In recent years, the world has witnessed several milestone
events signaling the arrival of a new generation of global internet
companies. Apart from the much-hyped dawn of social media, there is
a much broader trend taking place, one that has outgrown the
traditional boundaries of the tech sector itself. "In
short," as Marc Andreessen wrote in a recent Wall Street
column, "software is eating the world." While
corresponding developments are happening in China, this new era has
caused and will continue to cause dramatic implications on the
monitoring and enforcement of intellectual property rights in the
In the United States, consider the examples that Andreessen
cites in his article. With the fall of Borders earlier this year,
Amazon is now the largest bookseller in the US; but through the
power of software, Amazon is beginning to emerge as threat to the
traditional retail industry. The most dominant and rapidly growing
distributors of music, movies, and television programming are
companies like Netflix and Apple (through its iTunes service), both
of which sell and stream their content entirely online. The
world's fastest growing telecom company is Skype (purchased by
Microsoft earlier this year). The fastest-growing recruiting
company? The newly-listed LinkedIn. Even the multi-billion dollar
gaming industry is being taken over by online gaming providers such
as Zynga and leaving behind traditional hardware manufacturers such
as Sony and Nintendo.
Parallel developments are also taking place in China, where the
social, political, and regulatory landscape have made the domestic
internet sector notoriously difficult to penetrate for foreign
players. Fast-growing consumer e-commerce websites such as
Alibaba's Taobao and 360buy.com are squeezing the market
share of traditional brick and mortar retail businesses. Online
video providers such as Youku.com
and Tudou are beginning to partner with traditional media
production companies such as Time Warner and Disney to provide paid
As the retail industry begins to migrate online and the
prospects of e-commerce have become more lucrative for small
businesses, sales of counterfeit goods on the internet have also
spiked in recent years. Likewise, the more primitive methods of
copying DVDs or sharing media through the web are now giving way to
streaming media websites that often contain copyrighted movies or
television programming. The result of these developments is that
the battle between intellectual property infringers and enforcement
efforts to contain them is increasingly taking place online.
Rather than employing litigation or notifying the authorities,
shutting down a retail operation for counterfeit goods now often
involves notifying consumer-to-consumer or business-to-consumer
platforms such as Taobao of infringing activities. Similarly,
rather than seeking to destroy countless DVD copies of copyrighted
content, removing infringing media from mass distribution often
involves corresponding with online video-sharing platforms. In both
cases above, the website provider risks exposure to secondary
liability if it is notified of infringing content and fails to make
sufficient efforts to remove such content or accounts.
Thus, as infringement activities become consolidated onto online
software platforms, whether these activities be the sale of
counterfeit goods on an e-commerce site or the distribution of a
copyrighted content on an online video site, monitoring and
controlling intellectual property infringement has improved.
The traditional view of the IT sector is that the internet has
transformed the way we obtain, process, and communicate
information, whether that information is in the form of a study in
an academic journal or the latest status update from a friend on
Facebook. However, in this new world of software-dominated
companies, the internet is not only a means of manipulating
information, but a means of providing consumer goods,
entertainment, services (the list goes on). How this will continue
to shape the future of intellectual property enforcement in China
remains to be seen.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The ever non-quenchable thirst for foreign investment on our part and the ever non-diminishing power hunger on the part of foreign investors culminating in different form of Joint Venture Agreement (JVA), Share Purchase Agreement (SPA) and Share Holders Agreement (SHA) result in inserting an omnibus arbitration clause to settle disputes that arise from these agreements.
The "variable interest entity" structure (the "VIE Structure") has been the investment structure of choice for foreign investors to navigate through the grey areas of PRC law on foreign direct investment ("FDI") for over a decade.
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