Fordham’s China IP Module (NYC), China IP Road Shows (Dallas and Houston) & Mandarin Intro to IP (Houston)

The USPTO in conjunction with its Dallas regional office, the United States Commercial Service and other partners is offering two seminars about protecting your IP in China and another seminar discussing IP basics in Chinese (Guoyu/Putonghua).  These  three events are free and open to the public, but registration is required and seating is limited. 

Tuesday, May 2: Lone Star Strategies for IP in China, What Texas Companies Need to Know Now in Dallas, TX

Belo Mansion/ 2101 Ross Ave. / Dallas, TX 75201 / 8:00 AM – 3:00 PM CT

Registration: https://emenuapps.ita.doc.gov/ePublic/event/editWebReg.do?SmartCode=7Q9Z

Registration Deadline is April 28.

Thursday, May 4: Mandarin Language Intro to IP in Houston, TX

GE Oil and Gas / 4424 W. Sam Houston Pkwy North / Room 108 (1st Floor) / Houston, TX 77041 / 1:00 – 5:30 PM CT

Registration: https://mandarin-introduction-ip.eventbrite.com

Following the event is a reception from 5:30 – 6:30 PM CT.

 Friday, May 5: Lone Star Strategies for IP in China, What Texas Companies Need to Know Now in Houston, TX

Bracewell LLP / 711 Louisiana Street / Suite 2300 / Houston, TX 77002 / 8:30 AM – 5:30 PM CT

Registration: https://info.bracewelllaw.com/38/1060/compose-email/uspto-ip-in-china-05-05-fw.asp?sid=blankform (Note that this registration may be temporarily down).

Further contact: USPTO – Texas Regional Office 469-295-9000

Also of interest, Fordham’s annual IP conference in NYC will host a China IP session in its opening plenary on Thursday, April 20.  Speakers include myself, David Kappos,  Prof. Peter Yu, fellow blogger Erick Robinson (Beijing East IP Ltd.),  Parker Zhang (Assistant General Counsel, Baidu) and others.  See the IP Institute’s website for further details (http://fordhamipinstitute.com/).

 

 

 

 

Upcoming China IP Program with the Boston Bar

The U.S. Patent and Trademark Office, Boston Bar Association and the U.S. Commercial Service for Massachusetts are bringing together thought leaders and policy makers on China IP issues from U.S. Government, academics to discuss China IP issues on April 18, 2017.  Here is the flyer of the Boston Bar China IP Program.

The Boston event is part of the U.S. PTO China team’s nationwide efforts to help U.S. businesses and inventors understand how they can obtain and enforce IP rights in China. Registration including breakfast and lunch is $25.00. The program lasts from 8 AM to 1 PM, and there are optional consultations with industry at the Commerce Department’s offices in Boston immediately following the program.  Prof. Mark Wu of Harvard Law School is the keynote speaker.

The next programs in this series will be in Dallas and Houston.

Stay tuned…

 

GAI’s Comments on AUCL

Ahead of schedule, George Mason University’s Global Antitrust Institute (“GAI”) has prepared its comments on the NPC’s proposed revisions to the Anti-Unfair Competition Law, available here. 

GAI commended the National People’s Congress for deleting Article 6 on abuse of superior bargaining position and recommended that any provisions that relate to conduct covered by China’s Anti-Monopoly Law (AML) be omitted entirely. GAI also strongly urged that Article 11 (which provides that “[b]usiness operators selling goods must not bundle the sale of goods against buyers’ wishes, and must not attach other unreasonable conditions”) be omitted in its entirety, as such conduct is already covered by Article 17(5) of the AML or at the very least, Article 11 should be revised to adopt an effects-based approach.

In my opinion, the argument that the AUCL shouldn’t duplicate the AML can also be said of other laws in China, notably the Technology Import / Export Regulations and Article 329 of the Contract Law regarding monopolization of technology.  Other laws, such as the Pricing Law also have a strong overlap with the AML, particularly as administered by NDRC. 

GAI’s comments on a prior State Council Legislative Affairs Office draft, along with the comments of the American Bar Association and American Intellectual Property Law Institute are available through this link.

I hope to post the comments of other organizations on the AUCL on this blog in the future. If you would like your organization’s comments to be considered for distributing here, please send your comments to me at: chinaipr@yahoo.com.

Of Trade Secrets, Section 337, AUCL Reform and Evidence Production

When faced with trade secret misappropriation, the United States International Trade Commission can provide a forum for U.S. companies faced with unfair competition resulting from the misappropriation, even if the “theft” occurs entirely in China and/or a misappropriated process is used in China to manufacture a product imported into the United States.  In Certain Cast Steel Railway Wheels, Certain Processes for Manufacturing Or Relating To Same and Certain Products Containing Same, 337-TA-655, Amsted Industries Inc. which licensed certain confidential manufacturing technology to two Chinese companies, Datong ABC Castings Co. (DACC), and Xinyang Amsted Tonghe Wheels Company Limited (Tonghe), claimed the respondent, TianRui Group Co. Ltd, had poached employees from DACC and Tonghe and stolen from them materials and other proprietary information sufficient to establish an identical, competing manufacturing line.  The ITC found a violation of Section 337 and issued a ten-year exclusion order.  On appeal of this landmark case, the U.S. Court of Appeals for the Federal Circuit held that the ITC has jurisdiction to reach trade secret misappropriation that occurs entirely abroad, so long as there is a nexus between the misappropriated trade secrets and the imported product.  Tianrui Group Co. v. ITC, 661 F.3d 1322, 1337 (Fed. Cir. 2011).  Interestingly, in that instance, the Chinese dometic authorities aligned with the United States.  Because railway wheels must be certified for use in China (as is the case in the U.S.), the Chinese Ministry of Railways declined to certify the Tianrui wheels until the U.S. matter was concluded.  The willingness of the Ministry of Railways to decertify Tianrui’s wheels while an ITC action was pending stands as an important contra-factual that suggests the relationship between trade secret theft in China and Chinese domestic industrial policy may be overstated.

More recently, in Certain Rubber Resins and Processes for Manufacturing Same, 337-TA-849, the ITC found a violation of Section 337 based on trade secret misappropriation that occurred entirely in China.  In that case, the Chinese authorities had ruled that there was no trade secret misappropriation in both civil and criminal proceedings.  In Sino Legend Chemical Co. v. International Trade Commission, 623 F. App’x 1016 (Fed. Cir. 2015), the respondents sought to overturn Tianrui, arguing that the ITC does not have jurisdiction to reach misappropriation taking place entirely abroad and that the ITC should have deferred to the Chinese authorities as a matter of comity.  In a nonprecedential judgment, the Federal Circuit affirmed the Commission’s finding.  On September 30, 2016, the respondent in the ITC case, Sino Legend, filed a petition for certiorari asking the U.S. Supreme Court to overrule TianRui, arguing that Section 337(a)(1)(A) contains no clear indication that it should apply extraterritorially and barring the importation of goods made using trade secrets misappropriated in China constitutes the impermissible regulation of conduct occurring overseas.  As an indication of how important this matter is to the Chinese government, in a rare filing, the Ministry of Commerce submitted an amicus brief supporting certiorari.  On January 9, 2017, the Supreme Court denied the certiorari petition.  Thus, U.S.-based companies can continue to turn to the ITC as a viable alternative for relief from trade secret misappropriation taking place in China.  Equally problematic, however, was the willingness of China’s judiciary to misconstrue the 337 decision as a victory for the Chinese defendants and to deem a lower court case as a model case while a related case was still pending on appeal to the court.  This case has also been an important counter-contra-factual indication regarding the relationship between trade secret theft in China and independence of the cour

How does this relate to legislative reform of the Anti-Unfair Competition Law in China?

China is currently revising its AntiUnfair Competition Law, which is the foundational law for trade secrets.  An important first step in addressing trade secret theft in China was the recognition that trade secret protection is a proper subject of the civil code in recent amendments to the civil code; i.e., that is not simply a matter of market regulation but of theft of a private property rightThe inclusion of trade secrets in the revisions to China’s general principles of the civil code was advocated in this blog, and also noted as appearing in an earlier draft.  The SPC, including Madame Tao Kaiyuan, were also involved in providing expert opinions on the draft.  The NPC comments on  the recent proposed revisions of the AUCL specifically calls out the important role of the SPC in revising the most recent draft of the AUCL, and note that civil compensation should assume a primary role in enforcing the anti-unfair competition law generally (善民事赔偿责任优先、与行政处罚并行的法律责任体系。不正当竞争违法行为首先损害了其他经营者的合法权益,需要民事赔偿优先,调动其他经营者制止不正当竞争行为的积极性。)  The primacy of civil enforcement is also found in Article 20 of the draft law itself with a clarification that a business operator who violates the law shall “bear civil liability” and that civil liability shall take priority over fines (Article 30).  I believe these efforts reflect some of the momentum generated by the SPC’s highly useful report, focusing on civil enforcement of trade secret.  Also of note is that at about the same time as that report, the US China Business Council outlined a number of the evidentiary problems in trade secret cases in its proposals for Chinese trade secret reform (2013), including burdensome notarization procedures, procedures which risk further disclosure of confidential information, difficulties in cooperation with the police, etc

The inclusion of trade secrets as a civil right was accomplished with civil code revisions adopted on March 15, 2017, with an implementation date of October 1, 2017.  (中华人民共和国民法总则)。  Article 63(5) includes trade secrets as a subject of intellectual property rights protection:

第一百二十三条 民事主体依法享有知识产权。知识产权是权利人依法就下列客体享有的专有的权利:    (一)作品;    (二)发明、实用新型、外观设计;    (三)商标;    (四)地理标志;    (五)商业秘密;    (六)集成电路布图设计;    (七)植物新品种;    (八)法律规定的其他客体。

Section 337 and the New Trade Secret Regime?

How do these reforms in trade secret litigation interact with US Section 337 procedures? Issues involving production of evidence between the US and China can be at the heart of many IP cases, but are especially critical in trade secret cases.   While some reforms have already been made in China, such as availability of preliminary evidence preservation measures in trade secret cases, the removal in the recent draft of the AUCL of a provision in an earlier draft that would have provided for a modest burden of proof reversal in trade secret matters is also troubling:

“Where the rights holders of trade secrets can prove that information used by others is substantially the same as their trade secrets and that those others had the capacity to obtain their trade secrets, those others shall bear the burden of proof to show that the information they used came from lawful sources.” (proposed Art. 22)

As the coauthor of this blog, Jay Reiziss, points out in his attached presentation to my recent class at Fordham, difficulties in gathering evidence have often been critical to use of Section 337 proceedings.  US Administrative Law Judges have granted motions to use the Hague Convention, such as where a foreign government formally weighs in (Switzerland indicated that it would cooperate with such a request (Certain Sintered Rare Earth Magnets, Inv. No. 337-TA855, Order No. 8). However other cases have determined that Hague Convention procedures would not be timely due to compressed ITC schedules (Certain Hardware Logic Emulation Systems, Inv. No. 337TA-383, Order No. 65).  Because of the threat of adverse inferences, there have also been several instances where Chinese respondents have reluctantly permitted plant tours to accommodate discovery requests (Certain R-134a Coolant, Inv. No. 337-TA-623.  FlexsysAmerica v. KumhoTire U.S.A., 5:05-cv-156 (N.D. Ohio)  Issues involving obtaining timely production of evidence have also appeared in other cases, notably the Gucci/Tiffany cases in the Second Circuit.

Even if the AUCL may not provide enough support for evidence production in China, the SPC has identified several bottlenecks in cross-border adjudication of disputes, including “hearing cross-border cases–service of process to overseas parties; obtaining evidence crossborder; determining facts that have occurred abroad; determining and applying foreign law”, which suggest that future cooperation with US courts may also improve.   Hopefully, as China improves its mechanisms to obtain foreign evidence and if it takes more proactive stances towards cross border cases, towards allowing production of evidence China, and as it improves its civil system, foreigners will be less reluctant to bring IP cases, especially trade secret cases, in China. In the meantime, it appears that the ITC and U.S. civil actions will continue to play a very important role in driving evidence based decisions on trade secret infringement involving China

 

Coauthored by Mark A. Cohen and Jay Reiziss.  This blog represents the authors’ personal views only and should not be attributable to any client, employer or any third party.

 

 

 

 

 

 

 

Upcoming Licensing Program in Taiwan

The American Institute of Taiwan (AIT) and the Taiwan Ministry of Economic Affairs, amongst others, are sponsoring a licensing program at AIT on March 30, 2017. The program will cover licensing issues faced by U.S. companies in Taiwan and Taiwan companies in the U.S., as well as open source innovation and tax considerations in licensing.

 A draft agenda with registration form is attached. If you are interested in attending, please register with AIT, Ms. Lisa Yang, as indicated on the form.

More Policy Discussions on Pharma IP Reform

There appear to be some serious discussion of late regarding China using its IP laws to encourage more innovative drugs.  One significant advance was the recent amendments to China’s Patent Examination Guidelines to permit post-filing supplementation of data in certain circumstances.

In addition to this reform, there is also talk of China addressing issues involving data exclusivity, lack of patent term extension and patent linkage.

CFDA Commissioner Bi Jingquan noted some of these developments at a press conference at the time of the NPC Meeting on February 27,2017:

鼓励药品的创新。我们要研究鼓励药品创新的政策,完善药品专利链接和数据保护制度,并且实现境内外临床数据的国际互认,降低企业的研发成本。

We want to study the policy of encouraging drug innovation, improve patent linkage and the data protection system, and to achieve domestic and international clinical data mutual recognition, reducing the cost of R &

Commissioner Bi also made a similar point in an interview on October 31, 2016:

..要努力建立鼓励创新的药品审评审批制度,完善法规制度、政策措施、技术指南,以临床为导向重构药品审评流程,以审评为中心整合监管资源,提高审评能力和监管效率,研究临床试验管理、数据保护、专利链接等与创新密切相关的政策,以监管制度创新推动制药业转型升级和供给侧结构性改革。

efforts should be made to… research clinical trial management, data protection, patent linkage and other policies closely related to innovation, to promote regulatory innovation to promote the transformation and upgrading of the pharmaceutical industry and supply side of the structural reform.

One pharma company (  天士力) CEO also made a case for patent term extension at the NPC meetings, due to regulatory delays.

None of these pharmaceutical IP issues are totally new to China.  Hopefully, their endorsement by industry and government leaders will help speed their consideration  and implementation.

 

RIP,Dr. Richard Solomon

Dr. Richard Solomon, who worked with Dr. Henry Kissinger on normalization of relations between the United States and China passed away on March 13, 2017.  The Washington Post described Solomon in its obituary on March 14 as “an intellectual polymath whose interests encompassed science, photography and international affairs.”

Dr. Solomon wrote a monograph on China’s government negotiating strategies from the period 1967-1984, which included the following guidelines for U.S. negotiators:

A)      Know the substantive issues cold.

B)      Master the past negotiation record.

C)      Know your own bottom line.

D)      Present your positions in a broad framework

E)      Be patient!

F)       Avoid time deadlines.

G)     Minimize media pressures.

H)     Develop a negotiating strategy and counter tactics.

His advice still holds.  My own three guidelines for negotiation are: be principled, informed and respectful, which overlaps considerably with these.

I did not know Dick Solomon well.  Some of his colleagues from those early days did help me out when I was a student and in the early days of my career.  I am grateful for his many contributions.