Newsletter
REGULATIONS ISSUED REGARDING IPR DISPUTES BETWEEN CENTRAL FACTORIES AND THEIR SATELLITE FACTORIES
The Fair Trade Commission (FTC) recently announced regulations aimed at balancing the rights and obligations between central factories and their satellite factories in disputes regarding intellectual property rights. Highlights of the regulations are as follows:
If the central factory and satellite factory believe it necessary to determine their rights and obligations regarding copyrights, patents and trade secrets based upon the technology contributed by each party, the parties should enter into a contract in accordance with the provisions of the Copyright Law, the Patent Law and the Trade Secrets Law. If the parties determine that there exists a dispute regarding the contribution of technology, they should refer the dispute to an impartial expert institution for resolution. Restrictive contractual terms involving copyright, patent and trade secrets should conform to Article 45 of the Fair Trade Law regarding the proper exercise of rights.
Intellectual property disputes should be resolved through judicial channels. Parties issuing warning letters must abide by a separate regulation issued by the FTC on the proper issuance of warning letters in cases of infringement of copyrights, trademarks and patents.
The FTL should apply if the rights discussed above are not exercised properly or if there are improper acts which restrict competition.
Restrictive contracts must satisfy two conditions: (1) There should be a cooperative technical relationship between the parties respecting molds, spare parts or design plans transfer or joint development; and (2) Restrictions on duplicating molds are limited to those needed to protect trade secrets of component parts during transport or manufacturing. Any disputes the parties have about the necessity of restrictions should be referred to an impartial expert institution for resolution.
Parties which do not comply with the above regulations should be subject to the terms of the FTL.