Friday, September 28, 2007

Pfizer: Testing the Potency of Chinese IP Law & a Beijing Court

Pfizer, the giant American pharmaceutical company, had its day in the Beijing 1st Intermediate People’s Court twice this year for different causes and with different results. Its experience with the Chinese legal system, to my mind, is a testament to the fact that China does have effective intellectual property laws (trademark law, at least) and competent judges, despite the many doubts and criticism out there on same.

First, let’s look at how Pfizer lost miserably in China in trying to protect its “Viagra” trademark back in February, 2007. The basic facts (in Chinese only) of the case are that a Chinese company named Weierman registered the trademark “Wei Ge” (伟哥) (meaning “Great Man”) in June 1998, and licensed to a third party to manufacture medicine using the said trademark. This manufacturer in turn sold its products to another pharmacy chain. These three companies were joined as co-defendants by Pfizer.

In its lawsuit, Pfizer alleged that Weierman acted in malice when it registered the “Wei Ge” trademark which had become a “famous” mark in China even though Pfizer had not registered it. To prove that the “Wei Ge” mark was a famous one belonging to Pfizer, it offered evidence of widespread media reporting about the function of the wonderful blue pill, commonly known as “Viagra” in the west, but translated into Chinese as “Wei Ge.” It further alleged that Weierman’s use of the “Wei Ge” trademark constituted both trademark infringement and unfair competition. At the same time, Pfizer petitioned the Court to declare its unregistered trademark “Wei Ge” legally famous (sounds just like the Ferrari case). For the sake of brevity, I will omit other details that Pfizer alleged and pleaded for in the lawsuit.

The Court slammed Pfizer. It ruled that evidence of media reporting did not in and of itself prove that “Wei Ge” is a famous trademark. The Court further found that Pfizer, in fact, never officially used the “Wei Ge” trademark (implying “how can you ask us to declare a trademark famous when you haven’t in fact even used it yourself?”). Of course, Pfizer could have argued for protection under the Paris Convention Art. 6bis, but the problem is that “Wei Ge” was practically unknown in the United States and other Western countries. In the West, the blue pill was known as “Viagra.” If “Wei Ge” is not even known in the U. S., Pfizer could not logically claim that “Wei Ge” is thus deserving of protection in China as an unregistered famous trademark. Therefore, “Wei Ge” as a trademark, neither first registered by Pfizer nor famous either in China or the U.S., does not belong to Pfizer. The Court definitely did a great job picking apart Pfizer’s arguments.

Despite the loss in February, Pfizer, in September, returned to the same Beijing 1st Intermediate Court for another infringement lawsuit (in Chinese only) against a Beijing copycat over the very trademark of “Pfizer” in Chinese—“辉瑞.” Same court, same plaintiff, same causes of action, but this time Pfizer came out on top.

Pfizer Products Co., based on undisputed facts, registered multiple trademarks in China beginning in 1995. Its registered trademarks include “Pfizer”, its Chinese translation “辉瑞”, “辉瑞 Products”, “辉瑞 Hui Rui”, and other related symbols and graphics. In 2004, a Beijing company registered its corporate name as “辉瑞” (this is beginning to sound more and more like Starbucks v. Shanghai Copycat). According to notarized court documents, this company later named itself the Beijing 辉瑞 (Hui Rui) Company, and on its company website, it put the Chinese characters “辉瑞” in a very prominent place. And on its website, the defendant claimed that it was an authorized agent of an American bio-medical corporation, that it possessed advanced research capability and skillful management talents, and that it was devoted to the application and promotion of bio-medical products. These claims obviously insinuated that the defendant had some kind of connection or relationship with Pfizer. The records also revealed that the defendant sold detoxification medicine, causing confusion among consumers because they found out that the products they bought were not effective as claimed by the defendant.

The Court held the defendant liable for trademark infringement and unfair competition. It stated that even though the defendant did not sell medicine under the trademark of “辉瑞”, its prominent use of “辉瑞” in its advertising in fact functioned as an identifying element, linking its products to the source. Therefore, the defendant’s use of “辉瑞” on its website and advertising was in fact trademark usage. Since the use was unauthorized, it constituted trademark infringement. In addition, the defendant’s purposeful registration of its corporate name, using someone else’s trademark “辉瑞”, constituted unfair competition because it was likely to cause consumer confusion and monetary damage to Pfizer.

Examined together, these two Pfizer cases show a great deal about the Chinese law and courts. First of all, its current trademark law and unfair competition law, in combination with the General Principles of Civil Laws, are sufficient in dealing with many complex commercial disputes involving foreign parties. As shown, Pfizer has tried to utilize the Chinese legal system to its advantage repeatedly with varying results. It did not win all the time, not because the law was inadequate or the judges were incompetent, but because of its own mistakes. Secondly, a careful read of both cases clearly demonstrate the judges’ ability to analyze the facts, to apply the law, and to reach well-reasoned and fair decisions. Of course, I have to admit a caveat that Pfizer’s cases were all decided by the same Beijing 1st Intermediate People’s Court, well known for its judicial prowess in adjudicating IP cases. (And not all venues in China are like this court.) Moreover, China’ record on IP protection and the fulfillment of international treaties is by no means perfect. Please read this for an in-depth analysis of China’s WTO-IP compliance.

While China still has a long way to go to forge a better legal system (although what constitutes “good” may still be controversial), it is in effect making progress, albeit slowly in a piecemeal and ad hoc fashion. When dealing with an ancient civilization partially cloaked in and still striving for modernity, it is easy to forget that China started to build its modern commercial law only about thirty years ago. So, attacking China in the abstract with allegations that it “does not have a body of civil law” might not only show ignorance and a lack of patience, but also piss some people off.

2 comments:

Todd Platek said...

Thanks for this informative and timely post.

Brad Luo 罗竞雄 said...

Todd:

Thanks for dropping by and for the comment.