State Council Clears Patent Law Amendments, Forwards to NPC, Patent Linkage Is Not Referenced ….

According to the official central Chinese government website, on December 5, 2018, Premier Li Keqiang chaired a State Council meeting which cleared the long awaited proposed draft of the patent law amendments.  The description of the draft is set forth below:

为进一步加强专利权人合法权益保护、完善激励发明创造的机制制度、把实践中有效保护专利的成熟做法上升为法律,会议通过《中华人民共和国专利法修正案(草案)》。草案着眼加大对侵犯知识产权的打击力度,借鉴国际做法,大幅提高故意侵犯、假冒专利的赔偿和罚款额,显著增加侵权成本,震慑违法行为;明确了侵权人配合提供相关资料的举证责任,提出网络服务提供者未及时阻止侵权行为须承担连带责任。草案还明确了发明人或设计人合理分享职务发明创造收益的激励机制,并完善了专利授权制度。会议决定将草案提请全国人大常委会审议。

A rough translation is as follows:

In order to further strengthen the protection of the legitimate rights and interests of the patent rights holder, improve the mechanism system for stimulating creation of inventions, and raise those mature practices for effectively protecting patents into law, the meeting passed the “(Draft) Amendments of the Patent Law of the People’s Republic of China.” The Draft aims to increase the severity of penalties for intellectual property infringement, draws on international practices, significantly increase the amount of compensation and fines for willful infringement and counterfeiting of patents, and significantly increase the cost of infringement to deter illegal acts;  it clarifies the burden of proof for the infringer to cooperate in providing relevant information, and sets forth that the network service provider should bear joint liability for not stopping infringement in a timely manner. The Draft also clarifies the incentive mechanism for inventors or designers to equitably share the proceeds from the creation of service inventions, and improves the patent authorization system. The meeting decided to bring the Draft to the NPC Standing Committee for its review.

In a possibly unrelated development, the National Development and Reform Commission released a Chinese interagency Cooperation Memorandum of Understanding on December 4, 2018  to deal with entities that have lost trust due to IP (patent) infringement. 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.  Compared to the proposed patent law amendments, this lengthy document focuses even further on public law aspects of a patent law system, including recidivist infringers, “irregular” patent applications, providing false documents to the patent office, etc. and includes a range of 33 different punishments to be meted out from a wide number of agencies, including denial of subsidies, debarment for procurement purposes, denying access to range of government programs, prohibiting leisure travel, etc.

The two documents taken together may suggest a disheartening renewed emphasis on administrative measures to deal with patent infringement and innovation incentives.  Such measures may be intended to address US trade concerns about IP infringement and “IP theft”.  They may also represent a return to China’s increasingly administrative enforcement-oriented approach to patent issues.  However, this renewed focus on administrative measures is also occurring the same time as China is moving to quickly establish a new national appellate IP court attached to the SPC by as early as the beginning of 2019.  This new court will be a national appellate circuit court with jurisdiction over administrative appeals and technical IP matters and will likely include seasoned judges from Beijing and the SPC itself.  Much work needs to be done to get this court off the group quickly.

What, however, is missing from both these documents is any reference to a patent linkage system for pharmaceutical products, which has been much talked about in this blog.  As previously reported, former CFDA Commissioner BI had been dismissed from his post as party secretary to SAMR this past summer in response to China’s tainted vaccine scandal. A State Council notice (no. 83) of August 20, 2018 on deepening reform in China’s medical sector thereafter also ominously omitted any reference to patent linkage.

As the original deadline for passage of the patent law amendments was the end of this year, my guess is that this draft may be referred on to the NPC by the end of this year, and passage may occur as early as the first half of next year.  I assume that a draft for public comment will be released by the NPC sometime early next year.  Generic and innovative pharmaceutical companies that believe a linkage system would help accelerate innovation in the pharmaceutical sector and support early introduction of high quality generics, may consider commenting on these issues once a public comment draft is made available.

SPC Sets Up Team to Work on Civil Law Reform – IP Likely Continues in the Mix

April2015Judicialprogram

On May 12, the SPC set up a civil law codification team, chaired by Vice Presidents Xi Xiaoming, He Rong, Tao Kaiyuan, with Du Wanhua 杜万华 serving as Director of the Office.  Xi Xiaoming introduced the preliminary work of the SPC in this area.  He noted that the SPC intends to give full play to its experts in an advisory role to the NPC in the codification of civil code as called for in the Fourth Plenum, and in that light the Supreme Court established a consultant and Expert Committee for the codification of the civil code.

My comment: It is particularly gratifying to see former IP officials like Madame Tao Kaiyuan contribute to the work of the civil code. At the same time, we are seeing more civil law law judges working on the development of China’s specialized IP courts, thereby demonstrating increasing cross-fertilization between IP issues and general civil law issues in China.  The more IP is regarded as a private right, the more likely it is that China’s goals of developing an innovative economy can be achieved, IMHO.

Content source: Susan Finder and the Supreme People’s Court website, via the Chinalaw Listserve.

Photo source: Mark Cohen at the April 2015 “First China Intellectual Property Judicial Conference” (with subtitle indicating “under the background of judicial reform”). Chief Judge Song Xiaoming of the SPC IPR Tribunal presenting opening comments.

2014 Judicial IPR White Paper Shows Huge Growth in Trademark Appeals

It is IP week and for IP data geeks like me, China is publishing huge amounts of data in a short period of time.  The biggest challenge isn’t collecting the data, but in understanding what the data says and doesn’t say.

I have reported for several years now on judicial data that is released by the Supreme People’s Court (SPC) around this time.  The Beijing Intellectual Property Institute and other media released data from the SPC Court 2014 White Paper.  Here is a summary:

1.  IPR Cases Continue to Climb, Foreigners Continue to Play a Small Role.

The courts throughout China received 133,863 cases in 2014, and adjudicated 127,129 cases, increases of 19.52% and 10.82%, respectively.  Much of the increases were due to increases in civil copyright cases and administrative trademark cases.

Patent infringement litigation filings increased to 9,648  or 4.93%;trademarks decreased to  21,362 for a decrease of  8.21% and copyright increased to 59,493 cases, or an increase of 15.86%.  Technology contracts increased to 1,071 or an increase of 12.86%;anti-unfair competition cases (which include trade secrets) increased to 1,422 (of which there were 86 civil antitrust cases) with an increase of 9.22%.     Filings of second instance appeals increased to 13,760 cases, or by 15.08%.

Foreign related civil cases increased by a meagerly 0.11% to 1716 cases, or are now a 1.8% of the civil IPR docket, down from last year’s 1.9%.   Hong Kong/Macau/Taiwan cases dropped to 426 cases, or by 11.8%.

2.  Administrative Cases Continue to Climb, Affecting the Beijing IP Courts Docket and Being a Focus of Foreign Rightsholders

Foreign-related administrative cases, which principally consist of appeals of patent and trademark office decisions to grant or deny patent or trademarks, showed a dramatic increase, to 9,918 cases filed and 4,887 adjudicated, with a jump of 243.66% and 68.46% respectively.  Patent cases declined 11.67%  to  539.  However, new trademark cases increased by 330.59% to 9,305, an increase of 330.59%.  There were also 12 copyright administrative cases filed, and 62 administrative cases of other types.

There was overall an increase of 70.5% in foreign related administrative cases (including Hong Kong, Taiwan and Macau) to 2247 cases.  Foreigners represented 45.77% of the total administrative docket.

3.  Criminal Cases Continue to Grow

New criminal IP cases filed in 2013 totaled 11,088, an increase of 18.83%. Appeals numbered 573 cases, a decrease of 13.44%.

Conclusion –

As I noted back in December, the Beijing IP Court continues to be the most important court for foreigners.  In addition the court was facing an “explosion” in trademark civil litigation, which is re-directing the courts resources.

In the past declines in patent administrative litigation, such as occurred in 2014, have been associated with the busy dockets of the court which has resulted in low “reversal rates” by the courts due to the amount of time needed to properly reverse SIPO.  This may indeed be the current situation. I recently heard Chief Judge Su of the Beijing IP Court talk about the busy docket his court is facing.  I suspect that the rapidly increasing trademark docket has resulted in the Beijing IP court focusing on disposing of its trademark docket, as SIPO reversals are more time consuming.  This may have resulted in a decline in patent administrative litigation.  In any event, the decline in administrative appeals to the courts in 2014 is not attributable to any decline in patent filings, which increased by 12.5% in 2014 to 928,000, or any decline in civil patent litigation, which as I noted, increased as well.

I am waiting for more specific data on civil or criminal trade secret cases, as the summaries I have read do not break out trade secret cases from other anti-unfair competition law cases.

As in past years, foreigners continue to play an important role in administrative IP litigation while their role in civil IP litigation continues to be a small percentage of a large docket.  The growth in criminal IP cases, however, also suggests greater opportunities for rightsholders and foreign governments to cooperate on IP cases, including transborder IP cases.

Here’s a link to the 2014 White Paper on the WIPO website (中国法院知识产权司法保护状况 [2014]).

New SPC Guidance on Appointments to and Jurisdiction of Specialized IP Courts

There have been two documents released recently on specialized IP courts. One is the “Guiding Opinion of the Supreme Peoples Court on on the Work of Choosing Judges Rules for the IP Courts” (Provisional) 知识产权法院法官选任工作指导意见(试行) and the other is the  “Regulation of the SPC on Jurisdiction of Cases of the Beijing, Shanghai and Guangzhou IP Courts” 《最高人民法院关于北京、上海、广州知识产权法院案件管辖的规定》.

I welcome commentary and analysis on these two.

China’s Judiciary Publishes Its Views on Trade Secret Protection

Several prominent Chinese judges recently published a Chinese language book on “The Judicial Protection of Trade Secrets” (商业秘密司法保护实务) (China Legal Publishing House May 2012) (536 pp, 98 RMB).   The book is an important summary, compilation and reprinting of many key documents involving trade secret protection in China.  It was edited by SPC IPR Tribunal Chief Judge Kong Xiangjun 孔祥俊 with the support of several prominent judges including Lang Guimei 郎贵梅(SPC), Song Jian 宋健(Jiangsu High Court), Dai Lei  戴磊  (Shandong High Court), Gu Tao 顾韬 (Jiangsu High Court), and  Wu Xin 吴欣and Wang Chao 王潮 (Shanghai Number 2 Intermediate Court). Continue reading