PRC IPR LITIGATION SKILLS (Presentation on June 15, 2008 Seminar)

Topic B:  Evidentiary Preparation and Case Presentation

I. Substantive laws and regulations, including judicial rulings and courts’ tendencies are important.

II. How to respond to a complaint, and the types of defenses to assert:

1. Trademark Law – 10 years protection upon registration, extension for same terms, from date of registration approval. 

(a) Defenses and counter-arguments:
i. Unregistered mark (misuse of registered mark, different elements – device, phonetic and literary Chinese versions or used in unregistered classes)

ii. Prompt registration + Customs recording vs. Distributor might register your mark – Unfair competition

iii. Well-known mark protection

iv. No Customs recordal vs. passive protection

v. Counterfeits or infringing goods
vi. Art. 56: Distribution without knowledge - Careful selection of distributors and business partners

vii. Proof of Actual sales vs. bait orders (legality?)

viii. OEM Exports vs. no competition in the same market

(b) Terms of Contract vs. Contract drafting (e.g., who pays for the royalty fee?)

(c) Close market watch Repeated raid actions  litigation + damage publicity

2. Patent Law - Inventions: 20 years, Utility Models: 10 years, Designs: 10 years, from date of application

(a) Defenses and counter-arguments:
i. Protection upon granting of patents vs. infringement from date of application

ii. Validity: Design patents are vulnerable

(b) Prompt application: novelty challenge – samples, exhibition and sales
(c) Counterfeits vs. Infringement
(d) Close market watch Repeated raid actions  litigation + damage publicity

3. Copyright Law - Protection upon creation, 50 years + unlimited duration for accreditation, amendment and completeness

(a) Product brochures, Computer software programs are protected

(b) Internet, domain names and copyright protection

(c) Prompt registration vs. infringement before registration

(d) Counterfeits vs. Infringement

(e) Low damages

(f) Foreign works published are protected only based on treaties and conventions

(g) Close market watch Repeated raid actions  litigation + damage publicity

III. Discovery and evidence gathering:  How to protect confidential information; how to gather evidence; the court’s in resolving disputes related to evidence gathering and discovery.

1. Investigation firm and investigators

2. Overseas investigation:
 To work closely with Customs in the importing countries to obtain the necessary evidence re counterfeit exports seizures and penalties to support the actions in China;

3. China investigation:
(a) To use legal means in collection, preservation and organization of evidence to satisfy the high standard of proof in administrative and judicial actions;

(b) To unearth factories and major distribution network of the counterfeits in order to fight counterfeits at the source;

(c) To focus on cracking down the criminals in financing, production and distribution of counterfeits and trademark labels;

(d) To follow up with the government enforcement authorities and the court closely to obtain the penalty decision, criminal prosecution and sentences and civil judgment for cases initiated; and

(e) To gain government support in enforcement raids, destroying the counterfeits and securing the penalty decisions, in litigation and other policy and publicity work.

4. Burden of Proof: perfect evidence vs. preponderance of evidence – the judge’s skills in exercising discretionary powers (fairness)

5. Evidence collection means: Books, Notarized sales and Bait orders

6. Certainty of Litigation Outcome: Post-raid and post penalty decision litigation vs. evidence preservation (bond is not required) vs. Seizure and Preliminary injunction (bond is required)

7. Accuracy in submissions, reputation of the company and trust in the system and judges

8. Burdensome misc.: Complex POA requirement (2 attorneys doing all work), no electronic filing (6-8 sets of all documents), lack of discovery tools – Complaint anticipating defenses, high costs (for instances) compared to the low damage awards are prohibiting factors. 

IV. Trial: Presenting the case in court

1. Complaint – Plaintiff tries to establish the case:  Not subject to as many revisions + should anticipate the defenses.

2. Defenses – Defendant tries to destroy the plaintiff’s case

3. Exhibits and testimonies – Both parties try to use the evidence to their benefit.

4. Arguments – the parties further argue why his claim should be sustained by the court

5. Closing statements – last words to the judges

6. Burden of Proof is the focus. Comparative study of the U.S. vs. China Rules:
(a)  Preponderance of Evidence vs. Burden on Plaintiff

In a trademark infringement case, Plaintiff has to prove 4 elements to establish infringement: tortuous act, intent, injury and direct relation between the act and injury.

7. Pre-trial moot court and cross-examination should be done.

8. Accuracy will affect credibility, the case outcome and the company’s reputation.

9. Liability is not clear and will be penalty when it is outrageous and intentional.

V. Types of remedies to request; when and how to negotiate a settlement; use of alternative dispute resolution or mediation.

1. Remedies: stop infringement, pay damage and eliminate adverse impact – public apology in newspaper

2. Settlement

3. ADR or mediation

VI. General operation guide: 
i. Company IPR protection guideline, employee handbook/labor contract/anti-competition and confidentiality clauses, company IPR management and risk control mechanism and action plan
ii. Internal IPR coordinator/brand manager: registration, extension (expiry), customs recordal, market watch and IPR enforcement
iii. Watch your JV partners, channels and distributors: Contract drafting and performance monitoring
iv. Market monitoring and prompt response: investigation, raids, penalty and legal actions
v. Eliminate source and support – manufacturers and distributors and even retailers.
vi. Good media relations and community support
VII. China IPR Legal Structure
i. TRIPS and other Conventions
ii. New Trademark Law（Oct. 2001）
iii. New Trademark Implementation Regulations（Effective as of 09/15/2002）
iv. New Patent Law (Aug 2000)
v. New Patent Implementation Regulations (July 2001)
vi. New Copyright Law (Oct. 2001)
vii. Anti-Unfair Competition Law (Sept. 1993)：trade secret, trade name, trade dress, quality or certification marks, counterfeit or knock-off of well-known brands
viii. Administrative regulations and judicial rulings.