USPTO Position Opens in Shanghai

The USPTO and US Foreign and Commercial Service have posted a notice to fill the position of IP Attaché at the US Consulate in Shanghai.   The position is open now for applications and closes September 14, 2018.  The position requires US citizenship, bar admission, at least four years of professional legal experience and at least one year of specialized experience (consisting in part of knowledge of international IP practices).  Although knowledge of Chinese language or experience in Chinese IP matters do not appear to be specific requirements for the position, a separate questionnaire as part of the application process asks for experience in these areas.  USPTO had also recently posted for another position: Senior Counsel, China in Washington, DC.

The current official holding the Shanghai position is Mike Mangelson, who has been there since 2014.  He will be missed when his term is up.

Summarizing the SPC’s 2015 White Paper

 

WP_20160420_005China releases much of its IP data in April, on the margins of World IP Day (April 26).  This year there have been important conferences summarizing these reports in advance of their release, including reports from the Supreme People’s Court on IP litigation, as well as white paper reports on specialized IP courts in Beijing, Shanghai and Guangdong.  In addition, there are SPC reports on fifty model cases and 10 big IP casesThe Western media has also reported on some of these reports, as have state run media in Chinese and in English.   This blog has reported on SPC whitepapers and model cases for some time.  As in prior years many provincial courts, such as Hubei, are also reporting out white papers of various kinds, as have IP and administrative agencies, such as Beijing municipality.

As in prior years, interpretation of the data, particularly for the foreign business community, can be challenging.  Here is my digest of the SPC’s important 2015 White Paper:

Foreign Cases Are a Shrinking Share

Perhaps the most dramatic national news from the official national data involving foreigners is that in 2015 foreign related IP cases dropped 22% in absolute numbers from last year, despite an overall increase of 7.2% of total decided IP cases. The total number of civil cases involving foreigners was 1,327.   As a consequence, foreign related IP civil cases as a share of total cases dropped from 1.9% (2013), to 1.8% (2014), to 1.2% (2015).   By contrast, total administrative cases in 2015 were 10,926, of which 4,928 were foreign or about 45%, continuing the trend of an outsized foreign administrative presence, with an undersized infringement role.

Data from other sources also casts some doubt on the “foreign-related” data in the SPC’s report.  The Shanghai IP courts reported that approximately one in six lawsuits received involved an overseas party, with most pursuing trademark or patent infringement claims.  A newly set up database company, IP House, also reported that over 20% of the IP litigation in Beijing involved foreigners.  Former SIPO Commissioner Tian Lipu also cast doubt on data suggesting that the amount of foreign-related IP litigation is under 5%, in a letter to then USPTO Director Kappos.  Conflicting data on foreign-related cases is likely due to the manner of reporting.  Although there is no official explanation I know of, I believe that foreign-related cases are likely those cases reported as foreign related for purposes of suspension of mandatory time frames for adjudication under China’s civil procedure law.  However, litigation commenced by a foreign invested entity in China may be characterized by the SPC as a domestic case.

Another explanation may be that the high level of foreign-related administrative cases may be due to the centralization of IP prosecution in the headquarters of many foreign companies which file these cases in the name of the parent company.  After China’s patent office or trademark office grants the right, the foreign company might then transfer the rights to the subsidiary.  This transfer is validated by the high percentage of related party IP licensing activity which US census also reports. I have not, however, seen any studies that seek to correlate foreign licensing activity, foreign investment and foreign-related litigation, which might support this hypothesis.

As I have noted elsewhere, comprehensive data must, however, await publication of the relevant source cases or data by the SPC and other courts.

IP Cases Continue to Grow Overall

The shrinking reported foreign share contrasts with the rapid growth of IP cases in China.  The SPC reported that newly reported first instance IP cases increased to 130,200, up 11.73% from 2014.  Total cases adjudicated were 123, 059, an increase of 11.68%, of which 101,324  were civil cases, an increase of 7.22%.  Administrative cases adjudicated constituted 10, 926, an increase of 123.57%, most likely due to changes in China’s trademark law which establish a more direct role for the courts.   Criminal cases adjudicated were 10,809, maintaining their slightly decreased level since 2013 (the SPC report notes that the cases are “stable” 同比基本持平)。

Patent Cases Continue to Grow

The SPC reported that patent and licensing cases continued grow, and that they increasingly involved complex areas of technology, with an increase of 22.1% to 13,087 cases.   However, I have not yet seen a breakdown of cases by type of patent or technology type which fully documents this observation.  The data appears too general at this point, considering that perhaps 2/3 of China’s patent cases involve unexamined utility models and designs of varying technological complexity, the relatively small share of licensing disputes, and the reality that many software and unfair competition cases may in fact involve high technology cases (but may not otherwise be reported as such).

Unfair Competition Cases on the Rise

The SPC report shows that unfair competition cases have increased, including those involving the internet and software technologies. Civil cases increased to 2,181, with antitrust cases increasing to 156. The total increase was 53.38%. Trade secret cases have not yet been separately reported out. They are generally a significant share of this relatively small portion of the IP docket. In 2009, for example, there were 1,282 cases under the Law to Counter Unfair Competition in the courts, of which 253 involved trade secrets.

What the Data Suggests on Courts Foreigners May Want to Pay Attention To

A foreigner traveling to China who is considering where to bring a case, or risks of being sued in a particular venue, should not consider all court as equally well situation.  The Beijing courts, for example, clearly play a key role in foreign related IP adjudication. As administrative cases are overwhelmingly located in Beijing, the Beijing IP court hears perhaps 80% of the combined civil/administrative foreign docket.

In addition, the SPC reports that Beijing, Shanghai, Jiangsu, Zhejiang and Guangdong accounted for 70 percent of the first instance IP litigation of all types. Shanghai is also a good place to engage, as it has the SPC has established an international exchanges base there. Indeed, the Shanghai white paper also reported out on its exchange activities, including singling out a significant conference last year with the US Court of Appeals for the Federal Circuit. Still, several courts are assuming increasing importance, and some may pose defensive risks and opportunities for foreigners.   Jiangsu’s docket increased by 38.71%; the docket in Tianjin increased by 50.41%. Anhui saw an increase of 101.26%, while courts in Shandong, Shaanxi, Hunan and Helilongjiang all saw increases of over 30%.

Just as the specialized IP courts were releasing their white papers, the SPC reported that NPC delegates from a number of provinces had been asking to establish their own IP courts in their region, and that the SPC would report out in August on these proposals.  In my opinion, these requests reveal the problem of this otherwise noble experiment in specialized IP courts: if multiple regions have specialized IP courts at the intermediate level, then efforts to insure national unity in reduce local protectionism in IP litigation through a national appellate court may be compromised. However, it is also important to note that these specialized IP courts would replace specialized IP tribunals – a significant difference from US trial court litigation, which  involves courts of general jurisdiction.

At the same time as these papers were being released, a judicial delegation from China was engaging with US federal and state judiciary to discuss the role of IP courts and possibility of future cooperation (see picture above by me from the Wisconsin Supreme Court).  I also believe that we can expect more discussion on these important issue in the months and years ahead.

Imminent Program in Shanghai with the IP Judiciary

IP Key, the European program for IP cooperation with China is sponsoring an EU-China Judge’s forum in Shanghai on March 17-18.  The program is jointly organized by IP Judicial Protection Research Center of Supreme People’s Court, Chinese Courts International Exchanges Base (Shanghai) for Judicial Protection of Intellectual Property Rights and the European Commission.  Topics to be covered include:

  • Innovation of Business Model and Intellectual Property Protection
  • Burden of Proof, Damages Calculation and Punitive Damages in IP Lawsuits
  • Judicial Protection of Trade Secrets

For more information on this activity, visit the IP Key website.

Federal Circuit Announces October Shanghai Program

The Federal Circuit Bar Association has recently announced its October 19-20, 2015 program in Shanghai, China, with the title “Intellectual Property & Trade 2015:  Adjudication, Administration, and Innovation October, 2015 Shanghai, China.” Here is the page where the agenda will appear. Here’s my bog on the last judicial conference sponsored by the FCBA in China.

A Deeper Dive Into the Jurisdiction and Role of Specialized IP Courts

deeperdive

As we previously reported the NPC’s Standing Committee established three Specialized IP Courts in Beijing, Shanghai, and Guangzhou.  The Supreme People’s Court and the cities’ High Courts are now in the process of implementing the NPC’s decision.

On November 3, 2014, the Supreme Court issued a decision and held a news conference outlining the jurisdiction of the Specialized IP Courts of Shanghai, Beijing, and Guangzhou. The court detailed the Specialized IP Courts’ jurisdiction over cases of first instance, over different types of IP cases, and over IP right authorization and verification.

The Specialized IP Courts have jurisdiction over three types of cases:

1.  Civil and administrative cases involving patents, new plant varieties, layout designs of integrated circuits, technical secrets, computer software and other technology cases; 2.  Administrative cases involving copyright, trademark, and unfair competition against the administrative action of the State Council department or above the county level departments; and 3. Civil cases involving the affirmation of well known trademarks.

The Specialized IP Courts will review civil and administrative IP cases challenging the judgment of lower courts. Additionally, the Higher People’s Courts, where the Specialized IP Courts are located, will review appeals against the judgment of the Specialized IP Courts.   Probably the two most important impacts of the jurisdiction of the courts in terms of its impact upon foreigners aspect of the jurisdiction are the jurisdiction of the Beijing Specialized IP Court over appeals over patent and trademark office final decisions and jurisdiction over well-known marks

Foreigner-related cases constitute a large percentage of these appeals from the patent and trademark office while the infringement cases brought by foreigners are about 2% of the docket.  According to various press reports, the overall share of administrative cases brought by foreigners in Beijing hovers near 50%.  Interestingly, in January of 2014, Beijing had already divided its intermediate IP court into two divisions one of which would hear patent appeals and the other would hear trademark appeals.  This experiment, which likely was intended to anticipate one national IP court like the Federal Circuit in the United States,  has necessarily become short-lived.  Nonetheless, in its jurisdiction over patent and trademark appeals, the Beijing Specialized IP Court does retain jurisdiction that is in many ways similar to the Federal Circuit’s  “administrative” jurisdiction over the USPTO.

I do not have precise current data on foreign-related well known mark cases.  However, well known mark status has been of concern to foreign brand owners for some time.  Former China Trademark Office Director-General An Qinghu 安青虎published an extensive analysis in English in 2005 on recognition of well-known marks in China, including the various circumstances by which foreign well known marks have been recognized, which as I recall from prior personal review of that article, was intended in part to address the concern of foreigners over how well-known marks were being protected in China  As DG An noted at that time “Among the 153 well-known trademarks affirmed by SAIC or Trademark Review and Adjudication Board, 132 are registered by Chinese registrants …, 21 by foreign registrants …” (fn. 7), and “SAIC had affirmed some well-known trademarks  in objection decisions in the 1990s, most of which were registered by foreign registrants.” (final endnote).  I do not have current data on well known mark ownership by foreigners.

The Beijing, Shanghai, and Guangzhou Specialized IP Courts have different focuses and differing impact upon foreigners.  As noted, the Beijing court is distinguished by its largely administrative docket.  The Shanghai and Guangzhou courts will deal with hear comparatively more civil IP cases and will hear relatively fewer administrative cases, mostly involving administrative enforcement decisions.  Guangdong has the largest IP docket in China although not the largest foreign-related docket.  Guangdong’s handling of intra-provincial IP disputes could become a model for a national appellate IP court.  Interestingly, an important and rapidly rising part of the overall IP docket in Guangdong involves online infringement owing to the large Internet business community in Guangdong.  However online copyright is not part of the Guangdong Specialized IP Court’s jurisdiction, despite many of those cases involving different regions of China and their rapid rise and complexity.  For example, from 2010-2013, the online infringement docket in the Pearl River Delta of Guangdong increased from 4058 to 9449, increasing from 21% to 38% of the overall IP docket.

The Supreme People’s Court also issued guidance regarding the selection of judges for the Specialized Court.  The judges can be selected either from those judges engaged in IP or related trials, or the judges can be selected if they have the same qualifications and conditions and are engaged in law practice, legal research or are law teaching professionals.

  1. A judge should also have the following qualifications: more than 6 years of relevant trial work experience; a bachelors or higher degree in law; a strong capacity for leading trials and drafting judgments; and Senior judge qualifications.
  2. The standards for other legal professionals as judges of the Specialized IP Court are referenced in further comments.

The candidates for the president of the Specialized Court are appointed by the city’s People’s Congress Standing Committee. The new President of the Beijing IP Court, Su Chi 宿迟, and his deputies, Chen Jinchuan 陈锦川 and Song Yushui 宋鱼水 appear to have such credentials.  Indeed, as if to underscore my analysis on the importance of Beijing to foreigners, the press reports  also underscore their experience in adjudicating foreign-related disputes.

Beijing’s Specialized IP Court will also include “Technology Experts,” (技术调查官)  who will help resolve technology issues that come up in the cases.  The High Court pointed to Taiwanese and Japanese courts that make use of such officials, noting that in those courts the Technology Experts are senior officials.  However, the SPC has also cautioned that the courts should not rely on such experts exclusively.

Here are three charts that demonstrate the jurisdiction of the Specialized IP Court in Beijing, Shanghai, and Guangzhou. See also the Chinese version.

Written by Mark Cohen with the support of Marc Epstein and Yao Yao from Fordham Law School.