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State Council Clears Patent Law Amendments, Forwards to NPC, Patent Linkage Is Not Referenced ….

According to the official central Chinese government website, on December 5, 2018, Premier Li Keqiang chaired a State Council meeting which cleared the long awaited proposed draft of the patent law amendments.  The description of the draft is set forth below:

为进一步加强专利权人合法权益保护、完善激励发明创造的机制制度、把实践中有效保护专利的成熟做法上升为法律，会议通过《中华人民共和国专利法修正案（草案）》。草案着眼加大对侵犯知识产权的打击力度，借鉴国际做法，大幅提高故意侵犯、假冒专利的赔偿和罚款额，显著增加侵权成本，震慑违法行为；明确了侵权人配合提供相关资料的举证责任，提出网络服务提供者未及时阻止侵权行为须承担连带责任。草案还明确了发明人或设计人合理分享职务发明创造收益的激励机制，并完善了专利授权制度。会议决定将草案提请全国人大常委会审议。

A rough translation is as follows:

In order to further strengthen the protection of the legitimate rights and interests of the patent rights holder, improve the mechanism system for stimulating creation of inventions, and raise those mature practices for effectively protecting patents into law, the meeting passed the “(Draft) Amendments of the Patent Law of the People’s Republic of China.” The Draft aims to increase the severity of penalties for intellectual property infringement, draws on international practices, significantly increase the amount of compensation and fines for willful infringement and counterfeiting of patents, and significantly increase the cost of infringement to deter illegal acts;  it clarifies the burden of proof for the infringer to cooperate in providing relevant information, and sets forth that the network service provider should bear joint liability for not stopping infringement in a timely manner. The Draft also clarifies the incentive mechanism for inventors or designers to equitably share the proceeds from the creation of service inventions, and improves the patent authorization system. The meeting decided to bring the Draft to the NPC Standing Committee for its review.

In a possibly unrelated development, the National Development and Reform Commission released a Chinese interagency Cooperation Memorandum of Understanding on December 4, 2018  to deal with entities that have lost trust due to IP (patent) infringement. 关于对知识产权（专利）领域严重失信主体 开展联合惩戒的合作备忘录.  Compared to the proposed patent law amendments, this lengthy document focuses even further on public law aspects of a patent law system, including recidivist infringers, “irregular” patent applications, providing false documents to the patent office, etc. and includes a range of 33 different punishments to be meted out from a wide number of agencies, including denial of subsidies, debarment for procurement purposes, denying access to range of government programs, prohibiting leisure travel, etc.

The two documents taken together may suggest a disheartening renewed emphasis on administrative measures to deal with patent infringement and innovation incentives.  Such measures may be intended to address US trade concerns about IP infringement and “IP theft”.  They may also represent a return to China’s increasingly administrative enforcement-oriented approach to patent issues.  However, this renewed focus on administrative measures is also occurring the same time as China is moving to quickly establish a new national appellate IP court attached to the SPC by as early as the beginning of 2019.  This new court will be a national appellate circuit court with jurisdiction over administrative appeals and technical IP matters and will likely include seasoned judges from Beijing and the SPC itself.  Much work needs to be done to get this court off the group quickly.

What, however, is missing from both these documents is any reference to a patent linkage system for pharmaceutical products, which has been much talked about in this blog.  As previously reported, former CFDA Commissioner BI had been dismissed from his post as party secretary to SAMR this past summer in response to China’s tainted vaccine scandal. A State Council notice (no. 83) of August 20, 2018 on deepening reform in China’s medical sector thereafter also ominously omitted any reference to patent linkage.

As the original deadline for passage of the patent law amendments was the end of this year, my guess is that this draft may be referred on to the NPC by the end of this year, and passage may occur as early as the first half of next year.  I assume that a draft for public comment will be released by the NPC sometime early next year.  Generic and innovative pharmaceutical companies that believe a linkage system would help accelerate innovation in the pharmaceutical sector and support early introduction of high quality generics, may consider commenting on these issues once a public comment draft is made available.

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SO MANY CHINA IP CONFERENCES, SO LITTLE TIME…

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Here’s a rundown of some past events, and some upcoming ones.  I will provide an update on some of the legal developments at a later date (I know I have been a bit remiss).

On October 4, 2018, I spoke about China at the University of Nevada Las Vegas’ program  on “Intellectual Property Enforcement at Trade Fairs.”   My observations: (a) China does not routinely great preliminary injunctions at trade fairs, despite heavy reliance on injunctive relief in final adjudication of IP infringements;  (b) The United States does have robust preliminary injunction/temporary restraining order trade fair remedies; (c) the use of sui generis administrative or quasi-administrative enforcement mechanisms for trade fair enforcement in China may be one reason that judicial remedies are not that common; (d) trade fairs do afford other opportunites – they are excellent evidence gathering opportunities, their use can help satisfy use requirements for a trademark, and they may constitute infringing conduct as an “offer for sale” under the patent law.  Please look through my  power point and tell me if you have any comments.

On November 2, 2018.  John Marshall Law School (JMLS) convened its 62nd annual IP conference I chaired a great breakout session on international developments, with Kira Alvarez, Peter Yu, Cynthia Ho, Tobias Hahn and Prof. Dennis Crouch.   The session discussed the state of global IP and China-specific IP negotiations in the Trump administration.   Kira Alvarez noted the success of the administration in negotiation trade secret commitments in the revised NAFTA.  The panel, along with the audience, also discussed the role of soft diplomacy, rather than trade disputes, to resolve IP-related trade conflicts.  Prof. Dennis Crouch attributed many of the changes in civil litigation globally to the work of former Chief Judge Rader “who was really using his gregarious nature to reach out and become close friends with the leading jurists around the world.”  This point was restated by many during the conference and thereafter.  The photo above is from the JMLS international IP panel with Kira to my right.

I also participated at the JMLS annual IP  conference in a plenary discussion on antitrust and IP developments, moderated by Prof. Hugh Hansen of Fordham with  Carlos Aboim, David Djavaherian, Suzanne Munck (FTC),  Prof. Ioannis Lianos, University College London and  Annsley Merelle Ward.   I looked at the evolution of Chinese judicial practice regarding SEPS, which are a remarkable set of steps in light of there being no substantive change in antitrust or patent law during this period, and likely reflect increased judicial experience as well as the impact of economic changes in China as an emerging licensor.  These developments were previously discussed in this blog.  I also discussed China’s historical reliance on civil law measures to deal with IP misuse, rather than remedies under the patent law or antitrust law, and how these compare with US practice.

On November 5, 2018, Dan Rosen (Rhodium Group) launched another path breaking paper “Missing Link – Corporate Governance in China’s State Sector” at the Asia Society of Northern California.  A copy can be found here.  The video of the launch can be found here.  The focus of my comments was on whether SOE’s can play a more active role in China’s innovation plans, and the awkward fit between SOE’s and global trading rules.  I believed that existing efforts to provide greater market accountability and transparency for SOE’s (and more broadly, China) have not achieved their intended outcomes despite  the extensive commitments negotiated with China at WTO accession.

I gave a talk at the IP Dealmakers Forum in NY on November 8, 2018 with several individuals involved in financing litigation, providing patent analytics, buying Chinese patents  – Roger Tu, Y. P. Jou,  Brian Yates, iPEL, and Bill Yuen.  Brian Yates’ company had just been the subject of a Chinese article regarding whether patent assertion entities will now be/should now be coming to China, that was posted by IPHouse.  I think many in the room shared my skepticism that China was now “ripe” for this type of activity, particularly for litigation by foreigners against Chinese.  There was however a general sense that the IP and litigation environment was improving.

In addition to these programs, here are some upcoming events;

November 12, 2018, I will be talking at NYU.  I have always greatly enjoyed the open discussions with Prof. Jerome Cohen (no relation), Ira Belkin and others, and I believe this upcoming event will be no different in my current role at UC Berkeley.

On November 13, 2018, I will be at Columbia University talking about “IP and the China Trade War: Long Overdue, a Pretext, or Both?”     I may be guided by the discussions around that topic at JMLS earlier in November, where many concurred that these actions on IP in China are both overdue and dwarfed by other concerns.

On December 2, 2018, I will be in Shenzhen. Peking University School of Transnational Law (“STL”) will be partnering with Berkeley to present an exciting program on “Legal and  Funding Issues for Successful Startups.”  Both the topics and speakers promise to make this an especially exciting launch event. Here’s the link to register.

On December 3, 2018, I will be at IPBC  Asia moderating a session on “China’s Mandate to Innovate” and its impact on IP commercialization. IPBC has constituted a great panel, including former SPC Chief IP Judge Kong Xiangjun, now Dean at Jiaotong University Law School, and Prof. Yang Guohua of Tsinghua Law School (former Chinese IP Attaché in the US, and DDG of MOfCOM), as well as Liren Chen, from Qualcomm, Eeva Hakoranta from Nokia and Roger Tu from Marconi.

On December 4, I will be at Tsinghua University speaking at the first annual Tsinghua/Berkeley conference on “Transnational IP Litigation: Opportunities and Challenges”.  A copy of the agenda (Chinese) is found here.   We will also have some great speakers for this launch event which focuses, non-exclusively, on US developments.  The speakers include several Tsinghua and Berkeley professors, and leading attorneys from practice in the US and China.  The program will cover a full range of issues including empirical data on litigation trends, venue, jury trials, Section 337 litigation, antitrust, the role of expert witnesses, and licensing strategies to mitigate risk.

I have some other events upcoming in Taiwan in December – but that will be another posting, along with some overdue updates on Chinese IP developments.

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China Town Hall October 9 at 3:00 PM Today At Berkeley

Berkeley Law and the Asia Society of Northern California will be sponsoring a China Town Hall with the National Committee on US China Relations today, October 9 at Booth Hall.  Former Secretary of State Condoleeza Rice is the guest speaker for this national town hall event.  After Secretary Rice speaks, a team of experts will discuss Secretary Rice’s comments in the context of US-China trade, technology and IP relations.  Commentors include Robert Merges, Vinod Aggarwal, James Green and Jenny Guo.  I will be moderating.  Admission is free.  The flyer is attached.

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Forthcoming Speaking Gigs

UNLVpostcard

The fall promises many opportunities to talk and exchange ideas on Chinese IP matters.  Here are a few of the upcoming speaking events that I will be speaking at:

On October 4, 2018, I will be speaking at the University of Nevada Las Vegas program on “Intellectual Property Rights Enforcement at Trade Fairs”.   USPTO Director Iancu will be keynoting, and I will also be joining my former USPTO colleague Conrad Wong at the event.  The seminar will be a great showcase for UNLV Prof. Marketa Trimble’s recent research on enforcement of intellectual property at trade fairs.  I am also looking forward to engaging with my fellow blogger, Prof. Thomas Cotter, who will be moderating my session.

Trade fairs, due to their short duration, their exhibition of leading edge technology, and their potential to disrupt customer and market patterns present unique challenges.  I have  followed China and US enforcement of IP at trade fairs on my blog, as well as when I was IP Attache in Beijing.   As IP Attaché, I helping a US company,  ABRO Industries of South Bend, Indiana, which detected extensive counterfeiting of its product at the Canton Trade Fair by a company called Hunan Magic.  At that time, about 10 years ago, there was a hope that judicial enforcement of IP at trade fairs in China might offer an opportunity to mitigate local protectionism in the court system by providing a judicial venue that is not where a trade fair exhibitor may have its principal place of business.  Several years later, I heard  Chinese companies were also complaining about US trade fair enforcement, and the US and China entered into a bilateral JCCT commitment on this topic.  The use of civil remedies to address trade fair infringements also implicates China’s rare use of preliminary injunctions, which has also been discussed here.

On October 9, 2018, Berkeley Law will be co-hosting the 12th Annual China Town Hall sponsored by the National Committee on US-China Relations, with former Secretary of State Condoleeza Rice joining the discussions being held virtually nation-wide. I will be joined by my colleagues Berkeley (Profs. Merges and Aggarwal) and the Asia Society of Northern California in the local discussions at UC Berkeley Law School.

On November 2, 2018,  I will be returning to John Marshall Law School to moderate a session on Global Issues in IP for its 62nd Annual IP Conference.

On November 6-8, 2018, I will be speaking at the 5th Annual IP Dealmakers Forum in New York City on “China – Has It Been a Boon for IP Licensing and Enforcement”.  I will also be giving talks at the U.S.-Asia Law Institute of NYU on November 12 and at Columbia Law School on November 13.

On December 1, 2018, I will be speaking in Shenzhen at the first joint Peking University/Transnational Law School / Berkeley Law program on “Entity Formation & Funding: Legal Fundamentals for Startups.”

On December 2, 2018,  I will be speaking in Shanghai at IPBC Asia’s conference on Maximizing  IP Value in Asia, where I will be addressing China’s licensing and enforcement environment.

On December 3-4, 2018, I will be speaking at Tsinghua Law School in Beijing at the first joint Berkeley/Tsinghua program on “Transnational IP Litigation.”  This program promises to have a solid line-up of academics, judges, officials and practitioners.  It is also a topic I have followed extensively here, and previously spoken on at Berkeley.

Note that some of the academic programs are not yet listed on sponsor websites, please reach out to the sponsors or organizers for further information.

Mark Cohen

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USPTO Position Opens in Shanghai

The USPTO and US Foreign and Commercial Service have posted a notice to fill the position of IP Attaché at the US Consulate in Shanghai.   The position is open now for applications and closes September 14, 2018.  The position requires US citizenship, bar admission, at least four years of professional legal experience and at least one year of specialized experience (consisting in part of knowledge of international IP practices).  Although knowledge of Chinese language or experience in Chinese IP matters do not appear to be specific requirements for the position, a separate questionnaire as part of the application process asks for experience in these areas.  USPTO had also recently posted for another position: Senior Counsel, China in Washington, DC.

The current official holding the Shanghai position is Mike Mangelson, who has been there since 2014.  He will be missed when his term is up.

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A Potpourri of AIPLA Legislative Comments — And Other Developments

potpourri

The American Intellectual Property Law Association has once again made its comments on proposed changes to Chinese IP legislation (laws, regulations, rules, examination guidelines,  judicial interpretations, etc. ) available to this blog.

Attached are the AIPLA’s response to the request for comments to revision of the trademark law in China (商标法修改公开征集意见) first published by SAIC.  SAIC is now a part of SAMR – the State Administration for Market Regulation. It had published a public solicitation of ideas for revising the trademark law on April 2, 2018, with a due date for comments of July 31, 2018.  AIPLA’s comments primarily focus on providing clarifying and strengthening legislation regarding bad faith trademark applications and registrations.

AIPLA has also commented on the proposed patent validity rules  of the SPC on administrative patent litigation (最高人民法院关于审理专利授权 确权行政案件若干问题的规定(公开征求意见稿)).  This judicial interpretation was previously discussed in this blog, with a translation by the Anjie law firm.  Additionally, here  is the Chinese version of these comments.

Finally, AIPLA has commented on the special approval procedure for innovative medica devices (创新医疗设备特别批准程序（修订稿)) which was first published for public comment on May 7, with a closing date of June 15.   Here is a text of the draft approval procedures in Chinese.

In a related legislative development, the recent dismissal of party secretary Bi Jinquan of the SAMR due the tainted vaccine scandal may also impact reforms that BI had spearheaded, which included pharma-related IP reforms (patent linkage, regulatory data protection, etc).   Commissioner Bi formerly served as the leader of China’s Food and Drug Administration.  An August 20, 2018 notice of the State Council  (no. 83) on deepening reform in China’s medical sector ominously omits any mention of patents or IP reform.  国务院办公厅关于印发深化医药卫生体制改革2018年下半年重点工作任务的通知, (国办发〔2018〕83号.  The next place where we might see the continued life in these reforms is in the proposed revisions to China’s patent law, which the National People’s Congress had tabled for completion by the end of 2018 as noted in its 2018 workplan  (全国人大常委会2018年工作要点).  A first draft of the revised patent law is needed as early as late August/early September 2018 in order to meet the NPC’s deadline.  One much anticipated pharma-related concern in the new draft, which would also support China’s efforts to develop both an innovative and high quality pharma sector, is incorporation of “artificial infringement” by which a request for regulatory approval would be deemed an infringing act in order to support a patent linkage regime.

 

Note: The above photo by Unknown Author is licensed under CC BY-NC-ND

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“Dying to Survive” and Pharmaceutical IP Reform in China

Last week while in Beijing, I finally had the opportunity to see “Dying to Survive” (Chinese title: “我不是药神”[translation: I am not the god of medicines]), the hit Chinese movie which concerns the problem of high priced cancer medicines that were not available through insurance on the Chinese market and had also been subject to patent validity and infringement disputes.  The screening I saw was filmed in Mandarin and subtitled in English.  When it opened in China, the movie was the second highest grossing movie in the world, and it is now on track to gross over 3 billion RMB.

The cancer medicine that is the focus of the movie is Imatinib Mesylate (Gleevec/Glivec), which was marketed by Novartis and is used to treat Leukemia.  The protagonist, Cheng Yong 程勇, was approached by a leukemia patient to travel to India and supply this person and others with a generic form of Novartis’ Gleevec.  Cheng Yong buys Gleevec for 500 RMB a box, and resells it at a 2,000 RMB, but which is still cheaper than Novartis’ offering (40,000 RMB).

Cheng Yong evolves over time from an unsympathetic trafficker in black market drugs  and possibly substandard medication for local patients to the lifeline of leukemia patients of an effective generic throughout China.  The evolution begins after nearly being arrested for selling counterfeit medicines when he briefly renounces his business in favor of a competitor.  However, he is soon approached by leukemia patients who desperately need his product at a reasonable price. He ultimately subsidizes the sale of Gleevec in China with his own money by distributing the product at cost.  Cheng Yong is thereafter arrested and sentenced.  He is released from jail early after petitioning by patients he has helped.  By contrast, the Novartis anti-counterfeiting investigator’s role remains a one-dimensional villain throughout the movie. The movie closes by noting that Imatinib Mesylate was ultimately made available legally and placed on insurance reimbursement lists and that new laws and regulations have been introduced since the incident described in the film.

The movie is based on an actual incident involving an individual named Lu Yong 陆勇.  The movie also bears some similarity to Dallas Buyers Club, which involved distribution of AIDS medication in the United States.  In real life, generic forms of Gleevec were approved by Chinese regulatory authorities in 2013. The product was also placed into the Chinese insurance reimbursement list in 2017.

The official and public reactions to the film suggest that China is indeed dedicated to both pharmaceutical IP and regulatory reform.  Premier Li Keqiang cited the movie in encouraging accelerated new product introduction and lower drug prices.  A translation by the Anjie law firm of an article by IPHouse on a screening of the film with leading judges, academics and lawyers is attached.   Based on this article and meetings I held in China, I believe that most people thought that the movie’s message was that China needs to continue to engage in a range of legal reforms, including:  accelerating approval of new drugs by China’s National Drug Administration; improving IP protection to encourage innovative drug development; and providing insurance to cover treatments.