1. HONG KONG  BEIJING  SHANGHAI 1 BEIJING Suite 508, Changan Tower 10 East Changan Street Beijing 100006, China HONG KONG 38/F, Cosco Tower Grand Millennium Plaza 183 Queen’s Road Central Hong KongSHANGHAI Suite 1002, The Headquarters Building 168 Central Tibet Road Shanghai 200001, China *Affiliate Offices: CHONGQING and SHENZHEN Recent Innovations in Resolving Licensing and IP Disputes Arbitration/Mediation v. Litigation/Administrative Proceedings The People’s Republic of China LES Manila 2009 Makati Shangri-La Hotel, Makati City, Metro Manila, Philippines 10 June 2009 2:00pm to 5:30pm HONG KONG  BEIJING  SHANGHAI Alvin Chang alvinchang@vcclawservices.com

2. HONG KONG  BEIJING  SHANGHAI 2 When must/can the Licensor and Licensee arbitrate/mediate a dispute? Contractual ObligationContractual Obligation Agreement to do so when dispute has arisenAgreement to do so when dispute has arisen –Effect of an Arbitration Obligation –Automatic stay of proceedings in favour of arbitration –Effect of a Mediation Obligation prior to proceedings –Comply with contract and mediate first

3. HONG KONG  BEIJING  SHANGHAI 3 Article 128 of the Civil Procedure Law “… at the end of the court debate, a judgment shall be made according to the law. Where mediation is possible before rendering a judgment, a mediation shall be conducted.“… at the end of the court debate, a judgment shall be made according to the law. Where mediation is possible before rendering a judgment, a mediation shall be conducted. Articles 51 and 52 of the Arbitration Law “… the arbitration tribunal may mediate a case before the award … Where an agreement is reached through mediation, the arbitrator tribunal shall compile the mediation decision or award based on the agreement.”“… the arbitration tribunal may mediate a case before the award … Where an agreement is reached through mediation, the arbitrator tribunal shall compile the mediation decision or award based on the agreement.”

4. HONG KONG  BEIJING  SHANGHAI 4 Where does Arbitration/Mediation take place in China? Arbitration CIETACCIETAC other independent arbitral tribunals, may be over 10 in a cityother independent arbitral tribunals, may be over 10 in a cityMediation privateprivate generally, part of the litigation or arbitration processgenerally, part of the litigation or arbitration process

5. HONG KONG  BEIJING  SHANGHAI 5 CIETAC case in 2008 1.1,230 case accepted in 2008, 548 cases are foreign related: a)General sale or transaction involving goods: 389 b)Bid and advertisement: 201 c)Machinery and electrical equipment: 171 d)Real estate: 96 e)Equity stake (shareholder dispute): 79 f)Financial: 73 g)Joint venture agreement: 71 h)Construction and renovation: 70 i)Industrial raw materials: 55 j)Franchise stores: 16 k)OEM and compensation trades: 8 2.1,097 cases were ended in 2008: 707 cases were awarded; 300 cases were revoked; 90 cases were reconciled. 3.The total amount of these cases is 21 billion. 13 billion is foreign related.

6. HONG KONG  BEIJING  SHANGHAI 6 In the case of a dispute with Licensee giving to rise to termination, what enforcement venues are available to the Licensor in case there is no arbitration/mediation provision?

7. HONG KONG  BEIJING  SHANGHAI 7 People’s Court at all levels Trade MarkPatent - Invention - Utility Model - Designs Copyright Unfair Competition/ Trade Secrets State or Local Administrative Authorities of Industry and Commerce Local Patent Administrative Offices State or Local Copyright Administration Unfair Trade Bureau General Administration of Customs Trademark, Patent and Copyright Enforcement Bodies

8. HONG KONG  BEIJING  SHANGHAI 8 Enforcement Bodies Administration for Industry & Commerce - Trade Mark infringement - Trade Mark infringement Investigation, search and “seal”Investigation, search and “seal” administrative injunctionadministrative injunction destruction of infringing goods/removal of detachable labelsdestruction of infringing goods/removal of detachable labels

9. HONG KONG  BEIJING  SHANGHAI 9 Enforcement Bodies Administration for Industry & Commerce - Trade Mark infringement (Cont.) - Trade Mark infringement (Cont.) impose a fineimpose a fine order an apologyorder an apology suspension or cancellation of business licence, etc.suspension or cancellation of business licence, etc. - Efficient & Effective No need for bond or guarantee No need for bond or guarantee Ex-parte Ex-parte

10. HONG KONG  BEIJING  SHANGHAI 10 Enforcement Bodies Customs General Administration –Prior customs registration required for automatic protection –Approximate time for recordal: two months –Action at border only –No release, for certain IPRs –Bond from trade mark owner required, but much less than the value of the goods

11. HONG KONG  BEIJING  SHANGHAI 11 Customs General Administration –Bond How much – the commercial invoiceHow much – the commercial invoice –Goods values less then RMB20,000 → same value –Goods value between RMB20,000 and 200,000 → half of the goods value, but no less than 20,000, no more than 100,000 –Goods value over RMB200,000 → fixed, 100,000 –When? Must paid within 3 working daysMust paid within 3 working days Enforcement Bodies

12. HONG KONG  BEIJING  SHANGHAI 12 Enforcement Bodies Patent Administration Office -Mediatory in nature -Secure an agreement between infringer and patent holder cease production cease production destroy infringing items and moulds destroy infringing items and moulds pay damages pay damages undertaking undertaking - Proposal to strengthen its powers

13. HONG KONG  BEIJING  SHANGHAI 13 Enforcement Bodies People’s Court Orders before trial –Pre-action injunction »Evidence of infringement »Irreparable harm –Made within 48 hours –But plaintiff must sue within 15 days –Right of re-consideration

14. HONG KONG  BEIJING  SHANGHAI 14 Enforcement Bodies People’s Court Reasonable and Effective Bond –Cash, deposit of Title Deeds »Extent of Infringement »sales volume »reputation –Removal/ Storage costs –Maybe RMB 1 million or more

15. HONG KONG  BEIJING  SHANGHAI 15 Can an injunction order be made in arbitration? Unclear if pre-action injunction can be obtainedUnclear if pre-action injunction can be obtained Arbitration Law however provides for application to the court for preservation of property and evidenceArbitration Law however provides for application to the court for preservation of property and evidence

16. HONG KONG  BEIJING  SHANGHAI 16 THANK YOU