the New NGO Law, the local enforcement agents are no longer able to turn a blind eye.  Once its fake NGO status is exposed, Savoy Chester is subject to a series of unpleasant consequences such as revocation/suspension of its business license, confiscation of its properties and/or even business profits. A violation of China’s New NGO law requires the involvement of Chinese policemen – the so called PSB. This is never something to take lightly because for serious cases, arrests and detentions are a real possibility.

If you think the New Law is all talk and no action, think again.  A former Canadian diplomat, Michael Kovrig, was arrested in China in December 2018.  The reason given by Beijing was that Mr. Kovrig’s employer – ICG (International Crisis Group) – held itself out as an NGO but it did not comply with the necessary procedures as required under the New Law.

One may argue Kovrig’s detention was triggered by the political standoff/issues with the US, Canada and China and the recent arrest of Huawei’s CFO.  That may all be true but why give Beijing an easy excuse to send the police to your door?

Since 2017, because of its powerful implications, the NGO law has become an effective legal tool in China to be used either offensively or defensively (or both). While the world is busy watching China’s recent new laws concerning its E-Commerce, internet domain registration, and advertising rules, NGO has become a less sexy but potentially a more powerful weapon to have in your IP arsenal in China. Just think about the leverage you could have if you could have the choice to expose your opponent’s less than legitimate NGO status.

Tag: #China, #Ecommerce, #IP, #NGO, #Taobao, #alibaba, #business, #startup, #counterfeit, #trademark, #patent

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Any thoughts how China’s copyright troll is watching and USING your team’s WeChat marketing and turning it into a copyright infringement case? I am honored to have been invited to speak at a Thomson Reuters webinar with Chris Shen (one of China’s most well-known copyright litigators) at 1PM EST January 17, 2019.  Registration link is below. Join us to find out why #copyright is functioning as #supertrademark in #China, top copyright cases, average copyright damages award and how to respond when a troll comes knocking on the door.

http://westlegaledcenter.com/program_guide/course_detail.jsf?videoCourseId=100241505&ADMIN_PREVIEW=true

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China’s e-Commerce Law will become effective on January 1, 2019. The key question here is how this would impact Western brands’ anti-counterfeiting / take down strategies in China. The answer is… not much at the moment.

The new rules are mostly about the smaller mom-and-pop shops selling homemade products which are not likely to be takedown targets anyway. One part that’s most likely to have an impact on the overall takedown / anti-counterfeiting strategy is the fact that an infringing link will be restored if no civil action or AIC complaint is filed within 15 days once the complaint has been forwarded to the seller.  This is connected with Article 43 of the Law where the eCommerce platform providers not only have the responsibilities to brand owners but also to their respective customers (i.e., sellers).  This is likely to have an impact to the overall takedown and anti counterfeiting strategies if Taobao / Alibaba decides to implement this rule strictly and literally.

Any predictions at this point are premature.  Neither Alibaba nor Taobao has made it clear how they would incorporate and implement the Law into their respective platforms (if at all).  Taobao did send out a two-page memo and our takeaway from last week’s Alibaba IP Summit is that they are considering the New Law and working on the detailed guidelines — We suspect the detailed guidelines will be announced round Spring of 2019 which should help answer most of the questions related to China’s New E-Commerce Law.

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  • Here are the numbers comparing litigation cases filed in China vs. in the US (2014):
  • For patent cases, 9648 litigations were filed in China in 2014, compared to 6185 in the USA. China is roughly 2 times of USA
  • For trademark cases, 21362 litigations were filed in China in 2014, compared to 3201 in the USA. China is roughly 7 times of USA.
  • For copyright cases, 59493 litigations were filed in China in 2014, compared to 3796 in the USA. China is roughly 16 times of USA
  • Surprisingly, foreign related cases were roughly 26% of the overall cases.
  • The 2017 statistics are not yet entirely available.

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ABA will be hosting a webinar focusing on: “IP Portfolio Management in China: What IP Attorneys Need to Know”. Amy Hsiao, a partner at our firm (click here to access her bio), has been invited to speak at this incredible seminar together with other IP veterans: Donna Suchy, Jason Burnette, and Stephen Yang. The webinar will discuss practice tips and critical components when navigating Chinese and global IP markets. Topics range from licensing, supplier agreements in Asia (is it enforceable?), to IP offensive & defensive strategies.  

Time & Date: Thursday, December 13, 2018 (1:00 PM – 2:30 PM EST).

Click here to access program details and register! 

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Join Amy Hsiao and Chris Shen (one of China’s most well-known copyright trial lawyers) to take a deep dive on the copyright system: why it is called a supertrademark, what are the top copyright cases and trends in China, and how a business can deploy a smart strategy to use it to the brand’s advantage.

Below is a quick description of the program and what you are expected to take away from the program.  Click here for registration and more details.

China’s Copyright — why is it called the “super trademark” in China?

This program will discuss the basics of China copyright law and highlight three key differences between the Chinese versus the Western copyright system. We will then discuss the key feature of China’s copyright and why copyright has been called the Super-Trademark.

The program will focus on the recent trends of copyright in China, including copyright issues relating to the Chinese fonts and social media images. Finally, we will conclude with top recent copyright cases and best practices gleaned shared straight from China’s IP courts.

This session focuses on three points:

  • Copyright basics in China – three key differences between China’s and the Western world’s copyright systems.
  • Key feature of China’s copyright – Why it is called super trademark, what the key limitations are and how to use copyright to strengthen IP protection and help out enforcements in China?
  • Top copyright cases in China, recent trends and best practices.
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It’s not a secrete Trump US and China do not exactly get along – this translates to a much tougher environment for business to operate and make a profit in China.  Rather than spending a lot of time (and money) to figure out complicated legal strategies, why not just know the core basics to avoid some easy attacks?

The fonts used in a website and the images shown on China’s social media such as Weibo and Wechat could expose a western business to difficult attacks from local companies.  It boils down to a simple yet powerful legal tool called: #Copyright.  Join us to find out the top three differences between China vs. Western copyright systems, why copyright is also called a #supertrademark and – more importantly – how it can be used offensively and defensively to protect your business in the Middle Kingdom.

Click here to joint the webinar hosted by Thomson Reuters/WestLaw.

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I had the pleasure of being interviewed by Bernie Thompson, one of the most successful #Amazon sellers, at the Seller Velocity platform. I want to write a special shoutout to Bernie on his exceptional moderating skills.  Most of the time our attention is on the speaker, not the moderator.  A lot of the programs therefore have “unusual” moderators where they strive to promote themselves rather than guide the conversation.  Bernie is one of the most impressive moderators I’ve ever encountered – he’s thoughtful; he actually listens; and then takes the time to organize and summarize the speakers’ thoughts to make it meaningful and easy to understand for the attendees. He asked practical questions that businesses do encounter everyday and guided the discussion in a logical manner and make the conversation flow well, and the feedback relate-able.  Moderators play a key part to make a program a HUGE success!

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