China Food and Drug Administration requires that all applicants for imported medical equipment must use Chinese names

According to a circular published by China Food and Drug Administration (CFDA) on November 2, 2017, from the publication date of this circular, all applicants for imported medical equipment must use Chinese names.

This change will mainly affect the foreign pharmaceutical companies which used to only register their English names with CFDA when selling their medical equipment to China. Since most big pharmaceutical companies have established their subsidiaries in China and have used their Chinese names for a long time, it is expected that this new rule won’t have much impact on them.

Having said that, for newcomers to the China market, it is time to think of a good Chinese name because you will need it soon. More importantly, don’t forget to register the new Chinese name as a trademark in China before you file it to CFDA. If a Chinese name is not registrable in China, don’t use it. Otherwise, you will be building your business on a name that you don’t own.

Counter-strike! China initiated an interim review on Dispersion Unshifted Single-Mode Optical Fiber originated from the U.S.

According to an announcement published by the Ministry of Commerce of China (“MOFCOM“) today, the MOFCOM has decided to initiate the interim review on Dispersion Unshifted Single-Mode Optical Fiber (“DUSMOF“) originated from the U.S. with respect to its applied anti-dumping measures.

Development

On April 21, 2011, the MOFCOM decided to apply the anti-dumping tax on the DUSMOF originated from the U.S. and the EU since April 22, 2011, for a period of 5 years.

On April 21, 2017, after the final review, the MOFCOM decided to continue to apply the anti-dumping tax on the DUSMOF originated from the U.S. and the EU since April 22, 2017, for a period of 5 years.

On May 11, 2017, 7 Chinese companies applied to the MOFCOM to conduct an interim review on the DUSMOF originated from the U.S. with respect to its applied anti-dumping measures due to the reason that during the implementation of the aforesaid anti-dumping measures, the DUSMOF originated from the U.S. are still dumping in China, and its scale of dumping has been increased exceeding the currently applied anti-dumping tax rate.

On August 1, 2017, the MOFCOM notified the U.S. Embassy of this anti-dumping interim review application and forwarded the relevant materials to it.

Scope of interim review

The scope of interim review is limited to the DUSMOF originated from the U.S.

Period to investigate

This interim review will investigate the period between January 1, 2016 and December 31, 2016.

Procedures of the interim review

  • Comments from stakeholders

Any stakeholder may submit opinions and evidence to the MOFCOM within 20 days of this announcement.

  • Registration for participating the investigation

Any stakeholder may register at the MOFCOM to participate in the investigation within 20 days of this announcement.

  • Questionnaire

The MOFCOM will send the questionnaire to stakeholders for information required for the investigation.

  • Oral hearing

The stakeholders may apply to the MOFCOM to hold an oral hearing. The MOFCOM may also decide to hold an oral hearing ex officio if it deems necessary.

  • Field investigation

If necessary, the MOFCOM may send its staff to do a field investigation on the relevant companies with prior notice to them.

Is this the beginning of a trade war?

The U.S. government initiated the Section 301 investigation against China on August 18. Only 4 days later, China fought back with the anti-dumping interim review. Although the anti-dumping measures on the DUSMOF originated from the U.S. and the EU started since 2011, this interim review clearly sends a message to the U.S. government because the EU is not subject to the investigation this time.

Administration Regulatioins on Patent Priority Review published by SIPO

On June 28, 2017, the State Intellectual Property Office of China (“SIPO“) published the Administration Regulations on Patent Priority Review, which shall be implemented on August 1, 2017.

According to the Regulations, if the applicants meet the conditions and the SIPO agrees to give priority to review their patent applications:

  • For the invention patent applications, the first Notification on Patent Review Opinioins will be issued in 45 days and the application case will be closed in 1 year;
  • For the utility model and design patent applications, the application case will be closed in 2 months;
  • For the patent re-examination cases, they will be closed in 7 months;
  • For the invalidation of invention and utility model patent cases, they will be closed in 5 months;
  • For the invalidation of design patent cases, they will be closed in 4 months.

Is it really necessary to do a comprehensive trademark search before filing?

Before filing your trademark registration applications in China, trademark attorneys will always ask you: do you wish to do a comprehensive trademark search before filing?

Advantages to do it

The advantages of doing a pre-filing trademark search are obvious:

  • You can confirm whether there are any conflicting trademarks before you file your application.
  • You don’t have to wait for a year or so to know that there is a conflicting trademark which can block your trademark registration, which you should have been known before filing (that’s one year earlier) if you had done the pre-filing search. It should reduce the uncertainty of your trademark’s status in China greatly.
  • If you find out that there are conflicting trademarks, you can take preemptive actions in advance, e.g. cancelling or invalidating or opposing the conflicting trademark, rather than waiting for a year to do that.
  • If you just cannot lift the conflicting trademark, you may consider your trademark strategy in China and amend your trademark for China. This is better than spending a lot of money to promote your brand in China, and found out later that you just cannot legally register and use it in China.

Disadvantages

Despite of the advantages of the pre-filing trademark search mentioned above, there are certain disadvantages to do the comprehensive pre-filing trademark:

  • It will increase your costs. Usually a comprehensive trademark search for one trademark in one Class will cost no less than USD 500. This is more than the cost of simply filing the trademark to China Trademark Office.
  • It will delay the process. As the comprehensive trademark search takes a lot of time, it will absolutely delay the process of trademark filing. In average, the filing process could be delayed for about 1 week if you choose to do the comprehensive pre-filing trademark search.
  • It may increase rather than reduce uncertainty. As the judgement of similarity between trademarks are quite subjective, it is not always a black-and-white issue to determine whether an existing trademark is conflicting with your proposed trademark. As such, sometimes the result of a comprehensive pre-filing search is more confusing, and no trademark attorney can guarantee what China Trademark Office will determine, which may cause greater uncertainty, rather than reducing the uncertainty.
  • It may put you in a more dangerous position. Taking an early action against the possible conflicting trademark could give an early warning to the owner of the conflicting trademark, and therefore may drag you into a fight when you just enter the China market and are not ready for the fight.

Our recommendation

Based on the above, it seems to us that a comprehensive pre-filing trademark search has its advantages and disadvantages. Whether you should do it really depends on your specific situation.

If you have already used your brand in China and built certain reputation on it, and changing your brand/logo could cause significant impact on your business, it seems that it is not necessary for you to do the comprehensive trademark search before filing.

This is because amending your trademark will not be an option for you and you can always take actions against the conflicting trademarks after your trademark applications are rejected by China Trademark Office citing certain conflicting trademarks. In this case, to keep a better position in the scenario of conflicting, it is always better to file your trademark application earlier rather than spend more time on trademark search which may not give you a lot of benefits.

However, if your brand is new to the China market and you can amend your brand or logo to suit the China market, and you just want to make sure that your trademark is registrable from the day one you promote your business in China, then yes, we strongly recommend you to do a comprehensive pre-filing trademark search, as long as you can afford it.

Having said the above, no matter what your specific situation is, you should always do a simple pre-filing trademark search to confirm whether there is any identical trademark existing. This should not take too much time and most trademark attorneys can do it without extra charge.

China ranks the second largest capital exporting country in 2015

According to the press conference jointly held by China Ministry of Commerce (“MOFCOM“), China National Bureau of Statistics (“NBS“), and China State Administration for Foreign Exchange (“SAFE“) on September 22, 2016, China’s outbound investment in 2015 hits record high at USD 145.67 billion, which makes China the second largest capital export country in the world. As the inbound investment to China is USD 135.6 billion in 2015, this means China has become a net capital exporting country.

During the press conference, the *Statistics Bulletin for the Direct Outbound Investment of China in 2015* (“2015 Statistics Bulletin“) was also publicized.

The main features of China’s outbound investment in 2015 are as follows according to the Statistics Bulletin:

  • China’s outbound investment in 2015 hits record high at USD 145.67 billion, which accounts 9.9% of the world’s investment. This makes China the second largest capital exporting country with US raking the first (USD 299.96 billion) and Japan raking the third (USD 128.65 billion). China has become a net capital exporting country in 2015 when the inbound investment to China was USD 135.6 billion.
  • The value of Chinese companies’ offshore assets has exceeded USD 4,000 billion, raking 8th in the world. As of the end of 2015, 20,200 Chinese investors established 30,800 greenfield companies outside China in 188 countries (regions) around the world, which own the toal assets of USD 4,370 billion outside China.
  • In 2015, Chinese companies implemented 579 outbound investment and/or M&A transactions in 62 countries (regions) with the actual transaction amount of USD 54.44 billion, among which, the direct investment amounts USD 37.28 billion accounting 68.5% and the offshore financing amounts USD 17.16 billion accounting 31.5%. The fields of M&A cover 18 major industries including manufacturing, IT/software and IT service, mining, culture/sports and entertainment.
  • Pirelli-ChemChina merger was the largest M&A deal implemented by Chinese companies in 2015, which involves ChemChina acquiring 60% shares of Pirelli with USD 5.29 billion.
  • More than 80% of China’s FDI went to developing countries, 14% went to developed countries and 2.1% went to economies in transition.
  • USD 10.05 billion was invested in equipment manufacturing industry, which indicated 158.4% year-on-year growth and accounted 50.3% of the investment in the manufacturing industry. These investments facilitated the China equipment, technologies, standards and services to “go abroad”.
  • In 2015, foreign companies invested by Chinese had paid various taxes of USD 31.19 billion to their hosting countries, which increased by 62.9% comparing to the previous year. They also hired 1.225 million labors in their hosting countries, which increased by 392 thousand labors comparing to the previous year.
  • 79.7% of the outbound investment in 2015 totaling USD 116.44 billion went to Hong Kong, Holland, Cayman Islands, BVI, and Bermuda. Apparently these places were used as investing vehicles by Chinese companies.
  • More than 80% of the non-financial outbound investment came from local companies (as comparing to companies owned by central government, i.e. large SOEs). The top 3 areas which made most outbound investment are Shanghai, Beijing and Guangdong, each of which had made over USD 10 billion outbound investment in 2015.
  • The new equity investment in 2015 amounts USD 96.71 billion accounting 66.4%. The investment made by earnings amounts USD 37.91 billion accounting 26%. The investment made by debts vehicles amounts USD 11.05 billion accounting 7.6%.

As of now, the full text of the 2015 Statistics Bulletin is not available for download yet but it is expected to be available soon.

Why Apple lost its case in China but Facebook won?

For those who are interested in the Chinese trademark laws, they may have heard that Apple lost its case in China with respect to the “IPHONE” mark in Class 18. As the result, the Chinese court decides that a Chinese company owns the “IPHONE” mark in Class 18 and therefore has the right to use the “IPHONE” mark on its leather wallet and purse products.

For the details of the “IPHONE” trademark case, please see our earlier article on this case, “Chinese court decides that “IPHONE” is not a well-known trademark“.

However, on a similar case with respect to the “face book” mark in Class 32 (beverages), Facebook won the case where the Chinese court decided that the Chinese individual who applied to register “face book” mark in Class 32 had the intention to copy other’s trademark of high popularity, and therefore his trademark application shall not be approved according to the law.

Please refer to the BBC report on the above cases at “Facebook wins China trademark case“.

As these two cases look pretty similar (both cases are about a Chinese company/individual applying for a famous western brand in China in a class which is not directly relevant to the main business of such brand), people are wondering why this happened? Is it true that these cases have different outcomes because of political reasons as hinted by BBC or other western media?

Well, maybe there are some political factors in these cases. However, from the legal perspective, there could be other reasons for the different outcomes.

Differences in the legal arguments made in both cases

For easy review, we compare the legal arguments made by Apple and Facebook as follows:

“IPHONE” case “face book” case
Approving the registration of this trademark will have negative impact to the society. (Article 10.1.8 of the 2001 Trademark Law) Approving the registration of this trademark will have negative impact to the society. (Article 10.1.8 of the 2001 Trademark Law)
“IPHONE” is a well-known trademark and shall be protected in all classes. (Article 13.2 of the 2001 Trademark Law) “Facebook” is a well-known trademark and shall be protected in all classes. (Article 13.2 of the 2001 Trademark Law)
N/A This trademark has infringed the prior trade name right of Facebook. (Article 31 of the 2001 Trademark Law)
N/A Trademark registered by deceptive or wrong means shall be revoked. (Article 41.1 of the 2001 Trademark Law)

As shown in the above table, Apple only made two legal arguments but Facebook made four legal arguments. The first two legal arguments made by Apple and Facebook are the same and none of them was accepted by the Chinese court. The third argument made by Facebook was also not supported by the Chinese court. In the “face book” case, the Chinese court decided in favor of Facebook based on the forth argument made by it.

In the “IPHONE” case, the Chinese court specifically addressed in the final judgment that because Apple did not argue that the “IPHONE” mark breached Article 41.1 of the 2001 Trademark Law, the court did not review this case based on such clause.

Here’s why

From the court’s perspective, there is no much difference in both cases.

The “negative social impact” argument was not accepted by the court because no public interest was involved in both cases.

The “well-known trademark” argument was not accepted by the court because neither “IPHONE” nor “Facebook” can established that it was well-known in China before the application date of the trademark in dispute.

The only difference which leads to the different outcomes of both cases is that Apple did not argue that the “IPHONE” mark was registered by deceptive or wrong means, which allows the judge to review the case from a more general perspective, i.e. whether the registration is in good faith.

To be fair, we have to say that it is not usual to quote Article 41.1 of the 2001 Trademark Law (the “good faith” clause) in a trademark case like the “IPHONE” case and the “face book” case and there is no precedence that the Chinese court can support this argument. However, apparently Facebook took its chance and finally won the case. As for Apple, maybe it is time to consider to change its trademark lawyer in China.

Chinese court decides that “IPHONE” is not a well-known trademark

Apple’s opposition against the “IPHONE” mark in Class 18

On October 18, 2002, Apple Inc. applied to register the “IPHONE” mark in Class 9 (computer hardware, computer software etc.) in China, which was approved on November 21, 2013.

On September 29, 2007, a local Chinese company Xin Tong Tian Di Company (“XTTD“) applied to register the “IPHONE” mark in Class 18 (leather, wallet, purse etc.) in China (“Disputed Trademark“).

After China Trademark Office (“CTO“) preliminarily approved the registration of the Disputed Trademark, Apple filed an opposition against it but the opposition was rejected by the CTO in 2012.

Then Apple applied for re-examination of the Disputed Trademark to China Trademark Review and Adjudication Board (“TRAB“). But the TRAB sustained the CTO’s decision on December 16, 2013.

Arguments of Apple

Apple argued that its “IPHONE” mark registered in Class 9 has gained high popularity and distinctiveness in China and therefore should be deemed as well-known trademark.

Since its launch of the IPHONE on June 29, 2007, it has launched 9 generations of IPHONE products and has been officially selling the IPHONE products in Mainland China since October 2009.

Based on the above, Apple applied to protect its “IPHONE” mark as a well-known trademark in China, which means, it should be protected in all Classes in China even if it has not been registered in a particular Class.

Opinion of the TRAB

The TRAB decided that Apple cannot prove that its trademark had become well-known in China before the application of the Disputed Trademark because its use of the trademark which can be supported by evidences submitted by Apple was all dated after the application date of the Disputed Trademark.

Despite that Apple’s “IPHONE” mark has high popularity on cell phones and relevant products, the current evidences were not sufficient to determine that the “IPHONE” mark had become a well-known trademark in China. It is not likely that the general public in China will associate the Disputed Trademark with Apple Inc.

Decision of the court

Apple appealed the TRAB decision to Beijing No. 1 Intermediate Court and then to Beijing Higher Court. Both courts decided that the “IPHONE” mark was not a well-known trademark before the application date of the Disputed Trademark because the IPHONE was first launched in June 2007 and was only officially sold in Mainland China in October 2009.

At the time of the application of the Disputed Trademark (September 29, 2007), the “IPHONE” mark was not well-known in China and therefore it cannot block the registration of the Disputed Trademark.

Accordingly, Beijing Higher Court finally rejected Apple’s appeal and affirmed the registration of the Disputed Trademark.

Comments from China Filing

Chinese laws do provide special protection to well-known trademarks. However, being recognized as a well-known trademark is not retrospective. Even if a trademark becomes well-known after massive use and promotion, at its early stage when it is not that “famous”, it cannot prevent others from registering the identical or similar trademark on irrelevant Classes (goods or services).

Big companies such as Apple should consider to register its major trademarks in all 45 Classes in China before its launch in China. The registration costs for all 45 Classes may seem to be very high, but it will save a lot of litigation costs in the future and can eventually protect its trademark in all Classes in China.

What is the cost to prosecute someone using your trademark?

The costs to prosecute someone using your trademark vary depending on the specific situation of each case.

Factors which can affect the costs include: whether you need to hire an investigator to collect the evidence on the infringing goods and the profits of the infringing party, whether you need to engage the notary public to notarise the evidence collected, where the infringing party is located in China, how much you intend to claim for compensation, etc, etc, all these will affect the costs of prosecution.

In a normal situation, the total costs for the first instance court trial could be between RMB 200,000 and RMB 500,000.

What options do I have if someone in China uses my trademark without my consent?

In general, you have three ways to stop the unauthorised use of your trademark in China:

  1. To send a cease and desist letter to the unauthorised user and the other concerned parties.
  2. To seek administrative remedies like requesting the competent administrative authority to investigate and stop the unauthorised use.
  3. To seek judicial remedies like applying for injunction to stop the unauthorised use.