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Some Upcoming Events and Opportunities

Here are some events and opportunities for the 2019-2020 academic year:

  1. 1. Bloomberg’s New Economy Forum is broadcasting a panel discussion on “Technology, Innovation and US-China Collaboration” on August 6 from 3:30-6:00 PM Pacific Standard Time in conjunction with the Asia Society. The discussion will be broadcast live on the Bloomberg Terminal and Bloomberg New Economy Forum YouTube Channel. It will also air on Bloomberg TV on August 9.  I will be joining as part of the invited Town Hall.
  2. On Wednesday August 7 at 12:30 PM EST, AIPLA is hosting a webinar on “US and China Export Control Laws and their effects on IP Protection Strategies.” I am moderating.  Here is the link for further information.
  3. On September 10, 2019, I will be speaking in Brussels, Belgium on “Geopolitical Aspects of SEPs: push pull forces in China and other jurisdictions” Here is the link. Readers of this blog may receive a 20% discount by using the code: CIPR. The code can entered at the very end of the registration process.
  4. Save the date: On October 22, 2019, Berkeley Law will be hosting its second program on transnational IP litigation with Tsinghua Law School. We already have several judges committed to attending.  Watch this link for further information.
  5. On November 12, 2019 from 4:30-6:30 PM, I will be at U Penn for its annual Policy Roundtable. The focus this year will be on technology issues.
  6. On November 13, 2019, I will be speaking at the IP Dealmakers Forum in New York City on the role of IP in the US-China Trade War.  There is a $200 discount with promo code: IPDF19_Speaker.
  7. Save the date: Berkeley Law is looking forward to welcoming back two giants of Chinese legal studies the week of March 15, 2020, Profs. Stanley Lubman and Jerome Cohen for a planned one and a half day program looking at some of the big picture issues in Chinese law today.

And an Job Opportunity: The Berkeley Center for Law & Technology at UC Berkeley School of Law is seeking to hire a Legal Research Fellow for its Asia IP Project, for an approximate one-year term with the possibility of renewal.  This position is open until filled.  Here is the link for more information, including required qualifications and application materials.   If you have questions about the position, please contact academicpositions-law@berkeley.edu.  UC Berkeley is an AA/EEO employer.

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Delay in the Courts… To Prove This One We May Yet Have to Wait…

On July 4, 2019, I posted a blog asking for help regarding rumors of delay and higher-level review of IP cases involving foreigners. Here is the follow-up. 

Spoiler alert: if you are looking for a smoking gun, you won’t find one.

Jacob Schindler from IAM pointed out that he looked into the issue for his magazine and after speaking to a number of lawyers and patent owners with active assertion campaigns in China, “found no evidence that this is true in any general sense.” Jacob noted that “the most likely explanation for delays faced by some US litigants is even more innocuous. Foreign companies, including US firms, seem to be big fans of the Beijing IP Court. And that has led to a very busy docket.” This perspective that clogged dockets are leading to delays has been cited by many, and a few people noted that the issue had been raised in various meetings or conferences.

Erick Robinson relied on his own experience prosecuting Non-Practicing Entity (NPE) cases, and commented in his blog that he had detected no changes. He further stated that claiming “‘cases can be decided but only upon approval from the Supreme People’s Court’ is obviously alarming, but without proof, this seems to be just more US politicizing of the trade war.” I will return to the issue of the trade war and patents in a future blog.  

One well-informed China-resident lawyer informed me that she “heard from a few lawyers that SPC instructed lower courts to suspend adjudicating all US-related cases for at least six months since the end of 2018.” This May, she advised, the SPC lifted the ban and now only supervises “sensitive cases.” For less sensitive matters, lower courts may proceed as they wish. This six month period identified by this lawyer roughly coincides with the period during which I had been hearing this rumor of delay. Others also confirmed that there was high-level supervision.   

The counter-factual that there has been no interference in court cases or administrative proceedings is perhaps easier to disprove. Many individuals have indicated concerns about informal interference in proceedings. Courtney Macintosh of Baker & McKenzie noted that “[w]e have been told by local enforcement authorities not to expect any nice treatment cause of trade war, so it is complex and not so straightforward.” The consulting firm Rouse had also observed what they thought was a trade-related impact in the negotiation of licensing deals requiring local government approval, with local governments “falling over” to ensure that they did not appear to be pressuring companies to transfer technology as a condition of investment approval. AmCham China’s 2019 Business Climate Survey for the first time listed “bilateral tension in US-China trade relations” as a top-five business concern (45% of respondents), and also noted that high tech and research-intensive companies were the most likely to feel less welcome than before (54%).

Some individuals suggested that there is no political interference at all in Chinese judicial proceedings. While an extensive analysis of the manner in which politics interferes in adjudication is beyond the scope of this blog, there is considerable literature around how politics influences Chinese court decisions, and there is no indication that IP cases are exempt from such influence.

First of all, as a de jure matter, an SPC decision to delay foreign cases is not inconsistent with Chinese civil procedure law.  Chinese courts are authorized to delay foreign civil proceedings, including IP litigation. Section 249 of the Civil Procedure Law provides that “The period for the trial by the people’s court of civil cases involving foreign parties shall not be subject to the restrictions of Articles 149 and 176 of the Law.” Articles 149 and 176 require first and second instances cases to be resolved in six to three months respectively, except when otherwise authorized by supervisory authorities.

Second, the courts themselves recognize that they are not exempt from politics. Prof. Susan Finder’s  Supreme People’s Court Monitor recently discussed this in her analysis of a speech by SPC Justice Liu Guixiang. Liu noted that “The People’s Court is first and foremost a political organ. It must put political construction in the first place and clearly talk politics.” The speech noted four principles, including “[t]o uphold the absolute leadership of the party,” and that “judicial independence” of the West must be resolutely resisted. 

Academic literature also has shown documented political influences and the data supporting it.  Prof. Perenboom’s China’s Long March toward Rule of Law (2002) surveys the many ways that “judicial independence” can be compromised in China’s system (pp. 280-342).  Prof. Howson’s article “Judicial Independence in China: Lessons for Global Rule of Law Promotion” notes that Shanghai courts “evidence serious independence limitations” in two areas: acting as the handmaiden of policy implementation in contravention of what the Company Law allows, or directly by blanket rejection of public company/large plaintiff cases.  Profs. Xin He and Su Yang looked at how the “have’s” come out ahead in Shanghai court cases and “cast doubt on the party capability theory.” The authors “speculate[d] that the causes of judicial inequality in China lie not only in resource gaps but also in the roots of the law and the nature of the court.”

Denying case acceptance has long been recognized as a political tool of the courts to push off politically sensitive cases, although it may be less frequent in foreign-related cases. 

Higher-level supervision is also well documented, in addition to being specifically provided for in the civil procedure law. Such higher-level supervision appeared prominently in the WTO IP enforcement case with China (DS362), when the US side presented a letter from China’s Supreme People’s Court on how to best handle a copyright issue that was then sub judice in Hunan (Exhibit US-60, Letter from the Supreme People’s Court to the Hunan Province Higher People’s Court in Zheng Haijin v Xu Zheng Xiong,  知监字 [1998]). As the Panel Report discusses, this letter was contradicted by a letter of the National Copyright Administration of China to the lower court with the opposite position. Panel Report Sec. 7.51.

Political interference may also originate from the court that hears the case, particularly its adjudication committees (shenpan weiyuanhui). Such committees play an important role in ensuring that cases are consistent with political directives. As the Duihua Foundation points out: 

“[Adjudication Committees] are unique to the Chinese judicial system and exist at  each of the four levels of China’s court system, from basic-level county courts up to the Supreme People’s Court. The committees meet regularly to discuss important or difficult cases, ‘sum up judicial experience,’ and review other important matters related to case adjudication. Generally, they are composed of the president and vice-presidents of the court, as well as the heads of the court’s tribunals—many of whom are, in effect, administrators rather than working judges.  

Committee meetings may be attended by the head of the procuratorate, which has a dual function as prosecuting body and overseer of judicial activity, as well as members of the judicial panel hearing the case under discussion. Court rules encourage submission of written case reports summarizing the facts of the case, major issues of contention, and preliminary opinions on how the case should be handled, but some cases are simply presented orally. Detailed minutes of the committee’s discussions are kept, but they are classified as state secrets and do not become part of the formal trial record.

Among cases that adjudication committees routinely take up are those ‘involving serious threats to national security,’ the death penalty, and ‘important’ matters involving foreigners or persons from Hong Kong, Macau, or Taiwan, as well as cases with multiple parties (quntixing anjian) that have a major social impact or could easily intensify conflicts. Meetings are held several times per month, and multiple cases are normally discussed at each meeting.” [emphasis supplied]

Such supervision need not be adverse to a foreigner’s interests. Politically sensitive litigants, domestic or foreign, use court supervision to advance their claims, as has been documented in an article by Profs. Feng Yuqing and Xin He.

Chinese behavior overseas may reveal an expectation that political interference or supervision in judicial processes is not unusual. For example, China reported an ersatz JCCT outcome to “give review priority” to a Chinese application on the basis that it believed that the USPTO had given unfair treatment to a patent application by the SOE, IWNCOMM. By contrast, the  US outcome sheet does not reflect any such commitment.  

In the absence of a “smoking gun” does the data suggest any changes in Chinese disposition of US or foreign patent cases?  The databases will not reveal this information until, if at all, next year for this year. Even then, as Prof. Benjamin Liebman and others have pointed out in “Mass Digitization of Chinese Court Decisions: How to Use Text as Data in the Field of Chinese Law”, there is a “need for humility and methodological pluralism among scholars seeking to use large-scale data from Chinese courts. The vast amount of incomplete data now available may frustrate attempts to find quick answers to existing questions…”   Finally, even if there were some delays or additional oversight in the handling of foreign-related cases, this may not prove the existence of a new internal directive or prejudice.  It may simply be due to existing civil procedures or courts exercising some greater prudence at this moment in time. 

We will need to wait and see.

Postscript of July 31, 2019:

Since this blog was posted, I have received two additional emails regarding the impact, if any, of the trade war on foreign-related IP litigation, particularly patent litigation involving Americans.

One well-placed source advised me that if there was any delay in adjudicating foreign IP cases, it would be due to the rapid growth in IP dockets in China and the relative flexibility in timing afforded adjudication of foreign-related IP cases.   This explanation is also quite plausible.  Overall IP cases did increase by 40.97% to 283,414 accepted cases.  Patent cases increased by 35.53% to 21,699.  These are huge increases and foreign cases may get delayed as courts adjust to their dockets.  See 中国法院知识产权司法保护状况 2018 年）(Intellectual Property Protection by Chinese Courts in 2018).

Another source told me that their client was told that due to the trade war and attendant “sensitivities”, the court would not be issuing its decision at this time.  No new timeline was offered.

References to “sensitivity” or “inconvenient time” can be a euphemism for political concerns or they can reflect real-world issues like a clogged docket or a complex case.  I can remember once as a government official, I directly asked a Chinese colleague and old friend if the time was “really” inconvenient to meet me, or whether this was simply a  way of avoiding conflict.  He responded with a long list of other commitments and told me “we look forward to seeing you, but it is really quite busy now.”  We both laughed.

Please continue to write in any other observations you may have.

 

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Collaboration or Confrontation: Beyond the False Dichotomy in US-China IP Relations

Recently several articles have criticized the Trump administration’s strategic choice of confrontation over collaboration with China.  Amongst them was an open letter published in the July 2, 2019, Washington Post, “China is Not an Enemy,” or “Making China A US Enemy is Counterproductive” (based on its hyperlink) that was signed by several distinguished former officials and scholars. Prof. Alastair Iain Johnston of Harvard University also wrote an excellent article, “The Failures of the ‘Failure of Engagement’ with China.”  Chinese commentators have also chimed in.  One of the signatories of the July 2, 2019 letter, Jim McGregor. delivered a great podcast that provides a nuanced view of the limitations of collaboration.  A counter-letter, “Stay The Course On China: An Open Letter To President Trump” has also emerged with the July 2, 2019 letter.  The debate to a degree is an extension of the Stanford University report “China’s Influence and American Interests: Promoting Constructive Vigilance” from 2018, which also generated its share of controversy.

The authors of these studies discuss all aspects of the US-China relationship- trade, security, scientific, intellectual property, etc., into the collaboration vs. confrontation dichotomy. I lack the breadth of this vision to discuss all aspects of a complex relationship.  My focus for this blog is solely on IP and innovation. 

A basic assumption of many of these authors is that we should avoid making China an enemy unnecessarily.  I agree. At the same time, many of the commentators seem to suggest that either IP engagement or confrontation may be counterproductive because of systemic failures of the WTO, or past disappointments.  As Prof. Johnston notes: “[T]here is no doubt that there are persistent WTO incompatible non-tariff trade barriers, including weak intellectual property protection, technology theft, and non-transparent regulatory practices, among others.” 

Overall, the IP-related arguments present a false dichotomy between engagement or confrontation.  Bilateral engagement is only one tool, and it need not be sacrificed to more assertive strategies.  The toolbox should include different approaches. Softer advocacy might include training programs in China on novel issues, supporting more focused strategies by businesses, joint collaboration on shared challenges and trade agreements that include China (such as a bilateral investment treaty), to name a few.  More assertive postures might involve critical white papers or non-papers, multilateral engagement, WTO or other international law diplomacy or cases, trade agreements that exclude China (TPP), and in appropriate circumstances quid pro quo retaliation such as tariffs and sanctions.  Simply put, carrots and sticks are not exclusive of each other.  Sticks, however, carry a cost and need to be carefully considered before deploying.

One of the legacies of the Obama administration on IP was that it was over-committed to dialogues.  As Chinese trade diplomacy has been highly transactional, this had permitted China to “buy time” without committing to any trade concession.  For those who lived through Obama’s excesses and opposed them, President Trump has demonstrated himself to be Obama’s Hegelian opposite.

The explosion in IP dialogues during the Obama period is well documented. For example, the 2015 Joint Commission on Commerce and Trade (JCCT), which was co-chaired by the Department of Commerce and USTR and was the highest-ranking trade-specific bilateral dialogue established IP-specific dialogues, exchanges and programs on such topics as: standards, trade secrets, geographical indications, sports broadcasting, media boxes and copyright, on-line enforcement (including referrals to another IP-related working group involving criminal law), case law and databases with the judiciary, bad faith trademarks, copyright legislation, IP legislation and protection of plant varieties.  Additionally IP was discussed outside of the JCCT in dialogues with a range of US agencies, including antitrust (DOJ/FTC), criminal law (DOJ/DHS), innovation (OSTP) and strategic and economic dialogues (State, USTR, Treasury), as well as at the WTO (USTR), WIPO (PTO), and in plurilateral discussions, such as the IP-5 (the five largest patent offices), TM-5 (the five largest trademark offices) and ID-5 (the five largest industrial design offices).  There were also other dialogues, including judicial exchanges (2016) and commercial rule of law (2016), which also focused on IP.

Properly and economically utilized, dialogues can advance understanding where ignorance of perspectives is a major impediment to resolving differences. They can build trust and long-lasting government to government relationships.  Dialogues may also spread the burden of advocacy among the US government, industry and trade associations and even foreign governments.  Educational training and assistance can also be leveraged for seeking additional concessions.  They also help establish a measured approach to escalating issues to increasingly higher political levels.  However, dialogues should never become ends in themselves and need to be periodically evaluated for their effectiveness and efficiency.  

In a typical, hypothetical IP matter, a strategic approach to dialogues and engagement might involve a white-boarded multiple-year plan for the US that reflects the varying interests of the US government, foreign governments, industry, and academia over a multi-year period.  The plan might progressively escalate concerns from a discussion around, say, bad faith trademarks, to a seminar on this topic, a meeting between the heads of the US and Chinese trademark offices, a JCCT meeting at a political level, a TM-5 meeting, a program with the International Trademark Association or the EU’s technical “IP Key” assistance effort, and perhaps a meeting amongst cabinet-level officials and/or a WTO case.  These approaches may be consecutive or simultaneous. This type of strategy is also well known in Chinese military history, as “coordinating one’s strategies” 连环计 i.e., never relying on a single strategy but having many to fall back on, which is the 35th of the 36th classical military stratagems 三十六计. 

There have been several successful examples of coordinated engagement in IP that have delivered real changes over the years.  Examples include China’s providing design patent protection for graphical user interfaces, which involved multi-year engagement by industry, academia, the Chinese and US patent offices, and ultimately the good offices of the JCCT, to deliver a tangible commitment in Chinese patent office practices.  Another example during the Obama period is the reform of China’s pharmaceutical patent examination process, which involved a similar process.   A longer-term engagement focused on the creation of China’s specialized appellate IP court.  It also involved several judges of the Court of Appeals for the Federal Circuit (CAFC) (including former Chief Judge Rader), the Federal Circuit Bar Association, academia, and others over a nearly 20-year period.  

To be effective, however, dialogues must be strategic.  The 2015 JCCT, by contrast, seemed to have an approach of letting “a 100 dialogues bloom”  (百对话齐放).   

The 2015 JCCT also provided a counter-factual in the strategic use of coordinated strategies in its handling of the US request of China to revise China’s discriminatory Administration of Technology Import/Export Regulations (TIER).  The 2015 JCCT included a commitment to “support a technology licensing joint seminar to be convened by MOFCOM in the first quarter of 2016.”  This was a strikingly modest ask of the very senior US and Chinese officials that chaired the JCCT: a Chinese Vice Premier and three US Cabinet-level officials.  However, JCCT support was necessary to overcome entrenched Chinese resistance. Moreover, despite the JCCT commitment, China did not follow through on this modest ask.  It did not host the seminar. 

During this same time period, the US Chamber of Commerce, Global IP Center,  published a report through its “Track II”, IP Cooperation Dialogue calling for reform in the TIER. The Track II Dialogue seeks to encourage expert non-government IP-engagement and not rely solely on over-politicized official bilateral dialogues.  It includes former judges and patent office officials, as well as academics (including this author). The 2016 Report also did little to convince official China to reform the TIER.

USG persisted.  The 2017 JCCT reiterated the commitment to “hold a joint seminar”. This program was ultimately convened on March 18, 2017,  However, the program concluded with no change in China’s position regarding the reform of the TIER.     

With no demonstrable momentum by China, USTR identified the TIER in its 301 investigation of China’s technology transfer practices.  It also filed a WTO case in March 2018. China finally took notice and amended these discriminatory provisions in 2019. Now that the offending provisions of the TIER have been amended, the WTO case has been suspended.  Today, with the suspension legal case, its full implementation should be monitored.

While it is likely that China would not have amended the TIER absent the WTO case, dialogue on the TIER also played the important roles of coordinating USG positions, elevating an issue politically, involving other foreign governments, testing the waters with senior leadership in China, and making sure that the US proceeded in a measured and thoughtful manner.   Many foreign governments, including the European Union and Japan were involved in these dialogue efforts and many also supported the WTO case.  The WTO “win” on the TIER is ironic as it came from an administration has generally shown opposition to multilateral institutions as well as dialogues.   

China has contributed to the demise of dialogues and similar mechanisms in its use of bilateral meetings as instruments of delay and retaliation.  It responded to the first WTO IP case that the US brought in 2007 as an “act of aggression” that it would “fight to the bitter end” in 2007 (DS/362).  China thereafter suspended many forms of IP-related cooperation with the US.   In the build-up to DS/362, the United States also sought to compel China to publish all its IP cases, which the WTO declined to support (a TRIPS “Article 63” request).  China also did not oblige in that request. 

DS/362  was the only WTO case brought against China on IP prior to the Trump administration. That case dealt with infringement of consumer goods – notably, copyright piracy and trademark counterfeiting, particularly criminal and customs remedies. DS/362 did not involve technology. Anybody claiming that the WTO has been a failure with respect to China’s enforcement of patents and trade secrets should look elsewhere.  That case has not yet been brought.

USTR likely viewed DS/362  was a failure. The US did not succeed in compelling China to amend its criminal IP laws in DS/362, nor in requiring China to make its cases publicly available.  As a consequence of losing the case, the US government lost faith in the WTO as a mechanism for resolving IP-related disputes. USTR instead launched a series of bilateral and multilateral negotiations, including a proposed Anticounterfeiting Trade Agreement and revised model IP texts in bilateral and plurilateral trade agreements.  

The ensuing devaluation of WTO mechanisms was, in my view, premature.  While lawsuits in the US often appear binary in their outcomes, pressuring foreign countries to adopt legal regimes that they are otherwise opposed to at the WTO is much more complex.  Additionally, US impatience is not well-justified as the US has also been slow in responding to many WTO rulings.  

USTR’s assessment regarding DS/362 may also have reflected its own institutional limitations. USTR is thinly staffed and lacks resources to engage in technical training or monitoring programs.  USTR relies heavily on industry suggestions, which may also be short-term in nature.  Unlike other US government agencies involved in IP, USTR is not the lead USG agency in a number of important IP exchanges, such as at the World Intellectual Property Organization, Interpol or the World Customs Organization. It does not participate in or promote IP office related exchanges,  does not have IP officers or law enforcement officers posted to China, and does not have a China Resource Center like the USPTO, which provides statistical analyses of IP-trends in China.  It can and does negotiate deals with trade officials or bring disputes. These are two important but limited options from a much broader set that can be brought to bear on an IP issue. 

The arguments that the WTO does not work in addressing IP-related disputes also ignore the success achieved by the Trump administration in seeing the TIER revised, as well as the demonstrable impact that DS/362 had in elevating the importance of criminal trademark and copyright enforcement to China, despite the setback of a loss in dispute proceedings.  The victory the US achieved in the criminal enforcement case materialized in the form of an uptake in criminal IP prosecutions. China increased its criminal IP cases from 904 in 2007 (the date DS/362 was filed) to 15,121 cases, involving 17,869 people in 2012.  This is a  16 fold increase.  By 2012, the Chinese criminal IP docket also grew to over 200 times the  US criminal IP docket of 2018. which consisted of 117 defendants in 67 cases.  One Chinese Supreme People’s Court judge confided in me that he attributed that increase to the spotlight that the US gave to the importance of criminal IP in China’s evolving IP ecosystem. For some recent analysis on these trends, please see Dan Prud’homme and Zhang Taolue’s excellent book “China’s Intellectual Property Regime for Innovation” (Springer 2019) which summarizes recent research on this increase, and provides data on criminal IP cases, defendants, prosecutions and convictions.  

A similar argument regarding the ultimate success of the US claims might be made about the request of the US that China should make all its IP cases publicly available in 2005/2006 (the so-called “Article 63 Request”). By 2014, China had decided to publish nearly all its cases of all types.  This publication of cases has been welcomed by the legal and judicial community alike and has helped to provide greater predictability in adjudication, minimize corruption and provide a basis for strategic IP enforcement.  

By contrast to these successes, there was one claim in DS/362 that had no significant positive impact.  This failure was not due to China’s intransigence. In DS/362 USTR also alleged that China’s disposal of seized infringing goods by auction offended WTO requirements.  However, WTO rules only require Chinese Customs to seize goods upon importation (TRIPS Agreement Art. 51). China was and remains primarily an exporter of counterfeit and pirated goods.  The WTO was unable to identify a single instance where China had auctioned off counterfeit goods imported into China.   “No infringing goods destined for importation”, the panel stated “have ever been auctioned…during the period for which statistics are available.” (Para. 7.351).  The Customs claim, criminal IP claim and the case publication achievement all underscore the continual need for good data to support IP engagement.

Arguing over whether China is becoming our enemy and the need for confrontation is redolent of the post-Korean War China rhetoric in the US.  A better approach might be to remake the US government into an institution that better understands, persuades and strategizes on complex technological and IP issues in China.  During the past 30 – 40 years, the US government has defunded or terminated every technology–oriented agency that cared to engage in a significant way with China, including the Office of Technology Assessment in Congress, the Technology Administration in Commerce, and the Office of Science and Technology Policy in the White House.  USTR’s mandate is also too limited to effectively engage in collaboration. USPTO has the deepest technical resources on IP and innovation issues, but lacks political clout. We need to coordinate more closely, and provide incentives for deeper engagement among all US agencies as well as with industry in order to be effective.   These issues have been apparent since at least the time of China’s WTO accession.  As I noted at a conference at the 24th Annual Fordham University IP Conference in 2016 (Session 4B-b “Asia and the Political Landscape”):

MR COHEN:… One of the lessons from WTO accession was — and I don’t know how to say this gently — how … under-informed US industry was about the legal system.  I say that because if you look at the number of civil cases involving intellectual property, in the year that China joined the WTO — and the negotiations occurred in the years before — there were about thirty.  So one could, theoretically, have contacted every company that had filed a lawsuit involving IP and you still wouldn’t have a very large cohort.

So a lot of trade negotiations, unfortunately but necessarily, are based on hypothetical constructs.  What makes a good legal system, with big words like “impartial,” “fair”?…

METALITZ:  So who was under-informed in that situation?  Was it the US negotiators or was it the US industry?  US industry — you’re right — was not bringing these cases.  But that may not have been out of ignorance. That may have been out of a supposition that they would not be useful.

BAI:  May I chime in?… I have seen US government officials talking about China when they don’t get their briefing right…. 

One way to improve policy is to hire the right people.  We need to promote and reward individuals who have the three “magic” skills: knowledge of Chinese law, knowledge of Chinese IP  or technology, and Chinese language skills. These individuals should also be given roles commensurate with their knowledge and skills.  The 2013 Report of the Commission to Stop American IP Theft, also identified this as an issue in the staffing of our embassies overseas: 

Strengthen American diplomatic priorities in the protection of American IP. American ambassadors ought to be assessed on protecting intellectual property, as they are now assessed on promoting trade and exports. Raising the rank of IP attachés in countries in which theft is the most serious enhances their ability to protect American IP. 

The need to restructure US government on tech and IP issues has long affected the quality of our “engagement.”   

Whether confrontation or engagement are pursued, the choice is complex, should be well-coordinated, and will need to evolve based on circumstances.  It should be based on the right information made by well-informed people.  It is not, ultimately, an ideological issue.  

Revised: July 21, 2019

 

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Where have all the cases gone… long time passing…

US and Chinese lawyers, companies and journalists have all reached out to me in the past several months with the same question: Is China not deciding cases during the pendency of the trade war?

This is what I have heard from various sources:

  1. US and possibly other foreign IP case are affected.
  2. The courts may not be accepting cases.
  3. The courts may not be deciding cases.
  4. Patent and/or trademark cases are affected.
  5. Cases can be decided but only upon approval from the Supreme People’s Court.
  6. There is internal court guidance directing that cases not be decided.

I have not seen anything in writing.  There are some reasons to believe that such a policy exists from a reading of the 2018 Report on IP enforcement by the Supreme People’s Court   最高人民法院发布《中国法院知识产权司法保护状况 (2018).  This report id not provide nationwide data on foreign-related IP cases, nor did the 2017 report.  This useful data was available in prior reports.

Several months I called up a US government official to ask him if he had heard that China was delaying decisions on US or foreign IP cases.  I told him that I heard this from several sources.  I never heard back from this official, so I do not know if it is true or not.  I also do not know if the issue had been raised with China in the trade talks

What have you heard?  Feel free to post a comment on this blog or send an email to me at chinaipr@yahoo.com.  I will supplement this blog if the additional information warrants it.

Cultural note: here’s the Youtube of Pete Seeger singing “Where have all the flowers gone” from which the title of this blog is adapted.

flower

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Public Awareness, the Gaokao and Respect for IP

bulldozing

IP Kat’s June 26, 2019 blog  When Gaokao (the toughest exam in China) Meets IP discusses the inclusion for a second straight year of IP-related questions in the Gaokao 高考.  The Gaokao is the Chinese college entrance exam administration administered in the 3rd year of high school.  The inclusion of IP in the Gaokao was also reported in a CNIPR article on June 14, “IP Once Again Appears in the Gaokao” (“高考试卷又见知识产权”).

While the inclusion of IP issues in the Gaokao is one indication of the increased public awareness around IP in China,  a question remains about the effectiveness of many of these efforts.  Arguments about Chinese people needing to increase their educational level to better protect IP have little empirical support.  Chinese survey data in fact has previously shown a negative correlation between the level of education and the willingness to buy pirated goods.  Simply put, poor farmers do not buy pirated goods while educated individuals do.   Government directed public awareness programs may also create biased perspectives. Consider two of the Gaokao questions: “What is the role of IP in promoting open development?” or “Explain why patents should be protected, and why the term of protection should not be indefinite”. These difficult questions may reflect interests in national development and sharing of innovations, rather than creating property rights.  Moreover, increasing public awareness is not without a downside.  If there is a high tolerance for infringement or bad faith activity, one may end up spending money training opportunists on how to abuse the system.

By comparison to China, intellectual property does not loom large in US college entrance exams. The World History Advanced Placement exam covers the technology, but intellectual property is not within its scope. AP Computing Science includes intellectual property in its discussions of Ethical and Social Implications of Computing Systems.  There had also been several efforts to improve education and awareness around IP.  Former USPTO Director Jon Dudas was actively involved in promoting childhood education of IP through PTO-sponsored Camp Invention.  At that time, I remember offers of Director Dudas’ to discuss youth IP education programs with SIPO Commissioner Tian Lipu, including an offer to lecture at a Chinese high school.   As best I recall, China was unwilling to permit USPTO to engage in China on youth IPR education.

US NGO’s have also developed extracurricular programs for adolescent youth.  The USPTO, Girl Scouts and Intellectual Property Owners, created a Girl Scouts Intellectual Property patch  (see illustration below). There is also an inventing merit badge for Boy Scouts.  The Lemelson Foundation also has a K-12 invention education project.

Other countries also have instituted IP education programs.  A review of these programs is found in the report of the Center for Intellectual Property Understanding  The State of IP Education Worldwide: Seven Leading Nations (2016).   To its credit, China has not only instituted many notable public awareness programs but has also encouraged other developing countries to do the same.

Unless public awareness programs are subject to rigorous monitoring and evaluation criteria it can be hard to judge the impact of programs beyond showcasing government efforts.  For several years after China joined the WTO, I attended several large-scale counterfeit DVD destruction ceremonies (see picture above).   These programs made good newspaper copy but did little reduce the incidence of piracy.  The failure of these and other efforts led a frustrated United States to bring a WTO case in 2007 to encourage China to increase market access for copyrighted content and to have more robust criminal IP enforcement. The destruction ceremonies did not stop the momentum for that case, nor did they help anticipate the challenges inherent in on-line copyright protection.

girlscouts

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Summer ’19 Events on Licensing, Export Controls and Trade

On June 20, 2019, I will be joining the Licensing Executives Society in a mid-day discussion at the Sheraton Palo Alto Hotel on IP Licensing in China.  I will be joined by: Matthew Laight;  Bird & Bird, Chen Gu, Tencent America; and Ben Wang, former Chief IP Counsel, ZTE TX.

In late July/early August,  I will be joining several colleagues in a discussion on recent changes to export control regulations in the US and China.  The program will be posted soon on AIPLA’s webinar page.  It will include myself, Justin Huff (Jones Day),   Gabriella Liu (Beijing IParagon), and Larry Ward (Dorsey & Whitney).

On June 13, 2019, I joined a webinar hosted by the Federalist Society on “Chinese Misappropriation of U.S. Technology: Assessing the U.S. Response.”  Prof. Mark Schultz from Southern Illinois University School of Law moderated.  I was joined by David Hanke (Arent Fox) and Andy Keiser (Navigators Global).  The focus was on CFIUS and export controls.  Here is a link to the recording.

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US Suspends IP Case Against China at the WTO. Quo Vadis Europa?

DS/542, the WTO case that the US filed against China regarding China’s legal regime for foreign technology transfers, has now been suspended by order of the Panel.  The parallel case that was filed later by the European Union has not yet been similarly suspended.

When I was in Beijing earlier this June 2019, I gave several talks regarding US-China trade, and I questioned why the US case was not suspended or dismissed. The US case set forth a very limited “de jure” or “as such” case of violation of certain TRIPS obligations, including national treatment with respect to licensing of patents, as well as TRIPS-inconsistent measures regarding the contribution of patents to joint ventures.  By filing the case immediately after the 301 Report regarding technology transfer and innovation, the US case seemed to be making the point that the WTO was still a viable mechanism for certain of the US complaints regarding China’s technology transfer regime.  It was welcomed by those who believe that the WTO continues to play an important role in trade disputes. Suspending the case now in a sense confirms that Donald Trump accomplished legislative reform more quickly with jaw-boning and tariffs than the WTO could have with dispute settlement proceedings.

However, the White House should also not rush to praise itself on the utility of its approach to using the WTO dispute mechanisms.  As I previously noted, the US complaint was narrow.  It only focused on a few laws and regulations regarding patents.  With the passage earlier this year of numerous legislative reforms, including removal of the most offensive provisions of the Administration of Technology Import/Export Regulations, as well as amendments to the Joint Venture Implementing Regulations what the US sought to challenge as de jure WTO violations have been resolved.  Numerous other issues that were identified in the Section 301 report, whether credible or not, were not raised in the WTO complaint.  In some aspects, this case was long overdue and relatively straight-forward.

Why has the EU case not been dismissed?  One explanation may be that the EU may yet follow the lead of the US in seeking a suspension based on how the current legislative packages are implemented. If the EU does not move to suspend the case,  an alternative explanation is that the EU case was more comprehensive than the US case and therefore harder to suspend or dismiss.  The EU case may yet stand as a raison d’etre for the WTO dispute mechanism.  The EU raised concerns over a wider range of laws, regulations, and policies, including Made in China 2025, antitrust laws and new electric vehicle regulations. It also included catch-all claims that extended to how laws and other normative documents are implemented, including their  “nullify[ing] or impair[ing]” the benefits accruing to the European Union.

In its summary of the EU complaint, the WTO docket sheet narrowed the EU’s complaints down to more closely mirror the US complaints.  If these are indeed the only claims that the EU is now pursuing than a similar suspension would make sense.  However, if the complaint remains unamended, it is the kind of complaint the US might have filed as an outcome of the Section 301 investigation.  This now leaves the EU with the option of continuing to push for additional improvements in tech transfer to China through the WTO system or, instead, pursuing other solutions such as trade diplomacy.