“Haworth & Lexon Law Newsletter” is issued every month, mainly introducing the legal change in the fields of Corporate, Securities, Foreign investment, Intellectual property rights, International trade etc. with necessary comment. All the comments do not mean the legal opinion of our firm and the firm does not have any legal liability for such comment. Should you have any interest in any topics or any questions please feel free to contact the firm. You will be expected to have satisfactory response from the professional attorney of our firm.
§ Latest Laws and Regulations
“The Labor Contract Law of the People’s Republic of China” (hereinafter, the “Labor Contract Law”) was promulgated on June 29, 2007 and came into force on January 1, 2008. This is another milestone in the legal construction of labor and social security. Compared with the former “Labor Law”, the “Labor Contract Law” has made new provisions as well as further improvement and development to the labor contract system.
According to the “Labor Contract Law”, besides the original domestic enterprises and individual economic organizations, private non-enterprise entities and other organizations have also been taken into the applicable range of the labor contract system. Meanwhile, except civil servants and the staff who are administered by reference to the “Civil Servant Law”, and the employers of the public institutions under the system of employment, the state organs, public institutions, social organizations shall establish a labor relationship with their employees and execute according to the “Labor Contract Law”.
Details can be found elsewhere in this newsletter.
The “Labor Contract Law” makes improvement to the problem that the employing entities do not execute written labor contracts, and provides that an employer shall establish a labor relationship with an employee from the date of starting to use the employee; and a written labor contract shall be executed to establish a labor relationship. Meanwhile, it provides that if an employer fails to execute a written labor contract with an employee more than one month but less than one year after the date on which it starts using him, it shall pay to the employee his monthly salary at double amount; if an employer executes a written labor contract with an employee more than one year after the date on which it starts using him, it shall be deemed that the employer has executed a labor contract without a fixed term with the employee.
The “Labor Contract Law” adds the circumstances by which a labor contract without a fixed term can be executed: The labor contract is to be renewed after two fixed-term labor contracts have been concluded consecutively; and if the employer fails to sign a labor contract with an employee after the lapse of one full year from the date of starting to use him, it shall be deemed that a labor contract without a fixed term has been executed. Meanwhile, the “Labor Contract Law” has amended the applicable condition that “both parties have to agree to renew the labor contract” for the execution of a contract without a fixed term after a consecutive working period of 10 years, and has changed the condition into that if the three circumstances in Article 14 of the “Labor Contract Law” have been met, then as long as the employee requires, the employer has to execute a labor contract without a fixed term with the employee, regardless of the employer’s consent.
The “Labor Contract Law” strictly defines the probation period that if the term of a labor contract is more than 3 months but less than 1 year, the probation period shall not exceed one month. If the term of a labor contract is more than one year but less than 3 years, the probation period shall not exceed 2 months, and If the term of a labor contract is more than three years or it is a contract without a fixed term, the probation period shall not exceed 6 months; for a labor contract based on the completion of a particular task or with a fixed term of less than 3 months, no probation period may be stipulated; an employer can only stipulate one probation period with a same employee. Meanwhile, the “Labor Contract Law” strictly defines that the salary of an employee during the probation period shall not be lower than the minimum salary for the same post of the same entity or not lower than 80% of the salary stipulated in the employment contract, nor shall it be lower than the minimum salary of the place where the employer is located. Besides, the “Labor Contract Law” defines that within the probation period, the employer shall not dissolve the labor contract unless for legal circumstances, while the employee may terminate the contract with a notice three days in advance.
The “Labor Contract Law” restricts the employer to stipulate penalty for breach of contract at ease by exploiting its dominant position, and clearly provided that, except the two circumstances of the violation of the stipulation on the training service period or the stipulation on the non-competition, the employer shall not stipulate for the employee to bear the penalty. Meanwhile, the “Labor Contract Law” limits the amount of penalty for the stipulated training service period to be no more than the training fees, and makes detailed provisions on the applicable target, period (2 years) and scope etc. of the non-competition.
Compared with the “Labor Law”, the “Labor Contract Law” has, on one hand, enlarged the conditions for the employee to dissolve the labor relationship at any time, such as that the employer fails to pay the social security premiums according to the laws, the contract is invalid and the employer’s rules infringe on the rights of the employees, etc.; and on the other hand, has added the circumstances for the employer to dissolve the labor relationship at any time, such as that the employee simultaneously establishes a labor relationship with other employers and may seriously affect his completion of the tasks of this entity, or he refuses to make a correction though the employer has pointed it out, the contract is invalid, etc. and added the circumstance that the employer can pay one month’s salary to substitute the 30 days’ notice period when dissolving the labor relationship. Besides, the “Labor Contract Law” gives more detailed provisions to the applicable circumstances for the dissolution because of downsizing.
The “Labor Contract Law” adds two circumstances for paying the employee an economic compensation, i.e. (1) The fixed-term labor contract terminates upon its expiration, unless the employee refuses to renew the contract even though the conditions offered by the employer are the same as or better than those stipulated in the current contract; (2) the employer is declared bankrupt, or has its business license revoked, is ordered to close down or is dissolved, or the employer makes a decision of dissolution ahead of the schedule. Meanwhile, the “Labor Contract Law” provides that an employee shall be given an economic compensation at the rate of one month’s salary for each full year he worked, as long as the circumstance belongs to economic compensations, and cancels the limitation of a maximum of 12 month’s salary provided in the former “Labor Law”, provided, however, that if the monthly salary of an employee is higher than three times the average monthly salary of employees in the district the employer is located, the rate for the economic compensations shall be three times the average monthly salary of employees and shall be paid for no more than twelve months.
Besides, the “Labor Contract Law” makes more perfect provisions to the issues concerning collective contract, worker dispatch and part-time labor.
First, Article 4 of the “Labor Contract Law” clearly provides that, when an employer formulates, amends or decides rules or important events concerning the remuneration, working time, work discipline etc. that are relating to the interests of the employees, such rules or important event shall be discussed at the general meeting of employees or all employees, who shall put forward proposals and opinions. The employer shall make decisions upon equal negotiation with the labor union or with the employees’ representatives. During the process of execution of a rule or an important event, if the labor union or the employees deem it improper, it (they) may require the employer to amend or improve it through negotiations. The employer shall make an announcement of the rules and important events directly relating to the interests of the employees or inform the employees. By analyzing the above terms, we can see that, under the framework of the “Labor Contract Law”, the two major necessities for the effectiveness of the employer’s labor rules are as follows: (1) the formulation of rules shall go through democratic procedures and the formulated rules shall be announced publicly; (2) the contents in the articles of the rules shall be legal and reasonable.
On one hand, after the “Labor Contract Law” has taken force, the rules shall not be decided unilaterally by enterprises, as according to the provisions of the Law, the events relating to the interests of the employees shall be decided upon negotiation with the labor union or with the employees’ representatives. Therefore, in order to make sure that the formulation of the rules meet the legal regulations formally, during the formulation and amendment of the rules, the employer may convene meetings to discuss the formulation or amendment of the labor rules, and discuss the relevant contents with the labor union or the employees’ representatives from each department.
Meanwhile, after the formulation, the labor rules shall be announced publicly to the whole staff, otherwise the labor rules shall not be binding upon the employees. Usually, the following several methods may be adopted by employers according fact as the case may be:
On the other hand and with respect to the contents of the rules, after the execution of the “Labor Contract Law”, employers shall typically notice to amend such terms in the employee handbook and in the labor rules that are inconsistent with the compulsory provisions of the “Labor Contract Law”, as according to Clause 4, Article 38, the employees may dissolve the contract if the employer’s rules are contrary to any law or regulation and impair the rights and interests of the employees. Under such circumstance, employers have to conduct a thorough adjustment and amendment to the contents in the employee handbook and the labor rules, so as to prevent the employees’ leaving by such excuse.
Besides, employers shall also notice the provision in the “Labor Contract Law” that, the employer may dissolve the labor contract if the employees seriously violate the rules, however, the Law does not clearly define what is “serious”; therefore, employers shall make clear what belongs to “serious” in the labor rules for the practical operation.
In summary, the enterprise labor rules are formulated and amended in accordance with the legal procedures with the contents reconstructed against the framework of the “Labor Contract Law”. This is quite important to employers and employees for implementation and execution of the rules as well as handling future disputes.
The “Trial Measures” provides that the examination and approval system shall be applied to the issuance of company bonds, and gives detailed provisions of the conditions and procedures required for such issuance. E.g.: apply the recommendation system; establish a managing system for credit rating; stipulate that the issuing price of the company bonds shall be decided by the issuer and the recommender through market price inquiry.
In order to protect the rights and interests of the bond holder, the “Trial Measures” also make a specific chapter of provisions, of which the most striking one is to introduce the bond trustee management system, which provides that the post of the bond trustee shall be held by the recommender of this issuance or other institutions that are recognized by China Securities Regulatory Commission. As the conflicts of roles and interests cannot be avoided between the recommender and the bond trustee, the “Trial Measures” also gives detailed provisions to the responsibilities of the bond trustee.
Besides, China Securities Regulatory Commission also promulgated the “Rules for the Contents and Form of Information Disclosure of the Companies that Offer Securities to the Public (No. 24)——the application documents for publicly offering company bonds” and the “Rules for the Contents and Form of Information Disclosure of the Companies that Offer Securities to the Public (No. 23)——prospectus for the public offering of the company bonds” on August 15, 2007, which make further arrangements for the details in the offering of the bonds.
The law application in the provisions only refers to the application of the substantive law and excludes the conflict law and procedural law.
According to the Provisions, the orders of laws applicable to foreign-related civil or commercial contract disputes are as follows: the laws expressly chosen by the parties involved; the laws of a country or region which are referred to by both parties without any objection of law application though without expressive choice by the parties involved; the laws of the country or region that has the closest relationship with the contract if no applicable laws were chosen by the parties involved. Notably, the decision of choosing or modifying the laws shall be made not later than the conclusion of the argument in the court of first instance.
According to the principle of using that with the closest relationship, the Provisions further makes clear the detailed circumstances of the law application for 17 kinds of contract disputes: the purchase contract shall observe the laws of the place where the seller is located upon the execution of the contract, and if the contract was negotiated and executed at the buyer’s place or the contract clearly provides that the seller shall perform the obligation of delivery at the buyer’s place, than the contract shall observe the laws of the place where the buyer is located; processing with supplied materials, assembling with supplied components and other contracts for processing shall observe the laws of the place where the contractor is located; the contract for supply of full sets of equipment shall observe the laws of the place where the equipment is installed; etc. However, if the above 17 kinds of contracts obviously have a closer relationship with another country or region, then they shall observe the law of the other country or region.
The Provisions also list nine circumstances under which the laws of the People’s Republic of China should be applied, which enlarge the previously provided range. Besides the Chinese-foreign equity joint venture contract, Chinese-foreign contractual joint venture contract, or the contract for Chinese-foreign joint exploration and development of natural resources, the following kinds of contracts shall also observe the Chinese laws: foreign natural or legal persons and other contracts that organize to run the Chinese-foreign equity joint venture contract and the Chinese-foreign contractual joint venture established within the territory of the People’s Republic of China; foreign natural or legal persons and other contracts that organize to purchase the stock rights of the shareholders from the enterprises without foreign investment within the territory of the People’s Republic of China; foreign natural or legal persons and other contracts that organize to purchase the asset of the enterprises without foreign investment within the territory of the People’s Republic of China; and other contracts that shall observe the laws of People’s Republic of China subject to the laws, administrative regulations of the Peoples’ Republic of China.
The new “General Provisions” has altogether 40 articles for five chapters, namely General Principles, Entrustment and Acceptance of Judicial Authentications, Implementation of Judicial Authentications, Issuance of Judicial Authentication Documents and Supplementary Provisions. Chapter 2 of the General Provisions clearly provides the form and requirements of the entrustment of the judicial authentication, the conditions and circumstances under which the judicial authentication institution may accept or not accept the entrustment for the judicial authentication, and the rights and obligations of the clients and the entrusted judicial authentication institution. The General Provisions make detailed provisions for the implementation of judicial authentications, e.g.: the judicial authentication institution and the authenticator shall observe the time limit during the acceptance and implementation of the authentication; and also makes special provisions to the complicated and special authentication events. Besides, in addition to the ordinary provisions made for the process of judicial authentications, the General Provisions also provides specific stipulations concerning body inspections for women and minors, the medico-legal mental disease authentication or autopsy, and on-spot survey.
According to the Implementation Opinions, for the newly established enterprises who want to apply for the qualifications for the project supervisory enterprise and the enterprises holding such qualifications who want to apply for a comprehensive qualification, higher-class specialized qualification or other specialized qualifications, they shall raise the application for the qualifications in accordance with the Order No. 158 upon and after August 1, 2007. The enterprises with the Enterprise Legal Person Business License can only apply for the comprehensive qualification or the specialized qualification; and the enterprises with the Partnership Enterprise Business License can only apply for the office qualification. For the newly established enterprises who want to apply for the qualifications of the project supervisory enterprise or the enterprise who holds such qualifications and what to apply for other specialized qualifications, they shall apply from B grade or C grade specialized qualification or the office qualification, and no certifying materials for the business performance are required.
With respect to the examination procedures for the acceptance of the application for qualification, all the application materials shall not be modified without approval upon the acceptance by the construction organs. Therefore, the applying enterprises shall fully prepare the materials before application. With regard to the project supervisory enterprises that are established after enterprise reform, split-up or merger, the qualification approval organs shall conduct the examination according to the following provisions: (1) the whole enterprises that have been reformed shall follow the qualification modification procedures; (2) the surviving or the newly established project supervisory enterprises after merger may maintain the higher grade of qualification of the two parties before the merger. (3) Two or more project supervisory enterprises split from one enterprise shall be reexamined for their qualification registration according to Order No. 158.
According to Several Provisions, where an interested party lodges a lawsuit in the people’s court for civil compensation on the grounds that an accounting firm has issued a false report during its engagement in the audit business and that the false report has caused certain loss to it, the people’s court shall accept the lawsuit. With regard to a natural person, legal person or any other organization that suffers any loss due to reasonable reliance upon or use of the false report issued by an accounting firm in doing a deal with the audited entity or in carrying out trading activities relating to the stocks or bonds of the audited entity, he or it shall be determined as an “interested party”.
Several Provisions strictly distinguish the compensatory liabilities caused by the fault or negligence of the accounting firms: (1) With regard to subjective malice, the accounting firm shall bear several and joint liabilities for the compensation with the audited entity: e.g. maliciously colludes with the audited entity; knows that accounting treatment of the audited entity will lead to misunderstanding by the interested party but fails to give a clear indication as such; does not refuse the audited entity’s hint of making a false report; etc. (2) With regard to negligence, the people’s court shall determine the accounting firm’s liability for compensation according to the seriousness of its fault. Usually it shall first let the audited entity to compensate for the losses of the interested party; if the property of the audited entity is still insufficient to compensate for the losses after the enforcement according to law, the accounting firm shall bear the compensation liability to the extent of the untrue audit amount. (3) No liability shall be borne without deliberate intent or negligence, e.g.: has already followed the working procedure as prescribed in the practicing guidelines and rules and has kept the required professional prudence, but still fails to find the errors in the accounting materials audited; has given a warning to the audited entity and has given a clear indication in the audit report, etc. However, notably, the indication in the report that “This report is intended merely for use in the annual inspection” and other similar expressions cannot be regarded as reasons for exemption of its liability.
According to the Notice and the Solutions, from July 1, 2007, adjustments will be made in 18 districts in Shanghai including Pudong (excluding Chongming), to the examination procedures for establishing commercial projects by foreign-invested enterprises, adding right of distribution into business scope and the corresponding modifications by non-commercial enterprises, and investing domestic commercial projects by foreign-invested enterprises. The details are as follows:
1. Except four kinds of projects, other foreign-invested commercial projects as well as the establishment and modifications of adding right of distribution into business scope by non-commercial enterprises shall be examined and issued approval by the government of the pilot districts and the approval certification shall be issued by Shanghai Foreign Investment Commission. The aforesaid “four kinds of projects” include: (1) The foreign-invested project that has a total investment of more than 10 million US dollars or the addition of distribution by non-commercial enterprises that shall be examined within the rights of Shanghai Investment Commission; (2) Projects that involve retail business; (3) Projects that establish branches in a different district; (4) Projects that shall be examined and approved with the Ministry of Commerce.
2. With regard to the modifications of the already established foreign-invested commercial enterprises and the foreign-invested commercial enterprises that already had distribution right, as well as the investment in the domestic commercial field by the foreign-invested enterprises, those which comply with the above provisions shall also be examined and issued replies by the district government, and receive the approval certification from Shanghai Foreign Investment Commission.
After the adjustments to the examination procedures, except the projects that shall be examined by the Ministry of Commerce, Shanghai Foreign Investment Committee no longer directly accepts the foreign-invested commercial projects and the establishment and modifications of the additional distribution projects of non-commercial enterprises. With regard to those within the examination range of Shanghai Foreign Investment Committee, the administrative organs in the pilot districts shall conduct the primary examination and then report to the Committee.
§ IP Cases
Infringement is Constituted for not Conducting Reasonable Inspection, when Providing Online Information in the Name of Providing Online Storage Space?
The plaintiff alleged that he had written a book named “Documentary Account of the Contemporary China’s Crime Crackdown” (hereinafter, the “Documentary Account”) by the pen name of Chonggang and Puyu. The defendant Haochen Network offered without permission the free download of “Real Record of the Contemporary China’s Crime Crackdown” (hereinafter, the “Real Record”), which had exactly the same contents as the “Documentary Account”, in the form of “.brm”——an electronic form readable on mobile phones, in the “Electronic Books Reading Column” of the “it 168 Nokia Forum” on the “IT Products Professional Shopping Guide Platform” (http://www.it168.com ) run by Haochen Net. Also, Haochen did not provide the name of Fang Siyu or pay any reward to him. Therefore, the defendant’s behavior infringed his right of authorship, right to network dissemination and right to remuneration.
The defendant responded that the “IT168 Nokia Forum” on its website was to offer online storage space to its users, and the “Real Record” was uploaded to the forum by the user. As there were a huge number of net users, it was impossible for the company, who was the provider of the online storage space to examine and select all the information. What it could do was to delete in time upon notification of infringing. The company had deleted the claimed article and shall not bear compensatory liabilities.
The court held that, Haochen Network was actually providing online information service in the name of providing online storage space. The reason was as follows: First, the “Electronic Books Reading Column” could be opened to scan without registration, which meant net users could, without providing any information, upload electronic books at ease for other users to download. Though the top of the webpage was indicated as “forum”, the form, contents and order arrangement of the “Electronic Books Reading Column” where the claimed “Real Record” was located, as well as the information like “essence of forum articles, recommend to download” all showed that the forum was for downloading the contents of the information such as electronic books. Secondly, according to the contents shown on the webpage during the process of downloading electronic books, such as “good post recommendation”, “essence of the forum” and “latest ring tones’ download”, it can be seen that the company had real control of the information uploaded by the net users, and actually participated in the layout and arrangement of the contents provided for the users. Thirdly, the “Electronic Books Reading Column” had set up a bonus system, indicating that it encouraged users to upload electronic books. Haochen Network was in fact a co-provider with the uploading users who jointly offer electronic books to uncertain users. Finally, Haochen set up the free download of the electronic books that readable on cells, with the aim to promote the reading by the relevant cell brands so as to promote the sales of the cells and their parts. Therefore, Haochen’s aim to gain benefits directly from the dissemination of the electronic books in the “Electronic Books Reading Column” was quite obvious, which also indicated that Haochen was not an online storage space provider that purely gain benefited from the storage space service. The plaintiff’s “Documentary Account” had already been published. As the provider of the contents and service, the defendant failed to examine whether the works uploaded had been permitted by the authorship owner or not, which violated its due responsibility of reasonable notice. Therefore, the court affirmed that the defendant’s behavior had constituted infringement.
The court of the first instance ruled that, Guofeng Yingte software co., ltd. (hereinafter “Guofeng Yingte”) was the author of “yahoo assistant”, and Alibaba was the software author of “yahoo widget”. According to the agreement involved, Alibaba had the right to claim the rights of “yahoo assistant” solely by itself. Both Alibaba and Sanji Wuxian were network service companies, who were horizontal competitors. As Sanji Wuxian lacked factual and legal bases to categorize Alibaba’s product as “malicious” or “dangerous”, it damaged the reputation of Alibaba, which constituted unfair competition. However, the claimed behavior of Sanji Wuxian did not constitute the infringement on copyright due to provisions in Chinese Copyright Law, and thus, Alibaba’s claim that Sanji Wuxian had infringed the claimed software could not be supported.
Neither Alibaba nor Sanji Wuxian accepted the first judgment and appealed. Alibaba claimed a higher amount of compensation while Sanji Wuxian claimed to rule its unfair competition as lack of evidence.
The court of the second instance ruled that, first, as Sanji Wuxian had not raised any objection towards the jurisdiction during the first trial, the court did not support its claim that “the mistake in affirming the domicile had led to the mistake in jurisdiction”. Secondly, according to the agreement between Guofeng Yingte and Alibaba, the software copyright of “yahoo assistant” shall be shared by both sides, therefore, Alibaba had the right to unilaterally claim the rights and enjoy the benefits of the claimed behavior. Finally, both parties involved had a relationship of horizontal competition, who should have observed the principles of willingness, equality, fairness and integrity, as well as the commonly recognized business ethic. As the members of China Internet Association, the two parties concerned in this case had participated in the formulation of the definition of “malicious”, which showed that both parties had acknowledged of the definition and relevant forms of malicious software announced by the Association. However, Sanji Wuxian failed to provide sufficient evidence to prove that “yahoo assistant” had the features of the “malicious software”, and that “yahoo widget” was “dangerous”. Therefore, its behavior to mark “yahoo assistant” as “malicious software” and “yahoo widget” as “dangerous” lacked bases and infringed the reputation of Alibaba, which constituted unfair competition.
The plaintiff held that, Dong Zhiyong, the defendant, began to work for its company as sales manager in Beijing since March 28, 2007, and both parties executed a labor contract and a confidentiality agreement. During that time, Dong Zhiyong obtained the company’s nationwide client information. In March 2006, Dong Zhiyong left the company without going through any hand-over formalities. Then Dong Zhiyong invested to establish Weilaike on May 23 of the same year, ran exactly the same business as Hailin, and used the client information stolen from Halin in its own business, which violated the labor contract and the confidentiality agreement and conducted unfair competition.
Dong Zhiyong, the defendant, responded that, he was coerced to execute the labor contract and the confidentiality agreement; he did not use the plaintiff’s client information in its business and the salary he obtained did not include non-compete compensation. Therefore, he did not agree with the plaintiff’s requests.
Weilaike, the defendant, responded that, it did not get and use the plaintiff’s client information, or made any transaction with the plaintiff’s clients, and thus no unfair competition was constituted and it should not be held liable.
The court ruled that, the labor contract and the confidentiality agreement executed by the plaintiff and Dong Zhiyong did not violate any regulation subject to the laws of the country and shall be effective for both parties to observe. Dong Zhiyong said that the labor contract and the confidentiality agreement were executed under the circumstance that Dong had already quit the previous job and had to sign, without any clear provision of the contents of non-compete compensation and thus shall not prevent him from working for horizontal companies. However, the above labor contract clearly provided that the salary included the non-compete compensation, and the actual salary paid by the plaintiff indeed exceeded greatly the lowest salary agreed by both parties. Though the content of “including compensations” on the salary list of Dong Zhongyong was written by hand, according to the actual condition as well as the integration of the contents agreed in the contract, the court affirmed that the salary paid by the plaintiff to Dong Zhiyong included the non-competition compensation and the non-competition period was one year according to the contract. In this case, Dong Zhiyong left the position in March 2006 and then immediately established Weilaike in May, served as chief director and manager and ran the same business as the plaintiff, which violated the non-competition agreement and shall bear liabilities for breach of contract. As to the contents held by the plaintiff that Dong Zhiyong violated the confidentiality agreement and used the plaintiff’s client information in his business and conducted unfair competition, the plaintiff failed to submit any evidence related to the business transactions between the two defendants and the clients in the plaintiff’s list, therefore, the court did not support this part of claim of the plaintiff.
The plaintiff alleged that, it applied for and registered the domain name “rc3m.com” with Beijing Xin Net in 2002. Then the plaintiff continued to use it and paid the operation fees for the domain name on time. In 2006, the defendant lodged a complaint to the Asian Domain Name Dispute Resolution Center for the reason that the claimed domain name was mixed up with its famous “3M” trademark and was in great similarity with the defendant’s domain name “3m.com”, which led to the suspension of using the claimed domain name. The plaintiff held that, its registration and use of the domain name “rc3m.com” were in good faith and shall be protected by laws, and the plaintiff’s complaint was obviously malicious; thus request the court to confirm the legality and effectiveness of the plaintiff’s registration, holding and use of the domain name “rc3m.com” and judge to eliminate the improper interference in the plaintiff’s using of the domain name.
The defendant responded that, it had the exclusive rights of the registered trademark “3M” and had rights of the domain name “3m.com”; while the plaintiff did not have the rights and interests of the major part of “rc3m.com” and registered the domain name through malice. The award issued by the Asian Domain Name Dispute Resolution Center had already affirmed the malice of the plaintiff by registering and using the domain name and required the plaintiff to transfer the claimed domain name to the defendant. Therefore, the plaintiff’s claim did not have factual and legal bases. The defendant requested the court to reject the plaintiff’s claim and affirm the defendant’s “3M” trademark as a famous brand.
The court ruled that, “Interpretation of the Supreme People’s Court on Application of Laws in the Trial of Civil Disputes over Domain Names of computer network” provides that, when trying cases of dispute over domain name of computer network, the people’s court shall come to the conclusion that the acts of the defendant of registering or using the domain name, etc. constitute infringement or unfair competition if the following conditions are met: (1) the civil rights and interests that the plaintiff asked for protection are legal and valid; (2) the domain name or the main part of the domain name of the defendant has constituted duplication, imitation, translation or transliteration of the famous trademark of the plaintiff, or is the same or similar to the registered trademark of the plaintiff so that the public may take it for the registered trademark of the plaintiff by mistake; (3) the defendant does not enjoy rights or interests of the said domain name or its main part, neither does he have proper reasons to register or use that domain name; and (4) the defendant is registering or using that domain name through malice. In this case, the defendant owned the trademark right of “3M”, while the claimed trademark was composed by the two parts of “rc” and “3m”, of which “3M” trademark had great prominence. The claimed trademark of the plaintiff contained the defendant’s trademark, which could easily mislead the relevant net users that the two had certain relations. Besides, though the plaintiff’s “3M” was the abbreviation of “Three abrasive”, which meant “abrasive materials”, “abrasive tools” and “abrasive grinding”, the plaintiff failed to prove that “3M” had already become the commonly recognized name for the industry of abrasive materials, abrasive tools and abrasive grinding. Therefore, the plaintiff’s use of “3m” did not have legal bases. Finally, the business ranges of the plaintiff and the defendant belonged to the same industry, and had a competitive relationship. The plaintiff should have known the defendant’s trademark “3M”, but the plaintiff still registered and used the domain name that contained “3M” to promote the same kind of products that were under the verification of the defendant’s registered trademark, which could easily make the net users to misunderstand the relationship between the plaintiff and the defendant and mix up the sources of the products. Therefore, the registration and use of the domain name “rc3m” by the defendant had malice, and according to the above condition, the court ruled that the plaintiff’s claim did not have factual and legal bases and shall be rejected.
The court of the first instance ruled that, first, by primary examination of the comparative documents provided by Shuaijia to apply for the invalidation of the claimed patent right, the court thought the materials were not enough to affect the effectiveness of the patent right, and thus did not support the appellants’ request to suspend the litigation. Second, though the six patent literatures provided by Shuaijia and Xibeile belonged to the already existing techniques, they could not deny the novelty, inventiveness and applicability of the claimed patent. Besides, such literatures could not prove that the claimed infringing product came from the already existing techniques. Therefore the court held that the behavior of Shuaijia and Xibeile had constituted patent infringement.
Shuaijia and Xibeile did not accept the judgment of first instance and jointly appealed.
The two appellants jointly alleged that, the “Patent Examination Guidelines” provided that “While examining the inventiveness, the invention requiring for protection shall be evaluated by integrating different technical contents of one or several already existing techniques”. As ordinary technical staff in the field of soybean technology, it’s obvious to integrate the literatures provided by the appellants. Therefore, the court of first instance had mistakes in affirming whether the claimed patent had inventiveness or whether the trial should be suspended. The court of first instance did not make objective comparison and analysis between the relevant technical literatures provided by the appellants and the claimed patent, and it had logical mistakes in affirming whether the defense of a publicly known technique had constituted.
The court of second instance held that, concerning the inventiveness of the claimed patent, the court thought the integration of the patent literatures provided by the appellants could not cover all of the technical features of the claimed patent’s requirements. Meanwhile, the behavior of the appellants to deny the inventiveness of the claimed patent by splitting and integrating the techniques stated in the comparative documents shall not constitute, as the techniques of the claimed patent shall not be deemed as simple combination of the already existing techniques. Therefore, the court could not support the appellants’ claim to suspend the trial for the reason that the claimed patent lacked inventiveness. Meanwhile, the appellants’ claim that the techniques they used came from the comparative documents submitted shared the same reason as for the above claim that the appellee’s patent lacked inventiveness.? “The defense of a publicly known technique” refers to that the technique used by the claimed infringing person was the same as, or more similar with the already existing technique. In this case, the techniques used by the appellants’ products was exactly the same as the claimed patented technique, other than “more similar” with the techniques in the comparative documents submitted. Meanwhile, the claim for a defense of publicly known technique by splitting and integrating the techniques stated in the above comparative documents shall not be established. Therefore, the court of the second instance made a final instance to reject the appellants’ claim, and affirmed the behavior of the appellants constituted an infringement on patent.