1. IPR and China – Putting Czech SMEs ahead of the game Presented by Helpdesk Experts: Simon Cheetham Jannik Skou

2. The Helpdesk Initiative European business is 99% SMEs, about 2/3 of employment & about 57-58% of value added (a bit like ratio of Chinese origin goods to all counterfeit seizures….) Definition of SMEs isn't only 'micro-enterprises' (under 10 people) but extends up to 250 employees, so covers more of economy than you might think SMEs tend to assume that IPR is: costly, technical, 'too complicated' and 'not for me' leading them to do even less than they could do otherwise SMEs have fewer resources so need help

3. Helpdesk services Office Network Research/Publication Business tools Training/Workshop Online Portal IP Expert Network

4. Online Portal – A business tool for you to use Upcoming events listed Ask our IP experts a question Navigation bar for ease of use Business tools easily accessible Helpdesk news Coming soon! E-learning module: Trademark protection in China

5. Workshop Agenda Getting ahead through innovation - why EU SMEs Need To Consider IPR What Do You Need to Protect? How Can Businesses Best be Protected: - Know before you go - While doing business with China

6. Why Do Companies Need To Consider IPR? EU - China trade in 2008 = US$360 billion EU China = US$113 billion EU China = US$247 billion Source: Ministry of Commerce for China

7. Prevention

9. Why Do Companies Need To Consider IPR? To protect products & ideas To protect & harness brands & reputation To justify research & development costs To take ownership of new rights To prevent other companies from using inventions & designs To keep competitors at a distance To create a market for future development To create a strong defence in case of conflicts / infringement To record attract investors To enable licensing- & co- operation agreements; To arrive at the best decisions for registering rights internationally.

10. What Do You Need To Protect? Brand names Inventions Technology Artistic works Literary works Domain names Designs Software Systems & procedures Know how Trade secrets

11. How Can Businesses Best Be Protected? Issues before you start doing business with China, you should consider: – Are your rights registered? – What countries are covered? – What about Chinese versions? – Who are you dealing with? – How do you know if they are reliable?

12. How Can Businesses Best Be Protected? China is a “first-to-file” country when it comes to IPR registrations. - Key issue for many EU Businesses – case study China, Hong Kong and Taiwan use separate legal systems, i.e. there is a need to file in both. For trademarks: register broadly in many classes, Chinese versions of your TM should be registered

13. How Can Businesses Best Be Protected? While you are there: – Contracts/NDAs/confidentiality – notarise agreements – Are they likely to develop your product – what about IPR? – Does your supplier/manufacturer have control of brand labels/moulds/production equipment/proprietary information? – Assess risks – who else does the supplier work for? Is there a conflict of interest?

14. How Can Businesses Best Be Protected? Precautions against loss of technology & IPR – Modular sourcing – Protect parts against copying – Integrate in-house if possible – Don’t openly send tech drawings – Keep data in Europe – Do your homework: Integrate employees

15. Case study: Great idea – poorly executed…

16. How Can Businesses Best Be Protected? Consider how you want the relationship to work and what controls you need to put in place to secure your rights Conditions should be put into a written agreement and accurately translated and understood by all parties Take steps to verify that your potential business partner are genuine and share the same goals as you If possible, consider keeping your most valuable IP a ‘trade secret’, for example, the formula for Coca-cola. Business partners and IPR protection

17. How Can Businesses Best Be Protected? Consider what samples and promotional materials you provide to potential partners Ensure that your property is protected after an agreement has ended e.g. include the return of moulds within the written agreement Clearly state what Intellectual Property Rights are owned by whom in respect any items you supplied Use confidentiality, non-competition and non-disclosure agreements Specifically state that your supplier may NOT use a sub- supplier without your permission Business partners and IPR protection

18. How Can Businesses Best Be Protected? Register IPR - Use a layered defence Domain names – a growing issue in China: list of officially recommended registrars on the CNNIC website: http://www.cnnic.net.cn/en/ind ex/0L/index.htm Keep trade secrets ‘secret’ Contracts / sourcing NDA / Confidentiality agreements - notarize Check & ensure IP materials used correctly Control labels / packaging / marketing material etc

19. Detection Police your market e.g. -Check suppliers -Audit manufacturers -Internet sweeps -Feedback from customers/sales staff -Market surveys -Customs (China & EU) Trade Fairs -Check exhibitor contract -Research other exhibitors -Prepare an IP pack -Determine strategy

20. Enforcement Administrative action: – There are over 30 different administrative authorities. No-one coordinates nor investigates. You need to obtain evidence and convince the authorities, who can: – carry out unannounced raids – seize, impound and destroy fake goods – issue punishment decisions – impose fines (not large) – revoke business licenses Criminal action – usually escalated via Admin Authorities SAIC building - Beijing

21. Enforcement - Raids Examples of raids – car parts, garments, shoes

22. Enforcement - Raids Exterior of Military area – PLA production base Shoe boxes printed with sale price in £ & Euros Factory making infringing footballs

23. Enforcement Civil action – plenty of resources: - 120,000+ lawyers, 10,000+ law offices, 350,000 court staff To guide you through the maze: – Trade associations / Chambers of Commerce etc – China IPR SME Helpdesk – Complaint Centers

24. Summary & Questions You don’t have to be an expert –there are plenty out there Register rights – if you don’t own it you can’t protect it You need to be the first to file IPR in China Use good contracts Prevention better than cure Be proactive

25. Online Protection of IPR in China Jannik Skou Thomsen Trampedach GmbH

26. Online Protection of IPR in China

30. Content – Introduction 1.Overview: The Internet and China 2.Why is internet domain name protection in China important? 3.How can European SMEs protect their IP assets online and mitigate related risks? 4.The domain name registration process in China 5.How can one recover an infringing.cn domain name? Online Protection of IPR in China

31. Introductory Project Meeting EU-China Chamber of Commerce, Beijing 12 March 2009 Jannik Skou Danish partner at Thomsen Trampedach GmbH, Swiss based consulting company Has 10 years experience with domain name strategy and online brand protection Serviced a number of top 500 multinational brands Service Areas Domain Name Strategy, Online brand protection, domain name and brand monitoring, recovery of domain names, investigations Business process optimization for domain name registrars and ISPs Introduction

32. Online IPR Strategy Operations Domain name policy, work flows, monitor, enforce etc. MarketingIT IPR Protection VisibilityInfrastructure and security Domains as IP assets IP Strategy Domain Strategy

33. 1. The Internet in China is booming Almost 300 million netizens Surpassing the US as largest Internet Nation ( VIDEO CCTV 2008) VIDEO CCTV 2008 Growth of 41.9 % Source; CNNIC.cn

34. Internet is going mobile – especially in China 650 Million mobile users* 40 % of netizens accessing Internet via Mobile phones ** China Telecom to purchase 50 million mobile phones this year, 20 million 3G mobile phones.* China´s ”go West – programme” likely to accelerate growth in number of mobile netizens in China Why important for European SMEs? Direct navigation > increase importance of domain names – Impatient : Guess for the name of the website Sources: *ChinaDaily.com.cn and **CNNIC.cn

35. Rapid Growth in Domain Names The world’s largest country code;.cn More than 14 million.cn registrations.cn dominating domain registrations in China (80%.cn)

36. Domain Names in China not just another TLD Romain Characters.cn Simplified Chinese.cn Traditional Chinese.cn Chinese Characters ”dot” Chinese Characters Key Words Wireless Keywords 34 Regional suffixes (bj.cn, sh.cn etc.).cn / com.cn/ net.cn / org.cn domain.cn 清华大学.cn 北京大学. 中国 手机 – (‘mobile phone’ in Chinese)

37. The.cn Domain name regulations have four important characteristics It is based on a ‘first come, first served’ principle Instant registrations Low costs Low demands for documentation as long as the domain name is available, anybody can register the domain.

38. Future Domain Name Developments already end of 2009 New gTLDs -.car,.shop,.brand,.berlin New fast track IDNs (internationalized Domain Names) – local characters ”dot” local characters – Chinese government specifies four Chinese character domain names as the first candidates which are ".Zhongguo (means China)", ".Gongsi (means company)", ".Wangluo (means Internet) and ".CN", which is the original domain name in China's domain name system. * VIDEO chinese characters in domain suffixes *Source: http://english.ipr.gov.cn/ipr/en (China Daily)http://english.ipr.gov.cn/ipr/en

39. Online Protection of IPR in China Content – Introduction 1.Overview: The Internet and China 2.Why is internet domain name protection in China important? 3.How can European SMEs protect their IP assets online and mitigate related risks? 4.The domain name registration process in China 5.How can one recover an infringing.cn domain name?

40. Why is internet domain name protection important in China? I have a.com domain name or a.cz – that should be sufficiant... You heard that Chinese Chery will buy Volvo? Let us find them:

41. Chinese Car Manufacturer...easy to find? Oups, I forgot the ”. ” after www

42. Try again... www.chery.com, right?

43. I can buy that...just make an offer...

44. … it must be cherycars.com then …

45. Or chery-auto.com ?

46. Or cherymotors.com ?

47. What about Google then ?

48. Hmmm ….do I have to look for a.cn domain?

49. Cheryauto.cn ?

50. Maybe just chery.cn ? Where is the ENGLISH button? Chinese use and search for.cn... And Expect Chinese Content!

51. Internet in China attractive.. For foreign companies... And infringers More shopping / purchasing online Easy to establish online business – Less administration in terms of JVs, WOFEs etc. Large growing domestic market BUT: Easy for Criminals as well – Poor protection for right owners – Easy to stay anonymous – Easy to copy online – Easy to ”hit and run” – Hardly any penalties

52. Types of Online Threats From Cybersquatting to Typosquatting Online Counterfeiting – Infringing domain name – Under Alibaba.cn, baidu.cn, ebay.cn? Elsewhere Fraud – Scams and slamming Phishing False affiliation

53. Possible impacts of online criminal activity Traffic diversion Lost emails*@company.cn*@company.cn Brand dilution Lost reputation Lost trust > Lost business and lost customers or even law suits from consumers against IPR holders!

56. Online Protection of IPR in China Content – Introduction 1.Overview: The Internet and China 2.Why is internet domain name protection in China important? 3.How can European SMEs protect their IP assets online and mitigate related risks? 4.The domain name registration process in China 5.How can one recover an infringing.cn domain name?

57. 3. How can European SMEs protect their IP assets online and mitigate related risks? Create a Domain Name Strategy – What is the purpose of domain name registrations? Protection of IP Increasing visibility (Online marketing) Infrastructure (emails, websites, intranet) Security (risk mitigation – avoid lost emails, lost traffic etc)....REGISTER! Do not rely on enforcement First step, though is...

58. Research Domain Name Audit Which domains are registered – by whom? How are these domain names being used? (Web content, emails)

59. Set guidelines Domain Name Policy Which exact domain names and keywords to register? – company names, product names, abbreviations, translations, transcriptions, IDN.IDNs with hyphens? Regional TLDs? How to register and use the domain names? – Active use, individual websites for Search engine optimization, DNS, emails, redirecting? Which existing third party domain names and keywords to recover? – Anonymous buy back? Legal actions? Observe?

60. Monitor and Enforce Monitoring Which possibly infringing domain names are registered by third parties on an ongoing basis? Which new websites are selling our products or eroding our brands? New Online threats emerging? New industry trends? Enforcement Recover third party domain names, take down of infringing websites, or take legal actions.

61. Online Protection of IPR in China Content – Introduction 1.Overview: The Internet and China 2.Why is internet domain name protection in China important? 3.How can European SMEs protect their IP assets online and mitigate related risks? 4.The domain name registration process in China 5.How can one recover an infringing.cn domain name?

62. 4. The domain name registration process in China Translate name – Transliterate and transcript Check for availability – Roman and Chinese names – http://www.cnnic.cn/en/index/index.htm http://www.cnnic.cn/en/index/index.htm Check for infringement – Do others hold a right to this domain name (TM, company name?) Choose a registrar – Usual European registrar or get Chinese registrar recommended – Foreign registrars http://www.cnnic.cn/html/Dir/2007/06/25/4671.htmhttp://www.cnnic.cn/html/Dir/2007/06/25/4671.htm Activitate domain name – Point to website, create emails, other Renew domain name Price: 15-40 EUR per.cn domain name per year. Volume discounts typically available. – Multiple periods (1-10 years available) Special Chinese Restrictions on domain name registrations are...

63. Article 27 1) Those that are against the basic principles prescribed in the Constitution; 2) Those jeopardize national security, leak state secrets, intend to overturn the government, or disrupt of state integrity; 3) Those harm national honor and national interests; 4) Those instigate hostility or discrimination between different nationalities, or disrupt the national solidarity; 5) Those violate the state religion policies or propagate cult and feudal superstition; 6) Those spread rumors, disturb public order or disrupt social stability; 7) Those spread pornography, obscenity, gambling, violence, homicide, terror or instigate crimes; 8) Those insult, libel against others and infringe other people's legal rights and interests; or 9) Other contents prohibited in laws, rules and administrative regulations. Article 28 Domain Name registrant sign the registrant agreement with the Domain Name Registrar. (Online) Source; China Internet Domain Name Regulations – Order No.30, Ministry of Information Industry of the People's Republic of China (from cnnic.cn) – Also; please BE AWARE OF...

64. What to do? ignore the email reply to the email that you will report this email to CNNIC (the Chinese domain name registry) as a “slamming” and fraud attempt forward the email to CNNIC at service@cnnic.cnservice@cnnic.cn register some of those domain names you were maybe already considering to register. Register through your local or usual registrar.

65. Online Protection of IPR in China Content – Introduction 1.Overview: The Internet and China 2.Why is internet domain name protection in China important? 3.How can European SMEs protect their IP assets online and mitigate related risks? 4.The domain name registration process in China 5.How can one recover an infringing.cn domain name?

66. Assess impact – Risk – Rights Options – Buy back – Legal actions Domain Dispute Go to court

67. Option 1 Buy Back – No legal rights? – Urgency? – Anonymous through agent? – Price; typically just lower than alternative dispute resolution fee

68. Option 2 – Legal action – Domain Dispute Legal assistance: – Send polite cease and desist letter – Send ”threatening” cease and desist letter If no success or response: ‘CNNIC Domain Name Dispute Resolution Policy’. – HKIAC Hong Kong International Arbitration Center (http://dn.hkiac.org/cn/cne_welcome.html) – CIETAC China International Economic and Trade Arbitration Commission’s http://dndrc.cietac.org/static/english/engfrmain.html http://dndrc.cietac.org/static/english/engfrmain.html – In Chinese if no other agreement – all documents to be translated – Cost for one domain name dispute case is appr. EUR 450, to which one has to add an attorney fee of around 1200 EUR. – Duration 2 months It is recommended to get assistance from IP Law firms - either Chinese or international - with expertise in domain name disputes.

69. Option 2 - Legal Action - Domain Dispute The main criteria for proving a prior right to a domain name are – the disputed domain name is identical with or confusingly similar to the complainant's name or mark in which the Complaint has civil rights or interests; – the disputed domain name holder has no right or legitimate interest in respect of the domain name or major part of the domain name; – the disputed domain name holder has been registered or is being used the domain name in bad faith. Note: A domain name dispute has to be carried out within two years after the initial registration of the.cn domain name. After this period one has to go through the legal system, which can be a timely and costly affair.

70. Latest decisions – as of April 09

71. Option 3 Go to court If either party wishes to go to court the general legal system takes over from arbitration. Costs: 100-600 EUR plus attorney fee!! Duration: within a year (8-10 months)* Appeal – additional one year Sources: Bettinger, 2008: ”Handbuch des Domainrechts.”

72. Wrap Up Poor Online IPR Protection may lead to – Lost traffic (Direct navigation) – Poor visibility SEO – brand dilution – fraud – lost reputation – lost emails – Counterfeiting – Lost Customers Solutions Create a strategy: – Proactive approach – REGISTER Cheap and fast – also for infringers Monitor and enforce – Enforcement is working : time and cost consuming

73. Online IPR Strategy Operations Domain name policy, work flows, monitor, enforce etc. MarketingIT IPR Protection VisibilityInfrastructure and security Domains as IP assets IP Strategy Domain Strategy

74. Thank You Mr. Simon Cheetham is the Team Leader for the China IPR SME Helpdesk and works for Erinyes International in London Questions ? Helpdesk expert Mr. Jannik Skou is based in Denmark and works for Thomsen Trampedach GmbH www.thomsentrampedach.com Email: enquiries@china-iprhelpdesk.eu Tel: +86 (10) 6462 0892 Website: www.china-iprhelpdesk.euwww.china-iprhelpdesk.eu