IP in the Xi-Obama Meeting – Following the Data Stream

There wasn’t much IP in the recent meeting of the Chinese and US heads of State at APEC in Beijing, nor should one expect more than a brief mentioning amongst all the other issues that the U.S. and Chinese leadership have to discuss. However there were two points of reference.  One was in the Chinese tabulation of the list of agreed outcomes which stated:

七、双方同意于2015年初举行中国公安部和美国国土安全部部级会晤。双方将利用这一契机深入探讨加强反恐、执法等相关领域合作。双方同意继续在追逃追赃、遣返非法移民、禁毒、打击网络犯罪、加强知识产权执法等领域开展对话与合作。

Essentially this commits the Ministry of Public Security and the Department of Homeland Security to their first Ministerial-level meetings in 2015 to discuss deepening cooperation in enforcement related actions. In addition they agree to dialogue and cooperation in addressing including online crimes and strengthening intellectual property enforcement.

President Obama also noted in the joint press conference that he “stressed the importance of protecting intellectual property as well as trade secrets, especially against cyber-threats [with Xi Jinping].”

This is one instance where the statistical back story supports the respective statements of the leadership.

In China, there has been a big increase in domestic criminal IP cases in China during 2014. In the first half of 2014, the number of all the intellectual property-related criminal cases of the first instance was 5,429,r ising 29.35% over the same period of last year.

In 2013, intellectual property-related criminal cases. of first instance handled by local courts, were reduced by 28.79% to 9,331 cases, including 5,021 infringement cases (3,473 involved infringement of registered trademarks, such as use of counterfeit marks, and 1,484 cases involved copyright infringement).  This drop of 35.96% from the prior year was probably due to the end of a special campaign.

The multi-year trend clearly shows continuing increases in criminal enforcement. Wang Yu(王瑜),an IP lawyer, tabulated the number of IP cases in a recent blog (Oct. 29, 2014), translated here.

From the above chart, the IP-related criminal cases appear to be rising again.  Copyright cases are also rising fast, from 0.6% of 2010 to 39% of 2013.  Trade secret cases, however, are a small percentage and hover around 50 total.

USDOJ data shows that there were about 168 and 178  federal cases filed in 2011 and 2012 respectively. As the data shows, the US federal government has a much smaller litigated criminal IP docket than China.

The data suggests that: (a) China has a comparatively large, and rising docket of criminal IP cases, and (b) the numbers and proportion of Chinese criminal trade secret cases are rather few. The above data, of course, does now reveal qualitative differences, plea bargaining, or how many cases were international in nature, amongst other important differences between the US and Chinese systems..

In sum, after looking at the data, if I were Mr. Obama, I might ask Mr. Xi about improving trade secret enforcement. If I were the Chinese leader, I might ask Mr. Obama about cooperation on criminal IP cases.

And that’s what they appeared to do.

Making the List: China Law Blogs

Carla Spina at Harvard Law School has compiled the following list of China Law Listserves, Blogs and Forums.  We are honored to be on this list, with some great company:

Chinese legal study.

See: http://guides.library.harvard.edu/content.php?pid=189933&sid=3922661.

Thanks to the Chinalaw Blog for pointing this out!

A Deeper Dive Into the Jurisdiction and Role of Specialized IP Courts

deeperdive

As we previously reported the NPC’s Standing Committee established three Specialized IP Courts in Beijing, Shanghai, and Guangzhou.  The Supreme People’s Court and the cities’ High Courts are now in the process of implementing the NPC’s decision.

On November 3, 2014, the Supreme Court issued a decision and held a news conference outlining the jurisdiction of the Specialized IP Courts of Shanghai, Beijing, and Guangzhou. The court detailed the Specialized IP Courts’ jurisdiction over cases of first instance, over different types of IP cases, and over IP right authorization and verification.

The Specialized IP Courts have jurisdiction over three types of cases:

1.  Civil and administrative cases involving patents, new plant varieties, layout designs of integrated circuits, technical secrets, computer software and other technology case; 2.  Administrative cases involving copyright, trademark, and unfair competition against the administrative action of the State Council department or above the county level departments; and 3. Civil cases involving the affirmation of famous trademarks.

The Specialized IP Courts will review civil and administrative IP cases challenging the judgment of lower courts. Additionally, the Higher People’s Courts, where the Specialized IP Courts are located, will review appeals against the judgment of the Specialized IP Courts.   Probably the two most important impacts of the jurisdiction of the courts in terms of its impact upon foreigners aspect of the jurisdiction are the jurisdiction of the Beijing Specialized IP Court over appeals over patent and trademark office final decisions and jurisdiction over well-known marks

Foreigner-related cases constitute a large percentage of these appeals from the patent and trademark office while the infringement cases brought by foreigners are about 2% of the docket.  According to various press reports, the overall share of administrative cases brought by foreigners in Beijing hovers near 50%.  Interestingly, in January of 2014, Beijing had already divided its intermediate IP court into two divisions one of which would hear patent appeals and the other would hear trademark appeals.  This experiment, which likely was intended to anticipate one national IP court like the Federal Circuit in the United States,  has necessarily become short-lived.  Nonetheless, in its jurisdiction over patent and trademark appeals, the Beijing Specialized IP Court does retain jurisdiction that is in many ways similar to the Federal Circuit’s  “administrative” jurisdiction over the USPTO.

I do not have precise current data on foreign-related well known mark cases.  However, well known mark status has been of concern to foreign brand owners for some time.  Former China Trademark Office Director-General An Qinghu 安青虎published an extensive analysis in English in 2005 on recognition of well-known marks in China, including the various circumstances by which foreign well known marks have been recognized, which as I recall from prior personal review of that article, was intended in part to address the concern of foreigners over how well-known marks were being protected in China  As DG An noted at that time “Among the 153 well-known trademarks affirmed by SAIC or Trademark Review and Adjudication Board, 132 are registered by Chinese registrants …, 21 by foreign registrants …” (fn. 7), and “SAIC had affirmed some well-known trademarks  in objection decisions in the 1990s, most of which were registered by foreign registrants.” (final endnote).  I do not have current data on well known mark ownership by foreigners.

The Beijing, Shanghai, and Guangzhou Specialized IP Courts have different focuses and differing impact upon foreigners.  As noted, the Beijing court is distinguished by its largely administrative docket.  The Shanghai and Guangzhou courts will deal with hear comparatively more civil IP cases and will hear relatively fewer administrative cases, mostly involving administrative enforcement decisions.  Guangdong has the largest IP docket in China although not the largest foreign-related docket.  Guangdong’s handling of intra-provincial IP disputes could become a model for a national appellate IP court.  Interestingly, an important and rapidly rising part of the overall IP docket in Guangdong involves online infringement owing to the large Internet business community in Guangdong.  However online copyright is not part of the Guangdong Specialized IP Court’s jurisdiction, despite many of those cases involving different regions of China and their rapid rise and complexity.  For example, from 2010-2013, the online infringement docket in the Pearl River Delta of Guangdong increased from 4058 to 9449, increasing from 21% to 38% of the overall IP docket.

Beijing’s High Court also issued guidance regarding the selection of judges for the Specialized Court.  The judges can be selected either from those judges engaged in IP or related trials, or the judges can be selected if they have the same qualifications and conditions and are engaged in law practice, legal research or are law teaching professionals.

  1. A judge should also have the following qualifications: more than 6 years of relevant trial work experience; a bachelors or higher degree in law; a strong capacity for leading trials and drafting judgments; and Senior judge qualifications.
  2. The standards for other legal professionals as judges of the Specialized IP Court are referenced in further comments.

The candidates for the president of the Specialized Court are appointed by the city’s People’s Congress Standing Committee. The new President of the Beijing IP Court, Su Chi 宿迟, and his deputies, Chen Jinchuan 陈锦川 and Song Yushui 宋鱼水 appears to have such credentials.  Indeed, as if to underscore my analysis on the importance of Beijing to foreigners, the press reports  also underscore their experience in adjudicating foreign-related disputes.

Beijing’s Specialized IP Court will also include “Technology Experts,” (技术调查官)  who will help resolve technology issues that come up in the cases.  The High Court pointed to Taiwanese and Japanese courts that make use of such officials, noting that in those courts the Technology Experts are senior officials.  However, the SPC has also cautioned that the courts should not rely on such experts exclusively.

Here are three charts that demonstrate the jurisdiction of the Specialized IP Court in Beijing, Shanghai, and Guangzhou. See also the Chinese version.

Written by Mark Cohen with the support of Marc Epstein and Yao Yao from Fordham Law School.

Warner Music and Tencent Enter Into Strategic Partnership: From the Licensing Bubble to Michael Buble?

Loyola/Berkeley/Renmin Program Highlights Recent US-China IP Developments

On Friday November 7 I attended and spoke at the US-China IP Summit at Loyola (http://chinaipr.com/2014/09/07/loyola-los-angeles-hosts-us-china-ip-summit-november-7/). Here are some highlights:

Prof. David Nimmer (UCLA) talked about whether there is a need to reintroduce a concept of formalities in copyright again, in order to deal with problems in determining rights and better utilize information technologies.

Dean Liu Chuntian of Renmin University, argued that China’s true economic constitution should be a civil code. He took issue with those that argue the Antimonopoly Law is China’s “new economic constitution.” In addition he expressed concern that IP shouldn’t depart from the civil law. Prof. Liu also reiterated his long-standing opposition to administrative enforcement in civil law matters and also argued that copyright law reform issues should focus on matters of economic importance. Copyright protection of sports broadcasting in China was singled out as such an economically important issue.

Regarding specialized IP courts, Dean Liu also noted that several “10′s of members” of the NPC Standing Committee dissented from the NPC decision. Prof. Luo Li noted that the Beijing Specialized IP Court was established last week, just before APEC. Prof. Luo noted that the jurisdictional divisions of the courts were quite complicated, due to differences in adjudication amongs civil, criminal and administrative jurisdiction. Computer software cases (piracy?) would also be heard by the specialized IP Courts.

I raised concerns in this discussion on the courts about how foreigners would be treated by these specialized courts, in light of evidence that suggests foreigners may fare less well in appellate specialized IP tribunals (see: http://chinaipr.com/2014/08/22/specialized-ip-courts-about-to-launch-in-three-cities-and-are-they-good-for-foreigners/)

Prof. Merges of UC-Berkeley described AIA post grant proceedings as a kind of “quiet harmonization” with foreign practices, including with SIPO. As with China, there is no mandatory stay of civil proceedings during these administrative proceedings.

Prof. Zhang Ping of Peking University discussed the Huawei/InterDigital Corporation case as a pioneering effort on the part of Chinese courts to deal with global standardization crises, including by determining appropriate royalty rates for standards essential patents.

Prof. Huang Wushuang of East China University of Politics and Law discussed current efforts at trade secret legislative work. He noted that he had submitted proposed revisions on the Antiunfair Competition Law regarding trade secrets, by expanding the current one article to 10. His discussions focused on several issues, including what constitutes reasonable precautions to protect trade secrets and the role of non-compete agreements and how to strike a balance between rights of employers and employees. He noted that he did not think it reasonable for injunctions in trade secret matters to be permanent, since every trade secret has its own life span. Regarding damages, he thought that a traditional hierarchy should apply by basing calculations on the plaintiff’s loss, the defendant’s profits, reasonable royalty and statutory damages. He also noted that there were few cases in China which showed a causal relationship between damages and infringing cases.

The last panel discussed trans-border cases and was one where I participated. There was an especially lively discussion on issues involving recognition of judgments and the timely implementation of Hague Convention requests for evidence. Various speakers noted efforts to settle global IP disputes such as by suspending cases in favor or one or more venues, using Hong Kong arbitration for cases involving Chinese entities, and the need for means to resolve increasingly more complicated trans-border disputes.

There were many more great speakers — my notes are hardly complete. Hopefully a transcript or summary of the presentations will be compiled shortly. Kudos to the organizers, including Prof. Song of Loyola, for another great program.

New SPC Guidance on Appointments to and Jurisdiction of Specialized IP Courts

There have been two documents released recently on specialized IP courts. One is the “Guiding Opinion of the Supreme Peoples Court on on the Work of Choosing Judges Rules for the IP Courts” (Provisional) 知识产权法院法官选任工作指导意见(试行) and the other is the  “Regulation of the SPC on Jurisdiction of Cases of the Beijing, Shanghai and Guangzhou IP Courts” 《最高人民法院关于北京、上海、广州知识产权法院案件管辖的规定》.

I welcome commentary and analysis on these two.

Upcoming China IP Program at UCSD

On this Thursday, November 6, the University of California at San Diego will be hosting a lunchtime program ““Doing Business in China: New Developments in Intellectual Property Law and Enforcement” A luncheon panel discussion “Doing Business in China: New Developments in Intellectual Property Law and Enforcement.”  I will be joined by practitioners and in-house counsel as well as  by Prof. Tai Ming Cheung by UCSD and my USPTO colleague Susan Anthony.  This is a two hour program.  Luncheon is provided and advance reservations are required (see attached flyer).  If you are in the San Diego area, please join us!