1. VIVIEN CHAN & CO. SOLICITORS & NOTARIES, AGENTS FOR TRADE MARKS & PATENTS 1 INTERNATIONAL BAR ASSOCIATION AUCKLAND, NEW ZEALAND 2004 INTERNET IMBROGLIO – OUTLINE FOR THE PEOPLE’S REPUBLIC OF CHINA George Ribeiro, Partner VIVIEN CHAN & CO. Email: ribeiro@vcclawservices.com Website: www.vcclawservices.com INTERNATIONAL BAR ASSOCIATION AUCKLAND, NEW ZEALAND 2004 INTERNET IMBROGLIO – OUTLINE FOR THE PEOPLE’S REPUBLIC OF CHINA George Ribeiro, Partner VIVIEN CHAN & CO. Email: ribeiro@vcclawservices.com Website: www.vcclawservices.com www.vcclawservices.com HONG KONG OFFICE 15/F, One Exchange Square 8 Connaught Place Central Hong Kong Tel: (852) 2522-9183 Fax: (852) 2845-9160 BEIJING OFFICE Suite 508, Changnan Tower 10 East Changnan Street Beijing 100006 People’s Republic of China Tel: (8610) 6522-7069 Fax: (8610) 6522-6967 Email: beijing@vcclawservices.com SHANGHAI OFFICE Unit 1106B, 11 th Floor 333 Huai Hai Zhong Road Shanghai 200021 People’s Republic of China Tel: (8621) 6387-9222 Fax: (8621) 6387-9111 Email: shanghai@vcclawservices.com CHONGQING Affiliate Office

2. VIVIEN CHAN & CO. SOLICITORS & NOTARIES, AGENTS FOR TRADE MARKS & PATENTS 2 Overview of Unfair Competition Laws in the People’s Republic of China Unfair Competition Laws include:- –Law of PRC against Unfair Competition (“Unfair Competition Law”); –Advertisement Law; –Administrative Rules, e.g. Regulations on the Prohibition of Trade Secrets

3. VIVIEN CHAN & CO. SOLICITORS & NOTARIES, AGENTS FOR TRADE MARKS & PATENTS 3 Overview of Unfair Competition Laws in the People’s Republic of China The Unfair Competition Law –3 elements constituting unfair competition by business operator:- Obtain business opportunities by using unfair means/acts; Damages the legal interest of others Social economic disorder

4. VIVIEN CHAN & CO. SOLICITORS & NOTARIES, AGENTS FOR TRADE MARKS & PATENTS 4 Unfair Competition Acts In respect of a product –Copying name, package or get up of another; or similarity causing confusion –Trademark infringement –Using name of another enterprise to cause confusion –Creation of monopoly with restrictions of supplies – patent misuse –Commercial bribery –False labeling, advertising or description –Dumping

5. VIVIEN CHAN & CO. SOLICITORS & NOTARIES, AGENTS FOR TRADE MARKS & PATENTS 5 Advertisement Law Any publisher, advertisement operator or advertiser:- –False description of the function, place of manufacture, quality, manufacturer, etc. –Disvalue other competitors –Fabricate data, statistics, results of questionnaire, etc is liable to general damages through court proceedings.

6. VIVIEN CHAN & CO. SOLICITORS & NOTARIES, AGENTS FOR TRADE MARKS & PATENTS 6 Fair Trade Bureau Powers of the Bureau –Enquiry and Inspection –Interrogation –Provision of evidence relating to unfair competition acts –Preservation and destruction of the goods –Impose fine of not more than RMB200,000 or 1-3 times of the illegal earnings –Confiscate the illegal earnings –Order for cessation of unfair competition acts In theory, any individual may make complaints to the Fair Trade Bureau

7. VIVIEN CHAN & CO. SOLICITORS & NOTARIES, AGENTS FOR TRADE MARKS & PATENTS 7 Advertisement Regulatory Bureau Power of Advertisement Regulatory Bureau –Restrict the publication of the advertisement –Use same amount of the costs of advertising to correct the advertisement –Impose a penalty of RMB10,000 – 100,000 or 1-5 times of the costs of advertising –Suspend/cancel business licence Any individual may be complainant

8. VIVIEN CHAN & CO. SOLICITORS & NOTARIES, AGENTS FOR TRADE MARKS & PATENTS 8 Liability of Vendor situate in PRC To Purchaser, if:- –False description (e.g. quality, ingredients, etc.) –Confusion as to manufacturer or brand owner Not actionable in China under the Product Quality Law –Goods are not manufactured or sold in China Not actionable in China under the Unfair Competition law at court level –No locus standi as the purchaser’s rights are not the subject of infringement

9. VIVIEN CHAN & CO. SOLICITORS & NOTARIES, AGENTS FOR TRADE MARKS & PATENTS 9 Liability of Vendor situate in PRC (Cont’) To Purchaser (Cont’) Actionable under Contract Law and Civil Procedure Law –If PRC law is the governing law; –If governing law is foreign law, but no exclusive foreign forum clause; or –If no governing law or jurisdiction clause.

10. VIVIEN CHAN & CO. SOLICITORS & NOTARIES, AGENTS FOR TRADE MARKS & PATENTS 10 Liability of Vendor situate in PRC (Cont’) To IPR/Name/Brand owner Actionable under unfair competition laws in China if the infringer is in China:- –Complaints to be made to Fair Trade Bureau, IPRs need not be registered in China –Court Proceedings

11. VIVIEN CHAN & CO. SOLICITORS & NOTARIES, AGENTS FOR TRADE MARKS & PATENTS 11 Liability of Vendor situate in PRC (Cont’) To IPR/Name/Brand owner (Cont’) Actionable under trademark laws in China if it relates to an infringement of registered PRC trademark:- –Complaints to be made to Trademark Bureau –Court Proceedings, if it is proved that:- Use of identical or similar trademark; Knowingly sell goods with infringed trademark; or Produce false trademarks. Remedies available at court level –Account of profits; or –Actual damages.

12. VIVIEN CHAN & CO. SOLICITORS & NOTARIES, AGENTS FOR TRADE MARKS & PATENTS 12 Liability of Vendor situate in PRC (Cont’) To IPR/Name/Brand owner (Cont’) Actionable under advertisement law in China if the vendor is in China:- –Complaints to be made to Advertisement Regulatory Bureau –Court Proceedings Remedies available at court level – general damages

13. VIVIEN CHAN & CO. SOLICITORS & NOTARIES, AGENTS FOR TRADE MARKS & PATENTS 13 Liability of Internet Service Provider situate in PRC To the Purchaser, if:- – there is false description of the product Actionable in China as long as the server/publisher of the advertisement is in China Remedies available at court level – general damages

14. VIVIEN CHAN & CO. SOLICITORS & NOTARIES, AGENTS FOR TRADE MARKS & PATENTS 14 Liability of Internet Service Provider situate in PRC (Cont’) To the IPR/Name/Brand Owner, if the advertisement:- –Infringe the patent of the owner; –Disvalue the owners’ products or services; or –Unauthorized use of the name / image of the owner. Actionable in China once the server / publisher of the advertisement is in China –Complaints to be made to Advertisement Regulatory Bureau –Court Proceedings Remedies available at court level – general damages

15. VIVIEN CHAN & CO. SOLICITORS & NOTARIES, AGENTS FOR TRADE MARKS & PATENTS 15 Liability of Internet Service Provider situate in PRC (Cont’) To the IPR/Name/Brand Owner (Cont’) Actionable under trademark laws in China if it relates to an infringement of registered PRC trademark:- –Complaints to be made to Trademark Bureau –Court Proceedings, if it is proved that:- Use of identical or similar trademark; Knowingly sell goods with infringed trademark; or Produce false trademarks. Remedies available at court level –Account of profits; or –Actual damages.

16. VIVIEN CHAN & CO. SOLICITORS & NOTARIES, AGENTS FOR TRADE MARKS & PATENTS 16 Enforcement of Judgments Court Litigation –China does not have Reciprocal Enforcement Treaty with most jurisdictions No point in suing in foreign Courts, unless they have assets there Suing on foreign judgment in China is questionable, as it has no common law Buyer in China to sue in China if foreign seller have Foreign Investment Enterprise in China Arbitration –China is party to New York Convention –Convention award registrable at Second Intermediate Court