Trade and Peace on Earth: Part 1

O ye who read this truthful rime From Flanders, kneel and say:
God speed the time when every day
Shall be as Christmas Day.

(Frederick Niven, “A Carol from Flanders”, regarding the WW I Xmas truce)

We are in the middle of the 90-day trade war truce, which was announced at the G-20 in Buenos Aires. Is there, however, an opportunity for a lasting trade peace?  Let’s look at developments to date…

Shortly after the Buenos Aires G-20 meeting on December 1, 2018 at which the 90 day truce was agreed to, USTR Robert Lighthizer gave an interview on Face the Nation where he  hinted at the pathway forward, noting: “We have had conversations ongoing.  We have had conversations ongoing for over a year.”  Lighthizer went on to say that we need structural changes and market opening “on this fundamental issue of non-economic technology transfer.”  Lighthizer’s focus was three-fold: forced technology transfer, cyber theft and state capitalism.  Lighthizer noted that tariffs will be raised in March unless a satisfactory solution is found.  In fact, USTR has announced on November 19 a deadline of March 2, at which time tariffs will be raised.  March 2 is 90 days after the December 1 meeting.

Notwithstanding LIghthizer’s assertions of on-going discussion, there have been several significant developments which suggest that there may not have been much real communication.  Typically, a new administration needs one to two years before adequately coming to terms with how China negotiates on IP and what may be the “low hanging fruit” in IP improvements that could have a durable impact.  This administration and China have not had anything approaching a “honeymoon” period.  It is not surprising, therefore, that some of the developments during this past year, as well as during the truce period appear, to be missing the mark.

If we dial back to the period when the 301 investigation was on-going, China failed to publicly disclose data on civil trade secret cases for 2018, and actually reduced its criminal trade secret prosecutions by approximately 35% to only 26 cases in that year. China’s revised trade secret law (Anti Unfair Competition Law) (eff. 1/1/18) also weakened trade secret protections by expanding the ambiguity around protections and procedures, where a non “business operator”, such as an employee, misappropriates trade secrets.

The United States also did not always engage comprehensively during this period. Although the United States filed a WTO case against China on March 23, 2018 (the day after the Section 301 Report was released) regarding compulsory licensing terms, the complaint does not specifically call out trade secrets (undisclosed information) as a form of technology licensing.  The European complaint, by contrast, more thoughtfully notes that “China imposes a different set of rules on the import of technology, including industrial property rights, other intellectual property rights and undisclosed information (“intellectual property rights”).”

Other recent efforts undertaken by China suggest that there may also have been some lack of understanding of US interests, including perhaps an undue emphasis on patent licensing.  NDRC, China’s powerful state planning agency,  announced a special Memorandum of Understanding/campaign mechanism involving 38 government agencies to address six types of “dishonest  conduct” by patenting enterprises and individuals.  The “MOU For Cooperation for Joint Disciplinary Actions Against Subjects of Serious Mistrust in the Field of Intellectual Property (patents).” 关于对知识产权(专利)领域严重失信主体开展联合惩戒的合作备忘录  is dated November 21 (before the G-20), but  was published on December 2 (immediately after).

How effective will this MOU be?  For some time, the academic data has suggested that such special campaigns have rarely brought any durable progress.  In fact, China suggested a special campaign for three months at the beginning of the 301 investigation. My response on the record to that suggestion was:

“Many scholars think that these short campaigns have limited duration and effect . . .. So, I’d like to know why is this particular program any different from other ones before it? Why not extend it or make it permanent? Or perhaps should the focus be on judicial reform or other areas?”

The data also shows that foreigners rarely use the administrative patent system and, as I have pointed out, along with former Chief Judge Rader and former PTO Director Kappos, vesting the administrative agency in charge of granting patents with the ability to bring infringement actions and special campaigns may not be conducive to independent adjudication of rights.

Another “truce-responsive” legislative effort appears to be in the works from China’s National People’s Congress, where a first reading of a new “Foreign Investment Law” is reportedly  now under consideration. The law would combine existing laws regarding foreign investment into one statute and is intended to insure that foreigners are accorded national treatment and can participate in government procurement and standards setting, as well as insure that transfer technology is on voluntary terms.  It  hopefully may address some aspects of forced technology transfer that have been identified by USTR in its 301 Report.

There have also been two other significant developments that could affect the landscape for technology transfer and IP protection in China that have a longer history and could be helpful to foreigners facing IP issues in China.  One of these is China’s proposed draft patent law amendments which have also been submitted to the NPC and have gone through its first reading.  The draft offers some improvement on judicial procedures and remedies (including discovery for calculation of damages, and improved damage calculations).  This latest draft also strengthens administrative enforcement, and extends the term for design patents to 15 years (in anticipation of accession to the Hague Agreement on the International Registration of Industrial Designs), provides for enhanced protection of patents in e-commerce, extends patent term for innovative pharmaceutical patents by five years.  However, it may also have weakened protections for pharmaceutical patents, as press reports thus far omit any reference to patent linkage, continuing a trend since this past August.

In my estimation, the most positive development is the establishment of a new specialized appellate circuit IP  tribunal attached to China’s Supreme People’s Court and under the direction of long time IP judge, Luo Dongchuan, now Justice of the SPC.  The new circuit tribunal will have national jurisdiction over technologically complex IP cases and will open for business January 1, 2019.   This court could also have an important impact on technical trade secret cases, patent disputes in key areas, such as semiconductors and pharma cases, appeals from China’s patent office, in insuring consistency of decision making across various intermediate courts, and in other areas.

Interestingly, none of these changes address Lighthizer’s other goals of addressing cyber theft and state capitalism.

There have been other changes in how the US engages with China that suggest some modifications in the bilateral relationship are permanent.  US companies have now begun wondering how they can take advantage of US Customs rules regarding determinations of country of origin of products with Chinese content, to minimize the potential application of 25% punitive tariffs.   They are busy revisiting Customs doctrines regarding “substantial transformation, including the progeny of cases and rulings since the landmark decision in Anheuser Busch v. United States 207 U.S. 556 (1907), in order to see how they might restructure manufacturing in China through conducting more assembly or finishing outside of China.  For Customs lawyers this must be a boon period.  At the same time, the US Department of Commerce has published new, potentially restrictive rules on “foundational” and “emerging” technologies, which may be targeted towards China, and the Treasury Department/Committee on Foreign Investment in the United States is conducting a pilot program that could restrict “passive, non-controlling” foreign investments in technology.  Meanwhile, Huawei’s CFO was arrested pending extradition to the United States, and Fujian Jinhua is banned from acquiring US technology, as it has been determined to be a threat to US national security.  It is clear to me that even if this stage of the trade war were to end, a new normal in trade relations with China has emerged and significant steps will need to be taken to reestablish trust.

My next blog will offer some ideas for reducing the bilateral temperature.

Christmas Day, 2018 (rev. 5:00 PM).

SO MANY CHINA IP CONFERENCES, SO LITTLE TIME…

markatjmls

Here’s a rundown of some past events, and some upcoming ones.  I will provide an update on some of the legal developments at a later date (I know I have been a bit remiss).

On October 4, 2018, I spoke about China at the University of Nevada Las Vegas’ program  on “Intellectual Property Enforcement at Trade Fairs.”   My observations: (a) China does not routinely great preliminary injunctions at trade fairs, despite heavy reliance on injunctive relief in final adjudication of IP infringements;  (b) The United States does have robust preliminary injunction/temporary restraining order trade fair remedies; (c) the use of sui generis administrative or quasi-administrative enforcement mechanisms for trade fair enforcement in China may be one reason that judicial remedies are not that common; (d) trade fairs do afford other opportunites – they are excellent evidence gathering opportunities, their use can help satisfy use requirements for a trademark, and they may constitute infringing conduct as an “offer for sale” under the patent law.  Please look through my  power point and tell me if you have any comments.

On November 2, 2018.  John Marshall Law School (JMLS) convened its 62nd annual IP conference I chaired a great breakout session on international developments, with Kira Alvarez, Peter Yu, Cynthia Ho, Tobias Hahn and Prof. Dennis Crouch.   The session discussed the state of global IP and China-specific IP negotiations in the Trump administration.   Kira Alvarez noted the success of the administration in negotiation trade secret commitments in the revised NAFTA.  The panel, along with the audience, also discussed the role of soft diplomacy, rather than trade disputes, to resolve IP-related trade conflicts.  Prof. Dennis Crouch attributed many of the changes in civil litigation globally to the work of former Chief Judge Rader “who was really using his gregarious nature to reach out and become close friends with the leading jurists around the world.”  This point was restated by many during the conference and thereafter.  The photo above is from the JMLS international IP panel with Kira to my right.

I also participated at the JMLS annual IP  conference in a plenary discussion on antitrust and IP developments, moderated by Prof. Hugh Hansen of Fordham with  Carlos Aboim, David Djavaherian, Suzanne Munck (FTC),  Prof. Ioannis Lianos, University College London and  Annsley Merelle Ward.   I looked at the evolution of Chinese judicial practice regarding SEPS, which are a remarkable set of steps in light of there being no substantive change in antitrust or patent law during this period, and likely reflect increased judicial experience as well as the impact of economic changes in China as an emerging licensor.  These developments were previously discussed in this blog.  I also discussed China’s historical reliance on civil law measures to deal with IP misuse, rather than remedies under the patent law or antitrust law, and how these compare with US practice.

On November 5, 2018, Dan Rosen (Rhodium Group) launched another path breaking paper “Missing Link – Corporate Governance in China’s State Sector” at the Asia Society of Northern California.  A copy can be found here.  The video of the launch can be found here.  The focus of my comments was on whether SOE’s can play a more active role in China’s innovation plans, and the awkward fit between SOE’s and global trading rules.  I believed that existing efforts to provide greater market accountability and transparency for SOE’s (and more broadly, China) have not achieved their intended outcomes despite  the extensive commitments negotiated with China at WTO accession.

I gave a talk at the IP Dealmakers Forum in NY on November 8, 2018 with several individuals involved in financing litigation, providing patent analytics, buying Chinese patents  – Roger Tu, Y. P. Jou,  Brian Yates, iPEL, and Bill Yuen.  Brian Yates’ company had just been the subject of a Chinese article regarding whether patent assertion entities will now be/should now be coming to China, that was posted by IPHouse.  I think many in the room shared my skepticism that China was now “ripe” for this type of activity, particularly for litigation by foreigners against Chinese.  There was however a general sense that the IP and litigation environment was improving.

In addition to these programs, here are some upcoming events;

November 12, 2018, I will be talking at NYU.  I have always greatly enjoyed the open discussions with Prof. Jerome Cohen (no relation), Ira Belkin and others, and I believe this upcoming event will be no different in my current role at UC Berkeley.

On November 13, 2018, I will be at Columbia University talking about “IP and the China Trade War: Long Overdue, a Pretext, or Both?”     I may be guided by the discussions around that topic at JMLS earlier in November, where many concurred that these actions on IP in China are both overdue and dwarfed by other concerns.

On December 2, 2018, I will be in Shenzhen. Peking University School of Transnational Law (“STL”) will be partnering with Berkeley to present an exciting program on “Legal and  Funding Issues for Successful Startups.”  Both the topics and speakers promise to make this an especially exciting launch event. Here’s the link to register.

On December 3, 2018, I will be at IPBC  Asia moderating a session on “China’s Mandate to Innovate” and its impact on IP commercialization. IPBC has constituted a great panel, including former SPC Chief IP Judge Kong Xiangjun, now Dean at Jiaotong University Law School, and Prof. Yang Guohua of Tsinghua Law School (former Chinese IP Attaché in the US, and DDG of MOfCOM), as well as Liren Chen, from Qualcomm, Eeva Hakoranta from Nokia and Roger Tu from Marconi.

On December 4, I will be at Tsinghua University speaking at the first annual Tsinghua/Berkeley conference on “Transnational IP Litigation: Opportunities and Challenges”.  A copy of the agenda (Chinese) is found here.   We will also have some great speakers for this launch event which focuses, non-exclusively, on US developments.  The speakers include several Tsinghua and Berkeley professors, and leading attorneys from practice in the US and China.  The program will cover a full range of issues including empirical data on litigation trends, venue, jury trials, Section 337 litigation, antitrust, the role of expert witnesses, and licensing strategies to mitigate risk.

I have some other events upcoming in Taiwan in December – but that will be another posting, along with some overdue updates on Chinese IP developments.

Draft of Data Exclusivity Rules Released by CFDA

CFDA just released on April 25, 2018 its Public Comment Draft of Pharmaceutical Data Exclusivity Implementing Rules  (provisional)  药品试验数据保护实施办法(暂行)征求意见稿 , available here (the web version is here) .  Comments are due by May 31, 2018 at yhzcszhc@cfda.gov.cn.

Article 5 proposes six-year data protection (which was China’s WTO commitment) for “innovative new drugs”.  “Innovative therapeutic biologics” are eligible for 12-year data protection (the previous May 2017 CFDA circular said 10 years).  The draft clearly encourages MNCs to include China in international multicenter clinical trials and to concurrently apply for market introduction in China (which can include other countries).  Full-term protection (6/12 years) is only available in this scenario.  Reduced Chinese data protection terms of one to five years may occur due to delays in introduction in China.  As a policy matter, this draft appears intended to help encourage conducting clinical trials in China as well as new product introduction into the Chinese market

Thanks to my friend and former student Jill (Yijun) Ge at Clifford Chance for bringing this to my attention and providing an initial review.  I welcome readers to submit English translations of this draft for me to post.

This is one of several exciting new developments in the pharma IP sector in China.  To help better understand the business implications of these changes, the Berkeley Center for Law and Technology is planning on hosting a half day roundtable discussion on pharmaceutical IP developments in China on May 30, one day before the comment period closes.  Seats are limited.  Please contact chinaipr@yahoo.com or mark.cohen@law.berkeley.edu for further information.

April 3 – 9, 2018 Updates

1.China pushes generics over brands with another round of new pharma policies. The General Office of the State Council on April 3rd, 2018 issued “The Opinion on Reforming and Improving Supply and Use of Generic Drugs” (国务院办公厅关于改革完善仿制药供应保障及使用政策的意见 国办发〔2018〕20号), to promote China’s generic pharmaceutical industry. The State Council said it would draw up new incentives aimed at encouraging the development and production of generic drugs, a move it said would help safeguard public health, reduce medical bills and spur innovation.

According to the document, CFDA and the National Health Commission will compile and actively update a drug list that encourages companies to produce generic versions. That list will include medications for rare diseases, major infectious diseases and pediatric treatments, as well as important drugs that are short in supply. Certain qualified generics makers are allowed to be designated as High and New Technology Enterprises (HNTE) with commensurate income tax reductions (see more about China’s practice of providing tax incentives to high tech enterprises here).

The State Council also said that with regard to IP protections, China will “strike a balance between the interests of patent holders and the public,” and would strengthen anti-monopoly enforcement. (Note that the recent combination of agencies involved with antitrust enforcement, IP with CFDA may offer increased opportunities for such antitrust enforcement). An “early warning” mechanism to prevent generic drug producers from infringing patents will be established. The policy also restates that China considers compulsory patent licensing (CPL) a bona fide option during public health emergencies or shortages of key drugs; however China has not explicitly implemented a CPL to date.

China is a major branded generics market and innovative pharma companies are heavily dependent on this market in the absence of a robust market and incentives for innovative pharmaceuticals. The Opinion also states that when there is a bioequivalence determination, the generic drug should be marked as a substitute for the innovative drug and release such information to the public. In the absence of special circumstances, no brand name could be written on the prescription.

With regard to intellectual property, the Opinion further states:

“…In accordance with the principle of encouraging the creation of new drugs and the development of generic drugs, research and enhance a system of pharmaceutical intellectual property protection that is compatible with China’s economic and social development level and industrial development stage, and fully balance the interests of drug patent holder and the public. Implement the patent quality improvement project and cultivate more core, original and high-value intellectual property. Strengthen the enforcement of anti-monopoly law in the field of intellectual property rights, prevent the abuse of intellectual property rights and promote the listing of generic drugs while fully protecting innovations in the pharmaceutical field. Establish and improve the patent early-warning mechanism in the pharmaceutical field to reduce the risks of patent infringement of generic pharmaceutical companies.”

按照鼓励新药创制和鼓励仿制药研发并重的原则,研究完善与我国经济社会发展水平和产业发展阶段相适应的药品知识产权保护制度,充分平衡药品专利权人与社会公众的利益。实施专利质量提升工程,培育更多的药品核心知识产权、原始知识产权、高价值知识产权。加强知识产权领域反垄断执法,在充分保护药品创新的同时,防止知识产权滥用,促进仿制药上市。建立完善药品领域专利预警机制,降低仿制药企业专利侵权风险.”

2. SIPO releases the 2017 China Patent Survey Report.  The State Intellectual Property Office (SIPO) recently released the 2017 China Patent Survey Report, which is the third time that the national patent-related survey results are publicized.

In 2017, the patent survey covered 23 provinces nationwide and was carried out concerning the valid patents and the patent holders who owned such valid patents at the end of 2016. The survey was launched in March 2017 and was completed at the end of 2017. 15,000 questionnaires about patent holders and 43,000 questionnaires about patent information were released. Over 85% of the questionnaires were returned.

According to the report, China’s overall environment of patent protection has been significantly enhanced, but still not to a level that is satisfied. More than 88% of patent holders believe that patent protection needs to be further improved in China. The report also notes that the emerging industries with strategic significance rely more on patents to gain their competitive edge and have better utilization of patents. Chinese universities have strong innovation capabilities, but their utilization rate of patents in 2016 (12.7%) was much lower than enterprises (59%). The lack of professional technology transfer team was considered to be the biggest obstacle for Chinese universities. The continuing focus on Chinese universities is odd, since universities should have a primary goal of information dissemination, not patent acquisition, but this is not necessarily a bad thing.

3. Chinese national convicted in US for stealing a valuable U.S. trade secret: Kansas rice seeds.  A scientist from China has been sentenced to 10 years in prison in the United States for stealing seeds of genetically modified American rice, the Department of Justice announced Wednesday.  The Chinese scientist Weiqiang Zhang is a U.S. legal permanent resident residing in Manhattan, Kansas. Zhang was convicted on Feb. 15, 2017 of one count of conspiracy to steal trade secrets, one count of conspiracy to commit interstate transportation of stolen property and one count of interstate transportation of stolen property. Zhang was working as a rice breeder at Ventria Bioscience, a biopharmaceutical company that creates genetically modified rice. According to trial evidence, Zhang stole hundreds of rice seeds from the company that had cost millions of dollars and taken years of research to develop and kept at home. In the summer of 2013, personnel from a crop research institute in China visited Zhang at his home in Manhattan.  On Aug. 7, 2013, U.S. Customs and Border Protection officers found seeds belonging to Ventria in the luggage of Zhang’s visitors as they prepared to leave the United States for China.

January 16 – 29, 2018 Update

Jan 16 – 29, 2018 

Here are some updates on IP developments in China from past two weeks.

  1. China criticizes US moves on intellectual property 商务部:缺少确凿证据无可信度 China on Thursday criticized recent moves by the U.S. targeting the sale of fake goods and Chinese telecoms equipment, saying Washington lacked “objectivity” in its approach to Chinese businesses. Commerce Ministry spokesman Gao Feng told reporters the U.S. Trade Representative lacked direct conclusive evidence and supporting data in listing three Chinese online commerce platforms and six physical bazaars within China as “notorious markets” engaging in commercial-scale copyright piracy and trademark counterfeiting. Meanwhile, Alibaba Group recently released a series of initiatives to strengthen its intellectual property rights protection. The event happened days after Taobao was put listed as notorious market. The ecommerce giant intends to gather as much information as they can and use the expertise of both brands and rights holder to create a much stronger database. It should effectively improve the algorithm that Alibaba uses to counteract the fakes and even gather evidence for offline investigations. Moreover, Preempting the 2017 USTR report’s publication by one day, the company has released the 2017 Alibaba Intellectual Property Protection Annual Report (in Chinese).
  2. Google announces patent agreement with Tencent amid China push Alphabet Inc’s Google has agreed to a patent licensing deal with Tencent Holdings Ltd as it looks for ways to expand in China where many of its products, such as app store, search engine and email service, are blocked by regulators. The agreement with the Chinese social media and gaming firm Tencent covers a broad range of products and paves the way for collaboration on technology in the future, Google said on Friday, without disclosing any financial terms of the deal. Additional articles are available here and here.
  3. China Publishes More Scientific Articles Than the U.S. For the first time, China has overtaken the United States in terms of the total number of science publications, according to statistics compiled by the US National Science Foundation (NSF). According to the report, China published more than 426,000 studies in 2016, or 18.6% of the total documented in Elsevier’s Scopus database. That compares with nearly 409,000 by the United States. India surpassed Japan, and the rest of the developing world continued its upward trend.
  4. SIPO Released Statistics Data on Major Work for 2017国家知识产权局公布2017年主要工作统计数据 SIPO recently released detailed breakdown of statistics on its work for 2017. Government data show that the number of annual applications for invention patents filed in the country topped 1.38 million in 2017, a 14.2 percent rise on the previous year. Beijing, Shanghai and Jiangsu are the top 3 provinces for number of patents per 10,000 people. State Grid Corporation of China, Huawei, and Sinopec are top companies with most patents granted.
  5. China’s trademark applications hit record high in 2017 China’s trademark applications exceeded 5.7 million last year, up 55.7 percent year on year, both setting record highs. At the end of 2017, China had 14.92 million qualified registered trademarks, the most of any country worldwide.
  6. “Jianwang [Swordnet] 2017” closed 2554 Pirated Websites“剑网2017”关闭侵权盗版网站2554个National Copyright Administration, State Internet Information Office, MIIT and Ministry of Public Security jointly held a conference on “Jianwang” special campaign recently. Since this special act being implemented in July 2017, 63,000 websites have been investigated and 2554 infringing websites have been closed. According to officer from National Copyright Administration, this special act had a focus on videos, news, mobile Internet applications (APP) and e-commerce platform.
  7. China Will Take the Lead in Promoting IP Protection Mechanism in Pilot Area我国将在全面创新改革试验区域推进知识产权保护改革率先突破 NDRC recently issued a notice to promote reform on IP protection mechanism in eight pilot areas, including Jing Jin Ji, Shanghai, Guangdong, Anhui, Sichuan, Wuhan, Xi’an, Shenyang. The government intends to promote integrated management of IP rights, explore new mechanism of IP protection, and establish a new mechanism to link administrative and criminal enforcement.
  8. U.S.-China IP Scholar Dialogue was Held中美知识产权学者对话举行 The Fourth U.S.-China IP Scholar Dialogue was held in Shanghai, China from January 17 to 18. Intellectual property is a key issue in the development of U.S.-China economic and trade relations. To increase cooperation and understanding, IP experts from both countries created this dialogue mechanism since 2013. This year’s dialogue emphasized on AI, biomedical innovation, technology licensing, trade secret law reform, IP judiciary protection and dispute settlement mechanism.
  9. US Commerce Secretary Ross says Beijing’s technology strategy is a “direct threat”; China demurs.  US trade authorities are investigating whether there is a case for taking action over China’s infringements of intellectual property, Commerce Secretary Wilbur Ross said. China responds that it did not expect more trade disputes.
  10. China Customs reports seizing infringing goods worth 552 mln yuan in past three years.   China has seized infringing goods worth 552 million yuan (86.06 million U.S. dollars) in the past three years driven by a special act called “Qingfeng” (“Clear Breeze”), according to the General Administration of Customs of China (GACC). The three-year crackdown on intellectual property rights infringement discovered about 120 million infringing items, according to the General Administration of Customs.  Compare prior discussion on previous reports of GACC hereand here.
  11. Beijing to set up IPR center to better serve high-tech firms.  Beijing will establish a center this year dedicated to providing services to high-tech companies on intellectual property rights (IPR), officials said. The center will offer fast-track services for patent applications to companies in information technology and high-end equipment production, two areas with the highest demand.  This is part of an existing SIPO effort to fast track areas of concern to industrial development.  Compare, however, article 27 of TRIPS Agreement – patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.
  12. SIPO released a directory of industries that need IP support.  SIPO recently released the 2018 Intellectual Property Supporting Industries Directory (知识产权重点支持产业目录(2018年本)), which identified 10 industries where IP will be key. The government asked for efficient allocation of IP resources within these industries to promote industrial restructuring and upgrading.
  13. China’s Sinovel Convicted in U.S. of Stealing Trade Secrets.  A Chinese wind turbine maker, Sinovel Wind Group Co. was found guilty of orchestrating the theft in a rare trial in Wisconsin that continues to raises doubts over China’s commitment to fighting infringement of intellectual property and corporate espionage.  The case is U.S. v. Sinovel Wind Group Co. Ltd., 13-cr-00084, U.S. District Court, Western District of Wisconsin (Madison). The conviction was against Sinovel Wind Group.  Previously a former employee of the victim had been found guilty of theft of trade secrets in a criminal case in Austria. In addition, there are in total five civil cases in China between Sinovel and AMSC, with one closed and four pending. AMSC filed one separate trade secret case in China plus two copyright cases and an arbitration.
  14.   Five New Guiding Cases (English translation available).  Of the five newly released GCs, four are administrative cases and one centers on a dispute over the infringement of rights related to a new plant variety (Case No. 92). English translation of those guiding cases are made available by the China Guiding Case Project of Stanford Law School. More information about previous guiding cases available here and here.

We hope to be providing more updates in the year ahead from UC Berkeley.  As usual, the information herein does not necessarily represent the opinion of any government agency, company, individual or the University of California.

Updated: February 13, 2018

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.

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.