NTD INTELLECTUAL PROPERTY

NTD INTELLECTUAL PROPERTY ISSUE 06, 2009 Main Contents: 1. Software Piracy Figures of China in 2008 Released 2. Haier technology recognized as international standard 13. Implementation of National IP Strategy Formulated in 13 Provinces 14. Swarovski Won over a Beijing Company for Trademark Infringement 15. IP cases be tried by IP tribunals from July 1 3. L'OREAL Defeats L'OIYIR for Trademark Infringement 4. Special Legislation to Protect IPR of Beijing's Traditional Brands Expected 5. China's Domain Name industry over 4.2 billion RMB 6. 70% Patents Commercialized in China 7. China and Japan Signed a Memorandum on Intellectual Property Rights Protection 8. Southwest Pharma won Sanlietong after 10-year Dispute 9. Shenzhen City of Guangdong Province to punish IP infringement via Internet 10. A Chinese S&T Company Prevailed in US 337 Investigation 11. Remote interview with examiners possible in Guangdong 12. Jiangsu Province to integrate three IP trials into one 1

Software Piracy Figures of China in 2008 Released 2009-06-05 On May 26, "Survey on China's Software Piracy Rate in 2008" was officially released. The survey shows that in 2008, the sales of China's software industry reached 757.3 billion Renminbi yuan. The proportion of pirated software in the whole software industry dropped from 20% in 2007 to 15% in 2008 if calculated by the economic value of pirated software. The proportion decreased from 56% to 47% by sets of software installed. The main reasons behind the decline in piracy rates are: legalization of pre-installed operating system software by PC manufacturers, completion of genuine software installation within government agencies and large enterprises, anti-piracy actions by software industries by both technical and legal means, promotion and free-to-use of major software products, increasing awareness of IP protection for software by consumers, software network, increasing number of free-of-charge software products. Haier technology recognized as international standard 2009-06-09 Four of Haier Group's refrigerator-related technologies received worldwide recognition on May 12, being written into international refrigerator industry standards by the International Electrotechnical Commission (IEC). The four technologies are secure, energy-saving and environment-friendly. This is the first time for an international organization to accept proposals from China on refrigerator technology. So far, Haier has been involved in formulation of 19 international standards, 3 of which including electric-shock-free technology have been issued and implemented..as the leading home appliance company, Haier has been dynamic in formulation of international standards, national standards and industry standards. Domestically, Haier presided or participated in the formulation and revision of 192 national standards and 439 industry or other standards. Haier's global recognition would encourage other Chinese manufacturers to devote more efforts to innovation. This worldwide recognition of Haier is due to the company's long-term attention to world-class technological innovation and its efforts in intellectual property rights protection. L'OREAL Defeats L'OIYIR for Trademark Infringement 2009-06-15 Recently, the Nantong Intermediate People's Court made the first-instance judgment on the trademark dispute over L'OIYIR and L'OREAL( 欧莱雅 as the Chinese version), ordering defendants Hangzhou L'OIYIR Cosmetics Co.,Ltd and Shanghai MILENE Cosmetics Co.,Ltd to cease infringement and jointly indemnify 400,000 Renminbi yuan in damages to the French firm L'OREAL. In addition, the Hangzhou company shall cease use of 欧莱雅 as its trade name and pay 100,000 Renminbi yuan to L'OREAL for unfair competition. From 1981 to 2001, L'OREAL registered several trademarks of L'OREAL, 莱雅 and 欧莱雅, which were approved to be used in Class 3 i.e. cosmetics, beauty products and perfumes. Hangzhou L'OIYIR was established in June 2004 and was engaged in manufacturing and distributing of cosmetics with Shanghai MILENE. In January 2005, Shanghai MILENE used a logo combining both English and Chinese, L'OIYIR 莱雅 on the packaging of 2

products. Hangzhou L'OIYIR advertised and recommended the products on its website and claimed that the products are from French L'OREAL. creation, study visit will be organized by members of enterprises with traditional brands to Hong Kong and Taiwan to attend the forum or discussions. Upon review, the Court held that the two defendants have jointly constituted trademark infringement, and the use 欧莱雅 by Hangzhou L'OIYIR as its trade name constituted the unfair competition. Therefore, the decision was made in favor of French L'OREAL. Special Legislation to Protect IPR of Beijing's Traditional Brands Expected 2009-06-16 According to the statistics, there are over 300 enterprises of traditional brands in Beijing, of which over 160 are currently still in operation, and over 80 have a history of more than rs. Among the list of traditional brands identified by Ministry of Commerce in 2006, 67 enterprises are lolcated in Beijing, accounting for 15 percent of the total numbers in the list. Beijing Municipal Commission of Commerce (BMCC) recently stated that Beijing will seek to protect and advance the development of those enterprises with traditional brands. Investigation and research are now being made and it is expected that government orders or regulations are to be approved to offer protection to traditional brands in various aspects, including intellectual property rights, cultural heritage and stable operation. In additional to the local regulations, Beijing will cooperate with the academic institutions to set up 2 research bases and 5 studios relating to intangible cultural heritage. Special funds will also be arranged to support the development of the traditional brands. In order to learn from Hong Kong and Taiwan regarding the brand operation, marketing and China's Domain Name industry over 4.2 billion RMB 2009-06-17 According to the first conference on domain names in China, the scale of domain name-related industry in China surpasses 4.2 billion Renminbi yuan, and people working in these sectors exceed 100,000. "Report on China's Domain Name Industry" released by China Internet Network Information Center (CNNIC) confirmed that, after more than ten years of development, China's domain name industry has begun to take shape and has gained a great deal of attention. in the international Internet area. The statistics show that by the end of 2008, there were a total of 16.8 million domain names, and 13.57 million domain names ended with cn. Related sectors such as email addresses, visual spaces are developing rapidly. Senior officials from ICANN also recognized the significance and value of CN domain names. It is also expected that domain names ended with. 中国 are expected to be listed in the Global DNS Root System However, due to the importance of the security of Internet, the security of domain name system will be elevated to the height of strategy, because a stable and secure domain name service system is the foundation of the sustainable development of domain name industry. For this purpose, the entire industry is required to unite and do more in self-discipline and improvement of systematic security. 3

70% Patents Commercialized in China 2009-06-18 A recent SIPO survey reveals how patents are implemented in China. The result shows that 70.2% patented technologies were implemented in China. By reviewing all the patented technologies, it is clear that more efforts have been made in innovations and related process creation. The survey also shows that there is a low rate of implementation of patented technologies owned by non-service inventors/applicants. According to the survey, the commercialization rates are: 52.4% for patents for inventions, 61.1% for patents for utility models and 84.7% for patents for designs. In view of the patentee, 86.4% are enterprises, 33.9% are academic institutions, 56.8% are research institutes and 41.3% are for non-service inventors. Among the non-commercialized patents, 26.4% are deemed technological reserve. Of all the patents not implemented by the enterprises, 60% are considered as technology reserve. country, Japan has many experiences in terms of the intellectual property system. The working group mechanism will be used to consult and solve problems in IP field. Early in 2007, China-Japan started the Economic Dialogue at senior level. Based on the joint communiqué at the first China-Japan Economic Dialogue, China and Japan have done a lot of cooperative work in the area of IP, such as revision and amendment of the IP related laws and regulations, exchange of information for IP infringement. Southwest Pharma won Sanlietong after 10-year Dispute 2009-06-21 The Supreme People's Court recently concluded the 10-year legal battle between Swiss pharmaceutical giant F. Hoffmann-La Roche AG (hereinafter referred to as Roche) and Southwest Pharmaceutical Co. Ltd.(hereinafter referred to as Southwest Pharma), affirming Southwest Pharma's trademark right for Sanlietong. China and Japan Signed a Memorandum on Intellectual Property Rights Protection 2009-06-19 On June 7, China and Japan jointly signed a memorandum under which a working group will be established to strengthen the exchange in IP legislation and enforcement. The working group will meet once a year and work on programs such as personnel exchange, training and technical assistance. Roche and Southwest Pharma signed a licensing agreement in 1987 in which Southwest Pharma was authorized to use the mark Saridon 散利痛 and manufacture Saridon painkillers. After the partnership expired in 1992, Southwest Pharma filed a trademark application for 散列痛 (Sanlietong) to the Trademark Office under the State Administration for Industry and Commerce (SAIC) and then applied for 散利痛 (identical Chinese characters with Saridon). Roche challenged the registrations by filing oppositions. In recent years, China has made significant progress in IPR protection, but there are still problems in enforcing IP rights. As an advanced After the decision was made in favor of Roche at the first instance court and the second instance court, Southwest Pharma filed for review by the Supreme 4

People s Court. The Supreme People s Court held that when Southwest Pharma applied for registration of 散列痛 (Sanlietong), it was not a registered trademark. It also held that the use of 散利痛 (Sanlitong) on the painkillers was an act of indicating the name of generic drugs, and such use should not be considered as use of unregistered trademark. The Supeme People s court therefore made the above decision in favor of. Shenzhen City of Guangdong Province to punish IP infringement via Internet 2009-06-22 In June, Shenzhen Municipal People's Government approved Provisions on IP Protection of Internet Software (hereinafter the provisions). The Provisions list the types of IP infringement via Internet and provide for the legal liabilities. This will further enhance the IPR protection for software in the Internet and push forward the healthy development of Internet and software industries. It is learned that the software industry made a large contribution to the local GDP in Shenzhen, more than 10% in recent years. By the end of 2008, Shenzhen had 1,521 software enterprises and the total income generated from software industry had been among the ranking list across the country. The statistics show that the Internet users in Shenzhen exceeded 1 million; more than 3,000 governmental departments; enterprises and public institutions registered their domain names. Internet services including online offices, hospitals, electronic tax declaration were gradually developed. It was reported recently that Guangdong Shengyi Science and Technology Co., Ltd. (hereinafter called Shengyi) eventually won the 337 investigation in the United States. The investigation was filed by Isola USA Inc.(hereafter called Isola) before the International Trade Commission (ITC), alleging that Shengyi and seven other companies infringed its three patents. ITC took the case on November 5, 2008. Shengyi filed a motion requesting terminatation of one patent investigation by presenting to the court detailed evidence. In the face of strong evidence, Isola had to withdraw its complaint against Shengyi in 2009. Remote interview with examiners possible in Guangdong 2009-06-25 In June, the remote interview system in Guangzhou receiving office made it possible for applicants to have an interview with patent examiners in State Intellectual Property Office (SIPO). This created a new additional way of examination on the basis of the current examination system. During the meeting, examiners from SIPO discussed some matters related to formality of patent application. It is said that this should be also helpful for discussions of technical issues. Such long-distance meeting is efficient and more convenient for applicants in different areas to communicate with patent examiners. A Chinese S&T Company Prevailed in US 337 Investigation 2009-05-21 5

Jiangsu Province to integrate three IP trials into one 2009-06-27 Recently, Jiangsu People s Court, Jiangsu Provincial People s Procuratorate and Public Security Bureau jointly issued Opinions on Three-to-one trial for Criminal cases relating to IPR (hereinafter referred to as opinions). Jiangsu People s Court also issued working advice in order to implement the opinions, and the work is to be started from July 1, 2009. The "three-to-one trial" of IPR means that civil, administrative and criminal cases will be heard by IP division in the court. The opinions provided for court on trial and others courts capable for hearing IP related cases. Further, the opinions also provide for jurisdiction, scope, examining bodies, and training of personnel. way to implement the Outline of National Intellectual Property Strategy. The formulation and implementation of local IP strategies will help achieve the objectives and tasks determined by the "Outline of National Intellectual Property Strategy". Swarovski Won over a Beijing Company for Trademark Infringement 2009-06-29 Recently, the Beijing High People's Court rendered its final decision in favor of Swarovski Co., Ltd (hereinafter Swarovski). In the case, Swarovsk alleged that Beijing Swarov Wedding Photo Co LTD (hereinafter Swarov) constituted an unfair competition and trademark infringement case. The case was first tried as a first instance case at the Beijing No.2 Intermediate People's Court in which the decision was made against Swarov. Implementation of National IP Strategy Formulated in 13 Provinces 2009-06-28 Since the release of the "Outline of National Intellectual Property Strategy" in 2008, all provinces and municipalities across China have been active in formulating implementation of local IP strategies according to the actual economic and social development in the region. Up to now, 13 provinces and municipalities countrywide have issued local IP strategies or similar documents. It is expected that in the next two years, most provinces and municipalities will release the local IP strategies. Some provinces that have released the IP strategies also formulated detailed plans in implementing the IP strategies. The formulation and implementation of local IP strategies is an essential part of national intellectual property strategy, and also an effective In 2007, Swarovski discovered that, without its authorization, Beijing Swarov used its registered trademarks and words similar to its registered trademarks on trade names, web site, domain name and advertisements of the company. Swarovski then brought the case to the Beijing No.2 Intermediate People's Court on the ground of trademark infringement and unfair competition. The Court entered into judgment last September, holding Beijing Swarov's acts of using 施华洛, 施華洛 (both Swarovski's trademarks in Chinese) and the use is sufficient to mislead and confuse consumers. Though the two companies engage in different businesses, Swarov's acts harmed the rights and interests of Swarovski. Swarov then appealed to the Beijing High People s Court, but was rejected. 6

IP cases be tried by IP tribunals from July 1 2009-06-28 Recently, the Supreme People s Court of PRC released Provisions regarding the Adjudication of IP Administrative Cases relating to the Assertion of Patent and Trademark Rights (hereinafter the provisions). According to the provisions, IP administrative cases concerning patent, trademark, layout-design of integrated circuit and new varieties of plants shall be tried by IP tribunals from July 1, 2009. Court on Adjudication of Patent and Trademark Cases after the amendment of the Patent Law and Trademark Law (issued in 2002) will be abolished. In accordance with the rules of jurisdiction, the IP Tribunals of Beijing 1st or 2nd Intermediate People's Court shall be the first instance court to try the said IP cases. and the IP Tribunals of Beijing Higher People's Court shall be the second instance court for hearing these cases. The Provisions also provide for review of the IP administrative cases. If the concerned party is not satisfied with the ruling or adjudication of the lower court, and file a request for review by the higher court, the review shall be conducted by the IP tribunal in the higher court. The changes are due to the fact that the judges in IP Tribunal are more familiar with the IP laws and regulations. Under the current judicial system, IP administrative cases are tried by judges in the Administrative Tribunal. It always happen that concerned party may seek for assertion of patent or trademark right during the examination of a civil IP litigation. The new provisions will avoid the inconsistence of adjudication standards when the Administrative Tribunal and the IP Tribunal adjudicate different IP administrative cases. The Provisions will become effective from July 1, 2009, and the Response by the Supreme People's 7