International Intellectual Property – China – Wallace (Weihua) Li

Intellectual Property (IP) is one of the core practice areas of Dacheng China. With 52 offices across the Chinese mainland, we have assembled a team of more than 300 professional IP specialists, lawyers, patent agents and trademark agents. Our extensive office network gives us a unique advantage in handling cross-regional IP cases, and so we are confident we can manage every IP case entrusted in the best possible way in each region. This is especially advantageous regarding multinational corporations or large private enterprises, as their infringement cases are often numerous and widely distributed across differing regions.

The IP legal services we provide to domestic and foreign clients include:

1) IP litigation and arbitration, including complex patent and trade secret disputes, trademark counterfeiting and market investigation, rights defence and anti-counterfeiting efforts, as well as administrative actions, dispute resolution and arbitration services related to copyright, and arbitration or litigation related to the Internet and unfair competition;

2) IP administrative complaints and customs enforcement, as well as criminal crackdowns;

3) IP transactions and licensing, including cross-border IP transactions and licensing, IP and image licensing, in addition to derivative product transactions;

4) Domestic and international patent and trademark applications, along with related administrative procedures, such as re-examination, opposition and invalidation;

5) Corporate IP strategy management, as well as the establishment and consultation of policies and systems;

6) Corporate IP search and analytical review (FTO analysis), legal risk assessment and prevention;

7) Antitrust administrative investigation, handling procedures and civil dispute litigation related to the abuse of IP;

8) Cybersecurity, data compliance and privacy protection related to IP;

9) Legal services in the field of film and television culture entertainment, including movies, television, games, animation, books, characters, variety shows, theme parks, sports and other areas.

We are committed to helping our clients address a wide range of IP issues, especially in preventing compliance risks that may arise during their business operations. We hope to provide the maximum possible commercial value to our clients through tackling these issues.

For example, in 2023, Wallace Li successfully assisted a leading German sanitary ware brand in resolving trademark squatting issues that had plagued the client for more than 20 years. This German brand is globally renowned as a top-tier sanitary ware brand. However, due to inadequate IP management upon entering the Chinese market in the early 2000s, its core trademark was maliciously registered in Chinese by a third party. Despite numerous legal measures and negotiations taken by the client over the years, the issue remained unresolved, severely constraining the client’s market expansion in China. Three years ago, Wallace Li was entrusted by the client to tackle the issue. Through comprehensive analysis of the client’s situation and legal issues, Wallace Li formulated a set of legal strategies and negotiation tactics. Eventually, leveraging favourable legal circumstances, Wallace Li compelled the opposing party to transfer all seven core trademarks maliciously registered back to the client at a transfer price of only 25% of the opposing party’s initial offer. In 2024, the client will embark on a comprehensive new brand strategy, which undoubtedly holds significant implications for its market expansion.

Overall, these are all areas that IP lawyers often need to solve and address for their clients.

China is a vast market globally, and over the years, the country has made significant strides in enhancing IP legislation and protection standards. However, counterfeit products remain a prevalent issue that foreign enterprises must pay close attention to when entering the Chinese market.
The development of new technologies, such as the Internet and AI, has brought great challenges to the legislation and application of copyright law worldwide, and China is no exception. Issues like platform liability for infringement, protection of copyright in Internet music, a series of copyright issues arising from live streaming, as well as the copyrightability and infringement concerns related to AI Generated Content are all significant problems currently being faced.

Litigation over trade secret infringement has become a prevalent type of IP lawsuit in the Chinese mainland in recent years, primarily due to the competition among technology companies’ products and the departure of core technical employees. Consequently, it is particularly important for companies to manage trade secret compliance effectively before disputes arise.

For global enterprises, the challenges of IP when entering the Chinese market are multifaceted. Foreign companies first need to have an objective and comprehensive understanding of the current state of IP protection in China, as well as being familiar with China’s legal and judicial systems for IP. There are significant differences between China and Western countries in these aspects, and so it is crucial not to directly apply the experiences from Europe and America to the Chinese market. Relying on professional IP lawyers, including IP investigation agencies, and engaging in cooperation with Chinese law enforcement departments with more intelligence, is a strategy worth considering.

As previously mentioned, the development of modern technologies, such as the Internet and AI, poses significant challenges to the legislation and application of IP worldwide – especially in such areas as copyright law, trademark law and anti-unfair competition law. Domain name disputes can also be included.

In 2023, Wallace Li successfully represented China’s first copyright infringement case of Texas Hold’em poker event footage. On behalf of the American Galaxy Media company, Wallace Li successfully won the case in the Beijing Internet Court and obtained financial compensation. In this case, the court determined that the footage of the Texas Hold’em poker game recorded by the plaintiff was original and constituted an audiovisual work under Chinese Copyright Law. Wallace Li’s legal team is currently representing Japan’s Tsuburaya Company and Shanghai SCLA Cultural Development Co., Ltd. (their rights holders of “Ultraman”) in a copyright infringement dispute against the defendant. The Guangzhou Court of first Instance ordered the defendant to cease infringement. It also compensated the plaintiff for economic losses of RMB 5 million. The case is currently in the second instance of the Guangzhou Intellectual Property Court. This case has reference significance for similar cases from the perspectives of infringement evidence collection, infringement determination and punitive damages, etc.

Cross-border IP enforcement is becoming increasingly complex under the new globalised circumstances. One of the biggest challenges in cross-border enforcement is the issue of jurisdiction and enforcement of judgements. Many countries strive for jurisdiction over IP cases that have a connection, sometimes leading to the same case being adjudicated in separate countries, and even resulting in entirely differing outcomes. Conversely, the business model of cross-border e-commerce sometimes makes it difficult for the courts of the country where infringing products are imported to have jurisdiction over the case, creating an awkward situation. Moreover, despite the existence of laws on the recognition and enforcement of judgements between countries, there are not many successful cases of mutual enforcement.

It is certainly a very important factual and legal issue. In cases of IP infringement, whether to engage a professional IP investigation agency for in-depth investigation can often make a big difference in the scale, object and compensation amount of the case. For example, in a case representing Evapco Inc, the leading American cooling industry company, Wallace Li successfully prompted the case-handling authority to take criminal coercive measures against the suspects and institute a public prosecution by communicating with investigation organ and supervisory organ. Ultimately, the court sentenced the two suspects to three years and three years, as well as six months of fixed-term imprisonment, effectively combatting and deterring the long-standing counterfeiting activities targeting the client’s best-selling products. This undoubtedly relies on thorough investigation before the case is initiated.

Before the case begins, it is essential for both parties to communicate thoroughly. You must fully understand the client’s motivation and objectives for initiating the case, and why they wish to proceed with it. In addition, during the course of the case, we will provide regular or irregular updates to the client to ensure they fully comprehend our actions and the reasons behind them.

Another point to always keep in mind is that while we can offer comprehensive advice and recommendations, the client retains the ultimate decision-making authority.

China’s Trademark Law, Copyright Law, Patent Law and Anti-Unfair Competition Law have all undergone relatively significant revisions over the past few years, greatly enhancing the crackdown intensity of IP infringement and raising the standards for compensation. The State Administration for Market Regulation has recently promulgated the Interim Provisions Against Unfair Competition in Cyberspace, which comes into effect on September 1, 2024. This regulation contains comprehensive provisions on unfair competition in the Internet domain.

Wallace Li graduated from the School of Intellectual Property of Shanghai University and Emory University School of Law, and obtained a Master’s degree in Law in China and the US respectively. He is currently an Equity Partner of Beijing Dacheng Law Offices, LLP (Shanghai) and the Co-chair of Dacheng China Intellectual Property Practice. Meanwhile, he also acts as the Co-chair of Dacheng China, Technology, Media & Telegram (TMT) Group.