Trade and Peace on Earth: Part 2

pendency

In the first part of this blog, I talked about unilateral steps that the United States and China have been taking during the ‘trade war’ to address concerns regarding forced tech transfer.  In this section I look at bilateral steps that can be taken.   I begin by looking at what the US and China should not do (“Do No Harm”), and then I focus on 5 areas for legislative reform:  trade secrets, licensing, good faith, patents and litigation. I conclude with confidence building steps.

Do No Harm:

There are some bilateral steps taken from playbooks of the past that China and the US should not do:

  1. Political campaigns, particularly to address patent or trade secret infringement. These actions are great for politicians, but they offer no prospect of durable relief.
  2. Accepting Chinese political statements or enactment of normative documents (inferior to State Council “regulations” 法规) that have no binding effect.
  3. Permitting two different fact sheets in Chinese and English to emerge from discussions – Diplomatic discussions should not be a “Rashomon” (羅生門) (see picture below) –  subjective explanations of a common experience.  We have already  differing interpretations of recent negotiations.  For a formal document, that generally means that an agreement needs to be reached several days before a due date in order to ensure there is a harmonized text.
  4. Entering into an agreement that is not verifiable or that the US government doesn’t have the resources to verify.

In his June 9, 2010 testimony  before the Congressional Security Commission, USTR’s Lighthizer, then a private attorney, noted that “China’s commitment to the rule of law is very much in doubt, and the U.S. government continues to express major concerns about China’s failure to respect  U.S. IPR.”  Given the investments to date in effecting change in China, I hope that USTR seeks durable legal changes that have too often been atypical.

The prognosis, however, is not positive.  Willingness to “horse trade” ZTE sanctions and Huawei extradition for trade concessions is one indication of US willingness to bend its rules.  Similarly, Xi Jinping apparently suggested at Buenos Aires that he would approve the NXP merger with Qualcomm at this time.  Many countries, including the US have extended  bilateral science and technology cooperation agreements with China without necessary legal changes to China’s licensing regime in place that would definitively facilitate sharing of improvements between the countries.  The administration’s reluctance to bring trade cases involving IP against China is another sign that negotiation, rather than durable legal changes, may become the dominant means of resolving the current impasse.  However, if we accept extra-legal commitments from China, how can we expect China to make structural changes in accordance with rule of law?

Nonetheless, it isn’t too hard to develop a range of possible legal outcomes that would help address US concerns over the IP issues identified in the Section 301 Report, provided they are carefully monitored.  Here is my initial positive list:

Trade Secrets:

China adopts a unified, stand-alone trade secret law.  This law would address the problem of scattered trade secret laws, insure that criminal trade secret cases are prosecuted, and that employees are treated as subject of trade secret protection and as actors in trade secret infringement, provide appropriate burden of proof reversals (e.g., for “inevitable disclosure” or in proving aspects of misappropriation), establish punitive damages, provide for referral mechanisms from administrative or civil proceedings to the courts, etc.  China previously rejected the idea of a stand-alone law in revising its current Anti-Unfair Competition Law, yet many leading Chinese IP authorities still consider it to be a useful concept.

China might also follow recent Korean legislative practice criminalizing overseas trade secret misappropriation with the intention to benefit a  domestic entity, and imposing aggravated penalties in such circumstances.  Such a provision, if enforced and monitored, could help address US concerns about Chinese indifference to overseas trade secret thefts, as well as set the stage for greater cooperation in transborder trade secret theft.

Technology import/Export Regulations and Licensing:

The Chinese government is already seeking to revise the Catalogue of Foreign Investment in China,  and is considering a Foreign Investment Law to provide greater protections against forced technology transfer, including, hopefully, provisions regarding Joint Venture ownership of foreign licensed technologies.  These positive steps are still not enough, due to pervasive national and local incentives in China at this time to acquire new technologies and the difficulties in tracking forced technology transfer.  As one additional step, China should vest jurisdiction in disputes over such forced technology transfer in the newly established circuit IP tribunal of the Supreme Peoples Court, in order to insure a consistent, high-level focus and opportunity for redress, including expanding its jurisdiction over decisions to approve or deny joint venture registrations.

China has also shown no interest to date in revising the Administration of Technology Import/Export Regulations (TIER).  Chinese intransigence in this area is harmful to China.  Until China amends its law, I suggest that the US consider enacting legislation imposing reciprocal treatment on Chinese licensors of technology to the United States, as ITIF has also suggested.

I also encourage formation of a bilateral non-governmental commission (“Bilateral Commission”) to review progress in forced technology transfers.  If necessary, the US could reimpose sanctions if sufficient progress is not made.  This Commission should also require that China regularly publish reliable licensing data on the quantity of legitimate technology transfer occurring between China and other countries, including technology transferred as part of a joint venture formation.  This information could support better data-driven discussions on technology flows between China and other countries.

Patents:

China’s patent law reform offers the possibility for concrete changes that should not be missed.  Of particular concern, is the absence of a patent linkage regime in the current draft.  USTR might consider requiring China to make necessary changes in its patent and food and drug laws to fully implement a modern pharmaceutical patent linkage regime, including data exclusivity and patent term restoration.

The Section 301 report also hardly addressed potential issues involving discriminatory treatment in patent prosecution, such as has been alleged from time to time in China.  As examples, low rate of patent grants in pharmaceuticals, and disparate treatment in granting of SEPS have been the subject of academic and industry concern.  Consideration of discriminatory treatment, or lack thereof, should be the focus of any future collaboration between the US and China (such as my proposed Bilateral Commission).

This issue of bias need not be “tip-toed” around.  China fired what was likely the first salvo when it alleged unfair treatment by USPTO regarding an IWNCOMM patent application at the USPTO during a JCCT meeting (a “Rashomon” meeting, where there was a  different U.S. outcome sheet).  USPTO data, however, generally shows that Chinese patent applications in the US are treated as well if not better than US applications, according to my former colleague Larry Lian (see, e.g.,  slide 14 above and the accompanying deck).  China has not produced similar data on American applications in China or refuted the research to date in this area.

The United States and other countries might also look at temporal studies to see if there is any link between changing industrial policies and behavior of China’s patent office towards foreigners.  One promising area of research that one of my students undertook in my Chinese IP class this year suggests that there could be temporal differences in patenting behavior over a multi-year period: as China increasingly focuses on national policies to stimulate indigenous innovation, bias rates may be affected.

The US should also push China to reform its metrics driven approach to patent filings, which wastes resources and distorts markets.

Good Faith/Bad Faith:

One of the discrete trends in China’s domestic IP environment is an increasing focus on the role of good faith / bad faith in a range of IP-related activities.  Elevating the legal consequences of bad faith actions could lead to structural changes in China’s IP regime.  Good faith has been an increasing factor in dealing with bad faith trademark registrations, in Guangdong IP court guidance on SEP negotiations, as well as in trust-losing patent behavior in the recent NDRC MOU providing for coordinated interagency action involving patenting behaviors, and will likely play a part in consideration of punitive damages for patent infringement in the proposed patent law reforms.  It could be extended further to impose a duty of candor on patent and trademark applications, provide for deterrent penalties against frivolous IP litigation, address contempt of court, etc.  Despite my concerns regarding the social credit system, it can also be tasked to monitor bad faith behavior in IP and non-IP related areas, to support claims for enhanced damages or referrals to criminal prosecution.  The courts can take an initial look at this area across a range of judicial sectors.

Litigation:

China’s efforts to publish cases and increase transparency over the past several years are laudable, but the work is not complete and confidence in the judicial system thereby suffers.  The courts should insure that, wherever possible, all cases are published.  Cases involving national or trade secrets could be expunged of confidential information but otherwise be made public.  The current data on trade secret theft is especially incomplete.  Complaints and other motion papers, including dismissals due to settlements, should be made available to the public, along with preliminary and interim injunctions.   Generally speaking,  China’s transparency efforts are vulnerable to claims of selection bias, which undercut the utility of these efforts for comprehensive trade negotiation purposes.  Transparency has the potential to create and support structural change, and it should be exploited for that purpose.

Confidence Rebuilding:

Assuming that the US and China can get past this 90 day milestone, efforts to improve the environment for high tech also need to be established  There were some efforts underway in the Obama administration that can create incentives for improvement in China’s IP regime (e.g., accession to the TPP), and positive environments for technology collaboration (e.g., the US-Clean Energy Research Center).  There is a tremendous upward potential for collaboration between the US and China if the right frameworks can be developed.

One thing is clear: real accomplishments, not conferences and dialogues, are needed.  As I often reminded my Chinese colleagues over the years, reform in China should not be an entirely self-serving process. The world needs better scientific collaboration to address many of the looming global challenges we face.  If China plays its cards correctly it can emerge as a balanced global stakeholder and welcome partner in innovation.  Otherwise, I fear that the trend could be ever downward.

January 2, 2019 Update:  A translation of the draft Foreign Investment Law, which is now open for public comment is available at the NPCObserver website.

(Note: Please feel free to add your suggestions!  Also, I am indebted in this blog to the work of my students in my Chinese IP class at Berkeley this year, many of whom prepared papers on some of the suggestions in this blog).

Movie poster for Rashomon, below:

rashomon

Semiconductor Patent Litigation Part 2: Nationalism, Transparency and Rule of Law

spindel

“The 60-year-old Yin Zhiyi (Gerald Yin) resolutely gave up the US’s annual salary of one million dollars, broke through the layers of US government review, … He led a team of more than 30 people back to China. … At the age of 60, he returned with his brain and founded China AMEC.

He said: We have done a lot of things for foreigners. It is time to make contributions to the people of our own country. He not only returned alone, but also led a team of outstanding Chinese of more than 30 people. It can be said that everyone has their own high-end technology weapons. And this move by him immediately caused the U.S. security department(s) to block him…  All the process and design drawings were completely confiscated.”

In my last blog I noted how semiconductor chip 芯片-related patent cases have a relatively low level of success in China, and that there appear to be wide regional variations in success rates.  Today, I will look at some of the legal issues raised by the emergence of Fujian as a venue for litigating these cases.  We begin by looking at the saga of Advanced Micro-fabrication Equipment, Inc. (AMEC), a semiconductor equipment manufacturer based in Shanghai, of which Gerald Yin, the subject of the above article, is both chairman and CEO.

AMEC has been described by the U.S. government as China’s leading semiconductor equipment manufacturer.    It has also been involved in three high profile IP disputes with US companies since its establishment.  Gerald Yin was a long-timer in Silicon Valley, previously served as a Vice President of Applied materials before joining AMEC, and prior to Applied he was with Lam Research and Intel – a scenario not unlike other Silicon Valley tech employees.  According to an on-line bio, he holds a doctorate in Physical Chemistry from UCLA and is a named inventor in 86 US patents and more than 250 foreign patents.  AMEC’s case against Veeco earlier this year bears many similarities to the facts noted in the media report of a preliminary injunction decision issued on July 3, 2018 in favor of UMC and Fujian Jinhua’s case against Micron, another American company, also in Fujian province.

AMEC’s Batting Average

The records regarding AMEC’s prior legal challenges are complex and scattered across multiple jurisdictions.  They include court cases, patent filings, patent oppositions and Customs actions. It is frankly beyond the scope of this blog to fully analyze the validity of each claim and counterclaim.  Overall AMEC appears to be enjoying a high win rate.

The reported legal saga begins when Applied Materials sued AMEC in California (2009) for misappropriation of trade secrets that related in part to confidential information he obtained while at that company which were also the subject of patent applications by him.  The case was dismissed in favor of AMEC on the basis that the contract regarding the inventions violated California law against enforceability of non-compete agreements, depriving Applied of any rights to inventions whether or not there had been a misappropriation of confidential information.  Also of note, in 2009, AMEC brought suit against Applied in Shanghai, under the anti-unfair competition law (AUCL), presumably for trade secrets, which was withdrawn on January 1, 2010.  Withdrawn cases permit the parties to refile later as no decision has been reached on the merits and may not be included in official case law databases.

Another case involved AMEC and Lam Research, another Silicon Valley company which was also Gerald Yin’s former employer.  This matter involved patent infringements and was litigated in Taiwan.  By 2012 Lam Research had exhausted its appeals and lost.

AMEC v Veeco

AMEC’s most recent dispute with Veeco, a New York-based competitor with a subsidiary in Shanghai, involved preliminary injunctions for patent infringement in the US against a supplier to AMEC and a preliminary injunction in China against Veeco, as well as Chinese Customs seizure of imported goods of Veeco that infringe Amec’s Chinese patent. Preliminary injunctions in patent cases have historically been quite rare in China.  For example, in 2013, Chinese courts granted 11 preliminary injunction requests out of 90,000 IP cases. According to press reports, the dispute between Veeco and AMEC ended with a global settlement.

The US action was commenced on April 12, 2017 in the Eastern District of New York against one of AMEC’s suppliers, SGL.  Limited discovery was conducted in July and October 2017.  The 76 page opinion of Judge Chen, dated November 2, 2017 and amended November 16, 2017, reviews the challenges to patent validity, the scope of infringement, extraterritorial issues and the balance of equities in issuing a preliminary injunction against SGL (the drawing above is excerpted from her opinion).  Chinese commentary suggests that Judge Chen did not have the benefit of the Chinese validity challenges based on on novelty or non-obviousness.  However, the issues, including an alleged pre-existing “hockey puck” design are discussed at length in Judge Chen’s opinion, and there appears to have been discovery, expert opinion and due process provided (see text at fn. 64 and references to “hockey puck”).

Note that on January 23, 2018, SIPO declared the counterpart patent(s) to those asserted in New York to be invalid.   Of particular concern in the NY litigation was the ‘769 patent, formerly owned by Emcore.  AMEC reportedly launched an invalidity challenge at the USPTO on December 8, 2017 against this patent.  A Chinese author’s description of the global patent challenges is found here.

The second significant decision involved a case initiated by AMEC against Veeco in July 2017. and the Fujian High Court granting an injunction on or about December 7, 2017 (see media reports). This case has not been released to the public.  I have therefore had to rely on various secondary sources of information in order to understand the circumstances of this case.

A Veeco press release states that “On December 7, 2017, without providing notice to Veeco and without hearing Veeco’s position on alleged infringement, the Fujian High Court issued a ruling, applicable in China, that requires Veeco Shanghai to stop importing, making, selling and  offering to sell Veeco EPIK 700 model MOCVD systems which contain the accused infringing synchronous movement engagement mechanism covered by AMEC utility model patent ZL 201220056049.5 and wafer carriers used as supplies for the EPIK 700 MOCVD system.” The circumstantial circumstances seem to support this position.  According to AMEC’s press release, the patent in suit was the subject of two invalidity challenges and was held valid by the Patent Reexamination Board on November 24, 2017.  This was the Friday of the US Thanksgiving holiday.   The patent in suit was a utility model patent, ZL201220056049.5.  Assuming that AMEC moved for a preliminary injunction on the following Monday, November 27, 2017, the injunction would have been issued approximately nine business days later, hardly time for a thorough consideration of infringement issues or the weighing of factors in a preliminary injunction.  The Chinese preliminary injunction case was different from the US case in many respects: notably the US decision was published, involved months of hearings and exchange of documents, and the decision was not issued on an ex parte basis.  I assume it would also be difficult for the Fujian High Court to issue as lengthy a decision as EDNY in light of the limited time it had before it rendered its decision, but we lack the benefit of a published decision in this matter.

AMEC v Veeco also shares other concerns with Chinese countersuits against overseas litigation.   Although this case was filed after Veeco filed its case in the United States, the court seemed intent on accelerating its decision making in order to undercut the effect of a US judgment.  As I have noted, this is typically done without any consideration of comity, and it is a common litigation tactic for a Chinese defendant to seek a quick decision from a court where it has a close relationship to undermine the effectiveness of an overseas litigation or 337 investigation.  It is hard to deny that the Fujian High Court is paying attention to timing when the Fujian High Court apparently drafted its non-public decision in less than two weeks.

There are some other similarities with Chinese anti-foreign suit litigation, including that often these cases also end up getting recognized as a “top 10” /guiding/leading cases  by local or national authorities and the authorities extol how they can help guide Chinese companies to break open foreign markets, thereby adding fuel to a techno-nationalist fire.

Another strategic point is that AMEC’s principle weapon was a Utility Model Patent (UMP), which lasts only 10 years.  The use of utility model patents or design patents to countersue in China is a well-established practice (Chint v Schneider; Chery v General Motors).  One reason may be that UMP’s do entail a lower threshold of inventiveness than an invention patent and for that reason may be harder to invalidate.  In a sense, AMEC’s “high tech” weapon was the lowest tech patent weapon in the toolbox.   For a utility model, the invention must possess “a substantive feature and indicates an advancement”.  An invention patent requires “a prominent substantive feature and indicates remarkable advancements” (Patent Law, Art. 22).  Nonetheless, as has been evident for 10 or more years, UMP’s can have remarkable litigation value and should be considered a part of every foreign company’s patent portfolio for both defensive and offensive purposes.

The Customs proceeding is also a bit of an outlier, and also lacks any publicly available record.  While Chinese Customs has the authority to seize goods on import, and to seize goods that infringe patents, such seizures are rare.   The seizure by AMEC was  listed as one of Shanghai’s “top 10” IP cases for 2017, and the listing made it clear that the case should serve as an example for other innovative Chinese companies.

There are other unusual aspects to this case.  For example, why would a Shanghainese company (AMEC) file a case in Fujian against another company (Veeco) that is also locally headquartered in Shanghai?  Furthermore, why did they choose a jurisdiction which hasn’t seen one reported patent case with the word “chip” (芯片) in it?

Transparency Woes

The AMEC case now joins a short list of not-so-distinguished cases involving foreigners, where the court has yet to publish or has significantly delayed publishing the final decision, including Huawei v Interdigital (Shenzhen first instance decision) and Chint v Schneider (Wenzhou).   This lack of transparency is striking considering the great strides generally being made in publishing court decisions.   Publishing decisions and other forms of transparency (such as amicus briefs) help ensure fairness, improve the quality of decisions, prevent corruption, develop appropriate legal strategies, and insure consistency with other legal opinions, amongst other benefits (as also noted elsewhere on this blog).

There may also be other explanations for this lack of transparency. The case was settled and, as noted, often decisions are not published after a case is withdrawn.  In addition, the case involved a preliminary injunction and such cases are just rarely published.  In the not too distant past requests for a preliminary injunction were handled exclusively by the “case filing division” of the courts and thus were never formally docketed. However, courts throughout China have been moving to limit the case filing division’s lack of transparency, and applied less discretionary “case recordal” acceptance procedures.  Fujian is no exception.  Non-publication leaves one guessing as to motives.

Added Motives to Be Non-Transparent?

Semiconductor companies are entitled to know more about Chinese and Fujian judicial practices in semiconductor patent matters, and what factors weigh in granting the rare preliminary injunction.  The news of July 3, 2018 that  the Fuzhou Intermediate Court reached a decision involving Micron’s alleged infringement of semiconductor patents, and that this case has apparently been released to the plaintiffs but has not yet been provided to the defendant, underscores the need for transparency (See press reports of Jinhua, UMC and Micron).   Also of concern is that the decision, which reportedly has immediate (立即 ) effect, was released the day before a US national holiday, July 4.  Generally preliminary injunctions are not effective until served, but time is likely of the essence in responsing to this order.  See also TRIPS Agreement Art. 41.3 (“Decisions on the merits of a case shall preferably be in writing and reasoned. They shall be made available at least to the parties to the proceeding without undue delay.”)

Another concern amongst the foreign business community, given the current trade climate, is whether China has begun using legal tools to retaliate against US companies in sectors targeted by “Made in China 2025”, including retaliation against efforts to use overseas litigation.   The Micron decision comes less than two weeks after a promise that Beijing would not seek retaliation against foreign companies operating in China.  China’s increasing involvement in the semiconductor sector was described by former U.S. Commerce Secretary Pritzker in September 2016 as “unprecedented” state-driven interference that “distorts the market” and “undermine[s] the innovation ecosystem.”

One hopes that industrial policy is not affecting the legal system, as right now we need less, not more, fuel on the trade war fires.   Appropriately containing disputes to fair and expert legal systems can be one effective way of reducing trade tensions.

I welcome any commentary, corrections and updates.

The opinions expressed herein are mine alone.  In my capacity as an academic at Berkeley and as a lawyer or consultant, I do receive support from and advise semiconductor companies as well as service providers from time to time.  These comments were drafted solely in my academic capacity and without clearance or review by any company or association.

Revised 7/7/2018

 

 

 

March 19 – 26, 2018 Updates

1. China Now Number 2 PCT Filer.  China has overtaken Japan to claim second place as a source of Patent Cooperation Treaty (PCT) applications  in 2017. In 2017, U.S.-based applicants numbered 56,624 PCT, followed by China (48,882) and Japan (48,208). Huawei Technologies (4,024 published PCT applications) and ZTE Corporation (2,965) – occupied the top two spots for PCT applications. They were followed by Intel (2,637), Mitsubishi Electric (2,521) and Qualcomm  (2,163).   Historically Chinese PCT applications have been concentrated in a few companies.

Chinese academic institutions are still minor users of the PCT.   Among the top 25 educational institution filers, there were only three Chinese academic institutions – Shenzhen University (no. 11), China University of Mining and Technology (no. 15) and Tsinghua (no. 19).

Computer technology (8.6% of the total) overtook digital communication (8.2%) to become the field of technology with the largest share of published PCT applications. These two fields were followed by electrical machinery (6.8%) and medical technology (6.7%)

2. China’s premier pledges market opening in bid to avert trade war On the heels of the Section 301 Report, Chinese Premier Li Keqiang reiterated pledges to ease access for American businesses, at the news conference following the closing session of the National People’s Congress (NPC). Li also said at a conference that included global chief executives that China would treat foreign and domestic firms equally, would not force foreign firms to transfer technology and would strengthen intellectual property rights. Another Vice Premier, Han Zheng,  made similar remarks at the China Development Forum.  Han said that China needs to “open even wider to the outside world,” and would do so via its Belt and Road Initiative.

According to Wall Street Journal citing unidentified source, U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer listed steps they want China to take in a letter to Liu He, a newly appointed vice premier who oversees China’s economy. The United States asked China to cut a tariff on U.S. autos, buy more U.S.-made semiconductors and give U.S. firms greater access to the Chinese financial sector. The article also reported that China and the U.S. have quietly started negotiating to improve U.S. access to Chinese markets.

 

US Files Consultation Request at WTO on Chinese Technology Licensing Practices

Fresh on the heels of the Section 301 announcement, USTR on March 23, 2018 made a  consultation request  of China regarding China’s discriminatory licensing practices.  This is the first step in initiation of  a WTO dispute.  Here is a link to the press announcement.

The consultation request broadly speaking alleges discriminatory treatment in licensing pursuant to China’s joint venture regime as well as the  Administration of Technology Import/Export Regulations (“TIER”), as compared to provisions under China’s contract law that may govern purely domestic technology transfers or Chinese exports of technology.  The complaint is based on the National Treatment provisions of the TRIPS agreement as well as Article 28.2, which provides that “Patent owners shall also have the right to assign, or transfer by succession, the patent and to conclude licensing contracts.”  The Section 301 Report of USTR also discusses these issues.

Update of June 2, 2018:  On June 1, the EU filed its own complaint against China at the WTO involving China’s technology licensing practices, including the TIER.  A copy of the request for consultations, which appears somewhat more extensive is available here.

 

 

 

March 13 – 19, 2018 Updates

1. China’s export of IP royalties increased 311.5% in 2017  According to the statistics of the State Administration of Foreign Exchange, the volume of trade of Chinese IP royalties totaled 33.384 billion USD in 2017, a 32.7 percent increase from 2016. The amount of exports of IP royalties totaled 4.786 billion USD, a 311.5 percent increase from 2016, which ranked No.1 in terms of the speed of growth in service trade. The exports and imports of IP royalties for manufacturing industry ranked No. 1, at 3.793 billion USD, a 544 percent increase from 2016.  The import amount totaled 20.753 billion USD, up 16 percent. In terms of category. The amount of exports of replication/distribution computer software ranked No.1. at 3.405 billion USD, up 652 percent from 2016. In terms of region, Guangdong province was the No.1 in amount of export and import of IP royalties in 2017. Its export amount totaled 4.013 billion USD, up 591.9 percent from 2016 and its import amount totaled 7.525 billion USD, up 9.8 percent from 2016.

Despite the significant increase in the amount of exports of IP royalties in 2017, China still has a trade deficit in IP royalties. The amount of the deficit totaled 23.812 billion USD, which increased by 0.978 billion USD. About 60% of the deficit reportedly originated from the United States, Germany, and Japan.

IP commercialization and utilization has been a focus of China’s IP efforts since the third plenum of the Communist Party in 2014. However, foreigners continue to view China as very challenging licensing environment despite China’s claims of a licensing “deficit”. China’s technology import/export regulations had been one of the challenges that foreigners expressed special concern. In the US Chamber’s recently released IP Index, it was noted that IP commercialization in China was hampered by “[s]ubstantial barriers to market access and commercialization of IP, particularly for foreign companies.” China received zero points for “Regulatory and administrative barriers to the commercialization of IP assets.”  Here is a link to the discussion of Chinese licensing practices. The US Chamber’s conclusion is not unlike that of the Global Innovation Index (2016) which, as we previously reported, scored intellectual property payments according to a formula as a percentage of total trade. China came out at 72nd place, while it ranked number 1 in high tech exports. Similar concerns were also voiced by USTR in the recently released Section 301 report.

2.SIPO takes efforts to develop ability and capacity of IP mediation entities.  SIPO recently issued a “Notice on Developing the Ability and Capacity of Intellectual Property Mediation Entities” (“Notice”), as part of its effort to strengthen the role of mediation in IP dispute and the overall IP protection system. According to the Notice, SIPO will select 20 to 30 existing IP mediation entities every year as the target for ability and capacity development and help with such development for two years. After the two-year period, SIPO will release the basic information as well as specialties of entities that made great progress. Selection and review of existing entities will start this year, which is done by SIPO. Entities can apply either through local IP offices or to SIPO directly.

Within the region, Japan is also considering the use of mediation system to resolve IP disputes. The Japan Patent Office (JPO) intended to introduce an ADR system to determine appropriate license fee of SEPs in 2017. However, the ADR SEP system is likely to be deferred, as reported after a JPO committee meeting in November 2017.

3.  Huawei v Samsung patent decision released by Shenzhen IP Court. The recent decision in Huawei v Samsung was released by the Shenzhen IP Court.  The case involves assertion of two SEP’s by Huawei, and the grant of an injunction against further infringement.

October Offerings on Chinese IP

Here are some upcoming programs that involve China in North American in October:

October 11-12, 2017, I will be speaking on a China IP Panel at the ABA IP West conference in Long Beach, California.  The panel will focus on China’s recent (paradoxical) emergence in IP protection and enforcement.  Mike Mangelson, China IP Attaché in Shanghai will also be speaking at a session focused on the China IP Attaché program at this ABA program.

On October 14, 2017, I will be moderating a session on new trends in Chinese IP litigation, courts and enforcement at the Sixth Annual IP  Summit hosted by Loyola University of Los Angeles.

On October 18, 2017, the University of Indiana/USPTO will be hosting a China “Road Show” in Indianapolis.

On October 20, 2017, the John Marshall Law School will be hosting a China “Road Show” with USPTO in Chicago.

On October 26, 2018, I am scheduled to be commenting (as an academic) at the Fordham IP Institute on a presentation by Dr. David Cole of the Hagley Museum and Library on “A Nation of Inventors: The Politics of American Patent Models.  The Hagley Museum is planning an exhibit in China of its patent models in 2018.

Apart from these events, there are also China IP road shows scheduled for Salt Lake City and Denver in October.   Watch the USPTO website for more information on these and other programs.

An addenda to October offerings, per its Federal Register Notice, on October 10, 2017, USTR will be hosting a hearing on the Section 301 investigation involving China’s Technology Transfer, Intellectual Property and Innovation – Related Rractices.