Foreign Enterprises’ Criminal Risk Prevention in China

GlaxoSmithKline

(By Ding Jinkun) Recently, Glaxo SmithKline, UCB and many foreign pharmaceutical giants are being investigated for their involvement in economic crimes. The entire pharmaceutical industry is involved into this investigation, stated-owned pharmaceutical firms included. Thus, it can be seen that the Chinese medical market has developed some deformities. Among the resulting crimes, some specific acts include unlawfully raising the price of medicine and unreasonably requiring consumers, particular patients, to pay “perks” for the lawbreakers in the form of small fees.

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Trademark “Zhuomuniao”: Cancelled for Squatting Though It Has Been Put into Use

(By Luo Yanjie) Abstract: when applying for a trademark, the trademark office will judge the similarity of the submitted trademark based on the International Classification of the Trademark Registration for Product and Service (the “Classification”), but the court does not use this only standard. Even if the court finds that the later trademark application to be similar with the earlier applications, and the trademark office approves the later applied trademark’s application, the earlier trademark holder shall have no right to demand the later user for any damages.

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Would Those First Users Involved in OEM Constitute Trademark Infringement?

(By Albert Chen) The author once introduced readers to different judicial opinions adopted in the Shanghai and Guangzhou courts over whether trademark infringement could be caused by an OEM. According to a ruling handed down by the Fujian Higher People’s Court in 2012, which came to the attention of the author recently, the judge confirmed that an OEM could lead to trademark infringement, but decide at the same time that no liability shall be taken by the first user of the mark, for no confusion would be made. As for that point, the author certainly has a different opinion.

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Could User Information Be Considered Trade Secret in China?

Abstract: trade secret must have three basic features: confidentiality, practicability, and security. Therefore, whether user information in a website could be considered as trade secret or not, it shall also be judged based on these three basic features.

(By Luo Yanjie) User information is very important to a website daily operation. To judge it from the legal protection perspective, it is generally protected as a trade secret. The case introduced in this article is a typical dispute on whether the user information could be considered a trade secret, and thereby could infringement be decided.

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Whether using the Name of Another’s Work Constitutes Copyright Infringement or Unfair Competition

Abstract: The Copyright Law and the Anti Unfair Competition Law supplement each other, but they also compete with each other.

(By Luo Yanjie Unfair competition refers to an operator’s misconduct that violates principles of fairness, justice, and good faith; it is also considered any behavior that violates widely adopted commercial ethics. As for copyright, as a kind of exclusive right, it mainly focuses on granting the right holder a monopolistic right in conformance with the law, and thereby grants the right holder monopoly rights as well as a competitive advantage through the exploitation of his/her own intellectual works.

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Why Hainan Netcom Is Judged Infringement Liability for IP Addresses It Manages?

(By Albert Chen) Hainan Netcom is an Internet Service Provider (“ISP”), but it also provides the content on the Internet. Even after the company failed todemonstrate that the IP address is used by a third party, and it fulfilled its obligation to check the content of the webpage, the company should still be liable for any corresponding infringement.

Case Summary:

Beijing Ciwen Filming Co., Ltd. (“Company C”) is the copyright holder of film Qi Jian (also known as “Seven Sword”) in mainland China. However, Company C discovered that Hainan Netcom hadbeen providing a link on its homepage (www.hai169.com) for its visitors to stream Qi Jian, without the authorization of Company C.As a result,in September of 2005, Company C filed a lawsuit against Hainan Netcom because it believed that Hainan Netcom had infringed upon its copyright.

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Is the Territorial Scope of a Famous Brand Limited to Chinese Territories?

(By Luo Yanjie) Abstract: The determination of a product reputation is usually limited to Chinese territories, while on the other hand the reputation of a mark may involve consideration of overseas reputation.

Freeriding among Chinese manufacturers is unfortunately a very common and severe issue, and for most well known foreign companies, there may be situations in which they have not paid adequate attention to the Chinese market, and ergo have provided insufficient attention to policing its marks within the realm of IPR protection. As a result, the vast majority of foreign brands are helpless in facing rampant infringement.

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Does 360’ s QQ Guard Constitute Unfair Competition against Tencent? Part II

(By Luo Yanjie) Today, we would give our opinions on 360’s unfair competition ruling

Lawyer’s Comments:

The case is a part of the 3Q battle, and has garnered wide attention in the society. From a legal standpoint, this case is not difficult.The ruling against 360 was proper for the following reasons:

1. The promotion of ads and charges are of the lawful items

It shall first be pointed out that despite the annoying functions in QQ, like the pop-up ads or value added service, these functions are of the legal profit model of Tencent. As known to all, QQ is a free software (despite the various charging items, the basic function of the software, namely the messaging is free). For Tencent has invested many resources in hardware and management cost, and should naturally be repaid through the ads or value added service. If other companies prevent the lawful advertising of Tencent, thereby reducing the chances of lawful transactionsfor Tencent and its clients, it would be of unfair competition.

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Does 360’ s QQ Guard Constitute Unfair Competition against Tencent? Part I

(By Luo Yanjie) Abstract: Although online ads or pop-up ads may make you feel uncomfortable, that is a profit model utilized by free software like Tencent’s QQ, the popular online messaging software. But, when the 360 Guard software removed QQ’s ads, it would no doubt damage Tencent’s legal rights. We’d like to introduce this case to our readers, beginning with today’s post and extending into tomorrow’s.

In 2010, Tencent introduced its “QQ Computer Keeper” to the market, which focuses on defending against attacks on Tencent. Before that, the Qihu 360 Company publicized its product 360 Guard. 360’s software could remove QQ’s ads, remove supplemental and additional functions found within QQ’s software, and prevent computer viruses from stealing QQ account information. Within the first 72 hours after the introduction of 360 Guard, it was downloaded more than 20 million times. Tencent believed that 360’s Guard software constituted unfair competition, and was possibly even stealing end user’s personal information. For this reason, Tencent announced that all computers with 360’s software installed would no longer be able to use QQ’s software.

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Analysis on the Anti-monopoly Dispute Filed by Qihoo against Tencent, III

(By Luo Yanjie) In our previous two posts, we introduced the reader to the facts involved in the monopoly dispute between Qihoo and Tencent, as well as the Court’s decision. Today, we continue that discussion of the case and would like to share our opinions on it.

Lawyer’s comments and analysis

It is not difficult to find from the above judgement that Qihoo lost the lawsuit mainly because the court in the first instance denied its allegation that Tencent held a dominant position in the market; ithe court’s decision was primarily based on a broad definition of “relevant market” in regard to Tencent’s QQ instant messaging software. The following is our analysis on the issue:

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Litigation in China: A Long and Rocky Road

(By Dr. Wenbao Qiao) For foreign companies doing business in China, disputes and litigation may sometimes be inevitable. Once a dispute cannot be resolved out of court, there is a long and rocky road to the final success, with several important points to be considered for the planning and handling of litigation in China: 

Documents and Evidence 

The first step of each procedure is to collect and prepare all necessary documents and evidence. According to Chinese law, documents and evidence from another country (such as excerpts from the commercial register or powers of attorney) have to first be notarized in their country of origin and then certified by the Chinese Embassy or Consulate in the respective country. Only notarized and certified documents and evidence will be accepted by Chinese courts. While preparing the documents and evidence, attention should be paid to the timeline required for notarization and certification. There are several important statutory deadlines shown below. Failure to meet these deadlines can lead to the loss of a case. Notarization and certification in Germany usually takes two to three weeks, which in turn may play a critical role for the scheduling of time in preparation for trial.

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Analysis of the the Anti-monopoly Case Filed by 360 Against Tencent, I

(By Luo Yanjie) Starting today, we will have three posts introducing the decision in China’s most closely followed anti-monopoly case. Today’s post will first introduce the facts of the case. Qihoo 360 Technology Co. Ltd. (NYSE: QIHU) (“Qihoo”) is a company whose primary business is security software. In October of 2010, Qihoo released software named “360 Privacy Protector,” which was claimed to prevent QQ, the instant messenger of Tencent Holdings Limited (SEHK: 700) (“Tencent”), from uploading the user’s personal information. Tencent issued a notice to its users, demanding that users who installed QQ not install any of Qihoo’s software. At the same time it took technical steps to check the computers for any Qihoo’s software. If any Qihoo software was found, the user was not allowed to sign in to QQ. This led to a large dispute on the Internet in China. After the Ministry of Industry and Information Technology (the “MIIT”) intervened, Qihoo recalled its 360 Privacy Protector, and Tencent revoked its regulation prohibiting QQ users from using Qihoo.

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A Dispute and Settlement involving Technology Investments

Comments on a Shareholder’s Qualification Case Arising out of Technology Investments

(Steven Wang) Recently, the author has represented parties in a shareholder’s lawsuit, with the dispute centering on IPR investment. The court has already heard the case. The property value involved in the lawsuit totaled as high as RMB 300 million Yuan, and the laws applied in its hearing involved IPR law, contract law, and corporate law. The focus of the dispute referred to the patent, exclusive technology, contribution, revocation of shareholder qualification and the application of law when a number of conflicts arise among these different areas of the law.  These conflicts have caused a lot of discussion regarding these legal conflicts, and several conclusions have been reached regarding issues presented in the case.

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Is Apple Breaching China’s Foreign Exchange Management Rules in the App Store?

(By You Yunting) In November of 2011, Apple Inc. began allowing its users in China to purchase app by RMB. At the time, the author believed that it means Apple would operate its AppStore in China. Yet unill now, the business concerning AppStore of Apple is still run by iTunes S.A.R.L.(the “iTunes”), the company registered in Luxembourg, a subsidiary of Apple Inc. Furthermore, according to the relevant International convention on transnational transaction, neither Apple nor iTunes is required to pay taxes for Chinese user’s purchase of the apps to the Chinese government. For Apple and iTunes, on one hand they take the payment in RMB, but on the other hand, they do not pay the taxes. This business model is achieved through the third party payment method. In this situation, the third party payment service provider would collect the payment from the Chinese users, and then transfer them to overseas. But this business model is at risk of violating the foreign currency control regulations of China. The following are the opinions of the author on this issue.

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