The S&F law blog


China Goes Too Far in Plagiarizing Korean Games
July 30, 2009, 5:22 pm
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Webzen's online role-playing game MU

Chinese game producers have crossed the line in plagiarizing Korean games.

According to industry sources, The9, a Chinese game manufacturer, has created an imitation of Webzen’s online role-playing game MU, called MU X.  It plans to exhibit the game to the public on July 23.

The company that administers MU in China, The9, blatantly stole Webzen’s characters without any contract or agreement.

Moreover, The9 has been expanding its cooperation with Korean companies after it failed to renew its World of Warcraft contract with Blizzard Entertainment.  This is an alarming move that calls for stronger protection of the intellectual property rights of Korean companies.

The9 is known to have planned the creation of MU X two years ago. It displayed an image of characters that closely resemble those of MU with a short comment that says it has inherited the world of MU on the teaser site of MU X, mux.the9.com.

The Chinese name of MU X is The History of Miracles (Ki Juk Jun ki), a name quite similar that of MU, which is Miracle (Ki Juk).

The9 is scheduled to present MU X to the public for the first time at the Chinajoy 2009, the largest game exhibition in China that opens on July 23. The9 has even sent out invitations in China to attend the press interview. Webzen, the creator of MU, expressed distress at the situation.

However, the situation is further complicated by the fact that The9 is currently controlling the distribution of Sun Online, another creation of Webzen, in China.

“We sent an official document to The9, urging them to do a prior consultation,” said a personnel at Webzen. “We will consider a countermeasure after evaluating the degree of resemblance after the exhibition on the July 23.”

Source: Korea IT Times

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Best Buy, Wal-Mart named in patent dispute
Best Buy Co, Wal-Mart Stores Inc and other companies were sued over dashboard mounts for navigation devices in a rare case of a Chinese company seeking to enforce patent rights in a US court.

Changzhou Asian Endergonic Electronic Technology Co, based in Changzhou, claims the retailers are infringing its patent on a design for the dashboard mounts by selling products made by a competitor. The patent was issued in March.

The Chinese company wants cash and a court order to prevent further use of the design.

The closely held company intends to build a market in the United States and filed the complaint to deal with “the knockoff”, said Chad Nydegger, a lawyer for Changzhou Asian.

The company also is suing the manufacturer in China, accusing it of infringing two Chinese patents, he said.

The complaint, filed July 2 in US District Court in Texarkana, Texas, reflects the rising use of the US patent system by Chinese companies.

US patent applications by residents of China surged 12-fold between fiscal years 2000 and 2008, according to the US Patent and Trademark Office.

“The Chinese are becoming sophisticated enough to take advantage of the patent system in the United States,” said Brian Nester, a lawyer with Fish & Richardson in Washington, DC, who often represents South Korean companies in US patent fights.

“You will see more Chinese companies filing suit in the United States,” Nester said.

Michelle Bradford, a spokesperson for Wal-Mart, said the company had not been served with the complaint, and that the company had no comment.

Kelly Groeler, a spokesperson for Best Buy, did not return messages seeking comment on the suit.

Best Buy, Wal-Mart named in patent dispute

A shopping cart sits outside a Wal-Mart Supercenter store in Rogers, Arkansas.

First case

Nester, the US lawyer, said the case might be the first time a Chinese company has sued in the United States over a patent obtained by a Chinese resident.

Lenovo Group Ltd, China’s biggest maker of personal computers, has sued companies over patents it acquired when it bought International Business Machine Corp’s PC division in 2005.

Nydegger, of Workman Nydegger in Salt Lake City, said Changzhou Asian, which makes Sianbag GPS mounts, lost a bidding war to a company, which he didn’t name, that makes the Nav-Mat mounts sold by the retailers.

He said his client is willing to negotiate with the US stores.

“They were bidding against this other company that has copied their design,” he said. “Their goal is to capture US market share.”

Nydegger said his client also predicts there will be more patent-infringement lawsuits by Chinese companies in the US.

First-world country

“The Chinese government is taking steps to assist companies in enforcing their patent rights both inside China and elsewhere,” Nydegger said.

“My client’s view is China is starting to emerge as a first-world country. There’s been a significant influx of technology, and they are starting to make improvements. They are becoming innovators, not just copiers,” Nydegger said.

China’s applications for industrial patents rose 22.5 percent to more than 110,000 last year, according to Lou Qinjian, China’s vice-minister of Industry and Information Technology.

Chinese mainland residents filed 5,129 US patent applications in fiscal 2008, according to preliminary patent office figures.

That makes it eighth in the number of filings by residents of foreign countries, behind Japan, Germany, South Korea, China’s Taiwan province, Canada, the United Kingdom and France.

The lawsuit over dashboard mounts might be the case of a Chinese company “dipping a toe in the water” to learn how the US legal system deals with intellectual property issues, said lawyer Robert Krupka of Kirkland & Ellis in Los Angeles, who has represented Japanese companies in US courts.

A ‘licensing play’

“They’re very carefully picking and choosing their battles,” Krupka said.

“This is a licensing play, not a real desire to go to court,” he said.

Krupka pointed to both the location of the court where the suit was filed and the types of companies that were sued.

Retailers are frequent targets of patent-infringement complaints over products sold in their stores, he said.

Other companies named in the complaint include Target Corp, Office Depot Inc, Radio Shack Corp, Staples Inc and TomTom NV.

Staples spokesman Owen Davis and Office Depot spokesman Brian Levine said their companies do not comment on pending litigation.

An e-mailed response from Radio Shack’s media relations department said the company doesn’t comment on pending litigation, either.

Taco Titulaer, a spokesperson for Amsterdam-based TomTom, did not return messages seeking a comment.

Multiple lawsuits

Target spokesperson Joshua Thomas said in an e-mail that the company has “yet to be served with a lawsuit, so it would be inappropriate for us to provide any comment”.

Minnesota-based Best Buy, the world’s biggest electronics retailer, has been named in nine patent-infringement suits this year.

Minnesota-based Target, the second-biggest US discount retailer, has been sued eight times over patents in 2009.

Arkansas-based Wal-Mart, the world’s biggest retailer, has been sued five times.

Changzhou Asian filed the complaint in Texarkana, Texas, part of the Eastern District of Texas, the most popular jurisdiction for patent-infringement litigation.

There were 322 suits filed there in the year ended Sept 30, or 11 percent of all new patent suits in the United States, according to the US Administrative Office of the Courts.

Patent owners have won 77 percent of trials in the district’s court in Marshall, Texas, compared with a 59 percent win rate nationwide, said Greg Upchurch, director of research for St. Louis-based LegalMetric Inc, which compiles litigation data for law firms and companies.

The Changzhou Asian patent, with two Chinese residents listed as inventors, is for a unique, non-functional design and thus has a shorter term of protection than a patent on an invention.
Source: Bloomburg



China owns most trademarks in the world
July 27, 2009, 3:21 pm
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By June 30, 2009, China’s number of applications for trademark registration reached 6.77 million. There are 2.4 million registered trademarks in total, ranking first in the world.

The applications for trademark registration nationwide in the first half of 2009 maintained a strong growth to reach 380,000, up 7.7 percent year-on-year.

China is not a trademark superpower yet, according to the State Administration for Industry and Commerce (SAIC). Despite the large number of trademark registrations, the nation lacks internationally renowned trademarks. The average number of trademarks owned by market entities is relatively few and it is urgently raising social awareness of trademarks.

The number of international trademark registrations falls far behind the speed of China’s economic and trade development. China’s enterprises need to strengthen their “going global” strategy for trademarks.

Source:People’s Daily Online



PEPSI confronts Henan free rider
July 24, 2009, 4:32 pm
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PepsiZhengzhou (Henan) Intermediate People’s Court heard PEPSI’s trademark infringement and unfair competition allegation against Henan 百事 (pronounces Bai-shi, PEPSI in Chinese).

PEPSI claims the registration of 百事 as a trade name by the defendant constitutes unfair competition. The defendant’s substantial use of 百事 in its website, packaging and promotional materials also infringes PEPSI’s trademark right. PEPSI sought injunction and 500,000 yuan in damages.

The defendant argues it legally registered its trade name with Zhengzhou Administration for Industry and Commerce. The trademark on the packaging and bottle label of its beverage products is 甜在心. On some products, even when 百事甜在心 and 百事饮品 are used, the two words 百事 are used in smaller font to minimize presence. No trademark infringement or unfair competition is constituted. We will follow the developments of the case.

Source: China IP Law News



Microsoft wins piracy lawsuit
July 24, 2009, 3:43 pm
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ms_windows

Microsoft’s Windows Vista operating system at display in a shopping mall in Beijing. The US software giant won a lawsuit against a Beijing computer dealer which was accused of providing pirated software to its customers.

China’s Do-It-Yourself personal computer market has proven a chronic headache for Microsoft Corp, which is continually battling the use of pirated software.

But the US-based software giant won a skirmish this month, when a Beijing court ruled against a major custom PC dealer accused of pre-installing pirated Microsoft Windows and Office software.

On July 2, Beijing No 1 Intermediate People’s Court, in a preliminary ruling, sided with Microsoft against Beijing Strongwell Technology & Development Co, one of the larger custom PC dealers in Beijing.

The court said the Beijing company infringed on Microsoft’s Intellectual Property Rights (IPR), and ordered Strongwell to pay Microsoft 461,409 yuan in compensation.

The ruling follows a year-long effort by Microsoft to focus more on battling piracy among smaller customer PC dealers and individual consumers suspected of using pirated software.

During the past few years, Microsoft has persuaded major PC makers, large companies and government organizations in China to use legitimate software.

But the use of pirated software reportedly still is prevalent among individual Chinese consumers.

“The enforcement of IPR protection is vital to innovation,” Yu Weidong, Microsoft China’s senior director on IPR issues, said in a statement issued to China Business Weekly following the court’s ruling.

“We will continue to work with the government to promote the use of legitimate software in China,” Yu said.

Established in 1994, Strongwell is the largest custom PC dealer in Beijing, with eight Do-It-Yourself PC stores in the city.

Microsoft sued the company after purchasing 12 computers pre-loaded with pirated Microsoft software, according to Microsoft’s lawsuit. Microsoft sought 500,000 yuan in damages.

Strongwell’s response was that the pirated software was installed at the request of individuals hired by Microsoft, and that the company only sells computer accessories – not computers.

Strongwell has not reported whether the company will appeal the ruling.

Although Microsoft was successful in promoting the use of legitimate software by corporations and government agencies, piracy reportedly is widespread in Do-It-Yourself markets, according to industry observers.

China’s Do-It-Yourself dealers are scattered, but altogether accounted for nearly 25 percent of the country’s PC market last year, according to the research firm IDC.

In July 2008, Microsoft filed a complaint with the Chinese government against the author of a highly popular, pirated version of Microsoft Windows XP. The man was arrested in August.

In October 2008, the company initiated a controversial tracking campaign that came with a warning system.

Chinese users of pirated Windows XP software would receive constant reminders from Microsoft.

The system also resulted in desktop screens being “black screened”, prompting numerous complaints.

A computer dealer in Beijing said the high price of Microsoft’s software is a major reason some consumers turn to cheaper pirated versions.

“Many customers spend 3,000 yuan for a Do-It-Yourself computer, and they don’t want to spend much of the rest of their limited budget on something if there is a free alternative,” said the dealer, who asked that his name not be used.

The dealer said that although Microsoft recently reduced its product price in China, many Chinese consumers still couldn’t afford it.

By the end of 2008, Microsoft had reduced the price of its Windows and Office software products by as much as 60 percent in China.

The drop in price broke with the company’s long-standing policy to maintain prices at about the same level around the world.

This month, Microsoft reported that it would sell the basic version of its Windows 7 software for 399 yuan in China — the lowest price worldwide.

The company hopes that the price reductions, together with its measures against piracy, will encourage more Chinese customers to buy legitimate software.

According to the Business Software Alliance, an international commercial software and hardware industry anti-piracy group, the PC software piracy rate in China dropped two percentage points last year to 80 percent.

That’s still almost twice as high as the global average of 41 percent.

Yu Guofu, a lawyer with Beijing’s Sam & Partners law firm, said the Strongwell ruling would have a limited effect on software piracy.

“But the case is not expected to extinguish pirated software in this market,” Yu said.

“Dealers may encourage consumers to install the pirated software themselves, which is not strictly prohibited under current IPR laws in China,” Yu said.

Source: China Law Daily



China battles against counterfeiting, copyright violations

China was recently named one of the world’s worst offenders in counterfeiting and copyright violations. But the country’s progress in protecting intellectual property (IP) rights has also been widely acknowledged.

The Silk Street Market in Beijing is popular with both locals and tourists. It is famous, or infamous, for its wide selection of fake branded goods, ranging from jeans and scarves to wallets and handbags.

Despite years of crackdown, counterfeit goods can still be bought, either openly or beneath the counter. When the market shut down 29 stalls earlier this year for selling counterfeit goods, vendors not only fought back, but also filed a countersuit.

An intellectual property rights expert said authorities could have taken tougher measures.

Edouard Schmitt zur Hohe, intellectual property expert, said: “In Shenzhen for example, there is an identical market Luohu and when Wu Yi (former Chinese politician) went down, she wasn’t happy with it and within 24 hours all counterfeits were gone. So if the Chinese government really wants to make a move, it will.”

It is estimated that piracy has cost American movie, music and software companies over US$2 billion a year in lost revenue.

Mr Schmitt zur Hohe said: “IP infringement is stealing, it is theft. Somebody spent time, money, investment to create an intellectual property, a movie. It is expensive to make a movie. The average wage in China is 2,000 RMB. An 80 RMB movie is not going to break the bank.”

Over the years, China has put in place comprehensive laws to protect intellectual property rights, including patents, trademarks and copyrights.

A newly-revised patents law, which will come into effect in October, will strengthen intellectual property protection for foreign investors, and encourage the import of advanced technologies.

This is a clear sign that Beijing realises that protecting intellectual property rights is an important step in promoting innovation and spurring economic growth.

Mr Schmitt zur Hohe said: “In the 19th century, America is a huge infringer of IP, but once they started on their own IP, they became much better – same with Japan and Taiwan. I think in China, once they get their own trademarks going, we will see much more protection of IP involved.”

Experts say longer prison sentences for violators and greater damages for copyright infringers may help in the fight against counterfeit and piracy. But what is also essential is a more rigorous and more consistent enforcement of existing laws and regulations.

Source: Channel News Asia



Honda wins motorcycle trademark case in China
July 16, 2009, 1:41 pm
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honda_logoA district court in Beijing ruled last Wednesday to support Honda Motor Co.’s claim that major private motorcycle maker Chongqing Lifan Industry Group Co. pirated the Japanese company’s logo, Beijing Times reported.

Honda had sued the Chinese motorcycle company to seek a cancellation of its registration of its trademark (轰达) that is pronounced and transliterated as “Hongda” — the English transliteration is used as part of the logo for the vehicle’s exports.

Honda previously filed a complaint with a Chinese government committee that oversees trademarks, but the committee brushed off the claim, saying the trademarks are distinguishable in Chinese characters, as Honda is 本田 in Chinese characters pronounced as “Bentian”, and Hongda is 轰达.

Source:China Daily