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On Monday, China prevented the World Trade Organization (WTO) from establishing an expert panel to arbitrate the intellectual property (IPR) case filed in April by the US. The case challenges China's market access restrictions on distribution of media like books, films, and music.
China's tactic will likely delay the case for a month or more, but will probably not stop the case from proceeding altogether. The WTO can still establish an expert panel if the US renews its request.
The delay is unfortunate because this WTO case appears to be souring ongoing communications between the two sides about IPR. At this past Wednesday's Sixth Annual US Ambassador’s Roundtable on Intellectual Property Protection and Enforcement in China, which your correspondent attended, no Chinese government officials chose to participate. In years past, your correspondent has seen Madame Wu Yi and Bo Xilai give keynote addresses, and has watched multiple panels on which Chinese government officials from Customs and the State Intellectual Property Office have spoken.
The Ambassador's Roundtable has symbolized the open lines of communication and goodwill between the two sides on issues of IPR enforcement. The absence of Chinese government participation this year was therefore conspicuous.
Word on the street is that the apparent Chinese boycott of the event was because of the WTO case. Up until now, the WTO case hadn't seemed to impair other US-China cooperative efforts on IPR enforcment. If that situation is changing, it doesn't bode well for either side.
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This article is from Danwei.org
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Chen Shoufu, the author of Coral QQ, a popular messaging system add-on, was arrested at the end of August for infringing on Tencent's intellectual property.
Tencent QQ, the dominant IM service in China, annoys some users by serving up ads and keeping contact locations secret. By installing Coral QQ, users can block QQ's ads and gain the ability to see the IP address and geographical location of their contacts.
This isn't the first time that Coral QQ has tangled with Tencent. Chen (who goes by the online handle "Soff"), originally wrote Coral QQ as patched version of Tencent's software, but ran into opposition from the company. Though free, QQ isn't open source, so when Tencent complained about IP violations in 2003, Chen stopped providing downloads of his patched version of QQ and promised not to alter Tencent code in the future.
Chen, a 28-year-old instructor at the Beijing Institute of Technology's computer center, later hit upon the idea of offering ad-blocking and IP-resolving in a non-invasive patch, and subsequently started offering downloads once again.
Last year, he was sued by Tencent for infringement; his company provided the non-invasive patch as part of a complete download package that also included Tencent's software. The judgment required Chen to pay 100,010 yuan (US$12,500), but it reportedly was delayed two months because of behind-the-scenes disagreements over the value of the IP that was infringed—Tencent had asked for half a million yuan.
The lawsuit did not mention the company behind the software, however, and according to the Personal Computer Digest, Chen took steps to formally distance himself from Coral QQ while still maintaining control over the whole operation. Additionally, although Coral QQ helps users avoid Tencent advertising, it began to strike commercial deals, and it now includes an astonishing variety of adware, malware, and spamware of its own.
Here's a sensationalized report from Shenzhen TV's "Case Tracking" program (案件追踪), complete with dramatic pacing, one-sided quotes, and a soundtrack pulled from Prison Break and some Jerry Bruckheimer movie:
Lots of netizens have a soft spot in their heart for Coral QQ and see Tencent as an unreasonable behemoth out to crush the little guy. Tech blogger William Long is amazed at this reaction; he see the case as cut-and-dried infringement, particularly since Chen was ordered to cease and desist last year.
Keso wonders whether Coral QQ's technology is infringement in and of itself :
Leaving aside the issue of Coral QQ's malware (it is indeed deplorably, but you can choose not to use Coral QQ), and looking solely at the screening of QQ's ads: is modifying software functionality piracy? Is it a criminal offense? As far as I know, when the young Norwegian hacker Jon Lech Johansen cracked the DVD IP protection scheme (CSS), not only did he not become a criminal, but he went on to crack the protection schemes of a whole group of famous products like QuickTime, iTunes, Google Video, and the iPhone; this technical genius caused headaches for lots of major corporations. Is Tencent more deserving of protection than the entire DVD industry?
If removing ads from QQ is a criminal offense, then should they arrest all companies and individuals that make plug-ins that screen ads, including Microsoft and Google (both of which offer pop-up blocking functionality)?
Protection vs. anti-protection and cracking vs. anti-cracking are long-term technical conflicts. Windows occupies an almost unshakeable position in the Chinese market, not because of Microsoft's successful marketing strategy but because various cracking techniques have allowed us to use its pricey software without paying. Before he became inflated with selfish desires, Chen Shoufu (writer of Coral QQ), was a powerful promotional tool for Tencent QQ. He helped those people who wanted to use QQ but hated the software become Tencent users. A friendly force has now come under attack, so I say that Coral QQ is just an unlucky ***.
Off-topic, Shenzen has always cultivated narrow-minded companies, from the time when Huawei sent its own employees to prison, to FoxConn suing the reporters, and now Tencent getting the author of Coral QQ arrested. You can't help but feel impressed at how good Shenzhen is for business. Or at least, the local courts and police are all in line behind those major companies. Unlucky Coral QQ just had to go up against a Shenzhen company. It had it coming.
Keso alludes to a rumor that surfaced on Thursday—IT news site 17Tech cited an inside informant who said that Tencent threatened to move its offices out of Shenzhen unless the police acted. The company denied the rumor the following day.
There are still a number of options available if you want to block ads from your QQ installation. See the link to the Personal Computer Digest article for a chart rating them feature and malware abuse. Additionally, in an article that has drawn heaps of abuse from Coral QQ fans, Coral QQ BBS editor Pikachu recommends LiteIM.
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This article is from Danwei.org
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On Wednesday science fiction writer, Boing Boing editor and copyright activist Cory Doctorow gave a speech at the Beijing Bookworm to an enthusiastic crowd.
Victor Muh filmed the whole speech and uploaded it to Youtube. The guy wearing an Antiwave T-shirt introducing Doctorow at the beginning of the clip is your correspondent.
This article is from Danwei.org
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 Mark Cohen just might have IPR superpowers. On August 31, a WTO committee met to consider the US request for an expert panel to arbitrate its suit against China over lax IPR enforcement.
A Xinhua/Reuters report reflects a range of responses. Professor Zhang Naigen, of Fudan University's IPR Research Center, seemed resigned to US suit going forward: "Since the US persists in wanting to establish the expert panel, the WTO will establish the expert panel." Wang Xinpei, spokesperson for the Ministry of Commerce, expressed China's "regret" at the US request, while a WIPO spokesperson reassured reporters that establishing an expert panel is just a WTO procedure and nothing to worry about.
The most interesting response came from Mark Cohen, US Embassy IPR Attache in Beijing. Recognizing that major problems still exist in many areas of IPR enforcement in China, Cohen advised that the most important step China should take is to protect its own patents. After all, Cohen cautioned, the US is suing China in the WTO on behalf of American companies, like Microsoft, that are multinational corporations; China is part of their market. "If China doesn't learn to protect the IPR of its own companies, then ultimately the biggest impact will be felt in China's own markets."
From his lips to SIPO's ear? Five days later, Xinhua published a report that SIPO would be establishing "patent work stations" in 73 of China's state-owned enterprise and institutional work units. The work stations will be served by a rotating staff of patent examiners, agents, attorneys and other IPR experts. The head of SIPO's business coordination department, Ma Weiye, explained that the main purposes of the work stations are to: (1) advance the development of IPR, (2) coordinate China's IPR strategy policy with its enactment, and (3) promote industry's IPR management capability.
As a non-adversarial approach to IPR enforcement that transforms the Chinese from "bad guys" into stakeholders, these in-house patent resource centers seem promising. Of course, that promise could be dissipated in the implementation. In addition, these patent resource centers shouldn't be limited to SOEs. China would probably do better to support its private sector - the source of much of its innovation - rather than reinforcing the old-style overlap between government agencies and SOEs.
Still, even if the patent resource centers go nowhere, they reflect thinking outside the box, which is a welcome development in response to US pressure about IPR. And given the extent to which the patent resource centers dovetail with IPR Attache Cohen's advice, it's possible that they also reflect some cooperative brainstorming between the US and China on IPR issues. If that's the case, it would be a truly welcome development.
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This article is from Danwei.org
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I  IPR enforcement in China isn't black and white About a week ago, the US announced that it was asking the WTO to hear one of the two IPR cases that the US had filed against China back in April. The case in question complains of three weaknesses in China's system for protecting IPR: (1) procedural barriers to criminal prosecution of counterfeiters, (2) redistribution of seized counterfeit product, and (3) withholding of copyright protection for works that have not yet received approval from China's content censors. (The second case, involving objections to China's restrictions on market access for foreign media products, appears to be in limbo.)
While USTR spokesperson Sean Spicer acknowledged that China has made progress in intellectual property protection, he qualified that "important gaps [still] need to be addressed."
China responded by insisting that it is in compliance with its WTO obligations. In the English-language China Daily, Ministry of Commerce spokesperson Wang Xinpei said that China objects to any US attempt to use the WTO dispute settlement process to force developing countries to shoulder additional IPR burdens. The Chinese-language China Business Times, however, asserted that the US is stressing the US-China trade relationship because trade protectionism plays well domestically; and further, that China wants to negotiate as an equal of the US, working cooperatively to resolve trade disputes.
Although both sides' responses contain legitimate points, what seems lost in the conflict is that meaningful IPR protection for foreign media and retail products is probably not possible in China right now. Take, for example, China's struggle to combat the availability of counterfeit medicines. Reporting on last week's Anti-counterfeit Medicine and Distribution Safety Forum, China Business News used the expression "serious, perplexing problem" to characterize the prevalence of counterfeit medicines in China's domestic retail market. Despite high-profile instances of counterfeit medicines resulting in fatalities, the Chinese government faces intractable obstacles in solving this public safety crisis.
Among the obstacles listed in the China Business News article were: (1) the fact that China's State Food and Drug Administration lacks the power to compel compliance with its recommendations, (2) "grey" market distribution networks for counterfeit medicines, and (3) the expense and futility of using bar-code technology to guarantee the safety of medicines, since counterfeiters copy the bar-codes. This combination of factors — weak regulatory power, no operational court system, grey markets, and the absence of effective anti-counterfeiting technology — also exists with respect to counterfeiting of US media and retail products.
With due respect to the industries that lobbied the US government to bring the WTO suits, counterfeiting of their media and retail products simply isn't as important a social issue as counterfeit medicine. Moreover, the counterfeit medicine problem hurts China's laobaixing more profoundly than it impacts any multinational corporation. The Chinese government has much more powerful incentives to solve the counterfeit medicine problem than it does to ease counterfeiting of US media and retail products. And yet counterfeit medicine remains a "serious, perplexing problem" in China.
If the Chinese government can't solve the counterfeit medicine problem, it probably can't solve the fake media and retail products problem, either. With the WTO suit, the US denies that likelihood and oversimplifies China's counterfeiting problem. At the same time, the WTO suit antagonizes China, without any potential upside for the US: even if the US wins, counterfeiting in China would still be endemic.
Given this expensive and wasteful WTO play, if somebody needs a hearing, maybe it's the American taxpayers.
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 "Scanning books is stealing. Scanning pens prohibited." The e摘客, or "e-Excerpter", is a handheld scanner manufactured by Hanwang, a Chinese OCR company. Suggested retail price is 2600 yuan for the version with 20M memory and 8.7M storage, and 1980 for the 12M/3M version.
Hanwang advertising promotes the scanning pen as a time-saver, a way to extract important information from documents without resorting to hand-copying, and a means of transporting large volumes of text in a convenient, 90-gram package. The pen's multi-language translation is also a big selling point.
However, an article that Hanwang dealers submitted to tech news site eNet last month plays up the rising cost of books:
Recently, "book scanners" carrying Hanwang e-Excerpter pens have appeared in bookstores in Zhongguancun. They are employing a brand-new method of taking the best parts of the books home with them. In addition, their reading techniques have changed. The resource pen can effectively reconcile the contradiction between high book prices and people's demand for reading material, saving readers a considerable amount of money and turning book-reading from "reading for the nobility" to "reading for the common people."
Hence the anxiety of the bookseller pictured above - according to China News, many stores in the Jintailu Wholesale Book Market in Beijing's Chaoyang District have similar signs posted.
On the other hand, at a scan rate of just 8-10 characters a second (or under a page a minute), there doesn't seem to be much of a threat of large-scale pen-aided theft going on.
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 Movie title or next step on IPR enforcement? The past two weeks have seen an interesting assortment of IPR developments. In a fresh installment of what seems to be the never-ending saga of the Silk Street market, enforcement authorities raided the shoe department this past weekend and confiscated every counterfeit Nike and Adidas product they found.
The Beijing Administration of Industry and Commerce's (AIC) trademark office claims to have adopted a new methodology, in that it conducted the raid on its own initiative, without waiting for a formal complaint from the trademark owners. If that's the case, it's worth asking why the raid exclusively targeted Nike and Adidas products.
In any event, by targeting only one or two brands, the AIC hasn't broken new ground. The Chinese government has consistently proved itself able to purge counterfeits of specific trademarks (for example, the Olympic rings), but remains incapable of tackling the problem of counterfeiting as a whole.
And despite the limitations of the Chinese government's "one at a time" approach, the American movie industry seems to have adopted it. As Caijing observed, American IPR rights holders have switched tactics, from pressuring the Chinese government to do their bidding on IPR, to suing individual infringers.
In Beijing, five Hollywood movie studios have sued two stores for having sold a total of sixteen counterfeit copies of War of the Worlds. Although the two stores lost the suit, neither complied with the court's judgment. The studios went back to court last week for an enforcement order.
Meanwhile, in Shanghai, seven Hollywood studios have filed their third consecutive suit against the same proprietor of counterfeit DVDs.
What these developments suggest is that enforcement efforts targeted only to one trademark or to one sales outlet are a waste. The gains from the periodic raids on Silk Street are temporary at best. As the Beijing Youth Daily pointed out, counterfeit goods disappear during the raids and reappear after a short hiatus. And the utility of private lawsuits against individual vendors is questionable. An operational court system — in a society that respects and abides by the court's judgments — is a prerequisite for the success of IPR enforcement through private litigation. The movie companies won't find that in China.
A meaningful anti-counterfeiting campaign in China must go up the supply chain and shut down the factories producing the counterfeits and/or throttle the distribution channels through which counterfeits move. The odds of such an approach being implemented in China are exceedingly small. Local protectionism, corruption and the inefficiencies inherent in any large-scale inter-agency enforcement effort make unlikely any attack on the supply chains for counterfeit goods.
So what's left? Counterfeiting might disappear from China if manufacturers valued the production of original work over copying and product quality over profits-at-any-cost. But on the question of IPR-related values, China and the US are still worlds apart.
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Beijing Guge Science and Technology Ltd. (北京谷歌科技有限公司) is suing Google China (谷歌信息技术（中国）有限公司) for disrupting its business - both companies use the name 谷歌 and this causes confusion. From Reuters:
"We just want Google to change their commercial name," Tian Yunshan, a company official, told Reuters on Friday. "We have already passed our demands on to Google ... We will see what happens in court."
The search engine's Chinese name - a transliteration of the English word "Google" - was also used in Beijing Guge's commercially registered name, Tian said.
People searching for Google through a local telephone directory assistance service were invariably directed to Beijing Guge, as the search engine was not listed, Tian explained.
The Reuters report was based on a story from The Beijing News on Wednesday; today's papers provided additional information.
According to TBN, Beijing Guge opened for business on 19 April, 2006, or one week after Google announced its new Chinese name the 12th.
However, Tian claims that his company had applied to use the name Guge in March, prior to formal business operations. Google's spokesperson pushed its date back even earlier, claiming that applications were filed in January. And Google deflected Tian's complaints about directory assistance misinforming customers by pointing out that many companies elect not to register with 114.
The general feeling online is that Beijing Guge chose its name out of opportunistic motives and filed its complaint in a bid to profit from the media attention.
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 China "strikes hard" against counterfeits No news isn't good news when it comes to the two IPR-related WTO cases that the US filed against China on April 11. According to WTO procedures, the parties were to have had 60 days to negotiate. If they didn't settle the dispute within those 60 days, the WTO would then convene a panel to arbitrate.
Sixty days has obviously come and gone and, while the US and China have met for two days of talks, the scarce media reports haven't shed much light on the outcome of the negotiations. Then, in early July, State Intellectual Property Office Director Tian Lipu announced that the US should withdraw the WTO cases. Claiming that China is "striking hard" against counterfeits and expending huge efforts to strengthen its IPR protection, Director Tian concluded that the WTO complaints are "unreasonable and should be withdrawn."
Whatever prompted Director Tian to issue this tautological announcement remains unclear. He himself is fuzzy about the precise state of the WTO proceedings: "So far as I know," he said, "at this moment, the US and China are still the process of consulting within the WTO framework." Why the US and China would still be negotiating a month after the 60-day period lapsed is unexplained — and why China's top IPR official would be in the dark about where things stand with China's top international IPR conflict is also unclear.
What seems clear, however, is that whatever the US hoped to achieve with the WTO cases is going to be slow in coming. For progress, one might look instead to the Cooperation Memorandum on Strengthening the Intellectual Property Rights Law Enforcement, which the US and China signed in late May at the US-China Strategic Economic Dialogue in Washington, DC.
That the two countries could conclude this agreement in the course of their regularly-scheduled trade talks might raise the question — as your correspondent has done previously — of why the extraordinary measure of filing WTO complaints was necessary.
Moreover, as Mou Xinsheng, director general of China's General Administration of Customs, explained: notwithstanding the WTO cases, China signed the Cooperation Memorandum because IPR is a global problem that no country can solve by itself, and because the US is an important trading partner. Director General Mou's reasoning sounds very pragmatic. Let's hope the US can show the same good sense in its WTO strategy.
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Sanmao, the wandering orphan created by cartoonist Zhang Leping in the 1930s, has been adapted for the screen many times over the years.
The latest adaptation, a live-action movie, is a Sino-Belgian co-production; some fans are worried about the prospect of Sanmao being "updated" and deprived of his Chineseness. Here's a recent article by Zhang's son Zhang Rongrong that explains how and why the family decided to grant a Belgian director the rights to the project:
Why we agreed to a co-production of Sanmao
by Zhang Rongrong / XEN
Sanmao has not "gone to live abroad"
Sanmao was created by my father, Zhang Leping. We siblings are the inheritors of the Sanmao intellectual property. More than a year ago, we signed a contract with a Belgian film company granting them the rights to film a Sanmao movie; in addition to stipulating that the movie must use live actors (i.e. not a cartoon) and must be adapted from the original Sanmao's Wanderings comic book, there were a few other special rules to guarantee that Sanmao's image would not suffer. For example, the contract stipulated that the movie "must respect relevant Chinese laws and regulations and must not produce any negative influence on the work (i.e. the origianl Sanma's Wanderings comic book) or Sanmao," and "the licensee (i.e. the foreign side) shall not register Sanmao or the Sanmao image as a trademark."
The contract with the foreign side also stipulated that "the licensee may freely select its own partners, but one must be a Chinese partner," in order to guarantee that the movie would be a joint production. The movie, which is currently in pre-production, is set in old Shanghai, so no matter which way you look at it, Sanmao has definitely not "gone to live abroad."
The contract clearly stipulates that "the intellectual property rights to Sanmao and the Sanmao image are the sole property of the licensor." There have been some rumors that Sanmao would "go Korean" or become a Mr. Bean-type character to amuse adults. But Sanmao is simply Sanmao. His unique personality traits will not change. If Sanmao's image were truly going to be injured, not only would we (the licensor) definitely not consent, the Chinese joint production partner would not consent either. For example, there is one passage in the script that goes like this: Sanmao rescues a foreign child from the river. The child lives in Shanghai, and to repay Sanmao, the child's parents provide Sanmao with room and board at their home. But in just a few days, Sanmao becomes leaves angrily after the foreign family's unfair treatment of him. This story was taken from my father's Sanmao's Wanderings; the rescued child was changed to be a foreigner, but Sanmao's personality was not changed. Wang Longji, the actor who played Sanmao in the classic film Sanmao's Wanderings, is a consultant for the Sino-foreign joint venture. Wang Longji and his family worked with the foreign side for several months. We are comforted by the fact that the foreign writer-director is on the side of the Chinese people and is preparing to shoot this movie with the feelings of the Chinese people in mind.
Agreement to grant rights to a co-production
For more than ten years, film people in US, Japan, Korea, the UK, Canada, Australia, and Hong Kong have expressed interest in shooting a Sanmao cartoon or live-action picture. This includes several major "international-weight" directors.
More than ten years ago, we had already decided to above all consider mainland China's strengths for a Sanmao cartoon or live-action show. We gave the first Sanmao cartoon rights to CCTV's China International Television Corporation. We also gave the rights to a live-action Sanmao adaptation first to Shanghai Film Studio, and then to Anhui Film Studio. In granting the rights, our first concern was nationality.
In 2005, at the 70th anniversary of the birth of Sanmao, our Belgian friends came to us. They had seen Wang Longji's Sanmao's Wanderings at an international film festival and they recalled the wonderful scene in the early 1980s when that movie had caught people's attention at Cannes and later screened for 60 days at six theaters in Paris, with two theaters extending the run another month. Later, they consulted Chinese people in France and Belgium, the majority of whom knew that China had an animated character called Sanmao and knew about his influence in China.
When Belgian writer-director Marc [-Henry Wajnberg] and the Chinese producer Liu Ying, who was living in Belgium at the time, came to us, we did not at first express too much enthusiasm. "Is it OK for foreigners to film a Sanmao movie?" "Will it be misunderstood by our countrymen?" For a long time we were unsure what to do, and we were afraid of being misunderstood; we rejected most foreigners' overtures to film Sanmao shows for this reason.
What moved us was Marc and Liu Ying's conscientious work ethic, their understanding of Sanmao, and their enthusiasm for China. They believed that Sanmao's heart was filled with sunshine; he was kind and honest, constantly trying to improve himself; he was clever and resourceful, full of a child's curiosities, and was educational for both children and adults all around the world.
...
During discussions, we requested that the foreign side's first domestic partner be the Shanghai Film Studio. At the time there were others in the domestic film sector preparing to shoot a Sanmao film, so to avoid a collision, we requested that the foreign side take care of things - only if the above-mentioned individuals clearly stated that they would drop their plans would we consider signing a contract with the foreign side. The foreign side readily agreed to these requests, and carried them out.
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Sanmao belongs to the Chinese people
Although the image of Sanmao was created by my father Zhang Leping, and we siblings are the inheritors of Sanmao's intellectual property rights, in a larger sense, Sanmao is not the private property of the Zhang family. Sanmao is the cultural heritage of the Chinese people. It belongs to China, so we have an even greater responsibility to protect the intellectual property rights of Sanmao.
Like a commentator on Eastday said, "Regardless of who you are, even if you hold the rights to licence Sanmao's image, you still should not forget that Sanmao is a classic in the treasury of Chinese cartoons. Sanmao belongs to all Chinese people."
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Beijing Business Today recently reported on China's accession and ratification of two U.N. Internet-related treaties, the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty.
Together, the two treaties require signatory countries to provide copyright protection for computer programs, databases, and digital audio and video files. About sixty countries, including the United States, are already signatories. Both treaties require China to make available legal enforcement mechanisms that will allow rights-holders to protect their copyrights quickly and effectively.
Speaking of China's ratification of the treaties, Long Xinmin, the director of China's International Copyright Office, said that countries world-wide are increasingly harmonizing their intellectual property laws with international standards, and that the force of international law is already too strong to resist. He pointed out that most countries are already using the framework of the TRIPs agreement (which comes under the jurisdiction of the WTO) to amend and perfect their intellectual property laws.
What's interesting about this report is that it sounds a note of unreserved acceptance of international standards.
More typically, China's stance on intellectual property enforcement includes caveats about China being a developing country or expresses concerns about wholesale adoption of foreign values and methods. For example, China has a "two track" mechanism for enforcing intellectual property that gives both courts and administrative agencies enforcement authority. This system creates inefficiency, a lack of accountability and has rendered intellectual property virtually unprotectable in China. But far from amending its two-pronged approach, China has showcased it, insisting that it yields even greater protection for intellectual property.
Perhaps China's embrace of the international standards in the WIPO Internet treaties signals a positive development. Obviously, no law — intellectual property-related or otherwise — will be of much use until China's courts can guarantee enforcement. And if China is open to international substantive legal standards, maybe international standards for legal procedures also stand a chance.
That said, don't expect too much in the way of copyright protection for online content. The Internet is where countries with advanced copyright protection and enforcement mechanisms meet their match. In acceding to the WIPO Internet treaties, what China may have done is join the rest of the world in paying lip service to the protection of copyright online.
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