1. Patent Protection during Exhibitions and at Customs and Criminal Protection of Patents King & Wood PRC Lawyers | 2009

2. 一、展会知识产权保护入标题 I. Intellectual property protection during exhibitions (I) General situation In Mar. 2006, four departments inclusive of Ministry of Commerce prescribed the procedure for intellectual property protection during exhibitions. In practice, the main content of complaint is trademark infringement. Exhibitions provide a good opportunity to take evidence for infringement, and notarization and fixed evidences can serve lawsuits effectively. A ban may be applied with a court during an exhibition, subject to the procedure for case registration. It’s difficult to judge whether an invention patent constitutes infringement or not, what’s more, both the patent rights of utility model and industrial design are unstable and make the settlement of infringement more difficult.

3. (II) Handling of complaints If an exhibition is scheduled for more than 3 days, normally an intellectual property complaint institution shall be set up. Member of intellectual property complaint institution: organizer of exhibition, exhibition management department, patent, trademark, copyright and other intellectual property administration departments. Responsibilities: 1. Accepting complaints and ordering stop of exhibition; 2. Transferring cases and following up the settlement of such cases. Documents required for complaint: 1. Certificate of patent (duplicate of register) and search report; 2. Certification for identity of subject of right; 3. Certification for identity of subject of infringement; 4. Fact and evidence of infringement; 5. Letter of attorney for complaint by an agent. Where a person has lodged a complaint with a court, any dispute related to ownership exists or invalid declaration request procedure is being handled, the complaint will not be accepted.

4. (III) Method for handling Where a local intellectual property bureau judges that infringement is constituted upon a request for settling invention or utility model patent right that may constitute infringement, the infringement shall be settled according to the provision stipulated in Paragraph 1 of Article 11 of Chinese patent law on prohibiting promissory sales and the provision stipulated in Article 57 of Chinese patent law on ordering immediate stop of infringement acts, the requested person shall be ordered to evacuate relevant exhibits from the exhibition, destroy publicity documents of these exhibits and replace the exhibition board of such exhibits. Where a request is made for settlement of any infringement to industrial design patent right, the requested person sells relevant product on an exhibition and the local intellectual property bureau determines that infringement is constituted herein, the infringement shall be settled according to the provision stipulated in Paragraph 2 of Article 11 of Chinese patent law on prohibiting sales and the provision stipulated in Article 57 of Chinese patent law on ordering immediate stop of infringement acts, and the requested person shall be ordered to evacuate relevant exhibits from the exhibition. Where one falsifies another’s patent, counterfeits patented products by non-patented products or patented method by non-patented method during an exhibition, the local intellectual property bureau shall punish the person according to the provisions stipulated in Article 58, 59 of Chinese patent law.

5. II. Intellectual property protection at customs General situation 1. Record: In 2007, General Administration of Customs of the People’s Republic of China received 2,788 applications for record, up by 48.3% than the previous year. By the end of 2007, the quantity of intellectual property records with the general administration has reached 9,325 pieces. Thereof, 5,450 pieces are involved with trademark right, 3,494 pieces with patent right and 381 pieces with copyright. 2. Investigation and punishment: In 2007, Chinese customs protected 5, 776 intellectual properties, the investigated and confiscated goods involved with infringement to trademark rights accounted for 99% of all the goods involved with infringement and total value of such goods accounted for 97% of total value of all the goods involved with infringement, while the quantity of goods involved with infringement to patent rights accounted for less than 1 ％ of all the goods involved with infringement and value of such goods accounted for about 2 ％ of total value of all the goods involved with infringement. Goods involved with infringement mainly included clothes, shoes, bags, cigarettes, etc. Those goods were mainly for exporting by sea transport, thereof goods exported by sea transport accounted for 97% of all the goods involved with infringement and value of such goods accounted for 86% of total value of all the goods involved with infringement.

6. （ I ） General situation Goods involved with infringement were discovered mainly at 10 customs such as Shenzhen, Shanghai, Ningbo, Hangzhou, Huangpu, Guangzhou, Qingdao, Fuzhou, Xiamen and Tianjin Customs. Quantity of goods involved with infringement and investigated and confiscated in those customs was more than 300 million pieces, accounting for 99.7% of all the goods involved with infringement. Goods involved with infringement were mainly investigated and confiscated by customs through active exertion of their powers, goods involved with infringement discovered in this way accounted for 99% of total cases while the cases in which detention was made upon application accounted for less than 1%.

7. （ II ） Conditions for record 1. Subject: a licensed person or user can’t apply for record or intellectual property protection with the customs, as is inapplicable to lawsuit. A right owner in Chinese mainland may directly apply for record or intellectual property protection with customs. Overseas (including Taiwan, Hong Kong and Macao) right owners need to make such application via agent in Chinese mainland unless they have an office in Chinese mainland. 2. Application: One who applies for record shall submit an application to General Administration of Customs. Application for record is essential for investigation and punishment by the customs. 3. Evidence: Identity of subject. Basis of right: Duplicate of patent register. Evidence for infringement.

8. (III) Detention by exertion of power During supervision, the customs may take initiative in detention and investigation according to its power if any imported or exported goods that may infringe intellectual property is discovered. 1. An owner of intellectual property shall record relevant intellectual property with General Administration of Customs in advance. 2. After discovering any imported or exported goods that may infringe recorded intellectual property, the customs shall stop release and give a written notice to the owner of relevant intellectual property. 3. Where the owner of relevant intellectual property asks the customs for detention of goods that may infringe the property, an application shall be made within 3 workdays. 4. The owner of intellectual property shall provide property guarantee for the customs. 5. The customs is entitled to investigate and determine the infringement of goods, and shall notify the owner of relevant intellectual property of applying for juridical detention with the local court. 6. The customs is entitled to confiscate goods involved with infringement upon its determination, impose administrative punishment on the consignor and the receiver of such goods, and transfer the goods to the public security for a crime, if any. 7. The customs is entitled to dispose the confiscated goods involved with infringement according to law.

9. (IV) Detention upon application Where an owner of intellectual property discovers any goods that may be involved with infringement is to be imported or exported and makes an application with the customs accordingly, the customs may detain such goods upon the application. 1. An owner of intellectual property may apply for detention with the customs directly after discovering any goods that may be involved with infringement to relevant property without the record of the property with General Administration of Customs in advance. 2. The customs isn’t in charge of monitoring the entry and exit of goods that may be involved with infringement.

10. Guarantee for detention of goods involved with infringement Where the customs exerts powers for investigation and settlement and an owner of intellectual property asks for detention of goods involved with infringement, the owner shall provide guarantee in the way below: guarantee equivalent to the value of goods less than RMB 20,000; guarantee equivalent to 1/2 of the value of goods from RMB 2 to 200,000; RMB 100,000 for goods in the value of more than RMB 200,000; or general guarantee of RMB 200,000 for a period as of the approval date of guarantee to Dec. 31 of the very year. Where the customs can’t determine infringement and the owner of goods provides guarantee, the customs may release the goods. The customs shall assist relevant court in detaining the goods upon the receipt of a written notice given by the court for detention within 50 workdays after the customs has detained the goods. Equivalent amount guarantee shall be provided upon application for detention of goods involved with infringement. The customs shall assist relevant court in detaining the goods upon the receipt of a written notice given by the court for detention within 20 workdays after the customs has detained the goods.

11. III. Criminal protection of patents (I) Definition The Chinese criminal law prescribes the crime for falsifying another’s patent only. Falsifying another’s patent means a behaviour that one uses another’s patent mark without the approval by the patentee. Such falsification may be in one of the forms as follows: 1. Marking another’s patent number on self-made or sold product or package of such product; 2. Using another’s patent number in an ad or other publicity materials to make people mistake relevant technology for another’s patented technology. 3. Using another’s patent number in a contract to make the persons concerned mistake the technology under the contract for another’s patented technology. 4. Falsifying or altering another’s certificate of patent, patent document or patent application document.

12. （ II ） Conditions for constitution of falsification of another’s patent 1. A falsification behaviour is conducted, i.e. one shows that its product is another’s patented product under legal protection or its technology is another’s patented technology under legal protection in certain form without the approval by the patentee to mislead the public. 2. The falsification is involved with a patent another has obtained and really exists. 3. Another’s patent is falsified intentionally. Infringed object of falsification of another’s patent is patent mark right of the patentee. Therefore, whether one applies another’s patented technology or not is not a condition for falsification of another’s patent, i.e. another’s patented technology may not have been applied for the object (product or method) under prosecution of infringement, product for which another’s product is falsified is different from patented product, and the method may be different from patented method.

13. (III) Civil liabilities for falsification of patent As prescribed in Article 216 of Chinese criminal law, for any severe circumstance, one will be sentenced for less than 3 years of fixed term imprisonment or criminal detention, meanwhile, a fine may be imposed. Any falsification of another’s patent in any of the circumstances below constitutes severe circumstance, and the patentee may directly lodge a criminal lawsuit, or the case may be transferred to the public security department for the investigation of criminal liabilities. 1. If illegal operation amount is RMB 200,000 and above or illegal income is RMB 100,000 and above. 2. If any direct economic loss of RMB 500,000 and above is caused to the patentee. 3. If more than two patents are falsified and illegal operation amount is RMB 100,000 and above or the illegal income is RMB 50,000 and above. 4. Other severe circumstances.

14. Thank you. Li Zhongsheng Lizhongsheng@kingandwood.com