Spring 2009 Eye on China Newsletter

11 June 2009 Publication

Legal News: China

With unprecedented growth in and influence over the global market — coupled with an ever-evolving legal landscape — China presents as much complexity as opportunity. With internationally recognized IP capabilities and extensive hands-on experience in the Chinese business market, Foley is well positioned to provide legal insight to U.S., Asian, and European companies preparing to do or doing business in China. Moreover, China’s fast-growing industry and businesses are seeking to expand their international reach. With more than 160 years of experience and 18 offices in the United States and a network of international partners, Foley is equally well positioned to assist Chinese companies as they expand globally.

We are pleased to introduce the inaugural edition of Foley Legal News: China Quarterly Newsletter, Eye on China, designed to offer companies helpful insight as they successfully navigate China’s complex and ever-changing legal and regulatory environment.

 


News and Noteworthy

China’s Highest Court Opines on Implementation of National IP Strategy: Courts Urged to Protect the Interests of IP Rights Holders
Foley Legal News Alert, April 10, 2009

On March 30, 2009, the Supreme People’s Court (SPC) of the PRC, China’s highest court, issued its Opinions on the Implementation of the National Intellectual Property Strategy (Opinion). The Opinion, which re-emphasizes the importance of intellectual property rights (IPR) and seeks to enhance the judicial protections of such rights, is likely to affect the protection of IPR in China significantly.

The Chint v. Schneider Settlement: 157 Million Reasons to Believe Chinese Patent Holders’ Rights Have Muscle
Foley Legal News Alert, April 15, 2009

Schneider Electric Low-Voltage (Tianjin) Co., Ltd. (Schneider), the French-based leading Western manufacturer of low-voltage electronics such as switches and circuit breakers, has settled its patent lawsuit with Wenzhou-based Chint Group Corp (Chint), its top Chinese competitor, for RMB 157 million (approximately U.S. $23 million). By Chinese standards, this high settlement amount is unprecedented and will certainly encourage more patent holders to aggressively enforce their rights in China.

China’s Highest Court Opinion Addresses Impact of the International Financial Crisis on Intellectual Property
Foley News Alert, April 24, 2009

In the face of the international financial crisis, China continues to focus on the importance of IP. On April 21, 2009, the SPC issued its Opinion on Certain Issues With Respect to Intellectual Property Judicial Adjudication Under the Current Economic Situation (Opinion) within the court system in China. Consistent with the National Intellectual Property Strategy Outlines published by the State Counsel on June 5, 2008, the Opinion emphasizes the balance between IP protection and public interests, and will certainly impact the protection of IP rights in China.

Judicial Recognition of Well-Known Trademarks in China May Be Tightened Up
Foley Article, June 11, 2009

On April 23, 2009, the SPC issued its Judicial Interpretation of Several Issues Regarding Application of Laws in Well-Known Trademark-Protection-Related Civil Disputes (Interpretation). The Interpretation, when implemented, is likely to reshape the judicial scheme for recognition of well-known trademarks set forth by the 2003 Provisions. 


Current Topics

Intellectual Property

  • Win, Lose, or Draw? An Update on the World Trade Organization’s Recent Ruling in U.S./China Intellectual Property Rights Dispute, by Foley Senior Counsel Heidi Belongia

    The WTO ruled that several aspects of China’s legal system for protecting and enforcing IPR were inconsistent with China’s obligations under TRIPS. The WTO panel signaled that it is not enough for member nations to merely pay lip service to IPR and their obligations under TRIPS; this is a positive sign for IPR holders worldwide.
  • Chinese Cross-Borders Measures for Brand Protection Come of Age, by Foley’s Song (Max) Lin and Wen (Jo) Xu

    During the past five years, Border Measures in China have developed into a mature and reliable system for IPR owners, especially for trademark owners. The Border Measures should play an important role in the brand-protection strategy for foreign brands in China. 

Labor and Employment

  • New Chinese Labor Laws Aim to Stabilize Relationships and Promote Long-Term Employment, by Foley’s Liang (Leo) He and Wen (Jo) Xu

    The year 2008 was a busy one in Chinese labor law circles, where new laws and regulations are likely to have an adverse impact on the labor environment in China. One of the key goals behind this focus on labor is stabilizing labor relationships and promoting longer-term employment. 
  • New Labor Rules Clarified Non-Compete and Other Employment-Related Issues, by Foley Partner Catherine Sun

    New labor rules impose more obligations on the employer to protect employees’ interests.  

Laws and Regulations Impacting Business in China

2008 – 2009 Legislative Update, by Foley Partner Catherine Sun

  • The New Chinese Anti-Monopoly Law Adds Uncertainty to Chinese Business Transactions

    On August 30, 2007, the Standing Committee of the National People’s Congress (NPC) of the PRC adopted the Anti-Monopoly Law (AML), which came into effect on August 1, 2008. IP owners or holders now should carefully review their commercialization and enforcement activities in China to avoid triggering the AML reviews, scrutiny, and claims. 
  • Technology Import and Export Contracts Required to Register Within 60 or Fewer Days

    New measures require timely submission for registration of technology import/export contracts. Failure to register technology import/export contracts in a timely fashion may make it difficult to remit the licensing fees out of China due to foreign exchange control policies. 
  • Mandatory Appointment of a Chinese Agent to Handle IP Customs Recordation Imposed on Foreign Rights Holders or Owners Without a China Presence

    On March 9, 2009, the General Administration of Customs issued Order No. 183 and published the amended Measures for the Implementation of the Regulation on the Customs Protection of Intellectual Property Rights (Customs Regulations). The amended Customs Regulations impose a mandatory entrusting requirement. Foreign right holders or owners without a presence in China will have to retain a Chinese agent to handle customs-related recordation and actions, as pro se actions will not be accepted from July 1, 2009.
  • Qualified Money Judgments Are Recognized and Enforced Between the Courts of Mainland China and Hong Kong

    Since 2000, mainland China and Hong Kong have been reciprocally recognizing and enforcing the arbitral awards of each other. The arrangement has provided a promising future to Hong Kong as a regional or international dispute resolution center in dealing with China. However, there are more hurdles to overcome in enforcing a court judgment rendered by a Hong Kong court in mainland China versus enforcing an arbitration award. 
  • China Trademark Law Is Being Revised: Is the Third Time Really a Charm?

    China is in the process of revising its Trademark Law for the third time after the law was promulgated on August 23, 1982. The current third revision was initiated by the China Trademark Office (CTMO) to streamline the trademark prosecution and enforcement process to meet the demand of rapid domestic economic growth. The CTMO published its latest draft in August 2007 for public comments and outlines ambitious measures to address the increased volume of applications and significantly backlogged pending cases.  

Noteworthy Cases and Court Rulings in China

2008 – 2009 Notable Chinese IP Cases, by Foley Partner Catherine Sun

  • Neoplan Bus v. Zhongwei Bus & Coach Group and Zonda Industrial Group et al.

    A German bus company is awarded the largest compensation for design patent infringement; the most expensive piece of evidence submitted is an infringing bus. 
  • Ferrero Rocher S.P.A. v. Montresor Food Co., Ltd.

    The world’s third-largest chocolate manufacturer, Ferrero Rocher, finally won its five-year unfair competition litigation case on March 24, 2008 through a decision handed down from the SPC. This case is widely regarded as the first pure unfair competition case for protecting a foreign company’s IP rights in China.
  • In re: Shanghai She Fu Surface Techniques Ltd.

    In this trade secret case, the defendants were sentenced and fined for a conspiracy to steal current and former employers’ trade secrets while holding management roles at the Chinese subsidiary of the foreign parent companies.
  • Microsoft et al. v. Qingdao Ultimate Transportation Equipment Co., Ltd.

    In this software copyright infringement case, foreign software developers obtained a favorable monetary award from a Chinese organization infringer. The damages were reduced by almost 40 percent through the appeal court’s mediation in lieu of a final ruling. This case is notable for obtaining evidence through administrative action.
  • Diageo PLC v. Blueblood (Shanghai) Wine Co., Ltd.

    In this unfair competition case, the court awarded higher damages than the maximum statutory amount of RMB 500,000. Notable mention: The defendant received administrative sanctions twice before the present case was filed. 
  • Zespri Group Ltd. v. Xishu Fruit Trading Co., Ltd.

    A trademark infringement case in which a foreign kiwi fruit provider registered the marks before the Chinese infringer who included the marks in its two design patents. 
  • Beijing Ciwen Movie & TV Production Co., Ltd. v. Beijing Zhenglejia Technology Co., Ltd.

    The first peer-to-peer infringement case with a final decision reported in China. 
  • GuccioGuccis S.P.A. v. Senda Co., Ltd.

    In this trademark infringement case, the second defendant, a Shanghai department store that sold infringing shoes without knowledge, was not found liable to pay damages. Trademark dilution by the first defendant was found. The first defendant’s infringing mark was recognized as a well-known mark in China before the present case was filed, while the plaintiff’s mark, “GUCCI,” was not.
  • In re: Counterfeiting of Foreign Wine Brands

    A criminal trademark case in which six Chinese defendants were sentenced and fined in Chengdu for making fake foreign-branded wine.
  • Pfizer v. Yang

    A domain-name case where the foreign trademark owner received a favorable ruling, but no damages were awarded.   

Staying Connected

Please Join Us — Future Events

  • Foley China Roundtable Series, From Made in China to Invented in China: June 19, 2009 in Beijing; June 22, 2009 in Schenzhen; and June 25, 2009 in Shanghai. The forums will address issues related to technology licensing, monetizing IP assets, IP enforcement strategies, patent standards, and IP commercialization.
  • “Effective Strategies for Licensing Technology in China,” the first of Foley’s Global Marketplace: Eye on China Roundtable Series: July 1, 2009 in Foley’s Boston office. The forum will address current issues and strategies related to licensing and protecting technology IP in China.

In Case You Missed It

  • Foley was the legal advisor to HUYA Bioscience International (www.huyabio.com) for an agreement with Abbott to identify and pursue proprietary preclinical and clinical drug candidates that originate in China. HUYA is a leader in enabling and accelerating the global co-development of novel biopharmaceutical product opportunities originating in China and has established extensive collaborations with Chinese biopharmaceutical, academic, and commercial organizations to speed development and value creation in world-wide markets for China-sourced product candidates.

Past Events

  • “Doing Business in China — Dealing With Regulatory and Practical Issues in the Current Economic Climate,” by Foley Partner Z. Julie Lee, presented at the 45th Annual Wisconsin International Trade Conference, May 12, 2009.
  • “China: A Regulatory Update,” Foley Senior Counsel Ken Duck, presented at the ACCA Conference in Detroit, Michigan, April 29, 2009.
  • Foley Senior Counsel Ken Duck spoke on April 16, 2009 at a conference at the University of Michigan's Automotive Research Institute on the Role (and Impact) of the PRC Government in the Auto Industry in China.
  • Foley hosted the China Workshop at the Asialaw 6th Annual Asia-Pacific In-House Counsel Summit on March 18 and 19, 2009 in Hong Kong. The Summit brought together nearly 500 in-house attorneys and industry leaders to share their experiences and discuss issues affecting enterprises operating or making investments globally and in the Asia-Pacific region. Foley Partner Jon W. Dudas, former Under Secretary of Commerce for Intellectual Property and Director of the USPTO, was joined by Foley Partners Sharon R. Barner, Catherine Sun, Harold C. Wegner, and Stephen A. Bent and Foley Senior Counsel Yan Zhao as presenters as the Summit.
  • “Distressed M&A: Issues and Opportunities,” presented as part of Foley’s M&A Briefing Series on April 28, 2009. Foley Partners Steven H. Hilfinger, Daljit S. Doogal, and Geoffrey S. Goodman, along with Miller Buckfire & Co. Director Alexander Tracy, discussed the issues, opportunities, and challenges both sellers and buyers face in distressed M&A transactions.
  • “Doing Business in China in the Current Economic Environment,” by Foley Partner Z. Julie Lee, presented at the International Glove Association Annual meeting in San Antonio, Texas, March 16, 2009.
  • “Private Equity Investments in China,” presented as part of the Foley Executive Briefing Series on May 7, 2008. Foley Partner David W. Kantaros and Senior Counsel X. Linda Ji and Carlos M. Bhola, Managing Partner at Celsius Capital, offered solutions for navigating and understanding the investment opportunities within China’s burgeoning marketplace, with a focus on both practical and legal concerns.

Legal News: China Quarterly Newsletter, Eye on China is part of our ongoing commitment to providing legal insight to our clients and our colleagues preparing to do or doing business in China. If you have any questions about this publication or would like to discuss the topics presented here, please contact your Foley attorney or the following:

Sharon R. Barner
Chair, Intellectual Property Department
Chicago, Illinois
312.832.4569
sbarner@foley.com

Catherine Sun
Chair, Asia Practice
Shanghai, China
86 21 6100 8900
csun@foley.com

Yan Zhao  
Senior Counsel, Intellectual Property Department
Shanghai, China
86 21 6100 8900
yzhao@foley.com 


Foley & Lardner LLP is licensed to operate in China as a foreign law firm. Under Ministry of Justice regulations, foreign law firms in China are permitted to advise clients on certain aspects of international transactions and to provide consultation concerning the impact of the Chinese legal and regulatory environment; foreign law firms in China are not permitted to practice Chinese law. The content of this communication does not constitute an opinion on Chinese law nor does it constitute legal advice, but is based on our research and our experience advising clients on international business transactions in China.

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