Keywords: privacy, PRC regulations, Contracts Bill
POST-NEW TRADEMARK LAW ERA IN CHINA – A FEW THINGS TO SHARE
By Alan Chiu, Partner, Mayer Brown JSM,
Cherry Jin, Associate, Mayer Brown JSM, Beijing
Valerie Chan, Associate, Mayer Brown JSM, Hong Kong
China's new Trademark Law has been in force for nearly five months. We share below our observations on the changes to the law and some of the new practice developments.
Tongda Trademark Service Centre ("Tongda"), an organisation formed under the State Administration for Industry and Commerce (SAIC) which provided official search services prior to June 2012, is about to undergo a revolutionary change.
Tongda has now been officially renamed the Cooperation Centre for Trademark Examination of SAIC (國家工商行政管理總局商標審查協作中心) ("Cooperation Centre") and its new website can be found at http://www.tdtm.com.cn/.
The Cooperation Centre has a new role, namely to assist the China Trademark Office (CTMO) in handling all examination work for trade mark filings, renewals, recordals of change of name/ address, assignment recordals, licence recordals, etc., whilst CTMO will primarily focus its resources on handling opposition cases and international registrations. It is expected that CTMO will review opposition arguments and evidence thoroughly and render decisions with detailed reasoning (just like the PRC Trademark Review and Adjudication Board (TRAB) used to).
The Cooperation Centre boasts several hundred staff and has plans to expand its staff and hire more examiners and support staff in order to expedite the examination time and meet the deadlines imposed under the new law. Although plans have been laid out, it is not yet known when the Cooperation Centre will take over full responsibility from CTMO for the abovementioned work.
When the new law initially came into effect, CTMO was very strict in respect of formality requirements for trade mark filings – it required the filing of original powers of attorney and original trade mark application forms signed by the applicants themselves. This caused some resistance from trade mark practitioners and agencies. However CTMO has since backed down – it now only requires the filing of copies of powers of attorney and original trade mark application forms signed by the trade mark agents. A copy of the business licence or incorporation certificate of the applicant entity together with its Chinese translation must also be submitted.
For oppositions filed with CTMO and reviews at the TRAB, copy Powers of Attorney continue to be accepted in practice as before, though it is a matter of good practice to submit the originals at the outset or supplement the originals later whenever practicable. A copy of the applicant entity's registration document and its Chinese translation are required to be filed for opposition cases.
Examination standard on goods/services
Under the new law, CTMO is expected to conclude the examination of each and every application within nine months. In order to comply with this statutory time limit, CTMO has been much stricter than before in examining the specifications of trade mark applications.
In China, only standard specifications of goods and services (i.e., basic taxonomy of the Nice Classifications) should be accepted, but many applicants still attempt to apply for non-standard descriptions in order to obtain the widest protection for their trade marks. Under the old regime, upon receiving notification from CTMO requiring applicants to amend non-standard specifications, applicants could file several rounds of amendments or even arguments to try to convince CTMO to accept certain goods/services.
With the new time limit in place, CTMO now only offers one opportunity for applicants to amend any specification to which an objection is raised. If any specification of goods/services remains non-standard or unacceptable, the whole application may be rejected outright. This practice will likely be followed by the Cooperation Centre going forward, in order to clear the backlog of cases.
It is therefore imperative to adopt appropriate amendments from standard descriptions in response to the official notifications. Written arguments or customised terms are unlikely to be accepted.
Local contact on trade mark application form
In the past, CTMO occasionally encountered difficulties in serving notices to foreign trade mark applicants/owners when their trade mark agents on record went out of business or could not be reached. For this reason, CTMO now requires a local mainland individual to be named as the contact point of a foreign applicant (including applicants from Hong Kong, Macau and Taiwan) on the new trade mark application form so that CTMO can still effect service on the foreign applicants/owners through their local contacts where service on their trade mark agent is unsuccessful. If no local contact is provided by the foreign applicant, there is a real risk that the application will be rejected outright, hence the possibility of losing a priority filing date.
The local contact requirement does not apply to local applicants. If a local applicant wrongfully puts in a local mainland individual's contact, the application will also likely be rejected.
Trade mark licence recordal
The new Implementation Regulations stipulate that a trade mark licence recordal application can be filed without submitting the trade mark licence agreement in order to protect the confidentiality of commercial dealings of parties. However, there is nothing in the law or regulations which expressly states whether a master trade mark licence has to be filed and duly recorded before a sub-licence can be filed, or whether both master licence and sub-licence can be filed for recordal at the same time.
Finally, CTMO suspended its substantive examination work in May 2014 and only resumed its work in mid-August 2014. Decisions and notices have now gradually been issued by CTMO in September and we are expecting that this will gather pace in the coming months.
We are closely monitoring the progress of the implementation of the new law and will be sharing practical tips and suggestions gathered from our day-to-day practice in future editions of this publication.
SPECIALISED IP COURTS ESTABLISHED IN BEIJING, SHANGHAI AND GUANGZHOU
By Alan Chiu, Partner, Mayer Brown JSM, Beijing
On 31 August 2014, the Standing Committee of the National People's Congress of the People's Republic of China ("NPC Standing Committee") issued a decision ("Decision") approving the establishment of specialised IP courts ("IP Courts") with pilot venues in Beijing, Shanghai and Guangzhou.
The Decision came into effect on 31 August 2014. We summarise below the main provisions of the Decision and offer our comments and observations:
Set-up and Organisation
- The composition of the IP Courts will be decided by the Supreme People's Court (SPC) depending on the types and numbers of IP cases filed.
- The IP Courts will be supervised by the SPC, the local Higher People's Courts where the IP Courts are respectively located as well as the People's Procuratorates (the level of which is not specified in the Decision).
- The IP Courts will report directly to the local People's Congress on work load and progress. In turn, the SPC will report to the National People's Congress on the progress made on setting up the IP Courts by September 2017.
- It is believed that the IP Courts shall have the same status as the Intermediate People's Court in China's judicial hierarchy, though this is not expressly stipulated in the Decision.
- The standing committee of the local People's Congress is empowered to appoint and dismiss the President of the IP Courts, whilst the Vice President, chief judges of tribunals, presiding judges as well as judicial committee members shall be recommended by the President and appointed by the local People's Congress.
- The Decision has not laid down any specific qualification requirements for the IP Court judges but it is a general perception that all presiding judges in these specialised courts should have a certain level of experience in adjudicating IP cases or at least have received formal IP training.
- The IP Courts shall have jurisdiction
- first instance civil lawsuits and administrative cases which concern highly technical subject matters such as patents, plant varieties, topography of integrated circuits, technology secrets, etc. (the jurisdiction over these cases is trans-regional); and
- appeals from first instance copyright and trade mark civil decisions, as well as appeals from administrative decisions made by the basic level courts of the municipalities where the IP Courts are respectively located.
- All first instance, appeals against decisions made by the State Intellectual Property Office (including but not limited to the Patent Office and the Trademark Office) will be heard by the Beijing IP Court instead of the Beijing First Intermediate People's Court.
- All decisions of the IP Courts are subject to appeal to the Higher People's Court of the province or city where the relevant IP Court is located.
- It is not entirely clear what "technology secrets" is intended to cover.
- Trade mark and copyright cases involving foreign plaintiffs are usually filed with the intermediate courts rather than the basic level courts. Though the IP Courts appear to have extensive civil jurisdiction including hearing copyright and trade mark civil appeals from basic level courts, it is not clear whether the IP Courts will replace the Intermediate Courts to be the forum of first instance trade mark and copyright lawsuits. What is crystal clear is that the IP Courts do not have jurisdiction over criminal IP cases.
The setting up of specialised courts for IP disputes underscores the Chinese government's commitment to enhance the protection of IP rights as part of its national IP strategy. With the introduction of the specialised courts, IP litigants in China are expected to be facing a judiciary that is more adept and experienced in handling cases involving complex IP issues or technical issues.
This new development is to be welcomed and China's own burgeoning innovators as well as most IP stakeholders, not least the more vocal overseas critics of China's record of IP protection, should be pleased. There are high hopes that the new IP court system will be able to deal with cases in a more efficient manner and produce fairer and more consistent decisions.
While the principles have been laid out for now, the devil is in the detail, and there are still a lot of things to be worked out before the new judiciary structure can be in full operation, which, according to reports, should happen by the end of this year.
CAN (AND SHOULD) A TRADER SETTLE A CRIMINAL CASE UNDER THE TRADE DESCRIPTIONS ORDINANCE?
By Eugene Low, Senior Associate, Mayer Brown JSM, Hong Kong
The Trade Descriptions Ordinance was amended on 19 July 2013 to bring about enhanced protection for consumers against unfair trade practices. Among other changes, the amendments introduced a new civil compliance-based mechanism. Under this mechanism, traders suspected of committing an offence under the Ordinance may offer an undertaking to the enforcement authorities (Customs and the Communications Authority) in lieu of prosecution.
This mechanism aims to resolve cases more expeditiously by encouraging the traders concerned to voluntarily correct the conduct complained of and commit themselves not to repeat such conduct in the future. During the investigation of a suspected offence, the enforcement authorities may explain the availability of this mechanism to traders but they cannot compel traders to offer an undertaking. Likewise, the enforcement authorities are not bound to accept an undertaking offered as they must first obtain approval from the Secretary of Justice before accepting it.
Undertakings are more likely to be accepted in cases where the contravention is of a less serious nature and where there was no significant harm done. In contrast, if the trader concerned is a repeat offender or if the conduct was outrageous or caused real loss to a large number of consumers, the enforcement authorities are more likely to press on with a prosecution.
Since 19 July 2013, there have been four reported cases where Customs accepted such an undertaking. The first such case related to an education institution which falsely claimed on its website that graduates of its diploma course could directly enter the final year of degree programmes at local universities.
The other three cases concerned food sellers: a bakery misused the labels "natural" and "no additives" when in fact its products contained artificial spices and essences; a Japanese food seller wrongly made references to an "original price" which it had never applied to its food products before; and a ham seller misled consumers by displaying photographs and awards of a famous ham slicer who did not slice the ham sold by the seller.
This undertaking system is not unique to the Trade Descriptions Ordinance. Under the "infringement notice" provisions (not yet in operation) of the Competition Ordinance, the Competition Commission may issue an infringement notice to a person and offer not to bring proceedings in the Competition Tribunal on condition that the requirements set out in the infringement notice are complied with. Nor are such civil compliance-based systems unique to Hong Kong. For instance, the Australian Competition & Consumer Commission has similar power to accept written undertakings in the exercise of its powers under the Competition and Consumer Act.
One may argue that offering an undertaking is an attractive option for traders as it may save them from criminal prosecution. This may be true in some cases, but on the other hand, traders have to bear in mind the limitations of the system and the implications of giving an undertaking.
First, although there is no standard undertaking, the enforcement authorities will expect certain terms in an undertaking. For instance, an acceptable undertaking will usually include an express admission of fault from the trader. Any statement in the undertaking which amounts to a denial of wrongdoing will almost certainly be rejected. In addition, traders will be expected to give specific details of their remedial actions (such as organising in-house training at prescribed intervals and designating an officer to oversee trade descriptions matters) and will be required to co-operate with compliance inspections conducted by the enforcement authorities.
Traders giving an undertaking should also consider the potential reputational consequences since the accepted undertakings may be published by the enforcement authorities in any form, including on their websites.
Lastly, the Trade Descriptions Ordinance empowers an aggrieved consumer to claim compensation from a trader whose conduct constitutes an offence under the Ordinance. Traders can therefore be exposed to civil claims (and perhaps even summary judgments) by reason of their admission of fault in an undertaking.
Traders facing an investigation should familiarise themselves with these features of the undertaking system and obtain legal advice should an opportunity to give an undertaking arise.
CALL ME, MAYBE? HONG KONG PRIVACY COMMISSIONER PROPOSES EXPANSION OF THE DO-NOT-CALL REGISTER
By Gabriela Kennedy, Partner, Mayer Brown JSM, Hong
Karen Lee, Associate, Mayer Brown JSM, Hong Kong
Cold calls are a commonplace nuisance in Hong Kong. It therefore comes as no surprise that the Hong Kong Privacy Commissioner is pushing to expand the current do-not-call register to include person-to-person calls, and not just pre-recorded telephone messages.
In March 2014, an opinion survey was commissioned by the Office of the Privacy Commissioner ("Survey") on person-to-person direct marketing calls ("P2P Calls"). The results of the Survey were released on 5 August 2014. Over 99 percent of the respondents to the Survey viewed P2P Calls as a nuisance, with over 42 percent considering such nuisance to be high.
The responses received also indicate that P2P Calls are ineffective. According to the Survey only 6 percent of the respondents said that they derived some benefits from the P2P Calls, with 49 percent of the respondents usually indicating at the beginning of the P2P Calls that they were not interested, and 21 percent terminating the calls immediately. Only 28 percent of the respondents would first listen to the P2P Calls to determine whether or not they were interested in the information being provided, before they terminated the call.
It seems that any advantage that could be derived by marketers or consumers from P2P Calls is disproportionate to the inconvenience and nuisance caused to the majority of the public.
Current Legal position in Hong Kong
Unsolicited Electronic Messages Ordinance, Cap. 563 ("UEMO")
Under the UEMO, consumers can register their telephone or fax numbers on a do-not-call register (administered by the Office of the Communications Authority) to block unsolicited commercial electronic messages. Apart from an individual's telephone or fax number, no other information is collected as part of the registration process for the do-not-call registers.
Any business that sends unsolicited commercial electronic messages to a number which is registered on the do-not-call register, without the consent of the recipient, commits a breach of the UEMO. The Office of the Communications Authority may issue an enforcement notice against the infringer requiring them to take specified steps to rectify the contravention within a reasonable period of time. Anyone who contravenes an enforcement notice will be liable to a fine of HK$100,000 or, on a second or subsequent conviction, to a fine of HK$500,000 (and a further daily fine of HK$1,000 for each day that the offence continues).
However, the do-not-call registers under the UEMO do not cover P2P Calls – they only apply to electronic messages, such as fax messages, SMSs, and pre-recorded telephone messages. This
loophole has been exploited by marketers to provide P2P Calls, which allow them to market even to subscribers on the do-not-call register, subject to compliance with the Personal Data (Privacy) Ordinance (see further details below). This being said, it is an offence, for a person to obtain information from the do-not-call registers (e.g., collating the telephone numbers registered on the do-not-registers), and to use that information to make P2P Calls or for any other purpose other than what is permitted under the UEMO. Anyone who knowingly commits such an offence faces a fine of HK$1,000,000 and five years imprisonment.
Personal Data (Privacy) Ordinance, Cap. 486 ("PDPO")
Even though P2P Calls are allowed under the UEMO, some P2P Calls may amount to a breach of the stringent requirements under the PDPO on the use of personal data in direct marketing. These provisions were introduced on 1 April 2013. The PDPO will only apply where personal data is involved. Personal data is defined as any data relating directly or indirectly to a living individual, from which it is practicable for the identity of the individual to be directly or indirectly ascertained, and in a form in which access to or processing of the data is practicable (e.g., name and contact details). Under the PDPO, anyone who is collecting personal data from an individual for the purposes of using it for direct marketing, must notify the individual at the time of collection of the following:
- Its intention to use the data for direct marketing;
- The type of data that may be used;
- The categories of goods/services that may be marketed (which must be sufficiently detailed);
- A means by which the individual can indicate his/her consent; and
- If the personal data will be transferred to a third party for them to use the data for direct marketing purposes, the individual must be notified of this in writing beforehand, along with the fact that such transfer cannot occur without his/her consent; the classes of transferees; and whether the transfer is made in return for gain, e.g., money.
The individual must have explicitly consented to the use of his/her personal data for direct marketing purposes after receiving the above notification. In addition, when a business uses an individual's personal data for the first time for direct marketing purposes (e.g., when it first makes a P2P Call), the individual must be informed of his/her right to withdraw his/her consent at any time.
Breach of the above requirements constitutes an offence, which may result in a maximum fine of HK$500,000 and three years imprisonment or, if the personal data has been sold (or otherwise transferred for gain) to a third party for direct marketing purposes in breach of the PDPO, then the maximum fine is increased to HK$1 million and five years imprisonment.
However, whilst the current PDPO may be effective in protecting individuals from receiving direct marketing P2P Calls, the PDPO will only apply where personal data is collected and used (e.g., telephone calls made by companies to their existing customers in order to promote an upgrade of services). A marketing call to an unidentified registered user of a particular telephone number (e.g., dialling a random telephone number without having any other information to enable them to identify the owner of the number) will not amount to use of personal data for direct marketing purposes under the PDPO, and will therefore not be subject to the above PDPO requirements.
Proposed expansion in Hong Kong
Given all this, the Privacy Commissioner has been urging the Commerce and Economic Development Bureau (CEDB) (who has policy responsibility over the UEMO) to expand the UEMO to cover P2P Calls. Extending the UEMO and do-not-call register to apply to P2P Calls will enable individuals to opt out of receiving all unwanted telemarketing calls, and not just pre-recorded telephone messages or other electronic messages. This would bring the UEMO in line with the current practice in many other jurisdictions, including the UK, USA and Singapore. Not only would the proposed expansion of the UEMO reduce the inconvenience caused to the public by P2P Calls, but it may also benefit marketers by enabling them to focus their resources on individuals who do not object to receiving P2P Calls. An alternative solution to the do-not-call register may be the use of smartphone apps to assist in filtering P2P Calls. However, such a solution would leave out fixed-line phones and therefore not close the loophole completely.
The expansion of the UEMO to P2P Calls is not a new proposal, and has already been considered during the Legislative Council Panel meeting in November 2009, and again during the 2009-2010 public consultation on the review of the PDPO. However, the Privacy Commissioner's latest push to expand the do-not-call register appears to have received some resistance from the CEDB. In a letter to the Privacy Commissioner dated 11 August 2014, the CEDB, amongst other things, noted that introducing a do-not-call register for P2P Calls would not resolve all issues, e.g., it may be ineffective to block calls made from outside Hong Kong, and would affect the 20,000 plus individuals employed by local telemarketing companies1. The CEDB also appeared to suggest that if a do-not-call register is set up for P2P Calls, that it should be done under the PDPO rather than the UEMO. The Privacy Commissioner, however, disagreed with the CEDB and maintained that any do-not-call register should fall within the UEMO in order to apply to all P2P Calls, and not just those that involve personal data2. This is supported by data in the Survey, as only 27.4 percent of the respondents stated that more than half of the P2P Calls that they received specified their names – this indicates that most P2P Calls are cold calls made to unknown registered users and therefore no personal data is involved. Such calls do not fall within the ambit of the PDPO.
Despite all this it seems that for the time being, the call for the expansion of the do-not-call register is not being answered.
Originally published September 2014
1. See the Privacy Commissioner's Blog on the "Renewed Call to Set Up a Do-not-Call Register for Person-to-person Telemarketing Calls caught between two Bureaux (21.8.2014)": http://www.pcpd.org.hk/english/about/blog.html
2. Ibid 2.
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