SIPO’s 2012 “Report on the Situation Regarding National Patent Strength”

SIPO’s recently released its  “Report on the Situation Regarding National Patent Strength”, (Chinese: “2012年全国专利实力状况报告”)This report provides a glimpse into the various measures that SIPO uses to quantify how local patent offices are being rated by SIPO.  Knowing these data can be very useful in understanding what the incentives are for evaluating innovation and patent protection in China’s various localities and, accordingly, can help in how a foreign company approaches a local IP office to better enlist their support.  In theory, it should also help in identifying the regions that are affording better patent protection in China to foreigners. 

 The report  is intended to be based on certain objective, common, sustainable, and easy to obtain data.  Some of the data that is used are:

(a)    Number of invention patents in effect held per capita.  This is the first item listed by SIPO and it does not include utility model and design patents, which are not substantively examined. 

(b)   Other patent data: including Patent Cooperation Treaty patent filings; patent maintenance rates; patent abandonment rates (as a negative factor).

(c)    Type of patent applicant data: service invention patent rates; patents filed by large and medium sized enterprises.

(d)   Commercialization data: ratio of R&D to patents filed; hypothecation of patents; licensing contracts for patents; patents that are being used in commercial production (based on a ratio of new products from high tech industries and patent applications from high tech industries); and awards for high quality patents.

(e)   Litigation and enforcement data: First instance patent cases in the courts; settlement rates for patent litigation; data on patent “passing off”; data on cross-boundary cooperation on administrative patent disputes; data on human resources in administrative patent enforcement, use of administrative complaint lines, and expenses for special enforcement campaigns.

(f)     Legal and administrative structure: SIPO is trying to encourage local patent offices to be active and independent of other agencies, such as Science and Technology Bureaus, in which some local patent offices are located.  In addition, SIPO is encouraging promulgation of local legislation on patents, including incorporation of the national IP strategy and economic plans into local level policy and actions.

(g)     Cooperation with SIPO on national projects: including recognition as a model locality for IP protection, or the presence of model enterprises for IP protection.

(h)   Services and civil society: presence of in-house IP departments in companies; presence and availability of Patent Agents; use of electronic filing mechanisms for patents and electronic information services; presence of public service organizations for patents (typically government-organized non-governmental organizations); participation in SIPO training programs (including distance learning programs).

The overall leaders in this statistically-intensive report: Guangdong, Beijing, Jiangsu, Zhejiang and Shanghai (in that order).   Comparative data to last year and to individual benchmarks are also provided.  These five leaders are not necessarily the leaders in other areas, including those that may be of concern to foreigners.  For example, in IP protection, the leaders were: Guangdong, Shandong, Hunan, Sichuan and Jiangsu.  Beijing and Shanghai were a more distant 11th and 16th place, respectively.  Beijing, Guangdong and Shanghai were also the top three jurisdictions for IP services.

The report should be used cautiously by foreign investors and rigthsholders as there is much  of concern to foreigners that is not utilized in the report, for example: numbers of foreign-related civil or administrative cases, availability of provisional measures, receptivity and accessibility of local complaint centers (including trade fairs) to  foreign complainants, availability of expert foreign language lawyers and service providers,  presence and engagement  of foreign-related civil society (INTA, QBPC, RDPAC, AmCham’s, etc.),  existence of policies that on their face discriminate or support foreign rights holders ,  availability of criminal remedies for IP infringement,  existence of “notorious markets” for IP infringing products, and evaluation of the locality by other reports on IP protection (e.g, annual Chamber reports, Section 301 reports).  In addition, as indicated above, the priorities that SIPO assigns to different factors would be different for foreigners.  Nonetheless, this is a useful report that can help foreigners in determining how “patent-friendly” different jurisdictions in China are, and can also assist in compiling a more narrowly focused report that highlights issues of concern to foreigners regarding IP protection in different regions of China.  

I also personally commend SIPO for its transparency in making this available on line.

Resident Legal Advisor for China – US Department of Justice

The Office of Overseas Prosecutorial Development, Assistance and Training (OPDAT), Criminal Division, U.S. Department of Justice, seeks an experienced prosecutor currently employed as an Assistant United States Attorney, Department of Justice Trial Attorney, or a State Prosecutor to serve as a Resident Legal Advisor (RLA) in the People’s Republic of China.  The position will be open until filled.

More information and application details can be found on the DOJ website.  Although not strictly an IP position, previous holders of this position have been involved in IP matters to varying degrees while at Post or upon return to the United States.

Supreme People’s Court Annual Report Shows Continued Meteoric Growth in Litigation and Increasing Professionalism of the Court

It is IPR Week in China, and once again there will be a flurry of reports that were presumably embargoed by Chinese agencies for the festivities of the week.  It’s a bit of an ironic week, since IPR Week is followed in the United States by the Section 301 Report of the US Trade Representative, which means that most of the data released this week has not been made available to the US government in time for its consumption for the Section 301 Report.

One of the more interesting reports is the Supreme People’s Court report on IPR protection, which has been released in English and Chinese for some years now.  It is available here in Chinese and English.

This year’s report is particularly detailed and appears to build upon concerns and critiques raised by many over the years.  In this context, I believe the hard work of individuals like Chief Judge Rader, the annual visits of Intellectual Property Owners, concerns about the general commercial rule of law developments, and my own sporadic inquiries on various issues are also helping the SPC to look into trends that impact foreigners, as well as to collect information on local trends.

Here are some highlights:

Civil IPR Cases Continued Their Meteoric Growth.  There were 87,419 civil IPR cases in 2012, an increase of 46% over 2011.  Copyright cases and trademark cases both increased by approximately 53% to 53,848 and 19,815 respectively.  Patent cases showed a more modest growth of 24%. Technology contracts remain disproportionately small, with an increase of 34% to only 746 cases.  Antimonopoly cases numbered 55, and antiunfair competition cases (which include trade secrets) numbered 1123, a drop of 1%.  This drop in unfair competition cases in the face of escalating IP cases generally and an increased interest in trade secret matters, suggests to me that the anti-unfair competition law needs revision to become more relevant to today’s market in China.

Provisional Measures are Still Under Utilized.  Of the nearly 90,000 civil IPR cases, there were only 27 applications for a preliminary injunction, with a grant rate of 83%.  There were 320 requests for provisional evidence preservation and 74 cases for provisional evidence preservation, with grant rates of 97% and 95% respectively.

Criminal Cases Showed an Even More Rapid Growth.  According to the report, there was an increase of 130% in judicial adjudication of criminal IPR cases, to 13,104 cases.  Infringement cases numbered 7840 cases, of which 4664 involved trademark infringement matters.  The remaining cases appeared to involve IPR infringements that were prosecuted under non-IPR laws, such as illegal business operations. Some of these non-IP laws carry more severe penalties.  This data also shows the impact of the efforts made by the State Council Leading Group in dealing with infringements and substandard products.

Administrative Cases Also On the Rise. There were 2928 IPR administrative appeals last year, an increase of 20% from 2011.  Patent cases increased to 760 (16%) and trademark cases increased to 2150 (22%).   I believe that most of these cases are appeals of patent and trademark validity decisions by the relevant administrative agencies.  Relatively low growth in administrative appeals in the light of rapidly increasing patent and trademark filings and infringement cases, may reflect the difficulty of reversing administrative agencies.

Foreigners Play a Diminishing Role in Civil IPR Litigation, But a Significant Role in Administrative Litigation on IPR Validity.  There was an increase of 8% in 2012 in foreigners using the civil IPR system, or 1,429.  However, as a proportion of total civil IPR litigation, foreigners dropped from 2.2% to 1.6%.    If current trends continue, I expect that foreigners will be less than 1% of the civil IPR docket in the next few years.    By contrast, foreigners constituted 47% of administrative cases, for a total of 1,349.   The large foreign share of administrative cases underscores the importance that foreigners attach to obtaining relevant rights, even if they are reluctant to enforce these rights, and also suggests that the foreign community should continue to engage the Beijing Intermediate and High Court on these important issues.   The introduction in this year’s report of information on foreign utilization of the administrative system is a welcome set of data.

Transparency and Commercial Rule of Law Are Improving.   The report notes that 47,422 IPR cases had been posted on the Supreme People’s Court case network through year-end 2012, which is still a fraction of the total numbers of cases.    Another challenge that needs to be faced is finding a way to make these cases more easily searchable.  The report also highlights numerous provincial-level local initiatives in improving IPR adjudication, on a range of issues such as electronic evidence, karaoke copyright disputes, notarization of evidence, etc. which is a useful listing of otherwise hard to get local initiatives.  Another useful data point is that the overall judicial settlement rate of IP cases last year was 70%.  As some have expressed concern about undue pressure to settle, comparative data on settlement rates in prior years might have been useful.    It might also be useful in future years if the court provided more data to compare with general civil law developments, such as the availability of provisional measures in the civil procedure law, comparisons to trends in contract disputes generally, and comparisons to overall civil and criminal litigation trends.

The report also notes that the SPC has been actively involved in commenting on the revisions to the IPR laws now underway, as well as responding to requests from lower courts on various research projects.  Considering the expansion in administrative enforcement in recent years, the constructive engagement of the courts on enforcement matters should be helpful to developing more balanced policies.  Also, simultaneously with the court’s release of its white paper, it announced the 10 leading cases in China, 50 typical cases and 10 innovative cases.  The innovative cases involved new legal issues and new thoughts on the application of law.  As there is no IPR-specific case that has yet been announced by the Supreme People’s Court in its Guiding Cases Project these cases are likely to be of greater influence.

The report also gives a shout-out to the highly successful Federal Circuit Bar Association program of May last year, which had over 1,200 attendees, 240 Chinese judges, over 200 US attendees, and seven federal circuit judges in attendance including Chief Judge Rader.

At a meeting hosted on April 22 by the US Chamber of Commerce, speakers noted that the IPR tribunal is once again looking at the possibility of establishing a specialized IP court in China, an issue that was previously flagged in the National IPR Strategy Outline of some years ago.  In this context, the report also discusses the numbers of IPR judges, IPR tribunals, experiments in combining civil, criminal and administrative adjudication, and background of the judges.

The report provides a useful snapshot of an increasingly influential, busy and complex IPR adjudication system in China.

OEM Manufacture and Trademark Use in China

OEM manufacture “use” of trademarks continues to be a hot issue following the Apple dispute last year, as seen in several recent cases.   George Chan, August Zhang, Chris Bailey at Rouse recently co-authored a short article* analyzing several recent rulings on OEM “use” of trademarks on goods manufactured only for export out of China (Article 52 of the Trademark Law). The article illustrates that despite recent suggestions to the contrary, the courts still consider that OEM manufacturing involves trademark use, although in legitimate cases of OEM solely for export, this may be a form of ‘reasonable use’. However, in trademark infringement cases involving reasonable use, it seems that use alone is no longer sufficient to determine whether trademark infringement has taken place; to find infringement, it is now necessary to establish a likelihood of confusion in the Chinese market. Outstanding issues include how the court will determine the legitimate owner of the trademark in the destination country and the “relevant public” for purposes of determining confusion.
The article was originally published in the World Trademark Reporter (WTR), here.

AMERICAN CHAMBER’S BUSINESS CLIMATE SURVEY 2013

The American Chamber of Commerce in China (AMCHAM) released its 2013 China Business Climate Survey Report. The report is a compilation of survey feedback received from 325 respondents in varying sectors: 31% Services; 28% Manufacturing; 22% Other; 10% High-tech; 8% Information technology and information services; 1% Retail, distribution, and logistics.   Continue reading

Policy Trade Analyst at the China Affairs Office of the USTR

From the USAJOBS site:

“The incumbent serves as a Policy Analyst (Trade) in the Office of China Affairs, at the Office of the U.S. Trade Representative.  The incumbent formulates and develops U.S. policy positions on international trade and investment issues, as they relate to China.  The incumbent also initiates the development of trade policy regarding China for consideration by higher level policy makers in the interagency trade policy making process.  The incumbent participates in the planning and formulation of negotiating positions and tactics to be taken by the U.S. government on a variety of trade issues during negotiations.  The incumbent prepares Congressional testimony, briefing materials, summary statements and speeches for the U.S. Trade Representative (USTR), both Deputy USTRs, the Assistant USTRs and other senior executives, as appropriate, on major trade issues.  The incumbent promptly analyzes information to explain and defend the Administration’s trade policies to foreign governments, the public, the press, and the Congress.  Extensive experience in leading negotiations on trade or international economic matters with China is required.  Proficiency in speaking/reading the Mandarin language is strongly desired.  The position requires domestic and foreign travel.”

 

For more information and application, please visit USAJOBS.

CECC Professional Staff – Commercial Rule of Law

The Commission is seeking a professional staff member to assist in monitoring and reporting on substantive issues pertaining to the commercial rule of law portfolio. The professional staff member will assist in assessing China’s compliance or noncompliance with international human rights standards and Chinese domestic law. Successful candidates should have substantive background and/or an interest in one or more of these issue areas. Successful candidates should also possess the necessary Chinese language, English writing, and communication skills to effectively research, analyze, and explain such developments to U.S. policymakers and the broader public.

Main duties:

  • Monitoring and researching Chinese and English language sources (media, government, NGO) for developments relating to their issue area.
  • Identifying and analyzing key developments and reporting their significance orally and in writing, including through drafting sections of the Commission’s Annual Reports, short analysis pieces, public statements, and press releases.
  • Researching political prisoner cases and creating and maintaining case records in the CECC Political Prisoner Database.
  • Assisting in organizing CECC public hearings and roundtables.
  • Staff member also may be asked to travel to U.S. cities, China, or other foreign locations on official business.

Qualifications:

  • Candidates must be a U.S. citizen.
  • Very strong demonstrated ability to speak, read, write, and perform research in Chinese (Mandarin) is required.
  • The successful candidate will likely have worked or studied in mainland China, Taiwan, or Hong Kong.
  • Candidates will preferably have a law degree or a Ph.D. or M.A. in political science, history, business, economics, or other social sciences. B.A. candidates with very strong credentials will also be considered.
  • Strong oral and written communication skills, and the interpersonal skills and enthusiasm to work under tight deadlines and as part of a team.

Application Procedure:

  • Please submit a brief cover letter, resume, short writing sample (5 pages or less), and the names and contact information for two references to Judy Wright, CECC Director of Administration, via e-mail atjudy.wright@mail.house.gov or via FAX at 202-226-2915. PLEASE NO PHONE CALLS. The deadline for applications is Monday, April 22, 2013, by 11:59 PM, EDT. Applications received after this deadline will not be considered.