China Updates- Intellectual Property & Internet

Intellectual Property

The State Administration for Industry and Commerce (SAIC) announced that the Provisions on Prohibition of Abuse of Intellectual Property, the final version of which was issued on 13th April, 2015, would come into effect on 1st August, 2015. This can be seen as the culmination of 7 years of IP reform in China, starting from the Intellectual Property Strategy Outline in 2008.

Very briefly, the Provisions strike a balance between IP protection and Anti-Monopolies Law, bringing in, for example, EC-type ‘safe harbour’ provisions (for example, a rebuttable presumption that an IPR agreement is unlikely to be anticompetitive).

This follows the issue on 1st April 2015, of a new draft of the fourth amendment of the PRC Patent Law (the “Draft Amendment”) by SIPO (the State Intellectual Property Office) for public comment. Key provisions include:

(i) Redefinition of “employee service inventions”, limiting these to only those made by an employee in execution of work assignments.

(ii) Extending industrial design protection to those for either the overall or the partialappearance of a product.

(iii) Improvements to the patent enforcement system, such as the beginnings of a disclosure system (China does not have a discovery process) where a patent holder has made best efforts to prove financial damage, introduction of punitive damages (recently imposed in the New Balance trademark case*), and the adoption of US-style safe harbour provisions for ISPs and OSPs.

*In the New Balance case, the US company sports footwear company was found not to have come to the court with clean hands and the damages against it on the appeal (which it lost) were therefore increased to punitive damages for its “bad faith”. It was not disputed that the sound translation of New Balance’s trademark had been registered and used by another company, but New Balance had opposed the mark back in 2007, but unsuccessfully, and then continued to use “its” mark in the knowledge that, as far as Chinese law was concerned, it belonged to someone else.

The legal position was very clear and the case should serve as textbook example to foreign companies of how not to approach trademark registration in China. The similar Michael Jordan case, now going to appeal in China may well have the same outcome, albeit without punitive damages.

The legal position was very clear and the case should serve as textbook example to foreign companies of how not to approach trademark registration in China. The similar Michael Jordan case, now going to appeal in China may well have the same outcome, albeit without punitive damages.

Internet

Following the rapid expansion of top level domain names (TLDs) by ICANN, the Chinese authorities have seen the need to impose greater control over domain names. In summary, a domain name can only be sold in the PRC if:

a. The registry that manages and controls the particular TLD of the domain name, has been approved and registered with the Ministry of Industry and Information Technology (MIIT); and

b. The registrar that sells and administers the domain name has been approved and registered with the MIIT.

This will mean a drastic restriction in the range of domain names that can be sold legitimately in the PRC domain name market. Most significantly, popular TLDs such as “.com”, “.net” and “.org” are not on the approved list and therefore cannot be sold in the PRC until they are approved by the MIIT.

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