1. Intellectual Property Rights Protection in China and Hong Kong Jurjen Groot External Expert / China IPR SME Helpdesk Sandanski, 20 November 2015 1

2. Today’s speaker Name: Jurjen Groot Firm: CMS Location: Utrecht, The Netherlands Jurjen Groot advises European clients on corporate, commercial and intellectual property matters related to their business in China. He worked 3 years for CMS in Shanghai and currently works for CMS in The Netherlands. Jurjen’s recent IP related work includes advising a Dutch market leader in optical fiber on licensing and IP protection matters, assisting a world known Dutch innovative storm umbrella company on its IP protection and anti- counterfeiting strategy in China, and advising a winner of the Shell Livewire Young Business Award on protection of its IP in China. 2 20 November 2015 Insert Photo

3. Agenda 3 20 November 2015 IPR Protection in China: Framework Types of IPR in China – Registration / Application Enforcement of IPR in China IPR Protection in Hong Kong Case studies & Lessons Learned Take-away messages Overview China and South-East Asia IPR SME Helpdesks

4. IPR Protection in China: Framework 4 20 November 2015 Fast changing landscape, substantial improvements Extensive laws and regulations developed First to file/register system Separate national IP systems: protected in home market(s) does not (automatically) mean protected in China! Infringement is almost inevitable, but enforcement is possible: choose your product specific IPR strategy & pick your battles!

5. Patents 5 20 November 2015 Different patents in China: – Invention Patents (20 years protection, application 3 – 5 years) – Utility Models (10 years protection, application appr. 8 months) – Industrial Design (10 years protection) Costs: 3500 – 11500 euros Chinese translation needed

6. Types of IPR in China 6 20 November 2015 Patents: PRC Patent Law and Implementation Rules – Invention Patents – Utility Models – Industrial Design Trade marks: PRC Trademark Law and Implementation Rules Copyright: PRC Copyright Law Domain names: Measures Administration Internet Domain Names

7. Patents 7 20 November 2015 Different patents in China: – Invention Patents (20 years protection, application 3 – 5 years) – Utility Models (10 years protection, application appr. 8 months) – Industrial Design (10 years protection) Costs: 3500 – 11500 euro Chinese translation needed

8. Trademarks 8 20 November 2015 “First come first serve”, be sure to be first! Others can register your trade mark in China, can cause big trouble Advisable to also register Chinese translation of trade mark Registration period: 12 to 18 months Protection period: 10 years, can be renewed Costs: appr. 250 euros

9. Trademarks – new PRC Trademark Law 9 20 November 2015 Entered into effect on 1 May 2014 Multiclass applications possible Higher compensation amounts (6 x higher) and administrative fines (5 x higher) Stricter on bad faith registration: registration rejected if applicant has a contractual or business relation with the (in China non-registered) right holder and knows of the prior right’s existence. However: strict enough?

10. Copyrights 10 20 November 2015 Originate automatically by creation of the work However: can be registered in China with Copyright Protection Center of China After registration: Copyright Registration Certificate, can be very helpful to prove that the copyright is yours But beware of software (source codes)!

11. Enforcement of IPR in China 11 20 November 2015 Cease and desist letter Administrative proceedings Civil court proceedings Criminal proceedings Customs protection

12. Cease and Desist Letter 12 20 November 2015 Quick and can be quite effective Strong signal that you are serious about protection your IPR If important infringers: be sure to first finish investigation/gather evidence Letters can also be sent to online shops (e.g. Taobao, Alibaba)

13. Administrative Proceedings 13 20 November 2015 Trademark: AIC (powerful) Patent: SIPO (less powerful) Can be very quick and effective Raids and injunctions No financial compensation possible

14. Civil Court Proceedings 14 20 November 2015 Specialized IP divisions in most Intermediate and High Courts Compensation of damages possible However: not always adequate compensation – 90 pct of cases below $100,000 – not seldom small % of total damages claimed Complicated invention patent infringements

15. Criminal Proceedings 15 20 November 2015 Local Public Security Bureau (PSB) Effectiveness varies Beware: no longer control of the case

16. Customs Protection 16 20 November 2015 IPR can be registered with customs On the basis of random checks Most effective for trade marks Can be combined with Customs Protection in EU Free Customs service Be sure to “educate” Customs about products and infringers

17. Enforcement (2) Criminal Actions Customs raid and seizure  Copyright  Trade Marks Shadow Companies 28 May 2014 17

18. Case Study I: Trade Marks & Customs 18 20 November 2015 Foreign company A has a good reputation in western fashion industry. Has own brand for shoes and clothes. Products manufactured in China, sold in Europe. A only registered TM for shoes in China. Competitor B has registered TM for clothes in China similar to A’s TM for shoes. B has also recorded that TM with China Customs. When company A shipped its clothes from China, Chinese customs detained the goods, and confiscated because of TM infringement.

19. Case Study I: Lessons Learned 19 20 November 2015 Trade mark registration must fully cover all goods of your company. Your trade mark is only protected in China if registered in China. Customs registration can be effective way of trade mark protection, also against you if you didn’t register your trade mark(!!)

20. Case Study II: Industrial Design & Exhibition 20 20 November 2015 Foreign company T designed a tractor, which was manufactured in China under OEM by company M. Their self-designed OEM agreement stated that IPR on this tractor remains with company T. After exhibiting the tractor on a fair in Europe, public feedback: engine too small.

21. Case Study II: Industrial Design & Exhibition 21 20 November 2015 Company T and M jointly designed a bigger engine tractor. Company T then started to register industrial design in Europe and in China. But: T discovered that M had already registered in China(!). T ended relationship with manufacturer and acquired another Chinese manufacturer to produce its tractors. M then sued T in China for infringement of their registered industrial design. Also, they requested the Customs to seize the T’s products, so that it could no longer export.

22. Case Study II – Legal Actions 22 20 November 2015 T then came to our law firm. 1 st step: start industrial design invalidation proceedings with SIPO in Beijing, with argument: lack of novelty. We won SIPO proceedings. M appealed in court, and finally even Beijing High Court, with no success. Local court proceedings also decided in favor of our client T. Total time spent: 2 – 3 years Result: Industrial design of competitor cancelled and no more legal proceedings against client: it could manufacture and export again. However: no way to prevent competitor from also doing so: no favorable market position(!). Also, T could not claim contractual damages for breach of OEM agreement, because wording only covered first (small engine) tractor model.

23. Case Study II – Lessons Learned 23 20 November 2015 Registration in both Europe and China too late: big consequences! Ineffective OEM agreement: self-made agreement did not offer sufficient IP protection, T with empty hands against M. Customs protection can be very effective – also against you! Displaying product on fair before registration IP very risky. Uphill battle because competitor had certificates and client did not.

24. Must be registered with the Trademarks Registry in Hong Kong 10 years, renewable 45 classes - multi-class applications available 20 November 2015 IPR Protection in Hong Kong – Trade marks

25. Application Deficiency Checking Search and Examination Publication for Opposition Hearing Registration 20 November 2015 IPR Protection in Hong Kong – Trade marks (2)

26. Standard Patents The State Intellectual Property Office The United Kingdom Patent Office The European Patent Office in respect of patent designating the U.K. 20 years Two Stage Application Procedure: Request to record published patent application Request for registration and grant 20 November 2015 IPR Protection in Hong Kong – Patents

27. Short Term Patents 8 years Formality examination only Single Stage Application Procedure: Direct application in Hong Kong Patent Reform Dual system maintained Original Patent Grant Regulate patent attorneys and agents 20 November 2015 IPR Protection in Hong Kong – Patents (2)

28. Civil Actions 1.Cease and desist letters 2.Litigation - mediation 3.Interim injunctions / Mareva injunctions 4.Anton-Piller Order / Norwich Pharmacal Order 5.Trial 6.Copyright Tribunal 20 November 2015 Enforcing your IP in Hong Kong

29. Take-away messages 29 20 November 2015 Be sure to file first (before your Chinese partner/competitor!) Register your trademark (preferably also Chinese translation) in China Protecting your IP should be part of your business model Careful with samples and exhibitions Your website is also accessible in China…

30. China and South-East Asia IPR SME Helpdesks 30 20 November 2015 30 Enquiry Helplines IP Guides & Newsletters E-learning & Business Tools Training Workshops & Live Webinars Websites & Blog

31. Enquiry Helpline IPR one-to-one consultations: E-mail, telephone, face-to-face First-line advice on China countries IPR matters Confidential Delivered by China IPR specialists Available for EU SMEs and SME intermediaries question@china-iprhelpdesk.eu +86 (10) 64620892 31 20 November 2015

32. Information & Materials Library of publications: – IP specific guides, incl. patents & trade marks – Industry specific guides, incl. textiles, machinery, creative industries – Business guides, incl. technology transfer – Hong Kong and Macao Factsheets Quarterly Helpdesk newsletters Article placement Topical blog posts 32 20 November 2015

33. Training workshops & webinars Workshops across Europe and China Addressing general IPR and industry specific IPR matters Trainings delivered in several languages Free one-to-one consultations Webinars: Save time by joining these interactive training sessions from your own office or watch recordings online 33 20 November 2015

34. Online portal Practical IPR guides E-learning modules Case study catalogue FAQs Helpdesk newsletters Event information Latest blog posts Helpdesk videos www.china-iprhelpdesk.eu 34 20 November 2015

35. The China IPR SME Helpdesk provides free, confidential, business-focused advice to European Small and Medium Enterprises (SMEs) relating to IPR in China  Helpdesk Enquiry Service / Training & Events: question@china- iprhelpdesk.euquestion@china- iprhelpdesk.eu  Materials  Online Services -www.china-iprhelpdesk.euwww.china-iprhelpdesk.eu For more information about our services and how the China IPR SME : Telephone/Hotline: +86 (10) 6462 0892 35 20 November 2015

36. FeedbackQuestions Discussion 36 20 November 2015