A Quick Report on the EIPC MIIT Conference Including SAIC’s IP Abuse Rules, Patent Law Amendments, EIPC MIIT Standardization Policies, Standards and IP Abuse…

EIPC MIIT’s Conference on Intellectual Property Standards and Anti-Monopoly Law convened on December 10 and 11 in Beijing.  The conference brought together about 150 international and Chinese experts, including lawyers, judges, academics, diplomats, and other professionals to the Wanshou Hotel in the Haidian District, Beijing.  There were over over 30 speakers. The initial speakers set the tone for the conference by concentrating on one theme:  China’s anti-monopoly regime had entered a new phase from theory to enforcement.  Further, this transition period is characterized by the need to balance anti-monopoly law and IP rights, regulation and innovation.

One example of the struggle for balance is the debate over the prevalence and importance of holdouts, or the practice of standards implementers engaging in conduct intended to drive royalties down royalties for Standards Essential Patent (SEP) holders to lower than F/RAND levels.  Dina Kallay, Director of Intellectual Property and Competition at Ericsson Ltd.  argued the problem of hold outs was real.  David Wang, Director of Standards and IPR Strategy, Intellectual Property Rights Department of Huawei Technologies Co., argued that that there is no evidence of real life hold outs.  His opinion comes in light of Huawei’s recent litigation with IDC, in which a court ruled that IDC should compensate Huawei for excessive pricing and tying practices.

Many speakers addressed current and future reforms.  Yang Jie, Director of the Anti-Monopoly and Anti-Unfair Competition Enforcement Bureau at SAIC, explained new revisions to its forthcoming rules on abuse of dominance and exclusionary relief (presumably, SAIC’s IP Abuse guidelines or rules). Since August, SAIC has modified seven articles. First, Yang Jie said that SAIC has maintained the “essential facilities” doctrine in the new version, however with some modifications. The doctrine will apply when an intellectual property right cannot be easily substituted in the relevant market, other players want to be part of the market, a refusal to deal would restrict competition or innovation in the relevant market, it harms the public interest, and the licensing of the patent would not negatively or unreasonably harm the interests of the patentee.

Yang Jie also explained that SAIC has adopted a narrow interpretation of refusal to deal for players in a dominant position.  It will only apply when the intellectual property right constitutes an essential element for production.  Moreover, a violation only occurs when the behavior limits competition. Additionally, in abuse of dominance, “abuse” must be considered parallel to other elements and the behavior must harm the public interest or consumer behavior.

Concerning guidelines for the standard setting process, Yang Jie explained that the rules do not include a special provision for horizontal agreements in the standard setting process, because this is covered under the provision for anti-monopoly agreements.  Furthermore, Yang Jie divided monopolistic behavior in the standard setting into standard setting procedures – for instance if a firm fails to say something in a patent application – and standard implementation, which would include violations of F/RAND commitments.  Yang Jie said that the standards clarify the “what should have been known” standard for the standard setting process.  For standard implementation, the guidelines add the requirement of restricting or limiting competition.  Additionally, the new guidelines will treat intellectual property rights the same as other property rights. In other words, SEP holders are not automatically deemed to have market dominant positions. Instead, a case specific analysis must show that a firm is “dominant” within the meaning of relevant provisions of the Anitmonopoly Law.

Lastly, the guidelines no longer include a specific provision targeting copyright collecting societies for abuse of dominance or restricting competition. Yang Jie explained that the provision was cut because there was no real evidence of copyright organizations abusing their position. That being said, enforcement agencies can still pursue copyright organizations as they are not otherwise exempt from the law.

Yang Jie also said that the official version has not yet been promulgated. The regulations have been submitted to relevant bodies within the State Council for review (note from Mark Cohen: it is unclear to me if this is registration with the State Council, or review by the Antimonpoly Enforcement Agencies, or another process.  If this document is an SAIC rule, then review by the State Council should be limited).

Zhang Yonghua, Deputy Director of No. 1 Division of the Legal Affairs Department of the State Intellectual Property Office of China (SIPO), provided details regarding the latest draft of the proposed patent law amendments.  The new draft empowers judicial and administrative bodies with the right of investigation and evidence collection. It also allows administrative agencies to effectively settle infringement issues by compensation.  Furthermore, the draft provides for punitive damages for severe infringements, a concept already employed in China’s trademark law. Additionally, protection for industrial design is extended to 15 years. The new draft also introduces a burden of proof shifting scheme in which the burden of proof shifts once the patentee has satisfied certain of its evidentiary burdens.

Zheng Wen, Deputy Director General of the Anti-Monopoly Bureau, focused on the need for improvement in the merger review process of MofCOM.  Zheng Wen said that MOFCOM had received over 1000 cases since August 2008 and had finished over 900, imposing sanctions in only 3% of the cases.  Zheng suggested that there was a need to impose more sanctions and to crack down on parties that illegally skipped merger review.  Since November, MOFCOM has been publishing notices of sanctions on parties that did not report their proposed merger but should have.  Zheng Wen also expressed the desire to set up a long term cooperation mechanism with the E.U. and U.S., especially for large scale transnational mergers.

Huang Yong, Vice Chair of the Expert Advisory Committee under the State Council Anti-Monopoly Commission, stated that allowing agencies the rights of investigation and suggestion would be a step in the right direction.

Concerning the new Specialized IP Courts, Jin Kesheng, Deputy Chief Judge of the IPR Tribunal and senior Judge of the Supreme Court said that we could look forward to a judicial interpretation regarding the role of the court’s “technology investigator” position.  Additionally, Zhang Xiaojin, Chief Judge of the Second Tribunal in the Beijing Intellectual Property Court, expressed serious concern over the new court’s ability to handle their large caseload. For instance, the Beijing specialized IP court has 100 staff in total, only 22 of whom are judges and the court is expected to receive 15,000 cases annually.  He expressed further concern over their ability to carry out judicial reform while so severely understaffed.

Finally, Shi Shaohua of EIPC MIIT spoke about feedback to EIPC MIIT’s own Template for IP Policies in Industry Standards Organizations, (which I previously wrote about here). Two criticisms were that the structure was too complicated and that courts do not have sufficient expertise to adjudicate F/RAND issues; injunctions and unwilling licensors;  and reference factors for unreasonable licensing, including factors such as the smallest component or device, the total aggregate royalties of all potential SEPs, the influence of standards on patents, and the extra value that standards bring to a patent.  EIPC MIIT also received comments concerning reciprocity requirements, for instance what standard should be employed and whether adding restrictions to SEP licensing will influence cross-licensing, market access, and reciprocity.

The conference also included presentations on Legal Issues of Competition in Internet Industry” and “Internet Based Information Security and Intellectual Property Protection” which unfortunately we were not able to cover.

Prepared by Marc Epstein of Fordham Law School with edits by Mark Cohen.   A special thanks to EIPC MIIT and Shi Shaohua for allowing a Fordham student to attend this important conference!  Please provide us with any corrections, additions or comments!  As always, these comments are the authors’ own.

Ministry of Commerce IP Program in DC December 5

Chen Fuli, IP Attaché at the Chinese Embassy in Washington, DC the morning of December 5.   The program is free of charge, but seating may be limited.   You should RSVP at: lishuai@mofcom.gov.cn.

The topics are all ones that I have actively followed in this blog.  Here is the tentative agenda:

International High Level IPR Cooperation Forum

Dec 5,  Georgetown Holiday Inn

2101 Wisconsin Ave, NW, 20007, Washington DC

 9:00-9:20  Opening remarks, by Both China and U.S. Representatives

 9:20-9:40   New developments in IP enforcement in China, by Director Jing Zhang from the Office of Fighting Against IPR Infringing and Making or Selling Counterfeit and Shoddy Products under the State Council

9:40-10:00  New amended Chinese Trademark Law, by Deputy Director General Qing Xia from CTMO

 10:00-10:15 Q & A

 10:15-10:30 Coffee Break

 10:30-10:50  Amending of Chinese Copyright Law by Deputy Director Ping Hu from NCAC

10:50-11:10  Amending of Chinese Patent Law and Regulation on Service Invention by director Yanhong Wang from SIPO

11:10-11:30  New practice of IP trials after the amendment of Chinese Civil Procedure Law by Judge Yuanming Qin from SPC

11:30-11:50 Q & A

11:50-12:00 Closing Remarks

—————-

12:00-13:30                    Lunch (hosted by China for all the participants)

In addition to the speakers noted above, there will also be Chinese official participants from public security, Customs, procuratorate, AQSIQ and other agencies, which should help make for lively discussion and interaction.  I hope to see you there!

Putting It Together: Some English Language Resources on Copyright Developments

The following are some English language reference materials for those who are closely following Chinese copyright developments, which can also be useful for those attending Fordham’s conference on July 25. Continue reading

China Copyright Conference – July 25, Fordham Law School

The Intellectual Property Law Institute at Fordham Law School, directed by Prof. Hugh Hansen, will host a conference on Chinese copyright law and policy, July 25, 2012. Topics will include:

  • Recent developments in substantive law
  • Sports broadcasting
  • Internet regulation
  • Judicial trends
  • Copyright, design, and conflicts with other trends

The Conference will be directed by Prof. Mark Cohen, and will take place in Room 302 of the Law School, 140 W. 62nd St., New York City. It will run from 10:30 to about 2:00, with lunch included. There will be no cost to attendees.  However, reservations are requested.

Continue reading

Call for Paper – 2013 “Suzhou-Silicon Valley-Beijing” International Innovation Conference

The 2013 “Suzhou-Silicon Valley” International Innovation Conference will be held in Suzhou, China on July 7-8, 2013. The Conference is jointly organized by the Center for Enterprise Innovation and Development at Soochow University, Lucas Graduate School of Business at San Jose State University, the China Institute for Science and Technology Policy at Tsinghua University, School of Information of UC Berkeley, and supported by many prominent organizations such as the Western Returned Scholars Association (WRSA) of China. Researchers, educators and students, policy makers, consultants, entrepreneurs and corporate managers are encouraged to submit papers.

More information can be found at http://ceid.suda.edu.cn/2013conference/index.asp.

Understanding China’s New Environment for Intellectual Property

On April 11th, Fordham Law School held its first China focused IP Conference, “Understanding China’s New Environment for Intellectual Property”.  The program covered a range of issues, from patenting trends, to challenges in design protection, and intellectual property protection challenges for cloud computing in China, with mixed panels of academics, practitioners, judges and government officials from both countries. Continue reading