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Anti-monopoly / Anti-unfair Competition

In addition to its role as China's leading law firm in patent, trademark and copyright litigation, LexField Law is also renowned for its achievements in antitrust, unfair competition and cross-border technology trade litigation. A few examples are cited here.

Anti-Monopoly

In 2005, Intel Corporation filed suit with the Shenzhen Intermediate People's Court charging Shenzhen Dongjin with infringement of software copyright and claiming RMB 80 million in damages.

In his defense of Donjin, Hongyi Jiang used Intel's own allegations to bring up an antitrust lawsuit with the Beijing First Intermediate People's Court against Intel targeting Intel's standard software licensing contract.

Though China had not enacted an anti-monopoly law at the time, Hongyi Jiang pointed to Article 329 of the Contract Law, which states that contracts that "illegally monopolize technology and impede the technical progress of technology are null and void." Hongyi Jiang alleged that provisions related to Intel's standard software licensing contract constituted an illegal monopoly of technology and an impediment to technological progress, which allowed the case to proceed successfully within the existing legal framework.

The Chinese media called it "the first case of intellectual property rights in China in 2006" and "the first antitrust case in Chinese high-tech area". The case drew widespread interest, forcing Intel to seek reconciliation and withdraw its allegation of software infringement against Donjin in exchange for Donjin's agreement to withdraw its litigation.

Unfair Competition Litigation

In 2008, a series of trade secret infringement disputes erupting between Foxconn and BYD was described in the media as "China's first case of high-tech intellectual property". BYD called upon Hongyi Jiang when the first instance of trial was nearing completion and the expert conclusion was unfavorable to BYD. Hongyi Jiang identified an enormous loophole hidden in the evidence that forced the plaintiff to withdraw quietly. Subsequently, local police withdrew criminal proceedings against BYD employees who Foxconn claimed had engaged in trade secret infringement, reversing the entire case and turning defeat into victory for BYD.

In 2008 and '09, LexField's litigation represented Google Inc., a U.S. company, in its lawsuit against Beijing Gu Ge (Chinese characters for "Google") Science & Technology Ltd., for the latter's use of the Chinese characters for "Google" claiming it constituted unfair competition. The case was a success, and the court ordered the defendant to change its corporate name to remove the Chinese characters for "Google". The Beijing First Intermediate People's Court singled out this case on Dec. 2, 2010, as the No. 1 case out of ten leading foreign-related intellectual property cases over the previous five years.

In 2009, LexField again represented Google Inc. in a suit against Shanghai Google Enterprise Co., Ltd., for its use of the Chinese characters of "Google" in its corporate name. The case was decided in our client's favor, with the court ordering the defendant to change its corporate name. 

In 2009 and '10, the LexField litigation team represented U.S. Johnson & Johnson and its related enterprises in China Xi'an against the Xi'an Qiangsheng Pharmaceutical Co., Ltd., for its registration of "Johnson" in Chinese characters for pharmaceutical trademarks, which we argued was unfair competition. The first instance was in our client's favor. In the second instance, the two parties reached a settlement in which the defendant agreed to transfer all trademarks containing "Johnson" in Chinese characters to U.S. Johnson & Johnson at a reasonable price and eliminate "Johnson" from its corporate name.

Cross-Border Technology Trade

In 2010, the Supreme Court issued its final decision on a patent infringement case involving Fuji of Japan Water Industries, Ltd., regarding the transfer of a non-patented technology to a Chinese company in China. The ruling found that the transferee's implementation of the technology infringed on the patent of another Chinese company. Consequently, Fuji of Japan was ordered to compensate the patent owner for more than RMB 50 million.

The case illustrates the huge infringement risk that can occur in cross-border patent licensing and non-patent technology transfers between Chinese and non-Chinese companies. Concerns of foreign companies have grown exponentially in recent years since many are engaged in cross-border technology trade with Chinese companies.

"Regulations on Technology Import and Export Administration of the People's Republic of China" are mandatorily applied to the cross-border technology trade. Article 24 of that document states, "the technology transferor to a technology import contract shall ensure that he or it is the legitimate owner of the technology supplied or one who has the right to assign or license the technology …Where the transferee to a technology import contract infringes another person's lawful rights and interests by using the technology supplied by the transferor, transferor party shall be found liable therefore."

In keeping with the legal provisions of mandatory application, it seems that foreign companies exporting technology to China cannot share with their Chinese counterparties or be exempted from liability as the result of an infringement of a third party's patents in China by their Chinese counterparties importing the technology. Instead, foreign companies are subject to corresponding liability.

In such scenarios, foreign companies can face unpredictable risks when exporting technology to China, especially when applying for a package of patent licensing involving many patents.

To help our clients deal with this issue, LexField has developed unique insights and legal resolutions based on years of in-depth study of Chinese laws and relevant international treaties. We know how to resolve legal risks that can arise from the mandatory application of the "Regulations on Technology Import and Export Administration of the People's Republic of China" to related technology import and export contracts, and we have a proven record of doing so for numerous multinational clients.

 

 

 

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