Case Analysis: Legal Risks in Franchise Business

(By Yu Zhiyuan) I recently represented a client who was finally the winning party to a typical franchise dispute case, from which we can learn most legal risks possibly facing franchisors and franchisees during their performance of franchise business as well as operational standards and risk control measures for businesses in the brand chain industry.

  1. Case Facts  

In this case, the franchiser, owner of a well-known early childhood education brand, entered into a franchise agreement with each franchisee to perform franchise activities as a chain store dealing in the franchiser’s brand. As mutually agreed, in addition to one-off franchise fees and deposits, each franchisee should pay royalty fees in advance before each royalty year begins, and if there is any overdue payment of royalty fees, penalties.

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What Startups Need to Know to Protect Their IPR in China

 (By You Yunting) I was once asked by a journalist what the foundation of intellectual property  courts and the ratification of the Opinions on Quicker Development of the Globally Influential Scientific and Technological Innovation Center matter to small and medium-sized startups, and replied the outcome of those two events were the same, both of which ultimately aimed to enhance the awareness of intellectual property throughout our society and guide small and medium-sized enterprises to establish a competition barrier and a management philosopher on how to avoid infringing others’ intellectual property rights. As governmental authorities define and set official instructions and policies, each startup should take full use of its intellectual property during daily operation, trying to become positioned to succeed, just like a well-known Chinese aphorism says that even the pig can fly when the typhoon comes. Combined with my experiences, this article mainly deals with the issue of how small and medium-sized startups seek intellectual property protection both internally and externally.

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Is Integrated Circuit Layout Design Protected by China Judicial Judgment?

(By You Yunting) Introduction to the case:

Appellant (plaintiff at first instance): Hi-Trend Technology (Shanghai) Co., Ltd (the “HTT”)

Appellant (defendant at first instance): Shenzhen Rui Micro-Technology Inc. (the “RMT”)

Respondent (defendant at first instance): Shanghai Yachuang Electronic Component Co., Ltd. (the “YEC”)

Court of first instance: Shanghai No.1 Intermediate People’s Court  No.: (2010)沪一中民五(知)初字第51号

Court of second instance: Shanghai Higher People’s Court  No.: (2014)沪高民三(知)终字第12号

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Introduction to Protection of New Varieties of Plants in China

(By You Yunting)Introduction to the Case:

Appellant (Defendant at first instance): Jiangsu Xunong Seeds Science and Technology Co., Ltd (the “Xunong”)

Respondent (Plaintiff at first instance): Tianjin Tianlong Seeds Science and Technology Co., Ltd (the “Tianlong”)

Court of first instance: Nanjing City Intermediate People’s Court  No.: (2009)宁民三初字第63号

Court of second instance: Jiangsu Province Higher People’s Court  No.: (2011)苏知民终字第0194号

On November 10, 2000, a new three-crossbreed hybrid japonica rice named “9优418”, jointly cultivated by the Liaoning Rice Research Institute (the “LRRI”) and the Xuzhou Academy of Agricultural Sciences (the “AAS”), was approved by the National Crop Variety Approval Committee of China (the “NAVAC”).

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Why China Court Decision Requires Software Interface Primary Aesthetics under Protection?

(By Luo Yanjie) Pursuant to the Copyright Law, the works shall be original with primary aesthetics. From this point, most software interface can’t receive protection from the Copyright law, because most software interfaces are designated in a simple arrangement for the purpose of easy-to-use and thus are likely to be considered as lack of “distinctiveness”. The judgment in the following case set forth the theory.

Introduction to the Case:

Appellant (defendant at first instance): Shenzhen Tenda Technology Co., Ltd (the “Tenda”)

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Regulations against Intellectual Property Malicious Litigation in China

    (By You Yunting) Malicious litigation refers to instituting a lawsuit through fictional facts and falsified evidences for the purpose of receiving unlawful benefits. In today’s post, we will introduce some provisions about malicious litigation in intellectual property laws and civil procedure law in China.

    I. Provisions on wrongful litigation injunction can be applied into malicious litigation.

    In litigations concerning patent, trademark and copyright, the right holder always applies for such litigation injunctions as termination of infringement, evidence preservation and property preservation. Where the court approved the application, if the litigation is proved to be malicious, the respondent may require the applicant to compensate for such losses. Article 13 of the Several Provisions of the Supreme People’s Court on the Issues Concerning the Application of Law to Terminating Infringement upon Patent Prior to Litigation stipulates that:

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Diagnostic Method Claim in the US

(By George Wu) Another important case concerning biotechnology was decided last year at the US Supreme Court: Mayo Collaborative Servs. v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012)

Prometheus Laboratories (“Prometheus”) had obtained a patent for a method of determining the optimal dosage of the drug thiopurine, which is used to treat auto-immune disorders.  The use of thiopurine in the treatment of disease was not a new discovery, but the use of the drug had been made difficult by the fact that thiopurine is metabolized at different rate in different people.  Accordingly, the same dosage could be too low to be efficacious in one patient, while too high and toxic in another patient.  Prometheus made the discovery that by assaying for the metabolites of thiopurine, the rate of metabolism could be determined and the dosage could be adjusted according to the patient.

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China Protects the Graphic User Interface for Software as of May 1, 2014

(By You Yunting)  In our previous post, we introduced that Graphical user interface (the “GUI”) for software has not been protected in China. However, State Intellectual Property Office (the “SIPO”) suggested protecting the GUI in the latest Draft Revision of the Patent Examination Guidelines (the “Draft Revision”) on October 22, 2013. Recently, in the publication of the Decision of SIPO on Amending the Patent Examination Guidelines, It is the GUI that is protected by the Patent Law as of May 1, 2014.

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DNA Composition Claim in the US

(By George Wu) Last year, I wrote an article entitled “Can Genes Be Patented?” referring – at that time – to the impending U.S. Supreme Court decision.  The following article is a summary of the prior history and the decision by the U.S. Supreme Court concerning the patenting of DNA.

From the 1980s, scientists from around the world started to search for specific genes that were associated with increased hereditary risk for breast cancer.  By 1990, two genes, BRCA1 and BRCA2, were discovered that if they had specific mutations/alleles would impart an increased risk for breast cancer in women.

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China Customs Requires that Patent Holders Update their Valid Certificates

海关总署

(By You Yunting) We have already introduced today’s topic in our previous post how to record patents with China Customs. For more background information, please read this article first. Recently the Chinese General Administration of Customs has updated its previous recordation system for intellectual property rights enforcement and began to utilize this latest recording system from March 1, 2014. This updated recording system puts forward a new requirement that upon patent recordation, the right holder of a patent that has been recorded by Customs must present valid documents of the relevant patent rights before the given deadline, otherwise the patent recordation will be canceled.

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Internet Society of China Published the Convention of Self-Discipline for Internet Terminal Security Service

(By You Yunting) On December 4, 2013, Internet Society of China (the “ISC”) published the Convention of Self-Discipline for Internet Terminal Security Service (the “Convention”) in Beijing. Those eight Internet terminal security service providers, such as Tencent (0700.HK), Baidu (NASD: BIDU), QIHOO (NYSE:QIHU), Kingsoft Corporation Limited (03888.HK), RISING, Jiangmin Technology, TOPSEC and NetIQ Mobile Inc, signed on the Convention. Afterwards, there are about 23 companies, i.e. SOHU (NASDAQ:SOHU), Sogou, Xunlei and Xiaomi Technology signing related documents in favor of the Convention. The Convention, comprising of 6 chapters and 27 articles, aims to protect legal interests of users, maintain a fair and harmonious market competitive environment and promote the healthy development of internet industry.

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How Patentees Protect its Publicized Invention without Grant of Patent Rights?

(By Luo Yanjie) Abstract: After the official publication of an application for a patent of invention, the applicant may demand the entity or individual exploiting that invention to pay an appropriate fee, but is not entitled to prevent others from using the patent. After grant of patent rights by the patent office, the applicant has no right of demanding the subsequent entity or individual to pay an appropriate fee. In today’s post, our case is involved in the 2011 Min Ti Zi No. 259 Civil Judgment of the Supreme People’s Court’s

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China Attempts to Utilize Patent to Protect Graphical User Interface for Software

(By You Yunting) In the epic battle of Apple Inc. v. Samsung Electronics Co. starting from 2011, Apple filed its lawsuit against Samsung in the United States, alleged that Samsung infringed several graphical user interface (the “GUI”). If Apple filed its lawsuit against Samsung in China, however, its complaint regarding infringing several GUI may not be filed because at present China has not accepted applications of patent for GUI. Nevertheless, good news comes that China’s governments are changing their attitude on the application for GUI.

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Whether Patented Products’ Profit Influences the duty to Reward Inventors?

Abstract:

Other local laws and regulations cannot be used in legal judgments. Furthermore, enterprises shall award to the employee proper remuneration regardless of profitability.

(By Luo Yanjie) Patent carries huge value to enterprises; key patents can be especially valuable, because they are often only gained after a great deal of expense. Because of this, according to relevant provisions in the Patent Law, the right to apply for a patent belongs to an entity for any invention-creation, either made by a person in the course of executing tasks of the entity he belongs to, or made by him by primarily utilizing material and technical means belonging to the entity. Inventors having rights over inventions is well accepted, but a difficult position for the inventor to be in; often, we find the laws to be inadequate to properly serve and protect the interests of the inventor-creator. In today’s post, we will introduce to you a case touching upon this legal issue.

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Shanghai Court Promulgated New Rules on Service Invention Remuneration and Reward

(By Albert Chen)  Recently, the Shanghai Higher People’s Court (the “Higher Court”) issued the Guidelines on the Trial of Employment Remuneration and Reward for the Inventor and Designer (the “Guidelines”), which has further provided the issues involving the standard of the remuneration and reward as well as their payment. In today’s post, the author would like to interpret the new regulations in the Guidelines.

I. The standard of the service invention remuneration

According to the Guidelines, the remuneration for the service invention shall not be less than RMB 3,000 and not less than RMB 1,000 for  design patent and utility model.

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