An Update on Data-Driven Reports on China’s IP Enforcement Environment

Several useful empirical reports on China’s IP environment have been released in the past few weeks.  I summarize four of them:

Trademark Litigation

Jerry Xia and his colleagues at the Anjie firm have written ”Trademark litigation Forum Shopping in China – What the Data Tells Us” (the “Trademark Report”) (July 8, 2020).

The Report looks at over 11,000 court judgments from 2019.  Only two of the top ten cities for hearing trademark matters were “Tier 1” jurisdictions, namely Shanghai and Shenzhen.  The authors argue that the experience of less well-known courts, including basic courts, is underestimated by many lawyers.  In some jurisdictions, such as in Zhejiang and Jiangsu, win rates for plaintiffs are as high as 100%.  These courts were also among the most efficient courts in adjudicating trademark disputes.   By comparison, the Beijing IP Court awarded fewer favorable decisions to plaintiffs and was slower, but it also awarded higher damages.

The Trademark Report argues that concerns about local protectionism in IP cases for foreign plaintiffs may be exaggerated.  The authors note that the probability of winning based on the available data is generally higher for foreign parties than domestic parties.  A similar argument is advanced in the Software Copyright Litigation Report (discussed below), as well as in other empirical studies.

The Trademark Report is available to subscribers of the World Trademark Review (issue 84).  It is behind a paywall for the next two months.  Registered non-subscribers may view two articles free per month.

SEP Litigation

LexField Law offices released a report by Zhao Qishan and Lu Zhen “Statistics of Chinese SEP Cases in 2011-2019” (the “SEP Report”).  The report is available here.

The SEP Report notes that from 2011 to December 2019, Chinese courts accepted 160 cases related to SEPs.  Not surprisingly, most of the cases involve foreign entities and relate to the telecommunication industry (96.25%).  Most of the cases were filed with the courts in Beijing, Guangdong, Shanghai, and Jiangsu.  Both practicing and non-practicing entities were plaintiffs.  Ten companies were responsible for 125 of the 160 cases reported, with practicing entities as the primary defendants.   Foreigners are the principal plaintiffs, but only by a slight margin.  The cases largely involved patent infringement disputes.  Cases asking the court to determine FRAND terms during license negotiations are also on the rise.  About 72% of the cases were withdrawn before final judgment.  The Huawei/Samsung settlement alone was responsible for the withdrawal of 28 cases.

The SEP Report provides a useful overview of the amount of litigation occurring over the past 9 years on SEPs, including understanding the role of foreign plaintiffs including NPE’s and China’s increasing importance in global SEP litigation.  As many SEP cases are not published, a major contribution of this article is in the description of various cases, as well as a collection of the docket numbers and case summaries.   A useful counterpart article on the foreign experience of SEP litigation in China is Gaetan de Rasenfosse’s article from 2017 on “Discrimination against foreigners in the patent system: Evidence from standard-essential patents on patent validity.”

 Software Copyright Litigation

Rouse published a China Software Litigation Report  (the “Software Report”) on July 7, 2020. The Software Report is based upon its proprietary CIELA database in conjunction with its network firm Lusheng and is available for free upon completion of this request form.  The Software Report aims to demonstrate how foreign litigants have fared in civil software piracy litigation in China and helps to delineate useful strategies in light of evolving judicial practices, the Phase 1 Trade Agreement commitments on software piracy as well as anticipated changes in the Copyright Law.

The Software Report reveals that out of 1,303 first instance cases reported in CIELA from 2006-2019, first instance cases brought by foreign plaintiffs numbered 285. In the authors’ view the key to success in software copyright infringement cases is proof of infringement.  In particular,  plaintiffs who secured evidence preservation orders were more likely to be successful.  The authors also suggest on-line usage tracking data as proof of copyright infringement.

One long-standing issue in software copyright enforcement has been concerns that governmental entities may have de facto immunity from successful lawsuits.  The data also does not support the assumption that State-Owned Enterprises may be immune to a successful lawsuit.  While the sample size of cases brought against SOEs is small, the win rate by foreign plaintiffs against different SOE’s is high as 85.7% (14 cases).  No data is presented on success rates in suing the government itself.   This issue also arose in a recent Berkeley Law webinar on copyright reform in China in response.  The panel observed that while there were successful cases against SOE’s in China for software copyright infringement, foreign companies are generally reluctant to sue foreign governments anywhere in the world.

Guangdong and Shanghai are the top venues for foreign and domestic litigants of software copyright disputes.  Forum shopping does not appear to be a useful strategy as software piracy choices are limited to suing where the infringing act is occurring. Unless the defendant has more than one location where piracy is taking place, action will need to be taken in the defendant’s home jurisdiction

The writers also note a high win rate for foreign plaintiffs in their sector (85.3%).  This average for foreigners is brought down by two of the most prolific plaintiffs in the dataset, who filed “bulk lawsuits” and received a markedly lower win rate.  Microsoft had an exemplary win rate according to the CIELA data – 63 cases filed and 63 wins.  The authors make out convincing arguments for greater use of civil remedies in the foreign software owners’ toolbox to address claims of rampant piracy.

Note that IAM did a short analysis of the Software Report, as did AsiaIP.

Trade Secret Cases         

Jerry Xia and Yulu Wang’s ”Analysis of Guiding Trade Secret Cases in China Published during the World IP Day in 2020” (the “Trade Secret Report”)  is available here in Chinese and machine translation.

Jerry Xia presented The Trade Secret Report at a recent Berkeley webinar on trade secret developments in China. According to the authors, of the more than 600 typical cases published in 2020, there were only 47 trade secret cases, accounting for less than 7.8% of the total.  By comparison, according to a Beijing Higher People’s Court study, from 2013 to 2017, a total of 338 cases of unfair competition involving trade secrets were concluded by judgment in the courts.  The typical case numbers may seem small; however, trade secret cases are a small cohort of China’s IP litigation docket. Earlier data, reported by CIELA also showed a low volume of trade secret litigation. I have also noted elsewhere on this blog that trade secrets are a small part of the criminal IP docket and of the AUCL docket.  The Trade Secret Report does not compare the data on typical trade secret cases with prior years’ reporting on typical cases, which could be a further indication of the interest of China’s courts in establishing clear rules regarding adjudication of trade secret disputes.

The Trade Secret Report notes that the number of cases in which trade secrets where plaintiffs won was 113, or about 35 percent of all cases.  Relatively low win rates have also been reported previously on this blog.  The cases equally involved both business information or technical information.  Zhejiang Province (10), Guangdong Province (9) and Shandong Province (7) announced the most cases. Of the 47 typical cases, there were no cases involving foreign parties and only one case involving Taiwan.

The authors additionally searched the public database for cases involving trade secrets from 2016 to the present.  The number of reported cases involving foreign parties was rare.  Only nine cases were retrieved, involving parties such as the United States, Japan, Germany and Australia, four of which were foreign vs. local, three cases were local vs. foreign, and two were foreign vs. foreign.  The relatively high percentage of local vs foreign cases in a limited cohort may nonetheless be concerning, particularly in light of proposed judicial interpretations regarding enhanced punishment when trade secrets are misappropriated on behalf of foreign actors.   Of the six cases in which foreign entities were plaintiffs, two were dismissed, two were voluntarily withdrawn and the results of the remaining two were not made public. Of the five cases in which foreign entities were defendants, the plaintiffs’ claims were rejected in four cases, and the outcome of the other case was not made public.

Among the published cases in 2020, there were two cases of punitive damages involving trade secrets.   These two typical cases do not give any clear criteria for the determination of “malice”. However, in determining the base and multiples of punitive damages, one typical case provides some guidance:  In a criminal case, a lost licensing fee was used as a calculation for assessing the severity of the punishment.  This is consistent with the proposed judicial interpretation of Criminal Cases Involving Trade Secrets, noted above.  The Trade Report also notes that although a shifting of the burden of proof is contemplated by the revised AUCL, there was no typical case on point.  However, there are two cases on point that came into effect after the new AUCL came into force

These typical cases help the public to understand how the courts are handling trade secret matters.  The relatively large cohort of trade secret typical cases so soon after legislation has been revised may also be seen as a political statement regarding judicial determination to handle these trade secret cases in accordance with the law.   As Susan Finder has noted in her article China’s Evolving Case Law System in Practice, these cases along with SPC guiding cases and other published instructional cases, may be important guides to the courts in determining how to rule on newly emerging issues.  In addition, at least in the case of IP issues, they may also provide assurances to foreign partners of the willingness of Chinese courts to comprehensively implement legislative reforms.

Improving Approaches to Using the Right Data

These reports all offer strategic guidance for companies and rightsholders and are part of a growing trend to use empirical tools in evaluating China’s IP environment.  The reports also effectively leverage recent or proposed changes in Chinese IP laws and judicial interpretations to provide a useful window into developing judicial practices.  While their utility for business strategic and policy purposes is easily recognized, concerns over case publication practices by the Chinese courts do limit their comprehensiveness.  The Software Report notes that most major jurisdictions are now publishing all their cases and it also notes that “the sample size of CIELA data is sufficient to be able to draw statistically valid conclusions.”  However, a consistent issue in looking at Chinese IP empirical studies is in determining how many cases are not being published throughout the country, particularly in less frequently utilized jurisdictions.

When cases are not published, some instructive messages can also be derived from the types of cases that are being published or actively promoted, such as the cases discussed in the Trade Secret Report.   Data on what is missing can be highly valuable data unto itself. One approach that is used in these reports is to rely upon a plurality of data sources to ensure that key judicial databases are comprehensive.  The SEP Report, for example, is based on “official announcements by the involved parties, information disclosed by the courts, and relevant news reports.”  Using a plurality of data sources may be necessary in analyzing trends in SEP cases as these cases are often not publicly available due to confidentiality concerns.  A pluralistic approach is also taken in the Trade Secret Report, which compares data and cases other than these typical cases in order to better help the reader to understand the nature of trade secret litigation in China as well as the role of the small cohort of typical cases in analyzing China’s developing IP jurisprudence.

A useful benchmark on the adequacy of a database of published cases is the SPC annual report on IP litigation, which generally reports on overall numbers of cases accepted or decided, rather than numbers of published cases.   In recent years, however, data on foreign-related cases has sometimes been missing or less comprehensively reported on in recent years. This may have been due to the trade war.  In the criminal IP context, comparisons among administrative referrals to police prosecution, police investigation data, procuratorate prosecution data, SPC case and conviction data and case publications (when they are available) can provide useful comparisons to evaluate trends.  For  examples of  typical SPC/published case discrepancies, the CIELA database includes 54,000 infringement cases of all types over a relatively longer period of time than the SPC database and the Trademark Report relies upon 11,056 judgments in 2019.  By comparison, the Supreme People’s Court reported that there were 65,209 trademark cases alone in 2019.   These discrepancies may be attributable in some part to delays between case publication, case decisions and case acceptance, lack of finality about the nature of reported cases (infringement/ownership/royalty or other disputes), the impact of settlement or preliminary relief in case publication, the confidentiality of decisions that may block publication, collection methodology used in supporting the analyses, and other factors.  These discrepancies and factors often make a selection of earlier years for analysis more attractive to scholars in reaching fully-informed decisions about judicial behavior, even if they may have less value for immediate strategic business purposes.

While I agree that the IP litigation environment for foreigners has been improving, foreigners nonetheless continue to underutilize China’s litigation system.  The Reports help underscore the importance of carefully crafted strategies which might help improve overall utilization and success rate.  In the future, I hope that reports will include such factors as the quality of the underlying right and the quality of the law firm representing the rightsholder. The relatively low level of foreign utilization of the Chinese judicial IP systems suggests that foreigners may also be selecting their strongest cases to litigate, which makes it difficult to compare with the more active docket of Chinese domestic rightsholders.  My guess is that assessing the impact of the law firm upon success rates will also show that the authors of these reports have contributed to a higher success rate for their clients.  In any event, legal analytics are becoming increasingly important tools for law firm and client success.

Interested in hearing more about Chinese legal analytics? Join us on Wednesday, July 15 4:30 Pacific Time for the final Berkeley China IP webinar, where we bring together David Kappos, Don Rosenberg, Mark Wu, Alex Capri, and Dan Prud’homme to discuss the future development of  China’s IP regime and its interactions with the United States.  The topic is certain to come up!

Essentially Derived Varieties and The Role of Leading Cases in Chinese Plant Variety Protection

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Editor’s Note: Plant Variety Protection (PVP) is a little-discussed topic in China’s IP regime. Indeed, this blog has only reported on PVP-specific issues
once before, and once in the context of the China-Swiss Free Trade Agreement (FTA). This guest blog post explores the relationship among plant variety protection, China’s treaty obligations, and determination of the scope of infringement based on essentially derived varieties (EDVs).   The author, Liz Freeman Rosenzweig, is a J.D. candidate at Berkeley Law. She obtained her Ph.D. in plant biology from Stanford University.

As with other intellectual property (IP) rights, China receives more applications for intellectual property protection of new plant varieties (PVP) than any other country. China grants these rights pursuant to its “Regulations on the Protection of New Varieties of Plants” (“Regulations”) (2014) (中华人民共和国植物新品种保护条例). However, China’s PVP legislative regime lags behind many other countries, largely because of China’s failure to date to accede to the most recent international treaty for protection of plant varieties, the 1991 Act of the International Convention for the Protection of New Varieties of Plants (UPOV ’91). Conversely, Chinese jurisprudence on the topic is significantly more developed than that in, for example, the United States. 

China is now considering amending its Regulations to include the concept of essentially derived varieties (EDVs) (实质性派生品种) and molecular markers (分子检测). Broadly speaking, these proposed amendments are also examples of two broader aspects of Chinese IP legal development: (1) China enacting legislation in anticipation or in excess of current international demands, and (2) Chinese legislation riding momentum generated in advance by judicial decision making. If China adopts the proposed amendments to its Regulations, the level of plant IP protection available in China could become among the strongest in the world. Moreover, the legislative changes would be based on the concrete experience and guidance afforded by previous guiding cases from the Chinese Supreme People’s Court (SPC), which suggest how the new provisions might concretely be applied.

 Plant Variety Protection and UPOV

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) requires WTO member economies, such as China, to provide IP protection for new plant varieties. Members may do so through a patent system, a sui generis system, or both. The United States takes the combined approach, offering plant IP via utility patents and plant patents under U.S. Code Title 35, and also via Plant Variety Protection (PVP) certificates under the Plant Variety Protection Act (PVPA). China does not provide patents for plants. Instead, plant protection in China is under an entirely sui generis approach.

Internationally, the most commonly adopted sui generis mechanism is the system of plant breeders’ rights (PBRs) promulgated by the International Union for the Protection of New Varieties of Plants (UPOV). The UPOV Convention was first finalized in 1961 and was revised in 1972, 1978, and 1991. As of February, 2020, 76 countries are UPOV members, 59 of which are members of the ’91 Act.

One key change between the ’78 and ’91 Acts is the extension of the scope of the breeder’s right to include EDVs. Per UPOV ’91, a new variety is considered “essentially derived” from an initial variety when it is both “clearly distinguishable from” and “predominantly derived from the initial variety, . . . while retaining the expression of the essential characteristics . . . of the initial variety.” A breeder may obtain a PBR for an EDV “in the same way as for any variety,” but if they wish to commercialize the EDV, they must obtain authorization from the initial variety’s titleholder. This is similar to the manner in which practicing a patent that improves upon a previously valid patent may require permission from the dominant patent’s owner. In contrast, under the ’78 scheme, rights to the initial variety are more limited, and no authorization from the initial variety’s titleholder is required to commercialize a variety that the ’91 Act would consider an EDV.

But defining precisely what constitutes an EDV is notoriously difficult. The ’91 Act provides examples of how an EDV may be created, such as by finding or creating a mutation in an initial variety. However, the list is not exhaustive. Furthermore, the text of the Act seems to contradict itself, leaving significant ambiguity as to the required level of physical resemblance between an EDV and its initial variety. That is, Art. 14(5)(b)(i) of the ’91 Act states that EDVs must “retain[] the expression of the essential characteristics that result from the genotype or combination of genotypes of the initial variety.” But then subsection (b)(iii) excepts “differences which result from the act of derivation” from the required level of conformity. It is not clear precisely how those two instructions are meant to be integrated. For example, a slide deck from UPOV itself presents a hypothetical derived variety that is closely genetically related to its initial variety, but in which “more than one or a few characteristics were affected,” and labels it, ambiguously, “EDV yes/no??” Thus, the ’91 Act does not provide a clear boundary line for when a variety is or is not essentially derived.

Many UPOV member countries prefer the definition of EDV to be broad in order to leave the determination of whether a variety is an EDV up to the rights holders. Conversely, UPOV’s guidance, though nonbinding, is narrower. UPOV is, however, currently revising its guidance on the topic to address these current ambiguities.

One method for defining an EDV is through genetic and biochemical techniques such as molecular markers (“markers”). UPOV does not require the use of markers, but it does provide guidance on their use. That guidance cautions against overreliance on molecular techniques, noting that their usefulness is subject to significant variability, and expressing concern that markers could be abused to make closely-related varieties seem more different than they actually are.

The US ratified UPOV ’91 in 1999. But China has only acceded to ’78. According to Dan Prud’homme and Taolue Zhang, one reason that China has not acceded to the ’91 Act is UPOV’s “lack of clarity in the definition of [EDVs] . . . , which makes it difficult to institutionalize in China.” However, China’s Ministry of Agriculture and Rural Affairs (MoARA) and State Administration of Forestry and Grasslands (SAFG), which govern the granting of plant variety rights in China, recently “expressed an intention to formulate a long-term plan to gradually satisfy key requirements of UPOV ’91,” including “adopting UPOV ’78 plus-style provisions/piloting important aspects of UPOV ’91 (e.g., instituting EDV for certain types of plant varieties) in order to see how the system works in practice.” China’s recently-released draft amendments to its Regulations do just that. Moreover, China’s Supreme People’s Court has also announced on March 19, 2020, its own plans to draft a new Judicial Interpretation regarding plant variety infringement determinations which will likely implement China’s emerging practices in this area.

Comparing Plant Variety Protection Definitions in China and the U.S.

China’s Regulations were promulgated and implemented by the State Council in 1997, two years before China acceded to UPOV ’78. China then revised its Regulations in 2013 and 2014. PBRs under the Regulations are issued in parallel by SAFG (for vines, forest trees, fruit trees, and ornamentals, with rights lasting 20 years) and MoARA (for all other plants, with rights lasting 15 years). China has faced both internal and external pressure to update the Regulations: National entities have pushed for a clearer and more streamlined application process, and many countries—members of the European Union in particular—have been pressuring China to adopt UPOV ’91-style provisions such as by providing for EDVs.

To that end, China began the process of revising its Regulations in 2016—a year before ChemChina, a state-owned entity, purchased Syngenta, a major beneficiary and user of the UPOV system, with hundreds of plant registrations internationally. The proposed draft amendments to the Regulations were released for comment in February 2019. These proposed amendments would essentially move China towards UPOV ’91. This is not an unusual move for China; the country has often enacted legislation in anticipation of meeting—or even in excess of—international requirements. For example, China provided copyright protection for the “right of making available” (right of communication to the public) in the 2002 amendments to China’s Copyright Law, well in advance of China acceding to the WIPO Internet Treaties in 2007. As another example, China also recently amended its Anti-Unfair Competition Law to be the most progressive trade secret law (at least on paper) by reversing the burden of proof, which is in excess of international requirements.

These draft amendments to the plant IP Regulations make several important changes. Crucially among those, the proposed amendments introduce the concepts of EDVs and molecular markers into the Regulations for the first time.

The proposed amendments define EDV as “a variety that is distinct from the original variety, but retains the basic characteristics or characteristics of the original variety, except for the differences caused by the derivation.” This proposed definition of EDV appears to be broader than the UPOV definition. Significantly, it also lacks contradictory language, discussed above, embedded in the UPOV definition and copied nearly verbatim into the U.S. definition.

The US recently also overhauled its PVP system, extending PVP eligibility to asexually propagated plants for the first time. The PVPA has included EDVs since 1994, the definition of which was taken almost verbatim from UPOV ’91—meaning it includes the apparently contradictory language that China’s draft avoids. Also unlike China’s draft amendments, the PVPA makes no mention of molecular markers or other genetic techniques. But the Plant Variety Protection Office, which oversees the PVPA, is moving towards incorporating such methods in the future.

China Leads the World in PBRs by Volume

One reason that China may wish to have an advanced PBR regime could be the growth of its own domestic research capacity in this important area. In 2018, China was “the top destination for plant variety applications,” receiving over a quarter of filings worldwide. Not only did China receive the most applications, but Chinese nationals also filed the most applications worldwide. A record high of >20,000 plant variety applications were filed worldwide that year, driven primarily by China. Applications in China grew by an astounding 29% in 2018, driven almost exclusively by domestic filings (this mirrors the Chinese patent system, which is also primarily used by domestic applicants). In contrast, applications in the US and EU grew by only ~3-4% in 2018, and the worldwide growth rate was ~9%. That being said, this surge is fairly recent, and the US and EU still outrank China in terms of number of active titles. But note that this source includes both PVPs and plant patents in the U.S. tallies. It is unclear why the US numbers do not include utility patents on plants (though it may be due to difficulty in data collection; unlike PVPs and plant patents, not all utility patents are directed to plants), but the US total would be even higher if it did. Considering just PVP rights, in 2018 there were 7,521 active titles in the US.

If China adopts its proposed amendments, then filings in China may also increase due to increased foreign applications, as well as stimulating foreign investment in China in this sector. Thus, activity in the Chinese plant variety protection offices will likely continue to dwarf that in the US. 

More Thorough Plant Variety Protection Guidance from Chinese Litigation than U.S. Litigation

There is significantly more PBR litigation in China than in the US. As of November, 2019, there have been at least 338 Chinese cases referencing the Regulations (华人民共和国植物新品种保护条例). At least 18 of these cases discuss molecular markers (分子检测). Although China is a civil law system where cases do not create binding precedent, for the past decade the Chinese Supreme People’s Court (SPC) has issued “guiding cases” that are “intended to be de facto binding decisions” to guide lower courts’ decisions in similar cases. The SPC has issued several guiding cases on PBRs. Stanford University Law School has also initiated a “China Guiding Cases Project” which provides a platform for research on these judicial developments.

Two guiding cases have discussed molecular markers specifically. These cases, discussed below, reveal that the SPC embraces the use of molecular markers—but is wary of overreliance thereon, and is careful to balance genetic results with observations from field trials.

In Guiding Case No. 2633, the SPC denied retrial after a lower court found non-infringement when there were no genetic differences between the varieties at issue, but there were phenotypic differences during field trials. In reaching this decision, the SPC noted that the genetic testing only assessed 40 locations in the genome, which does “not necessarily correspond to the traits” observed in phenotypic field tests.

Guiding Case No. 92 was essentially the reverse situation: the SPC found infringement when markers revealed a single genetic difference but field tests showed no phenotypic differences. In doing so, the SPC formulated a technical balancing test for reconciling field and genetic tests that tempers over-reliance on molecular markers.

By late 2019 there were no reported Chinese cases that specifically referenced EDVs. But the molecular marker cases likely hint at how courts will address them. Intriguingly, the facts of Guiding Case No. 92 seem remarkably similar to an EDV situation, in that the accused variety retained the characteristics of the first variety while displaying minor genetic differences. If Chinese PBR agencies or the Courts formally adopt EDVs, they may determine essential derivation with a test much like the one set out in Guiding Case No. 92, as the Chinese concept of EDV would likely cover most types of genetic changes.

Neither of those two guiding cases have been cited by name, however, in published subsequent cases according to a March 23, 2020 search on Caipanwenshu 裁判文书 (the official SPC database). This is not unusual, as most guiding cases are not widely cited by lower courts, who, along with practicing lawyers, still remain unfamiliar with citing and distinguishing cases in rendering decisions. Rather than being “precedential,” guiding cases such as these may also be issued primarily to illustrate examples of good reasoning for judges, or to provide political coverage for consistent decision making.

Ironically, although China is a civil law country, its case law fills the statutory gaps for plant variety protection far more comprehensively that in the U.S. In contrast to the robust Chinese case law, there have been only 19 reported (and 28 unreported) U.S. cases referencing 7 USCS § 2541 (PVP infringement) as of March, 2020. These include 4 Supreme Court cases and 5 at the Federal Circuit. The Supreme Court cases either reference the PVPA only in passing or are outdated.

A handful of U.S. cases reference genetic testing, but do not address the concept in much detail (See Ark. Seed Co., Inc. v. Williams, No. 10-1231, 2011 U.S. Dist. LEXIS 100224, at *3 (C.D. Ill. Sep. 6, 2011)). Despite the presence of EDVs in the PVPA, there has not been reported EDV litigation in the U.S. as of March, 2020. The closest case was the denial of a motion to stay litigation pending the PVPO’s assessment of an application for an allegedly infringing variety of lettuce, but the court did not decide whether the variety was an EDV, and the case has no subsequent appellate history. (See Genecorp, Inc. v. Progeny Advanced Genetics, Inc., No. C 97-20706 RMW, 1998 U.S. Dist. LEXIS 21910, at *7 (N.D. Cal. Apr. 9, 1998)).

Conclusion

If China adopts its current proposed amendments, it would offer protection to plant breeders in line with “or even above” UPOV ’91. Given that Chinese PBRs represent the lion’s share of all such rights worldwide, this would be a significant change. It seems likely that legislators will approve a version of these Regulations in the next few years, though it is unclear when. Notably, the “Opinions on Strengthening the Protection of Intellectual Property Rights” recently released by the Chinese Communist Party and State Council (November 27, 2019), also explicitly calls for encouraging Chinese innovation by improving the protection, examination, and international sharing of examination results for new plant varieties. If China does adopt the proposed amendments, China would likely become a de facto member of at least part of UPOV ’91, as Chinese officials reportedly “want legislation in line with the 1991 UPOV convention but do not want to actually accede to the 1991 UPOV convention.” This pattern of gradual and partial adherence to international treaties has also manifested itself elsewhere in China’s legal regime, including in the gradual piloting of civil or economic legal reforms before wider introduction into the Chinese legal system or economy.

The nuanced treatment of molecular markers in the proposed amendments and in Chinese guiding cases is ahead of that in the US, and the US may very well follow China’s lead in adopting a more systematic use of molecular markers in the application process. The proposed amendments’ concept of EDV strengthens the incentive for innovation by expanding the scope of the breeder’s right.

Moreover, the definition of EDV put forth in the proposed amendments is arguably broader and clearer than that under UPOV ‘91 and in the US, which may give holders of Chinese rights a competitive advantage and increase the incentive to protect new plant varieties in China. But the extent of foreign investment these amendments would engender is unclear, given that China requires that Chinese parties be controlling shareholders for “selection and cultivation of new varieties of crops.” 

ACKNOWLEDGEMENTS: Many thanks to Mark Cohen, Elaine Wu, David Kappos, Edgar Krieger, Cynthia Mathiesen, Alanna Rennie, Xiaofan Xu, and Alexandra Draggeim for valuable discussion, comments, feedback, editorial help, and research and translation assistance.  Photos (c) by Mark Cohen of Huntington Gardens and US Plant Patent.

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New CPC and State Council Opinions on Improving IP Protection

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On November 24,  2019, the General Office of Communist Party of China and the State Council jointly released the Opinions Concerning Enhancing Intellectual Property Rights Protection (关于强化知识产权保护的意见).

It is often too easy to dismiss documents like these, that have typically delivered an ephemeral higher state of vigilance by the Chinese government.  Nonetheless, there are some useful statements in this document that may be an indicator of future durable improvements, including:

  1. It is jointly published by the CPC and the State Council and thus has high level political and executive branch support.
  2. It does address some long-standing concerns raised by industry, such as development of a patent linkage system, patent term extension and copyright protection for sports broadcasts.
  3. There continues to be a focus on punitive damages in litigation. However, this document does appropriately point out the need to increase actual damages.
  4. Improving criminal enforcement, including revising criminal judicial interpretations – is also addressed.  Along with revising the criminal code, revising criminal JI’s and their high criminal thresholds was a goal of the WTO case that the US filed against China over 10 years ago (DS362).  This task is long overdue.
  5. Improving coordination between administrative and criminal enforcement is once again highlighted. This is also a long-standing issue.  In light of numerous prior efforts and experiments, a more concrete explanation of how this might be accomplished to better enable prosecution of major criminal actors would be helpful in the future.
  6. Case guidance and public trial systems are highlighted. Hopefully, the case guidance system will add further momentum to successful case law experiments in IP at the Beijing IP Court.
  7. The introduction of technical assessors into administrative enforcement could suggest a continued enhanced role for patent administrative enforcement, which has been increasing even as trademark administrative enforcement has been declining. If so, it may not augur well for foreigners who have traditionally been heavy “consumers” of the administrative trademark system, but not the administrative patent system.
  8. Improvements in the “examination” of utility models and designs are noted as a goal. However, these rights are generally not examined for substance except in the case of “abnormal” applications.
  9. Continuing attention is paid to challenging markets, such as e-commerce platforms and trade fairs, as well as establishing faster protection mechanisms.
  10. There is a continuing focus on supporting Chinese rightsholders overseas.

This document arguably goes part-way in establishing an outline for addressing US concerns about IP theft.  However, it offers little to address such concerns as ensuring greater transparency in the courts, publishing foreign-related cases, or addressing certain trade-sensitive topics outlined in USTR’s Section 301 report, such as cyber intrusions or criminal trade secret misappropriation.

The word cloud, above, is drawn from a machine translation of this document.  The original Chinese language and my redlining of a machine translation are found here.

Addendum of November 26, 2019:

Susan Finder in her Supreme People’s Court Monitor blog, reported on Judicial Interpretation drafting by the SPC for next year, some of which are referenced in the recently released Opinions.  According to that blog, on 29 April 2019, the SPC’s General Office issued a document setting out a list of 47 judicial interpretation projects, 36  with an end of 2019 deadline.  Several of these involve IP-related issues, including issues addressed in the joint CPC and State Council Opinions, including:

  1. Interpretation Concerning the Application of Law in Cases of Disputes over the Infringement of Trade Secrets (关于审理侵犯商业秘密纠纷案件应用法律若干问题的解释). Responsibility of the #3 Civil (IP) Division.
  2. Interpretation on Several Issues Concerning Punitive Damages for Intellectual Property Infringement (关于知识产权侵权惩罚性赔偿适用法律若干问题的解释). Responsibility of the #3 Civil (IP) Division.
  3. Provisions on Issues Concerning the Application of the Foreign Investment Law of the People’s Republic of China (I) (关于适用《中华人民共和国外商投资法》若干问题的规定(一)). Responsibility of the #4 Civil Division. The Foreign Investment Law and the recently released draft implementing regulations contain provisions protecting the intellectual property of foreign investors, including prohibiting forced technology transfers and enhancing the availability of punitive damages.

These draft JI’s have a due date of the first half of 2020.  Susan Finder notes in her blog that given the worldwide attention on the issues set forth in these three judicial interpretations, she expects that they will be released for public comment.  I hasten to add that the IP Division of the Court has generally taken a positive attitude towards soliciting public comment on its draft judicial interpretations, and I hope that they maintain this tradition.

It was also noted by Susan Finder that certain JI’s were due by year-end 2019, including:

  1. Intellectual Property Rights Evidence Rules (关于知识产权民事诉讼证据的若干规定).  Responsibility of the #3 Civil (IPR) Division. This draft was discussed at a conference hosted by the SPC in Hangzhou in 2018.  As Chinese courts experiment with more expanded discovery, evidence preservation and burden of proof reversals, clearer rules regarding the obligations of parties to produce evidence are becoming more critical.  A particular notable example of such a reversal is found in the recent amendments to the trade secret law (Article 32), whereby  a rights holder that has preliminarily proven that it  has taken reasonable confidentiality measures on the claimed trade secrets and has preliminary evidence reasonably demonstrating that its trade secrets have been infringed upon, can shift the burden of proof (BOP) to the infringer to prove that the trade secrets claimed by the right holder do not belong to those as prescribed in this law.
  2. Judicial interpretation on administrative cases involving patent authorization and confirmation (关于审理专利授权确权行政案件若干问题的解释). Responsibility of the #3 Civil IPR) Division. Another interpretation that previously had a 2018 year-end deadline.  A draft was issued for public comment in the summer of 2018; see my earlier blog.

Addendum of November 27, 2019:

Another China law blog, the NPC Observer also expects that some of the IP legislation flagged in the Opinions for revision may be considered as early as late December of 2019t.  According to the NPC Observer:

We expect the session to review a … draft amendment to the Patent Law [专利法] …The session may additionally consider the following bills: …

I have previously blogged about proposed revisions to the Patent and Copyright Law.

Addendum of January 9, 2020: Here is a translation of the Opinions from China Law translate.