GAI and ABA Publish Their AUCL Comments

Attached are the comments of the American Bar Association Sections on International Law and Antitrust Law  on the proposed draft revisions of the Anti-Unfair Competition Law (AUCL)  as well as comments of the Global Antitrust Institute of George Mason University.

The ABA’s comments are comprehensive – addressing IP issues (including trade secret and trade dress), advertising law, competition law issues and commercial bribery.  GAI’s  comments are focused on the interface between the AUCL and the Antimonopoly Law.

Regarding the overlap with the AML, the GAI advocates that “any provisions in the AUCL that relate to conduct covered by traditional antitrust laws, or conduct covered by China’s Anti-Monopoly Law, be either omitted entirely or revised to limit liability to situations when there is substantial evidence of harm to competition.  … The AUCL should be implemented in a manner consistent with these objectives of competition policy.”  The same argument might be applied to other laws in China, such as Section 329 of the contract law, which deals with monopolization of technology.   In fact, China has a long history of industrial policy regulation of competition, much of which was enacted prior to China’s antimonopoly law.

Neither set of comments fully addresses a core concern of the proponents of this draft,  “that the administrative law enforcement is dispersed, that law enforcement standard is not unified, that the legal responsibility system is not perfect, and that the punishment is too lenient.”  Prior experience of administrative trade secret enforcement of the AUCL has shown that foreigners have not been a significant beneficiary, despite high level political attention paid to increased trade secret protection.   In the trademark context, SAIC’s foreign-related docket is several multiples of all foreign-related civil IP cases.  Increased administrative enforcement authorities raise several complicated concerns:  will these authorities be used fairly on behalf of Chinese and foreigners alike,  will trade secrets be protected by administrative agencies, are the courts better situated to adjudicate the various divergent issues,  what priority will AUCL enforcement assume in SAIC’s vast bureaucracy,  how will these expanded authorities be coordinated with criminal law enforcement and the courts, etc.

Update of March 16, 2017:  Attached are the  Comments of the American Intellectual Property Law Association.

 

 

Revised Patent Infringement Judicial Interpretation Released

The Supreme People’s Court published its revised judicial interpretation on patent infringement litigation.  I previously blogged about the early draft here.  Here is a Chinese language article on the press conference announcing the draft Judicial Interpretation, which was held on March 22, 2016.  The JI goes into effect April 1.

The drafting and timing of the JI seems to be drafted in part in response to perceived problems in enforcing patents in China, which have put pressure on the legislative bodies, courts and administrative agencies to seek appropriate reforms.  In particular, the JI may be perceived to be another policy initiative undertaken to address the continuing competition between the courts and administrative agencies over which agency should be the principle patent enforcing agency. Justice Tao Kaiyuan addressed this issue for the courts in an article earlier this year, while SIPO’s efforts to enhance its role were articulated in a draft SIPO revision of the patent law released for public comment by the State Council Legislative Affairs Office at about the same time as the draft law was released.

For those inclined to seek political motivations to legislative and policy actions particularly by competing agencies, the release of this JI is also proximate to the release by SIPO of its revised provisional guidelines for administrative enforcement earlier this month (March 2, 2016) (专利行政执法操作指南(试行).

The court’s press conference noted that the revision of the JI seeks to address concerns over patent litigation involving a high burden of proof, low damages and delay.

Who is winning in this competition – the courts, SIPO, the State or the patentee?  I hope to provide more detailed comments on the JI later.

Update April 3, 2016: : Song Haining has done a good summary of these recent developments in his blog, including an unofficial translation of the JI, available here.

The “Supremes” Talk About Rule of Law and IP

sfda

The meetings of China’s legislative and advisory branches have just concluded and, as in prior years, the annual work reports of  the “Two Supremes” 两高 (Supreme People‘s Court [SPC] and Supreme People’s Procuratorate [SPP]) have been presented, including their responses to various legislative proposals from delegates attending the meetings.  While more detailed reports on IP activities of the courts and other agencies will likely released around the time of IP Week (April 26, 2016), these reports provide a general sense of how IP has been prioritized by these two important agencies over the past year.

The SPC reports that IP cases totaled 120,000.   In addition, there were 1,802 antimonopoly law cases.  To give an idea on how IP fits into the court’s docket, there were 10,505,731 civil, commercial and IP cases last year, which were 62.86% of the 16,71.4,000 case national court docket. Taken on their own, IP cases were about 0.7% of the national court docket.  Although the court does not give a number for foreign related IP cases for 2015, the report notes that foreign related commercial cases totaled 6079 out of 3,347,000 commercial cases or about .18% percent.  This is about one-tenth the percentage of foreign related IP cases in the overall IP docket in 2014 (1.8%), although we do not yet have the data for 2015 my guess is that it will still be within the 1.5 to 2.5% bandwidth.    Perhaps the most striking aspects of this data is that foreign administrative IP cases, at 45.77% of the total administrative IP docket (2014), are not only in stark contrast to the civil IP docket, but in an even more extreme contrast with overall foreign-related commercial litigation.  The data also suggests that if China wants to become a center for judicial international commercial dispute resolution, it will still have a considerable distance to travel. [updated April 4, 2016]

The SPC noted in its report that it improved copyright protection and it issued a judicial interpretation on patent litigation.    By contrast, the SPP noted that it has strongly attacked counterfeit trademarks and the infringement of trade secrets and “other IP rights” (without mentioning copyright specifically), with 8,664 prosecutions.  Taken together, the two data streams suggest that China’s IP enforcement “market” continues to use public resources for trademarks (eg, criminal enforcement) and rely more heavily on civil remedies for copyright.

The court also notes that now 95% of all cases are accepted without the intermediation of the “case acceptance” procedure, which has historically been a major impediment for controversial cases and for cases involving preliminary relief.  More detail is needed to determine what impact if any reforms in case acceptance have had on IP cases.

Administrative litigation also increased by 50.13% for trademark matters, in line with the increased demands imposed by the court as a result of trademark reforms.

The SPP noted that China’s new IP courts handled 9,872  cases.   At the recent Commerce Department/MofCOM legal exchange in Stanford and Washington, DC, SPC Judge Wang Chuang broke down these cases by court: Beijing (5,432), Shanghai (1,047) and Guangzhou (3,393).

 According to the SPC, the IP courts are exploring the direct participation of adjudication committees in in trials.  In addition, the court had established technology assessors to assist in assessing technological facts, and the Beijing IP court has taken the opinion of the assessors into its case decisions.

In terms of publishing cases, the court noted that as of February 2016, the court had released 15,700,000 case decisions.  Civil, Commercial and IP cases against for 10,505,731 decisions.   Administrative cases accounted for 272,882 of the published decisions.

I have previously discussed how the SPP and SPC try similar approaches to show how effective they are and indeed, may be competing for public attention, here.  Among these common issues, both the SPC and SPP discuss their international cooperation.  The SPC notes that there were 2,210 cases involving international judicial assistance.  The SPP notes that there were 113 cases of international cooperation.  Both the SPC and SPC reports discuss developments in inter-regional jurisdiction, including judicial and prosecutorial experiments with inter-regional courts and procuratorates.  Both reports also underscore their efforts to expand public awareness and improve transparency, and their use of case decisions to improve the public’s knowledge of their work and insure greater predictability in the law.

Among the notable areas of attention of both the SPP and SPC are those involving substandard products.  According to the SPC, civil product liability cases increased by 116.52% in 2015.  The SPP noted that there were 1,646 criminal cases referred to it by food and drug regulatory authorities, with 877 cases established, and 81 cases handled directly by the SPP itself.   No data is provided on how many of these substandard cases also involved trademark counterfeiting or other IP infringements.

The flow chart  at the top of this blog is from the SPP’s report.  It depicts the procedures for handling administrative and prosecutorial cooperation in food and drug cases, including referrals to the police and public prosecution before the courts.