PROTECTING YOUR INTELLECTUAL PROPERTY RIGHTS IN INTERNATIONAL MARKETS By Michael R. Polin, Esq. An International Law Firm Specializing on China and India Business Practices and Cooperation Agreements Certificate in Global Program CSUSM, October, 2005 Importing and Strategic Outsourcing

A well-developed, comprehensive IPR strategy should be a major part of the business plan of any company looking to do business in or with China. A company must identify its IPR, control it and protect it.

What are Types of I.P. rights? –Literary –Musical –Dramatic –Pantomimes –Choreographic works –Pictorial, Graphic and Sculpture –Audiovisual and Sound Recordings. –Patents –Know hows –Product blue prints –Specifications –Drawings –Manufacturing and test procedures –Trade names, trade marks –Market intelligence –Feature Films –Television (Cable, Satellite, Terrestrial) especially animation and co-productions –Mobile Phone Content –Internet Content –Publishing –Newspaper –Books –Magazines –CD-ROM –VCD –Children, teenager, adults –Foreign –Merchandising –Licensing and Intellectual Property Rights (IPR) protection

Technology Transfer Agreements and Equity arrangements Be very careful! What is being transferred? What is the Registered Capital Valuation? What is the total consideration ratios in cash, time, software and how does that equal the Chinese contribution? Look for low valuations and be prepared to fight for the higher value.

ISSUES TO EVALUATE WHEN CONSIDERING INTERNATIONAL I.P. TRANSFERS WITH COPYRIGHTS, TRADEMARKS, AND PATENTS. Legal system Government support Current State of the Regulatory Environment Censorship Foreign Participation in Media Euro-Sino-Foreign Co-Productions (Government and Private) Distribution Networks Agreements, Partners, Acquisitions, Strategic Alliances ( The right ones) –Joint Ventures –Agreements in Principle –Articles of Association –Technology Transfer agreements Revenue Sharing Foreign Investment ( operations and management) Piracy Key Legislation Copyright Consultation Branding Marketing Strategies and Channels-Targets E-Commerce Strategies New Product and Service Development Customer Relationship Management Sales Strategies Technical Support Services Strategies

CHINA IP PROTECTION APPEARANCES ARE GOOD BUT STAY AWAKE China is a member of, and has ratified, the following agreements: Berne Convention for the Protection of Literary and Artistic Works (since 1992); Convention for the Protection of Producers of Phonograms Against the Unauthorized Duplication of Their Phonograms (since 1993); Paris Convention for the Protection of Industrial Property (since 1985); and World Intellectual Property Organization Convention (WIPO) (since 1980).

But When it comes to your Intellectual Property Rights: It behooves all traders and investors to take aggressive measures to minimize their potential IPR vulnerability in the market. For trademarks, you must file with the State Administration of Industry and Commerce to receive protection. You should also notify Customs. For patents, you must file with the State Intellectual Property Organization (SIPO) to receive protection. At a minimum, it is advisable to register copyrights in China, even though you may theoretically receive protection under the Berne Convention. Confirm this with your legal counsel, as the copyright treatment across industries is not identical. You should also notify customs. Affix a copyright stamp (year of first notice of copyright or publication and owners name), file with the Copyright office with a deposit and Register there accordingly. This will provide most of your protection. Protection without following procedures: Common Law Copyright Protection. Term: Authors death plus 50 years.

I.P INFRINGEMENTS AND WHAT MUST BE PROVED? What is Copyright Infringement and what must be proved to be successful in defending an authors right to protect his I.P. Proof: A complaining party must prove that: –he/she owns the rights in issue and the defendant is infringing on those rights (copyright filings, usage, publication) –that the defendant/infringer copied complainants work, and that this was an improper appropriation (work must be similar or could be strikingly similar allowing inferences and the reduced burden on proving access) –and that defendant had reasonable access to the copyrighted work Signed agreements as to originality and acceptance of patent, trademark, or copyright are very strong evidence sources.

BEST WAYS TO REDUCE RISKS FOR I.P. INFRINGEMENTS Prevention - The best weapon is prevention. Be clear of your rights before the product ever crosses the border into China. Every legal means available should be used to mitigate the risks from the start, including: –Incorporating copyright protections into contracts and marketing strategies; –Entering into written and enforceable contracts that require agents, suppliers, distributors and employees to protect your copyright; –Refusing to register your software copyright unless and until you have clearly determined that registration is necessary; –Refusing to assign or license your copyright unless and until you fully understand the consequences; and –Making certain that your rights in the copyright remain upon termination of the assignment, license, transaction or investment. Protection – If you discover that your copyright has been violated, do something immediately to protect and enforce your rights. Investigations, raids, seizures as well as civil litigation, administrative proceedings and criminal prosecutions are some of the tools available. Before deciding which tool(s) to use, however, you should ask the following preliminary questions: –Is the copyright registered or otherwise protectable in China? –Is the harm being caused in China or overseas? –What is the source of the harm? Competitors? Employees, agents or contractors? –Seek Legal advice immediately

C.S. CONSUMPTION SEDUCTION OR BIGGER IS NOT NECESSARILY BETTER DONT BE SEDUCED TO MAKE BAD JUDGEMENT DECISIONS BECAUSE OF SIZE AND POTENTIAL

RELATIONSHIPS ARE YOUR BEST PROTECTION JUST ASK: RUPERT MURDOCH DISNEY AND WARNER BROTHERS WHAT HAPPENS WHEN YOU DO NOT HAVE THE RIGHT ONES.

FREQUENTLY ASKED QUESTIONS What must a foreign copyright holder do to become eligible for copyright protection in China? Must the copyright holder register the work with a Chinese government entity? Because the United States and China have entered into bilateral agreements and are signatories to various copyright treaties, the rights holder may enjoy copyright protection within China, even if the work was first published outside of China. Works of foreigners first published in China are also eligible for protection within China. A work by a foreign author that is published in China within 30 days after it is published outside China is deemed as simultaneously published in China. What is the duration of copyright protection in China? Fifty years, or the life of the author plus 50 years in the case of an individual author. Where should a copyright holder file a complaint alleging copyright infringement? A copyright owner may choose between two channels to seek redress for copyright infringement: a) administrative adjudication by the local copyright bureau; or b) judicial adjudication beginning with the local intermediate Peoples Court. If a copyright holder selects the administrative channel, can the owner obtain compensatory damages? No. Only a court can award compensatory damages to a copyright holder. If the court finds the plaintiff has met its burden of proof, the maximum amount to be awarded to the copyright holder is RMB500,000 (US$62,500) in cases where illegal gain is difficult to determine.

Continued Frequently asked questions. What administrative remedies may be imposed against the infringer by the local copyright bureau? Administrative Fine. The local copyright authority may order an administrative fine not exceeding three times the illegal revenue received by the infringer, provided that the copyright bureau makes a factual determination that the infringement has caused harm to social and public interests. If it is difficult to calculate the illegal revenue, the copyright bureau may impose a fine not to exceed RMB100,000. These fines are not compensatory damages paid to the copyright holder, but are paid to the Chinese government. Cease and Desist Order. Confiscation and Destruction. Confiscation of the Means of Manufacture. Means of manufacture refers to items used to produce the infringing work, including materials, tools, and equipment. Referral to the Procuratorate. In instances where the circumstances are serious, the copyright authority may refer the case to the Procuratorate for criminal prosecution. If a party to an administrative proceeding before a local copyright authority objects to the administrative penalty, may either party appeal to the peoples court? Yes, within three months after receiving written notification of the decision.