Increasingly Strict Law Enforcement in IP Protection in China

Recently, General Administration of Customs of PRC published ten typical cases regarding infringement of trademark rights, proudly to say, two of which were represented by our law firm. The publication of these cases is a signal of enhancing trademark protection by China’s government, not only for domestic brands, but also for foreign brands.

Trademark protection, however, does not influence our life directly. What I really want to talk about is the continuously enhanced copyright protection in China. Several years ago and even now, Chinese people get used to enjoying free music, films and books online, and like to buy pirates for their extremely low price. We have access to this free and endless treasure and ignore the great effort and high cost of creating them. We almost take them for granted. Nevertheless, things are changing these years, slowly at first, and then quicker and quicker. If we want to download some music online, we must pay for it, and if we want to see some movies, they are not free anymore. One of my friends used to operate a website which provides American episodes for free. He got the sources from an international online pirate base and made a profit by publishing other companies’ advertisements on his website. He consulted me many times and I advised him to stop, for that may not only incur civil liability on him, but also the criminal result. He had luck psychology at first and ran his illegal business for years, for despite of the civil and criminal laws on copyright protection, the law enforcement is not strict anymore. Last year, however, he stopped his business actively, even without my advice, for many websites like his were punished by a huge amount of penalty and some operators of the websites were punished by an imprisonment. I am happy for his wise choice, because if he hadn’t stopped, he wouldn’t have escaped from legal liability.

It is seemingly that IP protection does no good to our common people’s life, for it increases our cost for spiritual entertainment. According to my observation, however, Chinese people from different communities really support this trend. With economic growth and education improvement, Chinese people can afford the money for intellectual property and we also learn to respect the labor and effort of IP creators. Besides, the key reason is quite simple, if we get free works now, we probably can’t get good works in the future.

Published by Mike Wang on April 29th, 2016 tagged Uncategorized | Comment now »

It’s that time again!

Lehman, Lee & Xu is proud to announce that in May this year the firm will be sending a delegation to the 138th INTA in Orlando, Florida.

In regards to the conference, Edward Lehman has the following to say:

Attending INTA is something that I have done every year since before I qualified as a lawyer. It is a wonderful opportunity to learn and to network with Trademark lawyers from around the world. Attending INTA gives me the opportunity to meet with all the leading IP lawyers in the world, many of whom are old friends, at a single venue.

Additionally, it is a valuable investment in the continued education of my team, who can learn about new practices from around the world and also show their abilities as leaders in their fields. I feel that if I invest in others, I will always get a good return.

INTA is a global association of trademark owners and professionals dedicated to IP protection to protect consumers and to promote innovation. According to INTA:

INTA’s members are more than 6,700 organizations from 190 countries. INTA members collectively contribute almost US $12 trillion / €8.8 trillion / ¥73 trillion to global GDP annually. For comparison, the 2014 annual GDP of the top three markets was $10.4 trillion (China), $18.5 trillion (European Union) and $17.4 trillion (United States).

Lehman, Lee & Xu is proud to be a member of INTA. We will provide you with updates during the conference.

Published by admin on April 27th, 2016 tagged Uncategorized | Comment now »

Criminal Responsibilities of Mental Patients In Criminal Cases

A criminal case occurred in Sichuan Normal University recently has been the focus of attention not only because an undergraduate has been killed by one of his roommate in a very cruel way, but also because the suspect’s mother claimed that her son has mental disease and used to commit suicide for twice, which according to the Criminal Law of China, may make the suspect free from the criminal responsibilities.  A juvenile who commits a crime may not bear the criminal responsibilities or may be given a lesser punishment or a mitigated punishment has been accepted by most people. However, a mental patient also may not bear the criminal responsibility or be given a lesser punishment or a mitigated punishment in the criminal case has not been widely accepted in China.

Most people, just as the older brother of the deceased, are worried about that mental disease may be taken advantage by the suspect as an excuse to avoid criminal responsibility. And some people have a misunderstanding that once the suspect was a mental patient, he or she will definitely and absolutely not bear any criminal responsibility. I guess that’s why this campus criminal case attracted public attention.

Therefore, I want to make an explanation of the relevant legal provisions in the Criminal Law. Actually, the special provisions about criminal responsibilities on the juveniles and mental patients lie on the base that they both are persons limited in disposing capacity or with no disposing capacity, who are unable to recognize or control his or her own conduct just as an ordinary adult. And the provisions in the Criminal Law are specific to different circumstances as below:

A mentally ill person who causes dangerous consequences when he/she is unable to recognize or unable to control his/her own conduct shall not bear criminal responsibility after being established through accreditation of legal procedures; but his/her family or guardian shall be ordered to subject him/her to strict surveillance and arrange for his/her medical treatment. When necessary, he/she will be given compulsory medical treatment by the government.
A person whose mental illness is of an intermittent nature shall bear criminal responsibility if he commits a crime during a period of mental normality.
A mentally ill person who commits a crime when he/she has not yet completely lost his ability to recognize or control his/her own conduct shall bear criminal responsibility but he/she may be given a lesser or a mitigated punishment.

These provisions mean that not every the mental patient will definitely and absolutely bear no criminal responsibilities for the crime he or she commits. The decisive factor is the mental status of the mental patient at the time he or she commits the crime, instead of that of before or after. And even the mental patient commits the crime when he or she is mentally disabled, he or she will not bear criminal responsibilities on condition that he or she was totally unable to recognize or unable to control his/her own conduct.

According to the relevant provisions, the suspect’s family and defender could apply for accreditation for the mental status of the suspect, and the investigation organization, the procuratorate and the court is entitled to start the accreditation for the suspect or defendant under provided circumstances. The accreditation will be proceeded by qualified professionals from hospitals appointed by government at provincial level. And the accreditation report shall be presented in court and cross-examined during the court hearings. During these procedures re-accreditation will be started by the aforementioned parties and the victim or his or her family or agent of lawsuit if necessary.

These provisions show the progress of the criminal law in assurance of human rights, and of course, there are still efforts required to be made to improve the provisions and practice in criminal law area.

Published by Myra Kong on April 25th, 2016 tagged Uncategorized | Comment now »

Tips for Establishing a Foreign Owned Company in China

I am recently helping a client to establish a foreign owned corporation which manufactures and sells medical devices in Guangzhou. Things went smooth at first, but in the final step of AIC( Administration of Industry and Commerce) registration, I was really tortured by the rigid and unreasonable requirements of the department. That may sound ridiculers to an American, for establishing a company in America is quite an easy thing and can be completed within one week. But in China, in spite of reforms against the bureaucracy and policies of promoting foreign investment, there is still large room for improvement.

Before this situation is changed, we still need to learn lesson from it and adjust to the current regulations and requirements, thus to help our client save money and hit the target in most efficient way.

The first lesson from my experience is that an investor, if is an organization, must have a seal and the seal needs to be affixed on some of the required documents. I know many foreign companies are not using a seal, I also told that to the officials of AIC, but they did not think that’s a reason for exception. So if the investor does not have a seal, just make one.

The second lesson is the signature. There may be some differences between signatures from the same person, that’s normal, but may incur bad results in AIC registration. The officials have discretion to judge whether the signatures on the documents are from the same person, if they think there is a possibility that some signatures are fake, they can refuse to accept the application.  The officials don’t pay attention to this matter every time, but we do not want to take the risk.  So, we should remind the client of signing his name totally the same.

The third lesson is the scope of business in name application. In some jurisdiction, the scope of business in name application is not important for establishing, but in Guangzhou, you must select the right scope. For everything related to AIC registration are handled online, if the scope of business in name application and that in registration application are not the same, the officials can’t move forward to next step and have to refuse to accept your application, and the only solution is to cancel the old name application and file a new one.

The aforesaid lessons are not complete but I think those are quite useful for our clients to save twists and turns in establishing a company in Guangzhou. It is also a precious experience for me, after handling this case, I am confident in maneuvering a similar in a quicker, cheaper and better way.

By Mike

Published by Mike Wang on April 22nd, 2016 tagged Uncategorized | Comment now »

Watch Out! Don’t Let Your Company Find Itself on the List of Abnormal Enterprises.

We have been doing a lot of due diligence work recently where we investigate a target company for corporate compliance issues. In one recent example, we found that a subsidiary of our target company had been put on the State Enterprise Credit Information Public System’s (Public Credit System, or PCS) list of Abnormally Operating Enterprises, (We’ll call it the list of shame). After reviewing this with company management, it turned out the company didn’t know about the PCS and the company had not published its annual reports on the PCS since its establishment in 2014 as required by regulations.

In the past, each company was required to perform an annual inspection, and to submit its annual audit report to various Chinese authorities each year. This system was substantially changed in 2014, with the publication of the Interim Regulations on Enterprise Information Publicity (“the Interim Regulations”). With the publication of the Interim Regulations, the requirement to submit annual reports to multiple different authorities was canceled. Instead, going forward each company would be required by the Interim Regulations to perform an annual audit, submit the audit to the tax authorities, and publish the company’s annual report on the PCS. Companies have until June 30 of each year to publish their annual report on the PCS.

Based on our conversations with the company’s management it seems they were under the impression that the cancellation of the annual inspection had relieved them of all duties other than the audit and reporting to the tax bureau. Someone did not get the memo about the PCS.

What is the list of shame? Companies which find themselves on the list will find that this status is publicized by the PCS. Other government agencies may refuse to accept documentation or official applications submitted by a company on the list. Banks are likely to refuse to open new bank accounts for such a company or to approve a new loan.

If a company remains on the list of shame for 3 consecutive years, it will be demoted to the list of Enterprises in Serious Violation. Believe us when we say that is not where you want to be.

Not sure if your China company is in compliance? Send a message to our China Lawyers now and we can check that out for you. If you are unfortunate to find yourself on the list of shame, we can work with authorities to develop a compliance plan to get your company off the list as quickly as possible.

Published by Bonnie Zhang on April 21st, 2016 tagged Uncategorized | Comment now »

Patent Administrative Enforcement

Few days ago, I received the phone call from one of my long-term clients indicating that their sales department found out the counterfeited products using their design patent in the market again. Now, the counterfeited products have been sold nationwide through internet shops.

This is harsh news for me, because since the year of 2013, I have been working on protecting this client’s patent rights together with our colleagues. During almost 3 years, we went to two provinces to collect evidence, consulted face-to-face with the infringers, sent out our attorney letters, tried to shut off every path through which the counterfeited products were selling, and we even trialed for several court sessions to safeguard our client’s patent rights. Finally, at the end of 2015, we obtain the judgments in favor of us and won over satisfied compensation for our client. In a manner of speaking, all these were a series of successful legal actions although the processes are not easy. Thus, it is beyond my thinking that my long-term client is anxious about infringements again instead of merrily implementing their own patent rights.

As a matter of fact, this client’s experiences just reflect the current problems lying inside of Chinese IP right protection system.  Right before the Two Sessions of 2016, the vice director of the State Intellectual Property Office, Mr. He Zhimin, had pointed out that along with the rapid development of E-commerce and new technology, the infringements on patent rights began to pose their novel gestures. In a meanwhile, new problems and conflicts emerged continuously within patent protection system. Innovative enterprises like our clients are facing up to many difficulties when they fight against the infringers. For example, it is very hard for the client to collect evidence on its own, and usually after a whole year time for going through legal proceedings, one paid a bundle but only got back little compensation. Even though everyone knows “no pay no gain”, the difference between the cost and compensation is too much for the right owner to bear. Because the patent administrative law enforcement system is out dated in comparison with the current development of patented products, we need more perfect legal basis to better protect patent rights. Otherwise, due to the hysteretic nature of administrative protection, even if we tried our best to defeat the infringers, we will still lose our market.

Fortunately, the authorities have been aware of the seriousness of the problems. From December 2, 2015 to January 1, 2016, the Legislative Affairs Office of the State Council published the Draft Amendment of Patent Law (For Review) for collecting public advices. On March 4, 2016, the Patent Administration Department of the State Intellectual Property Office also issued and published three drafts including The Guide for determination of Patent Infringements, the Guidelines for the rules of evidence in patent administrative law enforcement and the Guidelines for the administrative mediation of other patent disputes for public consultation. Up to now, advices and suggestions from public society have been well collected. These drafted prescriptions defined the concept and types of patent infringement, stipulate the methods for collecting evidence and also promote the initiatives of the administrative organs on law enforcement. Thus, to some extent, if the drafted provisions may be implemented, the above mentioned problems in protecting patent rights could be better solved.

We hope that the subsequent revisions of Patent Law and other relevant legal instruments can be completed as soon as possible. Therefore, there will be a solid and perfect legal basis for us to provide our legal services, and our clients may get real restitution after successfully fighting back their patent rights.

Published by Crys Zheng on April 19th, 2016 tagged Uncategorized | Comment now »

Special Campaign against Illegal Photocopying in University Copy Shops

I believe that a lot of people, just like me, has benefited from the small copy shops in college. We got a much cheaper copy of the textbooks and reference books compared with the original version, we could find the copy of a book out of print or which we were not able to borrow from the library, and we could even get the copy of notes of other students.

However, students in the universities of 40 cities may not continue to enjoy these “benefits” any more from February 2016 since a special campaign against the illegal photocopying of small copy shops operating around the university campuses was launched by several governmental authorities. This campaign is aiming at stem the illegal operation without relevant approvals and/or licenses, and illegal copying without inspect the contents, providing illegal copy service by using electronic documents stored in the computers and Yunfiles and so on. This is a special campaign to protect Intellectual Property Rights after the “Two Sessions” of 2016.

Although we benefited from these small copy shops in our universities, however, it does infringe the legal rights of copyright holders and relevant presses and do harm to the Intellectual Property Rights protections sometimes. The illegal operation without necessary approvals or licenses, of course, shall be prohibited. But as to the copy of textbooks, reference books, and some books out of print, how to tell the difference between the reasonable use and infringement in this specific circumstances?

According to Copyright Law of the People’s Republic of China, the reasonable use includes the use of a published work for the purpose of individual study, research or enjoyment, and the translation, or reproduction of a small number of copies of a published work where such translation or reproduction is made for the purpose of classroom teaching or scientific research and is to be used by teachers or scientific researchers, provided that such translation or reproduction is not published and distributed. And according to the Implementing Regulations of the Copyright Law of the People’s Republic of China,  Where any person exploits, according to the relevant provisions of the Copyright Law, a published work that may be exploited without the authorization of the copyright owner, he shall not affect the normal exploitation of the work, nor unreasonably prejudice the legitimate interests of the copyright owner. And the Beijing Higher Court also holds in the judgment for Wang Shen Vs. Google that, the following factors shall be considered to decide whether it is reasonable use, the purpose and nature of using the work, the nature of the work, and the nature of the used part and its proportion in the whole work, and so on. The current legal provisions just provide the purposes for reasonable use without explicit provisions about what amount constitutes “a small number”. That is to say, there is no explicit provision on the quantity about reasonable use. I think there is difference between that I borrow a book from the library and make a copy for my own study and that the copy shop makes scan copy of a book and prints it and sells it to a lot of students. And for one student, a copy may not constitute the illegal use, however, for a copy shop, make a copy for every student may constitute illegal use. Making a copy for the whole book and making several copies for a part of the book, which constitute reasonable use? As a legal professional, I am glad to assist in the IP rights protection, and at the same time, enjoy the books within the limit of reasonable use. The Law requires more practice to become more explicit at this point.

Published by Myra Kong on April 18th, 2016 tagged Uncategorized | Comment now »

A Faster Process for Trade Mark Examination

There is an old saying of describing bureaucracy of Chinese officials in departments which hold rights of issuing a certificate or approving something: difficult access, bad attitude and tortuous procedures. I used to be a prosecutor and now work for Lehman Lee & Xu Law firm, I have a more comprehensive knowledge and hatred for the bureaucracy.

The government knows this. So the central government is now

Implementing a reform with features of decentralization and streamlining organization. To respond to the requirement of central government, the minister of State Administration of Industry and Commerce said to journalists during the two sessions just held in Beijing, that SAIC is aiming to further shorten the pendency period for trademarks at the CTMO (Chinese Trade Mark Office).

That is just a void promise. The public needs to know how, to know the specific measures and the time schedule. Just one week ago, CTMO was reported for half a year late of issuance of trade mark certificates, and CTMO explained that they were lack of paper for making certificates. That is ridiculous. We can see from the extreme case that low efficiency and laziness is a chronic disease of governmental officials and difficult to be rectified just by a promise.

Even though, we should applaud for the trend that the government pays more attention on better service. We need to push and supervise them and give suggestions.

My first suggestion is to open an online approval way. That means the applicants can submit materials, consult with the official, and know the update of the process through website. That eliminates the need for the applicant to go to the office by person and save time and paper.

My second suggestion is to shorten the legitimate time period of examination. That is the most direct and effective way. Now, the applicant needs to wait for almost one year from a formal application to issuance of certificate in event of no dispute is involved. That is too slow and there is wide space to squeeze the time. Undoubtedly, the officials will bring about difficulties like no sufficient staff or lack of cooperation mechanism, but that is the problem they need to solve, not the public’s concern. Only with a new law and regulation, will the office be pushed ahead.

We look forward a good result and hope that promise will be realized in a near future.

By  Mike

Published by Mike Wang on April 15th, 2016 tagged Uncategorized | Comment now »

No Gay Marriage in China

A case involving two gay men has caught the attention of the Chinese media. It reached a conclusion on Wednesday, when they lost their legal battle for the right to marry.

It was the first case of its kind in China and while homosexual acts are not illegal in China, same-sex marriages are not legally recognised. The action was raised by the couple, who were challenging the decision of a local Civil Affairs Bureau that had denied them the right to marry.

The couple had gone to the Furong district civil affairs bureau in June to register to marry but were rejected. An official told them that legal marriage had to be between a man and a woman.

The case was dismissed following an open hearing that had an audience of nearly 200 people at a court in Furong district, Changsha city, Hunan province.

According to China Daily, Sun Wenlin, the 26-year-old plaintiff, walked out of the court hand-in-hand with his partner, Hu Mingliang, and said he would appeal. “We gave away our ‘wedding’ candies after the hearing and even the opposing lawyer took a candy with a smile,” he said.

The basis of the dispute was that the words used in the Chinese marriage law, 一夫一妻(yifuyiqi), which means husband and wife, refers to role of the participants, not their gender. The judge said that China did not have explicit laws concerning same-sex marriage and that a husband and wife could only be a man and a woman under the marriage law.

Accordingly to China Daily:

Shi Fulong, Sun’s lawyer, said he would like to represent Sun when he appeals. “Marriage is a basic right of all citizens, including homosexuals,” Shi said. Li Yinhe, a famed sociologist who is a prominent supporter of LGBT rights, said the fight to realize same-sex marriage would continue.

The writers support the decision of the Court because on a normal, reasonable interpretation of the laws only a man and woman can marry. If any changes to the law are required, it should be a decision for the legislature, not the courts. In any event, we wish the couple luck on their endeavour.

Their argument raises a question in the writers’ minds. Who is the husband and who is the wife?

By Chris Fung and Mike Wang.

Published by Christopher Fung on April 15th, 2016 tagged Uncategorized | Comment now »

IP Protection Reform a Hot Topic after the Two Sessions of 2016

As corporate attorney, it is common for us to attend meetings with clients to discuss new laws, regulations and policies which will affect the company’s business and operations. It is noteworthy that after the Two Sessions of 2016 (the National People’s Congress and the Chinese Political Consultative Conference) many clients wanted to hear more about pending reforms in China Intellectual Property protection, especially regarding patents protection.

It is understandable, as Premier Li Keqiang emphasized in the Government Work Report of 2016 to strengthen IP protection, and to punish infringers and counterfeiters.

In addition, during the legislative discussions among the deputies to the People’s Congress, many delegates discussed proposals for IP protection in depth. Mr. Zhao Wen, the Vice-Mayor of Shanghai, called for changes to the present dispersed management system and the unification of patents, design patents, trademarks and copyright protection into a single Ministry-level department, as a strong step toward building an effective Intellectual Property protection environment. The vice president of the State IP Bureau, Mr. He Zhimin called for speeding up the process of enacting the new Patent Law. The new Patent Law is expected to establish a pluralistic model of patent protection, and a more effective enforcement regime. And Mr. Song Beibing, former vice chairman of the All-China Federation of Industries, called for severe punishments for pirated and counterfeit goods.

Slowly but surely Chinese authorities are beginning to take action to promote Intellectual Property protection. As many know firsthand, it has in past years been extremely diffult to effectively safe guard Intellectual Property rights in China. Problems include difficulty in the collection of evidence, lengthy investigations and associated high costs, and finally prolonged judicial proceedings. Because current laws provide for relatively low damages, these actions are seldom deemed costs effective and worthwhile by those who have had their Intellectual Property stolen or counterfeited in China.

Finally, on March 13th 2016, the Chief President of State Intellectual Property Bureau, Mr. Shen Changyu told the press that the Bureau will develop a new, more effective system for the protection of Intellectual Property rights. The State IP Bureau will also cooperate with various other government bodies to promote the amendment of the Patent Law.

Just like our clients, we are paying close attention to these new developments in Intellectual Property protection in China. When new opportunities become available, we are ready to take advantage of any legal changes to protect the interests of our clients, new and old.

Published by Bonnie Zhang on April 14th, 2016 tagged Uncategorized | Comment now »