“An Enterprise Should Have Its Own IP Team”— An interview with Wang Longxia, Representative of the NPC

Wang Longxia,[Comprehensive Reports]

On March 13, 2009, the 2nd Session of the 11th National People’s Congress (NPC) recessed in Beijing. Nearly 3,000 representatives were present at the session. Their motions and proposals attracted wide attention from all parties.

Wang Longxia, an NPC representative, and Director of the IP Department of the Guangdong Galanz Group Co., Ltd., offered proposals related to intellectual property rights at the session. What are the contents of these proposals, and how does corporate IP work? With these questions in mind, China IP arranged an interview with Ms. Wang during that session.

China IP:Could you briefly describe the proposals you put forward at the National People’s Congress and the Chinese People’s Political Consultative Conference (NPC & CPPCC)?

Wang: I put forward four proposals, two of which involved intellectual property rights. What I hope for the most is that I could receive feedback on one of my two IP proposals concerning trademark infringement disputes caused by OEM (Original Equipment Manufacture) products for foreign clients. Generally, I hope that customs can, in the future, work to handle such disputes in light of the specific situation rather than confiscating all the goods.

China IP:How does the Customs deal with these types of disputes at present?

Wang: The Regulation of the PRC on the Customs’ Protection of Intellectual Property Right explicitly specifies that “the State prohibits the importation and exportation of goods which infringe intellectual property rights.” Thus, OEM products for foreign clients will constitute infringement if, when exported, they bear identical or similar marks with the same type of products made by Chinese enterprises. If the relevant trademarks have been recorded with the Customs by the trademark owners, the alleged infringing goods will be seized. As I see it, such practice conforms to neither China’s situation nor international customs practice.

After investigation and research, as well as communications with many experts, I find that foreign OEM has the following particularities. They are:

First, the consigners of foreign OEM are foreign companies, and most of them are the holders of lawful trademarks. The reason for their unwillingness to register their trademarks in China is that they do not sell their products in China. Yet, we restrict the exportation of their products simply because of trademark-related issues. I don’t think this is reasonable.

Second, from the perspective of the larger environment, OEM plays a very important role in China. It has contributed to the growth of China’s economy and the development of China’s private economy. Presently, many private enterprises in the eastern part of China are doing OEM. As a matter of fact, some large enterprises like Midea and Galanz started by doing OEM and eventually become pillar enterprises in China’s household appliance industry. These OEM enterprises, in dealing with the foreign markets, have accumulated a lot of hands-on experience, such as learning how to avoid anti-dumping investigations, and have gained advanced management experience in order to understand the international market. In addition, the development of private enterprises has also had a positive impact on employment. For example, there are 40,000 employees at Galanz and 60% of its output value depends on OEM. This indicates that the existence of OEM is important. Though China endeavors to promote the export of domestic-owned brands, the reality is that China’s domestic-owned brands do not exceed 15% and it will take a long time to change this situation. Given the above factors, I take the view that the current system does not comply with China’s situation.

Third, this system may give rise to a series of problems, such as trademark squatting. For example, in 2006, a company registered 180 trademarks in Hong Kong, which were later rejected. In Guangdong, many enterprises’ goods need to be exported abroad through Hong Kong. If that person’s registrations had been approved, the consequences would have been unthinkable.

Lastly, OEM is actually a common practice around the world and it was not created by China. TRIPs require member countries to check imports; the exports of OEM products are for choice. So in many countries, according to different degree, suspected infringing goods are returned or their infringing marks were eliminated before imports. This type of method will not go against TRIPs and could take suitable measures according to different situation. In contrast, China’s law, with strict enforcement regulations, is not as flexible as in other counties.

China IP:What is the root of this problem in your opinion?

Wang: In my opinion, this problem has its source in the Article 52 of the Trademark Law providing that an act shall be an infringement of the exclusive right to use a registered trademark if it involves the use of a trademark that is identical with or similar to a registered trademark in respect of the identical or similar goods without authorization from the trademark registrant. The region of trademark is another problem. Although the owner has trademark right in the country where he sells the goods, if he didn’t register his trademark in China, when he uses it in China, it causes infringement upon similar trademarks registered in China. At present, there are different understandings on the legal nature of OEM infringement in academic filed. In recent years, some cases handled by the customs and the courts raised the public’s attention. Many enterprises consider “OEM is dangerous” or “OEM enterprises have overloaded responsibility”.

China IP:How should this problem be solved in your view?

Wang: I hope that under the current legal framework, Customs, the industry and commerce departments, and the courts can join together to formulate relevant measures on OEM by considering the special form of foreign trade, and treat such cases differently, or at least not directly confiscate the goods. For example, for the same or similar goods, if the trademarks are similar and owned by people in different countries and the owner could prove he has trademark right and the OEM products are all sold by the owner, it should be treated differently. However, I think the most fundamental need for change is the revision of the Trademark Law. Some specialists provided many good proposals.

China IP:Could you talk about the other IP-related proposal you made at the session?

Wang: The other proposal concerns the infringement of electronic navigation maps, which came to my attention during an investigation and research as an NPC representative. Personally, I think this issue has affected the existence of this industry. Therefore, I offered a proposal that our country protect the intellectual property rights of this industry so as to promote its sound development.

China IP:What are your reasons for saying that IP issues will affect the existence of the electronic navigation map industry?

Wang: That is because the industry has its own features. First, it involves a large amount of input. Generally, billions of funds will be invested at the initial stage of surveying and mapping for an enterprise. Further, with the fast development of cities, the map needs to be updated yearly and even several times a year. Of course it is only an investment of money. However, it also entails more manpower input. For example, some enterprises have a surveying and mapping team consisting of thousands of people, who are exposed to wind and rain every day. Some surveying and mapping personnel even have to wait until nighttime when there are no cars and people in order to conduct their surveys. Besides, nowadays the roads and highways all lead to villages and towns and so the scope of their work has become broader and broader. I am very touched by this. Second, the products of this industry are under great threat of being pirated because the navigation maps are all electronic versions, closely connected with the network, and thus it is very easy to be pirated. Many electronic navigation maps sold in the large stores at present are pirated versions and the legal versions are no more than 10% in electronic market. Third, the core intellectual property in this industry is copyright. However, it is difficult to conduct investigations and collect evidence in copyright infringement cases and the copyright protection is relatively weak in relation to other IPR protections. Based on the above characteristics, without protection, enterprises will lose confidence in producing innovative products.

China IP:Then how do you think we should protect this newly-emerging industry?

Wang: I do not work in the electronics industry, so I just hope that what I have said can induce others to come forward with insightful thoughts. I have consulted a lot of materials and have found that electronic navigation maps should belong to the category of electronic databases. However, for this category, there is no special law in China protecting it at present. Thus, it can only rely on copyright law for protection. Yet, there exists great difficulties and it involves a lengthy amount of time to obtain copyright protection. Therefore, I think competent authorities should intervene in the industry and crack down on piracy and infringement by formulating industry norms and taking administrative measures. Only by this means can IPR problems be resolved in a relatively effective way. In terms of the systems, I think annual examination systems should be established. Those who want to enter this industry should have the required aptitude and be examined annually. If an enterprise always pirates another’s products, relevant punishment should be imposed on them, such as reorganization or closing down the enterprise.

On the other hand, the speed of electronic maps in updating and spreading information render it likely that the new version was pirated while the lawsuit was pending, resulting in the issue of expired protection of IPR. Therefore, the courts should speed up their trials involving these types of cases.

China IP:What is your opinion on the IP-related contents of the report on the work of the Supreme People’s Court, as well as the report on the work of the Supreme People’s Procuratorate, which made during two sessions of the NPC and CPPCC?

Wang: I am very delighted that in the report on the work of the Supreme People’s Court there is a special part for IPR issues. I noticed the government’s focus on intellectual property. It states that in the context of the financial crisis, the courts should be careful and cautious in enforcing mandatory measures. Personally, I believe that the IP field’s mandatory measures should be used with caution all the time whether it is during a period of financial crisis or not because IPR cases often involve advanced technology, for example, the legal conformity and stability of utility model is not satisfactory. If the courts fail to use mandatory measures cautiously, may result in not only direct losses but also intangible losses. Intellectual property should not only protect the right owner’s interest but also the public’s right.

China IP:Speaking of your work, could you briefly describe the status of the IP Department in your company?

Wang: The IP Department in our company is a separate branch from the law department. It belongs to the group company, consisting of five professional staff. There are also many part-time IP liaisons in other departments. We have close contacts with market department and our workload is very heavy.

China IP:In your opinion, why does enterprises’ IP work receive less attention from society? Is it because there are fewer enterprises that need IP talent?

Wang: As a matter of fact, each enterprise needs to have its own IP personnel. Sometimes small enterprises are more in need of a professional IP staff. At present, there are not so many people who can do IP-related works in enterprises. Although there are many reasons, in my opinion, one reason that enterprises’ IP talents fail to get their due attention is that, unlike a professional manager, their profession has not become widely known to society. For the past 20 years, China has cultivated a large number of excellent IP officers, agents, and judges, but only enterprise IP talents have failed to receive due attention. In reality, we may feel embarrassed by this. For example, a newly-recruited college graduate may resign from their office some time later after obtaining an agent qualification certificate. The reason is very simple: an agent is a profession recognized by society. I have been working for an enterprise for many years. Yet, if asked about my profession, I cannot properly say that I am an IP manager, instead, just doing patent-related works. (Laughing)

China IP:What do you think is the significance of cultivating enterprise IP talent?

Wang: First of all, from an enterprises’ perspective, an IP agent cannot replace an enterprise IP department because IP work involves IP creation, practice, management and protection and technology, market, and many other aspects. Many business secrets cannot be done by an IP agent. Secondly, from a macro perspective, the cultivation of enterprise is an important part of the national IP strategy. Hence, the cultivation of enterprise IP talent is very important. If the enterprise IP talents reach a certain amount and flow among enterprises, which is the best way of exchanging experiences, China’s enterprise IP level will be thereby improved greatly. I have been appealing for continuously that the talent flow system should be firstly established to cultivate an outstanding enterprises IP team.

China IP:What is your perception of the protection of enterprises’ IP after so many years of enterprise IP work?

Wang: Now many people are talking about enterprise IP strategy. Actually, I don’t think that enterprise IP work is a huge project. Instead, it is composed of many small links and is accumulated in the process of enterprises’ production and marketing efforts and should be adapted to the status of these enterprises. For example, at present, Chinese enterprises have no advantage in technology compared to foreign enterprises, so we cannot force our enterprises to sell technologies every day like Philips. The primary thing we need to do is not only to defend our own IP, avoid the infringement of others’ IP, and to promote our own innovation. I believe this is the most realistic IP strategy for an enterprise. In other words, what we do should conform to our own actual conditions and our country’s situation.

China IP:Could you please talk about your feelings as an NPC representative? What are your plans for next year?

Wang: It is not easy to be an NPC representative because it means having a mission and a duty. I have a grass roots background and so I am more concerned about public sentiment. For example, aside from taking part in the concentrated investigation and research organized by the People’s Congress at various levels, I also take the opportunity to attend meetings to learn more about the need of enterprises,’ to build up an extensive network. In my opinion, the NPC representatives’ exercise of their rights is actually through the channel of the deputies in order to convey public opinion.  As for my future plans, I think I should firstly focus on my own work and make research public’s and enterprises’ focus in order to consider proposals for the next session.


                                        (Translated by Zhang Meichang)

 

 

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