What the EU and US WTO IP Disputes Reveal About Trade Diplomacy

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Two contrasting approaches to using the WTO for China-related IP issues involving technology licensing and forced technology transfer are now pending at the WTO.

The United States initiated a WTO dispute on China’s licensing practices by filing a  consultation request on March 23, 2018.  Shortly after the filing of that case, Japan, the European Union, Ukraine, Saudi Arabia and Chinese Taipei requested to join the consultations.  The European Union additionally filed its own parallel WTO consultation request on June 1, 2018, with a broader scope. It is too soon to tell which countries will join the EU request.

Both countries timed their requests in conjunction with other trade actions. The WTO case was filed by the United States one day after the Section 301 report  was released. The European Union simultaneously filed its case against China with a WTO case against the United States regarding US tariffs on steel and aluminum imports.

The EU’s approach to this IP case is markedly different from the last time the US filed a WTO dispute involving China’s IP practices (DS/362).   At the time that the US filed a request for IP-related cases from China, the EU declined to make a similar transparency request.  It also did not join the US as a co-complainant in the ensuing WTO case, nor did it file a parallel complaint, but it did participate as a third-party.  By contrast, the EU approach in the current dispute is to both support the US and dig deeper.

The US consultation request was portrayed by USTR as addressing “technology licensing requirements.”  The thrust of the complaint involves China  “denying foreign patent holders, including U.S. companies, basic patent rights to stop a Chinese entity from using the technology after a licensing contract ends.”  The consultation request is therefor somewhat narrow.  The US complaint does not specifically address other technology-oriented rights, such as trade secret protection or undisclosed data, nor does it take on the topics set forth in the Section 301 report involving “IP theft.”   The consultation request is now numbered WT/DS542/1.

The EU complaint (WT/DS549/1), cites several Chinese measures in addition to those identified in the United States’ consultation request, and invokes more expansive WTO principles and procedures. The additionally cited measures include the “Working Measures [sic] for Outbound Transfer of Intellectual Property Rights (For Trial Implementation), (State Council, Guo Ban Fa [2018] No. 19)” (知识产权对外转让有关工作办法(试行)) which was previously discussed here.  The Chinese promulgation of these interim Regulations only five days after the US filed its consultation request, looks to some like another act of synchronized trade diplomacy — in this case as a possible retaliatory act for the 301 report and the WTO case.  My guess is that the EU, by referring to these new largely untested regulations is however seeking to address the legality of controls China has additionally imposed on foreigners’ transferring IP out of China.

The EU has also swept in other measures into its complaint, including China’s trade secret law (the Anti-Unfair Competition Law), the Anti-Monopoly Law, the Regulations [sic] of State Administration for Industry and Commerce Administrations on the Prohibition of Abuse of Dominant Market Position, and the Regulation [sic] on the Prohibition of Conduct Eliminating or Restricting Competition by Abusing Intellectual Property Rights.  The nomenclature the EU uses for these various legal documents appears imprecise.  The March 2018 “measures” may properly be classified as “regulations” 法规 issued by the State Council. The SAIC “regulations” should properly be classified as “rules” 部门规章 issued by an administrative agency. This is the nomenclature China set forth in the Report of the Working Party on the Accession of China (WT/ACC/CHN/49), paragraph 66 ( the “Protocols of Accession“).  The Working Party Report nomenclature establishes clear legislative hierarchies pursuant to China’s Law on Legislation.

The EU also argues that China’s appears to directly or indirectly “nullifying or impairing” the benefits accruing to the European Union and its Member States that were expected by China’s WTO accession, thereby opening the door to broader arguments regarding how China may deprive WTO members of the benefits they legitimately expected while at the same time not violating the literal language of any commitment (See, e.g., Art. 64 of the TRIPS Agreement).  These arguments have been subject to a moratorium and have historically been difficult to assert, but in my estimation have some relevance to the current situation in China.  The EU is also seeking to utilize provisions in the WTO that address the “impartial and reasonable application and administration of its laws, regulations and other measures” (Article X.3(a) of the GATT 1994 and Paragraph 2(A)2 of the Protocol on the Accession of the People’s Republic of China to the WTO).  The “impartial administration” requirement, as found in the Protocols of Accession requires China to “apply and administer in a uniform, impartial and reasonable manner all its laws, regulations and other measures … pertaining to or affecting …  trade-related aspects of intellectual property rights (“TRIPS”)” (p. 74).

Contrasting the actions of the US and the EU, the EU complaint urges a legalistic and multilateral resolution of trade disputes, using doctrine that has proven difficult to assert.  The approach also appears to reflect a waning confidence by some that China today in fact has an effective and independent legal and political system which “impartially administers its laws”.   My former colleague at Fordham, Prof. Carl Minzner describes some of these political reversals in his recent book  End of an Era: How China’s Authoritarian Revival is Undermining Its Rise (2018).

The US approach, by contrast, uses the 301 report to point to perceived technological threats, manifested through industrial plans, vague laws, industrial espionage and unfairly adjudicated cases, to make the point that the WTO might be inappropriate to resolve its concerns. In a sense, the US assumed in the Section 301 report that in the party- and plan-controlled China of today, with a resurgent state sector, there aren’t many “laws, regulations and other measures” to administer impartially.  The United States therefor pays scant attention in the 301 to the numerous legal reforms and civil adjudication in intellectual property that have taken place in recent years.  The United States approach is also more broadly consistent with the perspectives of Prof. Mark Wu at Harvard Law School who prophetically pointed out in his article “The ‘China, Inc.’ Challenge to Global Trade Governance”  that “the WTO faces a challenge: can the institution craft a predictable and fair set of legal rules to address new trade-distortive behavior arising out of China, Inc.? If not, key countries may turn away from the WTO to address these issues.”

While the EU and the US likely have common goals with respect to China’s IP regime, I believe that they likely could also learn something from each other in their strategies and perhaps they will as these cases progress.

 

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Bottom photo by Mark Cohen of Charleston, SC United States Custom House.

 

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.

The Widening Impact of China’s Publication of IP Cases

I recently had the opportunity at the Fordham IP Conference to discuss the potential impact of the continuing publication of court decisions by China’s courts since 2014, including their wide-ranging impact on legal research, China IP strategies, and trade.  China’s publication of court cases has had a dramatic impact on political science, legal research and IP strategy.  Here is an extended version of my presentation:

A good starting point for understanding these developments is the important paper of Profs. Benjamin Liebman, Margaret Roberts, Rachel Stern, and Alice Wang on the China Judgements Online Database (CJO) entitled Mass Digitization of Chinese Court Decisions: How to Use Text as Data in the Field of Chinese Law (June 13, 2017) (21st Century China Center Research Paper No. 2017-01; Columbia Public Law Research Paper No. 14-55).  This team looked at 20,321 land use administrative court judgments in Henan Province. The authors critical approach to CJO is summarized below:

First, it is critical to take missing cases into account, rather than succumbing to the temptation to treat even a very large sample as an accurate reflection of reality. … Second, viewing millions of court decisions provides an unparalleled wide-angle perspective on courts’ daily activity, and exposes underlying patterns… Scholars must remember that court judgments provide only one, often limited, view of actual practice. Third, a migration toward treating text as data in the field of Chinese law will require a multi-method approach that combines expertise and insights from law, the social sciences, and computer science.

Their article also discusses motivations for transparency (including reducing corruption), and motivations for individual courts to disclose cases. They note as well that an “incentive bias” now exists which includes making judicial decisions available at the end of the calendar quarter before court evaluations (p. 16).

Moving from the use of the CJO to look at legal issues generally to IP, an important recent study on foreign participation in China’s IP system has also recently been-published by Berkeley JSD Candidate Bian Renjun. Her provocatively-entitled articleMany Things You Know About Patent Infringement in China are Wrong  is scheduled to appear in the Berkeley Technology Law Journal. Ms. Bian uses CJO to analyze 1,663 patent infringement judgments decided by local courts in 2014. Her research provides a much-need supplement to the scholarship of Brian Love, Xuan Thao Nguyen, as well as this blog, about foreign “win” rates in the Chinese courts.

Ms. Bian observes that foreigners asserting invention patents are not underrepresented in the courts. The proportion of invention patents granted by SIPO to foreigners was roughly equivalent to the proportion of foreign invention patent cases decided to overall invention patent cases in court (7.16%/6.92%). The gross number of decisions however was only 115 cases. During that year foreign win rates were higher compared to domestic litigants (84.35%/79.84%), as were injunction rates (92.78%/90.05%) and damages (201,620.45 RMB/66,217.93 RMB).  In sum, Ms. Bian provides a more compelling narrative of the probability that foreigners win in patent litigation in China than predecessors such as Brian Love. However, she does not address how to consider issues involving validity in overall success rates, as has been attempted by such databases as Darts IP, nor does she include metrics to assess any differences in the quality of the patents being asserted, for which additional research would be required.

The third article to look at judicial practices in IP, including the IP databases is Max Goldberg’s promising paper Enclave of Ingenuity: The Plan and Promise of the Beijing Intellectual Property Court (May 2017). Mr. Goldberg is a 2017 graduate of Yale College. His paper won an award as the best student paper in East Asian Studies during the year he graduated.

Mr. Goldberg draws from the work of Martin Dimitrov in suggesting that China’s administrative enforcement system is more politically reactive and less independent. He shares the view of this author and others that the Guiding Cases System of the Supreme People’s Court has had limited uptake by the courts, while the precedent system of the Beijing IP court (BJIPC) appears to have been more widely adopted by judges and practitioners of that court in part due to the releative ease of introducing this system into one highly trained court in an affluent city. Mr. Goldberg offers a reply to the concerns of Benjamin Liebman et al. over the large number of “missingness’” in court cases, by noting that while “the phenomenon of sensitive cases’ omission from government databases in China is well documented, lapses of this size are “much more likely the result of a lack of attention and resources than deliberate censorship.” He bases this part on the more comprehensive reporting rate of IP House at 94.25% based on the docketed numbers of cases at the BJIPC, while CJO had only about 50% of the cases from the same period in 2015.

Mr. Goldberg also focuses on specific judicial policy developments, many of which have been little noticed in the West. For example, he notes that “BJIPC opinions are 40-50% shorter than the decisions of more traditional IP tribunals, despite the fact that the BJIPC jurisdiction specifically includes the most technical cases.” He also notes that the court is also interested in soliciting the opinions of third parties, in a manner akin to an amicus brief. Amicus briefs have been advocated for some time by the US-China IP Cooperation Dialogue, with some important experiments, of which this author is a member. Mr. Goldberg also notes that the Beijing IP Court permits dissenting opinions and that the courts have held open “adjudication committee” meetings, which is an important new innovation. Finally, he notes, that the courts are more actively engaged in use of precedent. The court also had an administrative decision revocation rate of administrative decisions of 17% and a withdrawal rate (where complainant withdraws a case before final decision) of only 7%, which suggests the court is acting to reverse administrative decisions and that litigants have enough confidence in the court that they are willing to pursue cases to their final determination.   Many of these innovations were described in an IP House report previously discussed on this blog, but Mr. Goldberg adds a useful gloss to these developments.

Mr. Goldberg’s article is another important indicator of how China is “crossing the rule of law river by feeling the IP stones.”  Importantly, Mr. Goldberg focuses less on whether foreigners’ win and more on whether procedures compatible with an advanced legal system are being put in place.

Adela Hurtado, one of my former students at Fordham law School has also recently written a useful note in the Fordham Intellectual Property Law Journal that, like Mr. Goldberg’s article, looks at the use of judicial and administrative remedies, including criminal procedures, in addressing rampant infringement. Ms. Hurtado believes that reactive, politically motivated administrative enforcement brings few sustainable results. In her view, foreign companies should consider using the civil system, with its relatively high win rates (as reflected in the new databases) and look to models of successful law enforcement campaigns in the United States which provide for more interagency coordination and sustained efforts to address specific problems. She uses data drawn from Walt Disney’s use of civil and administrative campaigns, comparing Disney’s actions in China with its use of civil remedies in the United States to suggest that Chinese IP enforcement campaigns by Disney should similarly return to greater reliance on civil remedies. Ms. Hurtado may be the first author to look at company specific behavior in different markets by using both Chinese and US databases and thereby highlights another future area of inquiry.

There have been several other efforts that look to China’s legal databases as analytical and research tools. Among other recent scholarship, Susan Finder has also recently written an excellent article on the evolving system of precedent in China in the Tsinghua China Law Review. For those individuals and scholars craving analytics, IP House has also begun publishing important analytic studies on trends in the courts. Topics covered include patent and health, motion picture and television industry and analyses of the decisions of the Beijing IP Court.  Another important application of China’s new databases is in development of course materials on China’s IP system.  In this respect, Profs. Merges and Seagull Song’s forthcoming book on Transnational Intellectual Property Law Text and Cases  (April 2018), comparing US, Chinese and European cases in the full range of IP law with a view towards their importance in developing global strategies, is also a promising step towards incorporating Chinese jurisprudence into the global discussions of IP issues.

China’s decisions to make cases more widely available  also has important consequences for trade-related discussions on IP. Approximately 13 years ago, a TRIPS “Article 63.3” transparency request was made by the United States, Japan and Switzerland at the WTO of China. This request demanded “clarifications regarding specific cases of IPR enforcement that China has identified for years 2001 through 2004, and other relevant cases.” The US delegation, of which I was a part, requested the cases to better analyze developments in China’s IP environment since WTO accession and to prepare for a forthcoming dispute. China refused to produce these cases either in the response to the request or during the dispute.  During the ensuring IP enforcement dispute (DS/362), the WTO itself refused to demand that China produce cases relevant to the outcomes of two claims – one involving copyright, and the other involving criminal thresholds. Indeed, rather than make an adverse inference from China’s unwillingness to produce cases, the WTO panel found that the United States failed to make out a prima facie case with respect to a claim that Chinese criminal thresholds failed to satisfy WTO requirements.

With the benefit of hindsight, one could argue that the WTO established a lower standard in DS/362 for analytical research on Chinese case law than China has since established. Additionally, DS/362 may also stand for the proposition that certain cases may be ahead of their time, particularly in light of China’s own commitments to innovation and development of its IP system.  But that is a topic for another blog….

 

US Files Consultation Request at WTO on Chinese Technology Licensing Practices

Fresh on the heels of the Section 301 announcement, USTR on March 23, 2018 made a  consultation request  of China regarding China’s discriminatory licensing practices.  This is the first step in initiation of  a WTO dispute.  Here is a link to the press announcement.

The consultation request broadly speaking alleges discriminatory treatment in licensing pursuant to China’s joint venture regime as well as the  Administration of Technology Import/Export Regulations (“TIER”), as compared to provisions under China’s contract law that may govern purely domestic technology transfers or Chinese exports of technology.  The complaint is based on the National Treatment provisions of the TRIPS agreement as well as Article 28.2, which provides that “Patent owners shall also have the right to assign, or transfer by succession, the patent and to conclude licensing contracts.”  The Section 301 Report of USTR also discusses these issues.

Update of June 2, 2018:  On June 1, the EU filed its own complaint against China at the WTO involving China’s technology licensing practices, including the TIER.  A copy of the request for consultations, which appears somewhat more extensive is available here.

 

 

 

Should the NPC also consider Criminal Copyright Reform when it considers Copyright Reform?

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At this month’s National People’s Congress, an NPC spokesman noted that this year the NPC intends to address reform of the copyright law, which has been long delayed. However, reform of the substantive copyright law will not typically address the need to reform the criminal copyright law and to address the relationship between civil and criminal copyright law. This point was raised in the Weixin platform Zhichanli (知产力), which addressed the key issues of criminal copyright law reform in a lively “cartoon” format (see above):

The four issues from the perspectives of the author of that blog are:

1.       Article 217 of the criminal code, mandates having a “profit motivation” in order for criminality to attach.Should the “profit motivation” requirement be removed from the criminal code?

2.       Whether to criminalize the Internet related right of “communication over information networks”?

3.       How to address secondary and principal liability of internet platforms?

4.       Three separate specific issues, including:

a)       How to criminalize destruction of technological protection measures?

b)      How to criminalize commercial scale use of piratical software?

c)       What are the thresholds to deal with online criminal enforcement?

In my view, these are all important issues, which should be considered in the context of copyright reform.    Many of these  issues were raised in DS/362, the WTO enforcement case which the United States brought against China.    Of particular note was that the United States raised the history of  amending US laws to address willful copyright infringement that caused large scale harm without necessarily causing commercial gain (the LaMacchia case, in the cartoon above).  In addition, the United States also recognized that thresholds based on the numbers of copies would not capture the harm caused by technological changes which permitted large digital quantities to be distributed on line or in compressed formats.   One of the current thresholds involves 500 “flat articles”  ( 500 ) (typically used for CD’s or flat pieces of paper), which the WTO panel called “copies, for the sake of simplicity” and is an awkward determinant for infringement in rapidly moving technologies.

Also of note is that criminal IP enforcement has become more important in China. This was brought to my attention by a Chinese judge who mentioned that while China opposed the WTO case, it was now widely recognized that criminal IP is an important part of an IP enforcement system. In a sense, the US may have lost the 2007 battle over criminal IP at the WTO, but clearly won the war. The data bears this out. When the WTO was filed against China, there were only about 904 criminal IP  infringement cases in China (2007).   In 2013, by comparison there were 7,804 infringement cases – an increase of about 8 times, not including increases in other provisions of the criminal code that also can address IP infringement, such as crimes involving illegal business operations or fake and shoddy goods.

While China recognizes that criminal IP is enforcement it an important part of its enforcement system,  an equally important question concerns the role of the relatively small criminal IP enforcement system in light of China’s civil, administrative and customs enforcement (see chart below).  In addition to the increasing number of criminal IP prosecutions,  the increasing numbers of referrals from China’s administrative copyright enforcement to criminal copyright enforcement is an encouraging trend in this regard.  An even more encouraging sign would be consideration by the NPC of criminal copyright law reform at the same time as it considers substantive copyright law reform.  As criminal law reform goes through different procedures at the NPC, working on both issues simultaneously may entail some coordination, but would help ensure that any changes to China’s copyright regime is comprehensive and would set a good precedent for other IP legislative reforms coming up, such as in reform of the trade secret regime in the Antiunfair Competition Law.

 

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Identical vs. Similar Trademarks in Criminal and Civil Adjudication

Both Judge Bao WenkJiong 包文炯 in Zhichanli, and James Luo on his blog, have recently  published  summaries of a 2014 case in Wuxi (无锡滨湖法院(2014)锡滨知刑初字第0002号刑事判决书) involving the definition an “identical” mark under China’s criminal trademark law.

This case raises the important question of the differing roles and standards for civil and criminal prosecution of trademark infringement – an issue that is especially important in light of the many different manners of enforcing IP in China, which also includes an extensive administrative punishment system.

Judge Bao noted that the court held that attention should be paid to avoiding excessive application of the “trademark similarity” standard of civil trademark cases to criminal cases.  More specifically, the case held that a counterfeit “identical trademark” in the criminal law means one that is identical with the registered trademark or not visually different from the registered trademark and therefor is enough to mislead the public.   Where, however, there is a slight difference between the accused counterfeit trademark and the registered trademark, the close similarity is sufficient to cause the relevant public to be confused and it should also be regarded as an “identical trademark.”

The requirement of an “identical trademark” derives from Article 213 of China’s Criminal Code, which provides:

“Whoever, without permission from the owner of a registered trademark, uses a trademark which is identical with the registered trademark on the same kind of commodities shall, if the circumstances are serious, be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also, or shall only, be fined; if the circumstances are especially serious, the offender shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined.”

A 2004 judicial interpretation on criminal IP matters (关于办理侵犯知识产权刑事案件具体应用法律若干问题的解释 (2004)) further clarified what constituted an “identical trademark” for purposes of China’s criminal IP laws:

“Article 8: An ‘identical trademark’ as provided for in Article 213 of the Criminal Law refers to the same trademark as the counterfeited registered trademark, or one that is substantially visually indistinguishable from the counterfeited registered trademark, and is sufficient to mislead the public.”

“第八条 刑法第二百一十三条规定的“相同的商标”,是指与被假冒的注册商标完全相同,或者与被假冒的注册商标在视觉上基本无差别、足以对公众产生误导的商标.”

Why should a higher degree of similarity of trademarks be required in criminal trademark cases but not for civil cases?    The critical test, to my mind, should be whether the infringement is willful, and not whether a cunning counterfeiter designed a mark that is insufficiently identical but nonetheless potentially confusing to a segment of the consuming population.  From a policy perspective, public criminal enforcement of the trademark laws can and should protect public interests greater than the legitimate trademark itself, including such interests as purchases by innocent consumers, protecting investment in brand creation and deterring brand dilution, and addressing the confusion of third parties who may be harmed by using these products.  These policies suggest that more liberal construction of what constitutes an “identical” trademark could be useful.   Indeed some courts in the United States have used civil standards to determine when a trademark is counterfeit (United States v. Petrosian , 126 F.3d 1232, 1234 (9th Cir. 1997).  Nonethelesss, even if prosecutors declined to prosecute an “identical” trademark case, the rights owner may still be free to bring a civil case under the “similar trademark” civil standard.

The Chinese summary of the case notes that the Jiangsu IP courts, where this case was held, play a role in delineating the role of the civil and criminal IP systems, as these courts have combined civil, criminal and administrative case adjudication in one tribunal.  I hope that these courts can play an even greater role in clarifying addressing the public policy needs behind different standards of IP protection under China’s civil, criminal and administrative enforcement regimes.

The Xmas Phone Call of ’06 And What It Meant to IP Cooperation

ID5The recent, successful launch of the ID5 (the Industrial Design 5) at the USPTO (picture above), with the participation of  OHIM (Office for Harmonization in the Internal Market of the EU), JPO, KIPO and USPTO underscores, yet again, the role of cooperative dynamics in IP reform.  While historically academics and officials had argued that IP reform in countries like China depended on either indigenous pressure (becoming a “stakeholder” in the IP system) or exogenous pressure (301, threats of trade retaliation or ‘linkage diplomacy’ as part of WTO accession or other trade agreements), another form of engagement is that conducted by and among IP offices.

I was fortunate to have played a small role in the evolution of this third dynamic.  On December 24, 2006, while on vacation in Los Angeles, I received a phone call from then USPTO Director Jon Dudas requesting that I call up SIPO’s Commissioner Tian Lipu to explore the possibility of developing an expanded “trilateral” of patent offices (EPO, JPO and USPTO) to include SIPO and KIPO.  On Christmas eve, I placed a phone call to the then Director General of SIPO for International Cooperation, Lv Guoliang 吕国良, extending an invitation for Commissioner Tian and Director Dudas to have a phone call together to see if SIPO might be interested in joining an expanded group, now called the IP5. From that original effort also came the inspiration for grew the TM5 [Trademark Five], and this past week, the ID5.

It is difficult to estimate the importance of these relationships, as they typically involve more technical issues of office operations, with the involvement of trade associations that are focused on the operations of these offices.   However, cooperation amongst the five largest offices also represents the vast majority of patent, trademark or design filings globally, and are also responsible for much of the activity in each of the five offices own dockets, as well as through such mechanisms as the Patent Cooperation Treaty, Madrid Protocol or Hague system for industrial designs.

One way of understanding its importance to China of these mechanisms evolved in response to that Xmas phone call.  In the spring of 2007, the United States took certain public steps towards filing of a WTO case against China.  The three claims that were ultimately filed involved copyright piracy and trademark infringement.  At that time, I was serving as IP attaché in Beijing.  Former Vice Premier Wu Yi told a large audience during IP Week in April 2007 in Beijing that China would “fight the US to the bitter end”.  I was at the conference as was then Ambassador Clark T. Randt, III.  The US Trade Representative, Susan Schwab, was quick to respond that filing of a WTO complaint was not a hostile act.   China had tried to avert the filing of a case by lowering criminal thresholds for IP criminal enforcement earlier in April, but apparently this had been deemed to be too little, too late.  China still warned of “severe damage” to bilateral trade relations and a suspension of some forms of cooperation between the US and China.

Despite threats and retaliation, the IP5 meeting planned for Honolulu, Hawaii in May of 2007 went on as  scheduled.   Since that time in fact, the IP5 has flourished, and has been joined by the TM5, and now the ID5.

What kinds of strategy works best to advance IP reform?  Taking the WTO case as an example, some have argued that the WTO case was a failure for the US  at the time, while others (including some Chinese scholars) have argued differently.  The rapid rise in criminal enforcement in China for IP infringements suggests that even if one accepts the premise that the US did not succeed in having China amend its law, it did draw attention to an important enforcement mechanism that had been underutilized in China, and now has grown to about 13,000 cases per year.    In a sense, the case accomplished its goal of increasing criminal enforcement in appropriate circumstances and in retrospect should be seen as a success for both sides.

Another way of looking at progress is to see what China was interested in advancing despite the WTO case.  Did the IP5 go forward in 2007 because the WTO case did not significantly involve patents, an area which I had considered “orphaned” trade discussions until relatively recently? Did the case demonstrate China’s abiding increase in continuing to engage in patents, an area which it deemed vital for its goals of developing an innovative economy?  Was the success of the IP5 due in part to the close relationship that existed between Jon Dudas and Tian Lipu? Or do these mechanisms succeed because their goals are invariably more technical, practical and obviously win-win?  Clearly, these big office cooperation mechanisms have their advantages, both in promoting practical steps towards improving services for the clients the offices serve, but also in developing trust amongst their leadership.  As USPO Director Michelle Lee noted in the recent launch of the ID5 “as only the five largest industrial design offices can, we must come together collectively to strategically develop tools, practices, and office efficiencies. These agreements will promote the further development of user-friendly, consistent, and interoperable industrial design protection systems. It through this approach that the ID5 will become the success we are all here to ensure.”

Bon voyage, ID5 – a continuing journey that I like to think began on Christmas Eve, 2006.