Haworth & Lexon Law Newsletter(78)

Haworth & Lexon Law Newsletter
No.4 2008 (Total:No.78) May. 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:


Latest Laws and Regulations:

Measures for Administration of Significant Assets Restructuring of Listed Companies

Provisions on Several Issues Concerning the Application of the Company Law of the People's Republic of China (II) issued by the Supreme People's Court

Notice on Printing and Distributing “the Measures for Administration of Recognition of High and New Technology Enterprises

Opinions on relevant Issues concerning Implementing the Regulations of the People’s Republic of China on Disclosure of Government Information issued by the General Office of the State Council

Notice of the State Development and Reform Commission and the Ministry of Finance on the Relevant Issues about Standardizing the Charging Modes and Standards for Housing Registration Fees

Guiding Opinions on Transfer of Existing Shares by Listed Companies that are Released from Trading Restrictions

Supplementary Provisions to the Standards of Prosecution of Economic Crime Cases

Reply of the Supreme People’s Procuratorate on How to Determine the Nature of the Act of Finding and then Using Others’ Credit Card in Automatic Telling Machine (ATM)

Interpretation of the Supreme People’s Court on Several Issues about Application of Laws in the Trial of Criminal Cases Concerning Illegal Practice of Medicine

Measures for Administration of Shanghai Land Transaction Market

 

IP Cases:

Use of “RITS” by Rits Company was Held Infringing the Registered Trademark “RITZ” of Ritz Hotel

Use of “Super Girl” by others as the Mark on Goods without Authorization is Judged as Unfair Competition

A Design is Held Infringing upon a Trademark and is not Allowed to Use thereafter although the Design has not been actually Used

A Trademark Registered Earlier cannot Repel that of the Same Sources Registered later

The People’s Court Held that the Filing and Registration of Website is not the only ground to Judge a Website Runner, and the Applied User of IP Address is the Real Runner of Website

 

Latest Laws and Regulations

Measures for Administration of Significant Assets Restructuring of Listed Companies

The “Measures for Administration of Significant Assets Restructuring of Listed Companies” (hereinafter referred to as “the Measures”) were promulgated by China Securities Regulatory Commission (“CSRC”) on April 16, 2008 and became effective as of May 18, 2008.

Firstly, the Measures define that any act, if it reaches any of the following three standards, shall constitute “significant assets restructuring”: (1) the total purchased or sold assets account for 50% or above of the total assets amount at the end of the period in the audited consolidated financial accounting report of the last fiscal year; (2) the business income accruing from the purchased or sold assets in the last fiscal year accounts for 50% or above of the business income in the audited consolidated financial accounting report of the same period; or (3) the total net amount of the purchased or sold assets account for 50% or above of the net assets amount at the end of the period in the audited consolidated financial accounting report of the last fiscal year, and exceed RMB50 million.

The Measures strengthen the functions of intermediary agencies, and request that listed companies shall engage securities service institutions such as independent financial advisors, law firms and CPA firms who are qualified for securities business for their opinions concerning significant assets restructuring, and independent financial advisors shall, if the restructuring is related to transactions between affiliated enterprises, pass a definite opinion on the impact on the non-related shareholders.

The listed company shall, as requested by the Measures, on the succeeding day after the resolution of significant asset restructuring is made by the board of directors, at least disclose and report to the agency dispatched by CSRC seated where the listed company is located such documents as the resolution of the board of directors and the opinion of the independent director and the scheme of the listed company’s asset restructuring; And the Report on Significant Asset Restructuring, the report of the independent financial advisors, legal opinions, restructuring-related audit report and asset appraisal report, coupled with audited profit forecast report shall be published before or at lease at the same time with the announcement of the notice of holding a meeting.

As to the Procedure concerning the disclosure, examination and approval of significant assets restructuring, it is generally provided that:
The Board shall legally make decisions;
Disclosing the resolution of the board of directors and the opinion of the independent director, and the scheme of the listed company’s assets restructuring;
The resolution of the Shareholders’ Meeting of the listed company concerning the restructuring of significant assets must be approved by 2/3 of the shareholders that attend the meeting.
Announcing the resolution of the Shareholders’ Meeting, preparing application documents according to the relevant regulations of CSRC, and engaging the independent financial advisor for filing with CSRC and filing a copy to the dispatched agency within three working days;
CSRC approves or rejects the application for the significant assets restructuring according to the relevant laws;
The listed company shall make an announcement of CSRC’s decision on the succeeding workday after receiving the decision of CSRC; and
If approved, the listed company shall implement the restructuring plan in time and prepare a report on the implementation within three workdays after completing restructuring. Written reports shall be filed with CSRC and its dispatched agency as well as the securities exchange, and announcement shall be made. If the implementation of restructuring is not finished within 60 days from the day that the listed company receives the approval, the listed company shall report the progress in the implementation to CSRC and its dispatched agency on the succeeding workday of the above time limit, and make an announcement. Thereafter, the listed company shall publicly announce its restructuring progress every 30 days until the completion of the implementation. If the implementation is not finished within 12 months, the document approving the restructuring shall cease to be effective.
The Measures also provide special rules for purchasing assets by issuing shares of listed company, which regulates the effects of such exchanges, the purchased assets, financial statements of the listed company and the like.


Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Company Law of the People's Republic of China (II)


The “Provisions on Several Issues concerning the Application of the Company Law of the People's Republic of China (II)” (hereinafter referred to as the “Provisions”) were promulgated by Supreme People’s Court on May 12, 2008 concerning the application of laws on dissolution and liquidation of companies.

As provided by the Provisions, shareholders separately or jointly holding ten percent or more of a company's voting rights may file a suit for dissolving the company if: (1). the company fails to convene the shareholders’ meeting or the general meeting of shareholders for continuously two (2) years, and the operation and management of the company fall into serious difficulties; (2). the decisions of shareholders cannot reach the statutory portion or that provided by the articles of association of the company and no effective decision has been made for continuously two years by the shareholders’ meeting or the general meeting of shareholders, and the operation and management of the company fall into serious difficulties; (3). the conflict between directors exists for a long time and cannot be settled by the shareholders’ meeting or the general meeting of shareholders, and the operation and management of the company fall into serious difficulties; or (4). the operation and management of the company fall into other serious difficulties and the existence of the company will seriously harm the interests of the shareholders. However, the people’s court shall not accept the petition if such shareholders’ rights to know or to claim for profit distribution are impaired, the company is losing money and its assets cannot pay all the debts, or the company has not been liquidated though its business license is revoked.

If there is a litigation concerning liquidation of the company filed by the shareholders, the company shall be the defendant and the other shareholders may only join the litigation as a third party. The decision made by the people’s court concerning the dissolution of the company is legally binding on all the shareholders.

A liquidation committee shall be formed within 15 days after the reason for dissolution occurs and the liquidation shall commence then. If the company fails to form a liquidation committee within that period, or delays to liquidate after forming the liquidation committee, or the liquidation is illegal that may harm the interests of the creditors or shareholders, the creditors may petition a people’s court for appointing a liquidation team to assume the responsibility and the people’s court shall accept the case thereafter.

If the creditor fails to declare the rights within the prescribed period, but perfects the declaration before the end of this liquidation procedure, the liquidation committee shall register the rights accordingly. Such supplemented creditor’s rights may be paid from the undistributed property. In the event that such rights cannot be so satisfied, the creditor may claim to be satisfied from the assets already obtained by the shareholders from the remaining assets and the people’s court shall thereupon support the claim, unless such declaration was delayed otherwise by gross negligence.

The Provisions provide if the creditors request the shareholders of limited liability companies, the directors and actual controlling shareholders of joint equity companies and the actual controller of such companies who are harming creditor’s interests by negligence and bad-faith disposition of assets and cause losses to such creditors to assume the liability thereof, the people’s court shall support the claim according to the laws.

The company shall, after legally liquidated, apply to cancel the company registration. In the event that the company cancels the registration before liquidation which later blocks the liquidation of the company, the creditors may request the shareholders of limited liability companies, the directors and actual controlling shareholders of joint equity company and the actual controllers of such companies to assume the liability of liquidation and the people’s court shall support the claim according to the law.


Notice on Printing and Distributing “the Measures for Administration on Recognition of High and New Technology Enterprises


The “Measures for Administration on Recognition of High and New Technology Enterprises” (hereinafter referred to as the “Measures”) were promulgated on April 14, 2008 by the Ministry of Science and Technology, Ministry of Finance and the State Administration of Taxation and dated back to be effective as of January 1, 2008.

High and new technology enterprises recognized by the Measures may apply for tax preference according to the Enterprise Income Tax Law of the People’s Republic of China and other relevant tax related laws.

To be recognized as a high and new technology enterprise, the enterprise shall

be registered within the territory of China (excluding those registered in Hong Kong, Macau and Taiwan), and own intellectual property over the core technology of its main products (services) by self development, assignment, donation or acquisition in the latest three (3) years or by exclusive license for a period more than five (5) years;
have products (services) that are covered by the provisions of “The High and New Technology Area Significantly Supported by the State”;
have a team of technological research personnel of college education or above that covers more than 30% of the total staff and in which, the research and development personnel covers more than 10% of the total staff in that year;
work continuously in R & D for new technologies (excluding humanities, social science), new knowledge by using creatively new knowledge, or improving substantially technology or products (service), and the cost on R & D covers a statutory criteria in its turn over, in which, the cost on R & D used within the territory of China shall not be less than 60% of the total R & D cost;
have a revenue from high and new technology products (services) that covers more than 60% of the total revenue of the enterprise in such year; and
have capable indications in respect of the R & D management level, transferability of scientific results, number of independent intellectual property rights, growth of sales and gross assets and so on that match the requirements of “Guidance on Recognition Management of High and New Technology Enterprises” (otherwise formulated).
The recognition procedure of high and new technology enterprises is: (1) self-appraisal and application by the enterprises itself; (2) submission of requested materials; (3) compliance investigation by recognition institutions; and (4) recognition, publication and filing. If no objection is filed within the publication period, the certificate of high and new technology enterprise will be issued, which will be effective for three (3) years. The certificate will expire if no re-examination application is filed by the enterprise three (3) months before the expiration of the term.

If the business or production technology of the high and new technology enterprise change substantially (including acquisition, re-construction, conversion of industry), it shall report such changes to the recognition management institution within fifteen (15) days; If the enterprise does not meet the requirements of the Measures any more, it shall terminate its qualification as high and new enterprises from that year.

As to enterprises that have received the certificate by providing fraudulent information, or have actions of tax evasion and tax fraud, or serious security and quality accidents have occurred to the enterprises, their qualifications will be cancelled and the recognition institution will not accept the application from such enterprises within the next five (5) years.


Opinions of the General Office of the State Council on relevant Issues concerning Implementing the Regulations of the People’s Republic of China on Disclosure of Government Information

“Opinions on relevant Issues concerning Implementing the Regulations of the People’s Republic of China on Disclosure of Government Information” (hereinafter referred to as the “Opinions”) was promulgated on April 29, 2008 by the General Office of the State Council.

The agency in charge of government information disclosure is administrative agencies and such organizations that have been authorized by the laws and regulations to manage public affairs.

Except for voluntary information disclosure by government bodies, the Opinions still established a system of government information disclosure by application. It provides that citizens, legal persons or other entities may, by their own special needs in production, normal life, scientific research and the like, apply to the departments of the State Council, local government of various levels, and the departments of local government above the county level for necessary government information, and such administrative agencies shall reply to the applicants within the time limit under the Regulations. However, information may not be provided when it has been repeatedly applied by the same applicant to the same administrative agency concerning the same issues, or when it is irrelevant to applicant’s special needs in production, normal life, scientific research and the like, or when disclosure may impair national, public or economic security or social stability. For government information whose major part shall be widely disclosed to the public or which requires the participation by the public but some of which relates to state secrets, it shall be disclosed after decryption and deletion of the secret part through legal procedures.

Besides, administrative agencies shall strictly undertake secrecy examination of information intended to be disclosed according to relevant regulations.


Notice of the State Development and Reform Commission and the Ministry of Finance on the Relevant Issues about Standardizing the Charging Modes and Standards for Housing Registration Fees


The “Notice on the Relevant Issues about Standardizing the Charging Modes and Standards for Housing Registration Fees” (hereinafter referred to as the “Notice”) was promulgated on April 15, 2008 by the State Development and Reform Commission and the Ministry of Finance.

The Notice provides that housing registration fees shall be charged by piece other than by area, volume, or price of the house. Of them, the residence registration fee is RMB 80.00 Yuan per piece and the non-residence registration fee is RMB 550.00 Yuan per piece, and such fees shall contain the charge on the property ownership certificate.

The housing registration fees shall be collected from the applicant. If it is provided that the application shall be applied by both parties, such fees shall only be collected from the party that is registered as the property right holder.

The Notice also provides that: (1) housing registration fees concerning the freezing or cancellation registration of the house and the change registration caused by the mistake of the registration agency shall not be charged; and (2) the fees charged on the registration of economic residential houses and such change registrations as resulting from the change of the street name, the number of the housing, or the name of the right holder shall be collected in half.


Guiding Opinions on Transfer of Existing Shares by Listed Companies that are Released from Trading Restrictions
The “Guiding Opinions on Transfer of Existing Shares by Listed Companies that are Released from Trading Restrictions” (hereinafter referred to as the “Guiding Opinions”) were promulgated by China Securities Regulatory Commission on April 20, 2008 to regulate and guide the listed companies’ transfer of existing shares released from trading restrictions and shall be implemented as of the date of promulgation.

The term “existing shares” as mentioned in the Guiding Opinions refers to the shares of a company that is listed on the Shenzhen or Shanghai main boards, which has completed the share trading reform and are still within a prescribed no-sale period, and the shares issued before IPO of the company that is listed on Shenzhen or Shanghai main-board market after “separating the new from the old”. The transfer of existing shares shall satisfy the provisions set out in the Securities Law, Company Law and CSRC regulations, and shall undergo the corresponding procedures.

Where a shareholder holding the existing shares released from trading restrictions anticipates that the quantity of the shares to be sold in public exceeds more than 1% of the total shares of the company, as provided in the Guiding Opinions, it shall transfer the holding shares through bulk sale system in the stock exchange and shall observe the relevant rules of the stock exchange and the stock registration and liquidation company; If the transferor is not the controlling shareholder of the listed company any more after the transfer, relevant regulations concerning acquisition of listed companies shall be observed by the transferor and the transferee.

The Guiding Opinions also provides that the controlling shareholder of listed companies shall not transfer the existing shares within thirty (30) days before the announcement of annual or semi-annual report.


Supplementary Provisions to the Standards of Prosecution of Economic Crime Cases


The “Supplementary Provisions to the Standards of Prosecution of Economic Crime Cases” (hereinafter referred to as the “Supplementary Provisions”) were promulgated on March 5, 2008 by the Supreme People’s Procuratorate and the Ministry of Public Security, and the Supplementary Provisions shall apply in the event that the provisions of the Rules on the Standards of Prosecution of Economic Criminal Cases issued by the Supreme People’s Procuratorate and the Ministry of Public Security in 2001 are inconsistent with the Supplementary Provisions.

The Supplementary Provisions have provided for more details on constitution of crimes concerning securities and futures. There are prosecution standards concerning five securities and futures crimes, which are cases involving unlawful disclosure or non-disclosure of important information, impairment of the interests of listed companies by breach of trust, insider dealing and revelation of internal information, manipulation of securities and futures market, and execution of entrusted property by breach of trust.


Reply of the Supreme People’s Procuratorate on How to Determine the Nature of the Act of Finding and then Using Others’ Credit Card in Automatic Telling Machine (ATM)


The “Reply on How to Determine the Nature of the Act of Finding and then Using Others’ Credit Card in Automatic Telling Machine (ATM)” (hereinafter referred to as “the Reply”) was made by the Supreme People’s Procuratorate to the People’s Procuratorate of Zhejiang Province on April 18, 2008, which came into effect as of May 7, 2008.


The Reply provides that the act of finding other person’s credit card and then using it in ATM is covered by item (3), paragraph 1 of Article 196 of the Criminal Law of the People’s Republic of China as “illegally using other person’s credit card”, and if the offence constitutes a crime, criminal liability for fraud by means of a credit card shall be prosecuted.

 

Interpretation of the Supreme People’s Court on Several Issues about Application of Laws in the Trial of Criminal Cases Concerning Illegal Practice of Medicine

The “Interpretation of the Supreme People’s Court on Several Issues about Application of Laws in the Trial of Criminal Cases Concerning Illegal Practice of Medicine” (hereinafter referred to as the Interpretation) was promulgated on April 29, 2008 by the Supreme People’s Court and has came into effect as of May 9, 2008.

“Illegal practice of medicine without obtaining medical practice qualification” refers to any of the following cases: (1) medical practice executed by any person who has not obtained or has illegally obtained the doctor’s license; (2) establishment of medical facilities by individuals without the license of a medical institution; (3) medical practice executed by licensed doctors during the period of revocation of his/her license; (4) medical practice in rural areas executed by any person who has not been licensed to practice as a rural doctor; and (5) medical practice executed by family midwives other than delivering children. “Serious injury to patient’s health” refers to the disability or organic injury of moderate level or above that cause serious functional disability to the patient, or minor disability or organic injury causing common functional disability to three patients or more.

The Interpretation provides if someone commits illegal medical practices, which also constitutes crime of producing and selling inferior medicines, the crime of fraud and the like, he/she shall be convicted and punished according to the provision of heavier punishment under the Criminal Law.

 

Measures for Administration of Shanghai Land Transaction Market

The “Measures for Administration of Shanghai Land Transaction Market” (hereinafter referred to as the “Measures”) were promulgated by Shanghai Municipal People’s Government on February 28, 2008 and became effective as of March 1, 2008.

The Land Transaction Market refers to a fixed place established upon approval of the Shanghai Municipal Government for collecting and releasing the land transaction information, publicly conducting land transactions and handling the affairs regarding land transactions, and the Land Transaction Market has formally been opened as of March 1, 2008.

The Measures provide that the following transactions of state-owned land use rights shall be conducted in the Land Transaction Market:

Transfer and lease of state-owned land use rights;
Segmental transfer of land use rights for tract development in an economic development zone;
Transfer of land use rights together with building construction projects; and
Transfer of properties (excluding dwelling houses) whose land use rights are allocated, unless the land use rights shall be taken back as explicitly prescribed by the law, regulation or administrative rule. For the transfer of land use rights other than those prescribed in the preceding paragraph, the land use right holder may authorize the Shanghai Real Estate Exchange Center to conduct transactions in the Land Transaction Market.
The Measures also provide for detailed information concerning public transaction rules for transfer and lease of land use rights, rules for agreement on transfer or lease of land use rights, rules on segmental transfer of land use rights for tract development, rules on transfer of land use rights together with building construction projects, rules on transfer of allocated land use rights, and other transfer regulations. For instance, if the land use right is transferred and leased by way of bidding, auction and quotation, Shanghai Real Estate Exchange Center shall organize public transactions according to the rules of the State and Shanghai Municipality for transfer and lease of state-owned land use rights; If the segmental transfer of land use rights for tract development in an economic development zone relates to industrial, commercial, tour, recreational, commercial residential or other business use, or if one land, except for commercial or business use, has more than two applicants, such transfers must be transacted through public bidding, auction or quotation.


IP Cases

Use of “RITS” by Rits Company was Held Infringing upon the Registered Trademark “RITZ” of Ritz Hotel

Shanghai No.1 Intermediate People’s Court made a judgment of first instance on April 21, 2008 in the case of Ritz Hotel Co., Ltd. (hereinafter “RITZ Hotel”) v. Shanghai Rits Gym Co., Ltd. (hereinafter “Rits Company”) concerning the trademark infringement, which held that Rits Company’s act had infringed upon the trademark rights of RITZ Hotel.

The RITZ Hotel claimed that, as a world famous hotel operating company, it had been using “RITZ’ as its trade name and main trademark for nearly one hundred years, and it had the registered trademark “RITZ” in China (International Classification 43 and 44) and the right to exclusive use of the aforesaid trademark. And the Defendant, as a company mainly engaged in sauna, massage, gymnasium and beauty salon, is using the trademark “RITS” in its business activities without the Plaintiff’s authorization. As the mark “RITS” was similar to “RITZ” and so was the service classification, the activity of the Defendant constituted infringement.

Rits Company defended that the service mark “RITS, Lichi (“丽池” in Chinese) & Picture”, used on its shop signs and articles was different from and not similar to the mark “RITZ” of RITZ Hotel. And the use by Rits Company would not give rise to confusion or misidentification by the public concerning the origin of the service. The defendant had a prior right and interest in the mark used by it and such use was in good faith and legal. Besides, the service provided by Plaintiff did not fall into the same category as that provided by the Defendant.

The people’s court held that the registered trademark of the Plaintiff “RITZ” was approved by State Trademark Bureau on classification 43 and 44 of International Classification of Goods and Services and was still effective, and thereby the right to exclusive use of the registered trademark on the approved items should be protected. The Trademark Law provided that use of a trademark identical or similar to a registered trademark in respect of the same or similar goods without the authorization of the proprietor of the registered trademark fell into the act of infringing upon the exclusive rights of the registered trademark. In this case, the registered trademark “RITZ” was approved to be used on Class 43 “Hotels, Restaurants, Cafes and Bar Services” and Class 43 “Beauty Salons, Hairdressing salons and Nursing homes”. Whereas the business scope of the Defendant was “Gymnasium, Baths Massage, Foot Massage, Beauty Service and Drink”, and it was clear that the service content and method of the defendant were similar to that approved by the Plaintiff’s registered trademark. Besides, the pronunciation of the marks used by the parties was similar and their written type was identical, and the first three letters, as well as their rank, were the same, which as a whole constituted similarity. In addition, the mark “RITZ” had been registered in many countries and many luxury hotels of high reputation in China were using the mark “RITZ-CARLTON” which contained the word “RITZ”. Therefore, the people’s court held that the use of “RITZ” as part of Plaintiff’s business mark was of high reputation and distinctiveness in China. As services of the Defendant were not only aimed to Chinese but also foreigners, when the mark “RITS” and “Lichi (“丽池” in Chinese) & Picture” were used in combination in similar services to that of the Plaintiff, the persons involved would pay more attention to the part “RITS” of the combination that was similar to the mark “RITZ”. Therefore, the defendant used the infringing mark on the service items that were similar to those of the Plaintiff’s registered trademark and such use would give rise to confusions to the origin of the service or the connection between the two disputing marks by the public involved. As to the defendant’s pleas of priority over the mark because of its prior use of the mark since the establishment of Rits Company, which was earlier than the registration of “RITZ”, the court held that although the disputed mark of the Defendant was used prior to the registration of Plaintiff’s mark “RITZ” in China, it did not necessarily mean that defendant had the prior civil rights. The trademark registration certificate issued by the State Trademark Bureau showed that the mark “LE RITZ” had been registered by the Plaintiff on service items in Class 42, whose main part “RITZ” was the same as the disputed mark “RITZ” in this case, as well as the service items covered. Therefore, the Plaintiff’s right to the mark “RITZ” was prior to that of the defendant to the disputed mark containing the part “RITS”. Also, the registration of the mark “RITS, Lichi (“丽池” in Chinese) & Picture” was rejected by the State Trademark Bureau for similarity to the trademark “LE RITZ” in the same or similar services (this ruling was under process of review), and thus the claim of use in good faith by the Defendant was untenable. For the reasons above, the people’s court held that the act of the Defendant had infringed upon the right to exclusive use of the registered trademarks.


Use of “Super Girl” by others without Authorization as the Mark on the Goods is Judged as Unfair Competition

 

Changsha Intermediate People’s Court of Hunan Province made a judgment of first instance on April 23, 2008 in the case of Entertainment Channel of Hunan TV Station (hereinafter Entertainment Channel) and Shanghai EE-Media Co., Ltd. (hereinafter EE-Media) v. Magic Sanitary Articles Co., Ltd. of Guangdong Shunde District (hereinafter Magic Company), Liu Xiangfu, and Tang Yangchun concerning unfair competition, which held the said three Defendants should be liable for unfair competition.

The Plaintiffs claimed that, “Super Girl” was a big entertainment show promoted by the Entertainment Channel in 2003, which achieved a great success in China or even the whole world, and was now a most influential entertainment brand in China. “Super Girl” was used as the name and mark of the entertainment show from the beginning till now. The mark “Super Girl” was written in special calligraphy in Chinese together with a special figure around the characters, and the copyright holder of this mark was the Entertainment Channel. On Jan. 1, 2005, the Entertainment Channel granted an exclusive license of all of the copyrights on this mark with the exception of authorship to EE-Media. However, the defendant Liu Xiangfu applied in bad faith the “Super Girl” for trademark registration without the copyright holder’s authorization. And the defendant Magic Company, by utilizing the brand advantage and potential market influence, conducted a series of unfair competition actions including infringement upon the name right, copyright of “Super Girl” and imitating the marketing strategy of “Super Girl” for profit purpose, and produced and sold sanitary towels with the mark of “Super Girl”. And the defendant Tang Yangchun, who was the general agent of Magic Company in Hunan Province, sold a lot of female articles marked “Super Girl” including sanitary towels. The unfair competition committed by the three defendants had badly impaired the legal rights and interests of the plaintiffs.

The defendants defended that, Magic Company was producing “Super Girl” sanitary towels under processing contracts with Liu Xiangfu and it had little knowledge about “Super Girl”. In addition, the OEM production was started after Liu Xiangfu had received the Acceptance Notification for “Super Girl” from the State Trademark Bureau, which demonstrated that there was no fault on the part of the Magic Company. The trademark “Super Girl” used in the sanitary towels produced by Magic Company had been applied by the applicant Liu Xiangfu for registration to the authorities and had been accepted, who therefore should have the legal rights to this trademark. The pack of “Super Girl” sanitary towels had also been applied by Liu Xiangfu to the authorities for design registration and had been accepted and therefore the applicant was entitled to use this package. Besides, the trademark used by the Defendants was obviously different from that of the Plaintiffs, so it did not constitute unfair competition.

The people’s court held that, the legislation of Anti-unfair Competition Law was to protect the specific business act of the dealers and regulate the competition order of the whole market, which gave more consideration to the justifications of the acts of market entities than the protection of certain legal rights. The basic aim of Anti-unfair Competition Law was to protect the fair competition between dealers of competitors, as well as the competition order of the relevant markets or even the whole market, i.e., to forbid dealers from unfairly getting more transaction opportunities by unfair means.

Item 2 of Article 5 of Anti-unfair Competition Law provided that the use of specific or similar name, package, decoration of famous or noted commodities that caused confusion among customers in distinguishing the commodities from the famous or noted commodities constituted unfair competitions. In this case, the unauthorized use of “Super Girl” by Liu Fuxiang and Magic Company was sufficient to confuse the consumers and the relevant public from identifying the origin of the product. However, such use was not enough to confuse the “Super Girl” sanitary towels with the “Super Girl” entertainment show. Therefore, the act of the defendants were not covered by Item 2 of Article 5 of Anti-unfair Competition Law, and the claim of the plaintiffs for infringement on specific name rights of famous commodity was not supported by the People’s Court. However, as the intelligent work creator of TV show and the brand runner of the entertainment products, the legal rights and interests of the plaintiffs should be lawfully protected.Firstly, the brand of the “Super Girl” TV show might become an important revenue resource of the Plaintiff. The Entertainment Channel strengthened the participation rate of audiences by bubble-gum, elimination and entire package, and the audiences might participate in the TV show by short message and the like, which made the TV show have a large number of audiences and highly influential as a famous entertainment commodity that could be transferred into business values; Secondly, TV shows were always coupled with commercial activities. The more famous a TV show is, the higher the profit these enterprises will receive from the connection with the TV show. In this case, with the increase of reputation of the “Super Girl” TV show, commercial activities such as sponsorship, naming rights, advertisements and so on were increasing with the running of this TV show, and the audiences and common consumers might thereby connect the commodities named “Super Girl” with the TV show itself and consider that they might have some connections like sponsorship or licensed use, and then the possibility of confusion on the origin of the product would highly increase. The plaintiffs enjoyed the exclusive rights over these rights and interests and were legally able to forbid others from commercially using the brand “Super Girl” without permission. The defendants Liu Xiangfu and Magic Company, without permission from the Plaintiffs, used the mark “Super Girl” on the sanitary towels produced by them by using its high reputation and brand in the market, which confused the consumers and relevant public regarding the origin of the product as if they were promotion products. In addition, the letters and designs of the “Super Girl” created and used by the Entertainment Channel were expressed in special calligraphy with special decorations around the letters, which as a whole constituted a particular creative plain work of aesthetics and belonged to the works under protection by the Copyright Law. It is found that the “Super Girl” used by Liu XiangFu and Magic Company on the sanitary towels was completely the same as the works to which the Plaintiffs enjoyed copyright in characters, drawing method and the pattern around the characters. Therefore, it was held that the acts committed by the defendants had constituted plagiarism under the Copyright Law. The running method imitating “Super Girl” TV show & brand and the use of basically the same commercial slogans and expressions as that used by the Plaintiffs, including the words “PK” and “Sing (Jump) As You Like” painted on the packages and brochures, were also a kind of ”taking advantage of the fame of others”. Lastly, such acts of the defendants had harmed the commercial interests of the Plaintiffs and hindered the enlargement of the Plaintiffs’ market value by utilizing its brand, and had potentially and negatively influenced the reputation of EE-Media as the brand runner of “Super Girl” on entering into female sanitary articles and the relevant industry. As the acts of the defendants met the factors for constituting infringement upon copyright and trademark, and were covered by the unfair competition law as well, legal concurrence arose. In the trial, as the plaintiffs expressly requested the use of Unfair Competition Law, the court held that the acts committed by the defendants had constituted unfair competition and should be prohibited.


A Design is Held Infringing upon a Trademark and is not Allowed to Use thereafter although the Design has not been actually Used


Beijing Higher People’s Court made a final judgment on April 3, 2008 in the case of Wang Jun (appellant, the defendant of the first instance) v. Louis Vuitton Malletier Holding Co., Ltd. (appellee, the plaintiff of the first instance, hereinafter “LV-M Company”) concerning a trademark dispute, which held that Wang Jun’s acts had constituted trademark infringement.

Beijing No.1 Intermediate People’s Court held in the first instance that, the patented design, as provided by Article 23 of The Patent Law, should not conflict with others’ prior legal rights and the application for declaration of invalidation of such design for the reason of such conflict should, as provided by Paragraph 3, Article 65 of the Detailed Rules for the Implementation of The Patent Law, be filed with effective decisions or judgments to prove the conflict of rights, or such application would not be accepted by the Patent Review Commission. It could be seen from the provisions that the judgment made by the people’s court concerning the conflict of rights was the key precondition for the parties to apply for invalidation of design patent. In this case, the disputed four trademarks of LV-M Company were all registered earlier than the patent of Wang Jun, and therefore LV-M owns priority of these four trademarks. As the design of Wang Jun was patented on hand bags, while the LV-M Company’s trademarks were registered on travelling bags, small hand bags for women and shopping bags, which belonged to the same category of commodities; likewise, the patented design of Wang Jun contained identical or similar marks to that of the four trademarks of LV-M Company, which also were the key design elements of the patented design, and it was possible that once the products of the patented design had been sold, the consumers would mistakenly take them as the product of LV-M Company. As a result, the design patent No. 02367907 had already infringed upon the prior legal rights of the said four trademarks of LV-M Company. Although no proof showed that Wang Jun had actually used this design, as it was proposed for market use, products bearing such design would definitely be used in the market. The people’s court of first instance held that, to avoid potential infringement upon the said trademarks, the design patent No. 02367907 had constituted “other acts that infringe upon the exclusive rights of registered trademark” provided in Item 5 of Article 52 of the Trademark Law.

After the first instance, Wang Jun appealed that: (1) the judgment of the first instance was wrong in holding that the design was conflicting with LV-M’s trademarks and even if it had so infringed upon the exclusive trademark rights, it should be declared invalid through the administrative procedure as provided under Patent Law, rather than the people’s court; (2) the products that used the design patent were hand bags, which covered a bigger scope than that of LV-M’s trademarks and they were not identical or similar, not to mention the confusion caused to the consumers; and (3) no proof showed that the patented products had been actually used and therefore it had not infringed upon the trademark rights.

The court of the second instance held that, a patented design that infringing upon prior rights could, as provided by Article 23 of the Patent Law and Paragraph 3, Article 65 of the Detailed Rules for the Implementation of The Patent Law, be deemed to be infringement without announcement of invalidation of design. In this case, LV-M brought the lawsuit on the ground that Wang Jun’s design patent was conflicting with and had infringed upon the exclusive rights of its registered trademarks and thereafter the first instance people’s court accepted the case in respect of trademark infringement and delivered the decision, which conformed to the provisions of Civil Procedure Law, Patent Law and the detailed implementation rules mentioned above. The registered items of LV-M Company’s trademarks were travelling bag, knapsacks, hand bags, shopping bags, brief bags (cases) and so on while that of Wang Jun’s design was hand bags, and although the use of the goods of the registered trademarks were limited to leather or artificial leather, the goods of the registered trademarks were the same as that of Wang Jun’s design in function, usage, consumer subject, sales distribution and the like and should be deemed similar products. The letters and pictures specified on Wang Jun’s design were identical to those of LV-M Company’s registered trademarks and the use by Wang Jun to specify the origin of the goods had constituted the act of using the same trademarks on identical or similar goods as that of LV-M Company. Although no proof in this case showed that Wang Jun had actually used this design in the market, it would give great confusions to the relevant public once it has been used in the market and therefore infringed upon the exclusive rights of the registered trademark of LV-M Company. And thus the judgment made by the first instance people’s court to avoid actual infringement was not unjust. Beijing Higher People’s Court at last affirmed the judgment of the first instance and held that Wang Jun should be liable.


A Trademark Registered Earlier cannot Repel that of the Same Sources Registered later


Beijing Higher People’s Court made a final judgment on March 13, 2008 in the case of Bei Daihe Yang Lao Ye Zi Bowel Food Co., Ltd. in Qin Huangdao City (appellant, the plaintiff of first instance, hereinafter “Yang Lao Ye Zi Company”) vs. the Trademark Review and Hearing Board of the State Administration for Industry and Commerce (appellee, the defendant of first instance, hereinafter the “Trademark Review and Hearing Board”), and the third party of the first instance Bei Daihe Yang Shi Bowel Food Co., Ltd. in Qin Huangdao City (hereinafter “Yang Shi Company”) concerning the administrative litigation against the adjudication rendered by the Trademark Review and Hearing Board, which held that Yang Shi Company’s trademark was not similar to that of Yang Lao Ye Zi.

Bei Daihe Yang Jia Bowel Food Co., Ltd. (hereinafter “Yang Jia Company”), the predecessor of Yang Lao Ye Zi Company, had the trademark “楊家長YANGJIACHANG” (hereinafter the “Disputed Trademark”) registered on March 21, 2002. On January 10, 2003, Yang Shi Company applied to the Trademark Review and Hearing Board to revoke the Disputed Trademark on the ground of previously registered trademark “楊長子” (hereinafter the “Cited Trademark”) and the Trademark Review and Hearing Board rendered an adjudication upholding the application thereafter. Later, Yang Lao Ye Zi Company brought the administrative litigation against the adjudication.

Beijing No.1 Intermediate People’s Court held that, though the two companies were disputed in the pronunciation of the letter “長” containing in the word “楊家長” of the Disputed Trademark and the word “楊長子” of the Cited Trademark, combining the inheritance relationship between the owner of the Cited Trademark Yang Shi Company and Yang Tingzhen, the purpose of the Cited Trademark and the report of relevant media, the public involved were more likely to read “楊長子” as “YANGCHANGZI”. Under this circumstance, although there were some differences from the outlook of the Disputed Trademark, the people’s court of the first instance made a judgment supporting the adjudication of the Trademark Review and Hearing Board by considering that such differences were far less enough to reduce the confusion in the public concerning these two trademarks because of their relationship in types of commodities, history and pronunciation.

Yang Lao Ye Zi Company appealed that firstly, these two trademarks were not similar because of their great differences in outlook, shape of words and pronunciation; secondly, Yang Shi Company was aiming to occupying the market which had been established by the appellant and had a great influence by registering the Cited Trademark, which constituted bad faith; and thirdly, the reason asserted by the first instance court that the co-existence of these two trademarks would cause confusion in the public lacked evidence.

The people’s court of the second instance held that, as provided by Trademark Law and its implementation rules, if the holder of previously registered trademark found that there were same or similar trademarks registered later than his/hers on identical or similar goods, he/she could, within five (5) years after the registration date of that later trademark, apply to Trademark Review and Hearing Board for revocation of such trademark. As these two trademarks were definitely registered on similar goods, the key issue of this case was whether these two trademarks were similar. Yang Tingzhen was reputed as “Yang Changzi” for his technology of injecting the bowel, and such reputation was of property value for certain market attraction. After the death of Yang Tingzhen, reputations bearing such kind of property value should not be exclusively enjoyed or monopolized by any single individual. Both Yang Lao Ye Zi Company and Yang Shi Company were set up by descendants of Yang Tingzhen, and therefore, each of them had the right to utilize the reputation “Yang Changzi” in production. Accordingly, both “楊長子” and “楊家長YANGJIACHANG” were utilizing the reputation created by their ancestor, and it was nor fair for Yang Shi Company to repel the Disputed Trademark of Yang Lao Ye Zi Company with the same sources on the ground of prior registration of the Cited Trademark. Besides, these two trademarks differ obviously in outlook, shape of words and pronunciation and the relevant public were able to distinguish them by normal notice without confusion on origin of products. Therefore, the people’s court held that these two trademarks were not similar trademarks used on similar goods, and the adjudication of the Trademark Review and Hearing Board and the judgment made by the first instance people’s court in respect of the similarity of these two trademarks were unjust and should be corrected.


The People’s Court Held that the Filing and Registration of Website is not the only ground to Judge a Website Runner, and the Applied User of IP Address is the Real Runner of Website

Changsha Intermediate People’s Court of Hunan Province made a judgment of first instance on May 6, 2008 in the case of Guangdong Zoke Culture Development Co., Ltd. (hereinafter “Zoke Company”) vs. Hunan Spring Scientific Development Co,. Ltd. (hereinafter “Spring Company”), and Changsha Seleader Computer Technology Co., Ltd. (hereinafter “Seleader Company”) concerning copyright infringement dispute, which held the said two defendants liable for copyright infringement.

Zoke Company claimed that, as a famous large audio and video cultural enterprise in China, it had several copyrights like internet broadcasting and the relevant interests in respect of TV series such as “Drawing Sword” and movies such as “S.P.L.”, “Eye of the Heaven”, “Sunflower”, “Kung Fu Fighter” and the like. However, the defendants were broadcasting these works without its permission on a website named “MZVOD” and produced, operated and sold as agent the software “MZVOD MOVIE MENU” for profit, which infringed the copyrights of the Zoke Company.

The Defendants defended that the website of the name “MZVOD” and the domain name “www.mzvod.com” were not held by them and thus, the claim of the Plaintiff should be rejected for improper subject.

The people’s court held after examination that, the citizen, legal person, or other entities signing on the works should be deemed, as provided by Article 11 of the Copyright Law, to be the author of such works if there was no opposite proof. Therefore, the plaintiff was the copyright holder of the disputed works in this case. Concerning the issue whether the defendants were runners of “MZVOD”, the court held that, IP address was a kind of internet protocol code composed of a set of numbers and the server, domain name and IP address of a specific website corresponded to each other. In this case, the internet server of the domain “www.mzvod.com” corresponded to the IP address 202.103.67.143, which had been applied to and used by Spring Company. Therefore, the actual runner of this website was Spring Company, the defendant in this case. Technically, a website, especially a big one, could have more than one server for running and a server might have several network adapters and the IP address of every network adapter might vary. However, as these IP addresses were all targeted at the same website, as long as one of them was targeted at the website, then the user of such IP address was the actual runner of the website. Therefore, Spring Company, who was the applicant user of 202.103.67.143, was the actual runner of the website “MZVOD”. Spring Company pleaded that the filing number of “MZVOD” was “XIANG Re. 05004328”, which was registered under the name Kong Xiangqian, and therefore Kong Xiangqian should be included into this case.The people’s court held that filing and registration of a website was only one proof of website runner rather than the only proof. As the domain name “www.mzvod.com” corresponded to the IP address 202.103.67.143, which was applied to and used by the Defendant Spring Company, and therefor Spring Company was the actual runner of the disputed website. Besides, Seleader, who was the seller of the MZD network platform software containing the disputed MZ VOD MOVIE MENU software, was deemed infringing upon the copyright as it could not prove the legality of the source of such products. In the end, the people’s court held both of the defendants liable for infringing upon the copyrights.