WATSON & BAND NEWSLETTER

Watson & Band May ~ June 2016 1

May ~ June 2016

Contents

Latest on Watson & Band

◆ W&B Attends the Shanghai International Film Festival 2

◆ The Latest Session of the China Law Salon: “Employee Disciplinary Offences and Derelic-

tion of Duty -- Solutions and Settlement of Related Disputes”

2

◆ Watson & Band Attended the 138th INTA Annual Meeting in the US 3

◆ W&B Named a “Top Law Firm in China Patent Litigation and Licensing” by IAM Patent

1000

3

Legal Developments

◆ Survey on the Implementation of Advertising Law: An Effective Curb on Tobacco Adver-

tisements

4

◆ National Online Trading Platform Regulatory Service System Launched on July 1 – a Big

Breakthrough for the Targeted Regulation of Illegal Online Operations

4

◆ Supreme People’s Court Publishes Top 10 Landmark Cases on Enterprise Bankruptcy Re-

structuring and Liquidation

5

◆ Seven Special Features of the Draft General Provisions of Civil Law: Fetuses Will Have Civil

Rights

6

IPR Dynamics

◆ General Office of the State Council issued Focuses in Nationwide Crackdown On Infringe-

ment of IP Rights and Production and Sale of Counterfeit and Substandard Goods 2016

8

◆ Nationwide Implementation of “Three-in-One” Trial Mechanism for IP cases 9

◆ Development of China’s IPR in 2015: Minimum Improvement in the Environment 9

W&B Attends the Shanghai International Film Festival

2

Latest on Watson & Band

W&B Attends the Shanghai International Film Festival

The International Film and Television Market celebrates its third anniversary this year. At the Market, part of the Shanghai International Film Festival, top exhibitors of domestic and foreign film and television technology gathered together. The exhibitors included representatives of film and television companies, streaming platforms, film and television bases and technical services companies. W&B attended as a professional legal services provider, where it provided legal services for various film projects and production companies and conducted on-the-spot consultations.

W&B began offering services to the Chinese entertainment industry long ago, and it has accumulated a profound under-standing of the current environment and trends in the Chinese entertainment industry as well as advanced developments in the industry both domestically and overseas. With its understanding and experience, W&B provides customized legal risk prevention services, policy analysis and business information to entertainment enterprises operating in the fields of film, music, performance arts and business intelligence.

Watson & Band May ~ June 2016

The Latest Session of the China Law Salon: “Employee Discipli-

nary Offences and Dereliction of Duty -- Solutions and Settle-

ment of Related Disputes”

On May 27, 2016, W&B convened another session of the China Law Salon lecture series on the 17th floor of the Wen Xin United Press Tower entitled “Employee Disciplinary Offences and Dereliction of Duty -- Solutions and Settlement of Related Dis-putes”. 40 enthusiastic representatives from various major companies attended the session. The purpose of the session was to discuss ways of standardizing corporate recruitment to facilitate sound corporate development and to improve the interpretation of labor policies and the coordination of employee relations at the managerial level.

The lecturer for this session was Mr. Li Huaping, Partner at W&B Law Offices. The lecture was divided into four sections: com-mon types of employee disciplinary offences, common types of employee dereliction of duty, solutions to employee misconduct and settlement of labor disputes. During the session Mr. Li summarized his experience in case management over the years. He introduced several common types of employee disciplinary offences and derelictions of duty such as breach of trust, absenteeism, forgetfulness at work, improper performance of duties and failure to perform one’s duties. He also cited labor laws and related legal provisions to instruct his audience on appropriate solutions to such misconduct, including evidence collection and dismissal procedures. At the end of the lecture, Mr. Li shared a humorous tongue twister on the means of settling disputes related to disci-plinary offences and dereliction of duty.

This session of the China Law Salon was a targeted and pragmatic introduction designed to facilitate the appropriate inter-pretation of labor statutes and regulations by relevant staff and to secure the sound protection of a legal, harmonious and orderly working environment.

3

Watson & Band Attended the 138th INTA Annual Meeting in the US

The 138th INTA Annual Meeting was held from May 21

to May 25, 2016 in Orlando, a city in central Florida. Wat-

son & Band was located at Booths 1108-1110 of the main

venue of the Orange County Convention Centre. Our rep-

resentatives were patent attorney Xu Yingcong, trademark

attorneys Mei Yuan and Ying Ying, and trademark and

copyright litigators Liu Yizhou and Wu Yueqin.Founded in

1878, INTA is a 138-year-old non-profit international or-

ganization with its headquarters in the New York City.

INTA is currently a United Nations non-governmental ob-

server with over 9,500 members from over 190 coun-

tries.Watson & Band’s representatives arrived in Orlando

on 18th May and initiated extensive dialogues with professionals from nearly 200 countries and regions, including over

9,500 enterprise brand management supervisors, intellectual property lawyers and trademark attorneys.During the

conference, our professional team engaged global strategic partners and customers in extensive discussions on top-

ics including the current status of trademarks in China, strategies for international companies to promote their trade-

marks in China, international trademark registration, and other topics. Our team also shared its practice experience

gained from performing domestic and overseas trademark and patent prosecution, intellectual property infringement

litigation, and the enforcement and assignment of intellectual property rights.During these conversations, Watson &

Band received recognition from the representatives of its global peers and customers for its trade and professional

achievements, as well as for its expansion of market share in recent years. Many of these representatives expressed

their wish to engage in bilateral cooperation with us.

W&B Named a “Top Law Firm in China Patent Litigation and Licensing” by IAM Patent 1000

When the IAM Patent 1000 results were released, Watson & Band appeared as a “Top Law Firm in China Patent

Litigation and Licensing”. As a world-class patent publication, IAM Patent 1000 specializes in providing customized

guidance for patent authorities and patent firms in major jurisdictions around the globe. It offers the only one-stop

guideline publication in the global IP industry, which provides listings and rankings of top practitioners in online patent

application and patent litigation services.The W&B team, comprised of attorneys with diverse language skills, has won

it great recognition within the IP industry as for its high-quality patent services. Specifically, W&B’s team is able to

work in Chinese, English, Japanese and Russian, and deals with a variety of technical issues. In particular, W&B occu-

pies a leading position in patent-related technical fields such as chemistry, mechanics, electronic communications and

optical physics. Meanwhile, W&B’s dedication to its pursuit of high-quality, efficient and innovative services using its

advanced case management system ensures that its work is characterized by consistency and high efficiency.

Watson & Band May ~ June 2016

Latest on Watson & Band

4

Legal Developments

Survey on the Implementation of Advertising Law: An Effective

Curb on Tobacco Advertisements

It’s been over six month since the new amendment of Advertising Law came into effect. As you may won-

der about the effectiveness of the enforcement of an advertisement law that prohibits all sorts of tobacco ad-

vertisement, on 28th Chinese Association of Tobacco Control (CATC) in Beijing released findings from surveys

at 11 cities which showed that the number of tobacco advertisement at premises other than tobacco POS was

significantly reduced. It is a cheerful demonstration of the success of the Advertising Law; however, only at plac-

es outside the tobacco POS: the advertising there is still a tough issue and hidden advertising is becoming a new

trend.The CATC conducted its survey of tobacco advertisement at tobacco POSs, public space and outdoor

space in 11 cities including Beijing, Shanghai, Shenzhen, Kunming, Xi’an, Hangzhou, Wuhan, Lanzhou, Harbin,

Zhangjiakou and Guangzhou. The places surveyed consist of 1236 tobacco POSs of various types, 1453 places of

public space and 149 heavily-trafficked crossroads.The survey revealed that an average of 46.8% tobacco POSs

in the above 11 cities were displaying tobacco advertisements. The highest ratio was in Lanzhou, which was 87.9,

and the lowest was in Shanghai, 23.5%. In 7 cities no outdoor tobacco advertisement founded during the survey,

and they were: Beijing, Shanghai, Shenzhen, Xi’an, Hangzhou, Wuhan, Zhangjiakou. All the rest 4 cities had out-

door advertisements for tobacco. Furthermore, In 9 cities, tobacco advertisements were found in the public

space; there was no such advertisement in Shanghai or Shenzhen.During the survey, it was also found that hid-

den advertisement and promotion have evolved to be the new trend of tobacco advertising. Tobacco POSs tend-

ed to utilize in-store notices, lighting, posters, arrangements of cigarette packs and pamphlet to promote tobac-

co products. Also, quite a few tobacco POSs did not just sell tobacco: 98.4% were also engaged in sale of other

kinds of products.

(Excerpted from: http://www.chinacourt.org)

Watson & Band May ~ June 2016

National Online Trading Platform Regulatory Service System

Launched on July 1 – a Big Breakthrough for the Targeted Regu-

lation of Illegal Online Operations

The national online trading platform Regulatory Service System successfully completed two rounds of net-

work testing and was launched on July 1.On June 27, the Internet Surveillance Department of the State Admin-

istration for Industry and Commerce (the “SAIC”) specially convened a seminar on the full launch and application

of a national online trading platform to listen to opinions and receive suggestions concerning work arrangements.

Directors of Internet regulators from the SAIC and relevant market supervision administrations conducted in-

depth discussions on issues such as evidence collection of webpage data, system users, security management,

etc. SAIC Deputy Director Lin Gan, issued special instructions for the seminar and proposed definite requirements,

due to the great importance he attaches to the construction and operation of the system. In his written speech,

Mr. Gan pointed out that as revealed in practice, the national online trading platform Regulatory Service System

has achieved a major breakthrough in the targeted regulation of online trading platforms and online shops. The full

launch and wide application of the system will represent a great breakthrough for the AIC’s online market regula-

tion activities. Mr. Gan called on the system to adapt to recently strengthened online market regulation, and in-

sisted on combining the deepening of the system’s application and (i) the implementation of special inspection and

remedial requirements, (ii) in-depth special online market regulation initiatives, and (iii) the promotion of integrated

online and offline regulations. The purpose of these initiatives is to fully exploit the system’s technical support

role and to effectively enhance the efficiency of online market regulation and enforcement.

5 Watson & Band May ~ June 2016

Legal Developments

Supreme People’s Court Publishes Top 10 Landmark Cases on En-

terprise Bankruptcy Restructuring and Liquidation

At the seminar, the SAIC’s Internet Surveillance Department demanded that local authorities (i) control the

base number of applications for the national online trading platform Regulatory Service System; promptly and

accurately identify illegal conduct and enhance scientific decision-making and micromanagement; (ii) use the In-

ternet to uncover leads to serious illegal conduct; strengthen enforcement efforts, eliminate blind spots and es-

tablish regulatory enforcement authority to promote regulatory standardization; (iii) strengthen administrative

guidance of operators of platforms and online shops, and combine regulation with services to promote orderly

development; and (iii) use the regulatory system to strengthen and streamline coordination with other depart-

ments, promote the sharing of information and leads, and consolidate the integration of online and offline govern-

ance.From March to May of 2016, the SAIC conducted two rounds of testing of the national online trading plat-

form Regulatory Service System and arranged for two special inspections of online shops that were suspected of

illegal operations. The local authorities inspected a total of 22,766 online shops, most of which were operated by

natural persons. Among these, 8,165 shops were found to be conducting illegal operations, and cases were dock-

eted for the investigation and handling of online shops involved in serious illegal conduct.

(Excerpted from: www.sohu.com)

On the morning of June 15, 2016, the Supreme People’s Court held a news briefing on the publication of the

Top 10 Typical Landmark Cases concerning bankruptcy and the promotion of supply-side structural reform. Ms.

Linping Yang, Chief Judge of the Second Civil Tribunal of the Supreme People’s Court, acted as spokesperson.

The news briefing was presided over by Ms. Ling Wang, Deputy Director of the Supreme People’s Court’s publici-

ty department.From the implementation of the Enterprise Bankruptcy Law in 2008 until the end of 2015, Chinese

courts accepted a total of 19,551 new bankruptcy cases and concluded a total of 21,995 cases (including pre-

existing cases). In the first quarter of 2016, the People’s Courts accepted 1,028 bankruptcy cases, representing a

growth rate of 52.5% over the same period of 2015. 507 cases were concluded, representing a growth rate of 61%

over the same period of 2015.The Top 10 Landmark Cases published this year involved bankruptcy restructuring,

bankruptcy liquidation, the joint bankruptcy of affiliated enterprises, conversion from restructuring to liquidation,

and transfer to bankruptcy review during enforcement procedures. According to Ms. Yang, these cases were bene-

ficial both legally and socially because they helped to (i) protect employees’ legitimate legal rights and interests;

(ii) fully utilize the joint coordination mechanism between the government and the courts; (iii) set precedents for

the prudent exercise of the courts’ right to grant compulsory approvals to restructuring plans; (iv) utilized market-

oriented methods to promote enterprise restructuring; (v) set precedents for the innovative legal disposal of as-

sets and (vi) emphasized the rescue of distressed enterprises through the exploration of comprehensive solu-

tions.In the trial of bankruptcy cases, the courts insist on a market orientation, encourage introducing strategic

investors through competition mechanisms, and prudently exercise the right to grant compulsory approvals to re-

structuring plans. In a bankruptcy restructuring case involving Changhang Phoenix Ltd., for example, the company

eliminated the traditional practices of relying on state-owned shareholders for financial support and rescuing dis-

tressed enterprises by means of “plugging holes”. The company ultimately eliminated its non-performing assets

through marketization while adjusting its remaining assets and business structures. In another bankruptcy restruc-

turing case involving Shenzhen Zhonghua Bicycle (Group) Ltd., although there were two votes for the draft re-

structuring plan, in the face of potential compulsory approval, the court instructed the administrator to act posi-

tively and be oriented by interests and development, so as to convince the creditors to change their minds in the

end. Restructuring accomplished the placement of 187 employees, and the delay in payment of social security

benefits for over 400 employees was resolved, while creditors still receive 70% of the value of their claims.As per

the introduction, in bankruptcy cases the courts are placing great emphasis on the positive role that bankruptcy

administrators can play. Specifically, they will designate competent administrators based on the circumstances of

the case.

6 Watson & Band May ~ June 2016

Legal Developments

On June 27, 2016, the General Provisions of Civil Law of the People’s Republic of China (Draft)

(hereinafter, the “Draft Provisions”) were submitted for review at the 21st Session of the Standing Committee of

the 12th National People’s Congress. The Draft Provisions include the following seven special features:

Feature 1: Fetuses would have certain civil rights.

The Draft Provisions propose explicit principles for the protection of the interests of fetuses; specifically,

where protection for the interests of fetuses (e.g. inheritance, eligibility for gifts) is involved, the fetuses shall be

deemed to enjoy civil capacity. Nevertheless, if the fetus does not survive birth, its capacity for civil rights shall

be deemed retroactively void.According to the current P.R.C. Inheritance Law, when dividing an inheritance, a

portion for a fetus should be preserved. If the fetus does not survive birth, such preserved portion shall be sub-

ject to China’s statutory succession rules. This provision, known as the “Special Portion System”, already pro-

tects the interests of fetuses. As standards of decency continue to evolve, however, the protection of the inter-

ests of fetuses should not be limited to narrow circumstances; rather, more comprehensive provisions should be

enacted.

Feature 2: A six-year-old child would be able to “buy soy sauce”

Buying soy sauce is a simple and common civil act. At what age should a child buying soy sauce enjoy

recognition and legal protection for such an act?

According to the current Chinese law, the minimum age limit for a limited capacity to perform civil acts is

ten years old. The Draft Provisions lowers this limit to six years old. Specifically, minors at least six years old but

not yet eighteen years old would enjoy a limited capacity for civil acts – they would be permitted to inde-

pendently conduct civil acts that accrue benefits only or that are consistent with their age and intelligence.Yi

Wang believes that the civil law should respect both the free will of adults to make decisions while also taking

into account the natural inclinations of minors. This respect could be expressed by lowering the minimum age

requirement for a limited civil capacity. Due to better lifestyle and educational standards, children are growing up

more quickly than before, both physically and mentally. A modern six-year-old tends to know far more than a six

-year-old knew many years ago. Since such children now possess better discernment and judgment, they should

have the right to independently perform certain civil legal acts. Consequently, the proposed revision can better

protect the interests of such children.

Feature 3: The elderly would be eligible for participation in the guardianship system.

When minors, people in vegetative states, the mentally ill and Alzheimer’s patients need to participate in

social activities or enforce their rights, guardians should be permitted to act on their behalf. “One of the fea-

tures in the Draft Provisions is that the classes of people who are protected under the guardianship system

would be broadened to create a fully functioning guardianship system.” According to Associate Professor Shi-

gang Li of the Fudan University College of Law, the guardianship system under the current General Principles of Civil Law applies to minors and psychiatric patients, but lacks protection for the aged. According to the proposed

revision, adults other than psychiatric patients, if lacking the capacity for civil acts, can also be subject to guard-

ianship.

Seven Special Features of the Draft General Provisions of Civil Law: Fetuses

Will Have Civil Rights

They guide bankruptcy administrators with specialized expertise in enterprise management and science and

technology, thereby enhancing the quality of the bankruptcy administrators. In a bankruptcy liquidation case in-

volving Beijing Lida Sea Life Aquarium Co., Ltd., the court guided the administrator to dispose of the bankrupt

assets as a package during ongoing business operations, thereby protecting the legal rights and interests of em-

ployees, the tax authorities and other creditors.

(Excerpted from the official website of the Supreme People’s Court)

Legal Developments

On June 27, 2016, the General Provisions of Civil Law of the People’s Republic of China (Draft)

(hereinafter, the “Draft Provisions”) were submitted for review at the 21st Session of the Standing Committee of

the 12th National People’s Congress. The Draft Provisions include the following seven special features:

Feature 1: Fetuses would have certain civil rights.

The Draft Provisions propose explicit principles for the protection of the interests of fetuses; specifically,

where protection for the interests of fetuses (e.g. inheritance, eligibility for gifts) is involved, the fetuses shall be

deemed to enjoy civil capacity. Nevertheless, if the fetus does not survive birth, its capacity for civil rights shall

be deemed retroactively void.According to the current P.R.C. Inheritance Law, when dividing an inheritance, a

portion for a fetus should be preserved. If the fetus does not survive birth, such preserved portion shall be sub-

ject to China’s statutory succession rules. This provision, known as the “Special Portion System”, already pro-

tects the interests of fetuses. As standards of decency continue to evolve, however, the protection of the inter-

ests of fetuses should not be limited to narrow circumstances; rather, more comprehensive provisions should be

enacted.

Feature 2: A six-year-old child would be able to “buy soy sauce”

Buying soy sauce is a simple and common civil act. At what age should a child buying soy sauce enjoy

recognition and legal protection for such an act?

According to the current Chinese law, the minimum age limit for a limited capacity to perform civil acts is

ten years old. The Draft Provisions lowers this limit to six years old. Specifically, minors at least six years old but

not yet eighteen years old would enjoy a limited capacity for civil acts – they would be permitted to inde-

pendently conduct civil acts that accrue benefits only or that are consistent with their age and intelligence.Yi

Wang believes that the civil law should respect both the free will of adults to make decisions while also taking

into account the natural inclinations of minors. This respect could be expressed by lowering the minimum age

requirement for a limited civil capacity. Due to better lifestyle and educational standards, children are growing up

more quickly than before, both physically and mentally. A modern six-year-old tends to know far more than a six

-year-old knew many years ago. Since such children now possess better discernment and judgment, they should

have the right to independently perform certain civil legal acts. Consequently, the proposed revision can better

protect the interests of such children.

Feature 3: The elderly would be eligible for participation in the guardianship system.

When minors, people in vegetative states, the mentally ill and Alzheimer’s patients need to participate in

social activities or enforce their rights, guardians should be permitted to act on their behalf. “One of the fea-

tures in the Draft Provisions is that the classes of people who are protected under the guardianship system

would be broadened to create a fully functioning guardianship system.” According to Associate Professor Shi-

gang Li of the Fudan University College of Law, the guardianship system under the current General Principles of Civil Law applies to minors and psychiatric patients, but lacks protection for the aged. According to the proposed

revision, adults other than psychiatric patients, if lacking the capacity for civil acts, can also be subject to guard-

ianship.

7 Watson & Band May ~ June 2016

Legal Developments Furthermore, if an adult is worried that he cannot participate normally in social transactions or act appropri-

ately in daily-life activities, he can name his guardian in advance as a proactive precautionary measure.

Feature 4: The definition of “legal person” would be broadened.

A “legal person” is a legal fiction that allows fictional “persons” such as companies and government agen-

cies to perform civil acts. The current General Principles of Civil Law classify enterprises, government agencies,

public institutions and social groups as legal persons. Due to rapid economic and social development, however,

significant changes have occurred in common forms of social organizations – new forms of organization such as

foundations, private non-profit entities and social services agencies are surging, and the current law cannot reg-

ulate all of them. Consequently it has become necessary to revise the law.For this purpose, the Draft Provisions

classify legal persons as profit-making and non-profit. Specifically, a legal person incorporated for the purposes

of obtaining profit and distributing them to members such as shareholders or other investors would be classified

as a profit-making legal person. On the other hand, a legal person incorporated for the public interest or other

non-profit purposes would be classified as a non-profit legal person that cannot distribute any pecuniary benefits

to its members or founders.

Feature 5: A new type of civil subject, the unincorporated organization, would be introduced.

The Draft Provisions specially provide for “unincorporated organizations” in a separate chapter where an

this term is defined as an organization with no qualifications as a legal person yet capable of engaging in civil

acts in its own name in accordance with the law. Well-known examples include research groups, village associa-

tions, branches or sub-branches of banks, or a programming team for a television station. The Draft Provisions

also enumerate certain forms of “unincorporated organizations” including individual sole proprietorship enterpris-

es, joint ventures and branches established by profit-making or non-profit legal persons in accordance with the

law.

Feature 6: Virtual assets such as QQ coins and online gaming equipment would be protected.

The Draft Provisions provide that civil subjects shall enjoy intellectual property rights in accordance with the

law. They enumerate nine types of rights including works, patents, trademarks, “data” etc. The determination of

ownership and the ability to protect various information and virtual network assets such as QQ coins and online

gaming equipment is obviously an important and urgent matter.The Draft Provisions also provide that civil sub-

jects shall enjoy legal property rights, and they clarify that if the law stipulates that specific rights or online vir-

tual assets should be the objects of certain property rights, such stipulation would be valid. According to legal

experts, the legislative spirit of the General Provisions of Civil Law must be adjusted to reflect the ever-changing

nature of the technical environment in order to effectively protect private rights. In addition, the legislative spirit

must also reflect the realities of the Information Age and the hi-tech economy, so as to effectively protect in-

tangible property rights.

Feature 7: Accident victims are encouraged to offer compensation to “Good Samaritans” who suffer injuries

while rescuing them

Recent years have seen the distressingly common phenomenon of “Good Samaritans “ who aid accident

victims suffering injuries themselves and becoming the focus of disputes. Who should bear liability if a rescuer is

injured or suffers damages? Should the rescued victim pay compensation? This issue commonly gives rise to

subsequent disputes. According to the Draft Provisions, when a person suffers injuries or damages by protecting

another party’s civil rights or interests, the culpable party (if any) is primarily liable for compensation to the vic-

tim while the rescued victim may provide appropriate compensation. If there is no culpable party, or if the culpa-

ble party flees or is financially incapable of paying compensation, the rescued victim should provide appropriate

compensation if the injured or damaged rescuer so requests.Secondly, the Draft Provisions particularly empha-

size that the rescued victim may provide appropriate compensation to an injured rescuer. Professor Tian Yin

from Beijing University, who serves as Vice Chairman of the China Civil Law Research Society, believes that this

revision represents a major breakthrough compared to previous legislation. Although the obligation on the res-

cued victim is phrased as “may”, meaning that it is voluntary rather than legally binding, it shows that this provi-

sion was meant as a moral encouragement. Since in many cases “Good Samaritans” suffer personal injuries that

cannot be completely compensated for monetarily, compensation to the rescuer from the victim on a case-by-

case basis actually represents a morally-motivated reward for the rescuer that the law advocates but does not

require.(Excerpted from: www.chinacourt.org)

8 Watson & Band May ~ June 2016

IPR Dynamics

General Office of the State Council recently issued Focuses of Nationwide Crackdown on Infringement of IP

Rights and Production and Sale of Counterfeit and Substandard Goods 2016 (hereinafter “Focuses”), stressing that

supply-side structural reform should be pushed forward to support the punishment to the full extent of law of in-

fringement and counterfeiting, which are in violation of the law, the innovative development, the principle of fair

competition as well as consumer’s rights so as to offering powerful protection to the constant and balanced eco-

nomic and social development.

Focuses identified 7 key issues with 27 items of focal point in the work.

The first is to strengthen the management of major areas by way of whole-chain regulation over the produc-

tion, circulation and consumption to eliminate infringement and counterfeiting. Specific measures include vigorous

crackdown on the online sale of counterfeit and substandard goods and internet infringement and piracy, enhanced

supervision and law enforcement over the rural and rural-urban fringe markets, continuation of “Fresh Breeze

(honesty and uprightness)” Campaign to maintain the reputation of “Made in China” overseas and promotion of

copyrighted software.

The second is to enhance daily supervision of the industry. Strict measures should be adopted to punish illegal

conducts including production and sale of fake or inferior medicine, production and sale of vehicle fuels that fail to

meet national standards and unlicensed release and sale of products that require compulsory certificate. Spot test

and special regulation should be imposed on haze-proof products. Legal actions should be taken to punish offenses

such as infringement or abuse of IP rights and consolidate administrative protection of business secrets.

The third is to improve the system of laws and regulations. Efforts should be made to speed up the legislation

and amendment of electronic commerce law, anti-unfair competition law, drug administration law, copyright law, pa-

tent law, cosmic health supervision regulations and regulations on patent commissioning. Also mechanism should be

improved for the innocuous disposal of infringing and counterfeiting goods.

The fourth is to strengthen cooperation between departments and judicial protection. Measures should be tak-

en to improve the transition from administrative law enforcement to criminal justice, vigorously promote information

disclosure of cases involving administrative penalty and drive collaboration on law enforcement on Yangtze River

Delta, Beijing-Tianjin-Hebei Region and Pan-Pearl River Delta. Strict investigations should probe into possible duty

crime behind the cases involving infringement and counterfeiting. Reforms should proceed to empower IP courts to

hear civil, administrative and criminal cases concerning IP Rights (“Three-in-One” Reform).

The fifth is to combine crackdown actions and preventive measures, crackdown measures and construction

works. Measures should be taken to perfect early-warning and prevention system, vigorously boost credit construc-

tion, give full play to trade self-discipline, stress the enterprise’s main body responsibility, explore the role of su-

pervision by media and general public, and promote social engagement in and shared benefit from the crackdown on

infringement and counterfeiting..

The sixth is to develop publication and popularization through various channels. Activities should be organized

for media outlets to interpret policies and measures, establish positive models and expose law-breaking behavours

and crimes. New technologies should be explored, such as mainstream media, weibo, wechat and mobile client to

extend the coverage of publicity.

The last but not least is to improve multilateral coordination and communication. Measures should be adopted

to intensify dialogs and communications on IP issues between China and the US, European countries, Russia, Brazil,

Switzerland and Japan. Also we should strengthen the cooperation in law enforcement between China and African

countries, Latin American countries and countries along the Belt and Road. Assistance mechanism should also be

improved for overseas right protection..(Excerpted from: www.renmin.com.cn)

General Office of the State Council issued Focuses in Nationwide Crackdown On In-

fringement of IP Rights and Production and Sale of Counterfeit and Substandard Goods

2016

Today, Intellectual Property Development & Research Center of State Intellectual Property Office of the P.R.C

released Report on the Development of Intellectual Property Rights in China 2015, revealing the findings in its re-

search. The report shows steady progress in the level of comprehensive development of nationwide intellectual

property rights as well as improved position in international ranking. On the other hand, the report also points out

the lag in the environmental construction for intellectual property rights relative to the capacity performance,

which calls for great efforts and long period of time to produce an effective solution..

Steady progress in the level of comprehensive development of nationwide intellectual rights

The report approached the development of IP rights in China from 4 aspects: invention, exercise, protection

and environment of IP rights. The report concludes that China’s IP rights has experienced continuous develop-

ment since 2010, which is adopted as the base year, with development index reaching 187.35 points in 2015 from

the benchmark 100 points in 2010.

Han Xiucheng, the director of Intellectual Property Development & Research Center, introduced that the

steady development in the creation, exercise, protection and environment and IP indexes over the past 6 years

demonstrates that China has entered a new stage of steady development in IP rights since the implementation of

China’s IP strategy in 2008. This trend is revealed by: (i) significant growth in the number of major IP rights pros-

ecuted and registered and optimized structure of IP creation;

9 Watson & Band May ~ June 2016

IPR Dynamics

June 16th marks the 20 year anniversary of the birth of IP “Three-in-One” trial mechanism. Pudong People’s

Court learnt from the roundtable meeting on the same day in celebration of the occasion that Supreme People’s

Court will promote the mechanism to other courts in China.

Pudong People’s Court is the first primary court in China to establish the IP court, and was also the first in

China to explore the new mode of IP court in 1996 by adopting “Three-in-One” (which means that civil, administra-

tive and criminal cases are all heard by the IP court) trial mechanism for IP cases. Mr. Zheng Chengsi, the renowned

IP expert, regarded the attempt as “Pudong Mode”. Mr. Song Xiaoming, the member of the judicial committee of

Supreme People’s Court and the chief judge of IP court, attribute to Pudong People’s Court the reproducible ex-

perience of “Three-in-One” trial of IP cases, which the court gained from vigorous judicial practices in a large num-

ber of typical IP cases in the past two decades, that could be widely applied to courts nationwide. He said Supreme

People’s Court is planning to extend the mechanism to other courts.

In 1995, the civil, administrative and criminal cases were taken to Pudong People’s Court separately regarding

the counterfeiting of the trademark Eagle owned by Shanghai Jili Co., Ltd, a Sino-US joint venture. The three trials

were successful, but the two issues arising during the course of the hearings aroused the attention of Pudong Peo-

ple’s Court: (i) due to the limitation of business scope, the criminal and administrative courts lacked necessary

know-how of IP issues for hearing IP cases; (ii) as the basic facts found by the courts during the case review were

the same, the separate hearing of the same fact by different courts wasted trial resources and increased the lawsuit

costs of parties involved, not to mention the different judgmental criteria adopted by different courts.

Based on the judicial practice in the civil, administrative and criminal trials of “Eagle” trademark, Pudong Peo-

ple’s Court analyzed practical needs and experience to propose some ideas of mechanism innovation. In 1996

Shanghai High Court approved the innovation and Pudong People’s Court became the first court in China to make

the attempt of setting up the IP court to handle the civil, administrative and criminal trials of IP cases. In 2007,

Huangpu Court learnt from the experience of Pudong People’s Court and set up the IP court to hear the civil and

criminal IP cases in its jurisdiction. In August 2008, Shanghai High Court made a unified deployment to extend

“Three-in-One” trial mode to every primary court with an IP court. In 2014, the mechanism of “Three-in-One” trial

over IP cases was adopted by courts of all three levels in Shanghai.

(Excerpted from: www.renmin.com.cn)

Nationwide Implementation of “Three-in-One” Trial Mechanism for IP cases

Development of China’s IPR in 2015: Minimum Improvement in the Environment

10 Watson & Band May ~ June 2016

IPR Dynamics (ii) continued increase in the number of transfer of patent rights and the amount of mortgage financing for pa-

tents and copy rights, and the boosting number of pledge registration and prosecution of trademark rights;

(iii) rising number of IP cases accepted by judiciary authorities and patent cases concerning administrative law

enforcement and steady growth in the effective number of IP rights filed with the Customs;

(iv) constant optimization of institutional environment: there are increasingly more facilitating agencies and staff

members, and the public awareness of IP rights is also improved significantly.

Slower growth in the East and great potential in the West

In the analysis by provinces and regions, East China boasts the most advanced provinces and cities in the de-

velopment of IP rights. Places such as Guangdong, Beijing, Shanghai, Zhejiang, Jiangsu, Shandong, Fujian have been

always at the forefront of list due to their mature handling of IP-related works, good planning and coordination be-

tween different fields of work, the virtuous cycle of IP rights development gained over decades of development, de-

spite the slowdown in the speed of IP affairs. On the other hand, Middle and West China boasts the fastest growth

in the progress of IP rights. The comprehensive index shows that over the last 6 years, Anhui and Hubei, both prov-

inces in Middle China, experienced annual growth rates of 5.32% and 5.28% respectively, while Shaanxi, a province in

West China, enjoyed an annual growth of 4.60%.

Improvement of international status despite serious imbalance in the development

The report also established three indexes of capability, performance and environment of IP rights to compare

China to 40 countries with most investment of technological resources and highest yields from IP rights. According

to the results, China experienced a year-by-year increase in the ranking measured by combined indexes from the

19th in 2008 to the 8th in 2014, one place up from the previous year. Yet the US and Japan still rank well ahead.

Overall, in 2014 China ranked top three in the indexes of capability and performance of IP rights but only 30th

in the environment index, which has not changed compared to the ranking in 2013.

(Excerpted from: www.renmin.com.cn)