China legal update: The SAMR releases Interim Regulation on Administrative Punishment Procedure in Market Regulation

I. Legal News

On November 6^th, 2018, the State Administration for Market Regulation (“SAMR”) issued the Interim Regulations on Administrative Punishment Procedure in Market Regulation (Draft for Comment) (the “Draft for Comment”) which is open for public comment until December 5^th, 2018.

The Draft for Comment is composed of 7 chapters and 81 articles. It clarifies the legislative purpose, applicable scope, basic principles, determination of the jurisdiction, general and simplified procedures, execution and conclusion of cases, among others.

According to the Draft for Comment, administrative punishment will be handled by local market regulation authorities, above the country level in the place where the offense took place, unless otherwise provided by the law. Provincial level market regulators will handle major and complicated cases in their jurisdiction while the SAMR will handle major and complicated cases across the country. The intent of the text is to unify the procedure of administrative punishment for market regulation.

The SAMR was created on March 17^th, 2018, it merged and took over the responsibilities of the previous State Administration for Industry and Commerce (SAIC), General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), the Certification and Accreditation Administration (CAC), the Standardization Administration of China (SAC) and the China Food and Drug Administration (CFDA).

(http://www.chinalaw.gov.cn/art/2018/11/5/art_33_209532.html

http://www.chinalaw.gov.cn/art/2018/11/5/art_33_209531.html )

On November 9^th, 2018, the Ministry of Justice (“MOJ”) released the Administrative Regulations for the Registration of Enterprise Names (Draft for Review) (“Draft for Review”), open for public comments until December 9, 2018.

The Draft for Review is made of 39 articles divided into 6 chapters and aims to reduce and simplify administrative procedures. Specifically, the Draft for Review replaces the examination and approval system for enterprise’s names by a declaration system (a new online system checked automatically for potential forbidden names or similar names) which enables the enterprises to be able to independently proceed to the name registration. The governmental authority will not review the similarity and requests the Enterprise to check itself through the online system. The Draft for Review also defines the formal elements that should constitute a company’s name and further clarifies what content is prohibited to be used in an enterprise name. It is also giving details on the period during which a declared enterprise’s name will be retained. Requirements and procedures of how to transfer of an enterprise name as well as how to authorize other enterprise to use its enterprise name are stipulated in the Draft for Review. In addition, dispute resolution mechanism and mandatory name cancellation system are also introduced in the Draft for Review.

(http://www.by-cpa.com/china/laws/coy/law_company_name.html)

On November 13^th, 2018, the China International Development Cooperation Agency (“CIDCA”) has published a draft on the Administration of Foreign Aid (“The Draft”) open to comments until December 12^th, 2018.

The Draft is composed of 43 articles spread through 7 chapters. It tackles the questions of foreign aid and policy planning, the management of foreign aid funds, the implementation of foreign aid management, the supervision and assessment of foreign aid and legal liabilities. The text distinguishes three categories of aid funds, the free aid, interest-free loans and concessional loans. The foreign aid will be classified according to its size and usage.

China’s aid spending isn’t public. However, according to a report by AidData, a research lab based at the College of William & Mary, the country would have spent USD 354.3 billion between 2000 and 2014, slightly less than the USA. On an annual basis China would now outspend the USA. A lot of China’s aid is now given through infrastructure investments in the One Belt One Road countries. Earlier this year, during the 2018 Forum on China-Africa Cooperation, China pledged USD 60 billion of aid for the continent in the next three years.

(http://www.cidca.gov.cn/2018-11/13/c_129992970.htm

http://www.chinalaw.gov.cn/art/2018/11/12/art_33_209566.html

https://www.aiddata.org/china)

II. Hot Topics

China’s trademark law was adopted in August 1982, two years after China joining the World Intellectual Property Organization (WIPO), in 1980. In May 2014 the Chinese Trademark Law was amended to include sound marks as registerable trademarks. The law now states in its article 8 that: “Any signs, including words, graphs, letters, numbers, three-dimensional symbols, color combinations, sound or any combination thereof, that are capable of distinguishing the goods of a natural person, legal person or other organization from those of others may be applied for registration as trademarks.”

Only four days after the amended law entered into force, on May 4^th, Tencent Technology Co., Ltd. (“Tencent”) filed a trademark application for the “didididididi”’ tone used by its instant messaging software, QQ. The application was rejected and Tencent applied to the Trademark Review and Adjudication Board (“TRAB”) for a review, which confirmed the first decision on August 24, 2015. Unsatisfied with the situation Tencent filed a lawsuit to the Beijing Intellectual Property Court, which eventually decided to revoke TRAB’s decision on May 7^th, 2018.

This case is the first administrative lawsuit of its kind since sounds can be registered as trademarks. As such it is interesting to look at the arguments developed by the court to assess the peculiarity of the sound.

The Court took several factors into account to decide of QQ’s tone’s distinctiveness. Elements as the duration, the complexity of the sound must be assessed. Besides that, an important factor was to determine if the sound had a specific rhythm, melody, that could be used to identify the source of the good or service based on that sound. In Tencent case, it appeared that the QQ tone is composed of clear, repetitive and brief sounds, which also possess a distinct rhythm. Thus, it is not just any kind of sound, but it is a distinctive, peculiar one. The Beijing Intellectual Property Court also based its decision on QQ’s large market share and number of users, the broad application of its “didididididi” for its services and the identification that results from hearing the sound.

The TRAB, which argued in its first decision that the tone was simple and lacked originality, made an appeal to Beijing’s Higher People Court. On October 25^th, 2018, the first decision was confirmed which means that the TRAB shall re-examine the trademark and render a new decision.

(https://www.sohu.com/a/271778608_115470

ip.people.com.cn/n1/2018/1029/c179663-30368115.html

https://www.lexology.com/library/detail.aspx?g=0ddfe942-1376-42ae-8695-6a97b31692e8)

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