Note: this is the second part of the Stanford Law and Chinese Transformation Conference that was held on May 6-7 at Stanford Law School, for part one, click here.
China won’t protect IP rights until China has IP rights
Mark Cohen, Director of International IP Policy of Microsoft started the IP enforcement panel discussion by presenting patent litigation trends in China. One point that Mr. Cohen brought up is that China won’t protect IP rights until China has its own IP rights that needs protection. Now that patent filings increased significantly, litigation seems to be catching up as well. The number of IP-related litigation cases handled by the Chinese courts is fast increasing, as previously report. He commented that the China is fast becoming the most litigious society in the world, in fact, there are more copyright litigation in China per capita than in the U.S.
Mr. Cohen noted that Chinese nationals are responsible for about 99% of Utility model and design patents litigation, and a significant portion of invention patent litigation as well. Foreigners are the minority of the Chinese civil docket – only about 3%.
Low damage, more injunctions, and low chance of invalidation in SIPO
Generally, the damage awarded by the Chinese courts is low. Apart from the few exceptions such as schroeder v. chint, where the judgment reached millions of U.S. dollars, typical damage award is still low, – around 600,000 RMB. However, injunction rate in China is higher than the U.S., China has not adapted an ebay v. Mercexchange style of injunction test.
As far as invalidation before administrative agencies, although the rate of trademark invalidation proceedings continues to increase, patent invalidation proceedings before SIPO decreased 17% recently. Mr. Cohen theorized the decrease in invalidation proceedings in SIPO and the increase in litigation may be attributed to that only 2% of invalidation proceedings before SIPO is ever successful. Therefore, there is a trend of going directly before the courts instead of bothering with invalidation or reexamination before SIPO.
The rise of patent cockroaches
Mr. Cohen noted that 62% of utility model patent applications are filed by non-service entities (individual inventors). The number of patent filings by non-service entities in China is about 8 times higher than that in the U.S. This high percentage of filing by individuals has lead to the not so flattering terms: patent cockroaches, a.k.a. Chinese patent trolls. The phenomenon of patent cockroaches is an emerging issue in China that foreign companies should monitor closely. Patent cockroaches may be even more problematic than patent trolls in the U.S., since utility model patents do not require substantive examination. It seems that companies need to pay particular attention to Chinese civil code regarding civil liability for frivolous and/or malicious litigation. For example, in Yuan Lizhong v. Yangzhou City Tongfa Air-Raise Actuator Factory & Yangzhong City Tongfa Industry Co. Ltd that was decided by the Nanjing Intermediate People’s Court in 2006, an individual inventor sough to enforce a utility model patent against a company and the company successfully counter sued for malicious litigation.
In conclusion, some of the patent litigation trends in China according to Mr. Cohen are potential rise of non-service entity initiated litigation asserting low quality patents, increasing in amount of awarded damages, and emerging regional differences (high level of patent activities in coastal areas) which may impact forum selection for litigants.
Baidu has been under fire from increasingly vocal and active copyright holders in China lately. Perhaps the most famous of the Baidu’s critics, Han Han (author, blogger, race car driver, New York Time columnist, copyright advocate, and all around Renaissance man a la James Franco) wrote a scathing post against Baidu, criticizing Baidu’s business model, copyright infringement, and indirectly, China’s IP policy.
The latest controversy centers on Baidu Wenku (百度文库), a free literary sharing platform similar to Google Scholar. Recently, many authors and publishers are suing or threaten to sue Baidu on copyright violation. In fact, even the Chinese Supreme Court preemptively jumped in to the fray by drafting a judicial interpretation on the safe harbor principles on Internet copyright infringement.
Likely the first court victory against Baidu goes to Shanda Literature (盛大文学). The case which began more than a year ago, was decided by Shanghai Luwan District Court (上海市卢湾区法院) on May 10th. The Court ruled that Baidu knowing that several copyrighted works belong to Shanda, but failed to timely remove the copyrighted works or remove the hyperlinks to the copyrighted works, constituted indirect infringement of Shanda’s copyright. Furthermore, the Court ruled that Baidu directly infringed Shanda’s copyright by reasoning that Baidu is not just a third-party website that directs users to the copyrighted works, instead, Baidu conducts metadata processing, copying, and uploading the copyrighted works such that Baidu supplants third-party websites and directly deliver copyrighted work to users.
The Court issued a verdict against Baidu for 500,000 RMB for damages, and 4,4500 RMB for cost. The total damage (roughly $80,000) is small, especially given Baidu’s massive revenue. Baidu stated that they will appeal the decision.
Many authors are teaming up with Chinese Written Works Copyright Society (CWWCS) to initiate further copyright infringement suits against Baidu. Even Guoqing Li, CEO of Dangdang.com, China’s largest online book retailer, posted on his microblog that he would financially support plaintiffs against Baidu.
In Baidu’s defense, Baidu stated that they have a report website set up where copyright holders can complain directly to Baidu and supposedly Baidu will take down the reported content within 48 hours.
At the Intellectual Property Rights Seminar organized by the Asian Patent Attorney Association, which took place on May 7th in New Delhi, India, several prominent Indian IPR professionals spoke about the current state and future development of intellectual property in India.
Among the guests are law minister Veerappa Moily, Chief Justice of Delhi High Court Dipak Misra, leader of opposition and a leading lawyer Arun Jaitly, senior advocate AM Singhvi, and Additional Solicitor General AS Chandhiok.
Former Law Minister Arun Jaitley commented on the development of copyright in India, which comes under the Ministry of Human Resource Development (similar to the U.S. Department of Education). Minister Jaitley further commented on expanding protection of copyright in India, however, he also noted the neglect of the copyright board to infringement grievances and the lack of resource to properly enforce copyright through India’s over burdened court system.
Designated senior advocate Abhishek Manu Singhvi said patents litigation has just started in India, and expressed the need for reform since apparently not one case in the past 60 years has been concluded. Advocate Singhvi further commented on the difficulty of obtaining a patent in India.
Another topic that came up is how fast should India amend it is IPR legal system. IPR reform in India has been an issue in India’s recent free-trade negotiations, particularly with European countries. India has taken a firm stance on not expanding it is IP regime beyond what is required by TRIPS. Sometime, countries negotiate for additional IP protection (TRIPS-Plus) as a part of a free trade agreement.
Minister Jaitley commented on this issue by stating that “‘we should not blindly follow the International laws on IPR but have to make a distinction on how these laws affect our country. We are still a poor country and if we go by the International advice on the patents of drugs so many life saving drugs will become un-affordable for the middle-class people also”. Mr. Jaitley also emphasized the requirement to balance out the conflicting interests of IP Rights and Public Health and the requirement to provide affordable medication, and urged the Prime Minster to resist international pressure to amend India’s patent laws. Other concerns raised by EU countries relate to geographic indication protection India.
In general, it seems that India wants to reform its IPR legal system. Especially considering the transformation in terms of IP procurement and enforcement in China, India might need to reform it is IP regime to keep pace. However, India seems to be taking a more humanist approach, particularly with issues related to generic drugs. Since the generic drug industry is booming in India, the resistance to patent reform may be a combination of economic interests as well as humanitarian interests.
The inaugural Stanford China Law and Policy Conference concluded over the weekend. It was an extraordinary event that bought together students, academics, in-house counsels, judges, practitioners from throughout the United States and China, as well as one ex-secretary of state, kudos to the student organizers and Stanford Law School for putting together the event.
The conference was not entirely devoted to IP but it came very clear that IP is one of the leading legal issues in China since IP related issues came up during almost all of the panel discussions including the keynote speech by Dr. Condoleezza Rice and the luncheon speech by the Counsel General Gao Zhansheng.
The conference consisted of six panel sessions, one of which was devoted to IP protection and enforcement in China. This post is devoted to the highlights of the non-IP focused panels; a later post will be devoted exclusively to the IP panel.
Legal education in China and the US
The conference kicked off with a panel on legal education in China and the US. The panel consisted of Assistant Dean Guo Li of Peking University Law School, Jeff Lehman, founding Dean of Peking University School of Transnational Law, Vice Dean Shen Weixing of Tsinghua University School of Law Dean Larry Kramer of Stanford Law School, and Dean William Treanor, Georgetown University.
The discussion focused on the harmonization of the law with globalization and as a consequence of which is the growing harmonization of legal education. Peking University and Tsinghua University which are the two top schools in China, now offers classes on common law to prepare students on better understanding of the U.S. and U.K. legal systems. Peking University now offers J.M. (Juris Master) degree, which seems to be the equivalent of the J.D. degree in the U.S. that focuses practical legal training, while the LL.M. degree is more academic focused. Peking University’s sister school, Peking University School of Transnational Law offers J.D. degree similar to the U.S.
On the U.S. side, Dean Treanor discussed the growing offerings in Chinese law courses at Georgetown, including Mandarin legal language course. Dean Kramer commented on Stanford’s project to translate Chinese Supreme Court’s leading cases and make them available in English.
One interesting point that was brought up was the convergence of common law and civil law. Dean Kreamer commented on the fact that the legal industry is dominated by common law trained lawyers from U.S. and U.K., and that has affected the development of civil legal development as well as legal education in civil law countries such as China. For example, the Chinese supreme court announced that they will issue decisions on “leading cases” which although not explicitly stated sounds very similar to common law case precedence. Also, Chinese supreme court is also actively drafting judicial interpretation of statutes.
Overall, it seems that in both China and in the U.S., there are significant interests in each other’s legal systems and many law students are engaged in other countries’ legal systems through courses and study aboard programs.
Keynote – Dr. Condolezza Rice
Dr. Rice was the most high profile speaker at the conference, and her presence attracted several unwelcomed characters to the conference. About 5 minutes into her speech, a protester interrupted the conference by screaming grievances relating to torture and the Iraq war. After she was removed, a second protester interrupted the conference, which angered Dean Kreamer considerably. After all the excitement, Dr. Rice spoke about IP problem in China, which in her opinion is still a major problem. Particularly troublesome to her is the joint venture model, where a foreign company must partner with a Chinese company including sharing IP.
Rule of Law in China
The panel on Rule of Law in China consisted of Juan Carlos Botero from the World Justice Project, Brian Cabrera, General Counsel of Synopsys Inc., Laura Stein, General Counsel of Clorox, the Honorable Judge Wallace of the ninth Circuit, and Yabo Lin of Sidley Austin. The discussion touched upon the growing awareness and the development of the legal profession in China, particularly, Mr. Cabrera commented on Synopsys’ growing usage of the Chinese court system, from contract cases to IP cases. Mr. Botero stated that the World Justice Project, which ranks rule of law in various jurisdictions, will publish their report in the next few months, although he didn’t share where China ranks, he hinted that the awareness and faith in the legal system might be higher than some would expect. The panel also commented on training employees on legal issues such as corruption practice and IP, Ms. Stein commented that a simple corruption issue regarding a few thousand dollars might evolve in to multimillion dollar legal issue, which might be mitigated with better education and training.
Overall, it seems that rule of law and awareness of the law and faith in China’s legal system is improving significantly, companies such as Synopsys seems to have growing confidence in the Chinese legal system. No doubt, the Chinese legal system still has a long way to go.
Cross-Border Acquisition and Investment
The panel on Cross-Border Acquisition and Investment consisted of Charles Comey of Morrison & Forrester, Mary Dent, General Counsel of SVB Financial Group, David Lee of Gunderson Dettmer, Yabo Lin of Sidley Austin, and Professor Michael Klausner of Stanford Law School. Mr. Lin discussed the perils and challenges faced when acquiring U.S. companies, and the Committee on Foreign Investment in the United States (CFIUS) review process. CFIUS is a major issue faced by Chinese companies not just in acquiring a U.S. company, for example, Huawei’s acquisition of 3 Leaf’s patent portfolio did not receive CFIUS clearance, which forced Huawei to divest the patents it acquired. Ms. Dent briefly commented the value of branding for China which can be mitigate weak patent protection, it seems that trademark enforcement which is tied to branding is better in China than patent protection.
Overall, the panel discussed the overwhelming energy of the Chinese entrepreneur community, and the growing sophistication of the Chinese entrepreneurs, some of which are on their second or third companies. The panel also discussed that in China, IPO in the U.S. (i.e., Ren Ren) is still the ultimate goal of Chinese startups, although China is hoping to create a Chinese NASDAQ in Shenzhen.
As stated before, the IP panel discussion, which consisted of Mark Cohen, Director of International IP Policy of Microsoft, Victor Liang, General Counsel of Baidu, Joseph Simone of Baker & McKenzie, and Judge Wang Yanfang, IP Judge of the Supreme People’s Court of China, will be covered in a later post.
Given the importance of the emerging economies such as the BRICS countries, U.S. based companies are increasingly filing patent applications in foreign jurisdictions. However, it is important to understand that the U.S. has established a comprehensive system of export controls that regulates international transfers of U.S.-origin goods, technology, and services, including regulation on patent filing in foreign jurisdictions.
Specifically, In the U.S., a patent applicant may not file an application abroad for 6 months after a U.S. filing unless the applicant obtains a foreign filing license for what is disclosed in the U.S. application. The purpose of this regulation is that it gives the government 6 months to decide whether to limit the export of the application that could be detrimental to national security. During the period prior to issuance of the foreign filing license, all technical data imports are subject to the Export Administration Regulations (EAR). Specifically, 35 U.S.C. § 184 states:
“[e]xcept when authorized by a license obtained from the [USPTO] a person shall not file or cause to be filed in any foreign country prior to six months after filing in the United States an application for a patent….in respect of an invention made in this country.” (emphasis added).
It is important to note that unlike other jurisdictions, the key determinant on whether a foreign filing license is required is whether the invention was made in the U.S., irrespective of the nationality of the inventor, whereas other jurisdictions such as India requires a foreign filing license if the inventor is an Indian national.
Although the exact meaning “made in this country” is unclear, U.S. court has interpreted it to mean that the invention must be reduced to practice in the United States to qualify as “made in this country” (Sealectro Corp. v. L.V.C. Industries, Inc., 271 F. Supp. 835 (E.D.N.Y. 1967).
USPTO groups 3640 & 3660 are charged with examine incoming applications for need of a secrecy order and type of order required. If the Commissioner determines that disclosure might be detrimental to the national security, the USPTO will refer it to the Defense Technology Security Agency (DTSA) for review, or alternatively, the Commissioner may allow export of the technical information via foreign patent application filing under 35 U.S.C. § 184 by granting a foreign filing license.
The USPTO will screen all provisional, utility, design and PCT applications when the U.S. is the receiving office. It should be noted that a PCT application where the U.S. is not receiving office requires a foreign filing license, so if an applicant were to file directly with WIPO for an invention made in the U.S., a foreign filing license is required.
The foreign filing license may be obtained by file a Petition for a Foreign Filing License under 37 CFR § 5.12 which carries a petition fee of $200 (at least 90 days in advance of the desired filing date in the foreign patent office is desired). Alternatively, the Applicant waits 6 months after filing a patent application in the USPTO, at which time a license is no longer required as long as no secrecy order is imposed.
If an applicant failed to obtain a foreign filing license and filed for patent protection for an invention made in the U.S. in a foreign jurisdiction or a PCT application with a receiving office other than the U.S., he could be subject to loss of U.S. patent ([an applicant] shall not receive a United States patent for an invention if that person, or his successors, assigns, or legal representatives shall, without procuring the license prescribed in section 18…have made, or consented to or assisted another’s making, application in a foreign country for a patent or for the registration of a utility model, industrial design, or model in respect of the invention 35 U.S.C. § 185), civil liability, and for willful offender, criminal liability including fine of up to $10,000 and imprisonment no more than 2 years. Also, a foreign filing license may be retroactively granted in situations where a proscribed foreign filing occurred through error and without deceptive intent as opposed to the earlier standard of in advertence.
It is important to note that the scope of a foreign filing license is limited to only filing for a patent in a foreign jurisdiction, therefore, the technology that is exported must be that which is contained in the application or otherwise necessary to the preparation of the application that is to be filed abroad. Furthermore, the foreign filing license does not cover information sent abroad for preparation of filings to be made in the United States (i.e., you don’t need to a foreign filing license for using a foreign firm to conduct patentability search or assist in application preparation). Foreign filing license also does not cover all information related to the invention — only that which is truly necessary for the preparation of the application.
Furthermore, if the transfer of technology is controlled under U.S. export controls, a foreign filing license does not authorize the one party to transfers said technology from a U.S. company to an affiliated company overseas. A separate export license must be obtained from the U.S. Department of Commerce or U.S. Department of State in order to engage in joint development activities.
At the 2011 Beijing Copyright Protection and Industry Development Forum, the Beijing Municipal Bureau of Press and Publication (Copyright Bureau) unveiled a new set of regulations aimed at strengthening Internet copyright enforcement.
The translation of the new regulations by R2G are as follows:
To be effective from 1 June 2011, the following are some of the significant regulations and guidelines being proposed:
1) Service Providers should follow and actively publicize the Copyright Law and related laws and regulations whilst undertaking efforts to fight piracy and copyright infringements to promote the development of a healthier industry
2) A Service Provider who provides file-sharing and hosting services is required to highlight in a prominent position on the homepage of its service that users are not permitted to upload contents without permission from the Copyright Owners.
3) A Service Provider who provides file-sharing and hosting services is required to record relevant registration information of its users such as name and IP address and keep it for future reference for 180 days. It is encouraged that the Service Provider adopts a real-name registration system for such a service
4) It is the responsibility of the Service Providers to introduce and administer effective measures to deter and restrain those who upload unlicensed material including terminating the offending users’ service and also reporting these infringing acts to copyright law enforcement authorities.
5) Service Providers who provide file-sharing and hosting services are required to adhere to copyright laws and take necessary technical measures to prevent unlicensed works being uploaded including the following:
a) Movies, TV series and other professionally produced long form videos
b) Works which display the publishing/ copyright symbol
c) Live television/ network broadcasts
d) Works from known authors, producers
e) Popular hit works
6) A Service Provider who provides file-sharing and hosting services, search, links or acts as a channel needs to employ effective technical measures to prevent users uploading or linking to copyrighted works as specified below:
a) The same copyrighted work uploaded by the same user that had been previously removed based on notification from the Copyright Owner
b) The same copyrighted work with the same link that had been previously taken down/ disconnected based on notification from the Copyright Owner
c) Works with declared Copyright Ownership as stated publicly on assigned websites of the Copyright Bureau department
d) Other copyrighted works that the Service Provider knows of, or should have known that the user does not have the right to upload or disseminate
e) Service Providers and Copyright Owners are encouraged to set up infringement prevention mechanisms including fingerprinting or watermarking/ DNA methods to better manage unrestrained infringing uploads or linking
7) A Service Provider who provides file-sharing and hosting services, search and links needs to establish a specialized department solely for the purpose of processing take-down notices, including the acceptance of notices, removal of infringing contents and links.
a) The Service Provider is required to immediately accept and take action on the take-down notice sent online or via email or letter in conformation with the Regulations on the Protection of the Right to Network Dissemination of Information
b) The Service Provider should remove the infringing content/ link immediately upon notice from the Copyright Owner, or latest within 24 hours if there is too much content or links to deal with and the take-down process is relatively complicated. If the Service Provider is unable to take down the infringing content/ link within 24 hours, they should provide an explanation to the Copyright Owner in writing immediately
c) For live television/ network broadcasts, the Service Provider should remove any infringing content or links immediately upon notice from a Copyright Owner. Only in complex take-down situations will the Service Provider be allowed to complete it at the latest, in an hour.
d) Service Providers are encouraged to provide Copyright Owners with a specialized back-end ‘green channel’ access to oversee and provide information to Service Providers for easy removal of infringing content/ links
8) Copyright Owners are encouraged to state the copyright information of respective content/ products publicly on assigned websites of the Copyright Bureau which the public (and Service Providers) are able to check
9) Copyright Owners are encouraged to provide information about their works which are available for licensing on assigned websites of the Copyright Bureau – and this will also aid Copyright Owners as they seek to license their works
10) Service Providers are required to follow the Copyright Law and relevant regulations, and coordinate with the Copyright Bureau with regards to regular supervision, law enforcement inspection and legal training
11) Copyright Owners are encouraged to exercise their power and right to issue take-down notices when their works are being infringed, and thus maintain their lawful right.
The regulation requires the removal of infringing content within 24 hours upon notice by the copyright owner. Although this sounds great for copyright owners, the regulation goes further to state that:
“If the Service Provider is unable to take down the infringing content/ link within 24 hours, they should provide an explanation to the Copyright Owner in writing immediately”
This clause significantly weakens the take down provision. Exactly what circumstance is considered reasonable for a service provider to assert that it is unable to take down the infringing content, and exactly what a reasonable explanation constitutes are not defined. In one scenario, can the service provider simply state that the infringing content is vital to the website/business, therefore the content will not be taken down? Also, the regulation does not clarify in a situation where the service provider is unable to take down the infringing content, what recourse does the copyright owner have? is granting a compulsory license an option?
Furthermore, the registration website for copyright owners seems like a great idea, since it establishes a database on copyrighted works, it also creates a host of issues. For example, will the Copyright Bureau verify that the claimed copyright owner is indeed the actual copyright owner?
Although it seems that the regulation requires more clarification, the registration website is an interesting idea. Even in the U.S., it can be difficult to track down who the copyright owner is, a registration website can provide certainty and facilitate licensing of copyrighted contents. But perhaps more importantly is the question whether the regulation will be enforced or not.
The U.S. Trade Representative’s office released this year’s special 301 Report, which identifies countries with weak protection of intellectual property rights. Of the 12 countries on the priority watch list – China has been on the list for 7 conservative years while Russia has been on the list for 14 years. Other countries on the list include Algeria, Argentina, Canada, Chile, India, Indonesia, Israel, Pakistan, Thailand, and Venezuela.
However, US Trade Representative Ron Kirk said that a program to crackdown on IP infringement launched in China last October by Chinese Premier Wen Jiabao might lead to “lasting improvements” in IPR enforcement. The program made a big showing during the World Intellectual Property Day by destroying millions of pirated CDs and books. Although similar CD destroying gesture has happened in China in the past, it seems there is greater momentum and the government is indeed taking IP infringement more serious than before.
The China has been targeting “a broad range of intellectual property violations,” the report said: illegal downloads of music and movies; CD and DVD piracy; software infringement; and trademark infringement, the latter involving particularly counterfeit mobile phones, auto parts, bulk commodities and pharmaceuticals.
The campaign “appears to have resulted in improved coordination among various IPR enforcement authorities in China at the central, provincial, and local levels,” it said.
Seventy-seven US trading partners were reviewed for this year’s report and 42 countries were placed on watch or monitoring lists.
The report also announced a new initiative to invite any trading partner appearing on the watch list to negotiate an action plan designed to lead to the removal from the watch list.
Bejing’s No. 1 Intermediate people’s Court ruled that one of Geely’s registered trademark should be revoked since the mark is already a well-known mark attached to British carmaker Land Rover Group Ltd. The case illustrates a classic example of trademark squatting that plagued many international companies when they first enter into an emerging market.
Gleely a high profile indigenous Chinese automakers that recently came under the international spotlight for it is acquisition of the Swedish automaker Volvo. Along with Cherry and BYD, Glee is known as one of China’s 3 musketeers of automakers. Unlike other automakers that started as joint ventures with international automakers such as GM and Volkswagen, the 3 musekteers are home grown.
The mark in question is “luhu” or “陸虎” in traditional Chinese. It literally means land tiger. In 1999, Geely applied to register the mark in China for motorcycles and other vehicles and the mark was granted in 2001.
When Land Rover entered the Chinese market in 2004, it found that the Chinese mark it had been expecting to use was already taken. Instead, Land Rover had to register different Chinese characters with the same pronunciation.
Land Rover applied to the Trademark Appeal Board under three occasions, requesting that the board revoke the Geely-registered mark, as Land Rover argued that the Gleely had left the disputed mark idle and had not manufactured or marketed any products under the name.
Under China’s Trademark Law, a registered mark can be revoked if it is left unused for three years. However, all three applications by Land Rover, in 2004, 2006 and 2009 for revoking the mark were turned down by the board.
Land Rover then filed a lawsuit against the Trademark Appeal Board in August 2010, requesting that it revoke the Geely registered trademark. The court began hearing the case last month.
The Beijing No. 1 Intermediate People’s Court ruled that Geely’s mark was registered after it had already become a well-known phrase in the automobile industry and recognized as a product of Land Rover.
The court’s ruling was partially based on 41 media reports on Land Rover cars using “陸虎”, published before Geely’s registration. What was harmful to Geely’s case was not only Land Rover allegedly made the mark well known (i.e., famous under U.S. law relating to trademark dilution), but also the fact that Geely was unable to justify it is action for not using the trademark after registering it. Following the court verdict, Geely’s mark will be revoked unless Geely appeals the decision.
Trademark registration in China (excluding Hong Kong and Macao which have different trademark systems) is administered by the China Trade Mark Office or CTMO, a separate office from SIPO which administers patents.
In China, a mark has to be registered in order to receive legal protection ( in contrast, in the U.S. where there is common law protection for unregistered trademarks).
Well-known mark, however, may be protected without registration. The courts and administrative bodies will take into account the level of knowledge of the trademark by relevant consumers, the length of use of the trademark, the amount of publicity given to the mark in China, and the history of the mark.
The case illustrates hurdles faced by international companies, although larger companies may be able to avoid similar problems by using the Madrid System (China is a member of both the Madrid Agreement and Madrid Protocol), which greatly facilitates international trademark filing.
