April 10 – 16, 2018 Updates

1.New Policies for  Innovative Drugs in China.  Premier Li Keqiang held an executive meeting of the State Council on April 12, 2018 to adopt a series measures to encourage the importation of innovative medicines into the Chinese market, to enhance intellectual property protection, and to lower the price of medications. The measures involve the exemption of cancer drugs from customs duty, reduction of drug prices, expedition and optimization of the process for authorization on the commercialization of imported innovative medicines, enhancement in intellectual property protection and quality monitoring.

The measures on enhancement in intellectual property protection includes the 6-year maximum data exclusivity period for innovative chemical medicines.  Further, a maximum of 5 years’ compensation of patent term will be offered for innovative new medicines which are applied for commercialization on domestic and overseas markets simultaneously (which appears to be a patent term extension system). See more discussion of the original CFDA proposals which these these appear to draw on here.  It’s still unclear how such policies will be implemented, The specific policies announced by the official in English is available here.

2.China to introduce punitive damages for IP infringements. According to an interview with Shen Changyu on April 12, China will soon introduce punitive damages for IP infringements. Shen said a fourth revision of the Patent Law will come faster than expected. “We are introducing a punitive damages system for IPR infringement to ensure that offenders pay a big price.” Shen also called on foreign governments to improve protection of Chinese IPR.

3.Commerce Blocks China’s ZTE from Exporting Tech from U.S.  The U.S. blocked Chinese telecommunications-gear maker ZTE Corp. from exporting sensitive technology from America.  According to a statement by the Commerce Department, ZTE made false statements to the Bureau of Industry and Security in 2016 and 2017 related to “senior employee disciplinary actions the company said it was taking or had already taken.”. ZTE did not disclose the factthat it paid full bonuses to employees who engaged in illegal conduct, and failed to issue letters of reprimand, the Department said.  Alleged export control violations had also been implicated in the NDA dispute between Vringo and ZTE involving settlement of patent claims, which were previously discussed here.

4.Judge Orrick Issues Anti-suit Injunction Against Huawei.  In the continuing transpacific saga of Huawei v Samsung, Judge Orrick of the N.D. of California issued an anti-suit injunction against Huawei’s implementing a Shenzhen intermediate court’s injunction against Samsung for the same patents in suit.  A good summary from the essentialpatentblog is found here.  The redacted decision is here.   One possible explanation for Huawei’s strategy might be that Huawei was trying to get a quick decision from Shenzhen, its home court, on a matter also involving an overseas litigation, such as Huawei obtained in the Interdigital dispute, and is also a common enough Chinese litigation tactic.  Such a decision might have tied Judge Orrick’s hand on at least the Chinese patents in suit, as well as on licensing behavior.  Judge Orrick in fact noted that “Chinese injunctions would likely force [Samsung] to accept Huawei’s licensing terms, before any count has an opportunity to adjudicate the parties’ breach of contract claims.”  (p. 17). 

Although anti-suit injunctions may be more common in common law jurisdictions,  it is wrong to assume that Chinese courts take a strictly “hands-off” attitude towards foreign proceedings.  One aggressive Chinese response might be to borrow a page from a Chinese (Wuhan) maritime court decision of last year, where the Chinese court issued an anti-anti-suit injunction, ordering a foreign ship owner to withdraw an anti-suit injunction in Hong Kong.  Commentators have also suggested that generally Chinese courts more commonly ignore these injunctions entirely.  Another approach was taken by the Shenzhen court in Huawei v Interdigital,  where the court imposed imposed damages on a US party seeking injunctive relief (an exclusion order) in a US Section 337 proceeding involving FRAND-encumbered SEP’s.   This did not constitute an anti-suit injunction, but rather “anti-suit damages.”  These actions may be based more on notions of judicial sovereignty than comity.  Judge Orrick for his part, did undertaken a comity analysis in rendering his decision, which is part of the non-confidential order he signed.

Probably the best approach however is for the parties to amicably resolve their disputes through arbitration or mediation. After all, even Huawei and Interdigital were ultimately able to settle their differences.

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