Category Archives: Corporation

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

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(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

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(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

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(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

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(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

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(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

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(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

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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?

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(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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China Supreme Court Publishes New Judicial Interpretation on Competitive Restriction Clauses

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(By Albert Chen) The system of competitive restriction is one of the major systems concerning the protection of trade secrets. In the beginning of 2013, the Supreme People’s Court of China (the “Supreme Court”) published its Interpretation IV on Several Issues concerning the Application of Law in Hearing Labor Disputes (the “Interpretation IV”). According to the new Interpretation, the rules related to the labor issue include: 1) a competitive restriction clause is valid when no article has been made regarding payment for the restriction; 2) removal of competitive competition due to delayed payment for the restriction compensation; 3) the employee may claim extra compensation when an employer terminates the restriction.

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Why No Solution to “Box Office Stealing” under the Current Laws in China?

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(By You Yunting) Abstract: the author was interviewed: is “box office stealing” mainly a result of a defect in GAPP’s legislature (the General Administration of Press and Publication) and SARFT (State Administration of Radio, Film and Television)? For this issue, the author’s opinion is that the administration and governance over the film industry is the real reason this problem arises, because there is really no way this would happen otherwise, and its unlikely those right holders would try to protect their rights, making the aggressive parties even more aggressive. Thus we would only see the bad drives out the good.

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What do the First Valuation Adjustment Mechanism (VAM) Lawsuits in China Tell Us?

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Analysis on the HF Fund’s lawsuits against Gansu Shiheng and Hong Kong Dia

(By Bai Lituan & Zhang Qianlin) In December 2012, HF Fund Management Co., Ltd. (the “HFF”) filed a lawsuit against Gansu Shiheng Nonferrous Metals Co., Ltd (the “GSNM”), and after being heard by the Supreme People’s Court, the Court stated that the valuation adjustment Mechanism (VAM) would be considered partially valid. This particular case has been seen ups and downs, and now that it has finally been heard, we would like to share our opinions on it within a framework of legal analysis, and hope that it will help clarify any issues presented in the case and thus help to reduce the risks investors typically face.

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The Shanghai Branch of CIETAC Changed Its Name

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Today, we noticed an announcement published on the website of the Shanghai Branch of the China International Economic and Trade Arbitration Commission stating that it has changed its name to the Shanghai International Economic and Trade Arbitration Commission (the “Shanghai Commission”). At the same time, it will begin to use the name of Shanghai International Arbitration Center. Additionally, starting on May 1, 2013, the Shanghai Commission will begin using new Arbitration Rules and a new arbitrator name list.

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A Case Showing the Legal Effectiveness of Property Transfer Signed on the Behalf of a Spouse

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Case Summary:

(By Zhang Fan) A and B are married. After being married, the couple established a real estate company through joint investment, by which A holds eighty percent of the shares and the owns the remaining twenty percent. C and D wish to purchase all of the company’s shares, to which both A and B agree. Additionally, both participate in the preliminary negotiation with C. Afterwards, however, negotiation was only carried out between A and C, and A signed on behalf of B on the concluded Share Transfer Contract, Shareholders Decision, and the documents prepared for the change of administration. As provided in the Share Transfer Contract, A’s eighty percent share option would be transferred to C, and B’s twenty percent share option would be transferred to D. B did not sign her name on the contract. After the payment by C to A for the share transfer, both parties went to the Administration for Industry and Commerce to register the change. Now the share holding of the company is eighty percent for C and twenty for B (B never took care of the registration transferring ownership to D).

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The Prospect and Challenge of China’s Share Transfer System for Medium and Small Sized Companies (the New Three Board)

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(Yu Zhiyuan) In September 2012, the China Securities Regulatory Commission promulgated the Supervision & Management Measures for Non-Listed Public Companies (the “Measures”), and the Measures came into effect January 1 2013. The Measures could be adopted as a fundamental regulatory rule of the OTC market of the security market in China. On January 31 2013, the overall regulatory rules for the three new boards, the Interim Management Measures for Liability Limited Companies for the Share Option Transfer of Medium and Small Sized Companies in China (the “Interim Measures”) was also published. The system construction of the OTC market has stepped into a substantial phase. Considering the large scale of the OTC market has the ability to exert great influence on the OTC market among multiple countries; it deserves people’s attention concerning its prospects and challenges in the future.

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How does the U.S. Government Guide Companies Registering IPR in China?

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(By You Yunting) This March, at the invitation of the U.S. government, Mr. You Yunting, the founder of Bridge IP Commentary began his journey to the United States. The main purpose of this visit was to better understand the system of intellectual property rights in the United States. Mr. You would like to share with our readers his experiences there in several posts here on our website. Of course, the content of the posts may not be truly comprehensive or strictly accurate; that being said, if you find any mistakes or comments that can be corrected or improved upon, please let us know. We encourage more dialogue with the IPR community and welcome all constructive commentary. The following is the first post in a series of Mr. You’s visit to the United States: 

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