Defeating IP Counterfeiting: From Retail Goods to ...

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Defeating IP Counterfeiting: From Retail Goods to Counterfeited Companies Policing and Protecting Brands and Enforcing Rights Against Infringers

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TUESDAY, JANUARY 21, 2014

Presenting a live 90-minute webinar with interactive Q&A

Rex Donnelly, Shareholder, RatnerPrestia, Wilmington, Del.

Edward Hardcastle, Executive, Rouse, Dubai

John Lee, Chief Executive Officer, LeeCore, Bothell, Wash.

Van H. Leichliter, Counsel, RatnerPrestia, Valley Forge, Pa.

Roland Pamm, Director, Brand Protection Center, E. I. du Pont de Nemours and Company, Wilmington, Del.

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FOR LIVE EVENT ONLY

Defeating IP Counterfeiting

From Retail Goods to Counterfeited Companies

Presented By:

Webinar Speakers: Rex Donnelly | RatnerPrestia

Van. H. Leichliter | RatnerPrestia Edward Hardcastle | Rouse

John Lee | LeeCore Roland Pamm | E. I. du Pont de Nemours and Company

&

Strafford Live CLE Webinars

4

Counterfeiting Across the Globe

Edward Hardcastle

Rouse | Executive

ehardcastle@rouse.com

5

Topics • Global Trends

• EU (Source: EU Commission) • U.S. (Source: U.S. Customs & Border Protection & U.S. Immigration & Customs

Enforcement) • China (Source: China General Administration of Customs) • Global (Source: International Chamber of Commerce BASCAP Report)

• Online Counterfeiters

• Factors driving use of the internet • Key players • Challenges and Trends

• Government Responses & Legislative Developments

• ACTA • Transit of Counterfeit Goods in the EU • Criminal thresholds in China • WCO Action Plan to Combat Counterfeiting

6

Global Trends

• Changing geographies – China, India, Pakistan, Central Asia, Asian Tiger economies

• The Internet

• Government attempts to catch up....

• FCPA/ABAC

• Consumers

7

EU Trends

8

Detentions Totals: 2010 2011

Cases 79.112 91.245

Articles 103.306.928 114.772.812

Domestic retail value € 1.110.052.402 € 1.272.354.795

EU Trends

9

EU Trends • The majority of counterfeit goods coming into Europe are shoes, medicines

and toys.

• With regard to copyright infringements, CD/DVDs were the most affected products.

• In 93% of all EU Customs cases, the destination was an EU country (i.e. not in transit with a destination outside the EU)

• China remains the primary country of origin. As in former years, China, Hong Kong, India, Turkey and the United Arab Emirates remain in the top 10. Syria appears for the first time.

• In over 90% of the detentions, the goods were either destroyed under the simplified procedure or a court case was initiated to determine the infringement. 10

U.S. Trends • Increasing - consumer safety and critical technology seizures (especially

pharmaceuticals).

• Decreasing - handbags/wallets/backpacks do not make the ‘Top Commodities Seized’ list.

• Maintaining - China as the number one source country for counterfeit and pirated goods seized (+60% of the total domestic value of seizures).

• Transforming - India and Pakistan both made the ‘Top Ten Source Countries’ in 2011/12 due to seizures of counterfeit pharmaceuticals. Pharmaceutical seizures accounted for 86% of the value of IPR seizures from India and 85% of the value of IPR seizures from Pakistan.

11

China Trends

12

• Civil litigation vs. administrative cases – the balance has shifted

• Criminal cases and the PSB – who is making money?

• The need for innovation and the price of copying

• Value of Customs seizures increasing, despite less items and cases.

• More seizures at seaports, but less items being seized... What does this tell us?

• Regional trends within China – West, South, East, North

Online Counterfeiting trends

• A 2011 study into Online Piracy & Counterfeiting carried out by Mark Monitor found that the combined traffic to the 48 sites selling counterfeit goods studied is more than 240,000 visits per day or more than 87 million visits per year.

• 74% of those sites were hosted in North America or Western Europe, 14% in Eastern Europe and 9% in Asia.

13

Organiser ?

Warehouse

Trader

I/E Company

Export Agent

SG

UAE

Import agent

Importer (ES)

Distributor (DE)

Retailer

Retailer

Retailer

Supplier Supplier Supplier

Assembler

Shipper

$

‘Traditional’ counterfeit route

14

‘Online’ counterfeit route

Retailer

Online trader

SG

UAE

End user

Supplier Supplier Supplier

Assembler

Visa, PayPal etc

UK

DHL

Organiser ???

$

$

eBay

15

Online Counterfeiters – Challenges & Trends Challenges • Risk of a genuine sale being lost • Customers become accustomed to buying “high quality” fakes online • Lack of understanding of online customers • Too easy to source counterfeit product online Trends • Social media growing as an influencer to buying decisions • Falling International Shipping costs and times • Increasingly difficult to tell genuine products from “good” fakes leading

to buyer ambivalence • Changing customer behaviour, mobile devices

16

Legislative Developments • Government Responses • ACTA • Transit of Counterfeit Goods in the EU • Criminal thresholds in China • WCO Action Plan to Combat Counterfeiting

17

Takeaways... 1. Increasingly complex landscape

2. China is still at the heart of the counterfeit threat, and this dynamic is unlikely to change.

3. However, other territories emerging with specific industry focus (e.g. India, Russia, Ukraine, Africa)

4. The impact of the Internet on counterfeiting business models is real and enforcement strategies need to change.

5. On-going lack of success in any joined up governmental approach means the burden is on the rights owner to be more proactive and creative.

18

New Threat: Expansion Into

Associated Crimes China Focus

John Lee

LeeCore | CEO

john@leecoreconsulting.com

19

My Background

30 years - 78 cities of world markets

development work

5 Industries Logistics, IT, Security, Banking , Consulting

Regional V.P. of Asia

Pinkerton Consulting and Investigations (Shanghai based) protected Asia units of Fortune

500 & FTSE 100 firms

8 Locations Beijing, Shanghai, Guangzhou, Hong Kong, Taipei, Singapore,

Jakarta, Ho Chi Minh City

20

THE PROBLEM

21

The Perceived Problem

Google Hack Attack Was Ultra Sophisticated, New Details Show

- Wired.com - January 2010

U.S. Demands China Block Cyberattacks and Agree to Rules

- NY Times March 2013

Major US Newspapers Allege Chinese Hack Attack

- ABC News - January 2013

22

The Perceived Problem

Counterfeit Chinese Parts Slipping Into U.S. Military Aircraft: Report

- abcnews.go.com May 2012

On Canal Street: A Tour Through the Counterfeit

Economy - Inc.com - September 2008

23

The REAL Problem – Part 1

The Chinese are not stopping at products & services, they are now using cyber attacks and IP theft to copy your entire company

• Operations

• R&D

• Finance

• Sales/marketing

In short: Creation of a Parallel Company that uses your company’s resources to leapfrog past you!

=

24

The REAL Problem – Part 2

They are also draining your resources by:

• External and internal agencies of attack

• Taking/copying what you have that is valuable

• Government and press participation

• Cyber attack

• Solicitation and elicitation of key personnel

• Production/supply chain disruption

• Labor unrest (strike, slow downs, vandalism)

25

Case Study 1 Situation: • Veteran of China (20+ years) global, U.S. based pharmaceutical

firm is attacked by various Chinese entities (individuals, quality board, “independent” scientific journal) - all calling to question the purity and quality of their products’ purity levels

Problem:

• These attacks happened after a long period of no such activity - “unprecedented”

• These attacks contained information that no one other than

internal folks would know

o Lost Value: $10 million/ revenue per year

26

The Attacks

• From the evidence gathered, the frequency, intensity and pervasiveness of the attacks is increasing on U.S. firms (regardless of whether they do business in China or not).

• The most asked question most asked:

• “Why now and why me?”

• What is triggering these recent attacks and why are they only going to increase?

27

THE CAUSE

28

China’s Master Blueprint Communist Party of China’s 12th Five Year Plan

(2011-2015)

Strategic Emerging Industries (SEI) are emphasized as the seven industries of the next phase of

China’s growth 29

Healthcare •Pharmaceutical Sector Restructuring •Bio-Medical Engineering •Bio-Breeding •Bio-Manufacturing

•Biotechnology Promoted

•Life Sciences

30

New Energy

• New-generation nuclear power equipment

• Large wind power generating sets and parts

• Efficient solar power and heat utilization

• Biomass energy conversion and utilization

• Intelligent power grid

31

Energy Conservation and Environmental Protection

• Promote efficient energy conservation

• Advanced environmental protection

• Resource recycling

32

Technology Indigenous Innovation Supports for:

• High End Software and New Information Services

• Electronic Devices

• Integrated Circuits

• Nano technology

• Next Generation: Networks, Mobile

• Cloud Computing

• Digital and Virtual Technologies

33

High-End Equipment Manufacturing

• Aviation

• Satellite and Application Industry

• Rail Transportation

• Marine Engineering

• Intelligent Equipment Manufacturing

34

New Energy Automobile

Conduct R&D and large-scale projects for:

• Plug-in hybrid electric vehicles

• Pure electric vehicles

35

New Materials

• New Functional Material

• Advanced Structural Material

• High Performance Composite Material

36

THE TACTICS

37

Takeaway #1 If your company’s industry is on the SEI list then there is a

high probability that you are being targeted.

38

What Do They Want?

• Key personnel

• Physical assets (machinery, equipment)

• Plans (Marketing, Finance, Operations)

• Database (customers/patients/partners)

• Intellectual property (formulas, algorithms, designs, patents, trademarks)

• Reputation/brand

39

Case Study 2 Situation:

• Large Asian technology company was finding that there were products showing up in the market very similar to their latest product offerings and prototypes.

• It was discovered that the producer of the rival products was a recently established technology firm in China.

Problem:

• Upon investigation, it was revealed that key engineers and designers had left the targeted Asia technology company and started to work quietly for the new Chinese rival technology firm.

• A lawsuit ensued that was very complex, ugly, expensive and long and then a TWIST!!

Stolen Value: $1.5 billion revenue per year

40

Other Takeaways

• The most sophisticated of defense systems can be defeated by humans.

• If there is an attack it will be done on an external AND internal basis.

• Conventional methods of protecting firms don’t work.

41

Regulatory and Legal Factors Impacting Counterfeiting in

China

Rex Donnelly

RatnerPrestia | Shareholder

radonnelly@ratnerprestia.com

42

Regulatory / Legal Factors Attributes of Chinese TM Law:

• First-to-file

• Sub-classes of goods/services

• “Well-Known Trade Mark” status needed for dilution or unregistered marks

• Need Certificate of Registration / Recorded chain of title for enforcement

43

Additional Factors in China

• Bad-faith registrations

• Registered solely to sell back to foreign TM owner at inflated price

• Contract manufacturer’s registrations

• Leverage in the event of a dispute

• Protection in Roman characters does not extend to

Chinese

44

In Practice

• Counterfeiters may register first

• If mark owner has not yet registered in China

• Same or similar mark for different goods

• Same or similar mark in Chinese characters

• Registrations used for Customs

45

Hypothetical

46

for “Paints” in class 2

Infringers may register:

• Chemical vehicles used in the manufacture of paints in class 1

• Spray guns for painting in class 7

• Paint brushes and paint rollers in class 16

• Painting services in class 37

RP

If TM owner only registers:

RP 豌豆

Counterfeiting Penalties

• Penalties for infringement relatively minor, unless “serious” or sales are “large”

• No monetary recovery for defensive registrations

• Criminal counterfeiting requires “serious” activity and “large” sales using mark “identical” to that registered, for “goods of the same kind”

47

Enforcement – Practical Issues

• Front companies (minimal records)

• Just-in-time production (no inventory)

• No samples

• Products shipped directly from sub-contractors to freight forwarders

• Payment entities separate from production and sales

• Genuine /gray market products mixed with counterfeits

48

Enforcement Options Administration for Industry and Commerce (AIC)

• Investigate premises

• Review and take evidence

• Seal, detain, confiscate infringing goods

• Order to stop production

• Destroy goods and special tools

• Impose fines (3X, $16K cap if can’t calc)

• No compensation to mark owner

49

Enforcement Options

Civil Action in People’s Court

• Complaint

• Answer

• Exchange of Evidence

• Hearing

• Judgment

- injunction

- seizure of goods and tools

- payment of damages to plaintiff (capped at $82K if cannot calculate)

50

Enforcement Options

Criminal Proceedings

• “identical mark”

• “goods of the same kind”

• Serious and large – 3 years imprisonment

• Extremely serious and huge – 3-7 years

Typically initiated by People’s Procuratorate

Direct action by mark owner possible (rare)

51

Goods “of the same kind” Case Study

BLACKBERRY®

“data processing devices, transmitters (for telecommunication purposes) and computer software”

Defendant: accused products = “mobile phones”

Prosecutor: products are “handheld electronic data transceivers or data processing devices for the purpose of tracking or processing personal information”

52

“Identical Mark” Case Study

Is BLACKBERRY identical to BlackBerry?

• “exactly the same as” or

• “visually almost non-different” and

• sufficient to mislead the relevant public

Still identical if:

• Change in font, case or arrangement;

• Change in spacing between words, letters or numerals

• Changes in color

53

Well Known Marks If not registered in China

• for identical or similar goods

• reproduction, imitation or translation

• liable to create confusion

If registered in China

• goods not identical or similar

• reproduction, imitation, or translation

• likely to mislead public and damage owner

54

Well Known Marks Factors

Article 14:

(1) degree of public recognition;

(2) duration of use;

(3) duration and extent of advertising, and geographical area thereof;

(4) records of protection;

(5) other factors

55

An Ounce of Prevention . . . File TM applications to register:

• prior to actual use in China (sale or mfg.)

• in non-Roman characters

• in all commercially relevant classes and subclasses offensively and defensively

• trade dress

56

An Ounce of Prevention (cont.)

• Request Certificates of Registration

• Record assignments immediately

Also register:

• with Customs

• copyrights for graphics

• primary domain names

57

QUESTIONS?

58

Please contact : Rex. A Donnelly Shareholder | RatnerPrestia (302) 778-3460 radonnelly@ratnerprestia.com

Anti-Counterfeiting: The New Reality

Roland Pamm

DuPont Brand Protection Center | Director – Brand Protection Center

Roland.C.Pamm@dupont.com

59

@2014 DuPont

DEVELOP KNOWLEDGE &

EXPERTISE

Field Work Internet Monitoring External Resources

TOOLS BEST PRACTICES

SOLUTIONS

EDUCATIONAL PROGRAMS

BUSINESS COMMITMENT

(Brand Stewards/Coordinators/Resources =>Implementation/Execution)

Brand Protection Process Cycle

Business Integration

Raising Awareness

Global Brand

Protection Center of

Excellence + Legal Trademark

+ Corporate Security

+ other partners

Gain Experience

Evaluation

Business Engagement

60

@2014 DuPont

Global Brand Protection – Business Process Integration

• Proactive/Preventive

• Brand Risk Evaluation

• Raising Awareness

• Product Protection Plan

• Continuous Assessment

• Education

• Communication/Advocacy

• Benchmarking

• Ex/Internal Networks

• Ex/Internal Resources

Global Brand

Protection Center of Excellence

• Reactive/Enabling/Stabilizing

• Value Chain Integrity

• Enforcement

• Enhancing Business Practices

• Continuous Improvement

Anti-Counterfeiting Risk Management

Brand Protection

61

@2014 DuPont

Authentication

Alliances Verification

Covert & Overt Markers

Taggants/Tracers QA/QC Programs

Transparent Tracking & Traceability

Compliance Audits Market Monitoring Import/Export Data

Marketplace Feedback

Education Customs Audits/Trng

Distributor Agreements “Selective Need-to-Know”

Transporter/Broker Contacts

Value Chain Integrity

Securing the Value Chain

62

@2014 DuPont

Chinese Customs Seizure of Nonstick Cookware - Teflon®

63

@2014 DuPont

Thread Tape Advertising for Teflon®

64

@2014 DuPont

Brand Protection Online Enforcement Priorities

Employee Referrals

Domain Names

eCommerce

Social Networks

Search Engines

65

@2014 DuPont

Possible Counterfeiting – Kevlar®

66

@2014 DuPont

Brand Abuse – DuPont™

67

@2014 DuPont

Brand Abuse – Freon®

2 Cans R12 R-12 Freon Refrigerant The Real Stuff

68

@2014 DuPont

Brand Abuse - Kevlar®

69

@2014 DuPont

Social Website Issues - Kevlar®

70

@2014 DuPont

Solutions for Internal Threats

John Lee

CEO | LeeCore

john@leecoreconsulting.com

71

How You See the Problem is the Problem Why are U.S./European firms stymied in their endeavors to protect themselves?

It is literally how they “see” the problem(s)

It starts with cultural conditioning on both sides and it extends to the realms of Prevention and Interdiction in solving problems!

72

What Does Not Work in Prevention U.S. entities are blind sided by the “American-ness” of their thinking and ways to PREVENT problems. Examples: • Non Disclosure Agreements and Non-Compete Agreements

• Code of Conduct Clauses

• Conflict of Interest Clauses

• Corporate Social Responsibility governance

• Audits (financial, physical, processes/procedures)

NOTE: While these are necessary things to do however, uniquely Western in thinking and easily defeatable because the assumptions underlying these aspects are all wrong.

73

Assumptions in Workplace

Most companies think that employees or contractors who are:

Well compensated

Long tenure

Senior position (senior age)

Friendly and collaborative

Works on committees or working group

Highly respected and well regarded

Naturalized US citizen

= SAFE Employee(s)

74

WRONG!!

75

Main Reason for Wrong Assumptions

“It is better to be the head of a chicken than the tail of the Phoenix”

• Criminal Fire Triangle

• Situational ethics – all is fine until: • Motive/payoff - (Fuel)

• Means/ability - (Oxygen)

• Opportunity – (Heat)

• Usually no criminal record, trusted individual

• Usually has access to the company’s “secrets”

or algorithms, designs, formula (or aspects of it) 76

Possible Reasons for Situational Ethics

Possible underpinnings that led to this problem:

• Amoralism abounds due to anti-theistic Communist culture

• Cultural Revolution (1966-69) threw out Confucius

• 1985 speech by Deng Xiao Peng’s “white cat, black cat” speech intimated that the dependence on the “State” should not be an underlying assumption

• Approach to all things is “I win, you lose” or “I win more, you win less”

• SO therefore this all translates to: “You are on your own!”

77

Ineffective Remedies

U.S. entities are blind sided by the “American-ness” of their thinking and ways to solve problems. Examples: • Audits (financial, physical, processes/procedures)

• Segmented way of doing business (local, regional, corporate)

• Conventional silo approach doesn't’t work: Legal, Security, Compliance, HR, Operations on an ad hoc investigative basis

• Reactionary SWAT team approach

• Pursue and punish seldom works out to remediate damage or stop future behavior

• Legal remedies such as lawsuits, cease and desist orders, restraining orders

• Reliance on Chinese governmental agencies to mediate or adjudicate

78

THE SOLUTIONS

79

Define the Endgame

What is the endgame strategy?

• Elimination of attacks?

Not realistic

• Spinning the attack responses correctly?

Reactive and no plan to deter attacks

• Deflect the attacks to other targets?

Redirection of attacks by making your firm hard to hit and giving the attackers no opportunity

80

Endgame

• Deflect the attacks to other targets

Redirection of attacks by making your firm hard to hit and giving the attackers no opportunity

81

What Works From Inside the Company

There is a way to defeat these attacks but you have to think beyond the norm (the U.S. norm): • Training that looks at where the gaps are that allows internal

“moles” to thrive and hurt your company

• Creating an attack deflection system that incorporates on-the-ground tools and personnel which are self-sustaining and self- governing

• Protection of your most valuable resources with a phased solution program

82

Phased Solutions Approach

Through a phased approach you can:

• Protect your “crown jewels” from inside out using guanxi mapping

• Harden internal structures through an aggressive employee adherence programs including fapiao auditing

• Put into place pre-set tools to prevent and interdict problems: Attack Playbook including threshold tests

• Document Controls are key! But maybe not what you may think in U.S. terms

83

Guanxi Mapping Relationship (guanxi) is key in prevention/interdiction of theft (IP or real assets): • Guanxi mapping shows the spheres of influence that exists within

the company • Guanxi mapping (done legally) can be done externally as well • It is key to know who is spending time with who and possible

motives NOTE: Very rarely does IP theft occur with one perpetrator

84

Fapiao Auditing

Fapiaos are government expense forms for transaction recordation. They are also a great source of finding the money trail. Looking at outflows:

• Supply chain vendors, channel partners, subcontractors

• Fleet management or bulk sales

• Sales and marketing campaigns

• One-time events such as junkets, events, conferences

• Management meetings

85

Attack Response Playbook

• Pre-formatted response to probable scenarios

• Playbook with pre-assigned roles/functions

• Metrics (time, $, personnel, results)

• Traffic Light (red, yellow, green) for incidents - Threshold Testing

86

Case Study 1

Situation:

A highly regarded Canadian standards company had suffered allegations of kickback and bribery being offered to and accepted by their inspectors in China. Problem:

The most recent allegations caught the standards company unready and scrambling to address the accusations however they lost time, credibility and (almost) a customer.

Solution:

A pre-formatted and vetted Anti-bribery Playbook was created to address the problem(s) with flow charts of progression, various roles, tools such as reporting kits, and expected process and results.

87

Document Controls

• Registration, recordation, accessibility and constant review of documents is critical to stop flow of resources out of your company

• Includes: fapiaos, expenses, requisitions

• Vendor or channel partner’s certifications, licensing, insurances (if any)

• Your own: certifications, licenses, tax authority, zoning, industry, compliance documents!

88

Solutions Team • Internal platform levels (local, regional, corporate) to work

together in protection

• Shape the responses in advance

• Everyone has role in adherence

• Concerted effort to eliminate all gaps or holes

• “If only _________ knew what ________ knows”

89

Case Study 2 Situation: An American services company in China was having most of its cash and revenues siphoned by various employees (some at director levels) Problem: • The perpetrators were in various locations, functions and ages

• Controls were very loose as to transactions and fapiao controls

• Perpetrators in the company were using outside vendors or subcons

Solution:

Solution teams were formed in various locations (some with the suspected perpetrators) to work on document controls (fapiaos, expensing, inventory)

Gaps were identified and perpetrators left soon thereafter as the illegally siphoned revenue streams dried up!

90

Positive Endgame

91

Potential Regulatory / Legal Solutions for IP

Protection Under the New Chinese Trademark Law

Rex Donnelly

RatnerPrestia | Shareholder

radonnelly@ratnerprestia.com

92

The New Chinese TM Law Introduction

• Passed and published August 30, 2013

• Effective May 1, 2014

• Implementing regulations still in progress

• Court interpretation will take several years

• Some provisions codify current practices

93

The New Chinese TM Law General Provisions

In general, the new law aims to:

• Increase penalties for infringement

• Discourage bad faith registration

• Provide limited rights for first users

• Streamline registration examination and challenge processes

94

The New Chinese TM Law Deterring Bad Faith

• Requires applications for registration and use be made in good faith

• Bad faith arises if applicant is aware of prior rights through business dealings or has contractual or other relationship with mark owner

• Remedies for bad faith:

• - Non-registration if opposed - Cancellation -- registration void ab initio - Treble damages for bad faith use - Cannot interfere with scope of prior use

95

The New Chinese TM Law Prevention of Bad Faith Registration

• Trademark Agencies • Must inform client if mark cannot be registered

• Cannot accept instructions to file in bad faith

• Can only file for its clients

• Cannot falsify documents, seal or signatures

• Consequences: • Fines (up to RMB100K per violation)

• Blacklisting by AIC or industry organization

• CTMO and TRAB may refuse to accept filings

• Public announcement

96

The New Chinese TM Law First Use

• First use now confers limited rights

• “Squatters” cannot enjoin activities covered by scope of first use

• But, first user may be forced to distinguish from first registrant

97

The New Chinese TM Law Well Known Marks

• Use prohibited if likely to cause confusion and to prejudice mark owner

• AIC fines

• Status can be requested at TM office, TM Review and Adjudication Board, or in some People’s Courts

• Status cannot be advertised for laudatory purpose

98

The New Chinese TM Law Damages

• Infringers must disclose accounting

• TM owner must prove use within last 3 years to receive damages

• Damages available:

• Punitive damages up to 3X actual damages

• Statutory damages up to RMB 3 million

• TM owner entitled to recover enforcement expenses

99

The New Chinese TM Law Administrative Penalties

Fines for AIC enforcement:

• Revenue > RMB 50K, up to 5X revenue

• Revenue < RMB 50K or incalculable, up to RMB 250K

• Greater fines if >2 instances within 5 years

• Well known mark: up to RMB100K per violation

100

The New Chinese TM Law Registration Procedures

• E-filing expressly included in statute

• Multi-class filings permissible

• Sound marks permissible

• Preliminary determination of registrability within 9 mos.

• CTMO can issue request for explanation

• Opposition and Invalidity Proceedings (relative) complete in 12 mos.; invalidity proceedings (absolute) in 9 mos.

101

The New Chinese TM Law Oppositions • Current law:

• Any party can oppose

• Unsuccessful opposer can appeal

• New law:

• Any party can oppose on absolute grounds (e.g. descriptiveness)

• Only prior right owner or interested party can oppose on relative grounds (i.e. likelihood of confusion)

• Unsuccessful opposition results in immediate registration* (applicant can still appeal)

102

The New Chinese TM Law Other features

• Likelihood of Confusion analysis now mandated (codification of current practice)

• Fair Use defense now includes protection for generic use of registered mark

• Use of registered mark or unregistered well known mark as a business name is clearly prohibited

• Knowingly facilitating or assisting infringement = infringement

103

The New Chinese TM Law Overall Outlook

• Addresses some current problems

• Need to see implementing regulations and how the law will be interpreted to understand impact of law

• Good faith requirement and higher penalties hold some promise

• First use provisions could go either way

• Does not address class subheadings

104

QUESTIONS?

105

Please contact : Rex. A Donnelly Shareholder | RatnerPrestia (302) 778-3460 radonnelly@ratnerprestia.com