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Copyright Infringement in Works of Applied Art in China

Infracción de derechos de autor en obras de arte aplicado en China

(Supreme Court Guideline Case No. 157)

On June 30, 2021, the Supreme Court of the People’s Republic of China issued the 28th batch of guidance cases, among which, No. 157 related to the protection of works of applied art.

Highlights of the judgment

For a work of applied art to be protected under the Copyright Law, it must be original, have a certain artistic value, and the latter must be clearly distinguishable from its practical meaning. Furthermore, the Copyright Act protects the “artistic” rather than the “practical” aspects of a work of functional art.

Background

In 2009, Crosplus Home Furnishings (Shanghai) Co., Ltd. (hereinafter referred to as “Crosplus”) designed a traditional Chinese-style wardrobe called “Tang Yun Wardrobe”. Between September and October 2011, it was displayed on a third-party website, and on December 10, 2013, Crosplus registered the three-dimensional pattern of the Tang Yun Wardrobe through the China Copyright Protection Centre.

armario tang yun

 

In 2013, Crosplus discovered that Mengyang Furniture Sales Center (hereinafter referred to as “Mengyang”), a distributor of Beijing Zhongrong Hengsheng Wood Co., Ltd. (hereinafter “Hengsheng”), was selling a cabinet manufactured by Hengsheng that was substantially similar in appearance to the “Tang Yun”. Crosplus then sued the Mengyang sales centre and Hengsheng for copyright infringement of its work of applied art, the “Tang Yun Wardrobe”.

The court opposed the plaintiff’s claims, and the decision was overturned in the court of appeal.

Conclusion

The second instance court analysed the case in two steps:

  1. Was the “Tang Yun Wardrobe” a work protected by the Copyright Act?

Article 2 of the Implementing Regulations of the Copyright Law of the People’s Republic of China provides that “The term “works” as referred to in the Copyright Law means intellectual creations with originality in the literary, artistic or scientific domain, insofar as they can be reproduced in a tangible form”.

Article 4(8) of the Implementing Regulation stipulates that ““works of fine arts” means two- or three-dimensional works of the plastic arts created in lines, colors or other media which impart aesthetic effect, such as paintings, works of calligraphy and sculptures”.

Therefore, any intellectual creation with originality that can be reproduced in a tangible form is protected by the Copyright Act as a “work”.

Although China’s Copyright Law does not cover “works of applied art” explicitly, in practice they are often protected as works of art. For an industrial product to be considered a “work of applied art”, it must, in addition to meeting the common requirements of a general work (independent realisation and creative expression), have an aesthetic effect. Furthermore, the scope of protection of the Copyright Act is limited to the author’s expression and does not protect technical utility. Therefore, the protection of a work of applied art by the Copyright Act also requires that its artistic and its functional character are clearly differentiated.

In this case, the plaintiff’s wardrobe fulfilled both  the aesthetics and utility requirements. On the one hand, the claimant’s creative work is reflected in the choice of materials, the patterns and the specific positions of the fittings. The colour of the furniture panels is not the wood grain itself, but mimics the colour and elements of traditional Chinese furniture redesigned with abstract techniques, and the front cabinet doors, drawer handles and drawer pulls use handmade pure brass hardware, among other features.

On the other hand, the artistic nature of the wardrobe can be clearly differentiated from its practicality, as the modification of the artistic elements would not affect the practical function of the wardrobe, which is the storage and display of clothes.

Based on the above, it was confirmed that the plaintiff’s wardrobe could be considered an artistic work which can be protected by the Copyright Act.

  1. Does the manufacture and sale of a product substantially similar in appearance to a registered work of applied art infringe the latter’s copyright?

To determine whether a product infringes the copyright of a protected work, the court must ascertain and decide whether the product is “substantially similar” to the protected work and whether the infringer had “access” to it.

As noted above, the Copyright Act protects only the artistic character of works of applied art, so the comparison between the infringing product and the protected work must be limited to the “artistic aspect”.

Following the comparison, the court found that the creative elements of the two works were substantially similar, inter alia, because of the general L-shape of the cabinet, the similar arrangement of the doors, the decorative fittings, the pattern of the panels and the general shape.

Since the defendant did not provide evidence to show when the design of the infringing products was completed, nor did he provide information about the designers -coupled with the fact that the defendant and the plaintiff were competitors in the same industrial field-, the court found that there was reason to believe that the defendant had “access” to the plaintiff’s works.

Based on this analysis, the court ultimately ruled that the defendant’s products infringed the copyright of the plaintiff’s protected work.

Author: Dan Liu

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Trademark Infringement in Parallel Importation in China

Background

SPATEN-FRANZISKANER-BRÄU GmbH is the owner of two international trademarks, “Franziskaner” (No. G807592) and “Franziskaner Weissbier” (No. G1241072), licensed to Budweiser Investment (China) Ltd. (hereinafter referred to as “Budweiser”) for the use and maintenance of both trademarks in China.

On March 7, 2019, Budweiser filed a trademark infringement lawsuit, arguing that Guangzhou Oriental Keyuan Import & Export Co. Ltd. (herein after “Keyuan”) had infringed its trademark rights by importing a batch of beer that was identical to the two international trademarks mentioned above without permission. The defendant argued that the imported beer was a legal parallel import, produced in Europe by the trademark owner (SPATEN-FRANZISKANER-BRÄU GmbH) and exported through its affiliated company, which did not constitute an infringement of the trademark rights in question.

barril, cerveza, franziskaner weissbier

 

The Yuexiu District People’s Court ruled in favour of the plaintiff, requiring the defendant to destroy the infringing products and compensate the plaintiff for damages. However, later, on appeal, the Guangzhou Intellectual Property Court overturned the first instance judgment and found that the defendant’s goods constituted legitimate parallel imports.

Findings

The Guangzhou Intellectual Property Court first clarified the definition of “parallel importation of trademarks” as “the cross-border trade of goods produced or sold abroad by the trademark owner with the trademark legally attached, which are imported into a third country or sold through customs without the consent of the trademark owner or its licensee”. Generally speaking, the act of parallel importation of a trademark includes the following five constituent elements:

  1. The right holder has legal authority over the trademark in both the exporting and importing countries;
  2. The parallel imported products are manufactured and released into the foreign market by the trademark owner itself or with its consent;
  3. The trademark rights in the exporting and importing countries are substantially owned by the same person or entity;
  4. The goods are imported into the targeted territory without the consent of the owner of the trademark in the importing country; and
  5. The importation does not violate the normal and lawful customs control procedures of the importing country.

In the main proceedings, the Court found that the beer at issue was originally produced and placed on the market in Germany by SPATEN-FRANZISKANER-BRÄU GmbH, and then sold and exported by INBEV BELGIUM S.A. to OKUNI TRADING BUANGKOK CRESCENT, the authorized importer and distributor of “Franziskaner” beer in Singapore. Later, STARBEV PTE LTD resold the beer purchased from OKUNI TRADING to the defendant, and OKUNI TRADING arranged the shipment from Singapore to China directly in accordance with the sales contract between OKUNI and STARBEV and between STARBEV and the defendant. The evidence available proved that the manufacturer, the seller and shipper in Europe, the licensor who authorized the importation and sale in Singapore, and the plaintiff of this case were all direct or indirect holding companies of ANHEUSER-BUSCH INBEV NV/SA.

Therefore, the court found that the parallel imported goods were genuine.

Secondly, and since the People’s Republic of China does not explicitly prohibit all parallel importation of trademarks, the court shall base its judgment on the legislative purpose and principles of trademark law on a case-by-case basis, i.e., to safeguard the function of trademarks and protect the interests of consumers.

The core function of a trademark is to identify the source of goods. In this case, the trademark used in the allegedly infringing goods was substantially owned by the same right holder in both the country of origin (Germany) and the country of final import (China). Therefore, for the relevant public in the Chinese market, the allegedly infringing trademark did not sever the exclusive link between the trademark owner and the parallel imported goods and did not create a risk of confusion.

In addition, both the parallel imported goods and the goods licensed for sale in the Chinese market were under the control of the same right holder’s product quality control system and were placed on the market by the right holder in accordance with the market rules, which means that the quality assurance inherent in the trademark had been fulfilled.

In view of the above, the court ruled that the Chinese trademark in question had not been infringed, given that the parallel imported goods had neither undermined the functions of the Chinese trademark act nor led to a risk of misidentification of the source of the goods by the consumer public.

Remarks

In this judgment, the court adopted a neutral approach to parallel importation of trademarks, holding that the legality of a parallel importation should be judged on a case-by-case basis considering the circumstances of each particular case. If the trademark rights used on parallel imported goods are substantially vested in the same person as the trademark rights in the importing country, and the function of the Chinese trademark is not affected, there is no reason to prohibit parallel importation.

Author: Dan Liu

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Changes to the system for protection of industrial designs in China

edificio, guirnaldas, china

Designs in China (where they are called “design patents”) are protected under the Patent Law of the People’s Republic of China. This legal text entered into force in 1985 and was reformed in 1992, 2000 and 2008.

On 1 June 2021 a fourth reform will enter into force, with important amendments regarding designs. Indeed, it was necessary to update some aspects of industrial design protection in China in order to, among other purposes, bring them into line with the industrial design protection systems of the world’s main IP Offices. It will thus facilitate protection for foreign designs in China, as well as enhancing protection for the designs of Chinese applicants in other countries and at other IP Offices.

farolillos, china, luces

 

This reform should also be regarded as part of China’s preparations to join the Hague System for protection of international designs, given that following the accession of the EUIPO, South Korea, USA and Japan, China is the only one of the countries of the IP5 (which includes the world’s five largest IP Offices) that is not yet a member.

It is also important not to overlook the global importance of China in terms of the number of design applications filed. Over the past few years, the CNIPA has been the Patent Office that has received by far the largest number of design applications. For example, in both 2018 and 2019 there were more than 700,000 design applications in China, which accounted for more than 50% of all design applications worldwide.

The main changes that will affect designs in China can be summarised as follows:

1. Extension of the legal lifetime of designs to 15 years

Article 42(1) of the Patent Law extends the legal lifetime from 10 to 15 years, always calculated from the filing date of the design application in China.

This extension of the term of protection of designs in China is due to the Hague Agreement, which requires that the period of protection granted by contracting States for national designs must be a minimum of 15 years.

2. Possibility of design protection for parts of a product

Article 2(4) of the Patent Law has been amended to include in the definition of “design” the possibility that it refers to “the whole or part” of a product.

This amendment allows the scope of protection of designs to be expanded to include partial designs or designs of a part of a product.

This new provision will, for example, enable more secure protection for the design of a part of a product, without the need to protect the design of the whole product. Currently it is necessary to depict the whole product with solid lines. However, after the reform it will be possible to show with solid lines only the part that is to be protected and with broken lines those parts of the product for which protection is not sought.

Moreover, this new possibility of protection for partial designs or for designs of a part of a product is expected to encourage the filing of new design applications, thereby enhancing protection against possible infringers. Indeed, following the reform it will only be necessary that the protected part (for example, the sole of a shoe or the handle of a tool) has been copied, and not the whole product, in order to be able to take action against possible infringements.

This provision will help to bring practice in China into line with that of the other IP5 countries, given that in all of those countries it is currently possible to protect parts of a product.

3. Possibility of claiming domestic priority for designs

Article 29(2) of the Patent Law introduces the possibility of claiming the domestic priority of an earlier design application in China, within a term of 6 months, in order to permit the filing of an improved subsequent design application.

Under the current system, if an applicant files a design application in China and the design undergoes improvements or modifications, it is necessary to file a new design application. If the improved design differs in relatively minor aspects, the new application for the design would be vulnerable due to the existence of the first application.

With the introduction of the possibility of claiming the domestic priority of designs in China, such adverse situations are avoided, given that once the design is created, the applicant can file an initial design application to obtain an earlier filing date and then improve the design in the 6 months following the filing of the initial application, claiming the priority of the same.

In summary, the reform of the system for protection of industrial designs in China is an important step forward that will help to encourage innovation and improve legal certainty in the field of design. Other potential changes, such as extending the possibility of multiple design applications, or establishing a substantive examination or searches for earlier designs during prosecution, have not been included. Perhaps we will see these changes in a future reform.

Author: Pedro Saturio

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Three lawyers from ELZABURU selected to form part of a new council of experts that will advise the Chinese government on IP matters

This new year 2020, China is launching a centre called the Chinese Overseas Intellectual Property Dispute Response Guidance Centre, which aims to bring together professionals from different countries who are experts in intellectual property to provide guidance on matters relating to this field. The centre has been established by the Chinese Patent and Trademark Office (CNIPA), which is the largest Office of its kind in the world, with a workforce of more than 20,000 employees.

 

The 75 experts who now form part of this centre were selected by means of a worldwide public merit-based competition. Of the 35 foreign professionals who will be participating in this initiative, 6 are Spanish, and 3 of them are lawyers from ELZABURU: Manuel DesantesEnrique Armijo Chávarri and Colm Ahern.

The CNIPA’s aim with this initiative is to provide guidance for resolving possible conflicts relating to intellectual property: on the one hand, to safeguard the rights of Chinese entities abroad and, on the other, to gain a better understanding of the intellectual property systems and rules of overseas jurisdictions.

As Manuel Desantes explains in an interview for Confilegal, the biggest problem encountered by Chinese companies seeking to expand internationally is a lack of knowledge of different countries’ legal systems. Therefore, this advice will be essential to dispel doubts and avoid future conflicts. Moreover, thanks to the cooperation of these experts, Chinese entities will be in a better position to defend themselves in the event that any foreign company infringes their intellectual property rights.

Through the creation of new channels for obtaining and distributing information on intellectual property disputes abroad, the centre aims to establish a guidance and coordination mechanism for handling IP disputes involving Chinese companies.

As China is the world’s leading force in intellectual property, it is hoped that this project will serve as an example for other countries with regard to avoiding conflicts and disputes, thereby improving legal certainty and international commercial relations, concludes Desantes.

Visit our website: http://www.elzaburu.es/en

New IP Court in China

On 26 October 2018, the Standing Committee of China’s National People’s Congress issued a decision to establish a new IP Court of Appeal at the national level within the Supreme People’s Court, operational from 1 January 2019.

The so-called SPC IP Court (Intellectual Property Court of the Supreme People’s Court) located in Beijing handles, principally but not exclusively, appeals in patent and technology cases.

TheSPC IP Court’s jurisdiction encompasses two types of patent cases:

  • appeals against judgments declaring infringement or non-infringement issued by courts of first instance nationwide, including the three specialized IP courts in Beijing, Shanghai and Guangzhou, the 16 intermediate courts with specialized IP sections and other intermediate courts with jurisdiction over patent cases; and
  • appeals against administrative judgments issued by the Beijing IP Court on patent validity or rejection of patent applications.

Understanding China’s timeline of development concerning IP provides a clearer overview with regard to this latest step. In 2008, China announced its National IP Strategy, which seeks to promote and protect IP creations with the goal of centralizing patent litigations. Then in 2014, specialized IP Courts were established in the key cities of Beijing, Shanghai and Guangzhou. Four more followed in 2017 in Nanjing, Suzhou, Chengdu, and Wuhan. Establishing a national IP appeal court has been a frequent topic of debate in China since the establishment of specialized IP courts in 2014.

Under the previous legal system, patent and technology-related cases were generally handled initially by the intermediate courts or specialized IP courts and appealed to the high courts of the different provinces, which led to splits on different patent law issues due to a variety of reasons, such as, unbalanced development in different regions, lack of expertise, diverging interpretations of the laws and regulations, or local protectionism.

It is also important to consider that legal and technical issues relating to patents and technology are often complex and require the judge to have a high level of expertise. The new SPC IP Court will be composed of judges who possess appropriate experience and knowledge of handling patent cases involving technology. Accordingly, the establishment of the new SPC IP Court will improve the quality of decision-making and act as a guide for first instance courts in technology-related cases.

As a result, the new SPC IP Court will contribute towards facilitating a more practical and international business environment and, thus, it is hoped that more foreign companies will feel encouraged to litigate in China to enforce their patents.

Finally, turning to the statement by the National People’s Congress, these changes are intended to “unify the standards of IP cases, further strengthen the judicial protection of intellectual property rights, optimize the environment for scientific and technological innovation, and accelerate the implementation of the development strategy driven by innovation.”

Author: Ruth Sánchez
Visit our website: http://www.elzaburu.es/en

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