Lehman, Lee & Xu
China Lawyers, Notaries, Patent, Copyright and Trademark Agents
(formerly known as the L&A Law Firm)
Suite 188, Beijing International Club
21 Jianguomenwai Dajie, Beijing 100020 China
Tel.: (86)(10) 6532-3861
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http://www.chinalaw.cc/  
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Patent Market to Open

China's patent holders will soon have a public trading place to translate their research achievements into real products when the country's first large-scale patent trading market goes into trial operation in mid-August. The Beijing Guozhuan Patent Trading Market is a joint venture of SIPO, the Beijing Patent Bureau and the Dongcheng District government of Beijing with a total investment of RMB 10 million. Located in Dongcheng District in central Beijing, the market is reportedly the first patent market in the country.

Since China issued its first Patent Law 15 years ago, more than one million patents have been approved and more than 700,000 patents have been publicly announced. New patents are growing at a rate of more than 100,000 units every year.

Shanghai, China's industrial and financial center, has received 1,617 patent applications on inventions in the first five months this year. Statistics from SIPO show that Shanghai led all other municipalities, provinces, or autonomous regions in invention patent application in the five-month period. Beijing and Guangdong, with about 1,200 and 605 patent applications respectively, were ranked the second and third.

But contrary to the rapid growth, the number of patents resulting in actual products has remained low. Because of the low rate, many patents were never introduced to the market. This has severely hindered technical innovation, and therefore economic development. Before construction of the patent trading market, patentees had no place to sell their ideas to investors.

"The patent market will be a bridge between patentees and investors," said an official with SIPO. The official said the patentees will be able to get proper financial feedback as well as supporting capital for further research.

With a group of experts in wide variety of specialties, the market will provide market analysis and consulting for patent holders. The market has set up a service system which will provide global archives of related patents. The market also set up it own website: www.Chinaipb.com to provide on-line services.

(Source: Xinhua News Agency)

Chinese Shop Assistant's Name Earns Shares

A shop assistant in Shanghai has become a shareholder of a newly-established company by letting the company use the trademark bearing his name.

Wang Zhen, 37, a shop assistant at Shanghai's Hualian Shopping Center on Nanjing Road, now holds RMB 200,000 of shares, representing four percent of the Shanghai Hualian Wang Zhen Information Co., Ltd.

The company, with a registered capital of RMB five million, was co-funded by Wang, Shanghai's Hualian Shopping Center Co., Ltd., and the Hualian Household Electric Appliance Co.

Local analysts referred to the development as the outcome of China's economic reforms, which have greatly increased the need for product and service quality.

Wang, who sells and repairs photographic equipment, is a market analyst and processes film. His expertise has drawn a steady stream of customers.

In the past four years, Hualian's sales of photographic equipment grew at an average increase of 30 percent annually.

Hualian registered a trademark bearing Wang's name at the end of 1998 to further promote its business and agreed to pay Wang Zhen a specified amount of money each year for the use of his name.

(Source: Xinhua News Agency)

French Computer Games Maker Ubisoft Fights Counterfeiters

The French entertainment software group Ubisoft has captured a third of the Chinese market for computer games since it began operating in the country in 1996. In a recent interview with Agence France Presse, Corinne Le Roy, Ubisoft's managing director, ascribes her company's success to its willingness to wage a vigorous battle against piracy.

Ubisoft's software design studio in Shanghai employs some 300 people and makes computer games for PCs and Sony Playstations the world over, in addition to Chinese language products. By basing its operations in China, Ubisoft could afford to hire outstanding software designers, engineers, and animators for a fraction of the cost of similarly qualified individuals in Europe. By selling its games in China for only 38 to 48 RMB, three or four times less than the price in the West, Ubisoft put its product within reach of many Chinese consumers and quickly expanded its market share. In 1999, the company broke even.

Another of Ubisoft's strategies, making its games available in corner stores and newsstands rather than simply in the big department stores, has proved riskier. Widespread availability has invited widespread pirating, with the fake products selling for the same price as the originals.

But Ubisoft has a strict, zero-tolerance policy towards counterfeiting; any factory caught producing illicit copies or any website caught offering its games as free downloads is promptly slapped with a lawsuit.

"If you sue them, they would rather copy someone else's products since most companies don't bother to do anything," Le Roy stated.

(Source: Agence France Presse)

Domestic Trading Companies Need to File Marks Abroad

Only 9 percent of Shanghai’s state-owned foreign trade enterprises have registered their trademarks overseas, and only 15% of goods exported from the city constitute goods that trade under their own marks. As one example, only 14% of Shanghai's textile exports are traded under their company's mark.

As a result, few brand names from Shanghai have become well-known internationally. The situation has been driven by several factors, including counterfeiting of famous brands and the limited number of companies that feel the need to file their marks overseas. Information regarding international filings is only now becoming known to many companies, and efforts of international organizations such as the International Trademark Association (INTA) to educate local enterprises has been stepped up in recent months.

(Source: ChinaOnline)

EU Trade Official Demands Greater Action on Counterfeiting Problem

Paul Vandoren, a senior European Union trade official, has taken Chinese authorities to task for their failure to crack down on counterfeiting and intellectual property theft. Piracy costs European companies operating in China millions of euros each year.

Vandoren's remarks came at a joint China-EU symposium devoted to the problem of copyright theft. While he acknowledged that "efforts have been undertaken" in recent years to shut down factories producing knock-offs, much work remains to be done. "We have made available to the Chinese authorities a list of more than 400 Chinese companies over which European companies have found that they are involved in counterfeiting or piracy," he told his audience.

The agro-chemical, pharmaceutical, and music industries are the hardest hit, the EU trade official observed.

The most senior Chinese official at the seminar, State Intellectual Property Office Commissioner Jiang Ying, would admit only that the counterfeiting was a "serious problem" and that the government was doing its best to remedy the situation.

Since October 1998, the EU has been working together with Beijing to help build a modern, effective mechanism for fighting intellectual property theft. Vandoren expressed hope that a legal framework would be in place by the time China joins the WTO sometime next year.

(Source: Agence France Presse)

300,000 Economic Offenses Handled in Half Year

Local administrations for industry and commerce handled some 319,000 economic offenses and irregularities in the first half of 2000, up 20 percent from the same period last year.

The total value of these cases stood at RMB 4.89 billion, the SAIC said this week.

Some 46 percent of the irregularities involved unfair competition, such as the counterfeiting of trademarks. The value of such offenses almost doubled the figure of the corresponding period last year.

During the six-month period, local administrations also cracked down on 1,879 smuggling cases, with goods implicated valued at RMB 640 million, a slight drop from the same period last year.

(Source: Xinhua News Agency)

The China Virtual Intellectual Property Law Newsletter is intended to be used for news purposes only. It should not be taken as comprehensive legal advice, and Lehman, Lee & Xu will not be held responsible for any such reliance on its contents.