CHINA INTELLECTUAL PROPERTY LAW NEWSLETTER
Vol. 4 , No.13 - November 20, 2003
TOPICS THIS ISSUE:
- Matrix Revolutions' Makes Almost Us$2.5 Million In China
- Counterfeting A Concern For Parts Suppliers
- Us To Press China On Intellectual Property, Farm Issues
- Online Battle Between 'Freedom' And 'Copyright'
Matrix Revolutions' Makes Almost Us$2.5 Million In China
The Matrix Revolutions has made almost $2.5 million US in China since a simultaneous worldwide opening that Chinese promoters say helped keep revenues from being undermined by the country's notorious counterfeiters.
China plans to release more films in co-ordination with other markets to help curb rampant piracy, Weng Li, vice-manager of the film exhibition and distribution arm of the state-run China Film Group.
The Matrix Revolutions opened on November 5, the first foreign movie to be released in China simultaneously with the global market.
"The globally simultaneous debut contributed to the movie's box office revenue and, more important, helped theatres fight against piracy," said Weng, whose company is one of two Chinese distributors of the film.
Foreign movies are often released in China months or even more than a year after their overseas debut - a delay that has enabled and encouraged widespread piracy by Chinese counterfeiters.
Giving Chinese audiences quicker access to those movies might reduce the get-it-first incentive to buy pirated DVDs.
"The longer it's out there, the more opportunities there are for pirates. This could slow the pirates down," said James Wise of the International Recording Media Association's Hong Kong office.
(Source: The People's Daily)
Counterfeting A Concern For Parts Suppliers
Automotive parts counterfeiters are getting bolder and more pervasive, causing increasing problems for traditional suppliers of the components.
Counterfeiting costs the global automotive industry a reported US$12 billion annually-US$3 billion in the U.S. alone-and about 750,000 jobs, according to the Motor & Equipment Manufacturers Association. This contributes to safety risks, inferior quality or performance, lost sales and damage to a brand's reputation for vehicle and component makers alike, the association claimed.
The issue mainly affects aftermarket parts for the passenger and heavy-duty vehicle segments, but it is also making its way into the original equipment parts sector as carmakers migrate to China, suppliers say.
Counterfeiting is the theft of the goodwill associated with a trademark, said Sharon R. Barner, chairperson of the intellectual property litigation practice at Foley & Lardner Global Partnership. There's no law prohibiting your competitors from copying your product as long as there's no confusion about the source. But using your trademark to confuse the consumer and present their products ''as the real McCoy,'' is not fair competition, she said. ''It's trading on someone else's mark and goodwill.''
China is the primary source of counterfeit products, accounting for 70% of the US$98 million worth of goods seized in the U.S. last year, Barner said. But the booming country is not the only source.
Federal-Mogul Corp., which inherited a slew of counterfeiting problems with its acquisition of T&N P.L.C., is monitoring about 50 cases around the world, including Asia, Northern Africa, the Middle East, eastern Europe, South America and the Caribbean, said Jon Shackelford, patent counsel for the supplier.
You used to be able to scan a region for counterfeit activity by checking for underpriced products, said Tom Strohm, general director of marketing for General Motors Corp.'s ACDelco division. But counterfeiters are getting more sophisticated, ''raising their price points so they don't stick out like a sore thumb.''
According to Ed Zimmer, ECC president and CEO, the counterfeiters also are growing bolder. One that had knocked off parts originally made by lighting producer Electronic Controls Co. was brazen enough to display them as their own at a trade show in the U.S.
Another company in Pakistan was attempting to register Federal-Mogul's trademarks and get injunctions against the supplier, prohibiting it from making its own products, Shackelford said. And still another bragged about its expertise in copying Hella North America Inc.'s processes as well as its components, and then proposed a joint venture with Hella, said Jason Bonin, Hella's vice president of business development and lighting technology.
It is difficult for a manufacturer to get a grasp on the issue as it affects its own operations, but that is a vital first step, suppliers said during an October conference on the subject, organized by the Original Equipment Suppliers Association and sponsored by Foley & Lardner.
Auto makers like GM and Ford Motor Co. have dedicated resources to combating counterfeit operations. According to Strohm, GM itself has conducted more than 475 raids, which led to the breakup of nearly 400 counterfeiting schemes and the seizure and destruction of US$180 million worth of counterfeit goods. But the true costs are on the brand equity side, Strohm said, and in the safety hazards caused by things like brake shore linings made from wood chips, cardboard, sawdust and grass.
It is important for manufacturers to ''plug in,'' he said. ''If you have a recognized brand in the marketplace, you're a target.''
Parts makers like Federal-Mogul, Freudenberg-NOK G.P. and Mark IV Automotive Inc. are forming task teams to locate and stop counterfeiting.
Identifying and stopping counterfeiters takes an organized effort, Shackelford said. Manufacturers need to preselect attorneys in problem regions and give them official power of attorney to avoid delays in raiding alleged counterfeiting operations, he said, adding that they also should register their trademarks and brands in all problem countries and use them consistently to make identifying problems easier.
But trademark registration takes time, said Susan McFee, trademark counsel for Ford Global Technologies L.L.C. The fastest she was ever able to get one was in 18 months, ''and that was at a good clip.'' Suppliers should consider that with the launch of new products in other countries, she advised.
It also is important for manufacturers to monitor their suppliers or partners in foreign places, said Michael Hathaway, a partner with Nathan Associates Inc. A company inadvertently can contribute to counterfeiting by not closely monitoring all production shifts at the operations of its foreign partners or vendors.
''As people look for lower-cost places to manufacture, that increases intelligence and the ability to compete there,'' said Ronald W. Wangerow, intellectual property counsel for Freudenberg-NOK.
While many manufacturers see counterfeit products aimed at their replacement market offerings, Mark IV is battling the problem in the OE market. ''Of concern to us is we've seen our (original equipment manufacturers) go over to (offshore) markets and source components that are counterfeit parts of our own,'' said Dan Engler, vice president of supply management, engineering and product development.
The questionable parts are exact duplicates of the tensioners Mark IV produces, he said.
''We're having very sensitive discussions with our customer right now,'' Engler said. ''We are assessing the ethical, confidentiality and infringement issues.''
(Source: Crain Communications, Inc. )
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Us To Press China On Intellectual Property, Farm Issues
Deputy U.S. Trade Representative Josette Shiner will press China to crack down on illegal copying of U.S. products and to open its market to more U.S. farm goods during a visit, said U.S. trade officials.
"America's manufacturers, entertainers, engineers and scientists continue to lead the world in innovation and creativity. It is absolutely critical that their legal rights to their inventions, brand names and product reputations are respected and protected by our trading partners," Shiner said in a statement.
The trip is the third for Shiner to the region in the past five weeks and comes as the Bush administration is under pressure to trim the United States' huge trade deficit with China, which totaled a record US$103 billion last year and is projected to hit US$120 billion this year.
U.S. officials have identified intellectual property rights as an area where the United States could take action against China at the World Trade Organization.
The U.S. Trade Representative's office said Shiner was leading two separate delegations to Beijing - one focused specifically on copyright, patent and trademark issues and another on the overall trade relationship.
"We will be pressing the range of concerns we have with China's restrictions on our businesses' access to the China market," Shiner said. "China is already our sixth largest export market, but we still have a long way to go before we can be confident that our manufacturers and farmers face a level playing field in China."
The United States has a variety of concerns with China's unpredictable and inconsistent treatment of U.S. agricultural goods, including soybeans, cotton, wheat and other commodities, incomplete fulfillment of China's WTO commitments on market access for service industries, and discriminatory tax policies which disadvantage American exports to China, among other matters, USTR said.
(Source: Reuters News Service)
Online Battle Between 'Freedom' And 'Copyright'
The magic powers of boy wizard Harry Potter were not enough to prevent him from being pirated by the Internet in China, which evoked a national debate on "freedom" and "copyright" in cyberspace.
Celebrated as one of children's most favored books, the "Harry Potter" series published its 5th book "The Order of the Phoenix" on June 21. Beijing based People's Literature Publishing House started its translation as soon as it got the book's copyright.
Apparently some people took the opportunity to put a Chinese version of the book on the Internet before its legal debut, bringing huge losses to the publishing house.
Experts pointed out that, both at home and abroad, the fight against Internet piracy is far from satisfactory. Internet proponents, on the other hand, hold that abundant information and convenient access are the core attractions of the Internet over other kinds of media, while too strict limits will surely restrain the free spread of resources.
The Internet is particularly popular among college students, who have access to a campus-wide information system and a great deal of free services for downloading software, films and music. In fact, most of these services are illegal.
"The Internet is for sharing resources. Generally speaking, students have greater demand for knowledge and information than other social groups, but without a stable income, it is impossible for us to pay every copyright," said a college student.
An Internet writer with the nickname of "ruffian dragon" said that most people post their letters online simply because they want more people to read.
"Reading articles online is just like borrowing books from a friend. Even if you have a strong sense of copyright, you are unlikely to pay the money to the author" he said.
However, some people disagree. In February 2001, Wu Weijie, who wrote an article named "Rose in Dusk", went to court claiming that Rongshuxia Computer Co. Ltd in Shanghai infringed on his copyright and asked for 1 yuan (0.12 US dollars) compensation. The case ended with the company's open apology published on its homepage.
What Wu wanted, experts said, was not money, but his deserved rights. In fact, more and more people have set out to protect their intellectual property rights (IPR) through legal channels.
"Every year, China's courts accept around 5,000 to 6,000 cases involving IPR and hundreds of them concern Internet IPR." said Jiang Peizhi, presiding judge of the 3rd civil judgment court of China's Supreme People's Court.
Xu Jiali, the top lawyer with Beijing's L&A Law Firm, thinks that sharing knowledge does not mean using it freely. Most people have a very weak sense of protecting their IPR on the Net, and most pirates also didn't realize that they had infringed on other's rights.
"So far, no country in the world has found a proper solution to this problem." Xu added.
Many website operators argued that there are tens of thousands of websites in China, involving millions of works of authors and musicians, so it is unrealistic to sign contracts with them one by one.
On the other hand, given the fact that no agreed charging standard on Internet works exists, individual authors may not want to bargain with multiple users after each of their works is published online.
Experts suggested establishing a kind of agent, issuing remuneration to those Net writers who have applied as well as charging fees from those website operators.
Luo Donchuan, deputy presiding judge of the 3rd civil judgment court of China's Supreme People's Court, said that if wrong action happens from using works on the Internet, the website should be responsible for it. And to enhance healthy development of the Internet, the problems concerning Internet IPR must be closely studied and corresponding solutions worked out.
(Source: The People's Daily)
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