Archive | 2016, February | (7) posts

Trademark Protection in China – if everyone could be Disney…

In October 2015, the Chinese State Administration for Industry and Commerce (AIC) announced a special one-year nationwide campaign to protect the Disney trademarks. The campaign aims at attacking infringements of Disney trademarks, protecting the rights of consumers, creating a fair market and maintaining China’s international image of IPR protection. Routine monitoring (including online monitoring) will be strengthened. AICs and market supervisory bureau all over the country will strive to stop the infringements and training will be enhanced.

The commencement of the campaign was soon followed by the Shanghai AIC’s administrative action against a hotel chain called Vienna. Five hotels of this chain used the Chinese version of “Disney” in their names (such as using “Disney Store” after the name of the hotel) and the related signs were used on the signboards, the websites and the electronic notice board in the lobby etc. The hotel chain was found to have infringed Disney’s trademarks and was fined RMB100,000.

Following this fairly publicized action by Shanghai AIC, the other campaign efforts recently reported by SAIC include the following:

  • the Haidian branch of the Beijing AIC has implemented specific measures for the campaign, namely strengthening the inspection on the use of Disney’s registered marks and the inspection on traders dealing with clothing, electronic products, toys, bags and stationery etc. in physical markets, preventing and punishing infringements of Disney’s registered marks and making use of a specific report hotline for faster investigation and action.
  • after receiving a report from the public, the market supervisory bureau of Yuhang District of Hangzhou City seized a large batch of children’s clothing featuring classic Disney figures. The suspected culprit sold this kind of Disney clothing mainly via electronic trading platform.
  • an English education and training institute in ZhuZhou City has been found to have infringed Disney’s trademarks by using the marks at the premises and in the teaching materials. An AIC office in ZhuZhou City has ordered the institute to immediately stop the infringement and destroy all infringing products and trademarks.

The campaign commenced before the opening of the Shanghai Disneyland, which is said to take place in the spring of 2016. This campaign which targets at a specific brand is unprecedented. Some commented that the campaign is necessary because the Shanghai government has commercial interests in the business of the theme park, and people inevitably ask “how about the other brands?”. Whatever the motives behind the campaign, the efforts should be seen as positive signs. Hopefully, awareness of the importance of IPR protection will be enhanced, which is crucial for an even better IP environment for all foreign businesses in China.

Rhonda Tin, Counsel

Your guiding star

A successful and effective company is organized such that the points of the Star Model – Strategy, Structure, Processes, Rewards and People – are aligned and mutually reinforce the business model. As well as using this model to improve the performance of a company, it can be applied when improving management of Intellectual Property (IP).

YourGuidingStar_Julia
 

An IP strategy reflects what kind of player you want to be – defensive or offensive? It answers questions such as what your IP portfolio will look like after a certain period of time. Or why you use IP and for what.

What about the structure? Consider who makes the decisions about your IP. Is it the R&D manager, or maybe the communication manager? Do you need an IP department in-house or will you be outsourcing everything to an IP firm such as ours? Or perhaps a combination would be best for you? If you want to shorten your lead time you might consider acquiring IP from other parties, cross-licensing, or maybe open innovation.

If you, for example, want to grow your patent portfolio quickly, your employees need to have time for innovation. As a further incentive, you may want to reward all invention disclosures – not only the ones leading to a patent application.

Do you have the right people with the right skills and mindset? Do your employees and co-workers have enough knowledge not to jeopardise your IP strategy, and instead act in line with it?

You probably have tollgates checking development goals but have you included IP in the tollgates? Are you keeping things secret that ought to be kept as a trade secret? Have you checked that your agreements do not include clauses in which all development goes to the other party? Those and other reviews should preferably be part of your processes.

Many companies invest far too much time drawing the organization chart and far too little on processes and rewards. In a fast-changing business environment, and in matrix organizations, structure is becoming less important, while processes, rewards and people are becoming more important.

To sum up, when working strategically with IP, it is not enough only to cover the legal aspects or the technology. You must also consider processes, reward systems and people.

Julia Mannesson, European Patent Attorney and Swedish Authorized Patent Attorney

Have faith in bad faith?

Swedish furniture retailer IKEA has lost the rights to its trademark in Indonesia. The Indonesian Supreme Court has cancelled the trademark registration of the Swedish company at the request of the local furniture company PT Ratania Khatulistiwa on the basis of non-use.

In 2013, the Indonesian company registered the trademark IKEA – an acronym for Intan Khatulistiwa Esa Abadi. The Swedish furniture maker registered its trademark in Indonesia in 2010, but has not used it in three consecutive years for commercial purposes. IKEA’s first and only store in the country so far was opened in late 2014. Under Indonesian trademark law, this means the registration can be deleted.

In my mind this immediately invokes the thoughts of a counter claim based on bad faith, which I expect IKEA has or is thoroughly considering. Naturally, the relevance and success for such a claim is up to the Indonesian courts.

Well-known trademarks are granted the possibility to cancel bad faith applications or registrations in the Paris Convention, but national trademark law is in need of harmonization.

INTA (International Trademark Association) did express the following general criteria for bad faith cancellation in a Board Resolution from 22 September 2009:

  1. the applicant/registrant knew of the third-party’s rights or legitimate interests in a mark identical to or substantially identical to the mark applied for/registered, where such knowledge is actual or may be inferred from the surrounding circumstances; and
  1. the applicant/registrant’s conduct in applying for/registering the mark is inconsistent with norms of reasonable, honest, and fair commercial behavior.

Bad faith cancellations generally have a huge problem, namely the burden of evidence. Generally, this lies heavily on the shoulders of the plaintiff. Ideally, the plaintiff can show some solid written evidence, such as in cases where the applicant actually has been in contact with the plaintiff concerning the trademark. This is rather common for instance with respect to local distributors, licensees or other business relations who proceed and register the trademark in their jurisdiction as a precaution, perhaps with a good intention of acting on behalf of the trademark owner. However, if the business relationship starts shaking, the local trademark right may become a cause for conflict.

However, if no such prior relation exists, the plaintiff needs to find other ways to prove to the court or other authority that the applicant in fact was in bad faith at the time of filing. Without a very well-known trademark you will certainly need some form of evidence and it may be hard to find.

You might end up filing a cancellation action against the conflicting trademark on other grounds, as I did many years ago before a small district court in the north of Sweden. I represented a well known international luxury hotel chain against a local business in the cancellation of their company name. The name was intended to be used for a hotel business, but no hotel ever actually opened. However, the company name was in fact used in contacts with local authorities, banks etc and the court was to decide if this use was sufficient to uphold the company name right.

I couldn’t believe my luck when the managing director of the Swedish company took the stand and started to tell his story with the sentence “Well, we had a lot of ambitions when we established this business and wanted to open a hotel here in the north of Sweden with the same quality and luxury level as XX (the name of my client)”. Needless to say, that company name got cancelled.

Kristina Fredlund, European Trademark Attorney

Revised PACE programme from 1 January 2016

The programme for accelerated prosecution of European Patent Applications (PACE) allows applicants to request that the European Patent Office (EPO) processes their application rapidly. The request must be filed in writing, but will be excluded from file inspection.

In certain technical fields there has been constraints on how fast the EPO has been able to process the applications, due to the number of incoming PACE applications. Therefore, as a general recommendation, a PACE request should only be filed for some selected applications of a portfolio.

On January 1, 2016 a revised programme was initiated, in order to help applicants make better use of the programme and enable the EPO to process applications for which accelerated prosecution has been requested as soon as possible (OJ EPO 2015, A93).

Applicants will, from now on, be required to use the dedicated request form and file the request online. Informally filed requests, i.e. without using the form, or on paper, will not be processed.

Further, a request for participation in the PACE programme may be filed only once during each stage of the procedure, i.e. search and examination, and for one application at a time. A PACE request filed during search will not trigger accelerated examination, and the PACE request during examination may only be filed once the Examining division (ED) has taken over responsibility for the application.

An application will be removed from the PACE programme if the PACE request is withdrawn, if the applicant requests extension of time limits, if the application has been refused, withdrawn or deemed withdrawn. It will under those circumstances not be possible to restore the PACE application.

Further, the failure to pay renewal fees will cause the accelerated prosecution to be suspended.

For European patent applications filed on or after July 1, 2014 (including the Patent Cooperation Treaty (PCT) applications entering the European phase where the EPO did not act as the International Searching Authority (ISA)), no PACE request is needed, as the EPO will issue the European search report (EESR) within 6 months under the Early Certainty from Search (ECfS) programme.

For European patent applications filed before July 1, 2014 (including PCT applications entering the European phase where the EPO did not act as ISA) the EPO will make every effort to issue the EESR within 6 months of receipt of the PACE request. Further if the application is a PCT application and the EPO did not act as ISA, the supplementary European search will only be issued faster if the applicant also waives the right to communications pursuant to Rule 161(2) and 162(2) EPC and pays all relevant claims fees due.

During the examination stage the request for PACE can be filed at any stage once the ED has taken over responsibility. For PCT applications where EPO acted as ISA, PACE can be requested at any stage, for instance on entry into the European phase or together with the response to the WO-ISA, required under Rule 161(1) EPC.

Upon receipt of a PACE request the Examining division will make every effort to issue its next action, and any further actions, provided that the application is still within the PACE programme, within three months.

Sofia Willquist, European Patent Attorney

Changes to the European Trademark system

Classification reform – Article 28 (8)

As we mentioned in our blog on 18 January 2016, a new regulation on the European Trademark (EUTMR) will enter into force on 23 March 2016. One of the changes concerns the scope of protection of a trademark registered in the European Union (“EU Trademarks”).

The new regulation reflects the changes in practice that followed the ruling of the EU Court in Case C-307/10 “IP Translator”. Thus, EUTM registrations with goods and services specification consisting of class headings will no longer be considered protecting the trademark for all goods and services that belonged to the alphabetical list of the relevant classes. Instead, the scope of protection will be restricted to cover the literal meaning of the goods and services in the relevant class headings (“What you see is what you get”). For instance, the heading of class 25 comprises “clothing, footwear, headgear” and protects inter alia “football shoes” but not “studs for football boots”.

According to the new regulation, the owners of EU Trademark registrations which were applied before 22 June 2012 and cove­ring a class heading will have the possibility to amend the specification of the goods and services to also include goods/services that belonged to the alphabetical list of the relevant class, at the time of the filing of the application. For this purpose, a declaration must be filed with the trademark registry between 23 March 2016 and 24 September 2016. Each term of goods and services indicated in the declaration must be clear and precise in order to be accepted.

If an EU Trademark registration covers the class heading and no declaration is submitted to the registry within the six month period, the registration will simply cover what can be naturally understood by each term of the class heading.

We strongly recommend the owners of trademark registrations to go through their portfolio of EU Trademark registrations filed before 22 June 2012, to ensure that they cover goods/services they actually need protection for.  We would be happy to assist with a strategy for amending and obtaining the best protection.

Please do not hesitate to contact Awapatent for more details or with any questions.

Sara Winther, European Trademark Attorney

OEM activities in China do not amount to trademark infringement

The PRC Supreme People’s Court has decided that OEM activities in China do not amount to trademark infringement (however, this does not seem to be the final word on the issue)

A foreign brand owner has registered its mark in a foreign country, but not in China. Another unrelated entity has registered the same or similar mark in China. Would a Chinese manufacturer be liable for trademark infringement in China if it manufactures in China solely for export purpose products bearing the foreign registered mark upon the authorization of the foreign brand owner?

Although in recent years, there have been more and more cases where the courts ruled that in the above original equipment manufacturer (OEM) scenario the Chinese manufacturer is not liable for trademark infringement, the position has not been clear. The law does not offer a definite answer and different courts have decided the issue differently. The Supreme People’s Court (SPC) had never ruled on this issue. In November 2015 its judgment in the “PRETUL” case was made. The judgment was long awaited as it was expected to offer some guidance on the issue.

TRUPER SA is a Mexican company and it has registered the marks “PRETUL” or “PRETUL & oval device” in Classes 6 and 8 etc. in different countries including Mexico. In China, an individual registered the mark “PRETUL & oval device” in Class 6 in 2003 and assigned this registered mark to Focker Security Products International Limited (Focker) in 2010.

TRUPER SA entrusted Zhejiang Pujiang Yahuan Locks Co, Ltd (Yahuan) to supply and produce goods bearing the marks “PRETUAL” and “PRETUL & oval device” and the goods were only for export to Mexico. Focker sued Yahuan for trademark infringement.

Both the Ningbo Intermediate People’s Court at the first instance and the Zhejiang Higher People’s Court at the second instance ruled against Yahuan. Both courts ruled that Yahuan’s use of the marks was trademark use and the marks and the goods are similar to those of Focker’s registered mark in China.

Yahuan requested the SPC to retry the case. The SPC overturned the previous judgments and found that there was no trademark infringement. The SPC considered that trademark use as referred to in the Trademark Law means use of the trademark for identifying the trade origin. The SPC ruled that the products were only for export to Mexico and were not sold in China and therefore the signs used on the products would not cause confusion in China and would not perform the identifying function within China. The affixation of the signs on the products cannot be regarded as trademark use. The SPC stated that if a trademark does not perform the identifying function and its use is not trademark use, it would not be meaningful to determine if the marks and goods involved are identical/similar.

One issue which the SPC did not deal with is the allegation that the Chinese registration by the individual was made in bad faith because that individual was a shareholder and officer of a supplier of TRUPER SA.

There is no case law (stare decisis) in China, so the courts are not bound to follow the SPC’s judgment, although it is expected that the courts would tend to follow the SPC judgment. This judgment may therefore help foreign brand owners who do not manage to register their marks in China, but want to have their products manufactured in China.

Further, how the courts decide on the issue would depend on the facts of the case and the courts may depart from the judgment of the SPC, if distinguishing facts are found. The Jiangsu High People’s Court, for example, has recently decided differently from the SPC. In that case, the Jiangsu High People’s Court, though recognizing that the activity involved is OEM manufacturing, ruled that there is infringement because the OEM manufacturer should know that the Chinese registered trademark is a well-known mark and the foreign brand owner may have hijacked the Chinese trademark and registered the same in the relevant foreign country (though the relevant authority in the foreign country has decided that the registration is valid). Based on this judgment, the OEM manufacturer has the burden to ensure that the company entrusting it with the manufacturing has the rights to do so.

Commentators have taken the view that the “PRETUL” case still needs to be explored regarding the legal questions surrounding OEM activities and the “PRETUL” case does not represent the final complete opinion of the SPC on OEM. It would be interesting to see how the jurisprudence evolves with further OEM decisions from the courts. It would also be interesting to see whether and how administrative trademark enforcement authorities such as AIC and Customs would be affected by the SPC judgment.  A simplistic pro-OEM approach can be a double-edge sword as this may not be favourable to foreign brand owners who have trademark registrations in China, but would like to stop the manufacture in China of counterfeits by foreign counterfeiters who have registered the marks in the exported countries.

Rhonda Tin, Counsel

Unitary SPCs in Europe after all?

As readers of this blog know, we at Awapatent are actively following the exciting developments in the creation of a unitary patent system in Europe. It will be possible to obtain European patents with unitary effect in 25 countries, and we’ll have a new Unified Patent Court (UPC) for centralized patent disputes. We look forward to the start of the new system, and will be prepared to act from day one. Right now, those of us with a focus on the biotech and pharma industries are looking closely at how the new system applies to the possibility to prolong protection beyond the normal life span of a patent, through Supplementary Protection Certificates (SPCs). SPCs are available in the EU for medicinal and plant protection products.

SPCs for pharmaceuticals are arguably the most valuable intellectual assets, at least in terms of the value per individual registered right. In the EU, SPCs are national, and must be applied for in each country separately. Against this background, one would have expected the new unitary patent legislation to take account also of SPCs, and to create a unitary SPC title. Unfortunately, even though there are provisions in the court agreement that bring national SPCs under the new jurisdiction, no unitary SPC is created. As a result, there will be a gap in the European law of SPCs, and substantial uncertainties regarding the interplay between unitary patents and national SPC rights.

Quite naturally, this situation is a concern to those industries that rely on SPCs to recoup their investments into new products. In a joint position paper from July 2015, the European industry organizations for human and veterinary medicine and crop protection called upon the EU Commission to urgently begin work on creating a unitary SPC. They also gave suggestions concerning what body would be responsible for granting such SPCs and how they may be litigated in the UPC. In a pleasing turn of events, it now seems like this call is going to be answered. In a strategy document from October 2015, the EU Commission stated that “the Commission will consider […] a recalibration of the patent and SPC regulatory framework in the EU, including […] a unitary SPC, which would enhance the value, transparency and legal certainty of the protection of medicines and plant protection products”. Recently, we received another sign that this process is underway, when the EU Commission put out a tender for a study of the current SPC system. The aim of this study is for example stated to be the creation of a starting point “for a future proposal by the Commission to create a European SPC title”.

The current SPC regime, while well-known to us, is full of inconsistencies, and is also applied differently in different countries. Just like the industry organizations in their position paper, we and our clients would very much welcome a unitary SPC and its likely positive effects on harmonization and predictability.

Niklas Mattsson, Partner and European Patent Attorney