News and Cases from China: January 2017

1. Canon fined RMB 300,000 (approx. US$ 43,000) for antitrust procedural breach

Issue date: 04 January, 2017

China’s Ministry of Commerce (MOFCOM) has imposed an administrative penalty on Canon for having failed to follow the correct anti-trust procedures when declaring its acquisition of Toshiba Medical System Corporation. MOFCOM initiated an investigation on 21 October 2016 and found that the acquisition involved a concentration of business that required the appropriate declaration. Canon and Toshiba Medical each generated more than RMB 400 million in revenue; in 2015, their combined revenue was over 2 billion.  However, because the acquisition did not preclude or restrict competition, MOFCOM decided merely to impose an administrative fine of RMB 300,000 for failure to lodge the appropriate declaration.  The acquisition had originally been structured in two steps, but MOFCOM considered that viewed as a whole it fell within the provisions of Article 20 of the Anti-Monopoly Law.  A declaration was, therefore, required.



2. American Company, GPNE, claims compensation of RMB 900Million (approx. US$ 129 million) in patent infringement action against Apple

Issue date: 05 January, 2017

The third hearing in patent infringement proceedings relating to the iPad and various iPhone devices, GPNE v Apple, took place in the Shenzhen Intermediate People’s Court on 28 November 2016. The patent in suit, for a ‘paging method and device’, relates to the General Packet Radio Service standard. Since 2008, the plaintiff has sued Motorola, Cisco, Blackberry, Samsung, LG, Sony Ericsson, Sharp, HTC and other famous telecommunication device companies, reaching global settlements or signing patent licensing agreements. It also sued Nokia in China, subsequently reaching agreement with Microsoft after it acquired the Nokia mobile phone business. In the current proceedings, GPNE has increased its original damages claim to RMB 900 million, making it the highest IP damages claim in mainland China to date,



3. SPC releases Regulations on Several Issues concerning the Trial of Administrative Cases involving the Authorization and Determination of TM Rights

Issue date: 11 Jan, 2017

Effective date: 1 Mar, 2017

The SPC has released Regulations clarifying a number of important issues concerning administrative trade mark cases. The Regulation contain 31 provisions dealing with both substantive issues, such as the scope of examination, the requirement of distinctiveness, prior rights in relation to well-known marks, copyright issues, and rights in names, and procedural rules (statutory procedures and non bis in idem etc.). Song Xiaoming, the head of No. 5 civil tribunal of the Supreme People's Court, introduced and provided background to the main provisions of the Regulations as follows:

1. With reference to the original intention of the Trade Mark Law, the Regulations clarify a number of issues that have caused problems in practice. 

2. Article 15(3) gives effect to the principle of good faith, protecting prior rights and restricting malicious cybersquatting. Article 5 provides that the names of certain public figures cannot be registered as trade marks. Highly distinctive names of characters and works are protected by the ‘prior rights’ provisions in Article 32 of the Trademark Law and Article 22.2 of the Regulations

3. The Regulations will increase the efficiency of trade mark registration and the handling of disputes.  In particular, Articles 2 and 30 contain specific provisions in relation to the scope of jurisdiction in trade mark revocation cases. 






4. Establishment of Intellectual Property Courtrooms in Nanjing and Suzhou

Issue date: 22 Jan, 2017

With the approval of the Supreme People's court, Intellectual Property Courtrooms were established in Nanjing and Suzhou on 19th December. The Courts will have cross-regional jurisdiction, which means that they will deal with most of the intellectual property cases in Jiangsu.

In October 2016, the Supreme People's Court requested the establishment of courtrooms with cross-regional-jurisdiction in relation to intellectual property cases, before March 2017, in Nanjing, Suzhou, Chengdu, and Wuhan. In 2014, Intellectual Property Courts were established in Beijing, Shanghai and Guangzhou: the establishment of these courtrooms continues the trend towards centralised jurisdiction in complex intellectual property cases

According to Li Hongjian, Committee Member of the Judicial Committee and President of the Third Civil Court of Jiangsu High People's Court, the Nanjing Intellectual Property Courtroom will have jurisdiction over first instance technical cases in the territories of Nanjing, Zhenjiang, Yangzhou, Taizhou, Yancheng, Huaian and Suqian, Xuzhou and Lianyungang. The Suzhou Intellectual Property Courtroom will have jurisdiction over Suzhou, Wuxi, Changzhou and Nantong. The two courtrooms will also have jurisdiction over first instance IP administrative cases and ordinary civil intellectual property cases where the amount involved is more than three million RMB.





5. Huawei and ZTE are settling patent disputes comprehensively

Issue date: 17 Jan, 2017

These two companies, competitors in both domestic and international markets, have for years been involved in litigation in many countries, including China. Recently, they have agreed to settle all actions in China.

In one of the latest cases, Huawei had filed an invalidity challenge in relation to ZTE’s invention patent for “a wireless card and computer data interaction method”, with the Patent Re-examination Board of the State Intellectual Property Office (the Board). The challenge was unsuccessful and Huawei brought the case to the Beijing Intellectual Property Court (BIPC). The BIPC found that the Board’s decision should be revoked on the ground of violation of legal procedures. ZTE refused to accept the verdict and appealed to the Beijing Higher People's Court. 

The Beijing Higher People’s Court has now made a final ruling allowing Huawei to withdraw its action, which, in effect, revokes the first-Instance ruling of the BIPC.