Sedona Conference January 17: Patent Protection and International Competitiveness

On January 17, 2019 in Washington, DC, many of the country’s leading patent experts, including USPTO Director Andrei Iancu, will gather to discuss how the U.S. patent system can be optimized for the benefit of all stakeholders.  The focus this year is on  “Promoting Invention, Entrepreneurship, Economic Growth, and Job Creation” .  The initial sessions focus on statutory subject matter, PTAB and remedies.  I will be participating in the last session focusing on how developments in Europe and China differ from the United States and could impact the innovation ecosystems of each region.   Former Chief Judge Paul Michel and former USPTO Director David Kappos will be co-moderating this session, which will also include former WIPO Deputy Director General for Innovation and Technology, Jim Pooley, Galit Gonen from Teva and Ami Patel Shah from Fortress Investment Group.

I have followed some of these issues in this blog, including the SIPO examination guideline revisions on software and life science patents, the role of industrial policy in patent grants in China, and the availability of injunctive relief (including in SEP cases, as well as preliminary injunctions).   The problems in differing approaches to patentability was also highlighted by me in written testimony before the United States-China Economic and Security Review Commission earlier this year (see p. 145).

Sedona conferences are highly interactive, policy-oriented expert discussions.  These are typically not one-off events, as they can often involve follow-up in the form of position papers or other efforts.

I hope that some of the readers from this blog can attend and contribute their insights, especially to my session. If you are interested, please register now.  More information about the Conference can be found on The Sedona Conference website.

February 13 – 19 Updates

  1. Honda takes Chinese competitor to Beijing IP Court

Honda Motor has asserted two patents against Chinese carmaker Great Wall Motors, according to a recent announcement by the Beijing IP Court. The Beijing IP Court said it had accepted the two suits in a statement made on 31st January, but it appears that the cases may have been first filed as far back as October. The Japanese automaker is demanding over 200 million yuan ($32m) in damages for the infringement of two invention patents, both filed in 2006. The first is titled “Hatchback door structure for vehicles” and has just a Japanese counterpart. The second, covering “Garnish attachment structure of vehicle body”, has family members in the US and Europe as well.

It is not the first time that Honda asserted patents right in China. A design patent dispute against Shuang Huan Automobile it initiated in 2003 went  to the Supreme People’s Court (SPC), where Honda lost. (See judgment (2014)民三终字第8号)

  1. The China Dashboard 2018: Chinese Innovation Catching Up

Rhodium Group in partnership with the Asia Society Policy Institute released the Winter 2018 edition of the China Dashboard, a project designed to gauge China’s implementation of its self-stated reform goals in the 10 policy domains it judges essential to long-term growth potential. According to the report, Beijing continues to prioritize high growth by deferring implementation of its comprehensive economic reform program. The bulk of Chinese reform priorities – 8 out of 10 areas of the Dashboard – show little or no forward movement. However, “innovation continues to show positive movement, but by using industrial policies favoring domestic players that are fomenting strong push back from Western policymaking.”

The report predicts that Chinese innovation is rapidly catching up to US levels in its role in the domestic economy: “China will catch up to the 2011–2014 levels of U.S. contribution from innovative industries to the industrial structure in the quarters ahead. Based on our methodology, structural adjustment toward innovation is taking place in China, backstopped by serious policies for both promoting innovation and suppressing sunset industries.”  Of particular note were innovations in the auto sector, ICT and instruments and meters. More details on innovation policy reform are available here.

  1. 2017 Top 100 Global Blockchain Patent Holder: China is the leading country

IPRdaily, a Chinese site dedicated to IP news, together with incoPat, an innovation research indexing center, recently released a report on global blockchain patents. The report (in Chinese) shows Alibaba leaping to pole position for the number of patents publicly published globally in 2017 across all three patent types (invention, design, and utility). Out of the top 100 companies 49 were Chinese, 23 from the US.

In second place is Bank of America with 33 new patents taking its total to 44. Third place went to another Chinese organization, the PBoC’s Digital Currency Research Institute (中国人民银行数字货币研究所) which also published 33 patents despite only opening in June 2017.

4.The Status Quo of NPE Litigation in China

IPHouse, a leading product and service provider of IP law in China reported an article written by King & Wood Mallesons on the status quo of NPE litigation in China. The article describes the various types of NPE’s in China, including: research-based NPE, conversion NPE, intermediary NPE and litigation NPE. Of particular interest is  深圳中科院知识产权投资有限公司 (Translation: Shenzhen Chinese Academy of Sciences IP Investment Company Ltd.,  or CASIP) is a research-based NPE under the Chinese Academy of Sciences which aims to commercialize the intellectual property of Chinese Academy of Sciences. CASIP’s website may be suggestive of its goals:  “Cash IP” – http://www.caship.ac.cn/.  CASIP brought a patent infringement lawsuit against Cree last year. The article describes the case as a battle between the “great research capacity of the Chinese Academy of Sciences” and the American “LED industry giant” Cree. But overall, NPEs’ activities in China are minimum. The article’s author expects NPEs to become more active in China in the near future.   

Stealing IP from the Steel Sector?

Michael Komesaroff, a Sinologist and mining engineer based in Australia, has published an interesting article on the website of the Center for Strategic and International Studies on Make the Foreign Serve China: How Foreign Science and Technology Helped China Dominate Global Metallurgical Industries.”

According to Mr. Komesaroff, China is now the world leader in metallurgical technologies as it has the largest and technically most efficient plants in the world. This was achieved through a number of strategies commencing with the purchase of obsolete western plants and extending to reverse engineering including the infringement of IP rights.  As Michael notes at p. 11, Chinese practices “do not discriminate in their lack of respect for intellectual property; Chinese companies will infringe the proprietary technology of national champions as readily as they do to foreign competitors and the absence of an enforced intellectual property law accelerates diffusion of any new technology.”  Furthermore, “with an endless supply of smart engineers and scientists, why pay for technology, something that you cannot touch, see, taste, or smell.”  Michael’s points are especially interesting because they link innovation with  capital intensive industries and state support, China’s past practices of acquiring obsolete Western plants and China’s  IP practices and policies.

IP issues in the steel sector have also become more of a focus point with the institution in May of 2016 of a 337 litigation by US Steel against several Chinese steel companies, which alleges that Chinese steel companies have engaged in the “the misappropriation and use of U.S. Steel’s trade secrets” as well as “the false designation of origin or manufacturer, in violation of the Lanham Act, 15 U.S.C. § 1125(a).”  This is not the first such trade secret related action involving steel and China.  Two years prior to this 337 action, several PLA agents were indicted in a US court in Pittsburgh for cyber-espionage related activities, including trade secret theft, in several industries.  US Steel and other iron and steel industries, as well as Alcoa, were alleged to be victims of these efforts.

There have also been numerous trade-related concerns expressed concerning China’s metallurgical industries over the decades since 1979, including a “Section 406” investigation that I was briefly involved in before China’s WTO accession (1987), that involved tungsten, and, more recently, trade discussions on Chinese excess capacity in the steel industryA WTO case had also been brought by the United States against China regarding its export restrictions involving rare earth metals, including  tungsten and molybdenum in 2012 .  While the metallurgical industries have been a trade-sensitive area for some time, it now appears that IP-related issues have become of significant concern.