Future Motion vs Changzhou First Int’l Trade Co: Defendant Fails In its Effort to Recover Security and Attorneys Fees at CES

Back in January 2016, a Chinese exhibitor at the Consumer Electronics Show (Changzhou Int’l Trade Co.) was reportedly raided for patent infringement by US marshals, after a US court in Nevada issued a Temporary Restraining Order.  That order was based upon a ex-parte motion of plaintiff Future Motion involving claims of infringement of a design patent and a utility patent and (reportedly) a seven minute court hearing where the defendant did not participate.  The case attracted some attention at CES, although few seemed to notice when the plaintiff dropped its case shortly thereafter.  On October 3 of this month another shoe in the case fell, when  Judge Miranda Du determined that the court did have jurisdiction over the issues of Changzhou’s requests for attorneys fees and recovery of the $10,000 security posted, but nonetheless issued an order  denying Changzhou’s motion to recover the security bond and attorneys fees for plantiff’s initation of this case.  According to Changzhou, it incurred $217,628.21 in attorney’s fees in this matter.

The case illustrates the difficulties for both plaintiffs and defendants in enforcing rights and defending rights at trade shows.  Trade shows are short-term events which typically involve exhibitors who might not otherwise be subject to the jurisdiction of the courts where the trade show is held.  It may be difficult for a plaintiff to act quickly, unless it has advance word of who is exhibiting and what products will be offered for sale.  Trade show exhibitors may also be showcasing their most recent products, which may then be used by infringers who develop copycat products.  Trade show exhibitors may come from foreign countries, such as China, with limited knowledge of the local legal regime.  If large scale infringing sales are booked, considerable harm can be caused to legitimate rights holders.  Plaintiffs may also be motivated to bring cases for improper purposes, as defendants may have little incentive to defend their case during the short term of the exhibition.

China has undertaken several efforts in China and in Europe to protect IP at trade shows.  The Blue Sky effort of China of 2007, to increase IP protection at trade shows,  was intended to “chase after cases of high attention by IPR holders for breakthroughs and special progress.”  At that time – in an era where e-commerce was less dominant, there was considerable focus on the Canton Trade Fair, among other venues, as places for display and distribution of counterfeit goods.    ABRO, an Indiana-based company that had had problems at trade fairs in China, reported in 2010 of its experience with trade fair enforcement in Guangdong “several companies were cited for selling counterfeit ABRO products and they were quickly dealt with by local Chinese authorities. These companies are now facing severe government repercussions for their illegal activities.”   Private investigators, lawyers and even foreign government officials often attend these fairs to help companies protect their rights.  When I was IP attaché at the US Embassy in Beijing, I often went to trade shows to see how IP booths were staffed, if English language information was available,  and to determine how often foreign companies used these facilities and with what results.  Often  when enforcement actions were undertaken, first and second time infringers were left off with just a warning. 

China has also worked with the European Commission to protect IP at trade shows in Europe by setting up information desks.  The success of these centers, which apparently also serve to mediate disputes and facilitate coordination with local enforcement, had also been separately evaluated, in a report prepared for the European Commission.

SIPO Publishes Proposed Revisions to Patent Examination Guidelines

On October 27, 2016, the State Intellectual Property Office (SIPO)  published the  Draft (For Public Comment) of Revisions to the Patent Examination Guidelines .  The Chinese text is available here. Comments on the draft should be submitted before November 27.

 In the important area of post filing data supplementation for pharmaceutical inventions, the proposed revisions clarify that such supplementation is permissible where “the technical effect to be proved by the supplemental experimental data shall be that which can be obtained in the contents of the [original] application disclosure by one who is ordinarily skilled in the art.” 对于申请日之后补交的实验数据,审查员应当予以审查。补交实验数据所证明的技术效果应当是所属技术领域的技术人员能够从专利申请公开的内容中得到的。

 The examination guidelines also loosen the standards for obtaining business method patents if there is a technical element to the novel business method.  Presumably these inventions were previously denied patentability on the basis that they were intellectual rules or methods under Article 25 of the Patent Law.  The proposed guidelines state:

 Claims related to business methods that contain both business rules and methods and technical characteristics, shall not be excluded from the possibilities of obtaining patent rights be Article 25 of the Patent Law. 涉及商业模式的权利要求,如果既包含商业规则和方法的内容,又包含技术特征,则不应当依据专利法第二十五条排除其获得专利权的可能性。

The examination guidelines also appear to loosen the standards for obtaining software enabled inventions:

In the second line of Part II, chapter IX, section 5.2, paragraph 1, the third sentence of the Patent Examination Guidelines are amended from, “and describe in detail which parts of the computer program are to be performed and how to perform them” to provide that “The components may not only include hardware, but may also include programs. 将《专利审查指南》第二部分第九章第5.2节第1段第3句中的并详细描述该计算机程序的各项功能是由哪些组成部分完成以及如何完成这些功能修改为所述组成部分不仅可以包括硬件,还可以包括程序”.

Postscripts (Nov 18 and 28, 2016):

1.  Here’s Jacob Schindler’s October 31, 2016 commentary in IAM on this blog, and  here’s another blog comparing US and Chinese software patent developments. 

2.  Here are AIPLA’s comments on the proposed revisions to the patent examination guidelines (Nov. 25, 2016 – bilingual).

 

ABA Teleconference on Antitrust Investigations (10/17/16)

The American Bar Association has asked me to post a notice on this forthcoming conference on Chinese Antimonopoly Law investigations, which is also expected to cover the IP issues in AML investigations, to be held on October 17, 2016:

International

  Post New Message

ABA teleconference on Antitrust Investigations in China; 17 October 2016

Matthew R E Hall

Oct 10, 2016 3:39 AM

Matthew R E Hall

ABA Section of Antitrust Law, International Committee

ABA Section of International Law, International Antitrust and China Committees

Present

Navigating Antitrust Investigations in China

October 17, 2016

12-13:30 EDT

China’s Anti-Monopoly Law Agencies continue to be active, including by investigating several multinational corporations and issuing numerous regulations and draft guidelines, including on antitrust intellectual property issues.  Join this panel of international experts to discuss recent developments by China’s National Development and Reform Commission and State Administration for Industry and Commerce.

Speakers Include:
* Maureen Ohlhausen, Commissioner, Federal Trade Commission
* Xin Roger Zhang, East Concord Law
* Fay Zhou, Linklaters LLP

* Wei Tan (Compass Lexecon)

* Mark Whitener (GE)

In-person option at Compass Lexecon – 1101 K Street NW, 8th Floor Washington, DC 20005

To register for in-person or teleconference, visit: http://shop.americanbar.org/ebus/ABAEventsCalendar/EventDetails.aspx?productId=257366549.  We hope our committee members can join.

 

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