Seven Judges from Hushun Intermediate Court Investigated for Complicity in Fabricated Famous Mark Litigation

"Regulations on Fair Trade in Book Business" Alleged to Violate Anti-Monopoly Law

Taiwan - Foreign Investment

Taiwan Allows Increased High Technology Investment into China

CHINA

INTELLECTUAL PROPERTY

Seven Judges from Hushun Intermediate Court Investigated for Complicity in

Fabricated Famous Mark Litigation

Seven judges from the Hushun Intermediate Court in Liaoning Province were dismissed from their positions for alleged involvement in fabricated litigation recognizing trademarks as famous. The seven judges have been placed under investigation by the Chinese government and are currently awaiting trial. The seven judges will join other judges from other courts in Liaoning province and 10 lawyers who have also been placed under investigation.

China's recognition and protection of "famous trademarks" began when China joined the Paris Convention for Protection of Industrial Property in 1985. Currently, a trademark can only be formally recognized as famous by either a local Administration of Industry and Commerce or by a court ruling. Having a mark recognized as a famous mark allows an enterprise to receive greater protection for the mark. Enterprises that have invested in a mark which earns famous mark recognition also enjoy monetary rewards issued by local governments.

According to recent reports, rewards from local governments have ranged from five million yuan in cities such as Shenyang, to one million in smaller regions of Southern China. The number of famous recognized trademarks is sharply rising. During the period from 2006 to 2009, there was a great increase in the number of recognized famous trademarks. Many of the companies requesting famous trademark recognition mostly came from the coastal provinces of Jiangsu, Zhejiang and Fujian.

Generally speaking, in such a case, a company will contact a trademark agency to fabricate "infringement" facts and file a lawsuit against another company or a "non-existent violator. It would then coordinate with court judges, who would then rule in the favor of the company and certify the company's mark as a famous trademark. As a result, trademarks that were not famous were certified as such, while the company that owned the trademark would receive an award for their famous trademark. According to Chen Jiamen, Assistant Professor of Tsinghua University Law School, "for many cases involving court recognition of famous trademarks, they meet formal requirements for filing the case, however, it's actually a collusion between companies and trademark agencies behind the scenes."

Rules on Fair Trade in Book Publishing Alleged to Violate Anti-Monopoly Law

Three publishing industry trade associations have obtained government approval to issue industry rules on book sales. The three associations, Publishers' Association of China, Books and Periodicals Distribution Association of China, and China Xinhua Bookstore Association issued "Regulations on Fair Trade in the Book Business", to the opposition of the China Consumers' Association and the Beijing Lawyer Association's Consumer Protection Committee. Among other things, the Regulations require book sellers not to discount book prices for one year and limit online book sellers to discounts of no more than 15%.

The opposition states that the "Regulations" will deprive retailers of their right to set independent prices for books, and this will lead to unfair competition, in violation of China's 2008 Anti-Monopoly Law. The criticism came shortly after a Beijing lawyer expressed a similar viewpoint in a letter to the National Reform and Development Commission to state that the Regulation is flawed. According to the Beijing Times, the letter said that setting prices for book retailers not only damaged their right to autonomous management, but also violated the rights of consumers who want discounts on book prices. However, as reported by Beijing Youth Daily, the Publishers' Association of China defended the Regulation by saying that the criticism was unfair. "The book industry is different from any other industry and it is not very profitable either. Large discounts will only damage the interests of publishers," according to the Publishers' Association of China. Both sides have suggested that the government should try to investigate and correct the situation.

The "Regulations on Fair Trade in Book Business" has 30 provisions, which give comprehensive regulations on ordering, displays, returns, purchase, and sales promotion. The Regulations are currently a trade custom with no legal binding force. According to Article 30 of the Regulations, compliance with the Regulations by suppliers and distributors engaging in book transactions throughout the country will depend on their self-discipline. A lot of the Regulations cover routine business issues like 180 days maximum credit, and timely payment of accounts payable, since late payment is a significant concern of book publishers. It is the provisions which affect consumer pricing that have attracted the most attention.

TAIWAN

FOREIGN INVESTMENT

Taiwan Allows Increased High Technology Investment into China

Taiwan announced that it would allow more high technology investments in China, but with some restrictions. The new policy would allow high-tech companies to invest in, build, or acquire plants in China. However, the plants in China must be less advanced than those in Taiwan and the total investment in China cannot exceed the total investments in Taiwan. In addition, the maximum number of Taiwan-invested flat panel display and chip manufacturing plants in China will be capped at three.

Investment proposals by Taiwan companies will be reviewed by a core technology screening task force to be created by the Ministry of Economic Affairs. Although the committee has not been formed yet, the MOEA has stated that members of the task force will include ministry and agency officials and industry experts. The task force will review investment proposals based on the level of technology, investment amounts, and company finances.

An MOEA official has stated that the MOEA's goal is "the companies' top technologies should be kept at home and their investment priority must also be at home." AU Optronics Corp. (AUO), a leading flat panel display maker in Taiwan, has praised the government's slackening of high tech investments regulations as aiding the flat panel display industry in market competitiveness. AUO announced through a spokesperson that the company hopes the government will look over and approve proposals quickly and efficiently in order to facilitate investments in an increasingly competitive and changing market environment.

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