A Taste of China IP In The New Year

There continue to be various thrusts and feints in these early days of the Trump administration on Chinese IP related matters.  Here’s  a quick rundown.

Tim Trainer, a friend and former colleague, who is also the President of Global IP Strategy Ctr, P.C. & Galaxy Systems, Inc. has  drawn attention to several China IP-related developments including a Trump executive order that involved IP theft, a bill introduced by Congressman Steve King of Iowa that targets China’s theft of intellectual property (February 14, 2017), and the effect of TPP withdrawal on China’s free trade agenda.

The Executive Order notes the following:

It shall be the policy of the executive branch to:

(a) strengthen enforcement of Federal law in order to thwart transnational criminal organizations and subsidiary organizations, including criminal gangs, cartels, racketeering organizations, and other groups engaged in illicit activities that present a threat to public safety and national security and that are related to, for example:

(ii)  corruption, cybercrime, fraud, financial crimes, and intellectual-property theft . . . .

This order from February 9 clearly puts IP theft on the radar.  While China is not singled out by name, it is worth reflecting that the term “theft” appears 7 times in the text of Dr. Peter Navarro’s book Death By China.  Of these seven times, “intellectual property theft”  appears  twice, and technology theft appears three times.  The term “intellectual property theft” is specifically indexed. Navarro, of course, is a leading advisor to the President on trade policy.

Continuing the theme of IP theft, Congressman King’s bill would, according to Trainer “require the imposition of duties on Chinese origin goods in an amount equal to the estimated losses from IPR violations suffered by US companies if enacted into law.”  This early stage bill is found here

Regarding TPP withdrawal and its effect on IP and China China’s Regional Comprehensive Economic Partnership agreements,   a recent Congressional Research Service report has noted that the RCEP agreements are “unlikely to include commitments as strong on issues from intellectual property rights to labor and environmental protections”.  As I have previously noted, “China’s  FTA  experience has thus far focused on a limited range of issues, most of which are not ‘core’ IP.”

Apart from Tim Trainer’s blog, the media has also reported extensively recently on several trademark decisions in China in President Trump’s favor.   However, China’s trademark examination standards contain provisions that prohibit use of the names of political leaders.   Moreover, unlike most other presidents, Trump was not a political leader until he was elected president.  The Chinese trademark examination standards prohibit trademarks that hurt social morality or have other ill political effects.  Amongst the enumerated bad political effects are trademarks that are identical or similar to a country, region or international organization’s leader’s name.

九、有害于社会主义道德风尚的或者有其他不良影响

二)具有政治上不良影响的

1.与国家、地区或者政治性国际组织领导人姓名相同或近似的

Postscript February 20, 2017:

While  I have no opinion on the merits of any case, I hasten to note that the great grandson of Teddy Roosevelt, Tweed Roosevelt, might have an opinion on whether rooseveltpolitical officials should be granted trademarks.  His company, Roosevelt, Tse and Company, owns several trademarks, many of which involve his eponymous restaurant in Shanghai, and some of which include the family crest (see below).   He also seems to have been the victim of some individuals filing using the family name.

Living political leaders have also had their names misused.  Three trademarks applications with the name of Barack Obama in 2008 by a company in Wuhan, China were refused registration by 2010.  There are several trademarks and trademark applications of varying status with the name Merkel.   A quick database search also showed up 7 applications with the Reagan name in English, one granted as recently as 2015 (Registration Number: 13981276) (for electrical goods).  There is one registration for Fidel Castro for use on travel bags, filed  by a natural person in Hebei 于锁群 (6792546).   Did Fidel authorize this?

Of course, trademarks are not only the names of people.  Several marks “In God We Trust” have been refused by the Chinese Trademark Office.  One is still pending (21508789).  It was filed by a company from Zhejiang.

A recent Washington Post article,  noted that China is a country where “faking foreign brands has long been a profitable business practice.”  The article refers back to the Qiaodan case as one important milestone in changing practices.  As any reader of this blog knows, there have been several important steps in recent years to address  abusive trademark practices. 

tweedroose

China’s Plan for Copyright Creativity

copyright

China’s National Copyright Administration released it plans for the 13th Five Year Plan regarding copyright (the “Plan”), attached here (including machine translation).  The plan comes on the back of the State Council’s 13th Five Year Plan for the Protection and Enforcement of Intellectual Property (January 16, 2017), which has further elevated IP in China’s state planning hierarchy.

The Plan reflects the State Council’s decision on China becoming a “Strong IP Country” and includes much of what one might expect from a state planning document on copyright.  For example, it notes that China will complete its revision of the much delated copyright law reforms, as well as related implementing regulations and ministerial rules.  The plan also emphasizes improvement of administrative enforcement, including criminal/administrative coordination, and working with the National IPR Leading Group and other agencies, rather than civil enforcement/remedies/injunctive relief, etc.  The draft also reflects the regrettable tendencies of the patent system of focusing on IP quantity as opposed to quality, with goals of increasing copyright registrations to 2,780,000 and software registrations to 600,000 by 2020, as well as creating additional demonstration cities and other copyright promotion projects.

The plan laudably calls for increased cooperation with foreign countries including “cooperative strategic MOU’s” with the United States and other countries, as well as  “working on more programs with international associations based in Beijing” , and resolution of bilateral issues in a “win-win” environment.

The draft also recognizes that “infringement of copyright is still relatively common, and the copyright environment in reality still needs to take steps forward to improve.”  However the report also notes that China is a “developing country” and it needs to avoid “excessive protection and abusive protection.”

Despite China having a huge copyright civil docket (over 60,000 cases in 2015), the report focuses exclusively on public enforcement and supervision mechanisms, including various interagency efforts, with commitments to:

Further strengthen copyright enforcement coordination mechanisms and promote improvement culture at all levels of law enforcement agencies implementation of the copyright law enforcement mechanisms, effective copyright enforcement in cultural market administrative law enforcement functions, use “anti-piracy and pornography” work organization and coordination mechanisms to strengthen Public security, Industry and Commerce, MIIT, Network Security and other departments, to cooperate and form collaborative copyright enforcement efforts. Strengthening the convergence of copyright administrative law enforcement and criminal justice, actively participate in the construction and use of national action against Counterfeit and Substandard goods enforcement and criminal justice information sharing platform for convergence of, and further information in copyright enforcement cases. Better play an oversight role for local law enforcement supervision and social rights, the establishment of local copyright law enforcement cooperation mechanisms cooperation with corporations, associations and copyright law enforcement mechanisms. [the link inserted is my own addition]

进一步强化版权执法协作机制,推动完善各级文化综合执法机构落实版权执法任务的工作机制,有效发挥文化市场行政综合执法中的版权执法职能,充分运用“扫黄打非”工作组织协调机制,加强与公安、工商、工信、网信等部门的配合、协作,形成版权执法合力。加强版权行政执法与刑事司法的衔接,积极参与建设和使用全国打击侵权假冒工作行政执法与刑事司法衔接工作信息共享平台,进一步推进版权执法案件的信息公开。更好发挥地方执法监管和社会维权监督作用,建立地方版权执法协作机制及版权执法部门与企业、协会合作机制

The government management approach to copyright is also reflected in a call for increased government subventions for copyright creation through “seeking financial support and preferential policies, and increasing the intensity of support for copyright.” This approach could result in further distortions of China’s IP environment, much as has occurred in the High and New Technology Enterprise program.

 

Note: Wordcloud at the beginning of this blog is from the machine translation of the Plan.

Upcoming Fordham Program on Discovery and Investigations in China

Fordham University, in conjunction with the Chinese Business Lawyers Association, the Asian American Bar Association of New York and Consilio, is hosting a program on discovery and compliance with investigations in China, Navigating the Complexities of US Litigation Abroad on Tuesday, January 24.

As I have repeatedly noted, discovery, (or lack thereof) has proven to be a crucial factor affecting IP litigation strategies.  This looks a valuable program on this important topic.  As Consilio’s website on this conference notes:

“Document collection and discovery has become an increasingly important and fraught issue in China. U.S. litigations often require the collection and review of documents in China in ways that conflict with Chinese laws, such as laws on state secrecy and financial privacy. How can discovery be conducted in China while avoiding legal financial, and ethical problems? And what about internal investigations, which often require reviews of sensitive documents and materials, which may also implicate Chinese laws and regulations? Our panels will discuss the challenges and solutions in both internal investigations in China and also document discovery in China as part of U.S. litigations.”

Sino Legend Saga Ends at US Supreme Court

The future ain’t what it used to be. (Yogi Berra)

Earlier this January, 2017, Sino Legend lost its long battle to have an ITC decision excluding its products form the US market reversed by a Supreme Court denial of its cert petition.

As I noted previously, the case presented an unusual set of circumstances, where Chinese courts had found that there had been no trade secret theft occurring in China, the USITC had found that there was trade secret infringement in an exhaustive opinion, China’s Ministry of Commerce sought a rehearing en banc after Sino Legend lost on appeal at the Federal Circuit, and a petition for certiorari was lodged by Sino Legend to the Supreme Court.  Attached are some of the US Supreme Court legal documents, including:  the petition for certiorari  (September 30, 2016); the amicus brief   of the Ministry of Commerce (Nov. 2016); the brief of   USITC in opposition (Dec 6, 2016);  brief of party respondent SI Group in opposition (Dec 6, 2016); reply of petitioners (December 20, 2016); and the Supreme Court’s denial of cert (Jan 9, 2017).

In its cert petition, MofCOM sought a reversal not only of the Sino Legend case but ultimately of the legal principle underlying the Tianrui decision.    The Chinese parties noted that in Sino Legend there a determination that there was no infringement in the case as litigated in China for facts arising in China.  As MofCOM’s brief notes:

[MofCOM] is disappointed by recent actions of the ITC. In wrongly interpreting Section 337 of the Tariff Act to allow the ITC to bar imports into the United States based on alleged actions conducted, and adjudicated, wholly within the borders of China, the ITC has impugned the sovereignty of China and refused to accord the comity expected of a trade partner.

MofCOM’s amicus brief further states:

The displeasure of [MofCOM] with what has unfolded in this, and other, recent ITC cases involving alleged trade secret violations should not go unnoticed. In this matter, there is no dispute that the alleged actions occurred entirely within China, by Chinese citizens, while working at Chinese companies. The alleged acts of misappropriation  were first raised by Complainant’s Chinese subsidiary in China. Both criminal and civil proceedings were instituted in China for these alleged misdeeds. The alleged conduct and actors in question were ultimately vindicated. However, Complainant, unhappy with the failure of proof in China, sought institution of a Section 337 proceeding in the United States based on the same conduct already adjudicated in China. The ITC conducted an investigation, ignored the rulings in China to the contrary, and determined that not only could the ITC bar products based on this conduct, but also that some of Complainant’s justify a limited exclusion order of Petitioner’s product.

The Chinese media had regrettably inaccurately described this case when it was decided at the ITC as a big victory for China involving a finding of no infringement in the US and China; rather a limited exclusion order was granted by the ITC in lieu of a general exclusion order.  China’s Supreme Court had also picked up on this inaccurate description when it regrettably determined that was one of the top 10 IP cases for 2014.  This recognition was troubling also as the complainant in the Sino Legend 337 case had sought a retrial of its case in China, which was denied by China’s Supreme People’s Court two  years later, in 2016.

The differences in final results in the US and Chinese decisions may also be due in part to disparate emphases in trade secret adjudication, with Chinese courts emphasizing similarities of technology between the parties, and the US courts relying more on unfair access to the technology by the alleged misappropriator.  One lesson of this saga is that comity may be more challenging to apply in trade secret litigation, which remains a relatively unharmonized area of IP law among various countries, and which is further weakened by differences in civil procedure including the limited availability of pre-trial discovery in China and many other countries.

Economics and IP Position At AIT/Taiwan

The American Institute in Taiwan has posted a position for an economic specialist in Taipei.  This is a local-hire position (for those ordinarily resident in Taiwan, and others). In addition to knowledge of Chinese and English, the position requires a Master’s degree in business, engineering, economics or law or related field .  The position entails, among other things,  “researching and drafting cables and other reports on policy, legal, and business developments in the high-tech, digital economy, cybersecurity, intellectual property rights (IPR), and labor sectors.”   The application deadline is February 12, 2017.

2017 Opens with More Positive Trademark Developments

The SAIC has announced that it has  amended its TM review and examination standards (“Trademark Review and Examination Standards”).  The revised standards, with a date of December 2016, are available here. The revisions incorporate revisions to Articles 19, 50, 15.2, 1and 10 of the Trademark Law.

In addition, the Supreme People’s Court published a judicial interpretation on Certain Issues Related to Trials of Administrative Cases Involving the Grant and Confirmation of Trademark Rights 最高人民法院关于审理商标授权确权行政案件若干问题的规定.  A public comment draft of the JI was circulated as early as 2014; the final version was released at a press conference on January 11, 2017.   The JI clarifies the application of “adverse influence” in Article 10(1)8 and “other improper means” in Article 44(1) of trademark law and provides details on prior rights of Article 32  including copyright, naming right, trade name,  amongst other provisions.   The Financial Times has suggested that the JI is linked to the Qiaodan case , although as the Chinese media as noted, Qiaodan may also be seen as one of a series of cases providing more expansive relief against abusive registrations and recognizing more extensive related rights, such as naming rights and even merchandising rights.  In an unrelated development, the SPC on January 7, 2017 listed the Qiaodan case  as one of the top 10 civil and administrative cases for 2016.

 The 2016 JCCT obligated China to “take further efforts to address bad faith trademark filings”, according to the recently released Joint Fact Sheet. The amended examination guidleines, JI, and related case developments, including the development of case law in IP,  should help implement this commitment. 

Chinese IP: the Graduating Class of Officials

 

There have been several Chinese officials with authority over IP over the past few years who have been  promoted.  In December, the Ministry of Commerce recently reported that DG Li Chengang was promoted to Assistant Minister in December 2016, with authority over law and treaties (which includes trade-related IP).  His predecessor, Assistant Minister Tong Dao-chi, was also promoted and now serves as Vice Governor of Hubei as of  December 2016.   Across the straits, in July 2016, Madame Wang Mei-hua, who was formerly in charge of TIPO was promoted to Vice Minister of Economic Affairs.  

The most prominent of the Chinese officials with deep IP experience who saw their career advance due to IP involvement in recent years is Madame Tao Kaiyuan the former DG in charge of Guangdong’s IP Department, who has served as one of the justices on China’s Supreme People’s Court since 2013, and has been a key advocate for judicial reforms and promoting rule of law.  Several other Chinese IP judges have also seen promotions in the recent years (Madame Tao and several current and former IP judges are pictured below).  Another official with deep IP experience,  Chen Fuli of MofCOM also was promoted from his former position as IP Attaché in Washington, DC and Director at MofCOM, where he oversaw IP engagement with the United States to his current position of Deputy Director General.

Also of note,  former Chief Judge Randall Rader is reported to be under consideration to become the next Director of the USPTO under the incoming Trump Administration.  Rader has noted that “Yes, several senators have sent my name to the Trump team for the position of director of the USPTO,” and that “The best way to protect U.S. jobs is to protect worldwide the IP that creates and guarantees those jobs.”  China has also been quick to recognize Judge Rader’s accomplishments.  In December 2016, he was awarded an Honorary Professorship by the President of Tsinghua University.  

The current situation for Chinese IP officials contrasts with the experience of only a few years ago when it appeared that many Chinese IP agencies and officials were riding China’s new Antimonopoly Law, and not IP, to advance their agencies or careers.  Officials such as DG Shang Ming moved from law and treaties in MofCOM to antitrust.  At that time, China’s IP courts also picked up civil antitrust jurisdiction and the unfair competition bureau of SAIC also picked up antitrust authority.  During those years, several officials also privately complained to me that their career advancement had been stymied by focusing too much on IP issues or engagement with foreigners.   Some may also have seen former Vice Premier Wu Yi’s retirement in 2008 as tied to the filing of a WTO on IPR against China, which she appeared to take as a personal loss and that he had promised to fight vigorously against

As far as I know, the most dramatic and unusual employment engagement of an IP-knowledgeable official was made by another ardent IP supporter, Abraham Lincoln, when he appointed Edwin Stanton as Secretary of War due, in part,  to his experience of working with him on a patent litigation when Lincoln was a private lawyer. 

When officials who believe in IP are promoted to positions of higher authority it is a good sign of political support for protecting IP.  This is true of both the United States and China. WP_20160802_005 (1)