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  1. 1. “ Rollershoe v. Chee Ting Shoe Trading Co.&quot; – a case study on developing a brand protection strategy in China <ul><li>Webinar presented by the United States Department of Commerce </li></ul><ul><li>and the American Bar Association Section of International Law </li></ul><ul><li>Featuring: </li></ul><ul><li>Ellen Szymanski, Department of Commerce </li></ul><ul><li>Scott Bain, Software & Information Industry Association </li></ul><ul><li>Elizabeth Chien-Hale, Institute for Intellectual Property in Asia </li></ul><ul><li>Paul Jones, Jones & Co. </li></ul><ul><li>Bruce A. McDonald, Schnader Harrison Segal & Lewis LLP </li></ul><ul><li>November 13, 2007 </li></ul>
  2. 2. Hypothetical 1: Rollershoe, Inc. <ul><li>Manufactures and sells shoes with built-in, battery operated wheels; also apparel </li></ul><ul><li>Manufacturing in U.S. since 1990 </li></ul><ul><li>TMs, Copyrights, Patents registered in U.S. </li></ul><ul><li>Registered Trademarks: </li></ul>
  3. 3. Hypothetical 1: Rollershoe, Inc. <ul><li>Chee Ting Shoe Trading Company </li></ul><ul><ul><li>Distributes foreign products in Chinese market </li></ul></ul><ul><li>July 10, 2007 trade show in Washington, DC </li></ul><ul><ul><li>Rollershoe and Chee Ting exchange marketing materials and catalogs </li></ul></ul><ul><ul><li>Enter into distributorship agreement </li></ul></ul>
  4. 4. Hypothetical 1: Rollershoe, Inc. <ul><li>Rollershoe registers trademark in China </li></ul><ul><li>Rollershoe chooses Chinese character name, and brand in Pinyin. Registers both in China. </li></ul>
  5. 5. Hypothetical 1: Rollershoe, Inc. <ul><li>Identify Rollershoe’s IP Portfolio </li></ul><ul><li>What has Rollershoe done to protect its IP in the U.S. and China? </li></ul><ul><li>What else could it have done? </li></ul>
  6. 6. Hypothetical 2: Rollershoe, Inc. <ul><li>After 1 year, 2 months Rollershoe sends Chee Ting letter remind of agreement terms </li></ul><ul><ul><li>Rollershoes are everywhere in China, but company’s reported sales numbers are down. </li></ul></ul><ul><li>Accidents lead to investigation in U.S. </li></ul><ul><ul><li>Shoe Emporium unauthorized U.S. retailer; purchased from Fay King Shoes, Ltd. in China </li></ul></ul>
  7. 7. Hypothetical 2: Rollershoe, Inc. <ul><li>Investigator tours Fay King factory in China, finds extensive counterfeit toys and apparel bearing Rollershoe marks, copies of Rollershoes’ brochures and catalogs with Chee Ting’s phone numbers. </li></ul><ul><li>Rollershoe sends C&D to Chee Ting. </li></ul><ul><li>Chee Ting responds that it owns the marks in China and has registered several (see Table C). </li></ul>
  8. 8. Hypothetical 2: Rollershoe, Inc. <ul><li>1) What actions can Rollershoe take in China? </li></ul><ul><li>2) What actions can Rollershoe take in the U.S.? </li></ul><ul><li>3) What can the U.S. government do to assist Rollershoe? </li></ul>
  9. 9. Patent Protection in China <ul><li>Elizabeth Chien-Hale </li></ul><ul><li>[email_address] </li></ul>
  10. 10. Patent Rights <ul><li>Patent laws and rights are territorial </li></ul><ul><ul><li>Even though one application can be filed in different countries </li></ul></ul><ul><ul><li>Even though an applicant may, after meeting certain requirements, claim the filing date of its first filing in the home country </li></ul></ul><ul><li>Your US Patents will not protect you in China </li></ul>
  11. 11. What Rollershoe Inc. Could Have Done: <ul><li>Apply for Design Patents: ornamental features, not examined, 10-year term </li></ul>
  12. 12. What Rollershoe Inc. Could Have Done: <ul><li>Apply for Utility Model Patents: shape and configuration, not examined, 10-year term </li></ul>
  13. 13. What Rollershoe Inc. Could Have Done: <ul><li>Apply for Invention Patents: products and methods of manufacturing, examined, 20-year term </li></ul>
  14. 14. The Patent Application Procedure <ul><li>Applications submitted to the State Intellectual Property Office </li></ul><ul><li>Formality Examination for design and utility model applications </li></ul><ul><li>Substantive Examination for invention patent applications </li></ul><ul><li>In 2006, China received over 570,000 combined invention, design, utility model patent applications </li></ul>
  15. 15. Patent Protection in China <ul><li>Not all inventions patentable in the United States are patentable in China: for example, software/business method patents are not easily granted </li></ul><ul><li>After two sets of amendments in 1992 and 2000, a third set of amendments in currently in progress </li></ul>
  16. 16. Patent Protection for Rollershoe <ul><li>Products have been out in the US since Jan. 1, 1990 </li></ul><ul><li>Majority of its old technologies will not be able to meet the novelty standards: priority date must be claimed within the 12-month period </li></ul><ul><li>Rollershoe should examine its patent portfolio and apply for patents in China for any new inventions </li></ul>
  17. 17. Enforcement of Patent Rights in China <ul><li>Good legal framework in place through legislative changes to bring its laws into compliance with international treaty obligations </li></ul><ul><li>Good registration/application procedures </li></ul><ul><li>Enforcement, or lack thereof, has been the focus of international attention </li></ul>
  18. 18. What Can Rollershoe Do in China? <ul><li>If Chee Ting applied for any patents for Rollershoe technologies in China, Rollershoe can invalidate these patents </li></ul><ul><li>Invalidation proceeding is before the State Intellectual Property Office </li></ul><ul><li>Decisions may be subject to judicial review </li></ul>
  19. 19. Enforcement Channels in China if Rollershoe Has Rights in China <ul><li>Administrative </li></ul><ul><li>Judicial </li></ul><ul><li>Factors to consider in choosing the appropriate channel: </li></ul><ul><ul><li>Are you seeking a quick, local solution? </li></ul></ul><ul><ul><li>Do you care about damages? </li></ul></ul><ul><ul><li>Administrative decisions may ultimately end up in courts </li></ul></ul><ul><ul><li>Most would recommend the judicial route for patent rights </li></ul></ul>
  20. 20. Customs Protection <ul><li>New Regulations on Customs Protection of Intellectual Property (IP) Rights came into force in March 2004 </li></ul><ul><li>Customs officials can detain and confiscate imported and exported infringing goods at the border </li></ul><ul><li>Two types of protection: </li></ul><ul><ul><li>Active protection: for pre-recorded IPR only; initiated by customs officials </li></ul></ul><ul><ul><li>Passive protection: recording of IP rights with the customs authorities no longer required; initiated by IPR holders </li></ul></ul>
  21. 21. Customs Protection (continued) <ul><li>Even though all rights can be recorded, customs is not very equipped to deal with complex patent infringement issues. </li></ul>
  22. 22. What Can Rollershoe Do in the US? <ul><ul><li>Section 337 investigation before the U.S. International Trade Commission: more and more Chinese companies are being sued and responding to the lawsuits </li></ul></ul><ul><ul><li>U.S. district courts </li></ul></ul><ul><ul><li>Customs actions at other countries where the infringing goods are sold: the EU countries for example </li></ul></ul>
  23. 23. The End <ul><li>Thank you! </li></ul><ul><li>Elizabeth Chien-Hale </li></ul><ul><li>[email_address] </li></ul><ul><li>TEL: 408-776-8719 FAX: 408-776-8718 </li></ul>
  24. 24. Trademark Protection in China 商标保护在中花人民共和国 <ul><li>Paul Jones </li></ul><ul><li>[email_address] </li></ul><ul><li>November 13, 2007 </li></ul>
  25. 25. Trademark Rights 商标权 <ul><li>Trademark laws and rights are territorial </li></ul><ul><ul><li>Even though one application can be filed in different countries </li></ul></ul><ul><ul><li>Even though an applicant may, after meeting certain requirements, claim the filing date of its first filing in the home country </li></ul></ul><ul><li>Your US trademarks will not protect you in China </li></ul>
  26. 26. What Rollershoe Inc. Could Have Done: <ul><li>Apply for Registration In China of: </li></ul><ul><li>ROLLERSHOE </li></ul><ul><li>All RS marks </li></ul><ul><li>我乐鞋 </li></ul><ul><li>WO LE XIE & DESIGN </li></ul>
  27. 27. What Rollershoe Inc. Could Have Done: <ul><li>Apply FOR Registration in China in multiple classes: </li></ul><ul><li>Footwear </li></ul><ul><li>Apparel </li></ul><ul><li>toys </li></ul>
  28. 28. The Trademark Application Procedure <ul><li>Applications submitted to the State Intellectual Property Office </li></ul><ul><li>Either directly or through the Madrid Process </li></ul><ul><li>Examinations currently backlogged by about 3 years </li></ul><ul><li>Status can be monitored online for free in Chinese </li></ul>
  29. 29. Trademark Protection in China 商标保护在中国 <ul><li>商标法 or Trademark Law adopted in 1982 </li></ul><ul><li>After two sets of amendments in 1993 and 2001, a third set of amendments in currently in progress </li></ul><ul><li>Regulation for the Implementation of the Trademark Law adopted in 2002 </li></ul><ul><li>Supreme People’s Court Interpretation on Several Issues Concerning the Application of the Law to the Trail of Civil Dispute Cases Involving Trademarks – 2002 </li></ul>
  30. 30. Enforcement of Trademark Rights in China 商标权实施 <ul><li>Good legal framework in place through legislative changes to bring its laws into compliance with international treaty obligations </li></ul><ul><li>Good registration/application procedures </li></ul><ul><li>Chinese courts do enforce trademarks, and especially foreign owned trademarks </li></ul>
  31. 31. Enforcement of Trademark Rights in China 商标权实施 <ul><li>Many IP decisions now available at: </li></ul><ul><li>http://ipr.chinacourt.org/ </li></ul><ul><li>Court web sites available at: </li></ul><ul><li>http://www.chinacourt.org/fyzx/ </li></ul>
  32. 32. What Can Rollershoe Do About Trademarks in China? <ul><li>Under the Trademark Law: </li></ul><ul><ul><li>Articles 15 & 41 – where an agent of a representative registers trademarks of the person for whom it acts – request TRAB to cancel </li></ul></ul><ul><ul><li>With respect to the RS marks, Articles 31 & 41 – registration by other cannot prejudice to prior right of Rollershoe – have 5 years to request review and cancellation by TRAB </li></ul></ul>
  33. 33. What Can Rollershoe Do About Trademarks in China? <ul><ul><li>With respect to RS marks, Articles 52 & 53 – use of similar marks </li></ul></ul><ul><ul><li>Articles 13, 14 & 41 – well known mark </li></ul></ul><ul><ul><li>Article 41 – Where the registration of a trademark was acquired by fraud or any other unfair means – TRAB shall cancel </li></ul></ul>
  34. 34. What Can Rollershoe Do About Trademarks in China? <ul><li>Under the 反不正当经济法 – Anti-Unfair Competition Law </li></ul><ul><ul><li>Article 5 – counterfeiting or copying packaging </li></ul></ul><ul><li>Decisions may be subject to judicial review </li></ul>
  35. 35. Enforcement Channels in China <ul><li>Administrative </li></ul><ul><li>Judicial </li></ul><ul><li>Factors to consider in choosing the appropriate channel: </li></ul><ul><ul><li>Are you seeking a quick, local solution? </li></ul></ul><ul><ul><li>Do you care about damages? </li></ul></ul><ul><ul><li>Administrative decisions may ultimately end up in courts </li></ul></ul><ul><ul><li>Trend is to r ecommend the judicial route </li></ul></ul>
  36. 36. The End <ul><li>谢谢 </li></ul><ul><li>Thank you! </li></ul><ul><li>Paul Jones </li></ul><ul><li>[email_address] </li></ul><ul><li>TEL: 416-703-5716 FAX: 416-703-6180 </li></ul>
  37. 37. China IPR Webinar Series November 13, 2007 <ul><li>Bruce A. McDonald </li></ul><ul><li>SCHNADER HARRISON SEGAL & LEWIS LLP </li></ul><ul><li>2001 Pennsylvania Ave., N.W., Suite 300 </li></ul><ul><li>Washington, D.C. 20006 </li></ul><ul><li>(202) 419-4235 </li></ul>
  38. 38. Questions <ul><li>What else might Rollershoe have done to protect its IP in the U.S? </li></ul><ul><li>What remedies does Rollershoe have in the U.S.? </li></ul><ul><li>Is Rollershoe liable for Sam Lo’s injuries? </li></ul>
  39. 39. Recordation of Trademarks and Copyrights With U.S. Customs <ul><li>See McDonald and Yoo, “Recording Trademarks, Trade Names and Copyrights with U.S. Customs: Requirements, Procedure and Fees,” in Masterson, ed., International Practitioner's Deskbook Series: International Trademarks and Copyrights - Enforcement and Management (American Bar Association 2004) </li></ul>
  40. 40. Review of Customs Determination <ul><li>Lois Jeans & Jackets, U.S.A., Inc. , v. United States, 5 C.I.T. 238, 566 F. Supp. 1523 (1983) </li></ul><ul><li>Ross Cosmetics Distribution Centers, Inc. v. United States, 18 C.I.T. 979, 34 USPQ2d 1758 (1994) </li></ul><ul><li>Sakar International, Inc. v. United States, 466 F. Supp. 2d 1333, 2006 Ct. Intl. Trade LEXIS 182 (2006) </li></ul><ul><li>United States v. Nippon Miniature Bearing Corp. and Minebea Co., Ltd., 25 C.I.T. 635, 155 F. Supp. 2d 707 (2001) </li></ul><ul><li>Vivitar Corp., Plaintiff v. United States , 8 C.I.T. 109, 593 F. Supp. 420 (1984) </li></ul>
  41. 41. Remedies in U.S. <ul><li>Action for Exclusion Order at U.S. International Trade Commission </li></ul><ul><li>Action for Injunctive Relief and Damages in United States District Court </li></ul>
  42. 42. U.S. Court Action <ul><li>Personal Jurisdiction </li></ul><ul><li>Trademark License / Joint Venture </li></ul><ul><li>Irreparable Harm </li></ul><ul><ul><li>Kitty Walk Systems, Inc. v. Midnight Pass Inc., 431 F. Supp. 2d 306 (E.D.N.Y. 2006) </li></ul></ul><ul><ul><li>Christopher Norman Chocolates, Ltd. v. Schokinag Chocolates North America, Inc., 270 F. Supp. 2d 432 (S.D.N.Y. 2003) </li></ul></ul>
  43. 43. ITC Complaint <ul><li>Faster / less expensive </li></ul><ul><li>Useful discovery for later court action </li></ul><ul><li>Decreases cost of later court action </li></ul><ul><li>Equitable relief against foreign parties not subject to personal jurisdiction </li></ul><ul><li>Easier burden of proof </li></ul>
  44. 44. ITC Complaint <ul><li>Section 337 of the Tariff Act of 1930, 19 U.S.C. § 1337 </li></ul><ul><li>In case of patent or trademark infringement, Section 337 prohibits: </li></ul><ul><ul><li>Importation </li></ul></ul><ul><ul><li>Sale for importation </li></ul></ul><ul><ul><li>Sale after importation </li></ul></ul>
  45. 45. U.S. Industry Requirement <ul><li>Relevant industry exists or is being established. </li></ul><ul><ul><li>investment in plant and equipment; </li></ul></ul><ul><ul><li>employment of labor or capital; </li></ul></ul><ul><ul><li>engineering, research and development; or </li></ul></ul><ul><ul><li>licensing. </li></ul></ul>
  46. 46. ITC Complaint <ul><li>Examined by Office of Unfair Import Investigations. </li></ul><ul><li>Recommendation to Commission w/in 30 days. </li></ul><ul><li>Commission usually determines whether to investigate w/in 30 days of filing complaint. </li></ul><ul><li>Notice of decision published in Fed. Reg. </li></ul><ul><li>If investigation is commenced, complaint is served on embassy of foreign respondent. </li></ul><ul><li>Decisions not to investigate are rare. </li></ul>
  47. 47. ITC Procedure <ul><li>Hearing before ALJ </li></ul><ul><li>Commission Rules, 19 CFR Part 210 </li></ul><ul><li>APA, 5 U.S.C. § 551 et seq. </li></ul><ul><li>ITC offices, Washington, D.C. </li></ul><ul><li>ALJ initial determination certified to Commission. </li></ul><ul><li>Commission may adopt, modify or reverse. </li></ul>
  48. 48. Counterclaims <ul><li>ITC does not hear counterclaims </li></ul><ul><li>But invalidity may be raised as defense </li></ul><ul><li>Counterclaim must be removed to federal court </li></ul><ul><li>Complainant may request stay of federal court action </li></ul><ul><li>Federal court counterclaim does not delay ITC investigation </li></ul>
  49. 49. Action by Commission <ul><li>Investigation concluded “at the earliest practicable time” = 15 months from publication of notice of investigation in Fed. Reg. </li></ul><ul><li>Decision not to review AJL initial determination is final agency decision </li></ul>
  50. 50. ITC Orders <ul><li>Exclusion Order </li></ul><ul><ul><li>All infringing products (general exclusion); or </li></ul></ul><ul><ul><li>Infringing product of named manufactuurer (limited exclusion) </li></ul></ul><ul><li>Cease and Desist Order </li></ul><ul><ul><li>Resale in U.S. </li></ul></ul><ul><li>Preliminary Injunction / TRO </li></ul>
  51. 51. Product Liability <ul><li>Rockwell, Trademark Licensor’s Liability for Injury or Death Allegedly Due to Defect in Licensed Product, 90 A.L.R. 4 th 981 </li></ul><ul><li>Note, Tort Liability of Trademark Licensors , 55 Iowa L.Rev. 693 (1970) </li></ul><ul><li>Franklyn, The Apparent Manufacturer Doctrine, Trademark Licensors and the Third Restatement of Torts , 49 Case W. Res. 671 (1999) </li></ul><ul><li>Franklyn, Toward A Coherent Theory Of Strict Tort Liability For Trademark Licensors, 72 S. Cal. L. Rev. 1 (1998) </li></ul><ul><li>Germain, Tort Liability of Trademark Licensors in an Era of &quot;Accountability&quot;: A Tale of Three Cases, 69 Trademark Rep. 128, 136 (1979) </li></ul>
  52. 52. Restatement <ul><li>§ 400 of the Restatement (Second) of Torts: “One who puts out as his own product a chattel manufactured by another is subject to the same liability as though he were its manufacturer.” </li></ul><ul><li>Compare Restatement (Third) of Torts: Products Liability § 14 cmt. d (1998) (apparent manufacturer doctrine &quot;does not, by its terms, apply to the owner of a trademark who licenses a manufacturer to place the licensor's trademark . . . on the manufacturer's product and distribute it as though manufactured by the licensor&quot;) </li></ul>
  53. 53. Issues <ul><li>Strict Liabilty </li></ul><ul><li>Control </li></ul><ul><li>Negligence </li></ul><ul><li>Defective Design </li></ul><ul><li>Need for enforcement action in U.S. </li></ul>
  54. 54. Factors <ul><li>Risk created by approving unsafe product </li></ul><ul><li>Ability and opportunity to eliminate unsafe character of product </li></ul><ul><li>Consumer’s lack of knowledge of danger </li></ul><ul><li>Consumer’s reliance on trademark / trade name </li></ul>
  55. 55. THE END .

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