MofCOM’s September 12 IP Program in DC Covers A Wide Range of IP Developments

Here is a digest of some of the highlights of the half day program hosted by MofCOM on IP in Washington DC on September 12.

The Supreme People’s Procuratorate gave a useful overview showing the policy reasons for the big increase in criminal IP cases, including the expanding role of the procuratorate.

SIPO underscored the increase in its examiners and the decreasing pendency periods to 22.2 months.   SIPO has also conducted a social survey which showed a relatively high approval rating of its procedures (81.8%).

The Chinese side did not address the foreign-related impact of the Specialized IP courts. However the low foreign utilization of the civil IP system was generally acknowledged.

Regarding the new TM law, procedures for auditory marks was discussed, oppositions for non use, and changes in the recordal system for licenses. SAIC was careful to underscore that its recordal system did not require submission of business confidential information.   SAIC also discussed the changed provisions for liability by reasons of “providing convenience” to infringement, including storage, transportation, mailing, printing, concealing, providing a business premises and providing an on-line goods trading platform.

SAIC also noted that the TM law also sought greater coordination with other laws, including the anti-unfair competition law and criminal laws. For example, it provided support for demonstrating “intentionality” in  TM infringement when other indicia, such as trade dress infringement, are present.  Chinese IP Attaché Chen Fuli also noted that a key provision of the new TM law was its including of concepts of honesty and credibility into the TM system, which were borrowed from the civil law.

The National Copyright Administration noted that there were now at least 632 million Internet users in China, and 527 cell phone users, with 2,730,000 websites. NCA also noted that there were widely differing opinions on the types of amendments that were necessary for the copyright law.  In revising the law to address recent developments, NCA was looking at earlier State Council regulations on on-line liability, and recent civil and criminal JI’s.  NCA also noted that the on-line “Sword Campaign” resulted in 201 cases sent to criminal referral.  In addition NCA was supervising 25 websites for their content of top movies, and TV programs.  In NCA’s view, music and published works were continuing to experience significant problems, and NCA hoped to address these through a black-list system.  Also, NCA noted that many IP addresses for companies that were subject of its enforcement campaigns were located overseas, including in the US.

The Leading Group reviewed its numerous, generally successful, efforts at improving coordination on IP enforcement, including its recent campaigns. Unfortunately, its special campaign on trade secrets had only resulted in 21 administrative enforcement cases in the first half of 2014.

Regarding China’s sui generis system of GI’s, AQSIQ noted that this system was based on China’s Product Quality Law, and was initially implemented in 2004 by the Department of Science and Technology of AQSIQ. AQSIQ noted that relevant rules governing operation of the sui generis system included the Provisions on Protection of Geographical Identity Products, and the Working Rules on GI Product Protection, which provide for opposition and cancelation of GI applications.  Describing GI’s as a “public rights” system, AQSIQ also noted that it has set up a  GI working group, it has started work on a GI products encyclopedia,  it had promulgated over 1000 standards for GI products,  and that it had set up exemplary zones for GI products..  AQSIQ also noted that NAPA Valley had secured GI protection in China.  Its GI application was published in August 2011 and there had been no opposition to it.

Altogether, it was a useful and informative program.

Full disclosure: I co-moderated the program, although this summary represents my personal views only.

Withering Problems in China’s Patent Drive? – The Latest from SIPO

SIPO’s six month report on patent filings, available on line in China shows some surprising data for the first six months of 2014.

Regionally, Jiangsu and Beijing are in the number 1 and 2 slots in terms of patent applications.  Both regions showed continued growth (slide 3).  Guangdong, however, showed a slight decline.  Anhui, Guangxi and Guizhou showed the most increase in patent applications in percentage terms (70-90%).  Interestingly, while invention patent applications increased by about 4% from domestic applicants, foreign applications were down about 11% (slide 9).  In general, increases in  Chinese-origin invention patents applications in China were not offset by decreases in utility model and design patents, with an overall decrease of 8 percent for Chinese versus a 2% overall increase for foreigners.

In terms of patent grants, amongst foreign countries, the United States showed an increase of 12% from the same period last year, while Japan and Germany (number 1 and 3, respectively amongst foreign filers), both showed declines of about 4.5%, as reflected in the following chart:

foreignpatentrates

In this chart, the orange and blue bars represent 2014 and 2013 respectively.  Japan, the USA , Germany, Korea and France are the first countries listed to the far left on the x axis.    The y axis reveals the number of granted invention patents in 2014.  The chart shows that patent grants were down for all three top foreign applicants for the first half of 2014 (by the percentages at the top of this graph). However, this could be due to drops in applications from several years prior.

The problem of low maintenance rates for Chinese-source patent applications also remains acute.  As I have previously blogged, China already shows lower patent maintenance rates than other IP-5 jurisdictions.  This report makes it clear that Chinese filers appear to be the predominant parties in China who prematurely curtail patent protection (p. 15).

patentmaintenance

The green line represents domestic patent filers; the orange line is foreign patent filers.  The x axis shows the year of the patent, through its 20th year, while the y axis shows percentage of patents filed.  The close-up image in the upper right corner is of SIPO’s own preparation.

The report also identifies Beijing as the city with the highest density of patents per capita (nearly 5,000 per million people).  Shanghai and Tianjin follow.  This further underscores that innovation is an urban phenomenon (page 17).  Guangdong also remained the main filer of PCT applications with nearly 6,000 applications — outpacing second place Beijing with about four times the number of applications (p. 25).

Some of the more dramatic changes are in utility model patents and design patents.  UMP applications from China dropped by 7.5% and design applications dropped by 28%.  The most dramatic drops were in non-service applications for UMP’s and in service inventions for designs (24.5% and 34.9% respectively).  However, foreign applications for UMP’s and designs continue to grow from a modest base (p. 29).   Non-service inventions still play a large role in China’s domestic utility model and design patent application portfolios (about 26.4% and 50.7% respectively).

 

In summary, the data shows continuing dramatic changes in China’s patent system, including shifting trends amongst domestic and foreign filers.  My guess is that the report shows the impact of an increased focus on invention patents by the government, and a decline in subsidies for utility model and design patents in key patenting regions.  The increase in service inventions for UMP’s is significant as it may show a shift to patenting in UMP’s for enterprises that actually practice the invention.   The rapid increase in regions like Anhui may be due to active government support in those regions.  The drops in patent filings for foreigners are surprising considering China’s continuing economic growth.  The report also underscores a predictable rise in China’s cities as centers of patenting activity.  Although individual PCT filers are not identified, the growth in PCT filings is probably to continued growth of companies like Huawei and ZTE from Guangdong.

SIPO’s Data Shows Continued High Demand for IP Information in China

Image

SIPO recently published its 2013 data on hits on Chinese government IP websites.   Overall, there were 2,974,407,259 hits on Chinese government IP system portal websites in 2013.  Total numbers of distinct on IP addresses were 30,066,575.

The three biggest foreign countries in terms of visitors were the US, France and Canada.  In terms of origin of page views, China was number one: 934,297,096.  The US was number two with 136,552,861.  France trailed at 6,120,926.  To put that in perspective, US page views were 14.6 percent of the total – which is rather high.

Country Page Views
1 China 923,297,096
2 United States 136,552,861
3 France 6,120,926
4 Canada 4,175,340
5 U.K. 3,676,532
6 Germany 3,436,612
7 South Korea 2,804,540
8 Japan 2,428,610
9 Brazil 1,892,332
10 Spain 1,297,910

There were 554,028,775 hits to the Chinese language patent search engine. Amongst English language hits, news ranked first (381,612), and law and policy was second (164,226).

The biggest domestic source of domestic page views were Beijing and Guangdong (approximately 286 million and 90 million, respectively).

There was a minor spike in visits in April (IP Day/Week – April 26, I presume),  another spike in July and August,  but the  big spike was in December with  an especially large growth in IP addresses towards year end, as the 12 month chart below of visitors indicates.

hits

The year end spike parallels the increase in patent filings at year end (http://chinaipr.com/2013/02/16/autumnal-hook-2012-update/.  )My guess is that seasonality in utilization of patent search engines would more closely approximate trends in patent filings, while overall utilization of government IP websites may tend to track IP campaigns and policy initiatives.

The ratio of distinct addresses to page views is about 100 hits per IP address (approximately 3 billion hits/30 million IP addresses).  We are an information-oriented profession!

I noted in an earlier blog “The Chinese IP Hits Parade”  that foreigners learn about Chinese IP from Chinese government websites, particularly when Chinese data is compared with US and European sources of information on the Chinese IP environment.    By comparison, total hits on my bog last year were 30,000, a number that pales in comparison to the millions of page views from foreign IP addresses on Chinese government websites, or in terms on Chinese government English language websites, where the differences narrowed.

While the data suggests continued growth in information services on IP, it would be useful if SIPO provided the tools to make better year on year comparisons or listed all of the Chinese government IP websites it is tracking.  Other problems: the numbers of page views is about one third lower than hits in SIPO’s report, which is hard to fathom, since each hit is necessarily a page view.  In addition, there appears to be a large spike in US utilization of SIPO websites compared to 2012 data in 2013, which is also hard to understand.

Source: http://www.sipo.gov.cn/zscqgz/2014/201405/t20140508_946303.html (关于全国知识产权系统政府门户网站2013年统计情况的通报) (Report Concerning the Statistical Situation of The Chinese Government National Network of  IP Portals in 2013).

 

 

USPTO’s Three Exemplar Goals in Its “Five Year” Plan With China

USPTO recently released its 2014-2018 Strategic Plan (38 pp).

Three specific goals are highlighted under USPTO’s efforts to “Work jointly with the administration to improve IP protection and enforcement in China.” These include: establishing a China Resource Center, which will support more data-driven analysis of IP trends; developing/increasing IP enforcement programs aimed at building Chinese enforcement capacity; and reviewing and advising on Chinese law and regulations.

China is also referred to elsewhere in the Plan both directly and indirectly, such as in noting USPTO’s efforts to address “counterfeiting, piracy and failure to respect IP rights” in “fast growing economies such as China and India”, and indirectly in USPTO’s “collaboration with global IP partners” which will “lead to greater harmonization of patent and trademark systems, strong IP enforcement throughout the world, and IP policies that benefit the global economy overall.”

Disclosure to Readers: My “day job” is with USPTO. This blog is unofficial; please consult the Strategic Plan for more information.

New Service Invention Draft Regulation…And Web page

SIPO released its latest draft for public comment of its proposed service invention regulations 职务发明条例草案 (送审稿), including a very useful Chinese language webpage on April 1.  The website contains additional reference materials including summaries of comments on prior drafts (August 2012, November 2012 and December 2013), a comparison of these drafts as well as a report on the Japanese service invention system and summaries of meetings and surveys.

The draft is the product of several ministries and agencies, including SIPO, Ministry of Education, Ministry of Science and Technology, MIIT, Ministry of Labor and Social Security, Ministry of Agriculture, NCAC, Forestry Bureau, China Patent Protection Association and the Chinese Inventors Association.   There is no stated deadline for submitting comments, rather the draft appears to have been published on a more open-ended basis to solicit public comments, including considering the viewpoints of comments previously submitted by others.  SIPO has once again done an admirable job of making its policy considerations public available.

The proposed rules appear to adhere to the principle that gives priority to contracts or agreements between employers and employees.  However, the drafters rejected proposals to place freedom of contract in the chapeau language of the draft regulation.  The drafters also believe that there are minimal compensation standards that should apply to employee compensation claims.  The draft removes prior references to employee compensation for software based on service invention standards, while maintaining compensation for plant variety protection employee contributions.  It also maintains protections for inventors when a patent disclosure is not filed for a patent and maintained as a trade secret, but the enterprise has benefited from the invention.  The employee inventor also retains a right to know about the circumstances of his/her invention being licensed to others which now is based upon circumstances where it has a need to know.

The survey of Chinese enterprises also provides useful background concerning SIPO’s motivations.  The data shows that enterprises recognized the need to provide service invention compensation.  However, there was concern about compensation for trade secrets, and interference in the management of enterprises to compensate inventors.  SME’s were particularly concerned about interference in their enterprise’s autonomy.

When I first blogged about this draft regs, I reached a high of 426 hits – an education for me about how important this issue is to readers of this blog.

Ministry of Commerce IP Program in DC December 5

Chen Fuli, IP Attaché at the Chinese Embassy in Washington, DC the morning of December 5.   The program is free of charge, but seating may be limited.   You should RSVP at: lishuai@mofcom.gov.cn.

The topics are all ones that I have actively followed in this blog.  Here is the tentative agenda:

International High Level IPR Cooperation Forum

Dec 5,  Georgetown Holiday Inn

2101 Wisconsin Ave, NW, 20007, Washington DC

 9:00-9:20  Opening remarks, by Both China and U.S. Representatives

 9:20-9:40   New developments in IP enforcement in China, by Director Jing Zhang from the Office of Fighting Against IPR Infringing and Making or Selling Counterfeit and Shoddy Products under the State Council

9:40-10:00  New amended Chinese Trademark Law, by Deputy Director General Qing Xia from CTMO

 10:00-10:15 Q & A

 10:15-10:30 Coffee Break

 10:30-10:50  Amending of Chinese Copyright Law by Deputy Director Ping Hu from NCAC

10:50-11:10  Amending of Chinese Patent Law and Regulation on Service Invention by director Yanhong Wang from SIPO

11:10-11:30  New practice of IP trials after the amendment of Chinese Civil Procedure Law by Judge Yuanming Qin from SPC

11:30-11:50 Q & A

11:50-12:00 Closing Remarks

—————-

12:00-13:30                    Lunch (hosted by China for all the participants)

In addition to the speakers noted above, there will also be Chinese official participants from public security, Customs, procuratorate, AQSIQ and other agencies, which should help make for lively discussion and interaction.  I hope to see you there!

The End of Year Hook in Administrative Patent Enforcement?

Along with Prof. Zhen Lei of Penn State, I have previously blogged about the late autumn surge in patent filings in China, in 2012, as well as in prior years.  This autumnal hook likely arises in response to subsidies, quotas or other support that must be exhausted before year end.

During a recent visit to China, I had an opportunity to talk about similar trends in patent administrative enforcement.   For the past two years, there appears to be a year-end uptake in patent enforcement:

  Infringement Disputes Other Disputes Patent Passing-off Total
2004 1414 66 1689 3169
2005 1360 132 2409 3901
2006 1227 43 966 2236
2007 986 27 713 1726
2008 986 27 713 1726
2009 937 26 578 1541
2010 1077 18 728 1823
2011 1286 27 1704 3017
2012 2225 268 6512 9005
2013 (mid-year) 1074 129 2633 3836

Here is what it looks like in graph form, with data ending at September 2013, on an annualized basis the totals would be 19,118:

Image

Why has there been such a sudden uptake in year-end administrative enforcement?  One explanation is an end of year rush to accept or resolve cases to show increased efficiency and impact.  On the converse side, the data also shows a significant drop in activity around holiday seasons, especially spring festival in January/February.    These factors may apply across the board to many forms of Chinese government activity.

Looking to policy factors, on June 28, 2011, SIPO announced a special campaign involving patent administrative patent enforcement.   However, the campaign did not immediately result in a significant uptake in administrative actions.

What may be more significant is the  August 2012 publication by SIPO of proposed patent law amendments, which provide for an expansion for administrative enforcement and greater involvement by SIPO with IPR as an instrument for “market order”.  These new policies may have precipitated a major uptake in administrative patent enforcement actions, on the assumption that “if you enforce it, they will legislate it”.  In fact, October 2012 was one period of high rapid increase – with enforcement actions increasing 112% from September 2012, followed by a drop in November 2012.

The rapid increase in patent “passing off” (counterfeit patent) cases similarly may also be timed with the patent law amendments.  The amendments contemplate an increased role for SIPO in policing “market order”. Since such cases may be initiated by self -initiated by parties other than the infringer, they may also be more responsive to policy changes by SIPO.  Local governments, such as Guangzhou, may also offer rewards for reporting these activities.  Moreover, the change in the mix of administrative enforcement actions is striking.  From 2006 to 2011 infringement cases dominated. Now patent passing off cases are approximately twice infringement cases.

There may be other factors contributing to this rapid increase, such as enhanced authority of local enforcement agencies.  In addition newly empowered agencies may now be engaged in rent-seeking behavior, such as by seeking revenue from filing fees. Indeed, Premier Li Keqiang identified excessive fee taking as a potential issue in IP administrative enforcement (http://www.gov.cn/ldhd/2013-11/20/content_2531230.htm).

One comparison that does not appear highly relevant is with overseas trends.  An influential article by Zhao Meisheng of SIPO Management Division Enforcement Administration Department  “An Analysis on the Trend and Reasons That US Government Agencies Strengthen Intellectual Property Rights Enforcement” ( 试析美国政府机构加强知识产权执法的态势与原因 – 赵梅生 (国家知识产权局管理司执法管理处)电子知识产权 (Electronics Intellectual Property) (2013, 4)  suggested that administrative patent enforcement is on the increase globally, including the United States.   Comparing “civil” or “administrative” actions in one country to another is often an “apples to oranges” type comparison, nonetheless, “Section 337” actions in the United States, which involve US administrative procedures, are only a very small fraction of Chinese patent administrative enforcement actions, and have been relatively constant over the past several years.
chart3

The growth in administrative litigation does not seem to be linked either with Chinese domestic IP litigation, which has shown steady growth over the past several years.
chart5

(The preceding was adapted from a presentation I gave at the recent Asia Pacific IP Forum sponsored by Renmin University in Suzhou.  The opinions in this blog are my own).