A Data Download on Semiconductor Patent Litigation in China

Because of its strategic importance to both the United States and China, the IC sector is a useful example of how Chinese policies and plans may – or may not – be influencing the Chinese government in the protection of foreign-owned IP.

A useful starting point for evaluating the challenges in IC IP protection in China is the data collected from China’s court cases.  IP House has conducted a heretofore unpublished and useful study of all semiconductor-related patent disputes in its database, attached here (in Chinese).  The data shows that there have been 166 first instance civil patent infringements IP judgments with the word “chip” (芯片), and 86 second instance cases.    There have also been 142 first instance administrative decisions, typically involving validity matters, and ninety second instance decisions. 52.91% of the first instance cases involved invention patents, 10.31% involved utility model patents and 36.77% involved design patents.

Regarding civil cases, 39 were heard in Zhejiang, 35 in Guangdong, 27 in Beijing, 21 in Jiangsu and 11 in Shanghai.  Every other jurisdiction had fewer than five cases, and no cases were reported for Fujian Province.

The data suggest a comparatively low “success” rate for plaintiffs in semiconductor patent disputes.   Amongst the 183 reported judgments, only 51 cases were fully or partially successful — a 38.34% success rate.  This compared to an overall success rate of about 80% for litigants in patent cases in 2014 in China, as reported by Bian Renjun at Berkeley. Cases were not reversed to a significant degree on appeal; 60 out of 70 cases supported the original decision of the first instance court.  Amongst the “top 10 “ courts in terms of litigation volume, the success rate for semiconductor patent plaintiffs varied dramatically.   Guangdong had the highest success rate (60%), followed by Beijing (43.75%), Zhejiang (23.08%) and Jiangsu (19.05%).  76 of 77 successful litigants obtained an injunction to stop infringement; one litigant did not request an injunction.

Regarding administrative reviews, 117 out of 140 cases involved affirming the original administrative decision, an “affirmance rate” of 83.57 percent.  Eighty one out of ninety cases were affirmed on appeal.

The United States was the principal foreign civil litigant, with seven cases, followed by the British Virgin Islands and the Netherlands, each with two cases.  The United States was the principal first instance administrative plaintiff challenging SIPO’s decisions, with 30 cases, followed by Japan (5), Netherlands (3) and several countries with only one civil case (France, Germany, Cayman Islands, Korea,   Singapore and Israel).

I draw the following tentative conclusions from this data:

  1. Success rates for semiconductor cases vary dramatically by jurisdiction in China. My guess is that the Guangdong courts, which have the highest success rates, have greater expertise in both semiconductor patent litigation and patent litigation overall, which may make them more “expert” on these matters. Due to variations in success rates amongst jurisdictions, the semiconductor sector is a useful example of why China needs a national appellate IP court.
  2. No matter what major court one looks to, success rates for these cases are lower than the average for other types of patent litigation. This may suggest either a lack of familiarity with the technology or an unduly skeptical view of the courts regarding semiconductor patent assertions at this time. Considering that the vast majority of the cases do not involve foreigners, the low success rate primarily affects Chinese litigants.
  3. Foreigners, and especially Americans, use the courts primarily to litigate patent validity matters. There were 4.5 times more administrative semiconductor patent cases brought by Americans compared to infringement cases. Overall foreigners brought four times more validity cases compared to infringement cases in this area.  This means that the Beijing IP Court, which hears all validity disputes, plays a key role for foreigners on semiconductor patent matters.  Semiconductor patent cases also follow the general pattern where foreigners are disproportionately willing to challenge SIPO in court, but are less willing to bring infringement cases to final adjudication.
  4. Utility model and design patents are frequently asserted in patent disputes in China and may have value to foreign companies needing to protect their IP in this important market.
  5. The Fujian courts do not appear in this IP House report. However, Fujian has already heard one high profile case (AMEC v Veeco), which was settled and does not appear to be publicly available at this time. The second high profile case, involves Micron Technologies, and is currently on-going.

I hope to blog further about the AMEC cases in the United States and China in a subsequent posting.

 

False Friends (形似神异): Comparing US and Chinese Administrative Patent Enforcement

The China Patents and Trademarks journal has now made publicly available the article I wrote late last year with former USPTO Director David Kappos and former Chief Judge Randall Rader (ret.)  “Faux Amis: China-US Administrative Enforcement Comparison”, in both  English, and Chinese (形似神异:中美专利行政执法制度对比).  Kevin Lu 吕行 of USPTO also assisted in researching the article.

The article discusses the differences between administrative enforcement of patents in the United States International Trade Commission (Section 337) and by SIPO in China and notes that the comparisons of China’s administrative patent system to the USITC system are misleading, as the two systems are different both qualitatively and quantitatively. 

The opinions in the article are of course strictly the authors’ own.

Chinese IP: the Graduating Class of Officials

There have been several Chinese officials with authority over IP over the past few years who have been promoted. In December, the Ministry of Commerce recently reported that DG Li Chengang was promoted to Assistant Minister in December 2016, with authority over law and treaties (which includes trade-related IP).  His predecessor, Assistant Minister Tong Dao-chi, was also promoted and now serves as Vice Governor of Hubei as of December 2016. Across the straits, in July 2016, Madame Wang Mei-hua, who was formerly in charge of TIPO was promoted to Vice Minister of Economic Affairs.

The most prominent of the Chinese officials with deep IP experience who saw their career advance due to IP involvement in recent years is Madame Tao Kaiyuan the former DG in charge of Guangdong’s IP Department, who has served as one of the justices on China’s Supreme People’s Court since 2013, and has been a key advocate for judicial reforms and promoting rule of law.  Several other Chinese IP judges have also seen promotions in the recent years (Madame Tao and several current and former IP judges are pictured below).  Another official with deep IP experience,  Chen Fuli of MofCOM also was promoted from his former position as IP Attaché in Washington, DC and Director at MofCOM, where he oversaw IP engagement with the United States to his current position of Deputy Director General.

Also of note, former Chief Judge Randall Rader is reported to be under consideration to become the next Director of the USPTO under the incoming Trump Administration. Rader has noted that “Yes, several senators have sent my name to the Trump team for the position of director of the USPTO,” and that “The best way to protect U.S. jobs is to protect worldwide the IP that creates and guarantees those jobs.” China has also been quick to recognize Judge Rader’s accomplishments.n December 2016, he was awarded an Honorary Professorship by the President of Tsinghua University.

The current situation for Chinese IP officials contrasts with the experience of only a few years ago when it appeared that many Chinese IP agencies and officials were riding China’s new Antimonopoly Law, and not IP, to advance their agencies or careers. Officials such as DG Shang Ming moved from law and treaties in MofCOM to antitrust. At that time, China’s IP courts also picked up civil antitrust jurisdiction and the unfair competition bureau of SAIC also picked up antitrust authority.During those years, several officials also privately complained to me that their career advancement had been stymied by focusing too much on IP issues or engagement with foreigners. Some may also have seen former Vice Premier Wu Yi’s retirement in 2008 as tied to the filing of a WTO on IPR against China, which she appeared to take as a personal loss and that he had promised to fight vigorously against

As far as I know, the most dramatic and unusual employment engagement of an IP-knowledgeable official was made by another ardent IP supporter, Abraham Lincoln, when he appointed Edwin Stanton as Secretary of War due, in part, to his experience of working with him on a patent litigation when Lincoln was a private lawyer.

When officials who believe in IP are promoted to positions of higher authority it is a good sign of political support for protecting IP. This is true of both the United States and China.

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Jordan/Qiaodan Trademark Case – Translation Now Available Here

Thanks to the hard work of Jessie Zeng 曾 潇 of Tsinghua University Law School, and the support of his professor, former Chief Judge Randall Rader, we now have a translation of the Michael Jordan/Qiaodan case.  Here is a translation of the decision in word formatJessie Zeng has also kindly provided a translation of cited laws in the decision.

On first impression, the case has significant implications for entertainment law, trademark rights for well known foreign individuals in China as well  bad faith issues.  Here are some key points: 

A) The SPC overturned Beijing High Court’s view that required a definitive association between Qiaodan and Michael Jordan, but instead required a stable association.  The court relied heavily on general civil doctrine, including tort law, IP law and advertising law in making its analysis.  The court also noted that, with respect to foreigners,  the key factor is that the relevant public in China has gotten used to calling the foreigner with a Chinese name in translation.

B) The court also admitted a range of evidence to support the fame and reputation of Michael Jordan as proof of bad faith by Qiaodan, including a large number of articles, endorsements and survey data.

C) The court recognized that, with respect to foreign names,  sometimes the public may use a name for the individual that is different from the name the person actively uses, and that this name should be protectable.

D) The court also noted that Qiaodan’s prior investment activities and brand promotion did not give it any “squatter’s rights”, noting that “Qiao Dan Inc.’s operation condition, its efforts in related trademarks’ publicity, use, related trademarks’ awarded prizes and received protection and etc. cannot make the disputed trademark’s registration legitimate.” Qiaodan operates about 6,000 stores in China.  The case is in a sense a warning shot to trademark pirates that a business model based on bad faith is risky in today’s China.

In fact, in the many years that I have followed this case one of my greatest concerns was how much a court would be unwilling to disrupt expectations built around a bad faith business model.  Viewed as a political statement, the SPC is sending a strong and laudable signal by saying that relatively settled expectations based on bad faith registrations will not legitimize these trademark registrations and indeed can end up being quite costly.  Times are changing…

My thanks, once again, to Jessie Zeng! 

(Note: Translation revision: January 6, 2017).

 

Jordan Wins Trademark Battle in China: Milk and Honey On the Other Side?

Michael Jordan won a partial victory in his 10 trademark  administrative appeals involving the Qiaodan sporting goods company for the 乔丹 (Jordan) mark at the Supreme People’s court.  Here’s a Chinese summary of the case from Sina.com, and an article from the Associated Press. 

The trial of the case was heard on World IP Day (April 26, 2016), was presided by SPC Justice Madame Tao Kaiyuan, and was attended by former CAFC Chief Judge Randall Rader, as an observer.

The decision reportedly grants to Michael Jordan and Nike the picture mark and the Chinese characters associated with Qiaodan.  Jordan and Nike did not win the pinyin (Romanized) Qiaodan because that can be expressed in many different ways in Chinese ideographs. 

The Chinese press is treating this as a win for Jordan and NIKE.  The Qiaodan website was dismissive of the case, noting that it had won 65 prior cases involving the mark.  In a somewhat related matter, as of this morning (November 8), I found online platforms, including in the US,  offering Qiaodan products under the Qiaodan name.  I also did not find the Qiaodan name in pinyin registered at USPTO.

Michael Jordan, in a statement to Reuters noted that “I am happy that the Supreme People’s Court has recognized the right to protect my name through its ruling in the trademark cases,” and that “Chinese consumers deserve to know that Qiaodan Sports and its products have no connection to me.”  The Qiaodan Company had previously brought a suit against Michael Jordan for trademark law suits that delayed its plans for a public offering. 

My initial impression is that the case does show the willingness of the Chinese judiciary to tackle issues arising from bad faith registrations that can raise some of the more thorny issues, as they may involve business models based on rights that may not have been obtained in good faith.  This decision is one of several indications that China is seeking to heighten its continuing efforts to address squatting, in the face of a giant Chinese Trademark Office case load (over 3 million applications in 2016), a huge trademark docket at Beijing’s IP court, a commitment at this year’s JCCT to undertake further efforts to combat bad faith filings, recent efforts to improve the environment for entertainment law including some decisions favoring “merchandising rights”, and a recent positive decision for a mark involving President-elect Donald Trump.

Postscript Dec. 13, 2016: Here’s a presentation that an SAIC official recently gave at a public program at USPTO on how the agency is dealing with bad faith filings.

I hope to make a full copy of the SPC decision available on this website, once I receive a translation.

Note for non-native English speakers: “Milk and honey on the other side” in the title of this blog is drawn from the folk song/ spiritual “Michael Row  Your Boat Ashore”.

 

Three Upcoming Programs

If you are near Portland, Oregon, Prof. Eric Priest of the University of Oregon, Chief Judge Rader (ret) and I will be talking at the University of Oregon about our joint efforts with the US Chamber on China IP related matters.  The program will be held form 12:00 to 1:30 on May 6th at the University of Oregon White Stag Building, 70 NW Couch Street, Portland, Oregon,  RSVP: teevee@uoregon.edu.  Oregon CLE is pending.

On June 2, 2016 in Beijing, IP Key will be cosponsoring a program on Infringement of Intellectual Property Rights Online.  Information is available here.

Another upcoming program on June 8 is in Alexandria, Virginia with the USPTO and George Mason University on licensing.  Although not strictly speaking a China-related program, I expect there to be  considerable discussion around China’s licensing environment.  Amongst the speakers will be Director Lee of the USPTO, Commerce Deputy Secretary Bruce Andrews, FTC Commissioner Ohlhausen, and former USPTO Director David Kappos.  I will also be speaking at this program.  The conference agenda and a link to registration are available here.