New Developments at Berkeley

There has been a string of exciting developments at Berkeley Law School and the Asian IP Project that I lead.

Several firms have come on board as sponsors of this project, and several more are in the offing.  Via Licensing, a subsidiary of Dolby, has been an active supporter, and released a press release on our planned collaborative projects.  Joe Siino, Via’s Vice President noted, “Our involvement with the Asia IP Project at UC Berkeley helps us fulfill our goal of elevating the level of mutual understanding and trust between leading innovators, companies and policymakers in Asia and the West.”  I look forward to working with Via in the years ahead, including during the upcoming IPBC Global conference in San Francisco in June and in planned seminars on licensing in China.

This April, I will be speaking again at the upcoming Fordham International IP Conference on trade secrets and judicial reform in China on April 5. On April 13, I will be joining the Berkeley Center for Law and Technology in its annual conference with the Berkeley Journal on law and Technology.  The theme for this year is “The Administrative Law of Intellectual Property”.  I will be offering comparative perspectives on China’s use of administrative procedures to develop a system of “IP for the Masses”, which includes low-cost rights and low-cost remedies.

In the upcoming months, Berkeley will be hosting the  IP Scholars Conference, which will have an Asian law component.  We have also proposed a program in the fall on international IP litigation, several roundtables in the US and China (including the US-China IP Cooperation Dialogue), a program on pharmaceutical patent linkage in China and start-ups, continuing discussions and projects around use of empirical data in Chinese IP, and a series of events in late May at Chinese universities in Beijing, Shanghai, Shenzhen and Wuhan with Prof. Robert Merges.

I will also be offering my Chinese IP class for two credits at Berkeley Law in the fall, where there will be guest lecture opportunities (check out this link when the class schedules are posted).  There are also other planned programs in the works with Chinese law schools.

As we roll out a series of programs, we also continue to host and welcome visitors to the Bay Area.  On March 27, we were privileged to host former SIPO Commissioner Dr. Gao Lulin on a visit to Berkeley.  Dr. Gao’s contributions to the development of China’s IP system have been enormous.

In case you missed it, there have also been several recent programs on Chinese IP that I have been participating in.  I recently  spoke at the Sedona Conference on International Patent Litigation, the University of Texas Advanced Patent Law Institute, as well as Santa Clara’s High Tech Law Institute.

For further information on our Asian efforts at Berkeley Law, contact the Berkeley Center for Law and Technology.

19th Century US Patent Models On Exhibit in China

I am pleased to see that a long planned project to display US patent models held by the Hagley Museum and Library  in Delaware has now been brought to China.   The exhibit opened in Tsinghua University on March 27, and will continue on to Shenzhen, Shanghai and Wuhan, where it will close on September 24.  The “Spirit of Invention” (发明的精) exhibit is comprised of sixty U.S. patent models, dating from 1836 to 1890. According to the press release,  Hagley and Tsinghua University will complement this presentation with academic symposia, and promotional campaigns connected to each exhibition venue.  Tsinghua’s announcement, excerpted below, is found here.

美国特拉华州哈格利(Hagley)博物馆与图书馆将于2018年3月—9月在中国北京、深圳等地举办 “发明的精神——美国哈格利(Hagley)博物馆与图书馆藏美国19世纪专利模型展(巡)”。本次展览将以实物展览的方式展出美国哈格利(Hagley)博物馆与图书馆收藏的60件1830年至1890年期间的专利模型和1件由乔治·华盛顿总统及其国务卿和司法部长于1797年共同签署的专利批准文件。展品还包括清华大学美术学院的师生团队根据哈格利(Hagley)博物馆的专利模型制作的视频、VR、模型以及图片文字说明,着重讲述发明背后的故事,鲜活再现专利发明的过程以及应用情况。

As China is focusing on “mass innovation”, the announcement notes that this exhibit complements this policy  noting how the patent models for the most part were made by common people in the United States.

 

Update from April 25, 2018: Here’s the Forbes Magazine article on the exhibit.

March 19 – 26, 2018 Updates

1. China Now Number 2 PCT Filer.  China has overtaken Japan to claim second place as a source of Patent Cooperation Treaty (PCT) applications  in 2017. In 2017, U.S.-based applicants numbered 56,624 PCT, followed by China (48,882) and Japan (48,208). Huawei Technologies (4,024 published PCT applications) and ZTE Corporation (2,965) – occupied the top two spots for PCT applications. They were followed by Intel (2,637), Mitsubishi Electric (2,521) and Qualcomm  (2,163).   Historically Chinese PCT applications have been concentrated in a few companies.

Chinese academic institutions are still minor users of the PCT.   Among the top 25 educational institution filers, there were only three Chinese academic institutions – Shenzhen University (no. 11), China University of Mining and Technology (no. 15) and Tsinghua (no. 19).

Computer technology (8.6% of the total) overtook digital communication (8.2%) to become the field of technology with the largest share of published PCT applications. These two fields were followed by electrical machinery (6.8%) and medical technology (6.7%)

2. China’s premier pledges market opening in bid to avert trade war On the heels of the Section 301 Report, Chinese Premier Li Keqiang reiterated pledges to ease access for American businesses, at the news conference following the closing session of the National People’s Congress (NPC). Li also said at a conference that included global chief executives that China would treat foreign and domestic firms equally, would not force foreign firms to transfer technology and would strengthen intellectual property rights. Another Vice Premier, Han Zheng,  made similar remarks at the China Development Forum.  Han said that China needs to “open even wider to the outside world,” and would do so via its Belt and Road Initiative.

According to Wall Street Journal citing unidentified source, U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer listed steps they want China to take in a letter to Liu He, a newly appointed vice premier who oversees China’s economy. The United States asked China to cut a tariff on U.S. autos, buy more U.S.-made semiconductors and give U.S. firms greater access to the Chinese financial sector. The article also reported that China and the U.S. have quietly started negotiating to improve U.S. access to Chinese markets.

 

US Files Consultation Request at WTO on Chinese Technology Licensing Practices

Fresh on the heels of the Section 301 announcement, USTR on March 23, 2018 made a  consultation request  of China regarding China’s discriminatory licensing practices.  This is the first step in initiation of  a WTO dispute.  Here is a link to the press announcement.

The consultation request broadly speaking alleges discriminatory treatment in licensing pursuant to China’s joint venture regime as well as the  Administration of Technology Import/Export Regulations (“TIER”), as compared to provisions under China’s contract law that may govern purely domestic technology transfers or Chinese exports of technology.  The complaint is based on the National Treatment provisions of the TRIPS agreement as well as Article 28.2, which provides that “Patent owners shall also have the right to assign, or transfer by succession, the patent and to conclude licensing contracts.”  The Section 301 Report of USTR also discusses these issues.

Update of June 2, 2018:  On June 1, the EU filed its own complaint against China at the WTO involving China’s technology licensing practices, including the TIER.  A copy of the request for consultations, which appears somewhat more extensive is available here.

 

 

 

March 13 – 19, 2018 Updates

1. China’s export of IP royalties increased 311.5% in 2017  According to the statistics of the State Administration of Foreign Exchange, the volume of trade of Chinese IP royalties totaled 33.384 billion USD in 2017, a 32.7 percent increase from 2016. The amount of exports of IP royalties totaled 4.786 billion USD, a 311.5 percent increase from 2016, which ranked No.1 in terms of the speed of growth in service trade. The exports and imports of IP royalties for manufacturing industry ranked No. 1, at 3.793 billion USD, a 544 percent increase from 2016.  The import amount totaled 20.753 billion USD, up 16 percent. In terms of category. The amount of exports of replication/distribution computer software ranked No.1. at 3.405 billion USD, up 652 percent from 2016. In terms of region, Guangdong province was the No.1 in amount of export and import of IP royalties in 2017. Its export amount totaled 4.013 billion USD, up 591.9 percent from 2016 and its import amount totaled 7.525 billion USD, up 9.8 percent from 2016.

Despite the significant increase in the amount of exports of IP royalties in 2017, China still has a trade deficit in IP royalties. The amount of the deficit totaled 23.812 billion USD, which increased by 0.978 billion USD. About 60% of the deficit reportedly originated from the United States, Germany, and Japan.

IP commercialization and 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 despite China’s claims of a licensing “deficit”. China’s technology import/export regulations had been one of the challenges that foreigners expressed special concern. 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. Similar concerns were also voiced by USTR in the recently released Section 301 report.

2.SIPO takes efforts to develop ability and capacity of IP mediation entities.  SIPO recently issued a “Notice on Developing the Ability and Capacity of Intellectual Property Mediation Entities” (“Notice”), as part of its effort to strengthen the role of mediation in IP dispute and the overall IP protection system. According to the Notice, SIPO will select 20 to 30 existing IP mediation entities every year as the target for ability and capacity development and help with such development for two years. After the two-year period, SIPO will release the basic information as well as specialties of entities that made great progress. Selection and review of existing entities will start this year, which is done by SIPO. Entities can apply either through local IP offices or to SIPO directly.

Within the region, Japan is also considering the use of mediation system to resolve IP disputes. The Japan Patent Office (JPO) intended to introduce an ADR system to determine appropriate license fee of SEPs in 2017. However, the ADR SEP system is likely to be deferred, as reported after a JPO committee meeting in November 2017.

3.  Huawei v Samsung patent decision released by Shenzhen IP Court. The recent decision in Huawei v Samsung was released by the Shenzhen IP Court.  The case involves assertion of two SEP’s by Huawei, and the grant of an injunction against further infringement.

USTR Releases 301 Report on China’s Tech Transfer and IP Practices

The news services are already reporting on the Section 301 Report of USTR, the USTR fact sheet, and the announcement of possible sanctions on 50 billion USD of goods and services imported from China.  Possible sanctions include tariffs on aerospace, information and communication technology, and machinery.  The announcement also contemplates a possible WTO case against China for its technology licensing practices which are alleged to discriminate against foreign licensors.  Investment restrictions are also under consideration.

As in long-past 301’s involving China, China also announced it will strongly oppose these measures, and the media reports that there is a counter-retaliation list.  According to press reports, China will impose reciprocal tariffs on $3 billion of imports from the U.S., including a 25 percent tariff on U.S. pork imports and recycled aluminum, and 15 percent tariffs on American steel pipes, fruit and wine. Unlike China, the US list will be announced in the Federal Register after a hearing on the matter, as announced in the fact sheet (above).

 

Summary of MoST Presentations at the Two Sessions

Thanks to Mr. Dai Nian, Research Associate, Duke Kunshan University for this summary of some of the presentations of the Ministry of Science and Technology at the two sessions of the National People’s Congress and Chinese People’s Consultative Conference (“lianghui”) meetings.   Much of this summary has direct implications for IP, particularly patents – including regarding China’s continuing innovation in fintech, AI, autonomous vehicles, US-China clean energy cooperation and science cooperation, and commercialization/licensing of technology.

Overall assessment of past achievement and current status

The strategic importance of Science and technology innovation in the overall development of party and state has been significantly increased. China’s S&T innovation capability and efficiency have been largely improved. The country is gradually transforming from passive follower and learner to leader in many fields. The contribution rate of science and technology has risen from 52.2% to 57.5%, with the new economy leading the world such as digital economy, sharing economy. Five years since the 18th National People’s Congress, the major historic achievements of China’s S&T can be summarized as:  S&T capability is significantly improved, the country has entered a stage of “并跑 (at the same speed)” and more and more “领跑 (take the lead)”. China’s strategic high techs is currently at the world forefront; S&T innovation provides strong support to supply-side reforms and improvement of people’s livelihood, fully integrating into socio-economic development.

Artificial intelligence

The critical step for AI to deeply integrate with all aspects of our life is to have strong capability and constant breakthroughs in key technologies, basic research, and make it available to individuals, entrepreneurs dedicated to innovation. But most importantly, China should strengthen the foundation for AI:  enhance the science foundation for AI, speed up integrated systematic R&D of key technologies, and improve R&D discoveries in open platforms. The Chinese government will release AI guidance and detailed rules and regulations in order to achieve breakthroughs in basic frontier theories and key technologies; expedite commercialization and application of AI. At the same time, research on policies, laws and regulations should be enhanced so as to properly address challenges arising from social ethics, employment structure, individual privacy, national security, etc; AI is an international trend. China will strengthen international cooperation, support Chinese AI companies and research institutes to have cooperation with foreign partners.

New energy car and US-China S&T cooperation

Volume of sales of electric cars and new energy cars reached 770,000 last year, and China is now in possession of 1.6 million accounting for half of world total. Primary reasons for developing new energy cars are: improve structure of energy consumption, reducing reliance on oil; reduce air pollution; significantly alleviate traffic congestion when autonomous driving, AI is combined with electric cars in sharing economy model. China and the United States have been cooperating closely in this field. e.g U.S.-China Clean Energy Research Center (CERC) that focuses on energy saving buildings, clean coal,  and electric cars. China-U.S. S&T innovation cooperation will constantly strengthen. The Chinese government is confident that bilateral S&T cooperation will go deeper, given that scientists, entrepreneurs, and government of each country have established well-functioning communication mechanisms.

Scientists and researchers are the main force of S&T management reform

The most important thing to do is focus on people (S&T personnel) if we want to strengthen basic research, promote commercialization, and improve performance of all-chain innovation. Over the past five years, the government has carried out substantial reforms in the overall S&T management system and use of funding. S&T personnel are empowered to have more discretion of fund allocation, to start businesses that commercialize S&T discoveries. Wan Gang points out some obstacles blocking the implementation of reform measures such as fiscal constraints, cap on the rewards to researchers, lack of budgetary flexibility. MOST will produce relevant policies in the near future regarding evaluation system, S&T commercialization, tax preference, and credibility of S&T personnel.

双创 (mass entrepreneurship and innovation)

Under national enthusiasm for 双创 (literally double creation, or mass entrepreneurship and innovation), a lot of group innovation space (GIS) have sprung up that give full play to young people‘s creativity and entrepreneurship and also greatly facilitates economic transformation and development.  Meanwhile, 双创 together with GIS helps promote openness and sharing of S&T resources because R&D achievements made by enterprises, universities, and research institutes are integrated here, with many public services becoming open to all. 双创improves the level of internationalization of China’s innovation, given that there are already many offshore Chinese innovation centers.

Wan Gang highlights three major task to be accomplished in order to upgrade 双创: deep integration of industry, university, and research institute so as to realize high level innovation and entrepreneurship that will serve real economy; promote fintech (finance and technology combination) and provide diverse financial services for tech entrepreneurs and start-ups; absorb and leverage international resources through cooperation, build a favorable ecology for innovation and entrepreneurship that is made up of GIS, incubators, accelerators, S&T parks that cultivate talent, promote commercialization, effectively combine VC with industries.

S&T commercialization

China has accomplished a trilogy in S&T commercialization: over the past five years, the government revised laws on S&T commercialization, promulgated a number of rules and regulations that facilitate and promote S&T commercialization, kicked off a series of moves—the end result is positive considering the significant progress made in technology commercialization and rapid growth of tech transaction market which reached 1.3 trillion yuan in 2017.

MOST at Two Sessions:

http://digitalpaper.stdaily.com/http_www.kjrb.com/kjrb/html/2018-03/10/content_390065.htm?div=-1

http://most.gov.cn/xinwzx/xwzx/twzb/fbh18031001/twbbzbzy/201803/t20180310_138522.htm

http://most.gov.cn/xinwzx/xwzx/twzb/fbh18031001/twbbzbzy/201803/t20180310_138521.htm

http://most.gov.cn/xinwzx/xwzx/twzb/fbh18031001/twbbzbzy/201803/t20180310_138520.htm

http://most.gov.cn/xinwzx/xwzx/twzb/fbh18031001/twbbzbzy/201803/t20180310_138519.htm

http://digitalpaper.stdaily.com/http_www.kjrb.com/kjrb/html/2018-03/12/content_390192.htm?div=-1