China update

I attended a seminar on re-examination and invalidation in China on 14th October, hosted by Linda Liu Group in Beijing, dealing with the 2009 changes to the law and 2010 changes to the Implementing Regulations and Guidelines. The speaker was Mr Zhang Hanguo of the SIPO Patent Re-examination Board. I hope to report in more detail elsewhere in future.

Here are some design-related points of interest for now:

• Two interesting recent cases on "reference views" were discussed, one concerning reclining sofas, and the other security doors. "Reference views" are additional views, commonly used in Japan, showing the product in use in various states (perhaps where different parts are opened, closed or otherwise moved). The issue was whether these should be taken into account, or ignored. The latest opinion of the Board (a shift from their former opinion) seems to be that there is no legal basis for ignoring them, and that they should therefore be taken into account for both validity and scope.
• He also discussed a recent invalidation case on a car design, compared to two generally similar designs. The Board had held that the similarities in body shape were caused by functional (i.e. aerodynamic) reasons, so that differences in headlight shape and at the rear of the car made the design valid. At first instance the Court overruled the Board and invalidated the design. The case is still pending at second instance. It makes a particularly interesting comparator for European eyes, since similar evolving car design situations were considered by the Swedish court in DaimlerChrysler's Application ([2005] E.C.D.R. 15) (in which the design was held invalid), and in the DaimlerChrysler v Centigon stretch limo infringement case, reported on this blog (in which the first instance German court held the design valid). Perhaps the issue of headlights deserves special treatment - to many, the front of a car resembles, and is as recognisable as, a human face, making headlight differences particularly striking.
• Design examination may be a bit stricter in future. SIPO hope to further study and standardise examining for whether designs significantly differ as, at present, even examiners with some years of experience may still sometimes have difficulty.
• Article 25 of the Patent Law has been amended to add an exclusion of "Designs of two-dimensional printed goods, comprising a pattern, a color or the combination of the two, which serve mainly as indicators." Apparently the indication can be of use, purpose or source. This provision will presumably therefore eliminate much potential overlap with logo trade marks.
• Where an application is found to contain multiple designs (a "lack of unity" situation) some of them may now be abandoned in response in the same way as where patent claims lack unity.
• Where invalidation is based on an earlier right rather than prior art, the applicant for invalidation can (indeed, must) now give proof that they are the prior rights holder or interested party but is no longer required to provide an earlier efffective ruling or judment by the Court or executive showing conflict with the earlier right (Sec 3.2 Guidelines based on Rule 66.3 of the Implementing Regulations). "Interested party" includes anyone who could enforce the earlier right - presumably an exclusive licensee for instance. (Sec 3.2 Guidelines based on Rule 66.3 of the Implementing Regulations).

We have perhaps not given China the coverage it deserves in the past.  I am not sure this blog is accessible from within China, but we are happy to post any China-related material readers may have.

Car Wars

We have been debating designs in the automotive sector in Europe for decades - but it has all been about spare parts. Car companies haven't been ripping each other off, and spares makers haven't been putting the parts together to make the whole. Well, welcome to the 21st century - the game has changed, and its name is now China. There's even a ripoff Rolls out there.

Most recently comes the Beijing decision on the Neoplan Bus GmbH (a MAN subsidiary) v. Zhongwei Bus & Coach Group, its subsidiary Zonda Industrial Group and its sales agent Beijing Zhongtong Xinhua Vehicle Sales Co. Their A9 bus is a dead ringer for Neoplan's, but at a third of the price. Good news - they won.

Zonda's website contains a sturdy rebuttal describing their ludicrous (and ultimately unsuccessful) counterclaim that the Germans were the ones ripping them off. Here's how they put it, in terms that every pirate wishes were true (it often is in China, it seems):
"In fact, this kind of lawsuit is not uncommon in the automobile industry. Toyota once filed a lawsuit against Geely, a Chinese car maker, for allegation of intellectual property right violation, but it is often the defendant sides win such lawsuits because there is no commonly accepted way in judging whether an automobile model has copied another or not."
Alas for them, producing a dead copy of a market leading design does tend to be an accepted way of spotting a knockoff. So does repeated and systematic copying. So they lost - or at least, they lost that round (they claim to be appealing).

• http://www.chinadaily.com.cn/bizchina/2009-01/22/content_7419231.htm
• http://english.ipr.gov.cn/ipr/en/info/Article.jsp?a_no=270390&col_no=126&dir=200903
• http://www.sipo.gov.cn/sipo_English/news/internationalip/200904/t20090417_454486.html

(NB: Zonda's reference to the Geely case goes back to 2003, when Toyota brought a trademark claim against Zhejiang Jili (same people as "Geely"?) for copying their logo - they lost, on the basis that this wasn't a "bag of sweets" case, the car customer was reasonably discerning. Well, yes, up to a point, Lord Copper. The very wonderful IPDragon blog reported that Yamaha were a bit more successful in getting back their mark which was pirated by two Chinese motorbike companies, and Honda took some cash off Lifan for using "Hongda" - well, who'd have thought that would be too close? )

Back to designs. Honda brought the first big Chinese test case back in 1997 against Shanghai Feiling Motorcycle Co. and Zhejiang Huari Co; their “mini-scooter” design was held invalid along the way but by 2004 their appeal had finally been upheld, at third instance. My recollection is that they lost in the end, but perhaps that is just natural pessimism; does anyone out there recall the outcome?

Their WAVE motorbike was also copied and Chinese exports went all over Asia. They had varied success in killing off the infringers. They took a beating in China when, in 2003, they sued Shuanghuan for infringement of the design of their CR-V SUV. Also in 2003, General Motors sued Qirui (same company as"Chery"? and perhaps "Geely" or "Jili"?) for infringement of their Daiwoo Matiz car compact design. That one apparently settled, reputedly on bad terms for GM.

Flushed with success, Shuanghuan pirated BMW's X5 SUV. Apparently fearing the same outcome as GM, according to MIP, the Bavarians let the infringements run in China but went for Shuanghuan in September 2007 on their home turf in Frankfurt, and got an interim injunction preventing them from launching at the Frankfurt auto show. At the same show, DaimlerChrysler kept Shuanghuan's Noble (a clone of the amazing Smart microcar) out of the show.

The latest is between the same opponents, but in Turin, triggered by the Bologna Auto Show. According to Trevizan & Cuonzo (look under Legal Update), DaimlerChrysler sued over two infringing models using both International Design registrations and a CTM shape mark, and posted one success and one failure on the design, but both infringed the trade mark.

With the world's oldest civilization, biggest population, best engineers and lowest prices already in their favour, isn't it time to ask why so much of China's automotive industry (remember, we haven't even looked at the spare parts and tyre ripoffs) is dedicating itself to such blatant piracy? It's not as if China is short of the brains to design their own cars, so why don't these companies do so? And, more worryingly, why they should think such obvious cut-price copies are going to be accepted meekly in the EU? Europe's auto industries may be looking pretty sick, but are they really giving off such signs of weakness that launching copies at major trade shows is an option?

We could urgently do with some strong, positive messages from the European courts that innovation and good design will be protected, and that obvious and blatant copying helps nobody. The confusion test isn't enough; even if the public intellectually know they're getting a cheap fake not the real thing, the subtle message is that the fakes are "as good as" the real thing. Don't believe me? Well, according to the according to the German importer, the litigation "elevates our products to the same level as BMW and Smart." Really? I think not. But in the long run, unless the EU takes IP enforcement seriously, the triumph of piracy may well bring the death of quality in the automotive sector.