As this chapter will show, the case of fake Beijing Olympics merchandise is rather curious. Even though there undeniably is a significant reduction of this merchandise in Beijing and other major cities during the Olympic Games, fake merchandise was widely present in other parts of the country. To a large extent, the presence of fake Olympic merchandise has shown that the challenge of confronting counterfeiting in China is more a reality than an excuse. It also provides an instructive example for understanding what the Chinese government can and cannot do in its effort to combat massive counterfeiting, the necessary complements for success, and the remaining challenges concerning efforts to protect trademark rights in such a large, complex, and highly populous country.

This chapter begins by describing the measures that the Chinese government and the Beijing municipality had taken in the run-up to the Beijing Olympics. It then explains why the case of fake Beijing Olympics merchandise provides an instructive example of the challenges to combating massive counterfeiting in China. In particular, this chapter explains the local protectionism problem, the need for both the government will and the people’s will, and the inevitable trade-offs concerning the use of enforcement resources. The chapter concludes with some lessons on the future protection of trademark rights in China.

Featured here is an abstract of a paper by , IP Osgoode Research Affiliate, Kern Family Chair in Intellectual Property Law and Founding Director of the Intellectual Property Law Center at Drake University Law School. Born and raised in Hong Kong, Professor Yu is a leading expert in international intellectual property and communications law. He also writes and lectures extensively on international trade, international and comparative law, and the transition of the legal systems in China and Hong Kong. The full article can be found .

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The saga began in 2011 when Proview alleged that they remained the trademark holders of the name “iPAD” from their development of that was “an all-in-one internet terminal” in 2000. Although Apple supposedly purchased a worldwide iPad trademark in 2009 through Proview’s parent company in Taiwan, Shenzhen Proview contend that this deal did not include the PRC jurisdiction. Proview successfully influenced some cities in China to when it won its case as the rightful owners of the trademark in a decision by the People’s Court of Huizhou in Guangdong province.

The case then went downhill for Proview when a California judge dismissed their claim against Apple in a U.S. Superior Court a few months ago. In the filing, Proview argued that Apple intentionally misrepresented itself by using a shell company called IP Application Development Ltd. (IPADL) to purchase the trademark rights from Proview Taiwan, effectively hiding Apple’s interest in the purchase. A proxy company is often utilized in business transactions to ensure that purchase prices are not irrationally inflated when a high-value buyer is involved. Indeed, one can easily imagine a few extra zero’s behind IPADL’s purchase price of $55,000 if it was publicly known that Apple Inc. was the buying party. Judge Mark Pierce of the Superior Court of California in Santa Clara granted Apple’s motion to dismiss the case on the grounds that he saw no reasons for the dispute not to be resolved through mediation in Hong Kong (as the parties had already agreed to).

In the PRC, trademark law operates strictly on the basis that legal owners of trademarks are determined on a first-file, first-served basis. The current battle with Apple remains focused on whether these trademark rights were appropriately transferred to Apple through the necessary procedures according to PRC intellectual property law. ��As of right now, Mainland Chinese officials have held that it was not, with the State Administration for Industry and Commerce (SAIC) issuing their in April of this year (*N.B.: Original transcript and video of the SAIC’s press conference is in Chinese). According to Chinese law, the original sale of the iPad trademark would require Apple (or IPADL in this case) to have signed an agreement with Shenzhen Proview instead of its parent company to validate the transfer of the trademark rights in the PRC. Thus, at present, Shenzhen Proview remains the rightful trademark��holder to the name “iPad” in Mainland China.

In early May, Apple reportedly for Proview to release the trademark rights it still technically holds in Mainland China. An agreement has yet to be reached however, as this amount fell far short of cash-strapped Proview’s original demand of $2 billion, as well as its subsequent amendment to $400 million. Given that Shenzhen Proview is on the verge of bankruptcy, but are quick to point out that the motivation behind Proview’s fervent challenge against Apple seems to be an attempt to amass more money for paying off its debts to creditors.

While the ongoing settlement negotiations between Apple and Proview has meant that the iPad 3 is currently unavailable to residents in the Mainland, Apple’s decision to continue its expansion into more Chinese cities may signify its confidence in a swift resolution to the issue at hand. It is worthwhile to note that some regard the PRC government as being caught in a situation where . As Apple’s , China remains a profitable territory for Apple and it is hard to imagine Chinese citizens being comfortable with having access to the full range of Apple products available in their shopping centres, save for the iPad. Nonetheless, given that Hong Kong is merely an hour’s subway ride from Shenzhen and costs roughly $5 Canadian one way, the option remains for Mainland residents to purchase the iPad in Hong Kong where the device is readily available, sans tax. This could mean that Apple’s forays into China without the draw of the iPad may not be as dire as expected.

Fan Hannah Lan is a JD candidate at Osgoode Hall Law School.

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Thomson-Reuters’ forecast is supported by the People’s Republic of China State Intellectual Property Office’s����(the Strategy), a document that was published November of last year containing tactics to significantly increase the nation’s patent production. The Strategy aims to reach 2 million patent filings per year by 2015 and to double both domestic and overseas applications. The document outlines approaches to achieve this, such as increasing patent examination and approval efficiency by cutting waiting times down to as little as 3 months and doubling patent examiners to 9000, as well as enhancing benefits of utilizing patents and protecting the rights of patent holders by improving patent law and regulations.

The Strategy is certainly ambitious, especially considering that China did not even have a patent law system in place until 1985.������noted their skepticism towards this pending patent explosion, expressing concerns that there may be a major quantity versus quality discrepancy.

Firstly, there are three types of patents in China: invention, utility model, and design. Chinese patent law allows double patenting where an applicant is able to simultaneously apply for an invention patent and a utility model patent. The utility model patent, which provides protection for a product’s shape or structure, requires no substantive examination and is typically granted very quickly. In some sense, it acts as a placeholder “mini-patent” before the invention patent, which does involve a potentially lengthy examination, is granted. A utility model patent must be abandoned before the invention patent is granted for the same product. These utility model patents are also often used to protect new ideas applied to pre-existing products. Hence, China’s numbers may have been artificially inflated. Three years ago, a legal expert proclaimed that the standard is so low that��. Since then, amendments have been made to the law in an effort to raise the quality of Chinese patents to meet international standards but we have yet to see evidence of a genuine technical innovation burst.

The second issue with patent quality is the use of state incentives for filing patents,including cash bonuses, residence permits, tenure, fee waivers, substantial tax breaks, and government contracts. These inducements then trickle down companies to its individual employees��. While these strategies technically work to aggressively increase numbers, they are misleading in painting China as an inventive nation. The problem is that these incentives are granted for patents, and not innovation.

The Strategy suggests that China is aware of these concerns, promising to enhance patent quality, as well as “”. The approach they appear to be taking is to establish themselves as global patent leaders in numbers first and then gradually refine quality. It is possible that what China will end up with is a mountain of useless patents but��. For example,��.

Nancy (Meng Xiao) Situ is a JD candidate at Osgoode Hall Law School and was enrolled in Professor Mgbeoji’s Patents class in Fall 2011. As part of the course requirements, students are asked to write a blog on a topic of their choice.

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