SPC Publishes Revised Judicial Interpretation on Patent Infringement Litigation for Public Comments

On July 16, the Supreme Peoples Court published a public comment draft of proposed revisions to its “Decision of the SPC Regarding Questions of Application of Law in Adjudication of Patent Cases”, 最高人民法院关于审理专利纠纷案件适用法律问题的若干规定. Comments are due by August 15, 2014. Comments may be emailed to: zhuanliyijian@163.com。 The last revision to this document was in 2013, when a provision was inserted to give jurisdiction to designated basic courts to handle patent cases.

Of particular note in this short set of revisions are provisions regarding providing an appraisal report for utility model patents to the court if such a report had been requested by the plaintiff of SIPO, as well as provisions which appear to provide more flexibility in calculation of damages by the court, consistent with the 2008 patent law.

Many of the changes appear self-explanatory – such as those which track changes in relevant statutory provisions.  However, in light of the efforts to amend the patent law, experiments in specialized IP courts, calls for more deterrent damages and more extensive commercialization of IP rights, some additional explanation would be helpful regarding the reasons for any changes in policy that may be implicit in these revisions and any further changes that may be contemplated.

For earlier USG comments on the patent law revisions see: http://www.uspto.gov/ip/ip_overseas/china_team/USPTO_Comments_to_Chinas_Patent_Law_Amendments_FINAL_%289.10.12%29..pdf.

Once I receive a full translation or comparison of prior drafts from any reader, I will post it on line. Readers are encouraged to send in their translations, suggestions and comments. For now, the full Chinese text of the proposed revisions with my own initial bilingual observations are attached.


State Council’s New Opinion on Market Order

On July 8 the State Council released a new opinion on “market order” which, like many similar rules in China, is suggestive of possible significant policy changes, while being of uncertain legal status, all cloaked with a rather unappealing title.

The document is called “Several Opinions of the State Council Opinions on Promoting fair Competition in the Market to Maintain the Normal Market Order.” 国 务 院 关 于 促 进 市 场 公 平 竞 争维护市场正常秩序的若干意见国发〔2014〕20号 (http://www.gov.cn/zhengce/content/2014-07/08/content_8926.htm).

“Market order” is a term that has significant overlap with IP protection and antitrust matters. It has appeared in the draft patent law revisions of SIPO, and was also the basis for MofCOM’s earlier efforts at coordinating IP protection through the Market Order Rectification Office. Of course, some laws and regulations, such as those involving consumer protection and unfair competition, have a more direct relationship with what many Westerners may conceive as “market order”. These opinions point out some of these, such as by calling for “the strict implementation of the financial, food and drug safety in production.” However, in China the term is arguably broader. For example, this document calls for an expansion of joint liability concepts and of punitive damages when harm is caused to the “market order”, which are usually civil – rather than regulatory – concepts.

The “guiding ideology” of this opinion is positive. It is intended to provide for “equal protection of the legitimate interests of market players, maintain market order of fair competition and promote the sustained and healthy development of economy and society.” The document “insist[s] on the use of the rule of law in …market regulation functions.” Procedures should also involve “government regulatory standards of openness, the process is open, the results made public,” thereby echoing current efforts in IP administrative transparency as well as commitments to make AML procedures more transparent (see: http://chinaipr.com/2013/11/24/through-a-glass-less-darkly-chinas-march-to-administrative-enforcement-transparency/).

The Opinion also calls for “severely punishing monopolistic conduct and unfair competition conduct” in accordance with the relevant provisions of the antitrust law, anti-unfair competition law, and the price law. It also addresses monopolistic agreements that “hamper innovation and technological advancement.”  Other concerns are: false advertising, price fraud, commercial bribery, illegal lottery sales, business defamation, laws to protect all types of intellectual property rights, the fight against manufacturing and selling counterfeit and shoddy goods, etc. The Ministry of Commerce, Development and Reform Commission, State Administration for Industry and Commerce, Intellectual Property Office and other departments were responsible for implementing this provision.

The Opinion also calls for efforts to “to resolve duplicate law enforcement.” Some of this appears directed to efforts to integrate culture and copyright protection through local task forces. However it  does not appear to be specifically directed to antitrust and unfair competition, particularly in its call for “the elimination of duplication multilayered enforcement”, including territorial and subject matter overlaps. The antitrust subject matter overlap appears acute to me at this time between NDRC (pricing law) and SAIC (IP abuse) at least with respect to standards essential patents and licensing.

Considering existing overlaps in copyright (through cultural task forces), trademark (through overlap with AQSIQ, MIIT, and others) and that China has a three-track system for enforcing antitrust matters (MoFCOM, NDRC, and SAIC), efforts to minimize duplication and achieve enforcement by laws that are consistently implemented throughout the country may yet be difficult to achieve absent more extensive reorganization.

Note: The word cloud, above, drawn from a google machine translation of the document suggests a robust role for  “supervision”, “market” and the “law” to promote “competition”, which one hopes is the prerequisite to a more robust role for the market, and not simply by market regulators.

As usual, these are my personal non-official observations.

Of Counterfeit Pandas and African Lions….

Want a glimpse of a counterfeit panda?  Go to: http://www.sznews.com/humor/2012-06/08/content_6820640.htm.

Fake pandas are easy enough to counterfeit – if you don’t mind painting up a shizu or other dog and hope that it doesn’t bark too much.   The Chinese press labeled these “shanzhai” (counterfeit/mountain stronghold) pandas, back in 2008.  This “innovation” appeared to have first appeared in Jilin Province.

Jacob Johanson recently posted on linkedin, another story – about a counterfeit African mountain lion in a Henan zoo.  (https://www.linkedin.com/groups/IN-CHINA-EVEN-ZOO-ANIMALS-4972308.S.5891817830172626948)   In this case the mountain lion was a dressed up Tibetan mastiff, at least according to Chinese news reports in 2013 (http://pinglun.eastday.com/c10/2013/0818/20675630.html).   Unlike the counterfeit panda, the Chinese media has suggested that the counterfeit mountain lion could have been created to fraudulently draw visitors to the zoo.

There are many other notable China inspired counterfeits.   Domestic cultural treasures like the terra cotta warriors have been charged with fakery (http://chinaipr.com/2014/02/23/truth-or-false-dream-of-the-red-chamber-and-the-terra-cotta-warriors/).   My favorite is the fake jail that manufactured fake cigarettes.(http://chinaipr.com/2014/06/09/jail-house-inventors-and-fake-jail-infringements/).   Living in China you might also notice when other countries engage in this type of fakery.  Consider for example the Wa state in Burma, which some Chinese consider a counterfeit (shanzhai) version of China.  (http://archive.today/cF98A).

IPR Deliverables at the Strategic & Economic Dialogue

Xi Jinping's Opening Speech

Xi Jinping’s Opening Speech

The US and China recently concluded their Sixth Strategic and Economic Dialogue. IP-related outcomes involved such areas as: trade secret protection; cooperation with China’s judiciary; and software procurement. In addition there were other outcomes with IP-related deliverables in such areas as antimonopoly law and control over active pharmaceutical ingredients.

Excerpts from the Joint Fact Sheet are below –

Trade Secrets:

The United States and China affirm that they do not approve of trade secret theft for commercial advantage and that the protection and enforcement of trade secrets is essential to maintain fair competition and to develop an innovative economy. Both sides are to pursue criminal and other actions to deter the misappropriation of trade secrets, and make information available to the public about their actions, to the extent permitted by law. China has incorporated the protection and enforcement of trade secrets into its 2014 Priorities of the Nationwide Crack Down on Intellectual Property Infringement and Production of Counterfeit and Shoddy Products, published by the State Council on April 14, 2014. As its next step, China is to vigorously investigate and prosecute trade secret theft cases; ensure that civil and criminal cases are tried and the judgments are published according to law; and protect trade secrets contained in materials submitted by companies as part of regulatory, administrative, and other proceedings according to Chinese law. China is also to undertake publicity and education activities to improve the awareness of companies and the general public regarding the protection of trade secrets; to undertake studies and research on trade secrets law and related legislative and policy issues; and is to continue engaging in technical exchanges with the United States on these issues. China affirms that it is to continue prioritizing trade secrets protection and enforcement and is to take positive actions that are to be included in upcoming work plans.

Trade Secrets and Administrative Licensing:

…Further, the United States and China commit to strictly implement existing laws and regulations to adequately protect any trade secret or sensitive commercial information provided by the applicant during the administrative licensing or approval process, consistent with laws.

Judicial Cooperation:

Building on the prior successful exchanges between the United States and China at the Joint Commission on Commerce and Trade (JCCT) Intellectual Property Rights Working Group and at meetings among relevant agencies, the United States and China are to continue to promote exchanges between respective Intellectual Property (IP) agencies, including judicial and administrative bodies, on topics of mutual interest, such as enforcement, transparency, and specialized IP courts. These
discussions and any recommendations are to be reported to the JCCT and other bilateral meetings.

Software Procurement:

China confirms that the Deployment Standards for the Assets of the Office of General Software of Government Agencies is a measure designed to strengthen the administration of spending and implement the CPC Central Committee’s call for frugality. This measure was drafted with the intention to not have any purpose or effect of creating obstacles to international trade. The United States and China are to continue to engage on ways to address any obstacles to trade facing companies.

Other Outcomes with IP Implications

Antimonopoly Law:

The United States and China recognize that the objective of competition policy is to promote consumer welfare and economic efficiency rather than promote individual competitors or industries, and that enforcement of their respective competition laws should be fair, objective, transparent, and non-discriminatory. China commits that its three Anti-Monopoly Enforcement Agencies (AMEAs) are to provide to any party under investigation information about the AMEA’s competition concerns with the conduct or transaction, as well as effective opportunity for the party to present
evidence in its defense.

Active Pharmaceutical Ingredients:

To advance the shared goal of ensuring access to safe and high-quality medicines for patients and protect supply chain integrity, to affirm the responsibilities of the manufacturers and regulators over the life-cycle of the drug to ensure product quality, and to fight against illegal actions to manufacture, distribute, and export counterfeit and substandard active pharmaceutical ingredients (APIs) and APIs used for counterfeit and substandard products, China commits, during the process of revising the Drug Administration Law (DAL), to develop and seriously consider amendments to the DAL requiring regulatory control of the manufacturers of bulk chemicals that can be used as APIs (“bulk chemicals”), including “export only” producers and distributors. To this end, China commits to hold a multi-ministerial work mechanism on a potential regulatory and enforcement framework to develop the oversight of bulk chemicals, and a roadmap for implementation, by the end of this year. The United States commits to continue to review its authority to exclude from consideration the import of bulk chemicals from firms that are not registered with China Food and Drug Administration (CFDA). In addition, the United States and China commit to deepen technical exchanges, trainings, and regulatory cooperation to enhance the safety of bulk chemicals traded between the United States and China, and to exchange views on the user fee programs at the upcoming pharmaceutical working group meeting of the JCCT.

There is also a separate US Fact Sheet which further elaborates on these deliverables.

USPTO China Update Program – July 18, 2014

USPTO’s “All you Ever Wanted to Know About Chinese IP and More” will be held at the PTO’s Global IP Academy *http://www.uspto.gov/ip/training/index.jsp) on the morning of July 18 in Alexandria, VA. Updated agendas will be available on line. The program is free, but pre-registration is required and a fee will be charged for lunch. The afternoon session is for US government only.

I look forward seeing you there!

To register for the event, log onto the online registration site: http://events.Signup4.com/ChinaIP.


Leading Group’s Work Plan for Fighting Infringement in the On-Line Environment

Here’s the full text of the June 18, 2014 work plan of the Leading Group under the State Council for fighting the manufacturing and sale of fake and shoddy goods in the on-line environment (关于印发打击互联网领域侵犯知识产 权和制售假冒 伪劣商品工作方案 的通知) (http://www.ipraction.cn/2014/06/25/ARTI1403685293345289.shtml).  The plan involves a range of agencies, including Customs, AQSIQ, GAPP/SARFT, SAIC, Ministry of Agriculture, and the Chinese Food and Drug Administration.

Notice on Issuing the Work Plan for Fighting IP Infringement and the Manufacturing and Sale of Fake and Shoddy Goods in the Internet Field (Da Jia Fa [2014] No. 3)

All member units of the Leading Group of the National Fight against IP Infringement and the Manufacturing and Sale of Fake and Shoddy Goods:

The “Work Plan for Fighting IP Infringement and the Manufacturing and Sale of Fake and Shoddy Goods in the Internet Field” is hereby issued to you, which you are required to implement carefully.

  Leading Group of the National Fight against IP Infringement and the Manufacturing and Sale of Fake and Shoddy Goods (“Leading Group”)

  June 18, 2014


Notice on Issuing the Work Plan for Fighting IP Infringement and the Manufacturing and Sale of Fake and Shoddy Goods in the Internet Field

This work plan has been developed to implement the spirit of the “Notice of the General Office of the State Council on Issuing the Essentials of the Nationwide Fight against IP Infringement and the Manufacturing and Sales of Fake and Shoddy Goods in 2014” (Guo Fa Ban [2014] No. 13), crack down the illegal and criminal activities of infringing IP and manufacturing and selling fake and shoddy goods in the Internet field (collectively “Infringement & Counterfeiting”) and promote the healthy development of e-commerce.

  1. Clarifying objectives and tasks

Starting from June 2014, we will spend half a year of time carrying out a special campaign to address Infringement & Counterfeiting in the Internet field; strengthen the supervision of key websites and online marketing platforms, severely investigate and punish a number of cases, shut down a number of illegal websites and deal with a number of lawbreakers to warn and educate operators and consumers. Meanwhile, in response to the cross-regional, long chain, virtualized and intellectualized characteristics of Infringement & Counterfeiting in the Internet field, we will innovate the modes and means of supervision, strengthen interdepartmental and cross-regional information sharing and law enforcement cooperation, enhance the resultant force of work, improve the long-term mechanism of fighting Infringement & Counterfeiting in the Internet field and maintain the normal order of e-commerce.

  1. Highlighting the focuses

(1)   Cracking down on the online sales of fake and shoddy goods. The departments, including the Ministry of Agriculture, SAIC, AQSIQ and CFDA, shall focus on agricultural materials, auto parts, children’s products and the drugs that treat tumors and chronic diseases, strengthen the surveillance of Internet search engines, promptly find the information on fake and shoddy goods and the websites, web pages and various links that are suspected of illegal sales, improve the mechanisms of information submission, clues sharing, case studies and communications.

(2)   Cracking down on online infringement and piracy. The departments, including the State Administration of Press, Publication, Radio, Film and Television (“Administration”) and the National Internet Information Office, shall launch the special “Sword Net Campaign” against Internet infringement and piracy that focuses on the key fields of online literature, music, films and TV, games, animation and software and the key products of books, AV products, electronic publications, online publications and standard copyrighted works; focus on combating the acts of committing infringement and piracy in the field of mobile Internet and through the use of set top boxes and TV dongles; punish and ban illegal websites of AV programs according to law. The Administration shall intensify the copyright supervision of key websites and standardize the order of the copyright market of works that are transmitted on the Internet. The Ministry of Culture shall regulate the market of online music and games and strengthen the supervision of the online cultural products that use such terminals as mobile phones and tablet computers as carriers. The SAIC and the SIPO shall step up the supervision and inspection of the online acts that infringe patent right and trademark right, intensify the communications with e-commerce platforms, improve the working mechanism of enforcement and case handling, and promptly investigate and punish infringing acts.

(3)   Intensifying the supervision of e-commerce websites. The departments, including the Ministry of Industry and Information Technology (“MIIT”), SAIC and the National Internet Information Office, shall screen and promptly delete the information on infringing and fake goods by focusing on large shopping websites; shield and shut down the websites that have violated laws and regulations on the basis of the records of the involved websites; strengthen interdepartmental collaboration to investigate and deal with unlicensed websites; intensify the supervision and management of the business conduct of Internet service providers, domain name registration service provides and information service providers; assist the law enforcement department in investigating and collecting the evidences of Infringement & Counterfeiting.

(4)   Intensifying the harnessing of production and processing sources. The AQSIQ shall carry out a special law enforcement campaign to intensify the centralized harnessing of the sources of e-commerce products, strengthen the monitoring, supervision and random check of the quality risks of e-commerce products, promptly announce the results of the random check of product quality; accelerate the building of a product quality traceability system, improve the mechanism of online discovery, notification of clues, source tracing, local investigation and treatment, strengthen the clean-up and rectification of places with concentrated production of e-commerce  products, and launch regional quality enhancement actions; push enterprises to set up the system for assuring the quality of e-commerce products, promote the application of the bar codes for commodities and organization codes; solve the information dissymmetry under the online environment; rely on the 托“12365” system to establish and improve the mechanism of collaboration in fake-fighting enforcement and strengthen joint cross-regional law enforcement.

(5)   Launching a special campaign for cross-border IP protection. The General Administration of Customs (“GAC”) and the post offices shall launch a special law enforcement campaign that targets the consumer products, cosmetics and electrical products transported via mailing and express delivery channels in cross-border online transactions to combat the infringing and illegal acts in the channels for import/export, mailing and express delivery. The Ministry of Public Security and GAC shall improve the mechanism of multilateral/bilateral law enforcement to fight the cross-border crimes of leveraging the Internet to sell fake and shoddy goods.

  1. Intensifying supervisory measures

(1)   Collaborating in strengthening enforcement. The competent administrative enforcement departments shall combine online supervision with offline supervision, provide each other with the information on Infringement & Counterfeiting found in production, sales and import/export, intensify the backward tracing of clues of Infringement & Counterfeiting, dig out and clear out the sources of producing and processing infringing and fake products; hand over or report the discovered cases of suspected crimes or the clues thereof to the public security authority in time; strengthen the collaboration in cross-regional law enforcement, improve the system of communicating clues, referring cases and assisting in investigations; hand over any illegal operators of online infringing and fake goods who are found to be in nonlocal places promptly to the law enforcement department at the location thereof or the servers of their websites for investigation and follow-up; report any dispute over jurisdiction to the higher law enforcement department for it to designate the jurisdiction; establish the mechanism of communicating and contacting with large local e-commerce enterprises and the logistic enterprises, EMS enterprises and payment companies related to e-commerce, obtain the information on operations, logistics and payment according to law to enhance case-handling efficiency.

(2)   Intensifying the supporting role of information. The Ministry of Public Security shall strengthen the cooperation with e-commerce platforms, meticulously screen the clues of online Infringement & Counterfeiting and enhance the ability to find criminal activities under the Internet environment; give full play to the advantages of cluster of campaigns, ferret out the production dens, destroy the marketing network and crack down on the criminal activities of online Infringement & Counterfeiting on the entire chain.

(3)   Strengthening social supervision and the self-discipline of industries. We should improve the system of report incentives, guide consumers to report the illegal acts of online Infringement & Counterfeiting and broaden clue sources and channels; improve the system of accepting the reports on the acts of online Infringement & Counterfeiting, case handling and feedback on results; encourage right holders to actively safeguard their own rights; publish the information on the cases involving online Infringement & Counterfeiting and expose typical cases to deter criminal acts and educate the general public. The industry management department shall give full play to the roles of industry organizations e.g. the associations and chamber of commerce, in the field of e-commerce, to conduct industry self-discipline and cultivate the fashion of consciously resisting the acts of Infringement & Counterfeiting in the whole industry.

(4)   Using IT to enhance supervisory capability. The competent law enforcement departments shall innovate the modes and means of supervision, use IT to set up the electronic service supervising network, database of Internet operators, right-safeguarding center for online consumption and reporting platform, develop and apply the engine of searching Infringement & Counterfeiting, information inquiry and monitoring software and traceability technology to enhance the informatization level of Internet surveillance and provide technical support for intensifying supervision and enforcement.

  1. Establishing a long-term mechanism

(1)   Promoting the improvement of laws, regulations and standards for supervision of the Internet. The Office of the Leading Group shall join the other related departments in establishing a long-term work mechanism that addresses the characteristics of Infringement & Counterfeiting acts in the Internet field and the vulnerabilities in the supervisory efforts, studying and making opinions on improving the relevant laws and regulations, promoting the release of judicial interpretations, tightening the connection between relevant laws, administrative regulations and departmental rules, clarifying the trading rules, quality supervision, after-sale service and compensation responsibility of e-commerce platforms and online shops, improving the evidence rules for investigating the Infringement & Counterfeiting in the Internet field and the method of protecting online business data, perfecting the standards for exhibition of online products, information disclosure and product verification to provide case handling with institutional guarantee.

(2)   Driving the implementation of corporate responsibility. The industry management department shall guide e-commerce enterprises in improving the internal management system, strictly examining the qualifications of the member merchants, registering their real names, strengthening the examination of the information on the goods sold online, taking the initiative to provide the law enforcement department with the relevant information of operators, and improving the mechanism of accepting and processing reports and complaints as well as  the mechanism for the elimination and withdrawal of illegal merchants; intensify the market supervision of logistics and EMS enterprises, urge the EMS enterprises to strictly implement the post inspection system; study the possibility of establishing the system of real-name postal delivery; guide the e-commerce payment companies, logistics enterprises and EMS enterprises in recording the information, providing information inquiry service as necessary for law enforcement and case handling, and assisting the law enforcement department in carrying out investigations.

(3)   Accelerating the building of the e-commerce credit system. The industry management department and the enforcement supervising department shall accelerate the creation of a fundamental database of e-commerce enterprises and improve the trading credit files of online commodities; promote the exchange and sharing of the credit information of e-commerce enterprises and the relevant information in other social fields; guide e-commerce enterprises in establishing and improving the system for management of customer credit and evaluation of trade credit; encourage the development of e-commerce third-party credit service organizations, the objective and just collection and recording of the credit of operators, establishment of credit evaluation system and credit information disclosure system to provide e-commerce enterprises and consumers with credit service and warn trading risks; strengthen the training of small and medium-sized e-commerce enterprises to strengthen their ability to prevent and identify fakes and cause them to carry out good faith and law-abiding operations.

  1. Meet work requirements

(1)   Strengthening organizational leadership. All regions and leading departments shall fully recognize the importance and necessity of fighting Infringement & Counterfeiting in the Internet field, strengthen organization and leadership, assign responsibilities to each level; reinforce the guidance and inspection of the grassroots, coordinate the handling of interdepartmental and cross-regional cases, concentrate resources to investigate and deal with a number of major cases of a serious nature that draw domestic and foreign attention. The Office of the Leading Group and the related departments shall supervise and inspect the implementation of the fight in various places in due time.

(2)   Scheduling. All regions and the related departments shall work out a specific implementation plan in light of their realities, refine the work measures and make all-round arrangement for the purpose before the end of June; collect criminal clues extensively, make careful analysis and screening thereof, sternly investigate, deal with and expose criminal cases, study the promotion of the relevant systems and mechanisms in July ~ December; make all-round summarization of the efforts and form a report to be submitted to the Office of the Leading Group before the end of December.

(3)   Strengthen publicity and education. All regions and the related departments shall make full use of the media, e.g. newspapers, TV, radio and press websites, for timely coverage of the work measures, results and typical cases to expand influence, create an atmosphere of public opinions; extensively popularize the knowledge about discerning fakes, guide consumers and IP right holders in taking an active part, pool the forces of the entire society to jointly address the Infringement & Counterfeiting in the Internet field.