GAI’S Comments on NDRC’s IP Abuse Guidelines

 “[T]he code is more what you’d call “guidelines” than actual rules” (Barbossa, Pirates of the Carribean, The Curse of the Black Pearl).

Attached find the comments of the Global Antitrust Institute of George Mason University (GAI) on the recently released public comment draft of NDRC’s IP Abuse Guidelines.

GAI’s excellent comments suggest that NDRC adopt a more compliance-based approach to ensure predictability to commercial actors.  In its view, the Draft Guidelines do not explain the significance of each of four factors enumerated by NDRC or how they will be weighed in Anti-Monopoly Law (AML) agencies’ overall decision-making process.  This approach allows the AML agencies broad discretion in enforcement decision-making without providing the guidance stakeholders need to protect incentives to innovate and transfer technology that could be subject to AML jurisdiction.  GAI also recommends that the NDRC include throughout the Guidelines examples similar to those found in the U.S. antitrust agencies’ 1995 Antitrust Guidelines for the Licensing of Intellectual Property to illustrate how the AML agencies will apply the basic principles.  GAI also provided specific line-edit proposed edits on four provisions: general analysis, charging “unfairly high” royalties, discriminatory treatment, and injunctive relief.

Anyone keeping a list of all the legislative activity in this area is likely to be bewildered.  I have previously released other comments of the GAI, including their recent comments on SAIC’s draft of the IP Abuse Guidelines, and an earlier draft of the NDRC IP Abuse Guidelines.  I also commented on NDRC’s questionnaire regarding the guidelines, and published the ABA’s comment on the questionnaire.  Activity on IP Abuse guidelines now stretches back several years.  Indeed. there were already SAIC several drafts when I helped author a chapter on IP and China’s antimonopoly region in Antimonopoly Law and Practice in China  (2011).   Additionally, the AML itself is reportedly under consideration for revision by the NPC, and related legislation, a draft of the Anti-Unfair Competition Law, has reportedly recently been submitted to the State Council for its consideration (it was listed for preparatory work in the State Council’s 2015 legislation plan).

One saving grace: the final guidelines would likely need to be adopted by the Antimonopoly Commission which, according to the AML itself, is in charge of “organizing, coordinating, and guiding anti-monopoly work.” In the interim, the large number of drafts by different administrative agencies, lack of clear legislative or judicial guidance, the overhang of active enforcement activities and large damage/international administrative and judicial decisions (such as Qualcomm and Interdigital), the “exporting” of AML cases overseas (such as in Huawei vs. ZTE), SIPO’s effort to address standardization issues in the patent law revision, etc., all suggest that a situation where agencies could be using rulemaking to both address voids in legislation but also enhance their position in a multi-agency turf battle.

During my trip to China last week, I also repeatedly heard concerns expressed about current practice of Chinese agencies drafting legislation that may be used to enhance their administrative power or enhance their influence, with calls for greater direct legislation by the State Council or National People’s Congress (here’s one article on this topic involving educational legislative work).  Despite the heavy work load of the State Council, it seems to me that the IP Abuse Guidelines are increasingly becoming more ripe for the already planned consideration by the Antimonopoly Commission or the State Council Legislative Affairs Office itself.

(Updated Jan. 21, 2016)

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 from the MofCOM website.  Source:

http://www.mofcom.gov.cn/article/i/jyjl/l/201512/20151201200026.shtm

“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, December 26, 2018.

JCCT 2014 Winds Up – Joint Fact Sheets Now Released

JCCT2014

The 2014 JCCT was hosted by the US government in Chicago, Illinois this year. Here is a link to the updated English  fact sheet (released Dec. 29) (Chinese:第25届中美商贸联委会联合成果清单)  that is now a joint fact sheet.    Here is a summary of the IP accomplishments of this year’s JCCT according to the joint fact sheet:

One significant outcome involved “technology localization” which is the practice whereby China grants tax preferences based on where IP is owned or R&D is undertaken.  Here is what the fact sheet says about the outcome in this area:

The United States and China commit to ensure that both countries treat intellectual property rights owned or developed in other countries the same as domestically owned or developed intellectual property rights.  ..Both China and the United States confirm that the government is entitled to take measures to encourage enterprises to engage in research and development and the creation and protection of intellectual property rights. 

In my personal estimation, the significance of this outcome is that China committed to not discriminating in awarding tax preferences based on where IP is owned.  To a degree this reflects footnote 3 of the TRIPS Agreement, which prohibits discrimination in “protection” of IP, which includes “matters affecting the use of intellectual property.”

Regarding service invention compensation, which has been important to readers of this blog, the JCCT commitment reflected the accomplishments of the 2014 Innovation Dialogue regarding freedom of contract:

The United States and China commit to protect the legal rights of inventors in respect of their inventions and creations, in accordance with their respective domestic laws and regulations, and in line with their domestic laws, commit to respect the legitimate rules and regulations developed by employers and legitimate contracts between employers and inventors concerning inventor remuneration and awards.

Another JCCT outcome involved protection of trade secrets in government regulatory proceedings:

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…

The rather “hot” issue of geographical indications was also the subject of an “outcome” involving not extending GI’s to generic terms and establishing procedures to object to and cancel the registration of the GI.

There were also a number of cooperative commitments which will likely be a focus of various bilateral discussions and programs, including on technology licensing, bad faith trademark registrations, judicial best practices, data supplementation for pharmaceutical patents, IP in standards setting, sale of IP-intensive goods and services, and addressing on-line infringement.

The revised joint fact sheet also includes a joint commitment on abusive litigation:

Patent Protection and Bad Faith Litigations

  • The U.S. and China remain committed to promoting a robust intellectual property system that will incentivize future innovation and economic growth in both countries. Both parties are to strengthen cooperation to protect innovators from bad faith litigations, including to hold a joint seminar on IP licensing, so as to create positive conditions for innovation.

 

 

There were also outcomes that weren’t focused on IP but have significant IP implications.  One involved medical device and pharmaceutical market access, where China committed to accelerate approval procedures, which has long been hampered by inadequate resources at China’s Food and Drug Administration.  Another involved clarifying standards for antimonopoly law enforcement, including providing for greater due process and law firm access.  Still another commitment involved collaboration on law firm market access, which certainly affects foreign IP lawyers practicing in China.

In my personal experience, this 25th JCCT might equally be labeled JCCT v. 3.0.  The JCCT has changed to accommodate the growing complexity and importance of US-China trade.  In its first version (1983 to approximately 2001), the JCCT was as often a rather sleepy technical exchange mechanism.  I remember attending an early JCCT dealing with the enforcement of arbitration awards.  Another iteration (v 2.0) was under the leadership of Vice Premier Wu Yi after China’s WTO accession.  The JCCT then became a mechanism for negotiating trade issues with the Vice Premier chairing on the Chinese side and the Secretary of Commerce and US Trade Representative as formal co-chairs, but with an important added role for the Secretary of Agriculture.  Version 3.0 includes the same leadership structure, but with more involvement by industry and the host locality through various programs and symposia, joint fact sheets, and commitments to move negotiations changes in the negotiating calendar, including “a year of continuous work to address important issues facing our two nations.”

The above are my personal, non-official observations.

A Quick Report on the EIPC MIIT Conference Including SAIC’s IP Abuse Rules, Patent Law Amendments, EIPC MIIT Standardization Policies, Standards and IP Abuse…

EIPC MIIT’s Conference on Intellectual Property Standards and Anti-Monopoly Law convened on December 10 and 11 in Beijing.  The conference brought together about 150 international and Chinese experts, including lawyers, judges, academics, diplomats, and other professionals to the Wanshou Hotel in the Haidian District, Beijing.  There were over over 30 speakers. The initial speakers set the tone for the conference by concentrating on one theme:  China’s anti-monopoly regime had entered a new phase from theory to enforcement.  Further, this transition period is characterized by the need to balance anti-monopoly law and IP rights, regulation and innovation.

One example of the struggle for balance is the debate over the prevalence and importance of holdouts, or the practice of standards implementers engaging in conduct intended to drive royalties down royalties for Standards Essential Patent (SEP) holders to lower than F/RAND levels.  Dina Kallay, Director of Intellectual Property and Competition at Ericsson Ltd.  argued the problem of hold outs was real.  David Wang, Director of Standards and IPR Strategy, Intellectual Property Rights Department of Huawei Technologies Co., argued that that there is no evidence of real life hold outs.  His opinion comes in light of Huawei’s recent litigation with IDC, in which a court ruled that IDC should compensate Huawei for excessive pricing and tying practices.

Many speakers addressed current and future reforms.  Yang Jie, Director of the Anti-Monopoly and Anti-Unfair Competition Enforcement Bureau at SAIC, explained new revisions to its forthcoming rules on abuse of dominance and exclusionary relief (presumably, SAIC’s IP Abuse guidelines or rules). Since August, SAIC has modified seven articles. First, Yang Jie said that SAIC has maintained the “essential facilities” doctrine in the new version, however with some modifications. The doctrine will apply when an intellectual property right cannot be easily substituted in the relevant market, other players want to be part of the market, a refusal to deal would restrict competition or innovation in the relevant market, it harms the public interest, and the licensing of the patent would not negatively or unreasonably harm the interests of the patentee.

Yang Jie also explained that SAIC has adopted a narrow interpretation of refusal to deal for players in a dominant position.  It will only apply when the intellectual property right constitutes an essential element for production.  Moreover, a violation only occurs when the behavior limits competition. Additionally, in abuse of dominance, “abuse” must be considered parallel to other elements and the behavior must harm the public interest or consumer behavior.

Concerning guidelines for the standard setting process, Yang Jie explained that the rules do not include a special provision for horizontal agreements in the standard setting process, because this is covered under the provision for anti-monopoly agreements.  Furthermore, Yang Jie divided monopolistic behavior in the standard setting into standard setting procedures – for instance if a firm fails to say something in a patent application – and standard implementation, which would include violations of F/RAND commitments.  Yang Jie said that the standards clarify the “what should have been known” standard for the standard setting process.  For standard implementation, the guidelines add the requirement of restricting or limiting competition.  Additionally, the new guidelines will treat intellectual property rights the same as other property rights. In other words, SEP holders are not automatically deemed to have market dominant positions. Instead, a case specific analysis must show that a firm is “dominant” within the meaning of relevant provisions of the Anitmonopoly Law.

Lastly, the guidelines no longer include a specific provision targeting copyright collecting societies for abuse of dominance or restricting competition. Yang Jie explained that the provision was cut because there was no real evidence of copyright organizations abusing their position. That being said, enforcement agencies can still pursue copyright organizations as they are not otherwise exempt from the law.

Yang Jie also said that the official version has not yet been promulgated. The regulations have been submitted to relevant bodies within the State Council for review (note from Mark Cohen: it is unclear to me if this is registration with the State Council, or review by the Antimonpoly Enforcement Agencies, or another process.  If this document is an SAIC rule, then review by the State Council should be limited).

Zhang Yonghua, Deputy Director of No. 1 Division of the Legal Affairs Department of the State Intellectual Property Office of China (SIPO), provided details regarding the latest draft of the proposed patent law amendments.  The new draft empowers judicial and administrative bodies with the right of investigation and evidence collection. It also allows administrative agencies to effectively settle infringement issues by compensation.  Furthermore, the draft provides for punitive damages for severe infringements, a concept already employed in China’s trademark law. Additionally, protection for industrial design is extended to 15 years. The new draft also introduces a burden of proof shifting scheme in which the burden of proof shifts once the patentee has satisfied certain of its evidentiary burdens.

Zheng Wen, Deputy Director General of the Anti-Monopoly Bureau, focused on the need for improvement in the merger review process of MofCOM.  Zheng Wen said that MOFCOM had received over 1000 cases since August 2008 and had finished over 900, imposing sanctions in only 3% of the cases.  Zheng suggested that there was a need to impose more sanctions and to crack down on parties that illegally skipped merger review.  Since November, MOFCOM has been publishing notices of sanctions on parties that did not report their proposed merger but should have.  Zheng Wen also expressed the desire to set up a long term cooperation mechanism with the E.U. and U.S., especially for large scale transnational mergers.

Huang Yong, Vice Chair of the Expert Advisory Committee under the State Council Anti-Monopoly Commission, stated that allowing agencies the rights of investigation and suggestion would be a step in the right direction.

Concerning the new Specialized IP Courts, Jin Kesheng, Deputy Chief Judge of the IPR Tribunal and senior Judge of the Supreme Court said that we could look forward to a judicial interpretation regarding the role of the court’s “technology investigator” position.  Additionally, Zhang Xiaojin, Chief Judge of the Second Tribunal in the Beijing Intellectual Property Court, expressed serious concern over the new court’s ability to handle their large caseload. For instance, the Beijing specialized IP court has 100 staff in total, only 22 of whom are judges and the court is expected to receive 15,000 cases annually.  He expressed further concern over their ability to carry out judicial reform while so severely understaffed.

Finally, Shi Shaohua of EIPC MIIT spoke about feedback to EIPC MIIT’s own Template for IP Policies in Industry Standards Organizations, (which I previously wrote about here). Two criticisms were that the structure was too complicated and that courts do not have sufficient expertise to adjudicate F/RAND issues; injunctions and unwilling licensors;  and reference factors for unreasonable licensing, including factors such as the smallest component or device, the total aggregate royalties of all potential SEPs, the influence of standards on patents, and the extra value that standards bring to a patent.  EIPC MIIT also received comments concerning reciprocity requirements, for instance what standard should be employed and whether adding restrictions to SEP licensing will influence cross-licensing, market access, and reciprocity.

The conference also included presentations on Legal Issues of Competition in Internet Industry” and “Internet Based Information Security and Intellectual Property Protection” which unfortunately we were not able to cover.

Prepared by Marc Epstein of Fordham Law School with edits by Mark Cohen.   A special thanks to EIPC MIIT and Shi Shaohua for allowing a Fordham student to attend this important conference!  Please provide us with any corrections, additions or comments!  As always, these comments are the authors’ own.

Loyola/Berkeley/Renmin Program Highlights Recent US-China IP Developments

On Friday November 7 I attended and spoke at the US-China IP Summit at Loyola (https://chinaipr.com/2014/09/07/loyola-los-angeles-hosts-us-china-ip-summit-november-7/). Here are some highlights:

Prof. David Nimmer (UCLA) talked about whether there is a need to reintroduce a concept of formalities in copyright again, in order to deal with problems in determining rights and better utilize information technologies.

Dean Liu Chuntian of Renmin University, argued that China’s true economic constitution should be a civil code. He took issue with those that argue the Antimonopoly Law is China’s “new economic constitution.” In addition he expressed concern that IP shouldn’t depart from the civil law. Prof. Liu also reiterated his long-standing opposition to administrative enforcement in civil law matters and also argued that copyright law reform issues should focus on matters of economic importance. Copyright protection of sports broadcasting in China was singled out as such an economically important issue.

Regarding specialized IP courts, Dean Liu also noted that several “10’s of members” of the NPC Standing Committee dissented from the NPC decision. Prof. Luo Li noted that the Beijing Specialized IP Court was established last week, just before APEC. Prof. Luo noted that the jurisdictional divisions of the courts were quite complicated, due to differences in adjudication amongs civil, criminal and administrative jurisdiction. Computer software cases (piracy?) would also be heard by the specialized IP Courts.

I raised concerns in this discussion on the courts about how foreigners would be treated by these specialized courts, in light of evidence that suggests foreigners may fare less well in appellate specialized IP tribunals (see: https://chinaipr.com/2014/08/22/specialized-ip-courts-about-to-launch-in-three-cities-and-are-they-good-for-foreigners/)

Prof. Merges of UC-Berkeley described AIA post grant proceedings as a kind of “quiet harmonization” with foreign practices, including with SIPO. As with China, there is no mandatory stay of civil proceedings during these administrative proceedings.

Prof. Zhang Ping of Peking University discussed the Huawei/InterDigital Corporation case as a pioneering effort on the part of Chinese courts to deal with global standardization crises, including by determining appropriate royalty rates for standards essential patents.

Prof. Huang Wushuang of East China University of Politics and Law discussed current efforts at trade secret legislative work. He noted that he had submitted proposed revisions on the Antiunfair Competition Law regarding trade secrets, by expanding the current one article to 10. His discussions focused on several issues, including what constitutes reasonable precautions to protect trade secrets and the role of non-compete agreements and how to strike a balance between rights of employers and employees. He noted that he did not think it reasonable for injunctions in trade secret matters to be permanent, since every trade secret has its own life span. Regarding damages, he thought that a traditional hierarchy should apply by basing calculations on the plaintiff’s loss, the defendant’s profits, reasonable royalty and statutory damages. He also noted that there were few cases in China which showed a causal relationship between damages and infringing cases.

The last panel discussed trans-border cases and was one where I participated. There was an especially lively discussion on issues involving recognition of judgments and the timely implementation of Hague Convention requests for evidence. Various speakers noted efforts to settle global IP disputes such as by suspending cases in favor or one or more venues, using Hong Kong arbitration for cases involving Chinese entities, and the need for means to resolve increasingly more complicated trans-border disputes.

There were many more great speakers — my notes are hardly complete. Hopefully a transcript or summary of the presentations will be compiled shortly. Kudos to the organizers, including Prof. Song of Loyola, for another great program.

MofCOM’s September 12 IP Program in DC Covers A Wide Range of IP Developments

Here is a digest of some of the highlights of the half day program hosted by MofCOM on IP in Washington DC on September 12.

The Supreme People’s Procuratorate gave a useful overview showing the policy reasons for the big increase in criminal IP cases, including the expanding role of the procuratorate.

SIPO underscored the increase in its examiners and the decreasing pendency periods to 22.2 months.   SIPO has also conducted a social survey which showed a relatively high approval rating of its procedures (81.8%).

The Chinese side did not address the foreign-related impact of the Specialized IP courts. However the low foreign utilization of the civil IP system was generally acknowledged.

Regarding the new TM law, procedures for auditory marks was discussed, oppositions for non use, and changes in the recordal system for licenses. SAIC was careful to underscore that its recordal system did not require submission of business confidential information.   SAIC also discussed the changed provisions for liability by reasons of “providing convenience” to infringement, including storage, transportation, mailing, printing, concealing, providing a business premises and providing an on-line goods trading platform.

SAIC also noted that the TM law also sought greater coordination with other laws, including the anti-unfair competition law and criminal laws. For example, it provided support for demonstrating “intentionality” in  TM infringement when other indicia, such as trade dress infringement, are present.  Chinese IP Attaché Chen Fuli also noted that a key provision of the new TM law was its including of concepts of honesty and credibility into the TM system, which were borrowed from the civil law.

The National Copyright Administration noted that there were now at least 632 million Internet users in China, and 527 cell phone users, with 2,730,000 websites. NCA also noted that there were widely differing opinions on the types of amendments that were necessary for the copyright law.  In revising the law to address recent developments, NCA was looking at earlier State Council regulations on on-line liability, and recent civil and criminal JI’s.  NCA also noted that the on-line “Sword Campaign” resulted in 201 cases sent to criminal referral.  In addition NCA was supervising 25 websites for their content of top movies, and TV programs.  In NCA’s view, music and published works were continuing to experience significant problems, and NCA hoped to address these through a black-list system.  Also, NCA noted that many IP addresses for companies that were subject of its enforcement campaigns were located overseas, including in the US.

The Leading Group reviewed its numerous, generally successful, efforts at improving coordination on IP enforcement, including its recent campaigns. Unfortunately, its special campaign on trade secrets had only resulted in 21 administrative enforcement cases in the first half of 2014.

Regarding China’s sui generis system of GI’s, AQSIQ noted that this system was based on China’s Product Quality Law, and was initially implemented in 2004 by the Department of Science and Technology of AQSIQ. AQSIQ noted that relevant rules governing operation of the sui generis system included the Provisions on Protection of Geographical Identity Products, and the Working Rules on GI Product Protection, which provide for opposition and cancelation of GI applications.  Describing GI’s as a “public rights” system, AQSIQ also noted that it has set up a  GI working group, it has started work on a GI products encyclopedia,  it had promulgated over 1000 standards for GI products,  and that it had set up exemplary zones for GI products..  AQSIQ also noted that NAPA Valley had secured GI protection in China.  Its GI application was published in August 2011 and there had been no opposition to it.

Altogether, it was a useful and informative program.

Full disclosure: I co-moderated the program, although this summary represents my personal views only.