ELLALAN – July Update

ELLALAN recently published legal updates on Employment and Data Privacy Laws

Employment Law Update – Bill passes to abolish Hong Kong severance and long service payment offsetting arrangements from 2025 

·         The Employment and Retirement Schemes Legislation (Offsetting Arrangement)(Amendment) Bill 2022 was recently passed in the Legislative Council. Starting from 2025, employers will no longer be able to offset severance payment (SP) and long service payment (LSP) by using the accrued benefits of the employers’ mandatory contributions (ERMC) under the Mandatory Provident Fund (MPF) System.

·         In this News Update, our Partner Charles To and Trainee Solicitor Holly Tang set out the implications of the new law.

 Data Privacy Law Update – Privacy Commissioner publishes revised guidance on data privacy for property management sector 

• The Office of the Privacy Commissioner for Personal Data (“PCPD”) issued a revised guidance note in relation to the protection of personal data privacy for the property management sector earlier this month.
• The guidance note covered a number of common duties of property managers that may involve the use and collection of personal data, especially amidst the adoption of smart technology means in property management.
• In this article, our Partner Charles To and Associate Tiffany Li remind property managers of some of the key privacy principles, especially where there is CCTV surveillance or collection of visitors’ personal data.

PRC

China Records a Fine of RMB 2.49 Million for Practicing Patent law without a License 

• On 8 June 2022, CNIPA announced that an administrative penalty of RMB 2.49 million was issued against a Zhejiang-based patent firm for practicing patent law without a license and filing abnormal patent applications. 
• The agency, without obtaining a license to practice as a patent agency, has represented 137 patent applicants in 566 patent applications, generating revenue of more than 840,000 RMB.
• As CNIPA stated, cracking down on unqualified patent agency is one of the key tasks of the “Blue Sky” special rectification action since unqualified patent agency acts seriously disrupted the order of the agency industry.
• IP practitioners should be delighted to see the tightening policies brought by the Chinese Government to establish a more proper and disciplined practice environment.

China Issued Typical Cases Involving Obstructing Epidemic Prevention Involving Trademark Cases 

• On 5 June 2022, China’s Supreme People’s Procuratorate and the Ministry of Public Security jointly issued the Typical Cases of Punishing the Crime of Obstructing the Prevention and Control of the Epidemic in Accordance With the Law (依法惩治妨害疫情防控保障犯罪典型案例), two of which related to counterfeiting TMs for medical products including protective clothing and COVID tests. 
• In October 2021, Hu (without the permission of owner of the registered trademark “Fuxianyuan”) commissioned others to print the inner packaging bags, outer packaging cartons, certificates, and instructions of “Fuxianyuan” brand medical protective clothing, and packaged his purchased unbranded “white board” protective clothing with the “Fuxianyuan” TM. The People’s Court of Nanchang High-Tech Industrial Development Zone sentenced Hu to a imprisonment of three years and one month, and also imposed a RMB 60,000 fine.
• In another case, Zhu A was found to have taken advantage of his former relationship with a biological technology company involving in the development of rapid detection reagents for coronavirus antigens. Zhu A, in collusion with others, acquired the same raw materials and re-packaged them for sale. The products were found in the market to contain a registered trade mark. Zhu A and the others were arrested for the suspected crime of counterfeiting registered trademarks. The case is currently under trial.
• During the pandemic, IP infringement is an issue, with counterfeit products such as fake test kits and counterfeit masks endangering the society and causes safety problem. Stringent policies and severe punishment are considered by the Chinese government to be a deterrent for such crimes.

Nike’s Run Club to stop service in China next month 

• On 8 June 2022, Nike’s running and working out app, Nike Run Club (NRC), has informed users that it will end the service in China starting 8 July 2022.
• While Nike did not provide further details as to why it would stop the services, the decision came after Beijing implemented two new laws, the Personal Information Protection Law and Data Security Law, which affect apps collecting personal data in China and exporting overseas of such data.
• The move by Nike follows in the footsteps of other Western internet and consumer giants, including Kindle, Airbnb and LinkedIn which have made similar announcements to retreat from the mainland China market.
• Brand owners who have implemented similar app or software may need to pay attention to the latest new regulations of the China Personal Information Protection Law and Data Security Law and evaluate whether these existing services would possibly violate these laws.

2021 Annual Report of National Intellectual Property Administration reflects that Invention Patent Application Filings Reached more than 1.5 Million 

• CNIPA released its 2021 Annual Report on 1 June 2022.  The report highlighted the latest statistics of IP applications:

                        i.          invention patent applications +5.9% year-on-year, with 1.428 million being domestic applications accounting for 90%. The top 3 Chinese applicants were Huawei (7,629), Tencent (4,537) and Oppo (4,204).  The top 3 foreign applicants were Samsung (2,293), Toyota (1,425) and Qualcomm (1,389).

                      ii.          utility model patent application filings –2.5% to 2.852 million;

                     iii.          design applications +4.6% to 806,000; and

                     iv.          TM applications +11.6% to 9.451 million (include 9.193 million domestic applications of 97.3%; foreign (2.7% of the total)).

• It seems the market is gradually recovering from the impact bought by the Pandemic and the number of IP applications has resumed to normal.
• Please read ELLALAN’s article (https://lnkd.in/dYr_HW_s)  prepared by our Managing Partner Alan Chiu, Partner Valerie Suen and our Patent Agent (PRC) Salina Ip.

Rest of the world

U.S. Senate likely to pass bill to bar tech firms’ favoring themselves in searches 

• On 8 June 2022, U.S. Senator Amy Klobuchar with lawmakers from both parties, urged for votes to be taken as they had sufficient Senate votes required to pass legislation aimed at limiting the four tech giants, Meta’s Facebook, Apple, Alphabet’s Google and Amazon.com.
• The Bill would bar these companies from favouring their own businesses in search results and other ways.
• Whilst the tech giants said the Bill would imperil popular consumer products like Google Maps and Amazon Basics and make it harder for these companies to protect their users’ security and privacy, others disagreed and believed that this Bill will prohibit the giant techs from misleading customers by rigging search results and cheating its sellers by stealing their non-public product information. The Senate is expected to vote on the bill in late June.
• As most consumers rely on information on the internet, it is more favourable to have certain regulations to monitor unfair competition online, including the searching machines on the internet.

 Apple introduces new Pay Later service 

• Apple Inc will itself handle the lending for a new “buy now, pay later” offering. A wholly owned subsidiary, Apple Pay Later, will oversee credit checks and make decisions on loans for the service.
• As stated by the company, Apple Financing LLC has necessary state lending licenses to offer the feature, although it operated separately from the main Apple corporation.
• The move marks the first time Apple is handling key financial tasks such as loans and risk management and credit assessments. To date, Apple’s financial services have been backed by third-party credit processors and banks, e.g. Apple Card credit card relies on Goldman Sachs Group Inc for lending and credit assessment.
• On 6 June 2022, the company’s Worldwide Developers Conference introduced Apple Pay Later as part of the iOS 16 operating system. The programme will initially start in the US and will let customers split the cost of any Apple Pay transaction over four instalments across six weeks.

Paramount Pictures faces copyright lawsuit over movie ‘Top Gun: Maverick’ 

• The family of the man whose magazine article inspired the 1986 film Top Gun is suing Paramount Pictures over copyright infringement claims.
• Shosh and Yuval Yonay – the widow and son of Ehud Yonay – claimed that they are exercising their right to recover the copyright to the story in 2018 and that it took effect in 2020. They alleged that Paramount did not reacquire the film rights before releasing Top Gun: Maverick.
• In 1983, California magazine published an article by Ehud Yonay called “Top Guns,” which told the story of Navy pilots “in a remarkably vivid and cinematic fashion,” according to the lawsuit. Back then, Paramount secured the film rights to the article weeks later, and the blockbuster film Top Gun was released 3 years after the article was published.
• The Plaintiffs say they have opted to recover the rights to the copyright, which they are permitted to do under US law after 35 years.
• We shall follow the lawsuit and update on developments in a future newsletter.

OpenSea claims that it is not liable for resale of Bored Ape NFTs and is seeking for dismissal of a lawsuit 

• OpenSea wishes a negligence lawsuit concerning a former Bored Ape Yacht Club (“BAYC”) non-fungible token (“NFT”) holder to be dismissed. The company argued that it is merely a marketplace and does not have a duty to protect its users from “dangerous conduct,” or scams which aims to steal heavily-hyped NFTs from owners. 
• In a newly-filed motion to dismiss in US, Ozone Networks d/b/a/ OpenSea argues that not only does plaintiff Robert Armijo fail to present “any novel legal questions” in the complaint which he has filed, his negligence claim against OpenSea – namely, that it failed to implement “common sense and reasonable security measures” to protect users from fraud and from the sale of stolen NFTs – is a “nonstarter.” 
• In its motion to dismiss, OpenSea also stated that it is a “web3 peer-to-peer marketplace where users can explore NFTs and can connect directly with each other to purchase and sell NFTs.” The plaintiff alleged that according to OpenSea, “although he purchased three NFTs using OpenSea’s platform, these NFTs were subsequently stolen through a phishing scam by a third party on Discord, [which is] a completely different online platform.” 
• Specifically, the New York-based NFT platform contends that “it has long been the rule in Nevada” that “no duty is owed to control the dangerous conduct of another or to warn others of the dangerous conduct, except where a special relationship exists, and the harm is created by foreseeable conduct.”
• We shall follow the lawsuit and update on developments in a future newsletter.

First-ever NFT insider trading case: former OpenSea employee charged in New York 

• U.S. prosecutors in New York charged and arrested Nathaniel Chastain, a former product manager at the online non-fungible token (“NFT”) marketplace OpenSea.
• The 31-year-old faced one count of wire fraud and one count of money laundering, in connection with a scheme to commit insider trading in NFTs, “using confidential information about how NFTs were going to be featured on OpenSea’s homepage for his personal financial gain.”
• According to the indictment, Chastain was tasked with selecting NFTs to be featured on OpenSea’s homepage. OpenSea kept those homepage selections confidential until they were released to the public, since a main page listing often results in an increase in price for the featured NFT as well as NFTs made by the same creator.
• Before June to September 2021, Chastain would secretly purchase an NFT just before OpenSea featured the piece on its website main page. Once those NFTs hit the main page and the price hikes, he would allegedly sell them “at profits of two- to five-times his initial purchase price.”
• To cover his wrongdoings, he conducted these illegal transactions with anonymous digital currency wallets and anonymous accounts on OpenSea.
• When the allegations were made against Chastain, he resigned from his position at OpenSea at the request of the company. Now he is facing up to 40 years imprisonment for the two counts of crime by only making 19ETH (estimated $67,000) for the trades.
• Opensea has since installed new policies prohibiting employees from buying or selling works designed by creators while the company is featuring or promoting them, or from using any insider information for NFT transactions on any platform.

SoftBank Executives’ Pay Cut After Historic Loss of the Vision Fund 

• SoftBank Group Corp.’s top executives had steep cuts in their salaries as Softbank marked a historic loss for its Vision Fund unit.
• Despite this, the company’s founder and Chief Executive Officer Masayoshi Son kept his pay unchanged at $785,000.
• Softbank is the world’s largest tech fund and it reported its biggest loss ever for the year ended March 31 as a selloff in tech shares deflated the value of its portfolio companies, including public holdings like Coupang Inc. and Didi Global Inc.