“Haworth & Lexon Law Newsletter” is issued every month, mainly introducing the legal change in the fields of Corporate, Securities, Foreign investment, Intellectual property rights, International trade etc. with necessary comment. All the comments do not mean the legal opinion of our firm and the firm does not have any legal liability for such comment. Should you have any interest in any topics or any questions please feel free to contact the firm. You will be expected to have satisfactory response from the professional attorney of our firm.
Guidelines
News of Haworth & Lexon
Latest Laws and Regulations
IP Cases
§News of Haworth & Lexon
Currently, Haworth & Lexon Law Firm is providing full-range legal services for Omega Mission Hills World Cup. The Mission Hills Golf Club, established in 1992, is the world’s No.1 Golf Club favored by many business leaders as their first choice for golf courses. Reputed as the “Olympics” for golf, the World Cup is by now the highest level of professional events and the only one that is competed among nations. With the approval of PGA (Professional Golf Association), the event will be staged from 2007 in Mission Hills China for a consecutive twelve (12) years. Meanwhile, Mission Hills also enjoys the priority in holding the event for the second 12-year. The event for 2007 will be inaugurated in Mission Hills in the late November. Representatives from thirty two (32) nations and regions will compete for the awards that totally amount to USD5million, and live TV shows of the games will be seen in more than 140 countries.
§Latest Laws and Regulations
The Standing Committee of the National People’s Congress promulgated the “Anti-monopoly Law of the People’s Republic of China” on August 30, 2007, which shall come into force on August 1, 2008. After 13 years’ repeated discussions, the Monopoly Law, so-called “Economic Constitution”, eventually broke from the soil.
Though U.S. promulgated such kind of law as early as a hundred years ago (“Sherman Act” of 1890), the Anti-monopoly Law is now still a new legal system in our country, as to a large degree, many industrial sections or major industrial sections are run by state-owned enterprises, which have brought serious problems of administrative monopoly. The promulgation of the Anti-monopoly Law is helpful to establish a market environment with fair competition, to balance and coordinate different interest relations and to promote improvement and development of the market economy system.
II. Contents of the Anti-monopoly Law
The Anti-monopoly Law has 57 articles divided into 8 chapters, which include: General Provisions, Monopoly Agreement, Abuse of Dominant Market Position, Concentration of Business Operators, Abuse of Administrative Power to Eliminate or Restrict Competition, Investigation into Suspicious Monopolistic Conducts, Legal Liabilities and Supplementary Provisions.
There are three kinds of monopolistic conducts provided under the Anti-monopoly Law: monopoly agreements reached between business operators; abuse of dominant market position by business operators; and concentration of business operators that may result in eliminating or restricting competition.
The Anti-monopoly law clearly provides that the State Council shall establish an Anti-monopoly Committee, which is responsible to organize, coordinate and guide anti-monopoly work and performs the following five functions: Studying and drafting relevant competition policies, Organizing investigations and assessments of overall competition situations, and releasing assessment reports, formulating and releasing anti-monopoly guidelines, coordinating for enforcement of the anti-monopoly administrative law, and other functions provided by the State Council. On the other hand, the Anti-monopoly Law Enforcement Agency under the State Council shall be responsible for the enforcement of the Anti-monopoly Law. However, the Anti-monopoly Law is faced with not only behaviors of restricting competition from large enterprise groups and monopoly enterprises, but also behaviors of abusing administrative power to restrict competition from the government. Under such circumstances, the independence of the Anti-monopoly Law Enforcement Agency is quite important, which closely relates to the effective implementation of the Anti-monopoly Law.
Chapter 4 “Concentration of Business Operators” in the Anti-monopoly Law gives a series of provisions: Business operators shall declare in advance the concentration reaching the threshold of declaration prescribed by the State Council to the Anti-monopoly Law Enforcement Agency, and otherwise they shall not implement the concentration. The Anti-monopoly Law Enforcement Agency will decide whether to prohibit such concentration of business operators. Meanwhile, the Anti-monopoly Law clearly provides, “if business operators can prove either that the favorable impact of the concentration on competition obviously exceeds the adverse impact, or that the concentration is in harmony with the public interests, the Anti-monopoly Law Enforcement Agency under the State Council may decide not to prohibit the concentration”, which means that the Law does not prohibit all concentrations that may eliminate or restrict competition and will not obstruct normal mergers and acquisitions of enterprises.
Notably, the Anti-monopoly Law provides that if a foreign investor participates in any concentration of business operators by merging or acquiring a domestic enterprise or by any other means, so that national security is involved, examination shall be conducted according to relevant provisions of the State.
The Anti-monopoly Law gives provisions to legal liabilities in a specific chapter, while there are at least two defects from current views: (1) Legal liabilities for monopoly behaviors are only limited to civil liabilities, which is not consistent with international practices, and is not tough enough to punish monopoly behaviors. (2) There are no provisions on legal liabilities that shall be borne by such senior managing personnel as directors and mangers or persons held to be directly responsible.
“Bonded port areas” refers to the areas under special supervisions of the customs that have functions of port, logistics and processing, etc. and are established within the port areas opened to the outside by the state and the specific areas adjacent to the said port areas. Comprehensive bonded areas that have functions of bonded port areas established within the territory of China upon approval of the State Council shall be managed by referring to these Measures.
For goods transported between a bonded port area and an overseas area, the customs formalities shall be completed at the competent customs of the bonded port area; and if any port of import and export is not located within the jurisdiction of the competent customs of the bonded port area, the relevant customs formalities may be handled at the customs of the port upon approval of the competent customs of the bonded port area. Unless otherwise prescribed by law, export duty shall be exempted for goods transported to an overseas area from a bonded port area and such goods shall not be subject to any import-export quota and license control.
For goods transported between a bonded port area and an outer area, enterprises within the area, or consignees or consignors within the outer area shall go through declaration formalities at the competent customs according to the relevant provisions on import and export of goods. For goods under the preferential trade treaty as transported from a bonded port area to an outer area, if they conform to the relevant provisions on administration of place of origin, they may enjoy a tariff rate as provided in the treaty or a specially preferential tariff rate.
The goods within a bonded port area may be circulated freely; both parties shall promptly report their electronic data and information to the customs.
The Detailed Rules give further explanations to “pricing benchmark date”, “the average price of the company’s stocks during the 20 transaction days prior to the pricing benchmark date”, “the number of issuing objects shall not exceed 10” and other concepts in the “Administrative Measures for the Issuance of Securities by Listed Companies”. For example, “pricing benchmark date” may be a date on which the resolution of the board of directors or shareholders’ meeting on this non-public offering is announced or the first date of the issuance.
According to the Detailed Rules, if the issuing objects are the following: (1) Controlling shareholders, actual controllers or affiliates controlled by the actual controllers; (2) Investors who obtain actual controlling rights of a listed company through subscription of stocks issued, or (3) Domestic or foreign strategic investors proposed to be introduced by the board of directors, then specific issuing objects, subscription price or pricing principles shall be decided by a resolution on non-public offering of stocks made by the board of directors of the listed company and be approved by the shareholders’ meeting; the shares subscribed shall not be transferred within 36 months from the end of the issuance. If the issuing objects do not belong to any of the three kinds above, then after obtaining approval on the issuance, the listed company shall decide the issuing price and issuing objects by way of price competition according to provisions in the Detailed Rules. The shares subscribed by the issuing objects shall not be transferred within 12 months after the end of the issuance.
It was decided at the 29th meeting of the Standing Committee of the 10th National People’s Congress to make the following amendment to the “Law of the People’s Republic of China on Administration of Urban Real Estate”: one article shall be added in Chapter 1 “General Principles” as Article 6: “For public interests, the state may expropriate any entity or individual’s housing built on state-owned land, but the state shall give relocation compensations according to law and safeguard the legitimate rights and interests of such entity or individual. If an individual’s residential house is to be expropriated, the state shall guarantee the housing conditions of the individual. The specific measures for relocation compensations shall be formulated by the State Council.”
After the implementation of the “Real Right Law”, the urban relocation in our country will not have laws to follow, and this amendment is to avoid such situation. According to Clause1, Article 42 of the “Real Right Law”, for purpose of public interests, it is allowed to expropriate collectively-owned lands, premises owned by entities and individuals or other immovable in accordance with the power and procedures provided by law. However, up to now, there is still no law providing the power limit and procedures of the expropriation and relocation of premises owned by entities or individuals built on urban state-owned lands and the applicable law is the “Regulations on Administration of Dismantlement of Urban Housing” promulgated by the State Council in 2001. After the implementation of the “Real Right Law”, the “Regulations on Administration of Dismantlement of Urban Housing” had inconsistency in some provisions with the “Real Right Law” and needed to be terminated, which might result in situations where the expropriation and relocation of the urban housing do not have laws to follow. Therefore, the State Council suggested that, before the promulgation of a relevant law on expropriation, the State Council should be authorized to formulate corresponding provisions by amending the “Law of the People’s Republic of China on Administration of Urban Real Estate”.The State Administration of Foreign Exchange promulgated the “Measures for Administration of Foreign Exchanged in Bonded Areas under the Customs’ Supervision” on August 15, 2007 (hereinafter, the “Measures”), which integrated various policies on administration of foreign exchanges applicable to different bonded areas under the customs’ supervision (including bonded zones, export processing zones, bonded logistic parks, bonded harbor areas, comprehensive bonded zones, cross-border industrial zones and other areas under the custom’s close supervision) and simplified the examination and approval procedures for foreign payments. The Measures came into effect on October 1, 2007.
The Measures provides, (1) business activities between bonded areas and overseas areas shall be valuated and settled in foreign currencies; (2) transactions conducted under the item of cargo trade between bonded areas and areas which are inside borders but outside the bonded areas may be valuated and settled in RMB or foreign currencies; and transactions under the item of service shall be valuated and settled in RMB; (3) Transactions between inside institutions may be valuated and settled in RMB or foreign currencies.
Besides, the Measures simplify the examination and approval procedures for foreign payments. When paying goods price to an overseas enterprise, an inside enterprise is not required to handle the verification and writing-off of import proceeds in foreign exchange; if an inside enterprise exporting goods to overseas handles the registration of the export of bonded goods at the customs, it is not required to handle the verification and writing-off of export proceeds in foreign exchange after collecting goods price in foreign exchange. If it declares the export of the goods as non-bonded goods, it shall handle the verification and writing-off of export proceeds in foreign exchange.
The State Council promulgated the decision to amend the “Regulations on Property Management” on August 26, 2007, and the new “Regulations on Property Management” (hereinafter, the “New Regulations”) has been implemented as of October 1, 2007.
Firstly, the New Regulations make changes to some specific terms, for example, “property management enterprises” is changed into “property service enterprises”; “the owners’ convention” is changed into “the management covenant” and “the temporary owners’ convention” is changed into “the temporary management covenant”. Besides, the New Regulations make some changes in wording of some articles.
Secondly, the New Regulations make different provisions on events commonly decided by owners and on voting procedures: (1) A session of an owners’ congress shall have presence of owners who possess exclusive areas accounting for more than half of the total area of buildings and owners who account for more than half of the total number of owners within the property management area; (2) Raising and using special maintenance fund as well as rebuilding or reconstructing a building and its attachments shall be approved by owners who possess exclusive areas accounting for more than two thirds (2/3) of the total area of buildings and owners who account for more than two thirds (2/3) of the total number of owners; and a decision made on any other matter shall only be approved by owners who possess exclusive areas accounting for more than half of the total area of buildings and owners who account for more than half of the total number of owners.
The Ministry of Finance and the State Administration of Taxation promulgated on August 20, 2007 the “Notice on Relevant Tax Policies for Science and Technology Enterprises Incubators” (Notice 1) and the “Notice on Relevant Tax Policies for National University Science and Technology Parks” (Notice 2), which offer some taxation preferential policies to science and technology enterprises incubators and state-level university science and technology parks. The details are as follows: (1) From January 1, 2008 to December 31, 2010, the properties and lands for self use by qualified incubators or science and technology parks, as well as the properties and lands provided for incubating enterprises by such incubators and science and technology parks free-of-charge or by way of leasing shall be exempted from property tax or urban land-use tax; (2) Incomes from leasing sites, housing and providing incubation services for incubating enterprises by such incubators or science and technology parks shall be exempted from business tax; (3) From January 1, 2008 on, incomes of incubators or science and technology parks that meet the conditions of non-profit organizations may enjoy preferential policies for enterprises’ income tax according to the taxation law and other relevant provisions.
The two notices raise some requirements for such incubators and science and technology parks to enjoy the above preferential policies. For example, the establishment and operation of such incubators and parks shall be consistent with the verification and management measures published by the administrative authorities of science, technology and education under the State Council, and shall have the corresponding qualifications; business incomes from leasing sites, housing and providing services for incubating enterprises shall be valuated independently in finance; meanwhile, the sites provided for incubating enterprises shall meet certain requirement in area. As to incubating enterprises, requirements are made in such aspects as years of existence, registered capital, last year’s business income, areas of sites and advanced and new qualities of programs or products they are engaged in.
The “Shanghai Collective Contract Regulations” was passed at the 38th meeting of the 12th Standing Committee of Shanghai People’s Congress (hereinafter the “Regulations”).
According to the Regulations, when an employer formulates, amends or decides on nine items of rules or important events that directly relate to the interests of employees such as remuneration, working time, insurances and welfare, rest and vacations, etc., such rules or important events shall be discussed with employees. When any employer or employee suggests a collective discussion, neither the employee nor the employees may refuse or delay such discussion under any of the following three circumstances: (1) if it is necessary to reduce 20 or more employees, or if it is necessary to reduce less than 20 employees but which accounts for 10% of the total number of the employees; (2) if any labor dispute results in collective shutdown or appeal to higher authorities; (3) Serious potential accidents or professional harms are discovered during production.
The Regulations provide if employees conduct collective consultation with employers regarding labor relationship, they shall elect their respective representative and chief representative for discussion according to legal procedures. If an enterprise has already established a commission for female employees, there shall be a female representative for the discussion.§ IP Cases
On September 12, 2002, Huashu applied for the registration of the disputed trademark “头包西灵Toubaoxilin” with the Trademark Office of the State Administration for Industry and Commerce (hereinafter, the “Trademark Office”). The registration was approved on February 7, 2004, showing Huashu as the owner of the trademark with the trademark registration No. 3304260. On March 31, 2004, Zhengtong applied for cancellation of the disputed trademark with the Trademark Review and Hearing Board, based on the reason that the registration of the disputed trademark violated the “Trademark Law”. On March 4, 2005, concerning the trademark dispute raised by Zhengtong, the Trademark Review and Hearing Board cancelled the disputed trademark according to laws.
Huashu did not accept the award made by the Trademark Review and Hearing Board and lodged a suit with Beijing No.1 Intermediate People’s Court.
Beijing No.1 Intermediate People’s Court held that: Firstly, Zhengtong independently applied for “头孢西林(“Tou Bao Xi Lin” in Pin Yin)” with the relevant administrative authorities of the state and got the approval, and thus it should be affirmed that Zhengtong obtained the commodity name first. During the application process for this commodity name, Zhengtong used “头孢西林” prominently on its commodity logos with a special font and size. During cooperation between Zhengtong and Huashu and after the termination of their cooperative relationship, “头孢西林” had been used prominently on the packing of commodities and the font, style and size of “头孢西林” were obviously differentiated from other words, which had realized the trademark’s function of indicating the commodity source. Therefore, “头孢西林” should be regarded as an unregistered trademark actually used by Zhengtong. The disputed trademark “头包西灵Toubaoxilin” shared similar words and pronunciation with Zhengtong’s “头孢西林” and both were words without any meaning, which made the two quite alike. On the other hand, according to the agreement executed by Zhengtong and Huashu, the two parties had formed a relationship of sales agent and Huanshu obtained the position of the agent, which was in consistency with the “agent” provided in Article 15 of the “Trademark Law”. As Huashu registered the disputed trademark similar to Zhengtong’s unregistered trademark, Huashu’s registration violated the principle of good faith and should be prohibited by laws. Therefore, the court of the first instance supported the award made by the Trademark Review and Hearing Board to cancel the disputed trademark.
Huashu refused to accept the judgment of first instance and appealed to Beijing Higher People’s Court.
Beijing Higher People’s Court held that, it was right for the court of the first instance to affirm that the commodity name “头孢西林” was first obtained by Zhengtong. Since “头孢西林” had been used prominently on commodity logos and packing in distinguished fonts and styles, it had realized the trademark’s function of indicating the commodity source. Therefore, “头孢西林” shall be regarded as an unregistered trademark actually used by Zhengtong. However, besides the obvious commodity name of “头孢西林 ”, there were also words for publicity on the package such as the trademark of “Huashu” and “developed by Huashu and manufactured by Zhengtong”. As the publicity and planning of the sales market, the pricing and fees for sales and promotion were also the responsibilities of Huashu, and Zhengtong did not have any evidence that, before its cooperation with Huashu, it had sold any animal medicine in the name of “头孢西林” after it had obtained the production license of such medicine. Therefore, the commodity name “头孢西林” shall be deemed as the unregistered trademark of Huashu. In addition, the “agent” provided in Article 15 of the “Trademark Law” referred to the representative of a trademark, who handled the registration and other matters related to the trademark. In this case, the relationship between Huashu and Zhengtong was cooperation in production and sales, which was not the relationship between agent and principal. In this sense, Huashu turned the commodity name into a trademark by using “头孢西林” and thus its application for the trademark “头包西灵” shall not fall into the condition provided in Article 15 of the Trademark Law. Therefore, the court of the second instance rejected the judgment of the first instance and ruled to dismiss the award made by the Trademark Review and Hearing Board.
Neither Zhengtong nor the Trademark Review and Hearing Board accepted the judgment of the second instance and they both applied for a re-trial to the Supreme People’s Court.
Zhengtong’s application for the retrial held that, the judgment of the second instance was wrong in interpreting the “agent” provided under Article 15 of the Trademark Law. In this case, an agent relationship between Zhengtong and Huashu should be affirmed. As a commodity name first obtained by Zhengtong independently, “头孢西林” was used prominently on the animal medicine produced by Zhengtong, which had constituted an unregistered trademark actually used by Zhengtong. The judgment of the second instance lacked factual grounds in affirming that “头孢西林” was Huashu’s unregistered trademark.
The application for the retrial submitted by the Trademark Review and Hearing Board held that, firstly, the judgment of the second instance was wrong in understanding the “agent or representative” under Article 15 of the Trademark Law, which violated the spirit of the law and did not comply with international practices; secondly, the judgment of the second instance wrongly defined “sales” behavior, and confused the relationship between the commodity name and the trademark, and decided the ownership of the trademark on the basis of the “Exclusive Sales Agreement”.
Huashu defended that the judgment of the second instance was right and petitioned the Supreme People’ Court to reject the application for the retrial.
The retrial by the Supreme People’s Court ruled that: firstly, Article 15 of the Trademark Law provided that: “If an agent or a representative registers the trademark of the principal or the represented in his/her own name without authorization, the trademark shall not be registered and shall be prohibited from use upon the opposition raised by the principal or the represented.” As sales agents or representatives may know or use others’ trademarks through special sales relationship, in order to prevent such agents or representatives from violating the principle of good faith and registering others’ trademarks in bad faith, the “agent” provided in Article 15 of the Trademark Law shall be understood in a broad sense, which shall not only include trademark agents and representatives appointed by applicants of trademark registrations and trademark registers to conduct trademark registration and other matters within the scope of authorization, but also include agents and representatives concerning special sales agent relations such as general sales (exclusive sales) and general agent (exclusive agent). Secondly, according to the agreement executed by Zhengtong and Huashu, the two parties formed an exclusive sales relationship. Huashu obtained the qualification of exclusive sales by this relationship and should be regarded as a sales agent under Article 15 of the Trademark Law. Thirdly, the disputed commodity name “头孢西林” in this case was a specific medicine name obtained by Zhengtong through administrative examination and approval. The “Exclusive Sales Agreement” executed by Zhengtong and Huashu only stipulated that Huashu might jointly use the commodity name “头孢西林”. Though Huashu’s application and promotion objectively strengthened the marking function of the commodity name “头孢西林”, such use according to the agreement should in nature be deemed as special use by Zhengtong, and the factual status derived from such use shall not necessarily change the ownership of the disputed commodity name. On the contrary, the agreement executed by both parties in fact stipulated that the related approval certificate including the commodity name “头孢西林” shall still belong to Zhengtong. Therefore, the disputed commodity name of “头孢西林” in this case shall belong to Zhengtong. The Supreme People’s Court eventually ruled that the disputed trademark registered by Huashu should be canceled and that the award made by the Trademark Review and Hearing Board and the judgment made by the court of first instance were correct.The court of the first instance held that, the products sold by Jianxing was exactly the same as He Wenjie’s design patent in front view and solid view. Though the external caps of the defendant’s products were not transparent, while the external caps at the bottom of planform of the plaintiff’s design was transparent, differences in materials should not affect the appearance of products, and thus the products sold by Jianxing were the same as He Wenjie’s design patent products. Jianxing failed to provide enough evidence to prove that He Wenjie’s design patent had lost its novelty. Thus the court of the first instance ruled that Jianxing’s behavior constituted infringement and Jianxing should be liable for such infringement accordingly.
Jianxing refused to accept the judgment of the first instance and appealed to Chongqing Higher People’s Court.
Jianxing held that, in the first instance, Jianxing had already applied for invalidation of He Wenjie’s design patent to the Patent Reexamination Board and had petitioned the court of the first instance to suspend the trial. However, the court of the first instance did not suspend the trial and thus violated legal procedures; He Wenjie’s design patent did not bear novelty or creativity and had conflicts with the former patent rights of others; etc.
The appellee He Wenjie defended that, the appellant’s application date had gone beyond the term of submitting evidence, which did not comply with provisions about suspending a trial; the appellee’s design patent was legal and effective and there did not exist any abuse of design patents; the motorcycle indicator sold by the appellant was the same as the appellee’s design patent, which constituted infringement.
The court of the second instance held that: Firstly, though Jianxing petitioned the court of the first instance to suspend the trial based on the ground that the Patent Reexamination Board had accepted Jianxing’s application for invalidation of He Wenjie’s design patent, whether or not to suspend the trial should be determined by the court according to trial conditions. The court did not violate any law even if it did not suspend the trial. Secondly, the claimed products of Jianxing were exactly the same as the claimed design patent products in shape, arrangement of indicator lights, shape of liquid crystal display and other main visual factors. The beach vehicle indicators produced by Jianxing fell into the protection range of He Wenjie’s design patent. Thirdly, as to the question whether He Wenjie’s patent products belonged to publicly known techniques, according to the facts of this case, in April, 2004, Yinguo factory began making moulds and manufacturing a whole set of plastic components of He Wen jie’s design patent products and sold them to He Wenjie, which reflected that Yinguo Factory must have known the design patent. However, He Wenjie had a specific cooperative relationship with Yinguo Factory, and thus no design patent should be known to the ordinary public due to such relationship, which meant that this design patent was not within public knowledge. Besides, even if Yinguo Factory did not have a confidentiality duty, what it sold were only plastic components rather than the claimed patent products. Though relevant manufacturers might get to know He Wenjie’s design patent due to the plastic components without any creative work, according to the standard for judgment of novelty as provided in the present “Patent Law”, comparisons should be made with design patents prior to the date of application, rather than with composition of products (the plastic components) when deciding novelty. Therefore, Yinguo’s sale of the plastic components did not cause loss of novelty of He Wenjie’s patent; thus the appealing ground of Jianxing was not tenable and the court ruled that Jianxing’s behavior constituted infringement.Tianjin Shenning held that, it was a company engaged in the research and production of health products called “Shenning—drug for adjustment of human body’s bio-rhythms ” (hereinafter, “Shenning products”, “神宁” in Chinese). Tianjin Shenning discovered that the three defendants fabricated and spread false facts to impair its business credit and reputation by publishing the “Letter to Users of Beijing Shenning” on their company websites, sending by post the “Letter to Users of Beijing Shenning” to users of Tianjin Shenning, making and spreading the “Letter to Users of Shenning” and the “Statement of Beijing Shenning”, making false publicity about Shenning products and Shengning （圣宁）products by lectures on health, making false publicity about Shengning products by falsifying the publicizing picture “Health Consultation Service Held by Beijing Shenning Health Club in Zhongshan Park” in propagandizing booklets of Shenning products and changing the topic into “Public Health Activity Held by Sheng’an Baicao Group”, and fabricating, spreading false facts about shenning products and sheng’an products to old users of Tianjin Shenning’s Shenning products by sales personnel.
Beijing Shenning defended that, Tianjin Shenning had an agency relationship with it, rather than competitive relationship. Beijing Shenning did not conduct the behaviors of unfair competition cited by Tianjin Shenning and the contents involved in the letters were facts, which should not constitute unfair competition.
Beijing Sheng’an Baicao defended and counterclaimed that, there did not exist a competitive relationship between Shengning products and Shenning products. It had never conducted those behaviors cited by Tianjin Shenning. Meanwhile, Beijing Sheng’an Baicao counterclaimed that Tianjin Shenning used pictures owned by Sheng’an Baicao in the publicity materials of Shenning and held that Tianjin Shenning published a statement on “China Quality Daily”, “China Consumer Journal” and other media announcing that Beijing Sheng’an Baicao had conducted unfair competition, the behavior of which actually constituted unfair competition.
Chen Rugang defended that, as a natural person, he and Tianjin Shenning did not constitute a competitive relationship. Though the charge by Tianjin Shenning had been stated by him, the statement was true.
The court ruled that, though both Beijing Shenning and Bejing Sheng’an Baicao were only sales units of the claimed products, the products sold by them and those produced by Tianjin Shenning belonged to the same type. And analyzing from a whole market perspective, they still constituted objects regulated by the Anti-Unfair Competition Law. Therefore, the court did not support the three defendants’ defense that they did not have a competitive relationship with the plaintiff. As the defendants failed to prove that the written materials unfavorable to Tianjin Shenning and Shenning products were true and such materials might bring adverse effects to the social assessment of Shenning and its products; and the defendant Beijing Sheng’an Baicao used pictures and articles in Shenning products’ publicity materials to Shengning products and changed all those words illustrating pictures that were relevant to Shenning into words relevant to Shengning, which might mislead consumers that there was certain relationship between Shengning products and Shenning products and led to confusion of the two different products, therefore the behavior of Beijing Sheng’an Baicao also constituted unfair competition. As to other behaviors of unfair competition claimed by Tianjin Shenning, the court did not support them due to lack of evidence. Concerning the counterclaim made by Beijing Sheng’an Baicao that Tianjian Shenning had behavior of unfair competition, the court ruled that, as the behavior of Beijing Sheng’an Baicao had already constituted unfair competition, Tianjin Shenning did not fabricate any false facts or defame, and thus no unfair competition existed.The plaintiff Building Materials Sub-Council held that, the “China International Exhibition for Building Materials” was one of a series of international exhibitions hosted by the plaintiff. “China International Exhibition for Building Materials” was held from May 10, 2007 to May 13, 2007 in Beijing Exhibition Center. This exhibition continued to follow custom of the past several sessions, simultaneously holding several special exhibitions, which include “The 4th China International Paint and Coating Protection Technology Exhibition”, an exhibition enjoying a high reputation and a great influence in the relevant industry and among a great number of exhibitors. However, two websites run by the defendant Jing Mu Bo published great a amount of publicity information named “The 4th China International Paint and Coating Protection Technology Exhibition” to invite exhibitors and announced that this exhibition would be held at the same time and in the same place as “The 12th International Construction, Building Materials and Urban Services Exhibition” to be held from March 28, 2007 to March 31, 2007 in Beijing Exhibition Center. Besides, to invite exhibitors, the two websites used many photos of “The 3rd China International Paint and Coating Protection Technology Exhibition” hosted by the Building Materials Sub-Council and listed the exhibitors of the plaintiff’s last exhibition as the “last session exhibitors” of the defendant’s exhibition. Jin Mu Bo also directly used the plaintiff’s name and address in its “Forum Application Form” and “Visiting Application From”. The plaintiff Building Materials Sub-Council held that, though the two defendants announced that their exhibition was the 4th session, they actually had never held any “China International Paint and Coating Protection Technology Exhibition”. Therefore, the defendants’ publicity belonged to false publicity and constituted unfair competition.
The defendants China-Italy-Germany and Jing Mu Bo defended that, firstly, the plaintiff Building Materials Sub-Council was a non-profit NGO and did not belong to operators provided under the “Anti-Unfair Competition Law”; thus it shall not have the right to lodge a suit on anti-unfair competition. Secondly, the plaintiff Building Materials Sub-Council did not have the exclusive use right or trademark to the name “The 4th China International Paint and Coating Protection Technology Exhibition”; thus any use of such name shall not constitute infringement. Thirdly, Jing Mu Bo cooperated with the plaintiff Building Materials Sub-Council in inviting exhibitors for “The 3rd China International Paint and Coating Protection Technology Exhibition” in September, 2005, and left the plaintiff’s name on the websites due to the negligence of website maintenance staff; but the plaintiff’s name had already been deleted. “The 4th China International Paint and Coating Protection Technology Exhibition” of China-Italy-Germany was completely different from that of the plaintiff and the Building Materials Sub-Council did not have any right to prevent the defendants from using such name.
The court ruled that, any citizen, legal person or any other organization might become a party to a civil lawsuit. Any other organization means a legally established organization that has certain institutions and properties but without a legal personality. In this case, the organization code certificate and relevant documents issued by China Council for the Promotion of International Trade submitted by the plaintiff may prove that the plaintiff was established with the approval of the relevant authorities and had certain institutions and properties, and thus might become a subject of a civil lawsuit. China-Italy-Germany participated in holding the “The 11th China International Construction, Building Materials and Urban Services Exhibition” prior to “The 12th China International Construction, Building Materials and Urban Services Exhibition”, rather than “The 3rd China International Paint and Coating Protection Technology Exhibition”. Therefore, China-Italy-Germany did not have factual bases to be engaged in activities to invite exhibitors by using the name “The 4th China International Paint and Coating Protection Technology Exhibition” and may easily mislead the relevant public, and therefore belonged to false publicity. In addition to Jing Mu Bo’s behavior of using the plaintiff’s name and address as well as photos and exhibitors’ list of the last session, it could be seen that China-Italy-Germany and Jing Mu Bo intentionally used the name of “The 4th China International Paint and Coating Protection Technology Exhibition” held by the plaintiff to mislead exhibitors. The behavior of making false publicity by the two defendants misled the relevant public, and violated the principle of good faith, and disturbed the order of market economy and damaged the plaintiff’s lawful rights, which constituted unfair competition.The plaintiff Li Changkui alleged that, it enjoyed the copyright of the book “Examination Guide to International Common Professional Qualification Certificates” (hereinafter, the “Guide”), which was published by Southwest University of Finance and Economics Publisher (hereinafter the “Publisher”) in April, 2003. Shenzhen Nanshan Library provided free online reading and download of the Guide jointly made by Apabi and Founder. The three defendants’ behavior had violated the right to network information dissemination enjoyed by Li Changkui.
The three defendants defended that, in 2003, Founder executed an agreement with the Publisher and authorized the Publisher to use Founder Apabi’s software products, making electronic versions of the books of the Publisher. In 2006, Founder obtained the right of using the Guide published by the Publisher and performed the obligation of examination. The author of the electronic version of the Guide was the Publisher while Founder provided software for making such electronic books and sold them to several digital Library systems using Founder Apabi’s software. Later, Founder transferred the above business contents to Apabi. At the end of 2006, Li Changgui discovered the Guide in some digital libraries and negotiated with Apabi and the Publisher. They agreed that Apabi and the Publisher shall compensate RMB 20040 Yuan to Li Changgui for their previous behavior; and Li Changgui expressed he would not claim for their previous liabilities. As technical staff had to be sent to local libraries to conduct the on-site operation of deletion, the deletion work was not completed very soon, therefore, the three defendants did not infringe upon the rights of Li Changkui.
The court held that, Li Changgui, the Publisher and Apabi decided through friendly consultations that Apabi should stop using the Guide after December 27, 2006. Concerning that the aim of such friendly consultations by the two parties was to stop the infringement that already happened and to compensate for losses caused to Li Changkui by previous infringement, the court thus held that the words “shall not use after December 27” was to emphasize that sales should not be carried on after this date and that the defendants should try to remove the influence caused by the previous behavior. Due to features of Founder Apabi’s software, technical staff had to be sent on-site to delete the claimed works and thus it took certain traveling time for such deletion. Both parties agreed upon the date of 27, one day before their consensus, as the time to stop using, and did not set aside reasonable deletion time for Founder. Therefore, the court ruled that, this was an unreasonable agreement caused by negligence during friendly consultations and shall be modified. In this case, during the process of deletion by the technical staff sent by Apabi in succession, Li Changkui conducted notarization for the undeleted contents of Shenzhen Nanshan Library and lodged the suit. However, before lodging the suit, the technical staff of Apabi had already carried out the deletion of the Guide in Nanshan Library. Therefore, the court affirmed that the deletion by Apabi happened within a reasonable period and should be deemed as normal performance of the deletion obligation as agreed in friendly consultations; the notarization by Li Changkui could not prove that the three defendants continued their infringement or conducted any new infringement, and thus the court did not support the claim raised by Li Changkui.