Three Laws/Policies Up For Public Comment

patentlinkageThree IP-related laws and policies have been released for public comment in the past week, at two different stages in the legislative process.

The first and perhaps most significant is the revisions to the Law Against Unfair Competition (AUCL), now at its second reading in the National People’s Congress.  The announcement is found here, and this is a Weixin posting from Lexis of the actual changes, while the full explanation is on the NPC website.  As translations or comments become available, please send them to me for posting.

The AUCL is an important law for a variety of IP-related areas, including trade secret protection, but also trade dress. Comments are due by September 24. The draft adds statutory damages to the list of remedies for violation of the law, but at the same time removes a provision from the earlier draft clarifying that employees  are subjects of the law, notwithstanding that the focus of the law is on undertakings (经营者).  However, the NPC reports that at the same time it clarifies the circumstances where an enterprise benefits from misappropriated information.  “删除修订草案第十条的规定;同时,在第九条中进一步明确:第三人明知或者应知商业秘密是权利人的员工、前员工或者其他单位、个人通过非法手段取得,仍获取、披露、使用或者允许他人使用的,视为侵犯商业秘密。(修订草案二次审议稿第九条第二款) .  Here is a link to information regarding the earlier public draft.

The second important law is the Standardization Law, also in its second reading at the NPC.  The announcement is found here, and the text is found here.  Comments are also due by September 24.   One potentially problematic provision involves providing support for standardization to indigenous innovated technologies for important national industries, strategic and emerging industries, and key public interest technologies.( 增加一条规定:国家支持在重要行业、战略性新兴产业、关键共性技术等领域利用自主创新技术制定团体标准、企业标准.)

Finally, the China Food and Drug Administration has released its proposed draft “Orange Book” (《中国上市药品目录集》(征求意见稿) which may implement a patent linkage scheme (see excerpt above which requires reporting of relevant patents and regulatory data).   A proposed linkage system was announced by CFDA on May 12, 2017 in Notice 55, about which I previously blogged.  The draft is available through this  link.  Comments are due by September 15.

Update on Research on Technology Protectionism and the Chinese Patent System

Prof. Gaétan de Rassenfosse and Dr. Emilio Raiteri (both at EPFL, the Swiss Federal Institute of Technology in Lausanne, Switzerland) have recently offered interesting statistical evidence for preferential treatment of domestic applicants and a potential issue with national treatment in patent applications in China. Their work shows that inventions by foreign firms were less likely to be granted patent protection, after adjusting for a range of other factors. However, their study of more than half a million patent applications reveals that only applications in “strategic” technology areas faced negative discrimination. More precisely, the probability that strategic patent applications by foreign firms will be granted is 5 to 15 percentage points lower than expected in the absence of discrimination.

Strategic technologies were identified using the ‘‘National Medium and Long-Term Program for Science and Technology Development 2006–2020’’ (citation to plan or to my blog) (“MLP”). The MLP, issued by the State Council, seeks to make China an innovation-driven nation by fostering indigenous innovation in selected technologies, including telecommunications, biotechnology and energy. Regarding telecommunications, the authors (with the co-authorship of Rudi Bekker of the Netherlands) find in another article that discrimination against foreigners was particularly strong among standard essential patents, an issue that was recently discussed by Professor de Rassenfosse in a recent webinar.

For background, one useful comparison of the MLP with other macro innovation/industrial policies has been prepared by Prof. Scott Kennedy.

There has been many complaints related to unfair treatment of foreign rights holders in the judicial system, and there has been some recent scholarship and support in analyses of newly launched databases, that suggests that China made significant progress in the area. Some of the sociological studies suggest that larger companies in China (as elsewhere), however, generally fare better in court.

The current paper focuses on consideration of disparate treatment and its causes in the patent system. However, the reason(s) for the effect are unclear and the authors are cautious not to infer that discrimination is intentional. They have ruled out a large number of possible explanations (such as differences in patent quality or in the quality of the translation into Chinese), but they suggest more work is needed to fully understand the source of anti-foreign outcomes for applicants.

The authors are not alone in looking at differential treatment by national patent offices.  Using data on about 50,000 patent applications granted by the USPTO and filed in the years 1990–1995 at the EPO and the JPO, Prof. Elizabeth Webster and colleagues (then at the University of Melbourne, Australia) had found that domestic applicants were more likely than foreign applicants to be granted patent protection, after certain normalizing adjustments. The authors in another paper noted that despite the efforts then subsisting of the trilateral offices (and other supporting efforts under the umbrella of patent harmonization), there is significant disharmony in the patent application outcomes across the trilateral patent offices. For instance, the overall rejection rate for patent applications which have been granted by the USPTO was 25 per cent for the JPO and 5 per cent for the EPO.  Webster and her co-authors note that there are numerous reasons why patent application outcome may vary with priority country status.  In light of recent changes in US practice due to Supreme Court decisions, one may also wonder whether differences in examination in certain areas, such as software-enabled inventions and biotechnology can also skew results in favor or local companies who have more up to the date information, are focused on the domestic market and may even have attracted capital upon the expectation of a local patent grant.

The papers on Chinese patent applications however are notable in that they (a) utilized a larger cohort of patent applications, (b) made comparisons in treatment by one office (SIPO) and (c) analyzed such treatment in light of articulated national industrial policies, and in comparison to treatment where no such national industrial policy is implicated.   The papers may suggest that political pressure, when it exists in China, may be more likely where there are clear national interests at stake rather in any matter in which a foreigner is involved.  Indeed, litigation data suggests that foreigners do well in Chinese courts; there is limited research on litigation outcomes when the subject is a matter of an articulated national industrial policy, such as these studies might suggest.

Written by Gaetan de Rasenfosse, edited by Mark Cohen.

The views expressed herein are the author’s own.

Forthcoming Webinar on Developments in SEP Prosecution and Injunctive Relief in China

The Federal Circuit Bar Association and USPTO announced on July 17, 2017 that they are hosting a webinar on the latest research and developments in standards essential patents (SEPs) in China on July 25, 2017 from 9:00 to 11:30 AM, EST.  The draft agenda and suggested reading materials are available via the link here.  Registration is free and is required to participate in the program.  Some of the speakers will also be discussing live at USPTO, for which registration is also required.  The focus of the program is on developments and research in patent prosecution and injunctive relief for SEPs.

Three Upcoming Academic Programs: Reserve the Dates

Here are three upcoming China IP-related programs hosted by academic institutions.

On the West Coast, the Tusher Center for the Management of Intellectual Capital at the Haas School of Business, UC-Berkeley will be hosting a workshop on  Standards Setting and IPR: United States and China on March 28, 2016.   The program includes speakers from the Standardization Administration of China and the China National Institute of Standards.

From March 31-April 1, Fordham University will be hosting its annual IP Conference.  I will be speaking along with David Kappos, Benjamin Bai, He Jing and others in a sunrise session April 1 on Chinese IP issues.

On April 14, the USPTO in conjunction with George Washington University will be hosting a half day program in the afternoon.  The program will be held at the USPTO, and will include two roundtables on IP Issues Related to US Companies in China and IP Issues Related to Chinese Companies in the US.    I will be co-moderating this program along with George Washington University Dean for Intellectual Property Law Studies  John Whealan.  We expect to have the participation of several Chinese judges and IP officials in the program. Here is the link to register, and a draft Agenda.

Updated: March 15, 2016 with GWU link and agenda.

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UK Court Rules Huawei/Samsung Infringe SEP Patent

Attached is the November 23, 2015 decision in Unwired Planet v Huawei and Samsung, which was heard in the England and Wales High Court (Patents), [2015] EWHC 3366 (Pat).   In this case, Mr. Justice Birss held that the asserted patent is valid and is infringed by wireless telecommunication networks which operate in accordance with the relevant LTE standard. Thus patent EP (UK) 2 229 744 “Method and arrangement in a wireless communication network” claimed a priority date of January 8, 2008, based on a US application US 61/019,746.

These patents in suit had apparently been acquired by Unwired Planet from Ericsson, and this is the first case involving these patents.  It was advanced by Unwired Planet that the patent in this decision was essential to an LTE standard, and that accordingly it was infringed through compliance with that standard in devices produced by Samsung and Huawei.  Further technical trials in relation to five other patents from this portfolio are set for 2016.  A non-technical trial to determine FRAND and competition issues is also scheduled to take place following the conclusion of the technical trials.

A more detail analysis is found on the website of Carpmaels & Ransford.

 

 

IPR Outcomes in the 26th JCCT

Here are the IP outcomes of the 26th Joint Commission on Commerce and Trade, concluded early in November 2015 in Guangzhou.  The IP-related outcomes appear primarily in three different places in the JCCT outcome document, under “Competition”, “Intellectual Property Rights” and “Cooperative Dialogues and Exchanges.”

I have repeated below the outcome language in full, without the annotation that appears in the US Department of Commerce release on the subject, followed by my own “references” on the outcome to compare the text with recent developments in these areas.

The Chinese government version of the outcomes follows the US outcomes.

COMPETITION

China’s anti-monopoly enforcement agencies are to conduct enforcement according to the Anti-monopoly Law and are to be free from intervention by other agencies.

China clarifies that commercial secrets obtained in the process of Anti-monopoly Law enforcement are protected as required under the Anti-monopoly Law and shall not be disclosed to other agencies or third parties, except with a waiver of confidentiality by the submitting party or under circumstances as defined by law.

Taking into account the pro-competitive effects of intellectual property, China attaches great importance to maintaining coherence in the rules related to IPR in the context of the Anti-monopoly Law. China clarifies that any State Council Anti-monopoly Law Commission guidelines will apply to the three anti-monopoly law enforcement agencies.

The Chinese side clarifies that in the process of formulating guidance related to intellectual property rights in the context of anti-monopoly law, it will solicit comments from relevant parties, including the public, in accordance with law and policy.

References: SAIC’s IP Abuse rules, NDRC’s draft IP Abuse rules. Importantly, this outcome specifically recognizes the pro-competitive nature of promoting IP. As I said in my comments on the NDRC’s IP abuse guideline questionnaire, “Rather than seek to minimize IP rights through euphemisms such as “balance” perhaps a better approach would be how to optimize the patent system to foster long term innovation and competition and insure that the competition system supports and does not retard such development.”

INTELLECTUAL PROPERTY RIGHTS

Standards and Intellectual Property

The United States and China affirm the beneficial role of standards in promoting innovation, efficiency, and public health and safety, and the need to strike an appropriate balance of interests of multiple stakeholders.

The United States and China commit that licensing commitments for patents in voluntary standards are made voluntarily and without government involvement in negotiations over such commitments, except as otherwise provided by legally binding measures.

The United States confirms that Chinese firms participate in the setting of voluntary consensus standards in the United States on a non-discriminatory basis, consistent with the rules and procedures of the relevant standards organizations. China welcomes U.S.-invested firms in China to participate in the development of national recommendatory and social organization standards in China on a non-discriminatory basis.

With a view to enhance mutual understanding and trust, the United States and China agree to hold dialogues over issues under this topic.

Here are some other blogs on this important topic.

Trade Secrets

The United States and China are committed to providing a strong trade secrets protection regime that promotes innovation and encourages fair competition.  China clarifies it is in the process of amending the Anti-Unfair Competition Law; intends to issue model or guiding court cases; and intends to clarify rules on preliminary injunctions, evidence preservation orders and damages. The United States confirms that draft legislation proposed to establish a federal civil cause of action for trade secrets misappropriation has been introduced in relevant committees. Both sides confirm that IP-related investigations, including on trade secrets, are conducted in a prudent and cautious manner.  The United States and China agree to jointly share experiences and practices in the areas of protecting trade secrets from disclosure during investigations and in court proceedings, and identify practices that companies may undertake to protect trade secrets from misappropriation in accordance with respective laws.

References: Note that the reference in the trade secret provision to a degree mirrors that of the Competition outcome, regarding protecting confidential information in administrative proceedings. Proposed revisions to the AUCL were previously discussed here.

Geographical Indications (GIs)

The United States and China will continue our dialogue on GIs. Both sides reaffirmed the importance of the 2014 JCCT commitment on GIs and confirmed that this commitment applies to all GIs, including those protected pursuant to international agreements. China will publish in draft form for public comment, and expects to do so by the end of 2016, procedures that provide the opportunity for a third party to cancel already-granted GIs.

Reference: This commitment builds on the 2014 GI commitment in the JCCT. An important case involving enforcement of a trademark based GI for scotch whisky is discussed here.

Sports Broadcasts

The United States and China agree to protect original recordings of the images, or sound and images, of live events, including sports broadcasts, against acts of unauthorized exploitation, including the unauthorized retransmission of such broadcasts over computer networks, in accordance with their respective laws and regulations.  The United States and China agree to discuss copyright protection for sports broadcasts and further cooperate on this issue in the JCCT IPR Working Group and other appropriate bilateral fora.

References: Copyright protection for sports broadcasting has been discussed elsewhere in this blog, and is of increasing important to China as it prepares to host the Winter Olympics and wants to develop its sports leagues. In addition US courts have granted copyright protection to Chinese sports broadcasts in a recent case. Tencent has also signed an important licensing deal with the NBA to make content available online.

Enhanced Enforcement Against Media Boxes and Unauthorized Content Providers

Noting the challenges posed by new technologies to the protection of copyright, China and the United States will continue discussions and share respective experiences and practices on combating the unauthorized online distribution of audiovisual content made possible by media boxes.  China clarifies it is to enhance enforcement against such media boxes and the providers of unauthorized content in accordance with its laws and regulations.

Reference: A recent US media box case involving Chinese content is discussed here.

Online Enforcement

In order to address the civil, administrative and criminal enforcement challenges caused by the rapid development of e-commerce, as part of the JCCT IPR Working Group, China and the United States will enhance engagement and exchanges between U.S. and Chinese government IPR policy and enforcement officials, IP right holders, business representatives and online sales-platform operators, among other relevant stakeholders.  This engagement will cover current and anticipated challenges in protecting and enforcing IPR online by sharing respective practices, discussing possible improvements in each country’s systems, facilitating information exchange and training between our two countries, and increasing cooperation on cross-border enforcement.  The goal of this effort is to enhance existing legal and cooperative regimes among businesses, rights holders and governments in civil, administrative and criminal online IPR enforcement.  Appropriate criminal matters will be referred, if necessary, to law enforcement agencies through the Joint Liaison Group (JLG) IP Criminal Enforcement Working Group or domestic law enforcement officials.

References: there have been numerous Chinese domestic efforts to deal with on-line infringement, including copyright-related campaigns, and an important role for Chinese Customs.

COOPERATIVE DIALOGUES AND EXCHANGES

Searchable Database for Intellectual Property (IP) Cases

The United States welcomes that the Supreme People’s Court has established a database for searching intellectual property-related court decisions.  In order to increase the understanding of each other’s legal systems, the United States and China agree to dialogue and to share experiences on their respective databases containing IP cases.

References: Whether or not China is developing “case law with Chinese characteristics,” understanding how Chinese courts handle cases can help guide sound business decisions.

Bad Faith Trademark Filings

Given the importance of addressing bad faith trademark filings, both sides agree to continue to prioritize the issue of bad faith trademark filings, and to strengthen communication and exchange on this issue through existing channels.

References: This is a continuation of earlier efforts.

Copyright Legislation

The United States and China are to continue exchanges on the development of their respective copyright laws.  China clarifies that its Copyright Law is in the process of amendment and useful principles and interpretative guidance from the Supreme People Court’s 2012 Judicial Interpretation on Internet Intermediary Liability will be considered in the law, if appropriate and feasible.

The final judicial interpretation is available here. Here is a blog on the 2014 State Council draft of the Copyright Law revision, and a blog on a 2012 NCA draft.

Exchange on Intellectual Property Rights Legislation

Recognizing the success and experience of recent exchanges on IP legislation through the JCCT IPR Working Group, programs under the Cooperation Framework Agreement and other fora, as well as the desire of the United States and China to further understand recent developments in this area, the United States and China agree to exchange views on their legislative developments in IP and innovation including on pending reforms in copyright law, patent law, trade secret law (anti-unfair competition law), science and technology achievement law, etc., with relevant legislative bodies.

References: This is a broad commitment, with much legislative activity planned in China in areas such as trade secrets, copyright, patents and related regulations.

Protection of New Plant Varieties

The United States and China agree to hold exchanges on the protection of new plant varieties through bilateral meetings and other means to be determined.

References: China and Switzerland agreed to extend plant variety protections in the Swiss-China FTA.

Here are the outcomes involving IP fromon the Chinese side, from the MofCOM website(http://www.mofcom.gov.cn/article/i/jyjl/l/201512/20151201200026.shtml).  I have translated the title of the outcome only.

“特别301”报告 SPECIAL 301 REPORT

美方重申其承诺,将在“特别301报告”中客观、公正、善意地评价包括中国在内的外国政府,在知识产权保护和执法方面付出的努力。美方欢迎旨在加强中国知识产权保护的改革和行动,并承诺在2016年“特别301报告”中将强调中国政府在知识产权保护和执法方面采取的积极行动。

 恶名市场 NOTORIOUS MARKETS

美方重申其承诺,如果适当,将在“恶名市场”名单中客观、公正、善意地评估和认可外国实体,包括中国实体,在知识产权保护和执法方面付出的努力和取得的成绩。美方计划在2016年通过将利益相关方的异议期延长一倍,继续增加程序的透明度。美方将继续与中方就此事项进行讨论。

 

知识产权有效和平衡保护 EFFECTIVE AND BALANCED IP PROTECTION

考虑到《与贸易有关的知识产权协定》的原则和目标,美方和中方将继续就诸如有助于保护创新者免于恶意诉讼的相关政策进行交流和沟通,为创新行为提供积极环境。

 

知识产权合作 IP COOPERATION

中美双方确认知识产权保护在中美双边经贸关系中的关键作用。双方承认合作的益处,并认可合作构成了双方知识产权交流的基础,承诺进一步加强重要领域的深入合作,包括:

进一步加强中美商贸联委会知识产权工作组作为牵头协调知识产权问题双边论坛的作用。

继续高度重视中美知识产权合作框架协议的工作,包括2016年司法交流和将在中国举办的一项培训项目;在完成并对现有承诺项目进行审查后,在预算允许的前提下,考虑在框架协议下增加其他项目。

支持中国商务部在2016年第一季度举办的技术许可联合研讨会。

其他项目将根据个案原则进行组织。双方认识到中美双方,特别是美方,与一系列从事知识产权培训和技术交流的机构和私人组织合作,实施了广泛的项目策划工作。

 

加强在打击网络盗版方面的合作  STRENGTHENED COOPERATION IN DEALING WITH ONLINE PIRACY

为应对在美国涉嫌网络盗版刑事侵权案件影响中国权利人的情况,中美执法联合联络小组下设的知识产权刑事执法合作工作组在美国驻华使馆的联系人将负责接收中方行政部门转交的此类信息。

 

通过中美双边合作加强知识产权在企业中的利用和保护 USING BILATERAL COOPERATION TO STRENGTHEN IP UTILIZATION AND PROTECTION IN ENTERPRISES

认识到双边贸易与投资持续增长的情况,中美双方同意加强合作与交流,就各自国家知识产权保护和利用有关的经验数据进行研究,并在此领域采取具体行动或举办项目,以协助中美关于鼓励创新的决策,并帮助中美创新者、创造者和企业家更好地理解如何在各自国家创造、保护和利用知识产权。

 

深化和加强中美知识产权刑事执法合作 DEEPENING CRIMINAL ENFORCEMENT COOPERATION IN IP

在中美执法联合联络小组下设的知识产权刑事执法合作工作组机制项下,中美将继续就跨国知识产权调查开展合作。双方将确定共同合作的重点案件,就此类案件保持定期沟通和信息分享,并探索在共同感兴趣的领域开展技术交流的机会。

 …

中美共同打击网络销售假药 JOINT SINO-US COMBATTING OF ONLINE COUNTERFEIT MEDICINE SALES

中美两国政府都非常重视打击网络销售假药以保障公共的用药安全和健康。两国食品药品监管机构之间已就打击网络销售假药开展合作,并承诺未来继续开展合作。这种合作包括分享信息、分享提高公众对网络销售药品认知的最佳实践以及加强在现有国际组织活动中的沟通与协调。

Updated: December 2 and 3,  2015

 

ABA Comments on MIIT/EIPC Standards and IP Template

Four sections of the American Bar Association, including the Sections of Antitrust Law, Intellectual Property Law, Science & Technology Law, and International Law submitted comments on the  Draft Template for Intellectual Property Rights (IPR) Policies in Industry Standards Organizations (Draft Template) issued by the Electronic Intellectual Property Center (EIPC) of China’s Ministry of Industry and Information Technology (MIIT). The comments represent the view of the Sections and may not represent the view of the ABA as a whole.

While these comments commend EIPC for its efforts to offer a template for standard development organization (SDO) IPR rules, the Sections “respectfully recommend against issuance of a single template to serve for all SDOs and circumstances, particularly on highly disputed issues that are best left to individual SDOs and their members to decide. There are many complexities involved in SDO IPR rules, different views and interests involved, and many different approaches that a particular SDO might validly choose to take. In addition, and importantly, because several issues addressed by the Draft Template remain under active debate among policy makers, SDOs, and market participants in several jurisdictions around the world, there is a substantial risk of conflict that could deter innovation and the efficient operation and success of SDOs in China, undermining EIPC’s stated objective.” The Sections also raise concerns that this policy, by itself, may “unduly influence” standards setting organizations, as it would be promulgated by an institution sponsored by a government agency, namely the EIPC – highlighting the sometimes difficult situation faced by Chinese Government-Organized NGO’s.

This draft Template has been the subject of some controversy. I have been advised by an official at MIIT that this Template should not be construed as an MIIT policy.