Monthly Archives: July 2015

In a Breakup, Who Gets Custody of the Dog

For many couples, a dog is just like a child. So, when a breakup or divorce happens, it can signal the beginning of a battle over custody of the dog. What does the law say? Who gets custody of the dog?
Will a court even hear such a case?
The first thing to understand is that, regardless of your feelings, pets are not people or kids, they are property. As such, dogs get distributed as other property would, and are not necessarily subject to visitation rights or support obligations as you would find with actual children. In the event of a simple breakup, the person who bought the dog usually gets to keep possession. The exception is when the dog was bought as a clear gift to the other partner. In that case, the dog may belong to the recipient.

If you believe you have a legal right to the dog, you cannot simply take the property back without committing a trespass or other potentially illegal acts. Thus, you will need to obtain what is known as a “writ of replevin.” This writ allows one to take possession of property to which that person has a superior legal interest to the one asserted by the person in actual possession. To be successful, you will need to know the actual whereabouts of the dog, but replevin is a much speedier process than a typical civil action. You could have your dog back within weeks rather than the years a typical lawsuit can take.

Replevin actions can take two forms: actions to gain immediate possession of the property or actions seeking a final ruling by a court as to the ownership of the property. In most states, when you seek immediate possession you must usually post a bond, typically double the value of the property in question. The bond protects the other party in the event the replevin is ultimately overturned and he or she is deemed to have a superior interest in the property. Upon receiving an order from the court granting the replevin, the judge will send a sheriff to enter the home where the dog has been wrongfully kept, collect the dog, and return it to you.

If there is some concern that the other party might hide the dog given notice of a legal action, it is usually possible to get a replevin without notice. To do so, you will need to show that there are valid reasons for seeking this relief without affording the other party notice. These reasons may include:

• Destruction or concealment of the dog;
• Removal of the dog from the state (and the jurisdiction of the court);
• Sale or transfer of the dog to a third party; or
• The dog was obtained by the other party via theft.

To demonstrate these sorts of conditions, you will have to sign a sworn affidavit detailing the facts supporting these assertions. Even though you may gain immediate possession of the dog via this replevin, the ultimate question of ownership will still need to be decided by the court after the other party is afforded adequate notice and due process.

On the other hand, dog custody following a divorce is a little more complicated. As property, the dog is subject to distribution as property. Thus, if the dog belonged to one of the spouses before the marriage, it will likely remain that person’s property after the divorce. However, if the dog was purchased after the marriage, it will be considered a marital asset. As a marital asset, the dog will be thrown into the mix along with other assets like furniture, vehicles, and retirement accounts. It would be equitably distributed to one of the spouses based on the amount of value attributed to the dog and that spouse’s proportional share of the assets. Thus, custody of the dog may have little or nothing to do with who will best love the dog.

However, it is possible for spouses to settle their divorce amicably through agreements or mediation. In so doing, the parties can address issues like dog custody, visitation, and even support payments.

To best assess which approach you should use, you should contact a licensed attorney in your area. You can use the attorney search feature on HG.org to find lawyers near you able to help you with your divorce and dog custody issues.

Can I Sue My Boss over a Client’s Inappropriate Behavior

Your employer’s obligation to keep you safe at work.
Are employers legally obligated to intervene when customers behave inappropriately toward employees?

This question was recently considered before a U.S. District Court. In this case, the employer found out that the phrase “the customer is always right” has its limitations.

Let’s take a look at what happened and then discuss what the law says about hostile work environments.

Peeping Tom

A young woman got a job as a sales associate at a clothing store in New York City.

Not long after she started, one of the security employees told her that a male customer had been caught following her and another female employee around the store. As the women walked up the stairs, the man had attempted to take photographs up their skirts.

The woman asked if anyone had called the police. The security guard said no but stated that he’d photographed the man’s ID and deleted the photos from his phone. The guard finished the conversation with a lewd comment about the female employee’s undergarments.

The woman spoke to several managers about the incident and was surprised to find out that the “peeping Tom” customer had been a regular visitor to the store. It seemed to be well-known that he often stationed himself under the open staircase in an attempt to look up women’s skirts.

Unsatisfied with the store’s response, the woman attempted to get the name of the customer so she could file a police report. The security guard refused to give her the information and told her to “stop being a bitch.”

A few weeks later, a different customer assaulted the woman. She quit and sued the company for a allowing a hostile work environment.

Did the Company Do Enough?

The company attempted to have the case thrown out, arguing that it couldn’t be held responsible for customers’ behavior, that it couldn’t have predicted the incidents, and that it had responded appropriately afterwards.

The woman’s lawyer argued that the company had been negligent in failing to prevent abusive conduct from reoccurring because the store’s management was aware of the first customer’s behavior.

The court sided with the woman. It ruled that there was ample evidence that the employer was aware of the first customer prior to the incident. Her case was allowed to proceed to trial.

What It Means to Employees

Employers have a duty to protect employees from known harassers—even if those people happen to be customers.
If you’ve been the victim of harassment at work and your employer has failed to address it, it may be time to speak to an attorney.

The Conflict in Licensing between Intellectual Property Rights and the Antitrust Regime

How China is regulating competition law aspects of intellectual property licensing.
In 2008, the Anti-Monopoly Law of the People’s Republic of China (the “AML”) was published in recognition of China’s efforts in promoting a fair competition market and decreasing monopoly activities. However, the creation of the Anti-Monopoly Law created a conflict with fundamental intellectual property laws, including the Patent Law of the People’s Republic of China (the “Patent Law”).

While intellectual property laws seeks to encourage new innovations in the form of technologies, artistic expressions and inventions by bestowing exclusive rights to the intellectual property and preventing others without a license, the AML’s purpose stated in Article 1 includes restraining monopolistic conducts and protecting fair competition in the market. Despite this, the AML and intellectual property laws have mutual goals, including enhancing economic efficiency, safeguarding the interests of consumers and social public interest, and promoting the healthy development of the socialist market economy.

Application of the Anti-Monopoly Law with Intellectual Property Rights

The AML provides a general provision to address the application of antitrust laws to intellectual property rights in Article 55, which states that the AML does not govern the conduct of business operators to exercise their intellectual property rights under laws and relevant administration regulations on intellectual property rights; however, business operators’ conduct to eliminate or restrict market competition by abusing their intellectual property rights shall be governed by this Law.

Therefore, Article 55 fundamentally provides an exemption from the application of the AML for intellectual property rights holders, who therefore are not subject to scrutiny for merely exercising their intellectual property rights consistent with the relevant laws and administration regulations. However, this exemption is conditional upon the fact the intellectual property rights holders do not seek to eliminate or restrict market competition by the abuse of their intellectual property rights.

Unlike AML’s specific legal framework providing for and regulating the abuse of dominant positions under Article 17, the AML does not provide the same for intellectual property related behaviours. Therefore, Article 55 is merely a general provision and does not clearly interpret how provisions on abuse of dominance should be applied to intellectual property related behaviours.

Recently, however, the State Administration on Industry and Commerce enacted the Regulation on the Prohibition of Conduct Eliminating or Restricting Competition by Abusing Intellectual Property Rights (the “Regulations”) on August 1, 2015, which clarifies how Article 17 of the AML may apply to issues surrounding the abuse of intellectual property rights, including the refusal to license, exclusive dealing, the imposition of unreasonable conditions, discriminatory treatment, and the practice of tying.

Refusal to License under China’s Anti-Monopoly Law

In particular, Article 7 of the Regulations provides that where its intellectual property rights constitute an essential facility for production and business operations, an undertaking in a dominant position shall not refuse to confer license to other undertakings to use such intellectual property rights under reasonable conditions without legitimate reasons. Additionally, Article 7 provides three factors to be taken into account when determining what constitutes an essential intellectual property right, including:
(a) the intellectual property right has no reasonable substitute and is essential for other undertakings to compete in the relevant market;
(b) refusal to license the intellectual property right will cause an adverse impact on competition or innovation in the relevant market, leading to the impairment of consumer or public interest; and
(c) licensing the intellectual property right will not cause unreasonable damage to the licensor.

There is controversy surrounding the factors in that they limit the scope of essentiality to an extent, therefore setting a low standard for imposing liability on an unwilling licensor, and potentially discourage motivation for research and innovation due to the violation of the intellectual property holder’s core rights of exclusivity. Furthermore, although the provision is similar to the European Union’s antitrust law, the Regulations have failed to include the additional qualifying factor, which states the licensee must use the licensed intellectual property right to bring a new product to the market, rather than copying the licensor’s existing product.

However, the Regulations fill the legislative gap by decreasing the legal uncertainty surrounding the tension between intellectual property rights protection and competition in that they provide guidelines and factors to take into account when evaluating dominant positions and potential abuse in relation to intellectual property related behaviours, therefore enhancing and complementing relevant currently existing laws.

Case Study: Huawei v IDC

The Huawei case involves the application of the FRAND principle (fair, reasonable, and non-discriminatory terms) for standard essential patents (SEPs) and the rules and regulations of the AML. The Huawei case is significant as it is a case in which a SEP holder assumed civil compensation liabilities under the AML for violating the FRAND principle.

Huawei, the plaintiff, is a major global supplier of telecommunication equipment, and IDC, the defendant, holds a large number of essential patents and patent applications under 2G, 3G and 4G standards in wireless communications, including those in the United States and in China.

In December 2011, Huawei filed a complaint against IDC before the Shenzhen Intermediate People’s Court accusing IDC of abusing its market dominant position by reporting that the amount of royalties IDC demanded from Huawei were significantly higher than those offered to other companies, such as Apple and Samsung, therefore imposing discriminatory rates; and giving Huawei global non-exclusive licenses for which royalties must be paid for all of IDC’s patents, rather than just the SEPs for 2G, 3G and 4G, therefore tying the licensing of SEPs with non-SEPs.

In determining the relevant market, the court took into account the definition included in the AML, which states that the relevant market means the range of commodities for which, and regions where, business operators compete with each other during a given period of time for the specific commodities or services, therefore covering a relevant commodity market and a relevant regional market. In SEP FRAND licensing, technologies protected by each SEP constitute an independent relevant market. Therefore, in this case, it was held that every essential patent licensing market under the China 3G wireless communication standard for IDC is unique and irreplaceable, therefore constituting many independent markets.

According to the AML, a dominant market position is a market position giving the business operator the power to control product pricing, quantity, and other transaction conditions, or to hinder or affect the entry of other business operators into the relevant market. Therefore, factors such as the business operator’s market share in the relevant market, and the competition conditions of the relevant market, are taken into account.

At first instance and on appeal in the Guangdong High People’s Court, it was found such criteria for a relevant market was satisfied due to the SEPs’ uniqueness and irreplaceability, and that IDC had abused its dominant market position by applying discriminatory rates. However, the practice of tying SEPs with non-SEPs was later held justified on efficiency grounds; and therefore not in violation of the AML.

The case is significant because it demonstrates a range of factors in the determination of FRAND terms and the application of the AML regarding SEPs, including principles such as:
(a) the holders of SEPs have a duty to license patents to implementers under the FRAND principle;
(b) where an implementer cannot reach an agreement with a SEP holder regarding licensing terms, it can seek assistance from the court to determine a reasonable rate under the law;
(c) the court may consider factors such as quantity, quality, the value of the SEPs, the relevant licensing situations in the industry, and the share of the Chinese SEPs among all the SEPs of the holder, when determining reasonable royalties; and
(d) if, during negotiations with the implementer of the patent, the patent holder abuses its market-dominant position, it will bear the legal consequences under the AML, including ceasing monopolistic conduct, and compensating the implementer’s loss due to its monopolistic conduct.

Furthermore, the court provided factors for determining the amount of damages, including:
(a) the reasonable expenses the plaintiff paid for deterring the defendant’s monopolistic conduct, including attorney fees in both China and the United States;
(b) the competing interest losses;
(c) the nature of the defendant’s infringement;
(d) the level of subjective mistakes; and
(e) the severity of damage caused to the plaintiff.

Case Study: Qualcomm Inc.

Qualcomm Inc., one of the world’s biggest chipmakers and is the owner of many significant SEPs, was recently fined U.S. $975 million and is a significant milestone in anti-competition law enforcement, not only because of the imposition of the highest fine to date in China, but also because of the imposition of uncommon intrusive behavioural remedies.

In its decision, the NDRC found that Qualcomm held a dominant market position for its SEPs by virtue of its large market share and ability to control pricing. Subsequently, the NDRC analysed a number of alleged anti-competitive practices and found that Qualcomm charged excessive royalties by:
(a) requiring licensees to cross-license their patents to Qualcomm and its customers free of charge;
(b) bundling SEPs and other patents;
(c) imposing patent rates based on the net wholesale price of the device;
(d) failing to disclose complete lists of patents to other market participants; and
(e) not modifying royalties upon expiry of a patent.

Furthermore, it was found Qualcomm violated Article 17 of the Anti-Monopoly Law by virtue of bundling SEPs and non-SEPs without any justification, and by imposing certain restrictions on its licensees, such as a covenant not to challenge the license agreement.

Consequently, the remedies imposed on Qualcomm include, but are not limited to:
(a) offering licenses to its current 3G and 4G essential Chinese patents separate from licenses to its other patents;
(b) refraining from bundling SEPs with non-essential patents;
(c) refraining from imposing non-challenge clauses or other unfair clauses in licensing agreements;
(d) providing patent lists during the negotiation process;
(e) providing fair consideration to any rights if Qualcomm seeks to cross-license from another licensee as part of an offer;
(f) providing its existing licensees an opportunity to elect to take the new terms for sales of branded devices for use in China;
(g) lowering its royalties by 35%, though Qualcomm is still entitled to base the calculation of its royalties on the net wholesale price instead of the value of the smallest saleable unit, therefore potentially allowing Qualcomm to preserve some elements of its royalties formula and avoid a duty to license at the chip level; and
(h) committing not to charge wireless communication device markers within mainland China for expired patents.

Case study: Japanese Auto Parts Makers

In August 2014, China levied a record of U.S. $200 million combined fine against ten Japanese auto-parts and bearings makers for antitrust activities, a move made more dramatic by the fact that it was a market dominated by foreign companies. It was found by the NDRC that eight Japanese auto-parts makers and four bearings manufacturers colluded over prices in China, including companies such as Denso Corp., Aisan Industry Co., Mitsubishi Electric Corp., Mitsuba Corp., Yazaki Corp., Furukawa Electric Co., Sumitomo Electric Industries Ltd., NSK Ltd., JTEKT Corp., and NTN Corp.

By colluding over auto-parts prices, car prices and bearings prices, the interests of downstream manufacturers and consumers were affected, hence the severity of the fine. Furthermore, China is a bustling market for auto-parts, an industry dominated by foreign companies; therefore the price of the fine was also influenced by China’s eagerness for a fair environment where innovation and honesty is encouraged.

Conclusion

There is an inherent conflict in relation to licensing due to the right of exclusivity inherent in patents rights or copyright, and the compulsory licensing based on antitrust law, however, China has implemented many laws and regulations, including the Anti-Monopoly law and its various intellectual property laws in relation to this issue to minimise confusion, and to provide for economic growth by encouraging innovation and the maximisation of consumer welfare.

Online Payment Systems Technology in China

The regulations existing in China dealing with online payment systems and related technology.
Over the past decade, advancements and innovations in communications technology have paved the way towards rapid globalisation. A main aspect of this is the convergence of telecommunications and computer technology, which has produced e-Commerce, now an essential feature of everyday retail business-to-customer, or business-to-business transactions. However, this in turn has introduced complex issues of information security, fraud or unfairness to the market, and operational disruption to settlements.

Online payment systems have many benefits, including promoting customer satisfaction, the reduction of settlement times, increased transparency of information regarding pricing and participant identify and fraud detection, and greater security. However, to ensure these benefits constantly outweigh the inherent dangers that come along with employing online payment system technology, the Chinese government imposes substantive regulations and licensing requirements surrounding the Internet, the information technology infrastructure, retail and related logistics and distribution, and media, therefore ensuring information security, fraud and settlement issues or disruptions are kept to a minimum.

China further ensures the minimisation of risks by administering control of payment systems through the People’s Bank of China (PBOC), and administering control of banking institutions through the China Banking Regulatory Commission (CBRC), whose major functions are:
(a) to stipulate regulations and provisions for banking supervision; draft laws, and administrative regulations and make proposals for their drafts and amendments;
(b) to approve the establishment, amendment, termination and business scope of banking institutions and their subsidiaries;
(c) to supervise banking institutions and punish those of unlawful behaviour;
(d) to compile statistics and reports of banking institutions;
(e) to offer opinions and proposals with the Ministry of Finance and PBOC; and
(f) to be responsible for the routine management of supervisory boards of major state-owned banking institutions.

Regulation of Online Payment Systems

In China, online payment systems are regulated under the Administrative Measures of the People’s Bank of China on Payment Services Provided by Non-Financial Institutions (the “Payment Services Measures”), which came into effect in September 2010. According to Article 1, the aim of the Payment Services Measures is to enhance the healthy development of the payment service market, to regulate the payment services provided by non-financial institutions, and to prevent payment risks and protect the legitimate rights and interests of parties concerned.

Essentially, the Payment Services Measures prohibit entities that are not CBRC-regulated from engaging in online payment, issuing or accepting prepaid cards, or accepting bankcards, unless these entities obtain a Payment Business License from the PBOC. Therefore, non-financial institutions are obliged to entrust custodial functions over their money to banks or else fulfill the requirements for a Payment Business License, which require the applicant to:
(1) be a limited liability company or a joint-stock company legally formed inside the PBOC and is the corporate body of a non-financial institution;
(2) have a registered capital reaching the minimum requirements of the Payment Services Measures, which is RMB 100 million;
(3) have capital contributors meeting the requirements of the Payment Services Measures;
(4) have at least five senior managers who are specialists in the payment business;
(5) have anti-money laundering measures meeting the prescribed requirements;
(6) have payment facilities;
(7) have a good organisational structure, sound internal control rules and effective risk control measures;
(8) have business sites and safety precautions meeting the prescribed requirements; and
(9) ensure neither the applicant or any of its senior managers have received any punishment for any violation or crime committed through the payment business or illegally providing payment services in the last three years.

The Payment Services Measures also include in Article 5 an obligation on payment institutions to follow principles of safety, efficiency, honesty and fair competition, and to protect the national interest, as well as public or legitimate interests and rights of clients, and an obligation in Article 6 to comply with anti-money laundering laws. Therefore, the Chinese government has invested a lot of effort in this area to ensure the online payment systems operating in China maintain safe and sound.

Consumer Protection and Data Security

Under Article 1 of the People’s Republic of China on Protection of Consumer Rights and Interests (the “Consumer Rights Law”), its main purpose is to protect the legitimate rights and interests of consumers, maintain the socio-economic order and promote the healthy development of the socialist market economy.

Among many things such as the right to obtain true information of relevant commodities, the right to a fair deal, and the right to acquire knowledge concerning consumption and protection of consumer rights and interests, e-Commerce platforms can be held to joint or several liability with the seller and/or manufacturer of the goods or services sold, therefore imposing a duty of care on e-Commerce platforms to take an interest and requiring such platforms to know their vendors or their products well, which will maximise authentic contact details and minimise the sale of defective or fake goods, or any such other activities that would infringe on consumers’ rights. As well as this, the recent amendment to the Consumer Rights Law increased compensation standards and penalties for violations; expanded liability for businesses involved in false advertising; the development of e-commerce regulations; and the creation of consumer privacy protection standards.

Furthermore, there are many diverse laws, regulations and local ordinances concerned with data protection, including principally the Consumers Rights Law and the Regulation on Personal Information Protection of Telecom and Internet Users (the “MIIT Regulation”). The main obligations espoused in these general laws on data controllers is to ensure data is processed properly, and for companies and other legal entities to collect and use personal information with regards to
(a) principles of legitimacy, rightfulness and necessity when collecting and using personal information;
(b) policies regarding the purpose, manner and scope of collecting and using personal information;
(c) obtaining consent from any individual that has information collected;
(d) refraining from collecting or using personal information in breach of any laws or regulations and with the agreement of any individual that has information collected; and
(e) confidentiality and legality of the handling of the personal information.

The PBOC, in July 2015, has also issued the Administrative Measures on Online Payment Business of Non-banking Payment Institutions, which is currently seeking public opinion. The Measures seek to put in place more restrictions on online payment businesses and online transfer businesses carried out by non-financial institutions, including limiting the amount an individual can pay online to RMB 5,000 per day through third-party payment accounts, unless the customer’s identity can be verified by a security token and electronic signature. Therefore, although there are risks involved in using online payment services technology, China has counteracted with additional laws and regulations to ensure the minimisation of such risks.

Conclusion

An inherent danger with employing online payment service technology is the threat to information security as well as potential issues within the market in relation to fraud the questionable integrity of several online payment systems. However, as an economy that is rapidly growing, especially in the e-Commerce world, China has adapted exceedingly well by ensuring its various administrative bodies, such as the Ministry of Industry and Information Technology, the People’s Bank of China, and the China Banking Regulatory Commission, are minimising such risks through the creation of relevant laws and regulations to further the growth of the economy in a safe environment.