You joined Simmons & Simmons as a partner in 2014, when you led the launch of the Simmons & Simmons (Beijing) Intellectual Property Agency. Which three key takeaways have you learned about effective management in this role?
First, empower your people for growth and development, by building more autonomy into your workplace. Second, ive your people time to develop. Real change takes time. Finally, if your objectives and goals are genuine, you can trust your instincts and intuition.
You have often talked about your sense of optimism. How is this embodied in your day-to-day work?
Finding a purpose in life is a good foundation for optimism, and I think this applies equally to work. To this end, I focus on IP law as being a way of giving value to what makes humans special, and using this to reward people for their extraordinary contributions. Shakespeare may have written “let’s kill all the lawyers”, but I think he would have benefitted from having a good copyright lawyer, who made certain that he received the recognition and rewards that he was due during his lifetime. The same could be said about Mozart. There is also Johannes Gutenberg who gave everything he had to develop the printing press and who died penniless. His ending is especially sad when you think about how his invention is credited for changing the course of history. Shakespeare, Mozart, Guttenberg and others deserved better endings, and I think they would have benefitted from our modern IP legal system. From this perspective, I think it is easy for IP lawyers to be optimistic.
Late last year, China’s State Administration for Market Regulation threatened to revoke the operating licences of platforms that fail to take proper action against counterfeiters. What impact - if any - do you expect this move to have on levels of counterfeiting in China?
This penalty was included in a Draft E-commerce Law of the People’s Republic of China (“Draft”) that was released in August 2021, which provides that the administrative authorities can revoke the licence of platforms ex officio in cases where there are “extremely serious” violations of the E-commerce Law of the People’s Republic of China. If this provision makes its way into the final promulgated E-commerce Law of the People’s Republic of China, I suspect that it will have limited application in only very exceptional cases. However, it should still help somewhat by requiring online platforms to exercise greater care in dealing with counterfeiters, under the threat of having their licences revoked.
You have been hailed as “the top IP lawyer in China”. How do you stay at the top of your game?
This is a humbling question, which I would qualify with my own opinion that there are some exceptional IP lawyers in China that may be more worthy of such praise. However, if you were to ask me how I try to stay relevant in my profession, I think that it is important to stay abreast of recent developments and, even more important, remain committed to finding innovative and creative solutions for your clients’ problems. Our clients are very sophisticated and they have seen the same arguments applied again and again to their problems; this being the norm, if you can deliver results through a creative application of the law or find a way to push for change, this gets their attention.
Despite the China National Intellectual Property Administration (CNIPA) reiterating its determination to crack down on malicious filings, bad-faith trademark filings increased by more than 3,000% in 2021 according to statistics released by the authority. Is the CNIPA using the right strategy to combat this phenomenon?
I think that the CNIPA is moving in the right direction in dealing with bad-faith trademark applications, but I also think that the CNIPA can do a much better job of deterring trademark squatters and their agents as part of a broader strategy to combat malicious filings. For the record, the CNIPA has adopted several methods for dealing with malicious trademark filings, which includes stricter examination guidelines and issuing administrative fines against trademark squatters and their accomplices. We are seeing some success with an increasing number of ex officio refusals of malicious filings and more successful trademark opposition and invalidation actions decided against trademark squatters based on their bad faith. However, the CNIPA’s administration of fines against squatters and their accomplices has been less impressive. The CNIPA can fine trademark squatters and their trademark agents between Rmb10,000 and Rmb100,000 ($1,480 to $14,800), which by itself may not be enough to deter trademark squatters. Furthermore, the fines that have been issued to date are at the lower end of the range and appear to be more symbolic than anything else. At the same time, we cannot expect to rely solely on the CNIPA’s efforts to eliminate trademark squatting and I think that Chinese courts and the government should also increase their efforts in addressing the problem of bad-faith filings.
The CNIPA has recently issued measures for the fast-track examination of trademark applications for trial implementation, but there have been concerns that the relevant requirements weigh against foreign applicants. Are these concerns justified?
Although it is true that foreign applicants are less likely to meet the requirements for fast-track examination, if you consider the requirements for fast-track examination approval, foreign applicants should not be concerned. Fast-track examination shortens the examination period of a trademark application to within 20 working days compared to four months as the new average examination timeline for new trademark applications. However, the documents required in support of a fast-track application are not easily obtained, such as recommendations or review opinions from central and state organs, provincial peoples’ governments or their general offices, or provincial IP management departments, and so on. This is a significant hurdle that must be overcome before you can even apply for the fast-track process and it is also still not clear how long it will take the CNIPA or China Trademark Office to review and approve an expedited examination request. Taken together, at this time, I cannot see how the fast-track examination process offers any exceptional time saving over the regular examination process.
Do you think IP rights were adequately protected during the Beijing Winter Olympics?
I think that China did a good job of protecting Beijing Winter Olympics IP rights. On the trademark squatting front, the CNIPA rejected many malicious trademark applications that targeted the Beijing Winter Olympics mascot Bing Dwen Dwen and Chinese Olympic star Gu Ailing (Eileen Gu’s Chinese name). Counterfeiting was also addressed, with several reported criminal convictions for the counterfeiting of Beijing Winter Olympics paraphernalia, including one case in which a counterfeiter received a one-year prison sentence and a Rmb40,000 ($6,290) fine. The crackdown on counterfeit Olympic paraphernalia had a knock-on effect resulting in high demand for Bing Dwen Dwen stuffed toys, with the topic of “too hard to get a Bing Dwen” trending on Weibo (China’s equivalent of Twitter). The shortage could be attributed to a shortage of genuine Bing Dwen Dwen stuffed toys that were only available from official authorised dealers.
The Chinese courts have been more active in applying punitive damages in trademark cases in the past couple of years. What advice would you give to rights owners looking to claim punitive damages?
While it may be the case that it is easier now to claim and secure punitive damages in trademark infringement cases, trademark owners should keep in mind that there may be costly consequences for making an overly speculative punitive damages claim. Court filing fees for a trademark infringement case are directly related to the amount of damages claimed (including punitive damages), and the higher the damages claim, the more you can expect to pay in court filing fees. The return of the entire amount of court filing fees is dependent upon a plaintiff successfully securing a full damages award. As such, if the punitive damages claim is rejected in whole or part, the plaintiff will end up forfeiting a part of their court filing fees.
Last year you expected that trademark squatting in China would finally begin to be reined in through the collective efforts of the government, the courts, the CNIPA and brand owners. Is the country on the right path?
I think that we are on the right path but the actors are out of step. As a result, it does not matter whether the government, the courts, the CNIPA and brand owners all want to curtail trademark squatting, unless we have greater alignment to advance this objective. Take for example two important cases that were decided last year that addressed the issue of making trademark squatters liable under tort law. One case was decided in Beijing and the other was decided in Fujian Province. Unfortunately, we had differing decisions from the courts. In the first case ((2021) Jing Min Zhong No 497), the Beijing High Court refused to recognise a tort claim filed against a trademark squatter and its trademark agent, and, in its opinion, decided that attaching civil liability to trademark squatting was unnecessary as brand owners can resolve all of their trademark squatting problems through administrative proceedings at the CNIPA. On the other hand, the Fujian Higher Peoples’ Court ((2021) Min Min Zhong No 1129) held that a group of defendants were liable for their coordinated trademark squatting activities under Anti-unfair Competition Law and Tort Law. I agree with the Xiamen Court’s reasoning over that of the Beijing Court, and I think that most people believe that attaching civil liability to trademark squatting could make a huge difference in deterring trademark squatting activities. Despite the differing opinions from the Fujian High Court and Beijing High Court, the issue of whether trademark squatters can be held liable for trademark squatting should be settled this year, when the Supreme Peoples’ Court reviews the Beijing High Court’s decision under a retrial petition filed by the trademark owner. As the highest court in the land, the Supreme Peoples’ Court can rule that the Fujian High Court’s assessment of the law is preferable over that of the Beijing High Court’s. This should be the most important trademark case in China for 2022.Finally, I think it is worth mentioning that the trademark owner’s application for retrial to the Supreme Peoples’ Court to review the Beijing High Court’s decision is an excellent example of how a brand owner’s efforts can achieve greater alignment.
Can AI-driven trademark monitoring programmes help combat trademark squatting in China?
Definitely. AI monitoring programmes can be very efficient in completing this task, while also reducing costs and without sacrificing the quality of monitoring results. To the extent that AI-driven trademark monitoring programmes can be very efficient in finding trademark applications that may be of concern, AI can also identify complicated filing patterns that can help brand owners connect related bad-faith filing activities, such as when a trademark squatter uses multiple shell companies to conceal large-scale trademark squatting activities. These features make AI-based trademark monitoring programmes superior to a human expert performing the same services.
Partner, Head of Beijing Intellectual Property Agency
George Chan is a partner in the China dispute resolution group and head of the Simmons & Simmons (Beijing) Intellectual Property Agency. He is a leading authority on intellectual property in mainland China and leads a veteran team that specialises in securing and enforcing IP rights, as well as advising on commercial and regulatory IP matters. Mr Chan is also at the forefront of the rapidly evolving field of online branding in China.