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SIPS Founder Invited to Address IP Panel of China Fashion Association Summit

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SIPS founding partner Joe Simone gave a speech in Mandarin to an online audience of over one million attendees on May 2, 2020, representing the International Trademark Association’s (INTA) China Advisory Council during the annual China Fashion Association Summit.

The live-streamed event was part of a panel discussion entitled How Intellectual Property Provides Support for Design Innovation, which brought together industry experts to discuss the importance of intellectual property protection in supporting design innovation and brand value.

Joe highlighted the important role industry associations play in the cooperation between industry and government specifically regarding policy and lobbying for reforming IP legislation.

He also discussed brand value and how vital it is for brand owners to take adequate measures to protect their intellectual property rights by registering in both China and internationally.

Please see below for the full English transcript of Joe’s presentation (originally in Mandarin Chinese).

A video recording of the panel discussion is available here.

About the Summit

As part of China Fashion Week (May 1-7, 2020), the summit theme was “Reconstruction” and was designed to discuss the impact of the coronavirus on the fashion industry from the perspectives of intellectual property protection, sustainable fashion, commercial innovation, and restructuring business models in the post epidemic era.

CFA Seminar – May 2, 2020

Comments by Joe Simone, Member Representative, INTA:

I ’m going to start by introducing the International Trademark Association.

Since 1990, I have represented the association in China through my work on various committees. As such, INTA asked that I introduce the association.  Later, I will provide some of my own opinions, but most are consistent with the views of other leaders in the association.

INTA has a history of more than 100 years, and its members include brand owners and outside lawyers. Its mission is to safeguard the interests of consumers and protect fair competition.

The association has over 32,000 members, many from China.

About 50% of the members also participate in committee work, which involves research, preparation of expert reports and lobbying to encourage governments and other associations to consider its research and suggestions.

During the annual meeting of the association, over 10,000 people participate, with about 100 different panels taking place to discuss education, research projects, etc.

Recently, INTA prepared a very detailed report on Brand Value. What is its value?  INTA’s report is available online.

INTA has also prepared important research and surveys – some which I have participated in.  For example, malicious registration of trademarks is a big problem everywhere, and INTA has been focusing its research in this area.  China has been prioritizing it as well.

Over the last three years, INTA has been involved in about 50 conferences in China. Many involve cooperation with other associations.

INTA has also submitted more than 40 reports to government authorities regarding legislation.

Senior leaders of the association have also been to China perhaps 15 times in the last three years.

INTA also cooperates with various inter-governmental and non-governmental bodies [listed in PPT], providing its views.  These organizations include representatives from China.

In 2017, INTA and the International Chamber of Commerce jointly funded research on the scale of global counterfeiting which indicated that annual revenues from infringement are about $1 trillion.  This phenomenon is relevant to China, as well as other countries. Few people know about this study, and perhaps more publicity is needed for it.

Now let’s talk about brand value in more detail.

The “brand” is the face of a company. It’s like your child. You want them to wear nice clothes, have their hair in order and a clean face.  The brand can also communicate the culture and characteristics of the company.  Making good quality products is the best-known and important way to build brand value. But if problems arise, that value can go down greatly after just one day of coverage on social media.

The existence of counterfeits and other imitations require brand owners to take measures to protect their brand value. Chinese clothing companies have previously told me that, on average 30% of their products may be counterfeits. In some cases, the situation is even more serious.

Brand owners need to work together to find ways of addressing these serious problems. This will require legislative work, and associations are the best platform for enterprises – local and foreign – to truly solve these issues together with governments.

Interestingly, I’ve participated in a number of IP seminars with Chinese companies in the past and found general managers and legal representatives speaking for their companies, not their lawyers.  While this reflects the importance given by Chinese companies to brand protection, I have always thought it better for companies to find qualified experts to hand this work, including representation in relevant associations, as the legal environment is changing rapidly.

Brands are valuable, and an important asset.  As mentioned, it’s important to protect brands against infringements – including through registering them in China and abroad. By protecting your brand, your stock value increases. It is also easier to secure financing.

Industry associations are increasingly important going forward. Business models are changing rapidly, with online trade offering many opportunities for selling overseas. It is also easier to secure overseas financing.

Ultimately, industry associations provide a lot of value through access to information, education and networking. Companies benefit by investing in their activities by having their employees participate, or failing that, having your external lawyers do so.

I understand that the China Fashion Association is developing its own IP committee, and I’m sure INTA would be very happy to support its activities.

These days, perhaps the two biggest issues facing industry are bad faith registration and online infringements. Both are quite new.

No country has a perfect law or enforcement system for dealing with these ever-changing phenomena. Governments, legislatures and academics cannot resolve these issues on their own. Industry must participate in developing solutions.

I now wish to briefly comment on some of the projects I have witnessed or participated in to help illustrate the importance of industry associations.

  • Starting in 2018, INTA established a Bad Faith Registration Task Force to collect best practices on a global level for dealing with the problem. Reports have been prepared, and relevant research materials already handed over to relevant Chinese authorities. The survey confirmed that no one country has a perfect system. But it put light on a number of solutions that can still be quite useful.
  • In 2018, the Council of Fashion Designers of America (CFDA), based in New York, undertook a survey which my firm supported to understand the scale and characteristics of bad faith registrations for its members. The survey revealed that half of all members had been seriously affected by the problem. After the survey was completed, the CFA, INTA, and CTA held a small-scale seminar with relevant Chinese authorities, and the results were good.
  • In 1998, I worked with a handful of companies in establishing the QBPC, mainly for the purpose of dealing with counterfeiting. Now the association has 200 members, mainly oversea companies. The QBPC has a Fashion Industry Working Group which includes major European and US fashion brands – all of which would be open to cooperating with the CFA.
  • Finally, about 15 years ago, I supported a coalition of 19 fashion brands from the US and Europe in pursuing civil cases and lobbying with the Chinese government targeting landlords in retail and wholesale markets in China – with particular focus on the Silk Street Market in Beijing. Ultimately, the Supreme People’s Court issued a decision confirming the responsibility of landlords to address counterfeiting in their markets. Local AICs also imposed fines on certain markets. This project illustrates the ways in which companies can work collectively on enforcement as a means of improving the intellectual property environment.

Moderator Christopher Shen:

Thanks to Joe for sharing.  He has brought us an international perspective.  The earlier speakers from fashion companies discussed the rights they had and ways of protecting them.  Joe has worked with INTA many years and has long experience in IP protection.  He has explained how to use the influence of the industry association to create a bigger bridge for industry and government cooperation.  This is good for China as well as other countries.  Problems are not about individual cases but rather the general environment for IP protection, and solutions cannot be solved by companies and their lawyers alone.  So Joe’s prior experience is important for our domestic enterprises and industry associations. International industry groups are very experienced and active, and they organize enterprises to help push governments to pass legislation to improve the big picture.  In recent years, domestic associations, including trademark associations, including the CFA, have been actively learning from foreign associations. We hope to have the chance to learn more about the practice of international associations in the future in order to integrate this learning into domestic associations.  Joe actually functioned as a matchmaker in the first cooperation project between the CFA, INTA and the CFDA.

Joe, did you study Chinese in Beijing?

Joe Simone: No. In the first year I studied in the US, and then I went to Taiwan. Eventually, I lectured and did research at People’s University.

[Question about imitation and plagiarism in fashion design]

Joe Simone:

The questions asked here are really for judges and other experts to answer, as they are complicated.

In my view, the biggest problem is that, from the standpoint of an enterprise, it is generally not worth litigating. Patent cases can drag out very long and lawyer fees can be high. Quick results are not possible.

I originally loved copyright law, and actually came to Beijing in 1988 to research this area of the law. To my knowledge, outside China, there are not many copyright case of this nature brought by foreign fashion companies, in part because the outcome is unclear.

I have an idea: For cases which are challenging, have them dealt with through accelerated arbitration. If the case is not to complicated, the arbitrator will be able to handle it quickly. And the decisions issued can help lawyers to understand the law and advise their clients.

If an online trade platform is unwilling to support arbitration of such disputes, if the parties are both members of an industry association, perhaps the arbitration can be mandated by the association.

Regrettably, Chinese internet courts do not yet accept disputes involving unfair competition, patents or trademarks. And administrative enforcement is difficult in China where the case is deemed too complicated. Accelerated arbitration can help to fill the gap.

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