Applications for Three Kinds of Patents Received by SIPO from Home and Abroad (2010) Invention Utility Model Design Total. Share in total.

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1 Newsletter 2011 Issue 2 IN THIS ISSUE 1. Statistics on China s IP-Related Figures for Frequently Arisen Issues in Court Hearings of Foreign-Related IP Cases in China 3. CPA Donates to Scholarship for Peking University Law Students Statistics on China s IP-Related Figures for 2010 (Part I) Statistical data regarding China s IP-related figures for year 2010 have been recently released. This article puts together some major figures, including those related to patent applications and grants, PCT international applications, valid patents to date, trademark applications and registrations, software copyright registrations and customs protection, to provide a snapshot of China s IP activities and IPR protection during the past year. Patent Applications and Grants In 2010, a total of 1,222,286 applications for patents (comprising invention, utility model and design) were received by the State Intellectual Property Office of the PRC (SIPO), representing an increase of 25.1% over the previous year. Of all the applications, 1,109,428 (90.8%) were domestic filings and 112,858 (9.2%) foreign filings. Applications for Three Kinds of Patents Received by SIPO from Home and Abroad (2010) Invention Utility Model Design Total Domestic 293, % 407, % 409, % 1,109, % Foreign 98, % 2, % 12, % 112, % Total 391, % 409, % 421, % 1,222, % In 2010, 815,000 patents (comprising invention, utility model and design) were granted by SIPO, reflecting a rise of 40.0% over the previous year. Of all the patents granted, 741,000 (90.9%) were issued to domestic filers, and 74,000 (9.1%) to foreign filers. 1

2 PCT International Applications In terms of international patent applications through the Patent Cooperation Treaty (PCT) in 2010, incomplete statistics from the World Intellectual Property Office (WIPO) show that PCT filings originated from China amounted to 12,337 in 2010, a surge of 56.2% compared with 7,900 in China now ranks fourth in terms of filing volume among all PCT filing countries, following the top three countries of the US (44,855 applications), Japan (32,156 applications) and Germany (17,171 applications). As for enterprise s performance by PCT filing volume in 2010, the Chinese enterprises ZTE Corporation and Huawei Technologies Co. Ltd. stood in second (1,863 applications) and fourth (1,528 applications) positions respectively among global counterparts, with Panasonic Corporation from Japan occupying a top slot (2,154 applications). WIPO s statistics further reveal that worldwide PCT filings reached 162,900 in 2010, a 4.8% increase over The growth momentum was most significantly felt in the field of digital communication, with 10,581 applications during the year, representing a 17.3% year-on-year rise; the biggest drop in filing volume was seen in traditional communication, with 6,230 filings during the year, reflecting a year-on-year decrease of 15%. Valid Patents As of the end of 2010, China housed a total of 2,216,082 valid patents, of which 1,825,403 were owned by domestic patentees (82.4% of the total), and 390,679 owned by foreign patentees (17.6%). By kinds of patents, 564,760 of the total were invention patents, 857,968 utility model patents, and 793,354 design patents. Further data about valid patents in China will be reported in ensuing issues of our newsletters. Top 10 Domestic Enterprises by Valid Invention Patents in China Ranking Patentee of Valid Patents 1 Huawei Technologies Co., Ltd ZTE Corporation China Petroleum & Chemical Corporation AU Optronics Corporation Hongfujin Precision Industry (Shenzhen) Co., Ltd LG Electronics (Tianjin) Appliances Co. Ltd VIA Technologies, Inc Taiwan Semiconductor Manufacturing Company Limited Inventec Corporation Macronix International Co., Ltd 963 2

3 Top 30 Foreign Enterprises by Valid Invention Patents in China of Ranking Patentee Country of Origin Valid Patents 1 Panasonic Corporation Japan Samsung Electronics Co., Ltd. Korea Canon Inc. Japan Seiko Epson Corporation Japan IBM US Sony Corporation Japan LG Electronics Inc. Korea Toshiba Corporation Japan Mitsubishi Electric Corporation Japan Sanyo Electric Co., Ltd. Japan Honda Motor, Ltd. Japan Hitachi, Ltd. Japan Sharp Corporation Japan Siemens AG Germany NEC Corporation Japan Sony Corporation Japan Toyota Motor Corporation Japan Intel Corporation US Koninklijke Philips Electronics N.V. The Netherlands Ericsson Telefon AB L.M. Sweden Fujitsu Limited Japan LG Display Co. Ltd. Korea NXP Semiconductors N.V. The Netherlands Samsung SDI Co. Ltd. Korea Ricoh Company, Ltd. Japan Qualcomm Incorporated US BASF AG Germany Murata Manufacturing Co., Ltd. Japan Semiconductor Energy Laboratory Co., Ltd. Japan Microsoft Corporation US 1255 Trademark Applications and Registrations Applications for trademark registration in China for year 2010 reached 1,072,000; on accumulative basis, applications for trademark registration amounted to 8,295,000, approved registrations to 5,628,000, and 3

4 approved registrations in force to 4,604,000 as of the end of In each of the categories mentioned above, China was ranked the first globally. By the end of 2010, the Chinese Trademark Office (CTMO) has received 154,000 cumulative international registrations designating mainland China under the Madrid System, rendering China the top receiving country for the sixth year in a row. At the other end, 11,415 domestic applicants filed with CTMO for international trademark registration, placing China the first on the list of developing countries. Software Copyright Registrations In 2010, China s software copyright registrations exceeded 80,000. Between 2006 and 2010, software copyright registrations nationwide maintained an average annual growth of 37%, amounting to 81,966 in 2010 compared with 21,495 in 2006, and aggregating 241,591 over the five years. Among software registrations in 2010, growth is more obviously seen in those for game software, which had 2,643 registrations, representing an increase of 37.51% over the previous year. Customs Protection In 2010, the China Customs seized 20,155 batches of IPR infringing goods for import or export, and detained 108 million pieces of goods worth RMB 249 million yuan. During the year, 3,020 IP recordals were approved by the General Administration of Customs of the PRC. Frequently Arisen Issues in Court Hearings of Foreign-Related IP Cases in China (Part I) Beijing No.1 Intermediate People's Court ( the Court ) recently gave a briefing on foreign-related IP cases heard by the Court. At the briefing, Judge Yi Jun, assistant to Chief Judge of Intellectual Property Tribunal of the Court, talked about issues that they find frequently arise during the court hearings of foreign-related IP cases. Due to the length of Judge Yi Jun s presentation, his report will be presented in our newsletters in four parts, starting in the following with issues related to the pre-litigation stage. Pre-litigation Procedures I. Incomplete and non-standard documents a. Identity of the party that acts on behalf of a foreign company to sign the power of attorney before a notary public is unable to be confirmed, as a result of certain neglect and oversight, such as failure to submit the articles of association of the foreign company when representing the company on such occasion, or missing the Resolution of the Board of Directors signed by the directors of the company authorizing such act. 4

5 b. Issues such as the entrusted matters, the scope of power and the term of the authorization are not clearly stated in the power of attorney, and therefore are unable to be determined. For instance, a power of attorney generalizing the scope of power as the right to institute legal actions against any act infringing the exclusive rights to use the Company s trademark in China is unacceptable; besides, clear statements also lack in areas concerning the right of the entrusted party in the transfer of the power, his right in signing legal documents like a complaint, and his scope of power in appeals. c. Notarized and authenticated documents are not ready and available as a result of not allowing sufficient time for their processing. In accordance with the Trademark Law of the PRC, a party concerned, if dissatisfied with a ruling by the Trademark Review and Adjudication Board, may bring a suit to a people s court within 30 days after the day of receiving the notification about the ruling of maintaining or withdrawing a registered trademark. As the notarization and authentication processes generally cannot be finished within the time limit of thirty days, if a foreign party concerned has the intention of making an appeal, he should initiate the notarization and authentication procedures in advance of the receipt of relevant ruling in order to have the procedures completed in time. II. Determination of jurisdiction In practice, the jurisdiction of a case is quite often found to be re-directed to a specific court by the intentional creation of a connect point. Such re-direction of the jurisdiction, notwithstanding the element of intentional creation in it, will still be tolerated as long as the selection of the jurisdiction is done according to law. Nevertheless, where the act of intentional creation contradicts the substance of legal provisions, the case will not be accepted. It is stipulated in Article 29 of the Civil Procedural Law that a lawsuit initiated for an infringing act shall be under the jurisdiction of the people s court in the place where the infringing act is committed or where the defendant has his domicile. According to the Court s experience in hearing relevant cases, it comes up with the following view: In accordance with Article 52 of the Trademark Law, selling goods that infringe the exclusive right to use a registered trademark is an infringement of the exclusive right to use a registered trademark, wherein selling should be interpreted as an act of gaining profit through commercial activities of selling an infringing product. When a company buys an accused infringing product from an alleged infringer to re-sell it to a third party in Beijing, thereby creating a connect point to render Beijing as the place of committing the infringing act in a suit, such re-selling does not materialize any profit gain, but instead merely involves the transfer of property right. And this manner of determining a jurisdiction, if given consent, will bring a consequence of recognizing any place where re-selling takes place to be regarded as the place of committing an infringement of the exclusive right to use a trademark. This obviously is not the principle for determination of jurisdiction stipulated by the Civil Procedural Law and the Trademark Law. The Court therefore refused to accept said case. 5

6 CPA Donates to Scholarship for Peking University Law Students Earlier in the year, China Patent Agent (H.K.) Ltd. ("CPA") made donations to Peking University ( the University) to start a scholarship for its law school students. The CPA Scholarship thereby set up has been in operation after the signing of the agreement between CPA and the University in February. According to the agreement, CPA will be funding RMB 300,000 yuan to the scholarship for a term of three years, open for application on annual basis by the University's master degree students majoring or focusing on IP-related law studies. Part of the scholarship is specifically devoted to encourage overseas studies by supporting students of outstanding academic performance to participate in international exchange programs. The CPA Scholarship is a token of CPA's appreciation to the tertiary education sector, and the University in particular, for its nurturing of IP experts and legal professionals, which has been a source of the firm's talent pool and contributed a lot to its development into a leading IP agency in China. All Rights Reserved Disclaimer The texts, the pictures and other materials contained in this newsletter are intended for information purposes only. They should not be considered as rendering any legal advice or legal opinion, nor should they be applied for said purposes. The use of any material from this newsletter does not constitute any attorney-client relationship between China Patent Agent (H.K.) Ltd. and the user. China Patent Agent (H.K.) Ltd. 22/F., Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong Tel: (852) Fax: (852) mail@cpahkltd.com Hong Kong Beijing Shenzhen Shanghai New York Tokyo Munich 6