Guo Shoukang, Eminent Scholar of IP Law, Passes Away

GuoShoukang

I am sorry to report that Prof. Guo Shoukang 郭寿康, the UNESCO Professor of Copyright Law, emeritus, at Renmin University, died Monday March 22 at 12:35 PM.  Prof. Guo was in his late 80’s.

Prof. Guo taught and inspired generations of Chinese law students and officials.

I would like to share a few moments from the many years of interaction and friendship I had with him:

I was privileged to attend the 65th anniversary of his teaching law in the fall of 2013.  At that time, I was told of how he advocated for a patent law for China in the early 1980’s at the National People’s Congress, when many members were opposed.  I was also told that many officials, such as former SIPO Commissioner Tian Lipu, considered him their teacher.  Moreover, his record of teaching law streteched back to the late 1940’s, when he was a young teacher at Peking University.

I was honored to join him in an interview on CCTV on globalization in IP.   If you go to 5:20 on this video, you will find Prof. Guo continuing his role as a passionate advocate for intellectual property, and countering the arguments advanced by CCTV that intellectual property is a barrier to the development of science and technology.

Even in his mid and late 80’s he was always active and contributing.  I have a copy of his translation of Mihaly FIcsor’s book on Law of Copyright and the Internet which he prepared in 2009 (1125 pp.).  He also continued to advise graduate students even in his later years.

On a personal level, I enjoyed the pleasure of Prof. Guo at a Passover seder at my house in 2007 when I was a diplomat based in Beijing.  I can’t imagine anyone more intellectually curious.

Guo Shoukang – scholar, gentleman, mentor and friend.  Rest in peace.

Dueling Software Data in the Spring and A Changing Tech Environment

夜来风雨声, 花落知多少? (At night the sound of wind and rain; Who knows how many flowers have fallen?; Poet Meng Haoran, 689-740, “Spring Dawn”)

cherryblossoms

It is almost April, which means it is not only time for cherry blossoms in Washington, but, as we approaching IP Week in China (April 26),  — dueling software data.

Here’s a digest of how China’s recently released data compares to BSA data.

According an article published in SIPO’s newspaper, which reported on a press conference on March 20,  New Progress in China’s  Promotion of Software Legalization, in 2014,  83% of Central and State organs promote their institutions have completed software legalization;   826,700 were procured, operating systems, Office, antivirus software, with a purchase amount of 461 million RMB. A total of 4,112 firms included in the annual software legalization work; 3,715 enterprises completed software legalization through inspection and acceptance.   The most critical datapoint: at the end of December 2014, new computer pre-installed genuine operating system software pre-installed rates continue to move up for 8 consecutive years, to a rate in 2013 at 98.42%.

The data from the Busines Software Alliance, released in the June 2014 BSA Global Software Survey, tells a different story. According to BSA, China has an unlinced PC software rate of 74%, with an unlicensed value of $8.767 billion. This reflected a decline from 82 percent in 2007.  The commercial value of unlicensed software dropped from 8.702 to 8.767 billion from 2011 to 2013.

The good news is that both sides appear to degree that software piracy is declining. The bad news is that the Chinese view the glass as nearly full.  BSA views the glass as more than 2/3 empty.

There may be any number of reasons for the differences in data, including sampling and analytical differences, but also including the type of software under consideration (package/embedded/cloud-based, commercial/non-commercial, etc.), and the impact of technological changes on these differences.   The migration to smart phone, tablet and cloud platforms and increasing competition may also be affecting package software sales.

In an apparently unrelated development, Microsoft announced March 18, 2015, that it is offering Windows 10 upgrades to both licensed and unlicensed users in China.   Microsoft said that its plan is to  “re-engage” with the hundreds of millions of users of Windows in China.  Microsoft is also working with Lenovo Group, to help roll out Windows 10 in China to current Windows users, and it also is offering Windows 10 through security company Qihoo 360 Technology Co and Tencent Holdings Ltd, China’s biggest social networking company.

Based on the press release one additional positive outcome of the plan may be that this free upgrade (or, indeed, legalization) is intended to help with adoption of Microsoft’s Windows Mobile platform,  which reportedly will provide a universal app plafrom across a range of devices including Microsoft’s mobile platform.

 

 

Service Inventions A Focus Point Once Again…

Although there is nothing under a year old when I looked today on SIPO’s s special service invention webpage, the topic of how much freedom employers have in determining how to reward their employee/inventors, has once again become a hot issue. Much of the discussion on this topic is being raised by the Ministry of Science and Technology, although SIPO reportedly is focusing on this issue as well.

Here’s an update on where we are:

At the US-China Innovation Dialogue in July 2014, the US and China agreed to the following language:

The United States and China resolved to protect the legal rights of inventors in accordance with their respective domestic laws and regulations, and in line with their domestic laws committed to respect the rules and policies developed by employers and/or legitimate contracts between employers and inventors concerning the awards and/or remuneration of inventors.

This language was essentially reaffirmed at the subsequent JCCT in December 2014:

The United States and China commit to protect the legal rights of inventors in respect of their inventions and creations, in accordance with their respective domestic laws and regulations, and in line with their domestic laws, commit to respect the legitimate rules and regulations developed by employers and legitimate contracts between employers and inventors concerning inventor remuneration and awards.

On March 2, 2015 the National People’s Congress also released a draft for public comment of The Law for Promoting Science and Technology Achievements (促进科技成果转化法修正案(草案)).  Here’s an unofficial translation of the changes that this draft makes to the old law.  This draft contains the following specific provisions on inventor compensation:

One article is added as Article 43: “After the commercialization of a service STA [Science and Technology Achievement], the STA completing entity shall give reward and remuneration to those who have made important contributions to the completion and commercialization of the STA.

The STA completing entity may prescribe or agree with its scientific and technological personnel on the form and amount of the reward and remuneration. When formulating the relevant regulations, the entity shall fully listen to the opinions of its scientific and technological personnel and make public the relevant regulations within the entity. ”

A revised Article 44 provides for default provisions for compensation, presumably if provisions are not established with technological personnel: “If the STA completing entity has not formulated such regulations or agreed on the form and amount of the reward and remuneration, the reward and remuneration shall be given to those who have made important contributions to the commercialization of the service STA according to the following criteria:

(1) If the service STA is transferred or licensed to others for implementation, no less than 20% shall be drawn out of the income from the STA so transferred or licensed;

(2) If the service STA is evaluated for investment, no less than 20% shall be drawn out of the shares or the proportion of contribution formed by the STA;

(3) If the entity implements the service STA by itself or in cooperation with others, no less than 5% shall be drawn out of the operating profits obtained from 3~5 consecutive years of implementation of the STA after its commercialization and successful start of production.

The criteria provided in the preceding paragraphs for the reward and remuneration given those who have made important contributions to the completion and commercialization of service STAs include the remuneration given to the inventors and designers of service inventions and creations that have received patent right in accordance with the Patent Law of the People’s Republic of China and the detailed rules for implementation thereof. …”

Although more general than the Service Invention Regulations that are under consideration by SIPO, this is a law that is more authoritative than a regulation. This law, along with agreed statements by the Minister of Science and Technology Wan Gang and OSTP Director Dr. John Holdren at the Innovation Dialogue could be read to show an inclination to favor contractual arrangements or corporate policies in establishing appropriate compensation for employee/inventors, although greater clarity concerning when such arrangements would be superseded by default provisions would be helpful.   Also of concern is that if more restrictive regulations are adopted in the Service Invention Regulations proposed by SIPO, they will be entitled to considerable deference as a subsequently adopted regulation which narrowly focuses on inventor compensation.  Moreover the regulations will be particularly important to SIPO itself in any enforcement or policy making it undertakes.

Another boost to regulating service inventions appears to have come from Premier Li Keqiang at  his March 5 speech at the recent 2015 “lianghui” – the meeting of the National People’s Congress and Chinese People’s Consultative Congress, where he stated that China should “enable innovative talents to share in achievements and profit, complete the transformation of science and technology achievements, and the service invention legal system” (使创新人才分享成果收益, 完善科技成果转化、职务发明法律制度).

Comments on the draft law are due by April 1.

As always, these are my personal opinions.

 

 

SPC’s Annual Report Gives A Passing Nod to IP

SPC President Zhou Qiang issued his 2015 Report on the Work of the the Supreme People’s Court to the National People’s Congress recently, and IP didn’t get much of coverage. However the IP cases continued to climb – by about 10%.  More data is usually released around April 26 – World IP Day.

The principle paragraph devoted to IP, which curiously links IP to antimonopoly law is:

加大知识产权司法保护力度。  依法制裁侵犯知识产权和制售假冒伪劣商品行为,维护公平竞争的市场秩序,保护知识产权,促进创新驱动发展。  各级法院审结一审知识产权案件11万件,同比上升10%。  审结奇虎与腾讯公司涉不正当竞争案和垄断案,促进规范互联网领域竞争秩序。 

”Increase judicial protection of intellectual property rights. Sanction IPR infringement and selling counterfeit and shoddy goods according to law, and maintain fair and competitive market order and protect intellectual property rights, and promote innovation-driven development. Each level of IPR courts of first instance concluded a total of 110,000 cases last year, which was an increase of 10% over the prior year. We concluded the case involving Qihoo and Tencent involving unfair competition and monopoly, and promoted order in the area of Internet competition.”

In addition, President Zhou noted amongst the year’s accomplishments:

设立知识产权法院。  根据全国人大常委会的决定,在北京、上海、广州设立知识产权法院,审理知识产权民事和行政案件,落实国家知识产权战略,发挥司法保护知识产权的重要作用.

“Establishment of IP courts. According to the decision of the NPC Standing Committee, we set up intellectual property courts in Beijing, Shanghai and Guangzhou to hear civil and administrative cases of intellectual property rights, to implement the national intellectual property strategy, and play an important role in the judicial protection of intellectual property.”

Another interesting element: China handled 2,872,000 commercial cases last year, of which only 5,804 involved foreigners. In addition, the Chinese courts handled 6,014 cases of international judicial assistance. It appears that foreigners in all areas continue to play a relatively small role in China’s commercial litigation.

Susan Finder did an excellent blog on the report: “Supreme People’s Court president says court reforms in “deep water area.”

The World of Injunctions: Guangzhou Makes Its Mark

According to various press reports, on March 9, 2105, the Guangzhou Specialized IP court issued a preliminary injunction in a copyright matter, Blizzard Entertainment and NetEase versus Chengdu Qiyou Limited (“Seven Games”),Beijing Fenbo Times Internet Technology Co., Ltd (“Rekoo”) and Guangzhou Dongjing Computer Technology Co., Ltd (“UCWeb”), regarding developing, operating, distributing and disseminating over the internet the game titled Everyone WarCraft: War of Draenor (formerly known as Chieftain Thrall: The expedition of WarCraft). The injunction calls for the above named defendants to cease reproduction, distribution and/or online dissemination of this game.

Eric Roeder, General Counsel of Blizzard is quoted in the media as saying ““We welcome the efficient and timely injunction of the Guangzhou IP Court based on Chinese…It provides a fast and effective remedy and fully demonstrates the determination and power of the Chinese courts to protect intellectual property…”

The case is notable for three factors

A) Its rarity. According to the Supreme Peoples Court, in 2013, there were 88,583 first instance civil IP cases, yet there were only 11 cases in which a preliminary injunction was accepted, and, according to the Court, “77.78%” were “granted approvals.” (Note: I can’t quite figure out how many of these 11 were granted approvals based on this percentage).

B) The importance of having an active licensee. From press reports, it appears that Blizzard and Netease have had a multi-year licensing relationship. As Chinese licensees become more interested in US content and establish collaborative relationships, I expect we will also see more strategic and path breaking judicial decisions.  As Eric Priest has discussed in his work, one approach to dealing with high piracy may be finding business models that work for licensor and licensee.

C) Political timing. The desire of the newly established Guangzhou IP Court to show its authority may  have been a positive factor in this case being acepted and the relief granted.  Although preliminary injunctions remain rare, there appears to be an interest in clarifying procedures and, one hopes, in increasing their availability.  In another important development, on February 26, 2015, the SPC issued a draft Judicial Interpretation for public comment on Act Preservation [Preliminary Relief] Measures in IP and competition civil cases. The measure seems to be directed to preliminary injunctions, but may also have an important impact on asset and perhaps evidence preservation matters. Comments are due March 30. Attached is an unofficial translation.  

“I’m Lovin’ it!” – A “Wrong Way” for McDonalds?

mcdonalds

My colleague at Fordham Law, Geoffrey Sant, has written an interesting  blog  on Salon “McDonald’s self-hating complex: Why its overseas P.R. campaign is the worst of all time” that addresses McDonald’s Chinese slogan which translates “I’m lovin’ it” to 我就喜欢  (wo jiu xihuan).

As Geoff explains:  “The second word in this sentence (jiu) is used to emphatically contradict what someone else has said.  The natural implication is that the speaker is responding to someone who has just insulted McDonald’s food.  While there is no perfect translation for the phrase, it has the same essential spirit as “I like it no matter what you say!”

Every student of Chinese in the West learns about the jiu particle early in their Chinese language career.   However, rather than rely on my study of Chinese grammar forty years ago,  I checked with Google translate, which suggests that the phrase  indeed connotes faint praise, and translates it as “I would like to.”

There are many other similar mistakes in both Chinese and English, including such notables as the “Rongwei” car, which sounded suspiciously like ‘wrong way”, and is now known in English as the Roewe.

Goeff suggests positive alternatives such as  “我很喜欢” (wo hen xihuan) or “我好喜欢” (wo hao xihuan), both of which mean “I really like it.”

Apparently the SAIC trademark database reflects a different market reality.  When I checked on March 15, 2015, I noticed that McDonald’s has six registrations in four classes (28, 29 , 30, 32 and 43) for 我就喜欢  (wo jiu xihuan).  There were an additional 21 registrations by other companies or individuals.

Perhaps McDonald’s has some squatters who are more interested in being paid off than grammatical niceties?

 

Geographical Indications: Guides and Commitments

The EU China IPR SME Help Desk recently published a Guide to Geographic Indications in China that may be useful for European companies seeking to protect geographical indications in China, and for US companies seeking to understand Europe’s approach to this issue.

This Guide notes that there are two aspects to GI protection in China:

“GIs in China can be protected as an intellectual property right (IPR) under Chinese Trade Mark Law as a collective or certificate mark which provides the same level of legal and economic protection as for any other logo, name or mark registered as a trade mark. Alternatively and in addition, the GI can be registered at the AQSIQ [Administration for Quality Supervision Inspection and Quarantine] which monitors and manages the quality and standard of products offered in the Chinese market. Duel [sic] registration can ensure the GI is protected both as an IPR and as a indicating a certain level of quality assurance to the public.”

This Guide notes that AQSIQ can “help” in protecting GI’s, but does not identify the same administrative mechanisms for AQSIQ to protect GI’s as exists for trademarks. In addition the Guide states that it is “only possible to litigate under the China Trademark Law” (pages 4 – 5).

The December 2014 US-China Joint Commission on Commerce and Trade included the following bilateral outcome which includes geographical indications and generic terms, as well as legal procedures for cancellation and recognition of a GI:

  • China and the United States …understand the following:
    • That a term, or its translation or transliteration, is not eligible for protection as a GI in its territory where the term is generic in its territory;
    • That the relationship between trademarks and GIs is to be handled in accordance with relevant articles in the TRIPS Agreement;
    • That the legal means are available for interested third parties on the above grounds to object to and to cancel any registration or recognition granted to a GI;
    • Where a component of a compound GI is generic in its territory, the GI protection is not to extend to that generic component.  In the event a relevant agency does not have a disclaimer practice, the agency may adopt such practice noting that the compound GI registered or recognized is to be protected only in compound form….

The general differences between the two system (trademark and AQSIQ) in my personal opinion, are largely attributable to the differences between a trademark system which is primarily based on private property rights and a product quality/protection system which looks more to public management.  These two systems may consequentially present different approaches towards the primacy of private enforcement and towards the role of the state. As they co-exist, they may also present challenges in coordination. Nonetheless, as the “sanctity of private property”, in the words of Dean Liu Chuntian of Renmin University, is a key principle in any intellectual property system, the trademark system more clearly reflects traditional notions of the balance between state and individual in how IP is to be created and protected, in my humble and non-official opinion.