Dealing with Bad Faith Trademark Filings in China

>>Welcome and thank
you for standing by. At this time, all participants
are in the listen only mode. If you would like to have
the question at any time or drop the duration of
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and record your name. Today’s conference
is being recorded. If you have any objections, you
may disconnect at this time. Now, I will turn the meeting
over to Ms. Janice Wingo with the International
Trade Administration.>>Good morning, welcome
to today’s webinar on Bad Faith Trademark
Filings in China. Today, we’re very lucky to have
Joseph Simone who is the partner of Baker & McKenzie
in Hong Kong. Joe has over 25 years
experience in IT registration and enforcement and I think
we can obtain some wonderful wisdom– grains of
wisdom from him. Mr. Simone has been very, very
gracious to say he’d be willing to listen, take questions
during his presentation and anybody who’s
listening on their– the audio task, they can
also email Mr. Simone. His email would be at
the end of the program and he said he’d be willing to
take your questions as well. So, Joe.>>Thanks a lot Janice. Let me just delve right into
it and to simplify for those who are just interested
in the top line and I’ve– I like to put our– the take
aways first and we’ll go into detail on a lot of these
points, but in a nutshell. If you don’t already know, piracy hit the register
extremely common and barely predictable even for
small brands in American brands, European even for Chinese. It’s a problem with the lack
of certain provisions and law, general lack of development in
certain legal concepts including that bad faith which I’ll
discuss a little bit more later and the, you know,
it’s kind of reflection of the developing legal
system in general in China. But and it’s also
partly that there’s a lot of enterprising folks
there who just, you know, looking to take advantage of
some weaknesses in the law and it’s kind of humiliator
I guess to a degree. Anyway, the– one must keep in
mind that this whole phenomenon that I’ll be maybe really very
focused on your English mark– your English trade mark. Pirates are also going after
Chinese versions of your marks. They’re going after logos and of course domain
names and company names. So I’m going to just focus my
discussions today on English– on the trade marks which are the
English-Chinese marks and logos. It is possible once
you find these marks to oppose them before they’re
registered and [inaudible] and to cancel them after they’re
registered, but I won’t go into too much detail
on those procedures. I could– I can provide
some basic material that if anybody would
like standard memo stuff but bottom line is we’ll go into
a more detail on the, you know, the basic Chinese
laws on these on– they can be used as a basis
for opposing/cancelling, but bottom line is
their outcomes most of the time are going
to be uncertain. If you haven’t already
registered your mark in China, somebody’s gotten there first, probably mean you haven’t
got a lot of use of your mark in China, a lot of
advertising sales et cetera and it probably means with the
lack of that kind of reputation in China, it makes the outcome
uncertain and we’ll discuss how to address that in
just a moment. Next, you know the pirates
work, how can they hurt you. Well, they can stop
you from selling and as a practical matter,
a lot of people go ahead and sell anyway and they take
a lot of risks in doing so, but they can, you
know, go after you, they can go after
your vendors in China, they can even threaten
criminal actions. So it’s a serious situation for
companies particularly since we, you know, [inaudible] been down
here a long time and, you know, when I started 20 something
years ago, folks go to China, it’s a like a third
to your market now. It’s the hope of
the whole company. And so one plans
ahead 5-10 years. Even today China is important– they’ll probably be feeling
it’s important in 5-10 years. So, again pirates can
stop you from selling and it’s something better dealt
with earlier rather than later. Next, pirates cannot
just stop you from selling domestically
in China. They can stop you from having
your product produced in China for export back to the
States or other countries and this is probably the
biggest concern that I see with SMAs small to
medium-sized companies from the US and elsewhere. They have product
produced in China and they may do it directly or
they may do it through mediary, somebody in Hong Kong or
Taiwan who arranges production in their factory in China. So there are consequences for when [inaudible] has a
registration and, you know, you may not be interested
in selling but you want to keep producing for export
through your OEM suppliers. So, this is another big
risk and it’s another reason to really be focused
on this sort of issue quickly,
earlier than later. As I said, pirates can
and do sue the owners of the real owners
of the market. So dealing with that kind of
federal litigation and trying to negotiate your way
out of it and trying to resolve this disputes as part
of what I want to discuss today and this best practices that
offer and to in a nutshell for the best practices,
I just list them up here as in the slide as a
file early and broadly. You’re going to hear
this from my IDA, USPTO, all kinds of associations
that whenever you hear about China file early to the
first file system, there’re lots of countries like that. China is an unusual, basically
means whoever gets there first to the register as rights, anybody who uses the mark
earlier is not presumed to have any kind of rights,
so and, you know, you– prior use can be useful in
an opposition/cancellation but by no means a slam dunk,
you’ll have to produce more than just evidence of basic uses
and generally a lot of evidence and reputation and other things,
we’ll get into that more later. Next, when they mention
pirates will go after a Chinese language
mark and best practice for avoiding piracy is to create and register your
own Chinese mark in China as early as possible. We found very recently in our
firm that a few of the sort of smaller up and coming
clothing brands in China– in the US have been produced
in China for a long time. They have no– they still
have no interest in selling in China not in the next
few years and they find that their brand has
already been reported on in the Chinese
financial press and then eventually there’s been
mail order type sales and you– when you do a search, you
find that there’s maybe 3 or 4 different Chinese
versions of the brand already in circulation, brand
[inaudible] know about it. Well, very likely, you know,
in situation like this, somebody in China is
going to figure out, not only that they should be
registering the English mark, take advantage of a loop hole,
but one of these Chinese marks so again it’s good to focus on Chinese brands
earlier rather than later. Next is conduct a deep audit. In all classes in China, it’s
not that hard to explain how that can be done cheaply
and just do it on your own without even a lawyer helping,
just get your self started in the process, but do an
audit and then, you know, if you find obvious
problems then, you know, you have to get some advice and
figure out what you need to do. Next is after you’ve done your
audit and you’re up and running, keep on checking the
register in China for pirates every 6 months
maybe even every year ’cause applications can be detected
while they’re pending through search online searches. There are watch services
you can hire for this. They are actually quite cost
effective but there is– you can just get a lot more
out of doing searches yourself that we’re– like
having a lawyer or a trade mark agency
to such services. The watch services generally
just, they rely on kind of computerized system which
is just not entirely reliable. Finally once you find that
you’ve been pirated, you have– it is important to look
carefully at the options and first thing almost
invariably we’ll suggest is to investigate. Have real investigators
out there in the field not just simple
web searches or DNV, but go out and have people in
the field and looking into the pirate [inaudible]
and try to generate evidence that will help you figure out
what legal strategies will work, whether oppositions or
cancellations are more likely to succeed or whether you’re
in trouble and you really need to look at other strategies
like buying the mark, and sitting with the pirate
somehow and negotiating. In some cases, you will find
that the pirates, you know, get a mark and they’ll
do anything with it and then the mark
expires after 10 years. So one strategy is to just
sit and wait, and we’ll talk about the risks of
that later on. If mark is not used for 3
years after its registration and you can like, what you
can file a cancellation on that basis that is very
cost-effective way of doing it. I’m dealing with the pirates but very often they
will start using a mark to avoid its cancellation to
stall that kind of cancellation. Next, as I mentioned you can buy
a mark these days for, you know, a typical SME brand,
you might be– if you’re lucky you’ll be able
to buy a mark for as little as 15,000 US but we’re routinely
dealing with cases wherever– we’re, you now companies are
required to fork out anywhere from the 200,000 US
dollars to, you know, 1 and a half million US dollars,
sometimes it’s even more but those are usually for
extremely famous brands but for a normal SME brand where
there’s a significant market in China, you know, already
a lot of potential let’s say if the China pirates
will recognize that and they will normally be
able to squeeze somewhere in that range I mentioned. And lastly I did mention
that, you know, you– pirates can sue you
and sometimes you– you’re going to want
to sue them as well if they’re using your mark
they might be using other parts of your intellectual property
you know designs or patents or whatever, you
know, your battles with pirates will sometimes
lead to real litigation one way or the other and those
litigations can be extremely important for companies that
are betting on Chinese market or where they are relying
on their Chinese suppliers to keep exporting, you
know product producing in China for export. So be ready for difficult
litigations. It’s not as expensive
litigating as it is in US or certain other countries
but you want to bulk up on, you know, the right lawyers,
investigators to make sure that you’re getting
[inaudible] you need. And so we call that sometimes
“bet the company” litigation. Okay, let’s take it
from the beginning, well that’s the presentation,
I’ll take it from the fundamental
elements here. Who are the key players? I’ll be talking about the
trademark office like the USPTO in the US it’s under the SAIC. It’s an administrative body
they handle oppositions and non use cancellation
s in the first instances and there’s the– another
administrative body that handles appeals
of the TMO’s decisions. There’s a little bit
more formality and review of evidence, exchange
of evidence. So it’s a little bit more
careful handling of disputes at the– by the trademark review and adjudication
board, the TRAB. Then TRAB’s decisions
can be reviewed by the number one
Intermediate People’s Court. IP tribunal. It’s a– it is fairly
conservative. It is only looking at whether
the [inaudible] case was handled appropriately by the TRAB
at the lower level not– they don’t, will not
really re-litigate or reconsider every
aspect of the case. Likewise there’s a
final level of appeal, the Higher People’s Court. Which is also somewhat
conservatively, generally I think
about 80 to 90 percent of cases are just sustained
at both of these court levels and there is another level
of I would call appeals to request a re-trial
request you can make to the Supreme People’s Court. There are more and
more of these cases. It is effectively
another level of appeal but you really don’t
want to pursue that one as a very distinct issue of law,
a very, very obvious problem with maybe with misunderstanding
of the facts, that sort of thing or allegation of corruption
if you will [inaudible] which is very rare
thankfully in China. Here’s a bullet point
[inaudible] with– provides general understanding of how applications are
reviewed and the timelines. So you– the timing for
applications and oppositions and cancellation is swung wildly
from, you know, fast and then to the very, very slow and now
it’s still subject to change but right now it takes
about 10 to 18 months to have an application
examine and then it’s gazetted for a 3-month opposition
period and that’s a period in which you can again
file an opposition to the trademark office
in the first instance. And then the trademark office
will take usually 1 to 2 years to issue a decision and the TRAB
likewise about a year and a half to 2 years and the courts
sometimes can be a bit faster in handling judicial appeal. So let’s get in terms of basics
some basic elements let’s get into the subject matter here. What– what are bad
faith filings, what kind of marks are
we talking about here? We could have a pirate you know
registering an identical mark or just some mark that
seems somewhat similar with some letters just changed in those very substantial
variations or can be a mark that covers identical goods
of those of interest to you or just goods that are related
or services that are related and arguably could lead
to consumer confusion if the market is
sufficiently similar. Then there are situations
where the marks are filed for covering extremely
different goods, entirely different
goods or services. Those are more difficult
cases because and particularly under Chinese law
they’re very mechanical, generally very mechanical about
whether there’s a, you know, the goods are similar
or not, inflicting or not there’s a
subclass index and so if your goods are deemed
dissimilar that’s generally it. It’s not a very easy to
argue that they are related or like they are in the
US and other places. The good part of that is you
get predictability at least. So bad faith filings
happen for all these, in all these situation. I’ll illustrate that in a
minute but before that I want to mention another type of–
kind of the unusual but, you know actually it’s
increasing phenomenon of pirates registering
nicknames basically of foreign companies come in. They have their trademark
but then once it gets into the market, the market
consumers journalists come up with their own
nickname for the brand. So for example for
the name Harley as in Harley Davidson
has been, you know, just got into common usage
and somebody I believe filed for that mark that
had to be dealt with. Sony Ericsson, suo ai
in Chinese, same thing. And Pfizer has had
the same issue with a Chinese version
of Viagra. So these nicknames are
something to keep an eye on once you’ve launched
your product. Make sure that they had– that there isn’t such a
nickname that’s been adopted. If there is you might
want to file for it before any pirates do. And when they illustrate here
its one of the top, you know, 5 brands of it and chance
of a certain, you know, lists that we’ve been
looking at to, you know, the most valuable
US brands I guess. Google is one of them. And we’re just doing
today a very simple search of identical marks in
China and we found filings by many different people
for– with all kinds of goods and services and the
records indicate Google who opposed all these and
most and all of them seemed so far have been–
have been rejected but obviously Google spent a
lot of time and money dealing with those cases and at least at the early days
they probably found that the cases were not
all that easy to prevail in but this again of
extremely famous mark and generally China
has been pretty good with protecting very
famous marks. Where the mark itself
is highly distinctive. And that’s why this
illustrates what happens with these similar marks. You’ve marks like Google pad
and Gqqgle which of course looks like Google and they got a
whole bunch of marks here where the Chinese marks are
filed together with the English and there’s a lot of
variations of Google in Chinese that had been adapted
by pirates. And, you know, one there are
lot of questions you can ask. Should I go after all those, well in these cases thankfully
each of the marks is filed with the English so you
don’t have to worry too much about the Chinese but
when a pirate goes after just the Chinese, you’ve
got some interesting questions to answer about whether
to spend on going after all the different
variations. That’s actually another
presentation you know dealing with Chinese language marks
but if anyone has questions about it I’d be happy to answer. And then there’s a– I mean
that’s a little illustration of one particular serial pirate
that we worked with or against for client with Zhejiang
Jialai Dunhuosai. They filed for 164 marks. We found including a list of
very famous automotive type of industry brands and all
in class 7 which is for, you know, mechanical equipment. And so how do you
search, how can you do it, well here’s a website and I’m
just– on the screen here, you can do identical
mark searches. You can do similar
mark searches. And we generally found the first
place to go when you just want to scope things out is the
identical mark search sections, the second one down on the left. So I can click down on the left. Now, as you will see the next
page of that is a sample of one of the page from a pirate’s
status file after one of its marks and at the top
left you’ll see there is an application registration number. It’s in Chinese here, so
but if you just, you know, familiarize yourself with these
fields you can find these– find it quite useful. Anyway so you get the
allocation date, the class, you’ve got the duration
of the mark, you can see if it’s been
gazetted as registered. And then you have a notation,
whether it’s been opposed or canceled and then at the
bottom right you may have– you’ll have this in red letters which invariably mean it’s
been rejected and invalid. So who are these pirates? Well they are individuals
normally local. They are also individuals
who set up local companies usually
very, very small but not always. There’s something called shadow
companies, which usually not– it’s foreign companies,
there were companies based in Hong Kong which are used
by Chinese individuals to file for this marks, what they do
is they open the shadow company as we call them, will use the
trademark and its company name. And then when the pirate
wants to do business in China, he’ll show up with using this
front of a foreign company to make it look like they’re
associated or actually part of the legitimate trademark
owner– and his group. So this phenomenon was a
lot hotter a few years ago. It seems to have
dissipated to some extent but it’s something
to be aware of. It also raises challenges
about having to shut down company names overseas. And there’s the serial
pirate who file for multiple famous brands. You’ve just seen an
example just a slide before. These are folks who are often
warehousers of marks and trying to just, you know,
just sell them as a business, a
very organized way. So what are the nefarious
aims of these pirates? Well, very often they’re not
really trying to sell the mark to you or sue anybody
they’re just trying to sell counterfeits. They will apply for
the registration mark. They’ll get a filing receipt
from the trademark office and then when they go around
trying to sell their products, they use the filing
receipt to suggest that they have legal rights
in the mark and you know of course a lot of
people will not understand that the filing receipt is not
a registration certificate. So that’s one type of
pirate and their mo– and very often they’re filing
for marks that are going to be rejected anyway. So, one has to distinguish
this phenomenon from other types of a piracy. The standard approach however
is for a pirate to file and the idea that eventually
the legitimate owner is going to come and try to buy and offer
a lot of money, to buy the mark. Sometimes these pirates
are looking for commercial cooperation. They really think that
by registering a mark, they’re going to be
able to persuade you to do business with them. It happens. It’s unbelievable but it does
happen and I’ve only once or twice seen a client actually
go into business with a pirate in a situation like this and
it’s been very entertaining and disheartening
right at the same time. Anyway, the pirates will
normally warehouse their marks again waiting for
you to come and– but sometimes they will use
the mark quite extensively and sometimes engaging in what
would as best is described as identity theft meaning
they’ll set up a company, retail locations, they borrow,
they steal, you know, designs and copy, you know, company
names in order to really look like they’re just part of
the legitimate brand owner. And again sometimes
these are companies who perhaps naively think that
they’re just going to be bought out not just the mark
but their whole business by the legitimate owner. Sometimes we find that pirates
are increasingly using a mark at a very nominal level
just to prevent their marks from being canceled for
not using to get leverage when they sue because
if you don’t use a mark, the courts in China
recently adopted a policy where they’re not going to
give any or much compensation. Even if the plaintiff doesn’t
show he’s been using his mark to some extent. And again some will
just will lie about, these pirates will lie
during negotiations about their uses is
sometimes hard to verify. Actually it is until
they [inaudible] or they’ll average
a better price. So what is the impact. As we said, it can block your
right to sell and license marks in china for domestic sales
and you’ve got the cost of oppositions and
cancellations. You know they can
be as cheab as 500– 700 dollars for very
small trademark agencies who don’t really invest
a lot of effort but– you know, companies who
went up doing 5, 10, 50, you know, 100 sometimes. We got some client search doing
500 oppositions a year in China and then you’ve got appeals
that you got to deal with. When you win [inaudible]
it with when you win over the other side challenges
the cost can add up dramatically as if you’re going to be using
there a more feeling of sort of competent you know legal
adviser for this sort of work. And you also have to deal
with [inaudible] claims which as you know litigation can
be trying, investigation cost and of course your company
time, your management time. And then of course just the cost
of buying a mark from a pirate which as I said can be high and
so these are significant costs that need to be considered
in deciding how to– whether to invest early in
filing for these, you know, filing for marks is an
insurance policy essentially. And one other thing if somebody
else has got a mark and, you know, your brand
actually is known already or you might become– you
might already be the victim of counterfeiting in China and if somebody else has your
mark you’re not going to be able to stop those counterfeiters
that easily. So that’s another important– but probably the thing that
has gotten the most attention recently in legal
circles out here, in China there’s a developing
law as it relates to the ability of companies to continue
producing in China even though another
party whether it’s a pirate, you know, bad faith
pirate or not. But when another party
owns a mark in China, so let’s say you’re arranging
production some factories in Guangzhou under decisions
to go back to the early 2000. And particularly we do refer to the Nike decision
in Guangzhou in 2004. An OEM factory for another
company that own the mark in Spain, the Nike
mark in Spain was told, “No you can’t produce in China.” This is, you know, by
producing in China just for export it’s still
an infringement of Nike’s trademark
registration in China but there had been a
couple of decisions coming out particularly the
Shanghai courts but not only but the most famous one
that’s referred to as, the Jiulide Shenda decision and there’s been more
recently Crocodile and a couple of others. These cases seemed to be
reflecting a preference by the judges and some policy
makers in China to carve out an exception much like
Taiwan did in 2000 such that if you can– if you’re
just producing in China for export it’s not being
to be an infringement. Why? Because, well they say
Chinese consumers are not being confused and where the law
is here is not sold yet, there is no trademark,
there is no national law or binding supreme court opinion
which would make this the law of the land but there is
the census that more of– the courts are now by and
large going to deem it not to be an infringement if you’re
producing in China but you– only for export back
to some other countries where you own the mark and where
you’re not selling those goods in China, there’s no factory
leakage that sort of thing and the supplier you have
in China has been reasonable to the diligence to
ensure that, you know, that you do own the mark
overseas and to verify who owns the mark
locally, et cetera. So the most interesting
recent development as Chinese custom has now
adapted this rule and that’s such that if a pirate actually
records with customs and wants to go after your OEM product
leaving China, customs is going to leave it alone as long as
you satisfy these conditions. Unfortunately we’re dealing with some very intense cases
right now where we found that local administrative
enforcers the AIC administration, industry and commerce they are not
respecting the following this customs policy and I can tell
you right now we’ve got cases where [inaudible]
AIC [inaudible] based on a complaint from the pirate. And it’s very messy so the
pirates can use, you know, the AICs and perhaps other
authorities to stop your product from leaving the factory and
getting to the overseas markets where you want it sold, So
there’s some very real risks, you can’t just take these recent
decisions, Shenda and Jiulide as a free pass to continue
producing and export without fear of, you
know, of being sued and having your supply
chain disrupted. So there are some strategy you
can deal with and you can adopt for this including going to
court and asking for recognition of order of recognition
of non-infringement. Now due to time limits I’m
going to skip over a lot of the other material here
but next page here with coping with piracy is very important. They mentioned to investigate
before you have a strategy. There are– investigate lots
of investigators in China for IT cases where you are
generally recommending the people hire, the higher level
investigators more expensive, more sophisticated, more
reliable and the people that who usually go to for
fraud cases that sort of thing. Because these are just, you know
very important cases obviously. The– and it’s important to investigate before you start
approaching the other side with– you know to
negotiate because they’ll– or before your file an
opposition or cancellation because the pirates will not
be expecting the investigator where as if you approach them
they will be, they will be on their guard for
investigators. I mentioned you can just
sit and wait and hope that a mark is just not used or
that the other pirate goes bust. But it is s dangerous strategy because pirates generally
are aware when they’ve got a valuable
mark and follow the development of a brand over the
internet and so sit and wait strategies are not
safe, you know, if you– . Where a pirate does threaten
action, we generally recommend that the cancellation be
files as soon as possible after [inaudible] investigating. So, such that if the
pirates comes after you, you can show what you’ve already
taken some steps to stop it and that will get the
authorities to come after you, you know of an extra
reason not to delay or suspend their actions until
the cancellation is decided but they have the authority to
discontinue conducting seizures and imposing a fine if they
want to notwithstanding the fact that you file a cancellation–
there’s no– just because you filed a
cancellation does not provide an automatic sort of free pass or it just you know give
you more time to [inaudible] and take action directly. We would recommend normally that [inaudible] began
[inaudible] approach customs and other authorities where
you have a factory in china, so that there will be,
they’ll understand what’s going on in case the pirates come and once you do file a
translation you approach test and this is another authorities
and tell you in courts and the reasons where you have
the– a factory in China to– so that they’ll be– you be ready for unmitigated
greed by the pirates. Moral insensitivity
they just don’t get it. I mean our sensibilities
is a, you know, Westerner’s a very
different ages. They just look at this
as a loophole in the law and that’s illegal
for them to file until they tell told otherwise. And be ready for that,
don’t get too emotional when you see how they react. Don’t get emotional when they
ask for business cooperation. It seems naive and silly but
it’s just part for the course so just be ready for it. And be ready to pay to
say no, “I’m not going to pay these guys I’m going
to let the legal process go as it’s delaying,”
sometimes the inevitable because if your lawyers are
telling you your chances of success are not good,
then it is probably better to pay earlier rather than
later for any number of reasons. And lastly it’s be
nice in negotiations because in China there are
cultural issues when negotiating and even when you
are you’re dealing with somebody you think its a
horrible, well they may not be that horrible they just,
you know, in fact– and in any case being
nice is a good tactic because in many societies
including China if you turn ugly and confrontational
and adversarial and aggressive then it
shuts down the channels of communication and very often
we’ve had delays of the year too because simply the pirate
didn’t like the negotiator and how they were being
treated and whereas if somebody else came later
on including perhaps somebody in senior management from
the client gave a little, enough respect to the other side and the deal was
done within weeks. So these are important
strategies, remember be nice. Okay, I’ve had a whole
bunch of slides on the law. I just want to basically
to boil it down to– I mean to somewhat
unstable, the state of the law but the current situation
is that is the– if you’re dealing with a–
you know a bad faith mark and you don’t have any kind
of significant theme and use of the mark in China or
your sales in advertising in China before the filing
date for the pirate, okay? That means 2 maybe 2 or
more years before you find out about the ca– the matter
or you are the post mark. If you don’t have
this kind of evidence and there’s a very good chance
you’re going to lose and even if you might say, “Well they
copied my logo, they copied– use of my font, they’ve copied 2
or 3 of my marks not just one.” Generally speaking
people are– don’t– are seriously surprised
when we tell them, you known you’re probably
going to lose, better to pay that we do sometimes win,
in some of these cases and we know the trademark office
has been trying to loosen up and interpret their regulations
and laws more effectively and so you might have some
wins out there, it’s not as bad as it was let’s say
a year or two ago. But you need to assume,
you need to be, you know assume the
worst for the most part. The cases where we are winning
these days are generally based on this provision in Article
X 18 just to get to it now where it basically
says that you cannot which harm socialist
morality or practices or marks that have others adverse
effects on society. Now these dispositions
are intended to protect the public good but
it has been used the language in recent decisions refer
specifically the confusion of by consumers and the
fact that a mark was famous. You know the overseas
companies mark was. So it’s very– you know it’s
reassuring there is very rare for this decision to
refer to the applicant, the pirates bad faith except
where there is extremely where you just evidence. So you know very
obvious evidence. it’s very, you know,
it’s reassuring here that there isn’t very rare
for these decisions to refer over the applicant that the
pirates’ bad faith except where there is extremely
egregious evidence of very, you know, obvious evidence of
serial piracy like they filed for 300 marks, 200 marks of
[inaudible] of all the line of other famous brands. They seem still to be shying
away from making determinations of what is bad faith and
using that because frankly in bad faith is not mentioned
in the trademark law directly as a basis and that’
a– that is one of the main problems
we’re having right now. But they’re trying
to do their best of at the trademark
office level. I’m going to click through
to just a couple other best practices and then
open up some questions. So for the opposition
sin cancellations if you can get evidence that the
pirate knew you’re a distributor or OEM supplier, we had some to direct business dealings
this is golden evidence that [inaudible] type of
positions in the law on this. It’s very hard to find
this in most cases but it’s worth fishing for it. Otherwise, you would try
to argue with your mark as well-known because
as you know in– that’s a term of art which
is kind of the highest level of fame but that really
only to extremely well done and the chinese over
reluctant these days to use, to designate the mark as
well known because all kinds of reasons– but one of them
is they found I think too much bribery in the– among
the Chinese brands and Chinese officials to
get well-known status. A lot of that is done
for marketing reasons because once they deal the
government has recognized it was well-known that’s
considered a marketing plus. So they will look for other
ways to give you the kind of question think you
deserve other than Conie at maybe using they
think you deserve of them calling it
well-known again, maybe using Article X
18 of the trademark law. Illustrate in your argument, you
r company’s benefits to China, how many people you hired,
you directly or indirectly, you know, any CSR activities
you know charity donation that sort of thing. Present the best evidence
of bad faith available. This is as I said its mandate
doesn’t directly mentioned in the law but there are
drafts of the law which a lot of amendment to the law which
would recognize past [inaudible] as a [inaudible] that’s got
a law which are circulating which would recognize past name
as independent grounds for– for dealing with
[inaudible] so in the– once they change the law would
probably be retroactively, of usually with in these
situations it would be. It also that so whatever
evidence of bad faith you gather
can have indirect influence on the examiners, they–
they’re not just going to ignore it entirely. So if infringements are ongoing
and by the pirate consider going to court maybe you’ll have
a basis for going after them under unfair competition
or some other grounds, maybe they’re fringing other IP. And once you get a judge
involved even peripherally they, the TMO and the TRAB
will usually want to hear what the judge has to
say and be guided by the court because in fact the courts trump
the administrative authorities in general for these sort of
things but the judges to deal with any kind of case
infringement case can not direct the TMO or the TRAB to decide
an opposition or cancellation in one way or the other. And if you obviously
if can get evidence of actual confusion that’s
wonderful Lastly I’ve put in some policy recommendations. I worked with a bunch of
these industry associations that have put together comments
for the Chinese legislature and the TMO about
how [inaudible] with more effectively– with– and how to deter bad
faith piracy and as well as deal with existing cases. And so I listed a bunch of
things out here which are based on international practice. I won’t go into them
but they are there for your viewing pleasure. Some of the recommendations in
this last page are suggestions on how to walk the interpreted
under the current law in a way that, you know, is [inaudible] crops
a bit more creative. And these are things
that you don’t– addressing the arguments,
you know that you’re filing. So thank you very much on [inaudible] prepare
marks any questions?>>At this time if you would like to ask question
please press Star 1 on your touchtone phone. You will be prompted
to record your name, please unmute your line
and do so when prompted to start your request
you may press star 2. again to as your questions
please press star 1 at tis time. One moment please.>>Thank you again Joe, I know
that there are some people who are listening who
may have some questions that they might want to
e-mail you privately. If you would like to do
so you can e-mail Joe at [email protected] this
is also for people listening to the audio recording
[inaudible] he said he’d be happy to answer your question.>>And we got a few
questions that have come in, Keith Park [phonetic]
your line is open.>>You know that the
evidence of self use of trademark [inaudible] you
know our company you know has this problem in China and they
license the trademark supposedly you can recall licensing
the trademark. The trademark [inaudible]
hasn’t registered in China. Does this– is that regarded
as the use of evidence in China even though the
licensee has not produced any products also has not
commercially sold the product.>>That is a good question. There aren’t that many cases
like that to come up and, you know, when I’ve inquired about that myself
I’ve had different– over the last 20 years
I’ve had different answers to the question but
the trend is not to recognize a mere licensing
as use if it’s quite clear that the licensee is not
about to start using the mark. I mean you have to–
they’re looking at the substance
here more and more. So if it was done for example
just for the purpose of the, you know, the license was put
in place and recorded just for the purpose of preserving
a registration protecting it from a cancellation. You’d have a better
basis of more confidence that you’d be able to resist,
that you’d be able to prevail on it and then not
use cancellation but that’s another reason again to investigate deeply China
is a [inaudible] the Chinese with several little countries. So, you know, decisions
can go both ways. There’s a lot of discretion. So I’m afraid there’s no simple
answer except for, you know, that there is a trend and a
positive direction for this but you need to argue it and to
get as much evidence as you can to show it’s not quantified,
you know use if you will.>>Thank you.>>Carla Kyun [phonetic]
you may ask your question.>>My question is what about
opposing an application in a [inaudible]
different from the one where the trademark
owner’s activities are principally involved? In other words, what are
the chances of success and what do you need to succeed
to oppose the registration of your mark in an
unrelated class?>>The question, generally you
start with this basic concept that you will– you’ll
lose, okay, unless your mark is
deemed well-known in China. So, and that’s just going to
be very rare there’s only, you know, a few hundred
marks recognized about any given year there
might be 80 or so marks. I think there’s now even a
quota system that’s just trying to limit the number of
Chinese and foreign marks. With that said as I mentioned in my presentation there have
been cases where mark is deemed to meet a certain level of
fame and where the TMO regards that there’s a new list
of confusion, all right? Because there are more
and more decisions where they are actually
protecting again vis a vis similar goods and services. So it’s happening but it’s not,
you know, generally speaking when you’ve been pirated–>>Yeah.>>– and the cases we’re dealing
with it’s just there’s not that kind of evidence of fame.>>I have–>>The mark is not distinct
as highly distinctive or maybe there isn’t
enough evidence of bad faith such that the examiner really
wants to, you know, to go there, you know, and use Article X 18. So again that would be situation
where our basic advice would be if it’s annoying– if this mark
is annoying you really don’t want it to be used by somebody
else but you’re not ready to spend money for it,
then just oppose, okay? File the opposition even if you
spend very limited money on it in terms of it, you know,
developing arguments and evidence that will at
least delay the registration of the mark for,
you know, 2 years and if you appeal maybe
another 2 years and often during that period the pirate will just
kind of lose interest and so that is a very practical
strategy and if you lose those
cases, you are not required to compensate the winner’s
legal fees or anything. So there’s really no
downside, there’s no risk in simply filing a simple,
you know, opposition.>>Right, did I hear you
say that if a pirate offers to sell you the mark for 15,000
US dollars that’s an okay price even in an unrelated class?>>Well that would
be a situation that– where 15,000 might be in
the high side but it’s going to depend on the goods and
the mark and the fame and– now very often one of the
strategies we use to buy such marks, even if it’s an
unimportant class is we have the investigator file, I’m sorry, the investigator set
up a front company.>>Yeah.>>And then he will
approach the pirate not in the trademark owner’s name
but in the name of essentially, you know, pretending
to be another pirate.>>Right.>>So, and we’ve been
able to get those marks and it’s [inaudible] smoothly. Yeah we like– we haven’t
had pirates come back and challenge the transfer
on the basis that, yeah, we didn’t disclose who we were. You know that he
was tricked by–>>Right.>>– you know, the investigator.>>Yeah, good point. Going back to the deemed
well-known mark in China, I tried many times through local
lawyers and I’ve never been able to get our clients [inaudible]
as well-known and so it a nice– so it seems like a
pretty difficult hurdle and you can only try to get your
mark recognized as well-known in the context of an opposition. You can’t just apply
to have it recognize as well known is that correct?>>Well opposition, cancellation
you can do infringement actions as well. But yeah, you cannot just
simply ask for that kind of recognition outside
of the context of some kind of dispute
basically.>>Right and you said
[inaudible] kind of guidelines as to when you might be able
to get your mark recognized, the amount of evidence that’
required for the recognition of the mark as well-known?>>Well, there’s a
list of suggest items that there are guidelines
on that. You don’t have to
provide everything but we generally do find that they will expect
a certain amount of– certain types of
material in the voices, you know tax receipts whatever
things that they are used to seeing so this is just some
they I mean know how that a lot of times that the attorney’s
agents will give you the list and then you just say,
“Well I can’t give this” or and then they won’t push
back and say, “No, no, no, you really need to
give us this.” You have to release this
stuff so there’s, you know– and generally speaking even if
your chanced of getting well in status in the field or
you know their law by going through that efforts, you know, pulling all that
material together , it does have an impact on the
perception of the examiners. So I would and as we said
you can still get the same protection. This would be the similar goods
under Article X 18 these days, you know, I wouldn’t– I wouldn’t say that
a year or two ago. But we’re getting that now. So in all and all cases
by any means are really– there seems to be–
but at least in cases where you know you might think
well my mark is well known in the US, right. And there has been some
significant use in China and you know those are cases
where again you are much more, you are more likely to have
a fighting chance under X 18.>>Okay, and if I may ask
one more follow-up question, you indicated that an
investigation to be done by people who are
prepared rather than just some internet search and I was wondering what is the
average cost of an investigation that would then prompt
the AIC to rate a factory? Well is there some–
what do you mean–>. My focus on investigators and my comments before
was really much more on preparing a strategy for
dealing with a bad faith pirate.>>Okay.>>Because you want to get
an evidence of connection, you know, would simply be
exempted indirect connection et cetera. You know evidence maybe oral
admissions of copying, you know, knowledge of the brand,
you know, infringement of other rights et cetera. So, you know, you
might want to– that’s why we suggest going after for a high level
investigators for that. Now, those kind of high level
investigators, you know, who will also be generating
evidence obviously many in infringement. They did permit you know, a
civil action a AIC action. Those guys I would normally
of all kinds, you know, 15,000 minimum off 15 to maybe
50,000 if they have to do 2 or 3 ways of you
know, inquiries. For your standard IT
investigator in China you can, you know, you get them
as still doing, you know, basic work for 1500 to 3000 US
dollars, that’s what we’re used to paying but, you know, it’s the same old you
know you are [inaudible] up so you get [inaudible]
and sort of thing about it might the
investigator’s[inaudible] but there you’re just not
getting the sort of time and sort of, you know,
know how as you would with a higher level
investigators.>>All right, okay
thank you very much.>>Bill France [phonetic]
you may ask your question.>>Thank you. Thanks so much Joe
for your presentation, I really appreciate it. Can you hear me okay?>>Yes.>>Great thanks. One of the things that
we’ve encountered with some of my clients is actually
pirate filing the logos that we have copyright
protected in the US. I’ve had some difficulty getting
reciprocal recognition even though China is a member
of the Berne Convention. I’ve actually had some
decisions that indicate that the copyright
wasn’t used in connection with a particular file’s goods. Have you had any
experience with this and do you recommend
filing copyrights actually in China even though you
have US registered copyright?>>That’s interesting, there might be a communication
issue here because generally when clients say what you– the first half of what
you’re saying they– what’s happened is
that the evidence of copyright ownership was not
informed that’s the trademark office got comfortable with. Then you don’t need to
actually register, you know, your copyright with the National
Copyright Administration of China. They do have a registration
system in China. Generally they will be happy
at the trademark office with a US copyright registration
provided it’s, you know, you processed it and
authorized [inaudible] –>>Right, we utilized it.>>And sometimes, you know, just the paperwork that’s a
supporting paper work is an otherwise incomplete
so I, and you know, it’s very case-specific but, you
know, it’s the work itself is and they like US
copyright registrations because they know the
US copyright office does examination for originality and in China actually we’ve
gotten copyright registration with things which would never
be registered in the US. So then to pay things back
to the US registrations. If you really need to pile on, the [inaudible] again it
takes a lot of discretion. Yeah and it’s a really important
for the client then go ahead and register in China too. It costs a lot more than in
the US in fact, but, you know, generally you ask should– you should define and this your
point about different goods and all that, that
sounds strange because generally a
copyright is copyright.>>Okay.>>It has nothing to
do with the goods so–>>Right.>>– they made a mistake. It just sounds like they
have mistaken the law or maybe you know the
decision may have been reported to all [inaudible]>>Well, we’re appealing
now in fact. We’re– but if– how
about and also one of the things I was wondering
too thank you for that but how about industrial designs filing
industrial design applications in China?>>Well you know
when you mentioned that the most common situation
we have is where a pirate and it’s also document
a design patent in China and they try to use that. You know I generally just ignore and generally speaking we had
always ignore those are not examined and usually
the dates don’t work up. Did not actually– you know, I generally just ignore
[inaudible] patents for all of these but this is I don’t
think clients should go after them unless they want to
going to use them defensively in against finding [inaudible]
it doesn’t really hasn’t really become that [inaudible]
or been that real of a [inaudible]
trademark registry disputes.>>Okay. okay Thank you.>>Sure.>>At this time we have
no further questions.>>Great time for bed.>>Yeah, it is quite
late in Hong Kong. Joe thank you again
for your time. I just want to remind
people who maybe listening on the audio recording that
if you do have any questions to Joe, you can reach him
at [email protected] I also want to like people know that on August 17th we will
have a presentation on patents. It’s a very basic
presentation on [inaudible] for business people and people
who may not like to file.

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