Haworth & Lexon Law Newsletter
No.2 2008 (Total:No.76) March. 20th, 2008
Edited by Haworth & Lexon
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“Haworth & Lexon Law Newsletter ” is issued every month, mainly introducing the legal change in the fields of Corporate, Securities, Foreign investment, E-commerce, 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.
Guidelines:
News of Haworth & Lexon
Haworth & Lexon Held jointly with Tindall Gask Bentley a Seminar Titled “Going Public in Australia: A new Choice for Chinese Companies” on April 2, 2008
Latest Laws and Regulations:
“Measures of the People’s Republic of China for the Administration of Sites under Customs Supervision”
“Law on Prevention and Control of Water Pollution (amended)”
“Notice on How to Handle Relevant Matters after Cancellation of Several Former Tax Preferential Policies on Foreign-invested Enterprises and Foreign Enterprises”
"Provisions on Causes of Action of Civil Cases"
"Provisions on relevant Issues on Trial of Cases of Civil Disputes concerning Conflicts between Registered Trademarks or Enterprise Names and Prior Rights"
"The Second Protocol to the Arrangement between the Mainland of China and Hong Kong Special Administrative Region for the Avoidance of Double Taxation on Income and Prevention of Fiscal Evasion"
"Measures for Administration of Auto Finance Companies"
"Opinions on Strengthening Supervision on and Administration of Internet Maps and Geographic Information Service Websites"
IP Cases:
The Court has the Right to Judicially Affirm the Ownership of Claimed Trademark Rights based on Facts.
Beijing Lantian Obtained Court Support in the Dispute over Trademark "Bainaohui"
"Su Fu Bi"(苏富比) is Affirmed as an Unregistered Famous Trademark under Legal Protection.
Using Originality of a Design Drawing whose Copyright is Owned by Others for House Decorations Constituted Infringement upon Copyright.
Using Other's Website Domain Name for Advertising Constituted Unfair Competition of False Publicity.
News of Haworth & Lexon
Haworth & Lexon Held jointly with Tindall Gask Bentley a Seminar Titled “Going Public in Australia: A new Choice for Chinese Companies” on April 2, 2008
Our firm held, jointly with Australian Tindall Gask Bentley law firm, a seminar titled “Going Public in Australia: A new Choice for Chinese Companies” in Shanghai Jin Jiang Hotel Shanghai on April 2008.
As Mr. Kevin Rudd, leader of the Australian Labor Party, was elected Prime Minister of the federation, there is a closer relationship between China and Australia in political and economic contacts. Among a great many securities exchanges abroad, the well-developed Australian Securities Exchange (listed as one of the top 10 World Securities Exchanges in 2007), along with potential and substantial investment opportunities in Australia, has presented a new choice for Chinese enterprises that are going or about to go abroad.
The seminar invited experts from Australian Securities Exchange, TGB law firm, Australian senior stockbrokers, investment banks, accounting firms, and Invest Australia etc. Discussions were focused on chances and challenges in investment and listing of Chinese enterprises in Australia, and seeking for practical solutions.
Latest Laws and Regulations
“Measures of the People’s Republic of China for the Administration of Sites under Customs Supervision”
The General Administration of Customs (hereinafter, “GAC”) promulgated the “Measures of the People’s Republic of China for the Administration of Sites under Customs Supervision” (hereinafter, the “Measures”) on January 30, 2008, which came into force on March 1, 2008.
According to the Measures, the term “sites under supervision” shall refer to specific zones which satisfy establishment standards and are used for entry, exit and berth of inbound and outbound vehicles or those carrying goods under customs supervision within the borders, for the loading, unloading, storage, delivery and shipping of inbound and outbound cargos, and for handling of business under customs supervision. The Measures shall mainly apply to the establishment and administration of sites under customs supervision.
To apply for setting up a site under customs supervision, the enterprise shall satisfy the following four conditions: (1) it has been registered with the administration for industry and commerce, and is an independent legal person; (2) its registered capital is no less than RMB three million Yuan; (3) it has business premises specially for storage of goods, and has the land use right over such premises. If it rents others’ land or site to run business, the lease term shall be no less than five (5) years; (4) special business permit shall be otherwise obtained if it engages in storage of liquid or gas chemicals, flammable or explosive articles or other goods under special licensing control.
For an applicant enterprise which satisfies the statutory requirements, the customs directly under the GAC shall issue to the applicant a “Decision of the Customs of the People’s Republic of China on Approving the Establishment of Sites under Customs Supervision”. Such applicant enterprise shall apply to the customs directly under GAC for acceptance check within one (1) year from the date when the Approval Decision is issued. If the site under customs supervision passes the acceptance check, it can be put into operation after it is registered with the customs directly under the GAC and obtains the “Registration Certificate of Places under Customs Supervision of the People’s Republic of China” (hereinafter, the “Registration Certificate”). The Registration Certificate shall be valid for three (3) years from the date it is issued. For sites under customs supervision which are established before the implementation of the Measures, enterprises running them must apply for the said certificate to the customs directly under the GAC within one (1) year from the date when the Measures come into force; otherwise those enterprises’ qualification for running sites under customs supervision would be cancelled.
The Measures also provide serious control over administration of sites under customs supervision: sites under customs supervision may only be used for storing goods under customs supervision; enterprises running such sites shall set up checkpoint at passages entering and exiting such places, assign special personnel to keep watch, and equip the places with corresponding equipment to be networked with the customs; the enterprises running such sites shall report to the customs for situation about cargos stored in the sites for three (3) months or more, etc.
“Law on Prevention and Control of Water Pollution (amended)”
The Standing Committee of the Tenth National People’s Congress amended and promulgated the “Law of the People’s Republic of China on Prevention and Control of Water Pollution” (hereinafter, “Law on Prevention and Control of Water Pollution”) on February 28, 2008, which shall come into force on June 1, 2008.
The “Law on Prevention and Control of Water Pollution” had been originally promulgated on May 11, 1984 and was amended on May 15, 1996. The current amendments mainly focus on the following aspects:
Intensifying responsibilities and providing higher requirements for water environmental protection of the people’s governments at various levels; Listing performance of water environmental protection target as one of the assessment factors of the local people’s government and its persons in charge.
The state institutes a system for control of the total discharge of major water pollutants. The People’s governments at the provincial, autonomous or municipal levels shall, in accordance with the provisions of the State Council, reduce and control the total discharge of major water pollutants within their respective administrative regions, and shall reduce such target of control to the people’s governments at the city and county level for implementation. Then the people’s governments at the city and county level shall, in accordance with the standards, reduce such target of control of the total discharge of major water pollutants to the discharging units. The people’s governments at the provincial, autonomous or municipal levels may define such major water pollutants under control according to the water environmental quality conditions and water prevention and control demand in their respective administrative regions. With regard to any region that discharges pollutants in excess of the standards, the relevant environmental authorities under the people’s governments shall suspend examination or approval of environmental evaluation of any project that increases major water pollutants in that region.
The new amendments provide detailed prevention and control measures for water pollution caused by the industrial sector, cities and towns, agricultural sectors, rural areas and ships.
Establishing a protection system for drinking water sources and special water bodies (such as water bodies at scenic or historic sites and important fishery water bodies). Drinking water sources may be divided into first-grade and second-grade protection zones. It is forbidden to construct, rebuild or expand within the first-grade drinking sources protection zones any project that has nothing to do with water supply facilities and protection of water sources, or within the second-grade drinking sources protection zones any project that discharge pollutants. With regard to projects irrelevant with water supply facilities and protection of water sources that have already been built in first-grade protection zones, or projects discharging water pollutants that have already been built in second-grade protection zones, the relevant people’s governments at or above the county level shall order that they be dismantled or closed.
Adding provisions concerning water pollution accidents. “Law on Prevention and Control of Water Pollution” requests enterprises and public institutions where water pollution accidents may happen to formulate emergency response plans for water pollution accidents. When an enterprise or public institution, as a result of an accident or other exigency, causes or may possibly cause a water pollution accident, it shall immediately start its emergency response plan and take emergency response measures, and report to the relevant authorities.
Reinforcing the penalty. Clarifying and increasing the penalty amounts for different kinds of violations. Adding means of penalty such as conducting treatment within a time limit, conducting treatment by production curtailment, suspending operation or closing down, and even imposing criminal liabilities.
“Notice on How to Handle Relevant Matters after Cancellation of Several Former Tax Preferential Policies on Foreign-invested Enterprises and Foreign Enterprises”
The State Administration of Taxation promulgated the “Notice on How to Handle Relevant Matters after Cancellation of Several Former Tax Preferential Policies on Foreign-invested enterprises and Foreign Enterprises” (hereinafter, the “Notice”) on February 27, 2008, which provides stipulations in three aspects:
Relevant formalities must be handled to enjoy the policy of tax-refund for re-investments. Where a foreign investor directly re-invests the post-tax profit obtained from its foreign-invested enterprise, into the said foreign-invested enterprise to increase its registered capital, or invests the post-tax profit as capital to establish another foreign-invested enterprise, if it intends to go through the re-investment tax refund formalities in accordance with the “Income Tax Law of the People’s Republic of China on Foreign-invested Enterprises and Foreign Enterprises” and other relevant provisions, it shall complete the re-investment prior to the end of 2007 and shall finish the change or registration procedures with the State Administration for Industry & Commerce. No tax refund will be made for any reinvestment, which was made, prior to the end of 2007, with the to-be-distributed profit of the year 2007.
For the income that a foreign enterprise obtains from transfer of know-how or provision of a loan to China, if the relevant contract was executed prior to the end of 2007 and satisfied the tax exemption conditions as prescribed in the “Income Tax Law of the People’s Republic of China on Foreign-invested Enterprises and Foreign Enterprises”, the foreign enterprise may, during the valid term of the contract, be allowed to be exempted from the income tax upon approval of the tax authority, excluding any extension or supplementary contract or expansion clauses.
For a foreign-invested enterprise to enjoy such preferential treatment as tax reduction or exemptions for a specified period under the “Income Tax Law of the People’s Republic of China on Foreign-invested Enterprises and Foreign Enterprises”, if its production and business operation nature or business period changes after 2008 and if, as a result, it no longer satisfies the conditions prescribed under the “Income Tax Law of the People’s Republic of China on Foreign-invested Enterprises and Foreign Enterprises”, it should, under the same law, make up the tax reduced or exempted that it has enjoyed during the specified period (including the preferential transition period).
“Provisions on Causes of Action of Civil Cases”
The Supreme People’s Court promulgated the “Regulations on the Causes of Action of Civil Cases” (hereinafter, the “Provisions”) on October 29, 2007, which came into force on April 1, 2008.
The Provisions set a categorization system of ten parts for first-grade causes of action, namely, rights of personality, marriage and family and succession, real rights, credit’s rights, labor and personnel disputes, intellectual property rights, maritime and marine disputes, civil disputes related to railway transportation, civil disputes related to corporate, securities and bills, and cases governed by special procedures. Instead of listing infringement disputes as an independent first-grade cause of action, the Provisions make clear that, for general infringement cases, they shall be classified into first-grade cases such as rights of personality, real rights and intellectual property rights; and for cases infringing upon both human rights and property rights as well as cases governed by special infringement rules, they shall be independently classified under the credit’s rights.
The Provisions add real rights as a new cause of action. Before the implementation of the “Real Rights Law”, there was no law providing the system of real rights. The “Provisions on Causes of Action of Civil Cases (Trail)” provided cases of real rights under ownership disputes. While this time, the Provisions put disputes over real rights as a specific type of cause, as disputes over personality rights, credit’s rights and other civil cases.
The Provisions make it clear that all disputes over contracts and infringement related to enterprise name (trade name), special logo and internet domain name, as well as disputes over monopoly and unfair competition shall be listed into the range of disputes over intellectual property rights. The Provisions make “disputes over intellectual property rights” as a first-grade cause and set three (3) second-grade causes under it, namely, “contract disputes over intellectual property rights”, “ownership and infringement disputes over intellectual property rights” and “disputes over unfair competition and monopoly” and meanwhile, 33 third-grade causes and 86 fourth-grade causes are set accordingly. In addition, the Provisions provide 3 third-grade causes related to temporary measures before intellectual property rights action such as “applying for cessation of infringement before action”.
“Provisions on relevant Issues on Trial of Cases of Civil Disputes concerning Conflicts between Registered Trademarks or Enterprise Names and Prior Rights”
The Supreme People’s Court promulgated the “Provisions on relevant Issues on Trial of Civil Disputes concerning Conflicts between Registered Trademarks or Enterprise Names and Prior Rights” (hereinafter, the “Provisions”) on February 18, 2008, which came into force on March 1, 2008.
Article 1 and Article 2 of the Provisions mainly focus on the acceptance and filing of cases of civil disputes over conflicts of rights. For a lawsuit filed on the ground that the character or figure used in the registered trademark of another party infringes upon the plaintiff’s copyright, design patent right, enterprise name right or other prior rights, if the lawsuit conforms to Article 108 of the “Civil Procedure Law”, the people’s court shall accept the filing. If the lawsuit is filed on the ground that a registered trademark used by another party on approved commodities is identical or similar to the prior registered trademark of the plaintiff, as Article 30 and Article 41 of the currently effective “Trademark Law” provide relevantly complete trademark dispute procedures concerning this, the court shall notify the plaintiff to apply to the competent administrative authority for settling the issue. However, if the lawsuit is filed on the ground that the registered trademark of another party is identical or similar to the registered trademark of the plaintiff, which is caused by use of a registered trademark by another party beyond the approved scope of commodities or by changing the predominant feature of the trademark, splitting it or combing it with others, the people’s court shall accept the filing.
Where a lawsuit is filed on the ground that the enterprise name of another party is identical or similar to the prior registered enterprise name of the plaintiff to the extent that it is easy for the public to be confused about the source of the plaintiff’s commodity, which is in violation of Article 5 (3) of the “Anti-unfair Competition Law”, if the lawsuit conforms to corresponding conditions for filing, the people’s court shall accept the filing.
The Provisions provide that the people’s court shall, in light of the plaintiffs’ claims and the nature of the disputable civil legal relations, in accordance with the Provisions, determine the cause of action of such cases and apply the corresponding laws. If such disputes belong to infringements upon the exclusive use right of a trademark, the “Trademark Law” shall be applied; if such disputes belong to unfair competition, the “Anti-unfair Competition Law” shall be applied and the corresponding causes of the action shall be determined.
“The Second Protocol to the Arrangement between the Mainland of China and Hong Kong Special Administrative Region for the Avoidance of Double Taxation on Income and Prevention of Fiscal Evasion”
The Mainland of China and Hong Kong executed the “The Second Protocol to the Arrangement between Mainland of China and Hong Kong Special Administrative Region for Avoidance of Double Taxation on Income and Prevention of Fiscal Evasion” (hereinafter, the “Second Protocol”) on January 30, 2008, which makes further provisions for relevant articles of the “Arrangement between Mainland of China and Hong Kong Special Administrative Region for the Avoidance of Double Taxation on Income and Prevention of Fiscal Evasion” executed on August 21, 2006.
According to the Second Protocol, if an enterprise of one side directly, or by its employees or other hired personnel, provides labor for the same project or relevant projects in the other side, including consulting services, the tax exemption period shall be limited to a consecutive or accumulated 183 days within any 12 months. The Second Protocol replaces the “6 months” with “183 days” as the calculation unit. For instance, if a Hong Kong enterprise provides labor services in the mainland of China for more than a consecutive or accumulated 183 days within any 12 months, it shall be deemed as having a permanent establishment in the mainland of China and shall be responsible to pay enterprise income tax.
Except for specific conditions, the income from transfer of an immovable property by a person in Hong Kong shall only be taxed in Hong Kong. Such specific conditions include certain kinds of share transfer. If 50% or more of the company property had once been immovable property within 3 years before a Hong Kong resident transferred his/her shares in a company in the mainland of China, then the income from such transfer shall be taxed in the mainland of China. In addition to the share of the kind above, if a Hong Kong resident had once held 25% or more shares of the company within12 months before he/she transferred his/her shares held in the company, the income from such transfer shall be taxed in the mainland of China regardless of the amount of shares transferred.
“Measures for Administration of Auto Finance Companies”
China Banking Regulatory Commission (CBRC) promulgated the “Measures for Administration of Auto Finance Companies” (hereinafter, the “Measures”) on January 24, 2008, which came into force upon promulgation. The Measures make great adjustments to the former “Measures for Administration of Auto Finance Companies (2003)” as well as its detailed rules for implementation.
The term “auto finance company” as mentioned in the Measures refers to non-banking financial institutions that are established upon the approval of CBRC for providing financial services for auto buyers and sellers in China.
The Measures provide many requirements for investors who intend to establish auto finance companies: (1) Investors of an auto finance company shall be legal-person enterprises established inside or outside China according to laws, in particular, the principal investor must be an enterprise or non-banking financial institution engaging in the production or distribution of whole vehicles. (2) At least 1 investor of an auto finance company shall have over 5 years’ (inclusive) experience in auto finance business management and risk control; and if the investors of an auto finance company fail to satisfy such requirement, they shall at least introduce a competent professional management team for the auto finance company. (3) If an investor of an auto finance company is a non-financial institution, it shall also meet the following requirements: its total assets value in the latest year is not less than RMB 8 billion Yuan or other convertible currency of the equivalent value; its annual business income is not less than RMB 5 billion Yuan or other convertible currency of the equivalent value (by standard of consolidated financial statement); its business performance is sound, and its year-end net asset value in the latest year is not less than 30% of the total assets value (by standard of consolidated financial statement); its business performance is sound and it has gained profits for the latest two consecutive accounting years; etc.
The Measures expand the business scope of auto finance companies by adding the following business: accepting the guarantee bonds of car dealers for loans used for purchasing cars, and accepting the guaranty bonds from the lessee for leasing cars, issuing financial bonds upon approval, engaging in inter-bank borrowing business, providing auto financing lease business (excluding leaseback business), selling and disposing of leasing automobile at salvage value, engaging in equity investment business related to auto finance business upon approval, etc.
“Opinions on Strengthening Supervision on and Administration of Internet Maps and Geographic Information Service Websites”
The State Bureau of Surveying and Mapping, the Ministry of Public Security, the State Administration for Industry & Commerce and the Press Office promulgated on February 25, 2008 the “Opinions on Strengthening Supervision on and Administration of Internet Maps and Geographic Information Service Websites” (hereinafter, the “Opinions”).
As the internet map is a special kind of map products, the Opinions provide stipulations of access for the compilation and publication of internet maps. Anyone who intends to engage in the compilation of internet maps must obtain the approval and a corresponding certificate for surveying and mapping from the administrative authority of surveying and mapping under the State Council. Anyone who intends to engage in the publication of internet maps must obtain the approval and a license for publication of internet maps from the press and publication authority under the State Council. Foreign organizations or individuals shall not engage in any activity of compilation or publication of internet maps within the territory of China.
Besides, before publication, an internet map shall be submitted for examination and approval to the administrative authority of surveying and mapping under the State Council or any administrative authority of surveying and mapping of a province, an autonomous region or a municipality directly under the Central Government; Anyone engaging in internet maps and geographic information services shall apply for a business license of internet information service with the information industry (communication) authority or go through formalities for filing.
IP Cases
The Court has the Right to Judicially Affirm the Ownership of Claimed Trademark Rights Based on Facts
Beijing No.2 Intermediary People’s Court made a final judgment on December 20, 2007, in the case of the appellant (the defendant in the first instance) Beijing Huabiao Industry & Trade Co., Ltd. (hereinafter, “Huabiao Industry & Trade”) vs. the appellee (the plaintiff in the first instance) Beijing Hongdu Group Corp. (hereinafter, “Hongdu”), regarding the dispute over ownership of trademark rights, which affirmed that the judgment of the first instance was correct and the claimed trademark rights should belong to Hongdu.
Hongdu alleged in the first instance that Beijing No.7 Fashion Plant applied and registered the trademark “Shuangshun” and then changed the registrant of the trademark to Beijing Huabiao Fashion Co., Ltd. (hereinafter, “Huabiao Fashion”). In December 2002, Beijing Yishang Group Co., Ltd. (hereinafter, “Yishang”) agreed to transfer all the corporate property rights of Huabiao Fashion to Hongdu. Therefore, the property rights should include the trademark “Shuangshun”. As Huabiao Industry & Trade Co., Ltd., without authorization, modified the registrant of “Shuangshun” to Huabiao Industry & Trade Co., Ltd., Hongdu appealed to the court and claimed a change of the holder of the trademark “Shuangshun” to Hongdu.
Huabiao Industry & Trade Co., Ltd. defended in the first instance that, according to the process of modification of the trademark “Shuangshun”, it had always been the legal registrant of the trademark. The evidences available then could not prove that “Shuangshun” belonged to Hongdu.
The court of the first instance held that, evidences showed that all corporate property rights of Huabiao Fashion should belong to Hongdu, including tangible and intangible assets. Therefore, it should be affirmed that Hongdu held all the ownerships of the properties of Huabiao Fashion, including the trademark “Shuangshun”. Though Hongdu did not handle the formalities for the modification or transfer of the trademark, it shall not change Hongdu’s identity as the owner of “Shuangshun”.
Huabiao Industry & Trade Co., Ltd. did not accept the judgment of the first instance and appealed on the grounds that the claimed trademark was originally registered under the name of Huabiao Industry & Trade Co., Ltd. During the reform, there was only a modification of nominal registrant, instead of an actual change of the ownership. Therefore the trademark rights should belong to Huabiao Industry & Trade Co., Ltd.
Hongdu accepted the judgment of the first instance.
The court of the second instance held that, as a superior entity and asset supervisor of Hongdu and Huabiao Fashion, Yishang took charge of and participated in the reform of its subordinate enterprise Huabiao Fashion, and confirmed the reform solution by way of reply that was in compliance with relevant provisions. Therefore, Yishang’s replies concerning disposition of relevant assets of its subordinate enterprise should be legally valid. Evidences showed that during the enterprise reform of Huabiao, Yishang had approved Hongdu to take all corporate property rights of Huabiao Fashion. According to the practices of enterprise reforms, such “all corporate property rights” shall include all tangible assets as well as intangible assets such as trademark rights and land use rights. Based on this, the court affirmed that Hongdu had obtained the claimed registered trademark “Shuangshun” together with other property rights previously owned by Huabiao Fashion. Though Hongdu did not go through the legal formalities for trademark change, it was the actual owner of the trademark, and thus the court finally ruled that Hongdu was the holder of the claimed trademark.
Beijing Lantian Obtained Court Support in the Dispute over the Trademark “Bainaohui”
Beijing No.1 Intermediary People’s Court made a judgment of the first instance on November 15, 2007, in the case of the plaintiff Lantian Computer Co., Ltd. (hereinafter, “Lantian”), vs. the defendant Trademark Review & Hearing Board of the State Administration for Industry & Commerce (hereinafter, “TRHB”), with Hangzhou Bainaohui Computer Market (hereinafter, “Bainaohui Market”) as a third party, regarding an administrative litigation concerning the “Decision on Review of Objections on the Trademark No. 1579958 Bainaohui” (hereinafter, Decision No. 4223) made by TRHB, which ruled to withdraw TRAR’s Decision.
TRHB issued the Decision No. 4223 based on its review of objections on the trademark No. 1579958 (hereinafter, the “Disputed Trademark”) submitted by Lantian. The Decision No. 4223 held that, the application date of the Disputed Trademark was March, 2000 while Bainaohui Market established its name and began its operation on August 25, 1998. The evidences provided by Lantian could not deny the fact that Bainaohui Market began to use “Bainaohui” as its market name in August 1998. Besides, Lantian’s evidences could not prove that the trademark “Bainaohui” registered and used by Lantian before August 1998 had been a renowned trademark in relevant fields in the mainland of China. Though Lantian had opened Bainaohui Information Plaza in Beijing and Shanghai before August 1998, it failed to prove that such Plaza had been influential to the area where Bainaohui Market was located. Therefore, the Decision No. 4223 ruled that Bainaohui Market’s application for registration of the No. 4223 did not violate provisions of the “Trademark Law” and should not be rejected.
Lantian refused to accept the Decision No. 4223 and appealed on the grounds that, firstly, the “Market Registration Certificate” and “Taxation Registration Certificate” (Duplicate)” of Bainaohui Market were certificates reissued after change, and the establishment date recorded on the certificates was not the actual date of using the name. Evidences showed that Bainaohui Market was a name modified on August 16, 1999. Secondly, Lantian’s “Bainaohui” Beijing market and “Bainaohui” Shanghai market respectively began its business in May and June of 1998. Lantian’s lease promotion of computer markets and doing business by leasing counters were both use of “Bainaohui” on lease of counters, which clearly reflected Lantian’s behavior of using “Bainaohui” on counter leasing before Bainaohui Market. Thirdly, soon after its establishment in Shanghai and Beijing, “Bainaohui” Information Plaza attracted a great number of customers, the influence of which radiated to the markets of the whole country. Finally, in respect of actual usage of the Disputed Trademark and the cited trademark, both trademarks were used on computer markets with exactly the same service target, channel and contents, which obviously could cause confusion among consumers.
TRHB defended that the Disputed Trademark and the cited trademark had obvious differences in the target, contents and other aspects of their respective approved services. Lantian’s evidences failed to deny the fact that before August 1998, Bainaohui Market had already used “Bainaohui” as its market name. Besides, Lantian failed to prove that before August 1998, its application of “Bainaohui” in services of exhibition facilities and counter leasing, which were approved to be used by the Disputed Trademark, had been influential at the place where Bainaohui Market was located, or had been influential enough in other places to affect the third party.
Bainaohui Market responded that its application and registration of the Disputed Trademark complied with the “Trademark Law” and applied to the court to sustain the Decision No. 4223.
The court held that, firstly, the “Market Registration Certificate” only recorded the date of establishment. Combined with other evidences, it could be confirmed that Bainaohui Market did not use the name “Bainaohui” initially when it was established on August 25, 1998. Therefore, TRHB had no ground in affirming that Bainaohui had already used “Bainaohui” as its market name as early as August 1998 only by reference to the establishment date of the market recorded in the “Market Registration Certificate” and the “Taxation Registration Certificate”. Secondly, the approved usage of the Disputed Trademark was “counter leasing” service while that for the cited trademark was “real estate management” service, which meant that the two belonged to different types in trademark service classification. However, “counter leasing” referred to leasing specific business areas in a certain business site to others; and such lessees leased specific business areas in a certain business site for daily operation. The business site and specific business areas all fell into the scope of real estate. Therefore, the counter leasing was actually real estate management and thus the “counter leasing” and “real estate management” belonged to similar services. Thirdly, according to a great number media reports provided by Lantian, it could be confirmed that Bainaohui Information Plaza leased certain areas in the Plaza to corresponding business operators by way of counter leasing. Therefore, the trademark “Bainaohui” used by Lantian had gained certain reputation before the registration application of the Disputed Trademark. As both Beijing and Shanghai were famous cities in China, reputation formed by the computer business industry in the two cities might radiate in an area large enough to cover Bainaohui Market which was located in Hangzhou. Therefore, the application and registration of the Disputed Trademark violated Article 31 of the “Trademark Law” that “Anyone applying for trademark registration shall not damage the existing rights of others obtained by priority, neither shall it register in an improper way, in advance, a trademark that has been used by others and is influential”. Based on these grounds, the court finally ruled that the Decision No. 4223 was wrong and should be withdrawn.
“Su Fu Bi”(苏富比) is Affirmed as an Unregistered Famous Trademark and thus Gets Legal Protection
Beijing No.2 Intermediary People’s Court made a judgment of the first instance on December 19, 2007, in the case of the plaintiff Sufubi Auction House (SOTHEBY’S) vs. the defendant Sichuan Sufubi Auction Co., Ltd. (hereinafter, “Sichuan Sufubi”), regarding infringement upon trademark rights, which affirmed that the plaintiff’s “Sufubi” was a famous trademark and that the defendant’s behavior constituted infringement.
The plaintiff alleged that, established in 1744 in London, it was one of the two biggest and most famous auction houses in the world. “SOTHEBY’S” was its trade name and “Su Fu Bi”(苏富比) was its formal Chinese trade name. The plaintiff had registered the character trademark “SOTHEBY’S” in auction services in the mainland of China and had registered this trademark as well as the character trademark “Su Fu Bi”(蘇富比) for relevant classifications. Besides, the plaintiff had submitted its registration application for the character trademark “Su Fu Bi”(苏富比) to be used for its auction service, but had not yet obtained approval. Meanwhile, the plaintiff had registered the character trademark “SOTHEBY’S” for its auction service in other countries and regions around the world. The claimed unregistered trademark “Su Fu Bi”(苏富比) actually met the standards of “Famous Trademark” for the auction service. Sichuan Sufubi extensively and prominently used “Su Fu Bi”(苏富比), “Sufubi Auction”, and “Su Fu Bi”(苏富比) with figures and constituted infringement upon the plaintiff’s unregistered famous trademark “Su Fu Bi”(苏富比).
Sichuan Sufubi defended that it legally used its enterprise name and trade name in good faith, which was not intentional infringement upon the plaintiff’s trademark and did not cause any confusion or misrecognition. Besides, the plaintiff did not register the trademark “Sufubi” for its auction service or use such trademark for commercial purposes in the mainland of China, and “Su Fu Bi”(苏富比) was not a commonly accepted translation for the plaintiff’s trade name or the registered trademark “SOTHEBY’S” in China, and therefore, “Sufubi” did not meet the requirements for “Famous Trademark”.
The court held that the claimed “Su Fu Bi”(苏富比) of the plaintiff was an unregistered famous trademark. According to the laws of our country, anyone who infringed upon a famous trademark unregistered in China should also stop infringement. According to the clarified facts in this case, the plaintiff and its affiliates had continuously used the character trademark “Su Fu Bi”(苏富比) in the mainland of China since 1988. Besides, the plaintiff and its affiliates established representative offices in Shanghai and held several charity bazaars, expositions and other promotional activities in China, during which processes the plaintiff used “Su Fu Bi”(苏富比), the calligraphic font “Su Fu Bi”(苏富比) and the trademark “SOTHEBY’S” on relevant promotional materials. Through constant usage and promotion, the claimed trademark “Su Fu Bi”(苏富比) had obtained a high reputation in the mainland of China. The relevant dispute settlement institutions and cultural relics authority also assured such reputation. Furthermore, the Chinese trade name and mark used by the plaintiff and its affiliates in China was “Su Fu Bi”(苏富比), and the relevant public and media in China usually refer “Su Fu Bi”(苏富比) to the plaintiff’s trade name and mark. Therefore, it could be affirmed that the plaintiff’s service mark “Su Fu Bi”(苏富比) belonged to the unregistered famous trademark in the classification of auction. Based on this, the defendant’s behavior constituted infringement upon the plaintiff’s trademark rights by using marks such as “Su Fu Bi”(苏富比), the calligraphic font “Su Fu Bi”(苏富比) and “Sufubi Auction” prominently in its auction activities, promotional materials, website and the business card of its legal representative since the mark they used was identical or similar to the plaintiff’s unregistered famous trademark “Su Fu Bi”(苏富比).
Using Originality of a Design Drawing whose Copyright is Owned by Others for House Decorations Constitutes Infringement upon Copyright
Beijing No.2 Intermediary People’s Court made a final judgment on December 20, 2007, in the case of the appellant (the defendant in the first instance) Jixiangwu Decoration (Beijing) Co., Ltd. (hereinafter, “Jixiangwu”) vs. the appellee (the plaintiff in the first instance) Beijing Golden Treasure Culture Communication Co., Ltd. (hereinafter, “Golden Treasure”), regarding infringement upon copyright, which affirmed that the behavior of Jixiangwu constituted infringement.
Golden Treasure alleged in the first instance that it was the copyright holder of the engineering design drawing of Golden Treasure Chain Stores. In August 2004, it engaged a decoration company to conduct the decorations for one store leased by Golden Treasure according to this engineering design drawing. Opened in September of the same year, the store was mainly engaged in selling Buddhism handicrafts. At the end of 2006, Golden Treasure found that the chained stores opened by Jixiangwu had nearly the same decorations as its own, with the same kind of doorway, the same design of elements and lecterns at the joints of counters, the same patterns of colored stripes on the floor and the same business of selling handicrafts. Golden Treasure held that the behavior of Jixiangwu had constituted infringement upon its copyright.
The court of the first instance ruled that, the decoration design for chained stores provided in the “Golden Treasure Brand Management Handbook” was a kind of engineering design drawing works, which should be protected by laws. Golden Treasure legally obtained the copyright of such works according to the copyright transfer agreement. As Jixiangwu used the same kind of doorway, the same pattern design (round up and long down) at the joints of counters and the same design for lecterns, which were the parts of originality of the works whose copyright was held by Golden Treasure, the court affirmed that Jixiangwu’s behavior constituted infringement by using the design whose copyright was held by Golden Treasure.
Jixiangwu refused to accept the judgment of the first instance and appealed on the grounds that, the so called original doorway, lectern and pattern design round up and long down) at joints of counters claimed by Golden Treasure were general and ordinary expressions, which did not contain creative elements. Ideas and expressions in the public domain should not be deemed as objects protected by the “Copyright Law”. The meaning of reproduction provided by the “Copyright Law” should only refer to printing, Xeroxing, re-shooting, etc. excluding stereographic reconstruction of a drawing. The structure, scale, shape, color, pattern elements and style of Jixiangwu’s store had nothing to do with the store design of Golden Treasure. The two were independent designs as Jixiangwu had never been accessible to the design drawing of Golden Treasure, not to mention conducting infringement.
The court held in the second instance that, in this case, as the decoration design drawing for chained stores in the “Golden Treasure Brand Management Handbook” could be used for indoor decorations, it should belong to engineering design drawing and be protected by the “Copyright Law”. Golden Treasure obtained the copyright of the works according to laws and thus should be legally protected. Jixiangwu used the same kind of doorway, the same pattern design at the joints of counters and the same design for lecterns, which were identical to the relevant contents in the design drawing whose copyright was owned by Golden Treasure. This fully reflected that Jixiangwu applied the parts of originality in the design drawing of Golden Treasure to its store decorations. This was done without the consent of Golden Treasure and no remuneration was paid. Therefore, the court affirmed that such behavior constituted infringement upon the copyright held by Golden Treasure.
Using Other’s Website Domain Name for Advertising Constituted Unfair Competition of False Publicity
Beijing Xicheng District People’s Court made a judgment of the first instance on December 3, 2007, in the case of the plaintiff Beijing Haidabaihui Technology Development Co., Ltd. (hereinafter, “Haidabaihui”) vs. the defendant Sun Peng, regarding unfair competition, which affirmed that the defendant’s behavior constituted unfair competition of false publicity.
Haidabaihui alleged that, established in 1998, it enjoyed a sound credibility and stable client resources. It applied for its website domain name in 2005, and with a daily page view number of over one hundred visitors, it enjoyed a good reputation in its field. As a former employee in the Marketing Department of Haidabaihui, Sun Peng was dismissed by Haidabaihui in October 2006. After leaving the company, Sun Peng, for several times and without any consent from Haidabaihui, used Haidabaihui’s website domain name in advertisements published on http://www.17pr.com/ for commercial promotion, which infringed upon the legal rights and interests of Haidabaihui.
Sun Peng defended that the post on the notarial certificate submitted by Haidabaihui had been written and restored in his computer when he was still in Haidabaihui. When he published the post, he forgot to delete the website name of Haidabaihui, which was by mistake instead of deliberate infringement. Besides, the number of visitors viewing this post was small and thus the post did not have any promotional function.
The court held that, anyone who published his/her business information for promotion should follow the principles of equality, integrity and commonly recognized business ethics. As Sun Peng used to work in Haidabaihui, he was quite familiar with the company’s website. After leaving the company, for the purpose of his own business, Sun Peng published promotional advertisement by way of posting on http://www.17pr.com/, and left the website domain name of Haidabaihui as the contact person in such advertisement, which would easily mislead the relevant public to think that the service supplier had certain relationship with Haidabaihui and would affect the consumption decision of users, consumers and the public. Therefore, Sun Peng’s website advertisement promotion fell into “false promotion to mislead the public”, the purpose of which was to increase his own business opportunities by unscrupulous means. This constituted unfair competition with similar business of Haidabaihui and thus Sun Peng should be liable, including stopping such infringement.
