APAC Monthly IP Update  – January 2021

China

New Balance wins RMB25m damages against New Barlun

The Shanghai Huangpu District Court awarded damages in the amount of RMB25,000,000 against New Barlun (China) Co Ltd and its distributor, Shanghai Shiyi Trade Co Ltd, for infringement by manufacturing and distributing shoes using a slanted “N” logo on footwear. In coming to the decision, the Court found that the infringing mark was visually and conceptually similar to New Balance’s mark. Furthermore, it was found that New Barlun had been acting in bad faith as there had been an interim injunction restraining the production of the infringing footwear.

GAC of China enhanced IPR protection

According to the General Administration of Customs (“GAC”) of China, in 2020, GAC of China seized more than 56 million of intellectual property (“IP”) right infringing goods in 61.9 thousand batches, which marks a raise of 20% comparing with last year. The GAC also approved more than 15 thousand of applications for IP protection, and this number increased 16% year-on-year.

To better protect IP right and crack down transnational IP infringement, GAC launched special IP protection actions of “Longteng 2020”, “Blue-net action”, and “Clean-net action”.

Please click here for the original source (Chinese only).

China releases Amendments to Criminal Law (XI)

On 26 December 2020, the National People’s Congress standing committee released the Amendments to the Criminal Law of the People's Republic of China (XI) ("Amendments XI "), which will take effect on 1 March 2021. Highlights related to intellectual property protection include:

• Trade mark

Under the current Criminal Law, the counterfeiting of a trade mark is limited to the use of the same trade mark on "the same kind of commodity". Amendments XI expands the criminal protection scope of trade mark rights to service trade marks. Amendments XI changes the determination of severity from “sales amount” to “illegal gain or other serious circumstances” for knowingly selling commodities bearing counterfeits of registered trade marks.

• Copyright

With regards to criminal offences for copyright infringement, Amendments XI expressly lists fine arts and audio-visual works as "works" that are prohibited from duplication, publication, and dissemination through the internet without the authorisation of the right owner. Amendments XI also includes the rights of a performer to duplicate the audio or video works of his/her performance or disseminate the performance as subject matter to the public through the internet into the protection scope. Amendments XI also expands the protection scope to copyright-related rights by including that the act of intentionally avoiding or destroying technical measures for protecting copyrights without the right owners’ authorisation represents a criminal infringement activity.

• Trade secrets

For criminal infringement of trade secrets, Amendments XI changes the determination of severity from “causing heavy losses to the right owner” or “especially serious consequences” to serious or especially serious circumstances. It expressly lists bribery, fraud and electronic intrusion as improper means for obtaining a right owner’s trade secrets and constitutes trade secrets infringement. Moreover, Amendments XI limits the criminal punishment to people who obtain trade secrets knowing that the trade secrets were obtained through illegal means. Amendments XI also extends punishable activities to allowing others to use these secrets. It also adds a new clause specifically directed at criminally punishing anyone guilty of stealing, spying, bribing, or illegally providing trade secrets for foreign institutions, organisations, or persons.

• Enhanced punishments

The maximum terms of imprisonment for the offence of counterfeiting registered trademarks, selling commodities bearing counterfeit registered trademarks, illegally manufacturing registered trademarks or selling such, criminally infringing copyrights or trade secrets are increased from seven years to ten years. The maximum term of imprisonment for selling works reproduced by infringing the copyright of the right owner are increased from three years to five years.

Please click here for the full text (Chinese only) of Amendments XI.

SPC issues 18 interpretations for intellectual property rights disputes

On 29 December 2020, the Supreme People's Court ("SPC") issued 18 interpretations related to intellectual property rights disputes, which took effect on 1 January 2021. The 18 interpretations cover issues arising from civil disputes involving patents, trade marks, copyright, information network dissemination rights, rights to new plant varieties, anti-unfair competition, monopolistic conduct, domain names, technology contracts, and the jurisdictions of the Beijing, Shanghai and Guangzhou Intellectual Property Courts. Highlights of the 18 interpretations are as follows:

• Patents

Modification of court jurisdiction over patent disputes

Some revisions concern the current jurisdictions granted to the people’s courts. The SPC clarified that the people’s courts have jurisdiction over contract disputes concerning the transfer of patent rights or the patent application right only. Also, the jurisdiction of the people’s courts is extended from “pre-trial application for ceasing infringement” to “pre-trial application for behavioural preservation”.

SPC also confirmed that the people’s courts have jurisdictions over declaratory judgment of non-infringement of patents, disputes over reimbursement of fees after a patent right has been invalidated, disputes over liability for damages caused by maliciously filing a patent rights-related litigation, disputes over royalties of standard and essential patents, all the other disputes over decisions made by patent administration departments of the State Council, and confirmation of whether a product falls into the protective scope of a patent.

Expansion of the meaning of lawful rights

SPC revised its interpretation of the term “lawful rights” in Article 23 of the Patent Law. Article 23 of the Patent Law stipulates that “any design for which a patent right is granted shall not be in conflict with the lawful rights obtained by others before the filing date.” Previously, lawful rights included rights such as trade marks, copyrights, company names, portraiture rights, and rights to use special packaging or the decorations of well-known commodities. With the amendment, lawful rights refer to legal rights or rights enjoyed by works, trade marks, geographical indications, names, company names, portraits, and commodity names, packaging, and decorations that have certain influence.

• Trade marks

Modify people’s court’s jurisdiction over trade mark disputes

In addition to its current jurisdiction, SPC confirmed that the people's courts have jurisdictions over declaratory judgments of non-infringement of trade marks, disputes over agreements between trade mark applicants and the representing agencies, and disputes over applications for damages and for ceasing infringement of registered trade marks.

Modification of damage determination method

In response to the punitive-damage clause newly added into the Trademark Law, the factors to be considered when determining damages will also include the degree of the infringer’s subjective fault.

Modification of trademark preservation term

SPC extended the preservation term of a registered trade mark in dispute from six months to one year.

• Information network dissemination right

SPC clarifies that the internet service provider should take necessary actions when the right holder submits a notification in a format of a written letter, fax, email, etc. and preliminary evidence showing that the infringement occurred. Otherwise, the people’s court should recognise that the internet service provider is aware of the occurrence of the relevant infringement actions. SPC also indicates that the internet service provider should deliver the right holder’s notification to the infringer in a timely manner.

• Domain names

For the registration or usage of domain names that constitutes intentional infringement and the circumstances are serious, the right holder is entitled to claim punitive damage.

Please click here for the full text (Chinese only) of the 18 SPC interpretations related to intellectual property rights disputes.

Local infringers sentenced and fined for criminally infringing Lego’s copyright

On 29 December 2020, the Shanghai High People's Court upheld the judgment of the Shanghai No.3 Intermediate People's Court and dismissed the defendants’ appeals by ruling that the evidence for proving infringement was authentic and sufficient, the laws were correctly applied, the sentences were proper and the procedure was legitimate.

During the first instance, the Shanghai No. 3 Intermediate People’s Court found that Lego A/S is the copyright owner of works of fine art in 663 toys in 47 series. Since 2015, without the authorisation of Lego A/S, the defendant (identified as Mr. Li) along with other defendants, purchased new Lego toys, researched and set up a toy manufacturing factory for duplicating, testing, packaging, storing, and selling Lego toys under a registered trademark “Lepin”. The court found that the defendants infringed Lego A/S’s copyright, and the illegal turnover amounted up to RMB 330 million (USD 48.31 million). The defendants were sentenced up to six years in prison and fined up to RMB 90 million (USD 13 million).

During the appeal, the Shanghai High People's Court held that:

• the Lego toys are works of fine art protected under the PRC Copyright Law. Both China and Denmark are member states of Berne Convention for the Protection of Literary and Artistic Works and Universal Copyright Convention, and thus the copyright of Lego A/S, a company from Demark, will be protected in China according to the relevant articles of the PRC Copyright Law and international treaties.
• the calculation method for determining the illegal-operation amount (i.e. the products sold and the products to be sold multiplied by the minimum retail price) is reasonable.
• it is a crime committed by natural person and not a crime committed by a company. In the present case, the defendant argued that the crime should be recognised as one committed by the company incorporated and operated by the defendants, the Meizhi Company. The court rejected this argument, because (1) the infringing products are not manufactured by or on behalf of Meizhi; (2) the profits and expenses are received in the defendants’ personal accounts instead of the Meizhi bank account; and (3) for the two companies manufacturing the infringing products, one was dissolved, and the other was incorporated for conducting criminal activities or mainly performed criminal activities, which should not be recognised as the subject of the crimes.
• recognising a sales person’s business activities also involving “duplication and publication” is proper and thus concurrently punishing the sales person for duplication, publication and sales of infringing products is proper. The court reasoned that according to the interpretations of the Supreme People’s Court, “publication” covers the activities of advertising to sell, wholesale and retail. In addition, the court also considered that the sales person has previously engaged in duplicating the infringing toys, and the duplication and sales activities of the infringing toys followed a clear continuity, and thus the sales person should also be punished for “duplication and publication”.
• the defendant’s cooperation after the authority controls criminal evidence should not be deemed as a confession, but a truthful admission of the crimes committed.
• the sentences received by multiple defendants are proper because the court found that the infringing activities were well organised, conducted over a long period of time, involved a huge sales amount and amounted to a joint crime causing tremendous damage to the right holder’s reputation and economic benefits, the economic market order, and the public interest. The sentencing of individual defendants are proper because the Shanghai No.3 Intermediate People's Court considered each defendant’s role in this joint crime and all the factors that could lead to leniency.

It is worth mentioning that the criminal judgment marks another victory for Lego A/S after an earlier victory in a civil copyright infringement dispute against the same defendants. In its final decision, the Guangzhou Intellectual Property Court upheld the judgment of the Guangzhou Yuexiu District People's Court and ordered the defendants to cease infringement immediately and awarded Lego A/S a total of RMB 4.7 million (USD 0.73 million) in damages.

Please click here for the full text (Chinese only) of the final criminal judgment.

New Administrative Measures for Registration and Record-filing of Cosmetics released

On 7 January 2020, the State Administration for Market Regulation released the Administrative Measures for the Registration and Record-filing of Cosmetics (“Measures”), which will come into effect on 1 May 2021. The key points of the Measures include:

• establishing a dual-track approach for registration and recordal based on the special functions and risks of cosmetics: special cosmetics and new raw cosmetic materials with high-level risks must be registered, but general cosmetics and other new raw cosmetic materials need only be recorded.
• clarifying responsibilities from administrative departments to manufacturers to ensure the quality and safety of cosmetic products;
• providing a detailed guidance regarding the registration and recordal of new raw cosmetic materials, including the definition of new raw cosmetic materials, the procedures for obtaining the approval, and the safety monitoring and reporting mechanism. The Measures also provide detailed regulations on the registration and recordal of cosmetics, such as the requirements of the registrant or the record applicant, the administration of the recorded cosmetic products and the registered cosmetic products, and the renewal of the registration;
• empowering the NMPA and the technical evaluation institution to perform supervisions of the registrant or the record applicant of its registration or recordal activities; and
• clarifying the legal consequences if the registrant or record applicant fails to comply with the Measures.

Please click here for the full text (Chinese only) of the Administrative Measures for the Registration and Record-filing of Cosmetics.

South Korea

Korea provides patent collateral loans to small and medium enterprises with high-value patents

On 12 January 2021, the Korean SMEs and Startups Agency announced that it will provide patent collateral loans to small and medium venture companies with intellectual property rights of high technical value.

The Korean SMEs and Startups Agency has implemented 'patent-secured direct loans' since 2013. In 2020, 75 small and medium-sized enterprises have received approximately KRW 26.5 billion as patent collateral loans.

The patent collateral loan project evaluates the value of future technologies vis-à-vis the technology and business feasibility of patents held by small and medium-venture companies and provides funds as collateral for patents. In 2021, up to KRW 3 billion can be provided per year for each company, and both driving and facility funds can also be applied.

For more information, please click here.

Korea Intellectual Property Office (KIPO) cracks down on overseas counterfeit goods through home telemonitoring teams

On 19 January 2021, the Korea Intellectual Property Office (KIPO) announced that the "overseas online counterfeit goods telemonitoring group" detected and blocked a total of 14.4 million posts of counterfeit goods between August 2020 and the end of December 2020, preventing an estimated KRW 420 billion in damages.

The telemonitoring team was launched to strengthen measures to detect the distribution of counterfeit goods to ASEAN countries and to contribute to the creation of non-face to face and digital jobs. The team monitors counterfeit posts on Lazada and Shopee, ASEAN's top online shopping malls.

Countries, rated from highest to lowest according to the number of counterfeit goods detected and blocked, are Philippines, Indonesia, Singapore, and Taiwan. By item, K-pop goods and fashion miscellaneous goods accounted for 70% of the total, followed by 19.12% in the infant sector, 9.27% in the beauty sector, and 0.49% in the home-appliance digital sector.

For more information, please click here.

Japan

Osaka High Court recognises copyright infringement of 'Goldfish Phone Box'

On 14 January 2021, Japan's Osaka High Court recognised the work of modern artist Nobuki Yamamoto (山本伸樹) and ordered the payment of JPY 550,000 in damages to the infringer for a similar goldfish phone box.

Case Background

In 1998, artist Yamamoto produced and published a telephone box of goldfish swimming entitled ‘Message’ (メッセージ), while a similar goldfish phone box entitled ‘Goldfish Phone Box’ (金魚電話ボックス) was installed by the merchant association (the Defendant) in Yamato Koriyama, Nara Prefecture, which is famous for goldfish. In response, the Plaintiff proposed to the Defendant that he redesign the Defendant's work and install it as his work at the Plaintiff’s expense. Negotiations, however, broke down, and the Defendant removed the goldfish phone box on 10 April 2018 and did not reinstall it.

Judgment in the first trial

The Nara District Court, the first trial court, recognised the Plaintiff’s work as being creative in its specific public expression in terms of the colour, shape, and layout, etc. of the phone box. However, the Defendant's work shared similarities with the Plaintiff’s work, meaning (1) both seemed to have identical telephone boxes, and (2) in both cases, air bubbles were used in the telephone receiver sections of the water tanks. As a result, the court ruled that this is beyond the protection of copyright law, and the case was not recognised as an infringement of copyright.

High Court Judgment

As with the first trial, the Osaka High Court recognised the workmanship of the Plaintiff, but unlike the first trial recognised that points (1) and (2) mentioned above represent creative expression. The Osaka High Court specifically dealt with the issue of whether the Defendant's work was based on the Plaintiff's work, to which the Court concluded in the affirmative. The producer of the Defendant's work stated that he did not know of the Plaintiff's work, but the Court analysed the circumstances in detail and determined that the statement could not be validated.

This case highlights the scope of the protection of copyright law in Japan and the strict application of the same by the High Court. The decision is expected to further increase protection of genuine original works of Japanese artists.

For more information, please click here.

Japan and Brazil ease restrictions on patent applications for Patent Prosecution Highway

On 4 January 2021, the Japan Patent Office (JPO) announced that it will ease restrictions on the number of patents being accepted and examined via the Patent Prosecution Highway (PPH) in collaboration with the National Institute for Intellectual Property of Brazil (INPI).

Brazil has South America's largest economy and population and has recently made significant economic development. Many Japanese companies have entered or are in the process of entering the manufacturing industry in Brazil, including the automobile industry. However, the delay in the patent screening process in Brazil was the biggest problem since it lasted on average more than ten years from the date of application until the INPI's first screening of patents.

• In response, the JPO and INPI implemented the PPH in the mechanical field, particularly focusing on IT and automobile-related technology from 1 April 2017 and expanded the screening target of the PPH by removing all restrictions in the technology field from December 2019.
• The use of the PPH significantly reduced the average period required for the results of the patent examination to be issued by the INPI to about six months, which had a significant impact on protecting early patent rights in Brazil. However, there was a limit on the number of PPH applications accepted by the INPI per applicant, which was set as one application per month.

The JPO and INPI have initiated changes to ease the limit on the number of PPH applications beginning 1 January 2021. The details are as follows:

• Number of PPH applications per applicant – Since the limit on the number of PPH applications with Brazil has been eased, the number of PPH applications accepted by the INPI per applicant has risen from one application per month to one application per week.
• Total number of PPH applications – The total limit on the number of PPH applications accepted by the INPI has also increased by 1.5 times from 400 applications to 600 applications per year.

The Patent Prosecution Highway (PPH) is a system that allows applicants who have received patent decisions from the patent office of their respective country to apply for an accelerated patent examination for the same patent to the patent office of the other country.

For more information, please click here.

ブラジルとの特許審査ハイウェイの件数制限が緩和されます （METI/経済産業省）

Singapore

IP Implications of new UK-Singapore Free Trade Agreement

The UK-Singapore Free Trade Agreement (UKSFTA) took effect on 1 January 2021 at 7 am Singapore Time via provisional application. The UKSFTA will formally enter into force after the UK completes its remaining domestic procedures.

The UKSFTA provides certainty and clarity to UK-Singapore trade. The rights and obligations of both countries under the EUSFTA will continue to apply to trading arrangements, including Chapter 10: Intellectual Property. This will allow Singaporean and UK companies to continue enjoying the benefits of the chapter, which includes copyright and related rights, trademarks, geographical indications, designs, patents, and enforcement.

In particular, the UKSFTA modifies the list of names to be applied for protection as geographical indications, incorporating only geographical incorporations that relate to the UK and Ireland, chiefly applying to:

• The “Scotch Whisky” geographical indication, which covers spirit drinks produced in the UK; and
• The “Irish Whiskey / Uisce Beatha Eireannach / Irish Whisky” and “Irish Cream” geographical indications, which cover spirit drinks produced in the Republic of Ireland and Northern Ireland.

Please click here for the full text of the UKSFTA, and here for the full text of Chapter 10:Intellectual Property of the EUSFTA.

For more information on the UKSFTA, a press release by the Ministry of Trade and Industry can be found here.

Impact of High Court structural reforms on intellectual property disputes

Structural reforms to the Supreme Court of Singapore took effect on 2 January 2021. With these changes, the High Court is restructured into two Divisions: the General Division of the High Court (General Division) and the Appellate Division of the High Court (Appellate Division). These changes seek to better deploy judicial resources and manage the increase in the appeals caseload in a more sustainable manner, while maintaining high standards for quality of justice and access to justice.

The restructuring will affect the appeals structure for intellectual property disputes. Appeals against a decision of the General Division arising from a case relating to the law of patents (even if the appeal does not raise any issue relating to the law of patents) is to be made to the Court of Appeal. Appeals against a decision of the General Division arising from other forms of intellectual property is to be made to the Appellate Division.

An appeal against a decision of the Appellate Division may still be made to the Court of Appeal. However, the scope for such an appeal is limited since leave of the Court of Appeal must be granted, and leave will only be granted if the appeal raises a point of law of public importance. The Court of Appeal also has the power to hear an appeal that has been made to the Appellate Division through its own motion or on application by any party to the appeal.

In addition to structural reforms, procedural innovations have been introduced for the timely disposal of appeals. All parties to an appeal before the Court of Appeal or the Appellate Division may consent to have the case decided by a two-judge coram and by a paper hearing (i.e. without hearing oral arguments). These changes further the efficiency and flexibility of the appeals process while balancing any concerns that parties may have. This procedural option allows parties to have their intellectual property disputes resolved faster and at a lower cost.

Please click here for the media release by the Supreme Court on the structural reforms.

Health products regulator publishes response to public consultation on Proposed Regulation for Cell, Tissue and Gene Therapy Products

On 6 January 2021, the Health Products Regulation Group published a summary of the responses to a public consultation on 6 November to 27 November 2020 in relation to new regulations for Cell, Tissue and Gene Therapy Products:

• Proposed Health Products Act (Amendment of First Schedule) Order 2020;
• Proposed Health Products Act (Cell, Tissue and Gene Therapy Products) Regulations 2020.

Some of the key responses to the Frequently Asked Questions are set out below:

• Definition of cell, tissue and gene therapy products (“CTGTP”)

CTGTP will be defined as substances containing or consisting of autologous or allogeneic human cells or tissues; viable animal cells or tissues; or recombinant nucleic acids (i.e. modified DNA or RNA as carriers of a therapeutic gene) that are administered for the diagnosis, treatment or prevention of any human disease or medical condition.

• Product registration and notification requirements

CTGTP will be risk-stratified into Class 1 (lower risk) and Class 2 (moderate to higher risk). Only Class 2 CTGTP will have to be registered with the Health Sciences Authority; Class 1 CTGTP only require product notification. Conditional registration for Class 2 CTGTP may be permitted where certain criteria are met (i.e. it is intended to treat an unmet medical need), early clinical trials establish product safety, and preliminary data shows meaningful evidence of a therapeutic benefit as compared to other available therapies. Unregistered Class 2 CTGTP may be imported and supplied in limited circumstances.

• Licensing framework

Different licensing requirements would apply to manufacturing, import and supply activities in accordance to the degree of manipulation of the CTGTP. Notification is required for entities dealing in minimally manipulated CTGTP, whereas a dealer’s licence is required for manufacturers, importers and wholesalers dealing in more than minimally manipulated CTGTP.

• Other

Other responses include recategorisation of existing medical devices containing human cells supplied under Medical Device Special Access Route to Class 1 CTGTP, clinical trials of CTGTP and reporting of product defects.

The announcement by the Health Products Regulation Group, Health Sciences Authority may be found here. Please click here for the response to feedback received from the public consultation.

Medical Devices Branch opens consultation on the Regulatory Guidelines for 3D Medical Devices

On 25 January 2021, the Medical Devices Branch, Health Sciences Authority invited stakeholders to provide feedback for the draft “Regulatory Guidelines for 3D Printed Medical Devices”. The guidelines were issued to clarify the application of the risk-based regulatory framework in Singapore to three-dimensional (3D) printed medical devices.

In general, medical devices are categorised into either mass-produced or custom-made medical devices. 3D-printed medical devices fall within the definition of the new term “patient-matched medical device”, and can be categorised as a mass-produced medical device. “Patient-matched medical devices” are “manufactured within a specified design envelope and typically produced in a batch through a process that is capable of being validated and reproduced”. With the capabilities of mass production on a commercial scale through 3D printing, patient-matched medical devices are different from custom-made medical devices that are “made at the request of a qualified practitioner and in accordance with the specifications of the qualified practitioner regarding the [unique] design characteristics or construction of the medical devices”. Custom-made medical devices are intended for use only in special clinical circumstances and in relation to specific patients.

The guideline clarifies that the categorisation would determine the applicable regulatory controls. While mass-produced medical devices are subject to a dealer’s licence requirements and post-market obligations and product registrations, custom-made medical devices do not have to be registered. In regard to 3D-printed medical devices, additional documents may be required during product registration, and the MDB may conduct post-market surveillance and investigations to ensure patient health and safety.

The consultation period opened on 25 January 2021 and will close on 28 February 2021. The announcement by the Health Sciences Authority can be found here, and the guidelines can be found here.