Draft JI Issued by SPC for Provisional Measures in IP and Competition Law Matters

On February 26, the Supreme People’s Court published for public Comment a draft SPC Judicial Interpretation on Concrete Issues in Application of Law in Determination of Action Preservation Measures in Intellectual Property and Competition Controversies (最高人民法院关于审查知识产权与竞争纠纷行为保全案件适用法律若干问题的解释)(征求意见稿). Comments are due Mach 30.  The SPC also issued an accompanying explanation of the draft JI.

When final, this JI will supersede prior JI’s involving preliminary injunctions in patent and trademark cases, which also served as reference for copyright matters.  The JI also further solidifies the extension of the civil procedure law reforms involving provisional measures to trade secrets, while also clarifying its expansion to civil competition law matters. The JI may open up the possibility of greater use of the civil courts for antimonopoly law litigation.

“Action Preservation” measures in the draft include measures to require a party to act by the court, or to prohibit them from acting. The draft JI specifically clarifies the circumstances by which licensees (exclusive or non-exclusive) may seek injunctive relief.   The time frame for rendering a preliminary injunction decision is a non-emergency matter may be as long as 30 days.  The draft JI also details such aspects of preliminary injunctions as the jurisdiction of the court, what constitutes “irreparable harm”, nature of guarantees, handling of appeals of cases and handling of oppositions to provisional measures, the effect of changed circumstances, fees, and other matters.

Five Year Judicial Reform Plan And Specialized IP Courts

On February 26th, the Supreme Peoples Court released its fourth five year reform plan (2014-208) (最高人民法院关于全面深化人民法院改革的意见) (dated February 4, 2015).  Intellectual Property is the third item listed of sixty-five action “Key Tasks in Deepening Reform of the Courts” (全面深化人民法院改革的主要任务 )  Here’s what the Court says

推动设立知识产权法院。根据知识产权案件的特点和审判需要,建立和完善符合知识产权案件审判规律的专门程序、管辖制度和审理规则。Promote the Establishment of Intellectual Property Courts. Establish and improve specialized procedures that fulfill the need for intellectual property adjudication, jurisdiction and trial rules, in accordance with the special needs of intellectual property case adjudication.

This “task” supports the specialized procedures now in place at the IP courts, including the use of technology assessors, as well as the unique jurisdiction of those courts.  The five year reform also extends beyond the three year trial period of the courts, which suggests that deeper/more durable reforms may be in the works.

There are also numerous other provisions in this plan that could affect IP adjudication, including provisions on transparency, administrative appeals, statistics, court management, petitioning, independence, supervision, as well as on international judicial assistance (No. 26). The draft also calls for the adoption of an international criminal judicial assistance law, which might be useful in dealing with transnational IP crime.

Thanks to Susan Finder for spotting this new development.

Federal Circuit Announces October Shanghai Program

The Federal Circuit Bar Association has recently announced its October 19-20, 2015 program in Shanghai, China, with the title “Intellectual Property & Trade 2015:  Adjudication, Administration, and Innovation October, 2015 Shanghai, China.” Here is the page where the agenda will appear. Here’s my bog on the last judicial conference sponsored by the FCBA in China.

Federal Circuit Affirms Findings of Non-Infringement and Invalidity in Interdigital 337 Appeal

In a non-precedential opinion authored by Chief Judge Prost and released today, the Federal Circuit  affirmed findings of non-infringement or invalidity in the five patents asserted by InterDigital in Certain Wireless Devices with 3G Capabilities and Components  thereof,Inv. No. 337-TA-800 (Dec. 19, 2013), in which Huawei and ZTE, amongst others, were respondents.  Huawei initiated  law suits in China in response to InterDigital’s original 337 filing, including claims for prospective damages for abuse of dominance by reason of InterDigital’s seeking an exclusion order at the ITC for claimed standards essential patents.

 

Top 10 Internet “Sword Action” Piracy Cases For 2014

sword

Let’s fight with gentle words Till time lend friends, and friends their helpful swords. (Shakespeare, King Richard the Second)

On January 14, 2015, the National Copyright Administration of PRC (NCAC), together with the National Internet Information Office (NIIO), the Ministry of Industry and Information Technology (MIIT), and the Ministry of Public Security (MPS), held a briefing in Beijing on the achievements of their campaign “Sword Action” (Jian Wang Xing Dong, 剑网行动) (or “Sword Network Campaign”).  This campaign is intended to address internet copyright piracy.

China has now carried out the “Sword Action” for 10 consecutive years.  According to information released at “Second China Seminar on the New Internet Copyright Issues”, this campaign has resulted in investigation of  4241 cases related to Internet piracy, including 1926 websites which were referred to MIIT for shut-down, the confiscating of 1178 servers and related equipment sets, and fines of 7.83 million RMB.  Perhaps most critically, 322 cases were transferred to judicial departments, presumably for criminal prosecution, or about a 7.6% “referral rate.”

Last year’s Sword Action covered a range of content types, including films and television programs, literature, and online games, with a particular focus on selling pirated products through Internet.  Here is a summary of these important cases, with our comments:

1.  Shanghai “Shooter net” (射手网)Infringing Audiovideo Works and Subtitle Translations

 

In September 2014, Shanghai Cultural Market Administrative Law Enforcement Team investigated the “Shooter Network” (www.shooter.cn) for alleged copyright infringement.  The investigation revealed that Shanghai Shooter Information Technology Co.  set up the ”shooter net” in shopping malls, for commercial purposes.  Shooter sold copies of their “2TB HD integrated video collection of resources” hard disk storage devices, “3TB HD super audio collection and other products”, with a total of about 100 units sold since May 2013.  In a separate investigation, Shooter subtitled “How to Train Your Dragon” and other television work without permission of the rightsholders and permitted users to browse, download and view these programs.  The site’s daily IP traffic was about 200,000, and daily visits were 400,000 page views.  The Motion Pictures Association of America certified that various titles were unauthorized and that films were subtitled without authorization of the copyright owner.   Shanghai Information Technology Co., Ltd. agreed to stop the infringement, and the site was shot down in November 23, 2014. A 100,000 RMB administrative punishment was imposed. This case alerted subtitle translation sharing groups that their previous sharing activities may constitute a form of copyright infringement.

2.  “Yi Dian Wang Ju” Company (一点网聚公司) Disseminating Literary Works

On December 2014, NCAC investigated on Yi Dian Wang Ju Company for allegedly disseminating literary works on-line.  The company, without the permission from Beijing weekly magazine, Beijing Finance World Culture Media Co., Ltd, and Beijing Figures World Culture Media Co., Ltd, disseminated 246 written works to public.  NCAC imposed a 100,000 RMB administrative punishment on the company.

3.  “Jian Gong Family” (建工之家) Website Software  

The copyright administrative law enforcement department of Yangzhou City (Jiangsu), together with Heze City (Shandong), investigated the “Jian Gong Family” website.  The website charged a membership fee and offered a number of cracked versions of software online and for downloading.  As of September 15, 2014, it had 1,430,332 website members, and on-line members of 6268.  The copyright administrative law enforcement department of Yangzhou imposed a 100,000 RMB administrative fine.

4.  Mr. Liu On-line Games Copyright

 

The Ministry of Public Security (MPS) of Heilongjiang Province together with NCAC investigated a Mr. Liu for allegedly infringing the copyright of an on-line game named “Zhu Lu Zhong Yuan”.  The infringed online games were operated through VPN proxy services, with rental servers inside and outside in China.  The companies used third-party payment platforms for cash flow.  There were hundreds of thousands of players and the scale of the website was close to that of genuine games. On July and August of 2014, Liu as well as other parties were arrested.  The court sentenced Liu and the technical directors of the computer service with maximum penalties of 3 years and 6 months imprisonment, and fines ranging from 400,000 RMB to 60,000 RMB.

5.  “HD Movies Download Website”(高清影视下载网)

 

MPS of Yangzhou City (Jiangsu) investigated the “HD Movies Download Website” for  infringing copyright.  Mr. Hu set up ”高清影视下载网”(www.gaoqing.tv), which he maintained and operated.  His wife was responsible for finances and procurement.  The service provided HD movies to copy and sell through their website and a Taobao store(淘宝)(affiliated with Alibaba) of a Mr. Ding.  Mr. Hu sold the membership invitation code of the website on the Taobao store, generating illegal revenue of 900,000 RMB in 2013.  The court sentenced Mr. Hu to a prison term of 1 year and 6 months and fined him 160,000 RMB.  Mr. Ding was sentenced to 6 months with a fine of 60,000 RMB.

6.  “999 Treasure Net” (999宝藏网) Software

 

MPS (Anhui) investigated the “999 Treasure Net”, for offering pirated Windows operating system software to download.  The website also offered advertising, bundled plug-ins and collected membership fees.  The infringers made an illegal profit of more than 2.5 million RMB.  The court sentenced 6 individuals to imprisonment ranging from 1 year to 3 years with fines ranging from 50,000 to 150,000 RMB.  NCAC gave the informer a 10,000 RMB reward.

7.  Mr. Liu Selling On-line Audiovisual Products

 

MPS of Zibo City (Shandong) and NCAC investigated three Taobao shops for selling pirated audiovisual products. Liu X, Song X, and Yang X, profited from downloading videos of calligraphy and education from the Internet, and employed Sun X to copy about 41,200 disks.  The illegal business profit was more than 4 million RMB.  In August of 2014, 11 related individuals were arrested, and 3,400 pirated CD’s were seized.  The case has been transferred for criminal prosecution.

8.  Hubei – A Number of Sites Suspected of Infringing “Comic Guests” 《知音漫客》Magazine

 

Hubei Province MPS investigated a number of sites of unauthorized dissemination of a network magazine “Comic Guests”.  Twelve key sites and organizations were identified, and three allegedly infringing website have been investigated, leading to the arrest of five suspects. The case has a value of about 13 million RMB and is being further investigated.

9.  Tan X Selling Pirated Software On-Line

 

In May 2014, Yongzhou Lingling District Public Security Bureau (Hubei) investigated Tan X and others for online sales of pirated software programs.  The investigation determined that Tan X had been pirating Microsoft software CD’s, printing blank software key labels with passwords, make pirated software discs, and selling on Taobao through a number of stores – “DELL HP IBM服务器”、“电脑软件批发”、“金英团队”、“迷彩指望”、“鑫城软件”、and “樱花肆虐的季节” (translations: “Dell HP IBM Server”, “Computer Software Wholesale”, “Kim / Gold Brave English team”, “Camouflage Expect”, “ Xincheng Software”, “Cherry Ravaged Season.”)  MPS has since arrested 5 suspects and the case has been transferred to prosecution.

10.  Guangdong “3 • 24″ Network Wholesaling Pirated Books

 

In March 2014, MPS together with the Cultural Market Comprehensive Administrative Enforcement team of Guangzhou, on the complaint of the China Construction Industry Publishing House, undertook a joint investigation on “3 • 24” network, which was thought to be pirating books on a wholesale scale.  The investigation revealed that Xiang X rented a room to store 28,000 copies of 53 editions of pirated books in order to wholesale these books for sale to stores at low-cost.  Based on the sales inventory, purchase receipts and other clues, the enforcement team arrested several vendors, destroyed eight “black” warehouses, four logistics companies, and a point of sale network.  Law enforcement also seized more than 500 pirated editions with 150,000 copies and more than 7 million Mayang (码洋) (book discount notices).  Enforcement authorities filed 35 cases and nine suspects were detained, of whom two were approved for arrest.

 

Comparing to the prior Sword Action of 2013, the “Sword Action” of 2014 entailed more interdepartmental cooperation.  It also struck at several important commercial networks, including physical and on-line stores.  These campaigns also show an impressive national scope, close coordination with MPS, a high referral rate and an interest of officials in addressing complex and emerging copyright issues.  Music piracy cases are noticeably absent from this list.

While these efforts are laudable, good cases may not be enough to drive social reform.  What remains to be seen is a comprehensive report on overall extent of copyright administrative enforcement efforts.   NCAC has not issued such a report in years.  For example, we do not know how many cases NCAC overall brings on behalf of foreigners, how many cases transferred to criminal prosecution, average fines, types of content being enforced, role of on-line and physical markets, etc.  Such data would enable meaningful identification of areas where enforcement is more likely to be aggressively pursued, as well as provide useful comparisons to other forms of enforcement in China.

We welcome any corrections or further detail on the above (prepared by Mark Cohen and Yao Yao).

 

 

On Presidents, Leaders and Patents

gwashington

Today, February 15, 2015, is the Presidents Day holiday in the United States. This holiday celebrates the birthdays of two of America’s greatest presidents, George Washington (February 22), and Abraham Lincoln (February 12).   Symbolically, it celebrates all American presidents.

One common theme of these two great leaders has been their support of the patent system. Two hundred and twenty five years ago, on January 8, 1790, George Washington emphasized patents in the first State of the Union Address, where he noted the importance of giving “effectual encouragement” to inventions. Soon after the speech, a Congressional committee was established to draft a patent law. On April 10, 1790, the first patent act was passed by Congress. With this step, Congress fulfilled its constitutional mandate to “promote the progress of sciences and the useful arts” by securing legal rights to “authors and inventors.”   Most importantly, copyrights and patents thereafter became rights subject to legal protections, rather than subjects of imperial decree.

Abraham Lincoln famously was the only president to have secured a patent. He was also, I believe, the only president to have been engaged in patent prosecution and litigation. Lincoln was personally interested in all improvements to the “useful arts” including those involving military technology. Patents, he argued, added the “fuel of interest to the fire of genius.”

Although considerably less florid than Lincoln, in 1979, Deng Xiaoping addressed the political divisions over whether China should have an intellectual property system, by noting that “It is better to have a patent system” (as quoted by Duan Ruichun). IP thereafter became an important part of China’s economic reform as China emerged from the Cultural Revolution. During the ensuing years, he believed that controversies over IP were due in part to a lack of understanding of the IP system and he encouraged more training and education of IP specialists. Later, during a 1992 Southern Tour, he asked details of IP management of companies he visited, and advocated for conformity with international practice.

Had Deng met George Washington or Abraham Lincoln and the topics of patents came up, I suspect that they all would have agreed that an IP system, based on property rights, was necessary for a country to “promote the progress of science and the useful arts,” particularly at times when their countries desperately needed to spur innovation to address seemingly insurmountable political, economic and military challenges.

Photo: From George Washington Masonic National Memorial in Alexandria, Virginia (near USPTO).

 

Plant Variety Protections Likely to Improve

This news comes to us from our colleagues at the Beijing Intellectual Property Institute (BIPI) (北京务实知识产权发展中心).

A revised draft Seed Law was completed by the NPC Agriculture and Rural Affairs Committee in January 2014.  It was transferred to the State Council for review in August, and is expected to be submitted for reading by the Standing Committee of the NPC in April 2015.

The draft of the Seed Law is revised from eight aspects to improve the level of legal protection for plant varieties, including creating a new chapter on this topic.  The new draft explicitly stipulates the content, ownership and grant conditions for plant variety protection (PVP) including application, examination, grant, implementation, infringement and exceptions, the period of protection, termination and invalidation.  The draft also increases the penalties for the infringement and counterfeiting (passing off).

The draft is also reported to reflect some of the advancements of the 1991 International Convention for the Protection of New Plant Varieties Union (UPOV Convention).  China is a signatory to the 1978 UPOV Convention.  Contemplated improvements include extension of the period of protection to 5 years; the object of protection is extended from propagation material to receiving goods; the content of protection is from commercial production and sale to production, propagation, sale, and commitments to sell, in order to strength the protection to the original variety.   As I previously noted, some improvements to China’s UPOV regime may already have been contemplated by the China-Swiss FTA (2013).

Prepared by Mark Cohen and Yao Yao.