China's amended Patent Law took effect this month, and finally provides a clear definition of the "patented pharmaceuticals" that are subject to compulsory licensing. So-called "patented pharmaceuticals" cover "any patented product or products directly obtained according to patented processes in the medical and pharmaceutical field to address public health issues, including patented active ingredients needed in the production of the product and diagnostic supplies necessary for the application of the product."

While compulsory licensing has been part of Chinese law for many years, critics complain that the regulations were not detailed enough to promote licensing activity. Specifically, the Patent Law allows for granting a compulsory license for patented pharmaceuticals in China for the purpose of public health, both for products in China and exports to qualified countries under international treaties. However, due in part to the previous lack of clear definitions, compulsory licenses for pharmaceuticals have never been issued in China, and there is a corresponding lack of generic versions of important drugs. Now, with a clear definition in place, it remains to be seen whether local pharmaceutical factories are confident enough that the law will ensure their rights in potential legal disputes to produce generics.

Having represented many of the world's leading pharmaceutical companies, Lehman, Lee & Xu boasts significant expertise in licensing transactions, and believes that cumpulsory licensing of patented foreign drugs will soon take off in China to meet domestic need and the government's healthcare and intellectual property policy goals.

Automotive giant Volkswagen Group has successfully prevented the registration of a Chinese trademark by a Shanghai-based motorcycle company.

The People's Motor International Group applied for the trademark "´ïÖÚ" in 2002 for use in connection with vehicle engines and motorcycles. Volkswagen challenged registration of this trademark before the Trademark Review and Adjudication Board (TRAB) of the State Administration for Industry and Commerce (SAIC), arguing that the mark is too similar to Volkswagen's Chinese company name "´óÖÚ" (both are pronounced "da zhong," although with different phonetic tones). TRAB sided with the trademark applicant, however the Beijing No. 1 Intermediate Court supported Volkswagen on appeal, holding that registration of the trademark would cause customer confusion, given that there are no obvious differences between the companies' respective trademarks and that these trademarks relate to the same class of goods.

This decision highlights the fact that the standards used by the China Trademark Office and those used by the Chinese courts are not the same. Accordingly, it is important for clients to retain attorneys with expertise in both venues. The legal team at Lehman, Lee & Xu includes skilled trademark attorneys, with a long history of success in both TRAB and court proceedings.

This decision also highlights the importance of formulating a comprehensive trademark filing strategy in China, covering not only key English-language trademarks, but key Chinese-language trademarks as well. The multilingual trademark staff at Lehman, Lee & Xu specializes in developing trademark portfolios for foreign clients seeking to enter the Chinese market.

Strix Ltd., an Isle of Man company that provides thermostatic controls for two-thirds of the world's water kettles, has emerged successful in its Chinese patent infringement lawsuit against two local companies. The Beijing Intermediate People's Court ordered Zhejiang Jiatai Electrical Appliance Manufacturing and Leqing Fada Electrical Appliances to pay damages in the amounts of RMB 7.1 million and RMB 2 million, respectively, to Strix. The court further issued cease-and-desist instructions to the defendants.

This decision evidences Chinese courts' ever-increasing respect for intellectual property rights. The court's decision is especially impressive in the context of China's small appliances industry, where such remedies are historically more rare. The court even granted Strix's request for an order freezing the defendants' bank accounts when the case was first brought in 2008, in order to ensure Strix's ability to collect damages later awarded.

Although Strix's manufacturing operations are based in Guangzhou, the company elected to pursue legal action in Beijing based on the defendants' sale of infringing items there. Lehman, Lee & Xu is headquartered in Beijing, and recommends the Chinese capital in cases such as this to negate an infringer's home venue advantage. Beijing courts are also the most sophisticated in China with respect to patent infringement cases, given their close proximity to the State Intellectual Property Office (SIPO) and their heavy patent-related caseload.

After an 8-year legal battle, Wuhan's China Environmental Project Technology Inc. (CEPT) has finally triumphed in its high-profile patent infringement lawsuit against foreign co-defendants Fujikasui Engineering and Huayang Engineering (a wholly owned subsidiary of Formosa Plastics Corporation). China's Supreme Court has ordered the co-defendants to pay CEPT more than RMB 50 million in damages for their infringement.

CEPT's patent covers a method for seawater-based fuel gas desulphurization in thermal power plants, without the use of industrial chemicals or fresh water. Huayang requested access to CEPT's technology in 1998 for a Fujian power plant, and, without authorization, implemented the technology during plant overhauls the following year in conjunction with its subcontractor Fujikasui. Huayang denied using CEPT's technology, claiming that it independently mastered the technology and corresponding apparatus abroad. CEPT subsequently filed a patent infringement lawsuit against Huayang and Fujikasui in 2001, that has since been appealed all the way to China's Supreme Court.

Although the traditional bias is that China is lacking in core technologies and relies on foreign innovation, the country is currently keeping pace with the more-developed nations in the emerging field of environmental technology. Chinese companies are also increasingly aware and capable of maintaining and enforcing their intellectual property rights, as demonstrated by CEPT. Lehman, Lee & Xu's award-winning patent department specializes in not only securing China patent rights, but also conducting China patentability and freedom to operate searches and analyses.

According to the Ministry of Culture, China confiscated over 36 million illegal audio and video products last year during a nationwide campaign that resulted in law enforcement officials revoking 6,632 licenses and imposing RMB 180 million in fines. Officials also monitored over 4.65 million computers in over 81,000 internet cafes to supervise the rapidly developing market for online games, music and films. The campaign prioritized intellectual property right protection, national security and the interests of minors.

The intellectual property enforcement team at Lehman, Lee & Xu works closely with law enforcement officials to organize raids and seizures of infringing goods. Given the nature of domestic markets and manufacturers, such raids and seizures are invaluable tools for combating intellectual property infringement in China, and are generally more cost-effective than litigation.