December 2017 Update

 

Here are some updates on IP developments in China from this past December 2017:

1.  Xi Jinping: China must accelerate implementation of big data strategy (English) 习近平:实施国家大数据战略加快建设数字中国 (Chinese).  Xi Jinping, during a collective study session of the Politburo on December 8th, has urged the country to accelerate implementation of its big data strategy to better serve social and economic development and improve people’s lives. Xi said efforts should be made to advance national big data strategy, improve digital infrastructure, promote integration and sharing of digital resources, and safeguard data security.

2.  Legal Daily on December 5, 2017 notes that leakage of private data from government  websites is getting attention, all local governments start rectification and protection mechanism  政府网站泄露隐私问题受关注,各地整改升级保护机制 (Chinese)

3.  Ministry of Education, Department of Human Resources and Social Security, and Ministry of Finance regulated information disclosure of private information 教育部人社部财政部三部委规范信息公开 保隐私信息安全自查工作要不留死角(Chinese).  This appears to be related to the developments described in the Legal Daily article described above.  Note that unauthorized disclosure of confidential information of foreigners had been a concern during prior meetings of the bilateral Joint Commission on Commerce and Trade.   Compare 2014 and 2016 U.S.-China Joint Commission on Commerce and Trade (JCCT).   From 2014 JCTT: The United States and China confirm that trade secrets submitted to the government in administrative or regulatory proceedings are to be protected from improper disclosure to the public and only disclosed to government officials in connection with their official duties in accordance with law.  Each side will further study how to optimize its respective relevant administrative and regulatory procedures within its legal system, where appropriate, including by strengthening confidentiality protection measures, limiting the scope of government personnel having access to trade secrets, limiting the information required from companies to include only information reasonably necessary for satisfying regulatory purposes, and stipulating that any requirements on government agencies to publicly disclose information appropriately allow for the withholding of trade secrets.  Government officials who illegally disclose companies’ trade secrets are to be subject to administrative or legal liability according to law.  The United States and China agree to exchange information on the scope of protection of trade secrets and confidential business information under their respective legal systems.  China acknowledges that it is to conduct a legislative study of a revised law on trade secrets.  The United States acknowledges that draft legislation proposing a Federal civil cause of action for trade secrets misappropriation has been introduced in the U.S. Congress.  From 2016 JCCT: Both sides confirm that, in those cases in which a judicial or administrative enforcement authority requests the submission of confidential information in conjunction with a trade secret enforcement matter, such requests will be narrowly tailored to avoid putting at risk sensitive business information and will be subject to appropriate protective orders to control additional disclosure and ensure that information is not further misappropriated and that any decision that is made publicly available in conjunction with a trade secret enforcement matter will have all confidential information appropriately redacted. The United States and China confirm that trade secret investigations are conducted in a prudent and cautious manner.

4.  Overview of China’s intellectual property protection: 32000 suspected criminal cases have been transferred since 2011.  中国知识产权保护状况全景式展示  2011年以来移送涉嫌犯罪案件3.2万起(Chinese).  Note: This is data on referrals from administrative to criminal enforcement. The transfer from admin to criminal seems like part of overall efforts that China took to improve IP protection. The article mentioned that three agencies: National Copyright Administration, SAIC and SIPO, all enhanced IP protection enforcement. For instance, National Copyright Administration, through “Jian Wang” (Swordnet) project, investigated 5560 infringement cases over the past 13 years; SAIC investigated 19,400 trademark infringement cases from Jan to Oct 2017; and SIPO and other IP protection agencies investigated 189,000 all kinds of infringement and counterfeiting cases in 2016.Related background information: State Council Opinion on Improving Administrative/Criminal IPR Enforcement Coordination.

5.  China Intellectual Property Development Alliance was established  中国知识产权发展联盟成立 (Chinese).   The focus of this alliance is to create a good environment for IP application and protection and to build an ecosystem for IP operation.

6.  Notice on establishing national intellectual property pilot parks.  关于确定国家知识产权试点园区的通知 (Chinese).  2017 new list of national intellectual property pilot parks 2017年新一批国家知识产权试点园区名单 (Chinese).  These pilot parks are established by local governments.  They will provide IP services, information sharing services, help incubate IP intensive industries, and provide supporting infrastructure. SIPO approves them, and will monitor pilot parks’ work progress and review document for renewal.

7.  The story behind of independent development of C919 (English); C919背后的自主研制之路 (Chinese).  The Chinese article describes the patents involved in the C919 aircraft project.

8.  China implemented the first national military standards of intellectual property management in the field of equipment construction 我国首部装备建设领域知识产权管理国家军用标准实施 (Chinese).

9.  China’s R&D investment hits a new high.  我国研发投入再创新高 (Chinese).   China’s total GDP in 2016 was $11 trillion and R&D investment is around $230 billion, which is about 2.15% of GDP. For US, R&D investment is estimated to be around 2.8% of GDP in 2016.

10. China’s invention patent applications exceed one million from Jan. to Oct. (English); 前10个月发明专利申请量超百万件 (Chinese).

11.WIPO Stats on Patent Application Filings Shows China Continuing to Lead the World (English);  China Tops Patent, Trademark, Design Filings in 2016 (English).

12,  “China Big Data Rule of Law Development Report 2017” released.   《中国大数据法治发展报告(2017)》发布 (Chinese).  Related:  Presentation on 2017 China Big Data Rule of Law Development Report 2017中国大数据法治发展报告(实录与PPT)(Chinese)

13.  China to boost competitiveness in AI (English) 产业三年行动计划提出在八大领域率先取得突破——人工智能服务渐入千家万户(Chinese).  The Ministry of Industry and Information Technology (MIIT) recently released an action plan to substantially improve the development of the AI industry. This plan set to make breakthroughs in eight areas, including smart cars, service robot, drone, AI medical diagnosis, facial recognition, voice recognition, smart translation and smart home product. The MIIT promised more policy support, including special funds, talent cultivation and a better business environment. Measures will also be rolled out to build industry clusters, set up key laboratories and encourage data sharing.

14.  Encourage indigenous innovation and build strong brands.  鼓励自主创新 聚力品牌经济 (Chinese).  The China Council for Brand Development is working with the National Development and Reform Commission to formulate “China’s Brand Development Strategy.” This program aims to cultivate 1000 well-known international brands in five years.

15.  More than 2000 clues have been received for the “Suyuan” campaign against trademark infringement.  打击商标侵权“溯源”行动已收到2000余条案件线索 (Chinese)  SAIC started a campaign called “Suyuan” against trademark infringement in September 2017. Until the end of November, more than 2000 clues on cases have been reported.

16.  Shenzhen IP court and Shenzhen Finance court were established 深圳知识产权法庭和深圳金融法庭同时揭牌办公 (Chinese).   A new Shenzhen IP court was opened on December 26, 2017. This court will handle intellectual property cases which were under the jurisdiction of the Shenzhen Intermediate People’s Court.

17,. Wang Jinshan was appointed as the Chief Judge of Beijing IP Court.  王金山被任命为为北京知识产权法院院长 (Chinese).  Wang replaces Chief Judge Su Chi, who has guided the court since it was first launched and implemented numerous reform projects. We wish him well. Judge Wang graduated from Peking University with a major in Law. He was the party secretary of Beijing IP Court since May 2017. Judge Wang also previously worked at Beijing Intermediate People’s Court.

18.  China’s software copyright registration exceeds 700,000 in 2017.  2017年我国软件著作权登记量突破70万件  http://www.nipso.cn/onews.asp?id=39313 (Chinese).

We hope to be providing more updates in the year ahead from the Berkeley Center for Law and Technology.

As usual the information contained herein does not necessarily represent the opinion of any government agency, company, individual or the University of California.

By Berkeley staff.

IPHouse And IP Litigation Strategies

cases-at-ip-court

  (IPHouse data on foreign-related IP cases at the Beijing IP court)

A Chinese judge recently told me that amongst the most important developments in the Chinese judiciary in recent years has been the increasing transparency of the courts.  I agree.  The increased transparency of the courts has also been noted by Susan Finder in her excellent blog.

One of the significant developments this year has been in the availability of value-added database services that utilize the underlying case data. IPHouse is a new database, set up this year, which provides comprehensive search capabilities for over 200,000 IP-related cases in China to date. It is operated under the guidance of former SIPO Commissioner Gao Lulin, a partner at the Beijing East IP  law firm.

IPHouse has prepared a 110 page English language statistical analysis of the work of the Beijing IP Court in 2015, available here.   IPHouse has told me that the report is prepared at the request of the Beijing IP court as part of its statistical review of the court’s activities.  It includes extensive data on types of cases, practices of individual judges and foreign-related activities, and summaries of cases.

As another sample of their work, regarding the important role of the Beijing IP Court in reviewing Chinese Trademark administrative decisions, IPHouse also prepared a brief report that shows from 2011 – 2015, there are 5,121 cases involved plaintiffs from foreign countries and Hong Kong, Macao, and Taiwan regions, where 1,010 administrative decision were reversed by the courts, accounts for 44.81% of all reversed cases. The rate of reversing cases involving foreign and Hong Kong, Macao, and Taiwan region plaintiffs is 19.72%. This is 1.89% higher than the average reversal rate.  IPHouse’s snapshot data of overall foreign IP cases shows a foreign plaintiff success rate in the courts of 70%.    Together these data suggest that foreigners have are faring well in the courts in China.  Finally, IPHouse has also prepared a short statistical summary of patent and trademark administrative decisions adjudicated at the IP Court, available here.

For US and Chinese counsel seeking to more accurately assess litigation risks and opportunities, IPNow builds on the existing IPHouse database. It provides search results in five different categories – courts, judges, agencies, attorneys, and parties. The search results are presented in various graphical charts depending on the search criteria, as follows:

  1. Courts – Collects judgments from over 800 courts across the country

–          Provides historical cases, length of trial, support rate of claimed damages, etc.

  1. Judges – Collects over 9,000 judges’ opinions

–          Provides the number of cases tried, case decisions, rate of support of claimed damages, etc.

  1. Agencies – Collects from over 29,000 intellectual property agencies

–          Provides winning rate from historical data.

–          Each agent can be compared with other agencies in more than 20 different selections.

  1. Attorneys – Collects from over 100,000 attorneys’ information

–          Provides winning rate from historical data, result of cases represented, and adversary party’s statistics.

  1. Parties – Collects over 148,000 parties

–          Provides party who filed the cases, the agency and agents hired, winning rate, and support from the court for the claimed damages.

Please contact IPHouse directly for further information.

China Passes the One Million Patent Milestone — Is it Yesterday’s News?

patentfilingchart

Several news outlets have reported on the recent WIPO World Intellectual Property Indicators 2016 report on IP filings, noting that China’s surpassing a milestone of one million patent applications in 2015, and that this may, according to WIPO reflect “’extraordinary’ levels of innovation.”

There are two significant problems with the reporting.

The first is that the news of one million invention patent filings is about one year old.  SIPO publishes its patent filing data on a monthly basis, which is available to all, at no cost.  The chart at the top of this blog is from the SIPO website statistics web page  as of November 27, 2016 and covers patent filings through the end of September 2016.  In other words, the news about China surpassing the one million benchmark was probably available sometime in the first quarter of 2016 – making it hardly news.

The second point though is the more troubling one:   Bigness does not mean “strength”, as China has itself noted in State Council documents.  Moreover, bigness does not necessarily mean innovation.

Let’s tease apart five of the hidden data of what the WIPO:

  1. WIPO Contradicts Itself on China’s efforts to Innovate: Some studies show China lags considerably on its efforts to innovate.  While WIPO’s Francis Gurry notes that “Innovators in China powered global patent applications to a new record in 2015”  another WIPO-commissioned Global Innovation Index looking at a broader range of factors, suggested that China is number 25 in global innovation, and number 72nd in technology payments, despite holding a top position in high tech exports.  The data suggests that what is made in China is disproportionately not innovated in China.  Indeed some would argue that the large overhang of unexamined utility model and design patents in particular is making it more difficult to innovate, by making it difficult to conduct freedom to operate analyses in China’s market.
  2. The Rising Tide Is Not Raising All Boats: China’s rapid increase in patent filings are overwhelmingly from Chinese domestic filers only. For example, according to the more up to date SIPO data above only 10.6 % of the invention patents filed through end of September 2016 were from foreign filers.  For design and utility model patents, the foreign numbers are even lower: about 3% for designs and about 1% for UMP’s.   Possible reason: subsidies for domestic patent filings may be more generally available than subsidies or other incentives to file overseas.
  3. China’s Patent Tide Stops at its Boundary Waters: China is not a major international filer. As the WIPO report notes:  “around 96% of total applications from China are filed in China and only 4% of the total are filed abroad. In contrast, filings abroad constitute around 45% of the total in the case of applicants from Japan and the U.S.”  As I have detailed elsewhere, when China does file overseas – such as at the USPTO – the quality of the patents is high.  However these overseas-filed patents still are a limited cohort of China’s domestic filings, even if it may represent its most innovative and high quality patents.
  4. China Is A Big IP Country, But Not Necessarily A Strong One = Particularly When Other Comparative Data is Introduced.     When patents per capita or patents per unit of GDP are compared or patents in force are calculated, China does not come out on top.  Japan, Korea, Switzerland,  the United States and other countries all have their strengths when comparative data is introduced. In fact, the United States has 2.5 million patents in fact, and China is behind Japan in the number three slot (1.4 million patents in force), despite the rapid growing number of its invention patent applications.
  5. Is China “Pulling out the Stalks to Make the Plants Grow”: A system that is overly geared to easy metrics? No less dramatic than the 1,000,000 patent benchmark are the areas where China so outstrips other countries as to suggest that there may be fundamental problems in the value proposition of its IP system. China’s 1.1 million utility model applications are about 127 times second-ranked Germany’s (chart A55).   China’s design patents constituted nearly 94% of global filings (p. 127)   The data suggests that China is indeed strongest where the government can most actively support registration activity.  Quantitative data also works to the disfavor of economies that have strong pharma sectors, which are dependent on fewer patents, and industries that rely on proprietary/unpatented technology. This blog has also repeatedly reported on both these SIPO filing data, and some of the distortions that have accompanied this dramatic ramp-up in patent filings, including  subsidies, “get out of jail” free subsidies, and end of year acceleration in patent filings to take advantage of incentives.   These incentives have helped increase patent quantity, but their impact on quality is harder to measure.

Summary: Judging the extent to which China’s rapidly evolving system is contributing to China and global innovation requires more careful thought than simply looking at the explosive growth in China’s IP filings.  In addition to the problems noted, it also requires looking at other data such as commercialization, citation rates, relationship to manufacturing and exports, licensing and assignment rates, adoption by standards setting organizations, etc. Nonetheless, the quantitative curve is obvious and impressive (see below).  patentofficetrends

 

Civil, Criminal and Administrative IP Litigation Continued in Climb in 2014

China’s Supreme People’s Court and Supreme People’s Procuratorate released a summary of their IP-related activities as part of their annual work report to the National People’s Congress.

As reported by the Beijing Intellectual Property Institute (www.bipi.org), here’s a quick summary of the numbers:

The total numbers of cases adjudicated by the SPC in 2014 was 9,882,000, an increase of 1.7% over 2013.  Amongst those cases there were 5,228,000 civil cases, with an overall increase of 5.7% from 2013.  There were also 131,000 administrative cases, with an increase of 8.3%.  The total number of IP cases of all types adjudicated by the SPC was about 110,000, an increase of 10 percent.

In a separate 2014 annual report, the SPC noted that there were 94,501 civil IP cases adjudicated in 2014 (about 1.8% of the civil case docket).  In addition, there were 10,303 IP adjudicated criminal cases (about .2% of the criminal docket), and 4,887 administrative cases (3.7% of the administrative docket).

The relatively low numbers of IP cases compared to China’s overall dockets and the changes that the IP system has brought to China’s judicial system in areas such as specialized IP courts and preliminary injunctions, demonstrates the out-sized influence on China’s judicial system.

The SPP’s report indicated that total prosecutions for trademark, patent, copyright, and trade secrets involved 9,427 people, an increase of 7.1% over last year.

More details should be available by the end of April, when numerous Chinese agencies release reports on their IP work for the year.

WIPO, SIPO and USPTO: US-China Patent Filing Trends

Chinese Activity at WIPO

A WIPO report released on March 19 noted that Huawei, with 3,442 published PCT applications, overtook Panasonic as the largest applicant in 2014. Qualcomm was the second largest applicant in 2014, with 2,409 published applications. ZTE Corp. took third place with 2,179 PCT applications.

These top three applicants have similar patent filing profiles, with digital communication accounting for the bulk of their total filings.

The report highlights some weakness amongst Chinese academic institutions: among the top 25 educational institution filers, there were only two Chinese academic institutions – Peking University (no. 19) and Tsinghua (no. 23).

United States Activity at SIPO

SIPO’s 2014 Statistical Report (no. 164), analyzes filing trends from foreign countries, including the United States that further underscores the competition amongst Qualcomm, Huawei and ZTE and in the ICT sectors.

United States China invention patent applications with SIPO amounted to 135,138 pieces over the previous five year period analyzed.   The annual growth rate during this period was 8.3%. In 2013 United States patent applications were 29,992, about 1.4 times 2009.

According to SIPO, the following companies from the United States filed more than 3,000 patents from 2009-2013: Qualcomm (6,029); GE (5,875); General Motors (5,697); Microsoft (3,957) and IBM (3,293). Also of note during this period, Apple’s patent filings have increased rapidly, while Microsoft’s decreased after 2011 to 327 in 2013, falling to 11th place among US applicants.

SIPO’s description of Qualcomm’s role in communication technologies underscores highly competitive relationships in China:

Over the five year period of this survey, Qualcomm’s 5-year filings have ranked amongst the top three United States applicants. Chinese enterprises have also substantially increased their communication invention patents, and this substantial growth has a number of advantages. However, in key areas such as mobile phone chips, Qualcomm still owns core IP. It provides licenses to patented technology to Chinese communications equipment and consumer electronics equipment enterprises, and uses this technology to charge exorbitant license fees.

What about Chinese activity in the US?

USPTO’S Fiscal Year Report (ending September 30, 2014), provides partial data on Chinese filing trends in the United States. In 2013, there were 15,496 patent applications from China, having nearly doubled from 8,358 in 2010. Patent grants to Chinese residents more than doubled from 2010-2014 from 3,059 to 7,717.

Additional data is necessary to compare Huawei and ZTE’s filing trends in the United States and whether they reflect similar competitive trends in PCT filings and in China.

SPC’s Annual Report Gives A Passing Nod to IP

SPC President Zhou Qiang issued his 2015 Report on the Work of the the Supreme People’s Court to the National People’s Congress recently, and IP didn’t get much of coverage. However the IP cases continued to climb – by about 10%.  More data is usually released around April 26 – World IP Day.

The principle paragraph devoted to IP, which curiously links IP to antimonopoly law is:

加大知识产权司法保护力度。  依法制裁侵犯知识产权和制售假冒伪劣商品行为,维护公平竞争的市场秩序,保护知识产权,促进创新驱动发展。  各级法院审结一审知识产权案件11万件,同比上升10%。  审结奇虎与腾讯公司涉不正当竞争案和垄断案,促进规范互联网领域竞争秩序。 

”Increase judicial protection of intellectual property rights. Sanction IPR infringement and selling counterfeit and shoddy goods according to law, and maintain fair and competitive market order and protect intellectual property rights, and promote innovation-driven development. Each level of IPR courts of first instance concluded a total of 110,000 cases last year, which was an increase of 10% over the prior year. We concluded the case involving Qihoo and Tencent involving unfair competition and monopoly, and promoted order in the area of Internet competition.”

In addition, President Zhou noted amongst the year’s accomplishments:

设立知识产权法院。  根据全国人大常委会的决定,在北京、上海、广州设立知识产权法院,审理知识产权民事和行政案件,落实国家知识产权战略,发挥司法保护知识产权的重要作用.

“Establishment of IP courts. According to the decision of the NPC Standing Committee, we set up intellectual property courts in Beijing, Shanghai and Guangzhou to hear civil and administrative cases of intellectual property rights, to implement the national intellectual property strategy, and play an important role in the judicial protection of intellectual property.”

Another interesting element: China handled 2,872,000 commercial cases last year, of which only 5,804 involved foreigners. In addition, the Chinese courts handled 6,014 cases of international judicial assistance. It appears that foreigners in all areas continue to play a relatively small role in China’s commercial litigation.

Susan Finder did an excellent blog on the report: “Supreme People’s Court president says court reforms in “deep water area.”

Five Year Judicial Reform Plan And Specialized IP Courts

On February 26th, the Supreme Peoples Court released its fourth five year reform plan (2014-208) (最高人民法院关于全面深化人民法院改革的意见) (dated February 4, 2015).  Intellectual Property is the third item listed of sixty-five action “Key Tasks in Deepening Reform of the Courts” (全面深化人民法院改革的主要任务 )  Here’s what the Court says

推动设立知识产权法院。根据知识产权案件的特点和审判需要,建立和完善符合知识产权案件审判规律的专门程序、管辖制度和审理规则。Promote the Establishment of Intellectual Property Courts. Establish and improve specialized procedures that fulfill the need for intellectual property adjudication, jurisdiction and trial rules, in accordance with the special needs of intellectual property case adjudication.

This “task” supports the specialized procedures now in place at the IP courts, including the use of technology assessors, as well as the unique jurisdiction of those courts.  The five year reform also extends beyond the three year trial period of the courts, which suggests that deeper/more durable reforms may be in the works.

There are also numerous other provisions in this plan that could affect IP adjudication, including provisions on transparency, administrative appeals, statistics, court management, petitioning, independence, supervision, as well as on international judicial assistance (No. 26). The draft also calls for the adoption of an international criminal judicial assistance law, which might be useful in dealing with transnational IP crime.

Thanks to Susan Finder for spotting this new development.