IP House’s Snapshot of Medical and Health Industry

IP House  has recently published a  Statistical Report on IP Cases in the Medical and Health Industry (December 2017) (Chinese language) covering 391 medical and health industry cases closed from January 1, 2016 to June 30, 2016. Among those cases, 158 were civil cases (67 patent and 91 trademark) and 233 were administrative cases (40 patent and 193 trademark).

As explained in further detail below, this time-limited snapshot of medical and health industry cases shows a relatively low utilization by foreigners of civil infringement remedies in both patent and trademark matters.  Foreigners, including Americans, did actively use judicial review procedures of patent and trademark office decisions.  The cases also show low damage awards for pharma infringement cases despite a high win rate.

Patent

  1. Civil Cases

There was a total of 67 civil patent cases in medical and health industry. Guangdong and Jiangsu were the top 2 provinces with close to 42% of the patent litigation. Among all the civil patent cases, around 74.6% were infringement cases, with the balance involving ownership and contract disputes. Infringement of utility model patents and invention patents were the top two claims of action at 24 and 19 cases respectively.   Amongst invention patents, 14 involved medical devices and 5 involved compound patent claims.

Foreigners were minority plaintiffs in these cases, accounting for only 6 out of 67 civil patent cases.  Only one case involved a US party.   Other countries included Japan (2), Norway (2) and Germany (1).   The foreign plaintiff win rate was 83.3% with average damage of 162,001 RMB, slightly higher than the overall winning rate of   82.1%. This “win rate” is approximately similar to win rates being generally report for patent infringement cases in China as reported in a recent article by Bian Renjun.   First instance (一审) infringement trials on average took took 226 days; second instance infringement actions  (二审) on average took 120 days.

Average damages in these actions was 439,896.2 RMB.   Of these, more than 95% of cases used statutory damage to calculate damages.  Two cases that awarded more than 1 million RMB in damages, which were calculated as lost profits.

The principle reason that plaintiffs lost was that the accused product was deemed “not within the scope of protection.” Invalidity was another reason.

  1. Administrative Cases

There was a total of 40 patent administrative cases in the medical and health industry, involving appeals of decisions of patent office decisions.   US entities were a party in seven of the fourteen foreign administrative cases.  This relatively high proportion of foreign administrative cases follows a pattern in judicial IP actions in China where foreign companies generally enjoy a  higher proportion of cases involving validity than in infringement matters.  Amongst all of these cases, the administrative judgment was vacated by court for 6 cases.

As for review period, action of first instance on average took 446 days, and actions of second instance took on average 248 days. Administrative cases took much longer than civil cases to review.  Amongst the administrative cases 72.5% (29 cases) involved drugs, and 27.5%, (11 cases) involved medical devices.  Furthermore, 33 cases involved invention patents and 7 utility model patents

Trademark

  1. Civil Cases

There was a total of 91 trademark cases, where Jiangxi and Guangxi were the top 2 provinces with most cases.  A majority of these cases involved trademark infringement (88). Plaintiff won 78 cases with a win rate of 85.7%. Trademark civil cases on average took 185 days until the first instance judgment and 106 days for second instance judgment.  Drug and health products constituted 81.8% of these cases, with average damages of 61,412.9 RMB.  All these cases used statutory damages, and only one case involved a foreign party (USA).

The relatively low level of trademark infringement cases may be due in part to the active roles played by SAIC in administrative trademark matters, including their handling of foreign related cases as well as administrative enforcement matters undertaken by CFDA and takedown activities by online etailers.  However, the concentration of cases in Jiangxi and Guangxi is difficult to explain, except perhaps due to inexact reporting procedures.

  1. Administrative Cases

There was a total of 193 trademark administrative cases. Among those cases, 62.2% or 120 cases were brought for review on refusal (驳回复审). Administrative judgements were vacated by court for 49 cases. On average, trademark administrative cases took 266 days for actions of first instance, and 113 days for action for second instance.  Foreign cases accounted for 75 of these administrative trademark cases with the US being the party for the most cases (22 cases), following by Japan and Germany.

In administrative trademark cases, when the applicant had been refused grant of the trademark, the courts primarily ruled on the basis that the same similar trademark was used in the same or similar type of product (87 cases).   Another frequent basis was that a trademark was deceptive, and led to consumer confusion regarding quality and origin.

Implications for the future:

This data, although limited, is suggestive of what a further landscape for pharma patent litigation will be if China institutes a patent linkage system.  To speculate: the data does not suggest that foreigners will rush in to assert infringement of their patents, but rather that foreigners currently play a limited role in infringement litigation.   The high foreign and domestic win rate on infringement matters also suggests that a linkage regime could therefore be very helpful in securing cost effective and timely protection of patent rights, even if this right may not be asserted with great frequency.  Finally, the data also suggests that foreigners appear relatively comfortable in pursuing challenges to administrative action in pharma IP matters, and therefor may ultimately be willing to avail themselves of a patent linkage regime administered by CFDA and the courts. I believe a greater factor in determining how much a linkage system may be utilized may be the development of new, innovative drugs that are patent protected by foreign or domestic entities.

Perhaps the readers of this blog have a different opinion –  we look forward to receiving them.

Written by Mark Cohen with the assistance of Emily Yang.

 

 

 

 

February 13 – 19 Updates

  1. Honda takes Chinese competitor to Beijing IP Court

Honda Motor has asserted two patents against Chinese carmaker Great Wall Motors, according to a recent announcement by the Beijing IP Court. The Beijing IP Court said it had accepted the two suits in a statement made on 31st January, but it appears that the cases may have been first filed as far back as October. The Japanese automaker is demanding over 200 million yuan ($32m) in damages for the infringement of two invention patents, both filed in 2006. The first is titled “Hatchback door structure for vehicles” and has just a Japanese counterpart. The second, covering “Garnish attachment structure of vehicle body”, has family members in the US and Europe as well.

It is not the first time that Honda asserted patents right in China. A design patent dispute against Shuang Huan Automobile it initiated in 2003 went  to the Supreme People’s Court (SPC), where Honda lost. (See judgment (2014)民三终字第8号)

  1. The China Dashboard 2018: Chinese Innovation Catching Up

Rhodium Group in partnership with the Asia Society Policy Institute released the Winter 2018 edition of the China Dashboard, a project designed to gauge China’s implementation of its self-stated reform goals in the 10 policy domains it judges essential to long-term growth potential. According to the report, Beijing continues to prioritize high growth by deferring implementation of its comprehensive economic reform program. The bulk of Chinese reform priorities – 8 out of 10 areas of the Dashboard – show little or no forward movement. However, “innovation continues to show positive movement, but by using industrial policies favoring domestic players that are fomenting strong push back from Western policymaking.”

The report predicts that Chinese innovation is rapidly catching up to US levels in its role in the domestic economy: “China will catch up to the 2011–2014 levels of U.S. contribution from innovative industries to the industrial structure in the quarters ahead. Based on our methodology, structural adjustment toward innovation is taking place in China, backstopped by serious policies for both promoting innovation and suppressing sunset industries.”  Of particular note were innovations in the auto sector, ICT and instruments and meters. More details on innovation policy reform are available here.

  1. 2017 Top 100 Global Blockchain Patent Holder: China is the leading country

IPRdaily, a Chinese site dedicated to IP news, together with incoPat, an innovation research indexing center, recently released a report on global blockchain patents. The report (in Chinese) shows Alibaba leaping to pole position for the number of patents publicly published globally in 2017 across all three patent types (invention, design, and utility). Out of the top 100 companies 49 were Chinese, 23 from the US.

In second place is Bank of America with 33 new patents taking its total to 44. Third place went to another Chinese organization, the PBoC’s Digital Currency Research Institute (中国人民银行数字货币研究所) which also published 33 patents despite only opening in June 2017.

4.The Status Quo of NPE Litigation in China

IPHouse, a leading product and service provider of IP law in China reported an article written by King & Wood Mallesons on the status quo of NPE litigation in China. The article describes the various types of NPE’s in China, including: research-based NPE, conversion NPE, intermediary NPE and litigation NPE. Of particular interest is  深圳中科院知识产权投资有限公司 (Translation: Shenzhen Chinese Academy of Sciences IP Investment Company Ltd.,  or CASIP) is a research-based NPE under the Chinese Academy of Sciences which aims to commercialize the intellectual property of Chinese Academy of Sciences. CASIP’s website may be suggestive of its goals:  “Cash IP” – http://www.caship.ac.cn/.  CASIP brought a patent infringement lawsuit against Cree last year. The article describes the case as a battle between the “great research capacity of the Chinese Academy of Sciences” and the American “LED industry giant” Cree. But overall, NPEs’ activities in China are minimum. The article’s author expects NPEs to become more active in China in the near future.   

January 30-February 12, 2018 Updates

Here are some updates on IP developments in China from prior two weeks.

  1. China’s tough cyber rules raise risk of infiltration US business group says In a report released on Monday, the US-China Business Council urged Beijing to loosen limits on data flow and storage that raise the risk of security breaches for foreign companies. The council said China should follow best international practice by opening access to cloud computing services, levelling the playing field in technology procurement and allowing foreign firms to send copies of data abroad for analysis and processing. The Council’s report also recommended that foreign partners in joint ventures be allowed to own and control software and other technology licensed to the joint ventures.
  2. MIIT Chief says China does not force foreign enterprises to transfer technology, says MIIT chief China did not and cannot force foreign enterprises to transfer technology to the country, and any cases of technology transfers are enterprises’ own choices driven by the market, Miao Wei, head of the Ministry of Industry and Information Technology (MIIT), said at a press conference on Tuesday, adding that China has been taking steps to better protect intellectual property rights.
  3. .The Supreme Court of China Issued Seven Typical Cases on Property Rights Protection最高法发布7起保护产权典型案例 on “property rights protection” last Tuesday. Among those seven cases, two focused on intellectual property rights, with one on trademark infringement and unfair competition, and the other on criminal trade secret protection in an employment context. Details of those typical cases are available here.
  4. FTC, Justice Department Officials Meet in China On Antitrust Enforcement The head of the Federal Trade Commission (FTC) and a representative from the Justice Department met with Chinese officials from NDRC, MOFCOM and SAIC in Beijing this week to discuss efforts to ensure effective antitrust enforcement and increased interagency cooperation. This is the U.S. delegation’s fourth meeting in China since the between the countries signed an antitrust memorandum of understanding on July 27, 2011.
  5. Baidu Accused of Not Playing Fair by Popular News Aggregator Beijing ByteDance Technology, which runs the Jinri Toutiao app that had 232 million monthly active users as of December last year, said on Tuesday that it filed the lawsuit against Baidu at the Haidian District People’s Court in the Chinese capital. In a post on its official WeChat account, ByteDance said Baidu used its “monopoly advantage” to mislead users and damage Toutiao’s reputation, the details of which it has filed in court. Ahead of the ByteDance filing on Tuesday, Baidu issued a statement that described ByteDance’s lawsuit, like its public relations efforts, as reflecting “anxiety over its own challenges in development”.
  6. China sees robust growth in technology transactions More than 367,000 technical contracts were signed in China in 2017, up 14.7 percent from the previous year, according to the Ministry of Science and Technology. The transaction value of the contracts totaled 1.34 trillion yuan (213 billion U.S. dollars), with a year-on-year increase of 17.7 percent. Electronic information, urban construction and social development, and transportation are the top three fields that gained the most value.  Among four types of technical contracts, technical service contracts (技术服务合同) and technological development contracts (技术开发合同) had strong growth. However, technology licensing contracts (技术转让合同) and technical consulting contracts (技术咨询合同) in fact had a decline.  Over 40 percent of transactions were contracts involving intellectual property rights. Biotechnology and pharmaceutical contracts had a strong growth of 62.94%, with a total overall transaction value of 1.19 billion yuan. The transaction volume of invention patents grew by 19.2 percent in overall transaction value year on year.    IP utilization has been a focus of China’s IP efforts since the third plenum of the Communist Party in 2014. However, foreigners continue to view China as very challenging licensing environment. In the US Chamber’s recently released IP Index, it was noted that IP commercialization in China was hampered by “[s]ubstantial barriers to market access and commercialization of IP, particularly for foreign companies.” China received zero points for “Regulatory and administrative barriers to the commercialization of IP assets”  Here is a link to the discussion of Chinese licensing practices. The US Chamber’s conclusion is not unlike that of the Global Innovation Index (2016) which, as we previously reported, scored intellectual property payments according to a formula as a percentage of total trade. China came out at 72nd place, while it ranked number 1 in high tech exports.
  7. The rise of Chinese groups applying for US patents The breakdown of patents granted in the U.S. per country changed little in 2017 from previous years, with China the glaring exception, according the analysis by patent service and analytics company IFI CLAIMS.  China’s overall slice of the pie remains relatively small. Just 11,240, or 3.5%, of the 320,003 utility patents granted in the U.S. last year went to Chinese companies, compared with 31% to other Asian businesses. But it is the pace at which certain Chinese tech companies have risen in the rankings that will have rivals from the U.S. and elsewhere taking note. For instance, BOE Technology Group (京东方科技集团股份有限公司), whose core business centers on display sensor technology and the Internet of Things, was granted 1,414 patents during the year, compared with 19 in 2013.  
  8. Guangdong’s accumulated invention patents top China Guangdong Province topped the country in the number of valid invention patents granted over the past eight years, according to local authorities. By the end of 2017, the accumulated number of valid invention patents in the province reached 208,500, said He Jufeng, deputy director of the Guangdong Intellectual Property Office. Note that although Guangdong has the most accumulated patent grants, in recent years Guangdong has met some competition.  Jiangsu Province, for example, was the No.1 for invention patent application in 2015, while Guangdong was No. 2, based on data from SIPO for 2015. Meanwhile, in 2014, Jiangsu was the No.1 for invention patent application and Guangdong was No.3. Guangdong has also been a source of many of China’s PCT filings, from companies like Huawei and ZTE.   
  9. Conference proposes int’l e-commerce cooperation An e-commerce conference held in Beijing called for coordinated regional cooperation on areas including supervision and standard setting to promote sustainable development of the emerging sector. The first global regulatory framework for e-commerce was put forward during the conference. Proposed by Chinese customs, the document listed eight core principles in e-commerce management including clearance procedures and the role of online retailers.
  10. New Intellectual Property initiative extends Berkeley Law’s reach in Asia China’s push to create a dynamic economy with innovative companies is creating opportunities for new academic, commercial, and government partnerships. Eager to maximize those opportunities—and to deepen its foothold overseas—Berkeley Law has launched the Asia IP Project.  Led by Professor Mark Cohen, and powered by the school’s Berkeley Center for Law & Technology (BCLT), the initiative seeks to enhance existing collaborations and develop new ones with academic institutions and other partners in Asia. Center leaders will bring together Chinese and U.S. academics, government officials, and practicing lawyers to better understand Asia’s intellectual property law issues through research, workshops, conferences, and other eventst. The program had its first US meeting on February 9, 2018.

We hope to be providing more updates in the year ahead from the Berkeley Center for Law and Technology. As usual the information contained herein does not necessarily represent the opinion of any government agency, company, individual or the University of California.

 

By Berkeley staff.

January 16 – 29, 2018 Update

Jan 16 – 29, 2018 

Here are some updates on IP developments in China from past two weeks.

  1. China criticizes US moves on intellectual property 商务部:缺少确凿证据无可信度 China on Thursday criticized recent moves by the U.S. targeting the sale of fake goods and Chinese telecoms equipment, saying Washington lacked “objectivity” in its approach to Chinese businesses. Commerce Ministry spokesman Gao Feng told reporters the U.S. Trade Representative lacked direct conclusive evidence and supporting data in listing three Chinese online commerce platforms and six physical bazaars within China as “notorious markets” engaging in commercial-scale copyright piracy and trademark counterfeiting. Meanwhile, Alibaba Group recently released a series of initiatives to strengthen its intellectual property rights protection. The event happened days after Taobao was put listed as notorious market. The ecommerce giant intends to gather as much information as they can and use the expertise of both brands and rights holder to create a much stronger database. It should effectively improve the algorithm that Alibaba uses to counteract the fakes and even gather evidence for offline investigations. Moreover, Preempting the 2017 USTR report’s publication by one day, the company has released the 2017 Alibaba Intellectual Property Protection Annual Report (in Chinese).
  2. Google announces patent agreement with Tencent amid China push Alphabet Inc’s Google has agreed to a patent licensing deal with Tencent Holdings Ltd as it looks for ways to expand in China where many of its products, such as app store, search engine and email service, are blocked by regulators. The agreement with the Chinese social media and gaming firm Tencent covers a broad range of products and paves the way for collaboration on technology in the future, Google said on Friday, without disclosing any financial terms of the deal. Additional articles are available here and here.
  3. China Publishes More Scientific Articles Than the U.S. For the first time, China has overtaken the United States in terms of the total number of science publications, according to statistics compiled by the US National Science Foundation (NSF). According to the report, China published more than 426,000 studies in 2016, or 18.6% of the total documented in Elsevier’s Scopus database. That compares with nearly 409,000 by the United States. India surpassed Japan, and the rest of the developing world continued its upward trend.
  4. SIPO Released Statistics Data on Major Work for 2017国家知识产权局公布2017年主要工作统计数据 SIPO recently released detailed breakdown of statistics on its work for 2017. Government data show that the number of annual applications for invention patents filed in the country topped 1.38 million in 2017, a 14.2 percent rise on the previous year. Beijing, Shanghai and Jiangsu are the top 3 provinces for number of patents per 10,000 people. State Grid Corporation of China, Huawei, and Sinopec are top companies with most patents granted.
  5. China’s trademark applications hit record high in 2017 China’s trademark applications exceeded 5.7 million last year, up 55.7 percent year on year, both setting record highs. At the end of 2017, China had 14.92 million qualified registered trademarks, the most of any country worldwide.
  6. “Jianwang [Swordnet] 2017” closed 2554 Pirated Websites“剑网2017”关闭侵权盗版网站2554个National Copyright Administration, State Internet Information Office, MIIT and Ministry of Public Security jointly held a conference on “Jianwang” special campaign recently. Since this special act being implemented in July 2017, 63,000 websites have been investigated and 2554 infringing websites have been closed. According to officer from National Copyright Administration, this special act had a focus on videos, news, mobile Internet applications (APP) and e-commerce platform.
  7. China Will Take the Lead in Promoting IP Protection Mechanism in Pilot Area我国将在全面创新改革试验区域推进知识产权保护改革率先突破 NDRC recently issued a notice to promote reform on IP protection mechanism in eight pilot areas, including Jing Jin Ji, Shanghai, Guangdong, Anhui, Sichuan, Wuhan, Xi’an, Shenyang. The government intends to promote integrated management of IP rights, explore new mechanism of IP protection, and establish a new mechanism to link administrative and criminal enforcement.
  8. U.S.-China IP Scholar Dialogue was Held中美知识产权学者对话举行 The Fourth U.S.-China IP Scholar Dialogue was held in Shanghai, China from January 17 to 18. Intellectual property is a key issue in the development of U.S.-China economic and trade relations. To increase cooperation and understanding, IP experts from both countries created this dialogue mechanism since 2013. This year’s dialogue emphasized on AI, biomedical innovation, technology licensing, trade secret law reform, IP judiciary protection and dispute settlement mechanism.
  9. US Commerce Secretary Ross says Beijing’s technology strategy is a “direct threat”; China demurs.  US trade authorities are investigating whether there is a case for taking action over China’s infringements of intellectual property, Commerce Secretary Wilbur Ross said. China responds that it did not expect more trade disputes.
  10. China Customs reports seizing infringing goods worth 552 mln yuan in past three years.   China has seized infringing goods worth 552 million yuan (86.06 million U.S. dollars) in the past three years driven by a special act called “Qingfeng” (“Clear Breeze”), according to the General Administration of Customs of China (GACC). The three-year crackdown on intellectual property rights infringement discovered about 120 million infringing items, according to the General Administration of Customs.  Compare prior discussion on previous reports of GACC hereand here.
  11. Beijing to set up IPR center to better serve high-tech firms.  Beijing will establish a center this year dedicated to providing services to high-tech companies on intellectual property rights (IPR), officials said. The center will offer fast-track services for patent applications to companies in information technology and high-end equipment production, two areas with the highest demand.  This is part of an existing SIPO effort to fast track areas of concern to industrial development.  Compare, however, article 27 of TRIPS Agreement – patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.
  12. SIPO released a directory of industries that need IP support.  SIPO recently released the 2018 Intellectual Property Supporting Industries Directory (知识产权重点支持产业目录(2018年本)), which identified 10 industries where IP will be key. The government asked for efficient allocation of IP resources within these industries to promote industrial restructuring and upgrading.
  13. China’s Sinovel Convicted in U.S. of Stealing Trade Secrets.  A Chinese wind turbine maker, Sinovel Wind Group Co. was found guilty of orchestrating the theft in a rare trial in Wisconsin that continues to raises doubts over China’s commitment to fighting infringement of intellectual property and corporate espionage.  The case is U.S. v. Sinovel Wind Group Co. Ltd., 13-cr-00084, U.S. District Court, Western District of Wisconsin (Madison). The conviction was against Sinovel Wind Group.  Previously a former employee of the victim had been found guilty of theft of trade secrets in a criminal case in Austria. In addition, there are in total five civil cases in China between Sinovel and AMSC, with one closed and four pending. AMSC filed one separate trade secret case in China plus two copyright cases and an arbitration.
  14.   Five New Guiding Cases (English translation available).  Of the five newly released GCs, four are administrative cases and one centers on a dispute over the infringement of rights related to a new plant variety (Case No. 92). English translation of those guiding cases are made available by the China Guiding Case Project of Stanford Law School. More information about previous guiding cases available here and here.

We hope to be providing more updates in the year ahead from UC Berkeley.  As usual, the information herein does not necessarily represent the opinion of any government agency, company, individual or the University of California.

Updated: February 13, 2018