The TRIPS Division of the WTO Secretariat is seeking candidates for an entry level position for people interested in working on the intersection of international intellectual property rules and trade in the general context of public international law. The deadline for applications is December 5, 2013.
Chen Fuli, IP Attaché at the Chinese Embassy in Washington, DC the morning of December 5. The program is free of charge, but seating may be limited. You should RSVP at: firstname.lastname@example.org.
The topics are all ones that I have actively followed in this blog. Here is the tentative agenda:
International High Level IPR Cooperation Forum
Dec 5, Georgetown Holiday Inn
2101 Wisconsin Ave, NW, 20007, Washington DC
9:00-9:20 Opening remarks, by Both China and U.S. Representatives
9:20-9:40 New developments in IP enforcement in China, by Director Jing Zhang from the Office of Fighting Against IPR Infringing and Making or Selling Counterfeit and Shoddy Products under the State Council
9:40-10:00 New amended Chinese Trademark Law, by Deputy Director General Qing Xia from CTMO
10:00-10:15 Q & A
10:15-10:30 Coffee Break
10:30-10:50 Amending of Chinese Copyright Law by Deputy Director Ping Hu from NCAC
10:50-11:10 Amending of Chinese Patent Law and Regulation on Service Invention by director Yanhong Wang from SIPO
11:10-11:30 New practice of IP trials after the amendment of Chinese Civil Procedure Law by Judge Yuanming Qin from SPC
11:30-11:50 Q & A
11:50-12:00 Closing Remarks
12:00-13:30 Lunch (hosted by China for all the participants)
In addition to the speakers noted above, there will also be Chinese official participants from public security, Customs, procuratorate, AQSIQ and other agencies, which should help make for lively discussion and interaction. I hope to see you there!
China’s use of the Antimonopoly Law to deal with pricing for royalties may have taken another turn with recent launch of an Antimonopoly Law investigation by the National Development and Reform Commission against Qualcomm. Although the exact basis for the investigation is unknown, the press reports speculate that the investigation is related to the forthcoming launch of TD-LTE by China Mobile in early 2014 as well as negotiations on chip and licensing pricing between Qualcomm and China-based companies.
Qualcomm announced the case on Monday November 25. The investigation has been covered in several articles in Reuters as well as other press sources, including the Chinese press. An NDRC spokesperson was quoted in China’s official press on Sunday November 24 that China’s AML authorities would focus on six areas of technology and pharmaceuticals. Some observers have also tied the case to the impactful recent Huawei-Interdigital case(https://chinaipr.com/2013/10/29/huaweiinterdigital-appeal-affirms-shenzhen-lower-court-on-standards-essential-patent) adjudicated in Guangdong, which also involved standards and royalties.
In separate developments, at a conference sponsored by China’s Ministry of Industry and Information Technology that I attended in Beijing on November 13, it was announced that the State Administration for Industry and Commerce will be revising its rules on AML and Intellectual Property. Last August a draft revision to its IPR enforcement guidelines was floated selectively for public comment(https://chinaipr.com/2012/08/26/a-quick-read-of-the-aml-ipr-enforcement-guidelines-fifth-draft/). Additionally, at this November 13 conference, the Supreme People’s Court noted that it would be looking into revising its judicial interpretation on patent infringement regarding availability of injunctions, presumably to make injunctions less automatic (or presumably, denied) in the case of standards-essential patents.
There are some areas where there appear to be less momentum, at least for now. I am unaware of any public initiative to deny orders stopping infringement in the case of standards-essential patents and administrative patent enforcement. In addition, I am unaware of any public request to date for an administrative compulsory license of patents through the State Intellectual Property Office for an antitrust violation or a refusal to license. To judge by the recent MIIT conference, there is also no active discussion on patent “hold-out” for refusal of a licensee to take a license under a standards-essential patent, and what that would mean in the Chinese context, where damages are low in litigation, injunctions are almost always granted, the state plays an active role in standardization, the statute of limitations is short and China’s equities as a patent holder and manufacturer are in flux. Also, noticeably absent from the November 13 program was Ms. Dai Hong from the Standards Administration of China, who had been active on these issues for SAC – an agency which had been relatively active on these issues some years ago. Please send in your comments if you know of other developments.
Overall, China’s ramp-up on AML is not unlike its ramp up for other disruptive economic laws, such as the bankruptcy law. Frequently these laws are enacted for “trial implementation” or alternatively they are not actively enforced until after regulators and the public have had time to become familiar with the laws and their implications and/or the political timing is “ripe.” It will be very interesting to observe future developments.
On November 20, the State Council, at an executive meeting chaired by Premier Li Keqiang, approved the “Opinion on Making Publicly Available According to Law Information on Administrative Penalties Concerning the Production and Sale of Fake, Counterfeit and Sub-standard Goods and Intellectual Property Rights Infringement” (关于依法公开制售假冒伪劣商品和侵犯知识产权行政处罚案件信息的意见). While, ironically, the opinion is not yet available on line, a statement released after the meeting said:
“The publication of such information [on administrative enforcement of IP] should be an important part of the government information disclosure requirements. Except for trade secrets and privacy considerations, the publication requirement should be self-initiated and apply generally to procedures for public disclosure of information regarding investigation and handling of all administrative punishment cases. Administrative enforcement officials should disclose information on the case according to law within the determined time frames for the determination of the punishment or a change in the punishment。
Published information should include the principle facts of the determination of illegality, the type of penalty, the basis for the decision and the results. This should be open and transparent, and there should be prompt replies to social concerns. Further, relevant administrative penalty information should be included in the social credit system so as to create “omnipresent constraints” on the creditworthiness of counterfeiters and infringers.
Administrative enforcement officials should strictly impose punishments according to law, and implement their responsibilities. Every level of government should promptly establish complete management and accountability systems, and strengthen supervisory investigation. We shall continue to correct with strict accountability to enable societal supervision for administrative enforcement for those who do not implement their responsibility to disclose information, who do not disclose in a timely fashion, who alter contents, who obtain payments against the laws, etc.”
Here it is in Chinese: http://www.gov.cn/ldhd/2013-11/20/content_2531230.htm.
The transparency contemplated by Premier Li may yet prove challenging to achieve for administrative IP and IP-related actions. The number of IP administrative cases (patents, trademarks and copyrights) is in excess of 100,000 at this time. If one included “substandard” goods, and other quasi-IP enforcement, for the full range of Chinese enforcement actors, the numbers could easily exceed 200,000 – including the enforcement regimes of SAIC (trademark, but also consumer protection, and antitrust), AQSIQ, SFDA, Ministry of Culture, SARFT/GAPP, Tobacco Monopoly, Chinese Customs, City Management (Chengguan), Police, etc.
One also hopes that these transparency efforts can also improve the administration of antitrust cases involving IP, where both general data as well as case-specific information is often lacking. It is also hoped that non-confidential versions of cases involving confidential information can be made available, even if there is confidential information in a specific case.
It is remarkable to think how far the quest for administrative transparency in IP has progressed since China joined the WTO. The TRIPS Agreement, Article 41 provides: “Decisions on the merits of a case shall preferably be in writing and reasoned. They shall be made available at least to the parties to the proceeding without undue delay.” Back in 2004, at the Trade Review Mechanism of the WTO, the Chinese delegation was asked to provide copies of its enforcement decisions. The response was: “Regarding obligations of administrative agencies to provide written decisions with interpretations for their enforcement decisions, [the Chinese delegate] said that his delegation believed that this question was not relevant to the IPR system and that his delegation was not obliged to answer it here.” TRIPS Council Meeting of December 1-2, 2004, IP/C/M/46 (11 Jan. 2005). The statement was repeated in a similar fashion later in 2005: (TRM, IP/C/39, p. 4 (21 Nov. 2005). The US requested a summary of China’s enforcement cases in its so-called “Article 63” request, which included information of the type that Premier Li is now requesting – information on the legal basis, remedies, location, year, competent authority, type of product, transfers to criminal authorities, and whether foreign nationals were involved, which was never provided (IP/C/W/461, Nov. 14, 2005).
Premier Li’s perspective reflects a general trend towards greater transparency, which he has now accelerated. For example, when a concern over transparency was also voiced by former USPTO Director Kappos in the context of SIPO’s more expansive role in administrative enforcement, SIPO Commissioner Tian responded in September 2012: “SIPO attaches great importance to the enhancement of the transparency of the administrative enforcement, as well as the importance of ensuring its openness, fairness and impartiality.”
Along with the legal reforms of the Third Plenum and other changes from the Supreme People’s Court under Zhou Qiang, these are signals suggesting deeper roots for China’s legal reforms, particularly in China’s omnipresent administrative system.
Along with Prof. Zhen Lei of Penn State, I have previously blogged about the late autumn surge in patent filings in China, in 2012, as well as in prior years. This autumnal hook likely arises in response to subsidies, quotas or other support that must be exhausted before year end.
During a recent visit to China, I had an opportunity to talk about similar trends in patent administrative enforcement. For the past two years, there appears to be a year-end uptake in patent enforcement:
|Infringement Disputes||Other Disputes||Patent Passing-off||Total|
Here is what it looks like in graph form, with data ending at September 2013, on an annualized basis the totals would be 19,118:
Why has there been such a sudden uptake in year-end administrative enforcement? One explanation is an end of year rush to accept or resolve cases to show increased efficiency and impact. On the converse side, the data also shows a significant drop in activity around holiday seasons, especially spring festival in January/February. These factors may apply across the board to many forms of Chinese government activity.
Looking to policy factors, on June 28, 2011, SIPO announced a special campaign involving patent administrative patent enforcement. However, the campaign did not immediately result in a significant uptake in administrative actions.
What may be more significant is the August 2012 publication by SIPO of proposed patent law amendments, which provide for an expansion for administrative enforcement and greater involvement by SIPO with IPR as an instrument for “market order”. These new policies may have precipitated a major uptake in administrative patent enforcement actions, on the assumption that “if you enforce it, they will legislate it”. In fact, October 2012 was one period of high rapid increase – with enforcement actions increasing 112% from September 2012, followed by a drop in November 2012.
The rapid increase in patent “passing off” (counterfeit patent) cases similarly may also be timed with the patent law amendments. The amendments contemplate an increased role for SIPO in policing “market order”. Since such cases may be initiated by self -initiated by parties other than the infringer, they may also be more responsive to policy changes by SIPO. Local governments, such as Guangzhou, may also offer rewards for reporting these activities. Moreover, the change in the mix of administrative enforcement actions is striking. From 2006 to 2011 infringement cases dominated. Now patent passing off cases are approximately twice infringement cases.
There may be other factors contributing to this rapid increase, such as enhanced authority of local enforcement agencies. In addition newly empowered agencies may now be engaged in rent-seeking behavior, such as by seeking revenue from filing fees. Indeed, Premier Li Keqiang identified excessive fee taking as a potential issue in IP administrative enforcement (http://www.gov.cn/ldhd/2013-11/20/content_2531230.htm).
One comparison that does not appear highly relevant is with overseas trends. An influential article by Zhao Meisheng of SIPO Management Division Enforcement Administration Department “An Analysis on the Trend and Reasons That US Government Agencies Strengthen Intellectual Property Rights Enforcement” ( 试析美国政府机构加强知识产权执法的态势与原因 – 赵梅生 （国家知识产权局管理司执法管理处）电子知识产权 (Electronics Intellectual Property) (2013, 4) suggested that administrative patent enforcement is on the increase globally, including the United States. Comparing “civil” or “administrative” actions in one country to another is often an “apples to oranges” type comparison, nonetheless, “Section 337” actions in the United States, which involve US administrative procedures, are only a very small fraction of Chinese patent administrative enforcement actions, and have been relatively constant over the past several years.
(The preceding was adapted from a presentation I gave at the recent Asia Pacific IP Forum sponsored by Renmin University in Suzhou. The opinions in this blog are my own).
This December 11th, George Washington University will host its third annual China IP Conference. Registration is free. The program follows the format of a moderated “public discussion” involving emerging IP topics of interest. In other words, anybody with valuable information or perspectives can and should contribute.
This year the topics will be patent and trade secret law. There have been many developments in this area, including in pharmaceutical patents, graphical user interface/design patents, antitrust and standards essential patents, changes to civil procedure, as well as in the overall direction of China’s civil court and administrative systems. The highlighted speakers include CJ Rader of the CAFC, former USPTO Director Kappos and former USPTO Deputy Director Rea. I will be moderating the afternoon event along with GW Dean John Whealan. There will also be a number of prominent government officials, academics, and practitioners. Come and join the discussion! (Mark Cohen).
Late last month the SPC published a list of eight model cases (Dianxing Anli,典型案例). The cases highlight some important new trends in the court, and also suggest directions that the court is headed in with regarding to publishing cases. Here are the cases and our analysis:
1. Eli Lilly v. Huang Mengwei (黄孟炜) – preliminary injunction order for theft of trade secrets (Shanghai). This case adopted provisions in the Civil Procedure Law Revision (effect Jan 1, 2013) making preliminary injunction orders available for all civil remedies. The case involved the misappropriation of trade secret documents by a departing employee of Eli Lilly. This summary is especially important as the case may not otherwise be available to the public due to its containing confidential information. As noted elsewhere in this blog, the US-China Business Council, as well as other organizations and governments have placed pressure on China to improve its trade secret regime, including making provisional remedies available, as they are in other IP-related cases. The Supreme People’s Court also issued a useful study on this topic. By disseminating this case, the court has assisted the public in understanding the basis of preliminary injunction order in trade secret matters and helped to address foreign complaints.
2. Foshan Haitian Flavoring & Food Co., Ltd. (佛山市海天调味食品股份有限公司) v. Foshan Gaoming Weiji Flavoring & Food Co., Ltd. (佛山市高明威极调味食品有限公司) – trademark and unfair competition case. This case in Foshan, Guangdong involved misappropriation of the brand of the Haitian company, “Weiji” (威极). Weiji Company, the infringer, used industrial brine in the production of soy source. When this scandal was exposed, sales of Haitian Company, a household manufacturer of soy source and the lawful holder of the Weiji trademark, dropped dramatically. Weiji Company’s action was determined to be illegal under the unfair competition law and Weiji was obliged to change its company name. Although Haitian failed to prove direct losses, the Court held the infringer to be liable for Haitian’s advertisement fee and other expenditures for eliminating negative effect of the scandal to minimize Haitian’s loss. As in other IP-related cases, an exacerbating factor seems to have been consumer harm. In addition, the case appears to be addressing problems of unfair competition/company name misappropriation, which has often been a difficult area in China’s IP regime.
3. BMW v. Guangzhou Shiji Baochi Apparels Ltd.(广州世纪宝驰服饰实业有限公司) – trademark and unfair competition. According to Article 56 of the PRC Trademark Law, when the exact amount of the infringer’s benefits derived from the infringement and that of the loss caused by such infringement are hard to determine, the current ceiling for the compensation to the trademark owner is 500,000 RMB. However, in the BMW case, the Beijing High People’s Court upheld an award of 2,000,000 RMB in TM infringement damages due to the infringer’s apparent bad faith, the length and benefit of infringement, BMW’s renowned reputation and BMW’s efforts to eliminate the negative effect of this infringement. Moreover, the Court also punished the infringer with a 100,000 RMB civil sanction and gave a judicial suggestion to SAIC (State Administration for Industry and Commerce) for a nation-wide investigation of this infringement. This case is significant in part because of a more active role by the court to address willful infringement, which has been incorporated into China’s newly revised Trademark Law. Moreover, the court is seeking to integrate both civil remedies and administrative/criminal remedies. China’s courts have the authority, which is rarely used and which I have long advocated for, to refer matters to criminal investigation in appropriate circumstances. This case may anticipate a more active role for the courts in addressing willful infringement.
4. Zhuhai Geli Electrical Co., Ltd. (珠海格力电器股份有限公司) v. Guangdong Meidi Refrigeration Equipment Co., Ltd. (广东美的制冷设备有限公司) – presumption of infringement in invention patent litigation. In this case, both parties are renowned Chinese electrical appliance enterprises. Geli claimed that the technological solutions applied in four types of Meidi air conditioners infringed its invention patent. There was no dispute that one of the four types of air condition infringed Geli’s IP right. The defendant failed to distinguish the remaining products with the infringing one. The Guangdong High People’s Court shifted the burden of proof to Meidi and held the remaining three types of Meidi products to be infringing.
5. Ashland Licensing and Intellectual Property LLC (亚什兰许可和知识产权有限公司) v. Beijing Ruishibang Fine Chemistry Technology Co., Ltd.(北京瑞仕邦精细化工技术有限公司) and Wei Xingguang – infringement of manufacturing process. While it is hard to prove infringement of a manufacturing process, Ashland, the patent owner, and its Chinese licensee secured 15,000,000 and 7, 000,000 RMB compensation respectively under the Court-hosted mediation. In this case the patented manufacturing process is a method to produce a certain industrial chemical that has a specific customer group and is impossible to obtain from the open market. The plaintiff had no access to defendants’ manufacturing process. However, considering that the main technical and management staff of defendant companies had had access to the patented manufacturing process as the licensee company’s former employees, Suzhou Intermediate People’s Court determined that the defendants production of that certain chemical constituted infringement based on a burden of proof reversal.
6. Beijing Ruibang Yonghe Technology and Trading Ltd. (北京锐邦涌和科贸有限公司, Ruibang) v. Johnson & Johnson Medical (Shanghai) Ltd. and Johnson & Johnson Medical (China) Ltd. As many observers know, many local IPR tribunals and the SPC IPR Tribunal are also authorized to handle antitrust cases. This minimum resale price maintenance case is highlighted as the first anti-monopoly case under Chinese AML where plaintiff won and the first case in China that involved a vertical monopoly agreement. The plaintiff, a former distributor of J&J, won a bid at a price lower than the minimum resale price fixed by J&J in the distribution agreement. In response to plaintiff’s breach of contract, J&J terminated plaintiff’s distribution rights, cut further supply and refused to renew the distribution agreement. Plaintiff claimed that such price fixing provision violated the AML in respect of a vertical monopoly agreement. The Shanghai High People’s Court held J&J liable for the distributor’s normal revenue losses, 530,000 RMB. The Count held that J&J’s minimum resale price provision excluded or at least restricted competition in relevant market, and that J&J’s actions were monopolistic in nature. For watchers of how American companies fare in litigation in China, this case along with Huawei/Interdigital suggest that foreign companies may be a focus on AML investigations. However the Eli Lilly and Ashland cases, amongst others, also demonstrate increasing success in IPR-related litigation by the same tribunals that hear IPR cases.
7. Jiangxi Yibai Electronic Technology Co., Ltd. (江西亿铂电子科技有限公司) , Yu Zhihong, and others – criminal trade secret case. A 37,000,000 RMB penalty made this case the largest business information trade secret criminal case in China, and may be a harbinger of harsher punishment in this area. In 2011, one the defendants established a manufacturing company called Yibai along with several sales companies. These companies sold $7,659,235.72 of competing products based on misappropriated information from Saina Technology Co., Ltd. The prices and sales channels of these products were all set on the basis of Saina’s operational information that the four defendants obtained through their previous employment at Saina in violation of their non-disclosure duty. Zhuhai Intermediate People’s Court sent the four individual defendants into jail. This case was also marked as a model for Guangdong province’s pilot program of intellectual property cases “three tribunals in one”, where civil, administrative and criminal IP jurisdiction are combined.
8. Zong Liangui and Huang Li’an and 26 other individual defendants – criminal trademark counterfeiting case. In November 2007, the defendants founded a factory to manufacture and sell fake cooking oil with registered trademarks “Jin Long Yu”(金龙鱼) and “Lu Hua”(鲁花). Meanwhile, the factory was also involved in trafficking of counterfeit “Jin Long Yu” and “Luhua” labels. The remaining defendants included workers of this factory, who participated in such production knowingly and obtained illegal earnings, and retailers of the fake cooking oil. [d2] This case in the Henan High People’s Court resulted in a total penalty of 27,040,000 RMB. The case also highlights the importance of piercing the corporate veil in criminal IPR matters, as well as the role of the combined civil/criminal/administrative IP tribunals in the courts.
While many of these cases are of great interest in their own rights, there also remains the broader question of what is the significance of the courts publishing cases? For some time there has been interest among academics and business people in the United States in a greater adherence in China to case law. There appears to be some interest in the court as well in having their cases to gain greater legal significance, beyond that of adjudicating the case in dispute. Back in 1981, the National People’s Congress formally delegated the authority to the SPC and the Supreme People’s Procuratorate to promulgate Judicial Interpretations (JI) – to interpret laws in the course of their work. As in traditional civil systems, Chinese courts are not supposed to interpret law; JI’s provide a basis for the courts to interpret laws in the form of a statutory type document, typically based on actual judicial experience. However the tribunals in the SPC have not confined themselves only to JI’s to guide lower courts and help insure greater predictability in decision-making.
United States interest in Chinese case law has manifested itself in the “China Guiding Cases Project” underway at Stanford University. The SPC’s guiding cases are intended to guide the courts in judicial decision-making in all adjudicated areas. The advisory board of Stanford’s project includes several IP notables – including Chief Judge Kong of the SPC IPR Tribunal and Chief Judge Rader of the Federal Circuit. The American Intellectual Property Law Association has a similar interest in model cases, with its China Precedents Project, in which “significant Chinese IP cases will be selected, reviewed, translated, commented on, and posted in a database available to AIPLA members.” However, the application of cases in China’s judicial system remains controversial in light of the limitations places on the court in interpreting the law.
It is clear that the use of precedents in China at this time is quite different from the United States. Among the most obvious reasons are that these cases are a small group selected by the courts themselves. In the usual practice of courts, they are not to be cited. Moreover, they are inferior to Judicial Interpretations. The context of the release of these cases may also be important. For example, these cases were released around October 22, by IPR Deputy Chief Judge Jin Kesheng (金克胜) at a press conference. These eight cases follow relatively closely on the heels of model criminal IP cases announced by the Supreme People’s Procuratorate in September. These cases may also be read to suggest that the SPC Civil IPR Tribunal is not to be outdone by the Procuratorate, particularly as they have shown the importance of higher civil damages and punishments, successful experiments in combining civil, administrative and criminal cases in lower level courts, improvements in civil procedures, an enhanced focus for trade secrets, the use of burden of proof reversals for patent protection[d3] , and other issues that are of timely, and even international importance.
There are many other types of instructional IPR cases that national and local courts issue have published, typically around the time of IP week (around April 26) each year – leading one to wonder what the relative value of these different kinds of cases are. For example, SPC or its IPR Tribunal now publishes “innovative cases”, “big cases” and “typical cases.” Some local courts also publish similar cases. And of course, there are the SPC’s guiding cases. According to relevant guidance “Senior Judges Chat about the Chinese Characteristics of China’s Case Guidance System” (大法官畅谈中国特色案例指导制度) on the SPC’s website, the legal power of these typical cases is different from that of guiding cases. It is at judges’ discretion to decide whether or not to follow these cases or to take them as reference in trial. These typical cases have no express binding power. Nonetheless, these Senior Judges point out that China is evolving its own approach towards the role of cases in guiding its judiciary.
If these cases are intended to be instructional in nature, I also wonder if the case summaries indeed correspond to the actual facts of the case, or are the facts selected to make the point clearer in light of China’s current needs. If so, the use of exemplary cases would follow a long tradition in Chinese society including model workers, model party members, and perhaps dating back to Confucius, who looked to “rectify names” (正名) and believed that the proper use of names would improve society: “When punishments are not properly awarded, the people do not know how to move hand or foot. Therefore a superior man considers it necessary that the names he uses may be spoken appropriately and also that what he speaks may be carried out appropriately.” (Analects, Legge, trans.)
Apart from this positivistic value, the cases may also present an opportunity for particular agencies to spotlight on their own accomplishments, such as the role of combined civil, criminal and administrative tribunals in these cases in these “typical” cases. In light of their positivistic value, the case summary and its instructional nature may be of greater precedential impact than the case itself. If however, their primary function is not to bind other courts. Indeed, if they are not binding, it may be some time before Chinese lawyers are arguing before a judge about whether a particular case is “on point”, or can be “distinguished” like a common law lawyer.
Photo: Moot court before the Court of Appeals for the Federal Circuit at US-China Joint Adjudication Conference, May 2012 at Renmin University, Beijing. The attorney representing the USPTO at this joint moot court was former Solicitor, now Judge at the CAFC, Hon. Ray Chen.
(rev. Nov. 13, 2013, Jan. 18, 2016)